Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
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Exchange
Act of 1934 (Amendment No. )
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Proxy Statement
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£ Definitive
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Person(s) Filing Proxy Statement, if other than the Registrant)
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Check
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SEC
1913 (11-01)
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Persons who are to respond to
the collection of information contained in this
form are not required to respond unless the form displays a currently
valid OMB control
number.
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Notice
of
Annual
Meeting of Shareholders
The
Annual Meeting of Shareholders of CLARCOR Inc. (the “Company”) will be held at
the Hilton Naples Florida Hotel at 5111 Tamiami Trail North, Naples, FL 34103,
on Tuesday, March 23, 2010 at 9:00 A.M., Eastern Time, for the
following purposes:
1. To elect as Directors the three
nominees named in the attached Proxy Statement for a term of three years
each;
2. To ratify the appointment of
PricewaterhouseCoopers LLP as the Company’s independent registered public
accounting firm to audit the Company’s financial statements for the fiscal year
ending November 27, 2010; and
3. To
transact such other business as may properly come before the meeting or any
adjournment thereof.
Only
holders of CLARCOR Common Stock of record at the close of business on Friday,
February 5, 2010 are entitled to receive notice of and to vote at the
meeting or any adjournment thereof.
Whether
or not you plan to attend the meeting, you are requested to sign and date the
enclosed proxy and return it promptly in the envelope enclosed for that
purpose.
|
- s - Richard
M. Wolfson
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|
Richard
M. Wolfson
|
|
Secretary
|
PLEASE
SIGN AND DATE THE ACCOMPANYING PROXY
AND
MAIL IT PROMPTLY.
Franklin,
Tennessee
February 12,
2010
TABLE OF
CONTENTS
ANNUAL
MEETING OF SHAREHOLDERS
|
Page
4
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PROPOSAL NUMBER
1 — ELECTION OF DIRECTORS
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Page
5
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Nominees
for Election to the Board of Directors
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Page
5
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Information
Concerning Nominees and Directors
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Page
5
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Vote
Required
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Page
6
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CORPORATE
GOVERNANCE
|
Page
6
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Independence
|
Page
6
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Meetings
and Fees
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Page
7
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Director
Compensation for Fiscal Year 2009
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Page
8
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Stock
Ownership Guidelines
|
Page
9
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Committees
of the Board of Directors
|
Page
9
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Executive
Sessions of the Board; Communications with the Board
|
Page
10
|
Code
of Ethics
|
Page
11
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Compensation
Committee Interlocks and Insider Participation
|
Page
11
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Certain
Transactions
|
Page
11
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BENEFICIAL
OWNERSHIP OF THE COMPANY’S STOCK
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Page
11
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Certain
Beneficial Owners
|
Page
11
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Directors
and Executive Officers
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Page
12
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Security
Ownership – Management |
Page
12
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Section 16(a)
Beneficial Ownership Reporting Compliance
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Page
13
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COMPENSATION
OF EXECUTIVE OFFICERS AND OTHER INFORMATION
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Page
13
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Compensation
Discussion and Analysis
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Page
13
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Overview
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Page
13
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Compensation
Philosophy
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Page
13
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Establishing
Compensation for Executive Officers
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Page
14
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Components
of Executive Pay
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Page
14
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The
CVA Model
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Potential
Cash Incentive Payments to Named Executive Officers in Respect of Fiscal
Year 2009
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Page
18
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Executive
Insurance Benefits
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Page
20
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Retirement
Plans
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Page
21
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Employment
and Change of Control Agreements
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Page
21
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Stock
Ownership Guidelines
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Page
21
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Compensation
Decisions for 2010
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Page
22
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Fiscal
Year 2010 Option and Restricted Stock Unit Grants
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Page
22
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Deductibility
of Executive Compensation
|
Page
23
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Compensation
Committee Report
|
Page
23
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Summary
Compensation Table
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Page
23
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“All
Other” Compensation Table
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Page
25
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Grants
of Plan-Based Awards for Fiscal Year 2009 Table
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Page
25
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Outstanding
Equity Awards at Fiscal Year-End 2009 Table
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Page
27
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Option
Exercises and Stock Vested During Fiscal Year 2009 Table
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Page
28
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Retirement
Plans
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Page
28
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Pension
Benefits for Fiscal Year 2009 Table
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Page
29
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Deferred
Compensation Plan
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Page
30
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Nonqualified
Deferred Compensation in Fiscal 2009 Table
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Page
30
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Potential
Payments Upon Termination or Change in Control
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Page
31
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Potential
Payments Upon Termination or Change in Control Table
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Page
32
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Equity
Compensation Plan Information
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Page
34
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REPORT
OF THE AUDIT COMMITTEE
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Page 35
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PROPOSAL NUMBER
2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED ACCOUNTING
FIRM
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Page
36
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Information
About Our Independent Registered Public Accounting Firm
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Page
36
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Amounts
Paid to PricewaterhouseCoopers LLP
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Page
36
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Audit
Committee Pre-Approval Process
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Page
36
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Vote
Required
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Page
36
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MISCELLANEOUS
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Page
37
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Internet
Website
|
Page
37
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Other
Business
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Page
37
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Proposals
of Security Holders for 2011 Annual Meeting of
Shareholders
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Page
37
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Expense
of Solicitation of Proxies
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Page
38
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CLARCOR
Inc.
840
Crescent Centre Drive, Suite 600
Franklin,
Tennessee 37067
PROXY
STATEMENT
Annual
Meeting of Shareholders
This
Proxy Statement and the accompanying proxy are being mailed to shareholders of
CLARCOR Inc. (the “Company”) on February 12, 2010. They are being furnished
in connection with the solicitation of proxies by the Company’s Board of
Directors for use at the Annual Meeting of Shareholders to be held at the Hilton
Naples Florida Hotel at 5111 Tamiami Trail North, Naples, Florida 34103, on
Tuesday, March 23, 2010 at 9:00 A.M., Eastern Time, for the purposes
set forth in the Notice of Annual Meeting of Shareholders. Directions to the
Annual Meeting and information on how to vote in person can be obtained on-line
at www.clarcorproxy.com
or by contacting the Company’s Secretary, Richard M. Wolfson, at 840 Crescent
Centre Drive, Suite 600, Franklin, Tennessee 37067, telephone:
(615)-771-3100.
A
shareholder who gives a proxy may revoke it at any time before it is voted by
giving written notice of the termination thereof to the Secretary of the
Company, by filing with him another proxy or by attending the Annual Meeting and
voting his or her shares in person. All valid proxies delivered pursuant to this
solicitation, if received in time and not revoked, will be voted. If no
specifications are given by the shareholder executing the proxy card, valid
proxies will be voted (a) to elect the three individuals nominated for
election to the Board of Directors listed on the proxy card enclosed herewith,
(b) to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s
independent registered public accounting firm to audit the books and accounts of
the Company for the fiscal year ending November 27, 2010, and (c) in the
discretion of the appointed proxies, upon such other matters as may properly
come before the meeting.
As of
January 30, 2010, the Company had outstanding 50,433,733 shares of Common Stock,
constituting the only class of voting securities of the Company outstanding, and
each outstanding share is entitled to one vote on all matters to be voted upon.
Only holders of CLARCOR Common Stock of record at the close of business on
February 5, 2010 are entitled to notice of and to vote at the meeting. A
majority of the shares of Common Stock issued and outstanding and entitled to
vote at the meeting, present in person or represented by proxy, will constitute
a quorum for purposes of the Annual Meeting.
Important Notice
Regarding the Availability Of Proxy Materials for the Shareholder Meeting to be
held on March 23, 2010:
The following Proxy materials are
available for you to review online at: www.clarcorproxy.com:
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•
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This Proxy Statement (including
all attachments);
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|
•
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The Company’s Annual Report for
the fiscal year ended November 28, 2009 (which is not
deemed to be part of the official proxy soliciting
materials); and
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|
•
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Any amendments to the foregoing
materials that are required to be furnished to
stockholders.
|
In accordance with Securities and
Exchange Commission (“SEC”) rules, the foregoing website does not use “cookies”, track
user moves or gather any personal information.
In
addition, you may request a copy of any of the above materials by calling
1-800-252-7267, pressing “0” and asking to be connected to the Company’s
Secretary, Richard Wolfson, or by sending an e-mail setting forth a valid
mailing address to: [email protected]
PROPOSAL NO. 1 —
ELECTION OF DIRECTORS
Nominees
for Election to the Board of Directors
The
Company’s Certificate of Incorporation provides for a Board of Directors
consisting of nine directors divided into three classes, each class consisting
of three directors. One class of directors is elected at each Annual Meeting of
Shareholders. The Board is currently comprised of eight directors,
three of whom are up for re-election this year.
Accordingly,
at the Annual Meeting three directors are to be elected. The nominees are
Messrs. Robert Burgstahler, Paul Donovan and Norman Johnson. All of
the nominees are current directors previously elected by the shareholders of the
Company whose terms in office expire this year. All have been
recommended by the Directors Affairs/Corporate Governance Committee and by the
entire Board of Directors for re-election to our Board of Directors and all of
the nominees have consented to serve if elected. In the event any of these
nominees is unable to serve as a director, the shares represented by the proxy
will be voted for the person, if any, who is designated by the Board of
Directors to replace the nominee. The Board of Directors has no reason to
believe that any of the nominees will be unable to serve.
Proxies
will be voted for the election of each of Messrs. Burgstahler, Donovan and
Johnson unless the shareholder signing such proxy withholds authority to vote
for one or more of these nominees in the manner described on the proxy card. If
a quorum is present at the meeting, the three candidates for director receiving
the greatest number of votes will be elected. In such event, abstentions,
withheld votes and broker non-votes will not affect the outcome of the election
of directors.
If
elected, Messrs. Burgstahler, Donovan and Johnson will hold office for a
three-year period ending in 2013 or until their respective successors are duly
elected and qualified.
Information
Concerning Nominees and Directors
The
following are the current directors of the Company (including the nominees),
their ages, the year in which each first became a director and their principal
occupations or employment during at least the past five years:
Name
|
|
Age
|
|
Director
Since
|
|
Year
Term as
Director
Expires
|
|
J.
Marc Adam
|
|
71
|
|
March
23, 1991
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|
2012(1)
|
|
Mr.
Adam is retired Vice President Marketing, 3M, St. Paul, Minnesota. He
served as Vice President Marketing from 1995 to 1999 and from 1986 to 1995
as Group Vice President, 3M. 3M is a diversified manufacturer. Mr. Adam is
a director of Schneider National Inc., a privately held trucking and
logistics company.
|
|
James
W. Bradford, Jr.
|
|
62
|
|
January
20, 2006
|
|
2012
|
|
Since
June 2004 Mr. Bradford has been the Dean, Owen Graduate School of
Management, Vanderbilt University, Nashville, Tennessee. From November
2002 until he became Dean he was the Associate Dean of Corporate Relations
of that school. From 1999 to 2001 he was the President and Chief Executive
Officer of United Glass Corporation, a national fabricator of flat glass.
Mr. Bradford is a director of Genesco, Inc. and Granite Construction,
Inc.
|
|
*Robert
J. Burgstahler
|
|
65
|
|
December
18, 2000
|
|
2010
|
|
Mr.
Burgstahler retired as Senior Vice President, Business Development and
Corporate Services of 3M, St. Paul, Minnesota, effective in August 2003.
He served as Vice President, Finance and Administrative Services of 3M
from 2000 to 2002, President and General Manager of 3M Canada from 1998 to
2000 and Staff Vice President Taxes of 3M from 1995 to 1998. 3M is a
diversified manufacturer.
|
|
*Paul
Donovan
|
|
62
|
|
March
24, 2003
|
|
2010
|
|
Mr.
Donovan was the Executive Vice President and Chief Financial Officer of
Sundstrand Corporation from December 1988 to June 1999. Mr. Donovan was
Senior/Executive Vice President and Chief Financial Officer of Wisconsin
Energy Corporation from August 1999 until June 2003. Mr Donovan retired as
a special advisor to the Chairman of Wisconsin Energy Corporation in
February 2004. Wisconsin Energy Corporation is a holding company with
subsidiaries primarily in utility businesses. Mr. Donovan is a director of
AMCORE Financial, Inc. and Woodward Governor Company.
|
|
Robert
H. Jenkins
|
|
66
|
|
March
23, 1999
|
|
2011
|
|
Mr.
Jenkins is retired Chairman, Hamilton Sundstrand Corporation (formerly
Sundstrand Corporation), Rockford, Illinois. He served as Chairman,
President and Chief Executive Officer from 1997 to 1999 and as President
and Chief Executive Officer, Sundstrand Corporation from 1995 to 1997.
Hamilton Sundstrand Corporation is an aerospace and industrial company.
Mr. Jenkins is a director of Acco Brands Corporation, AK Steel Holding
Corporation, and Jason Incorporated.
|
|
*Norman
E. Johnson
|
|
61
|
|
June
26, 1996
|
|
2010
|
|
Mr.
Johnson has served as Chairman, President and Chief Executive Officer of
CLARCOR Inc., Franklin, Tennessee, since March 2000. Mr. Johnson is a
director of Schneider National Inc., a privately held trucking and
logistics company.
|
|
Philip
R. Lochner, Jr.
|
|
66
|
|
June
17, 1999
|
|
2011
|
|
Mr.
Lochner serves on corporate boards of public companies. Currently, Mr.
Lochner is a director of CMS Energy, Crane Co., and Gentiva Health
Services.
|
|
James
L. Packard
|
|
67
|
|
June
22, 1998
|
|
2012
|
|
Mr.
Packard is the retired Chairman, President and Chief Executive Officer of
REGAL-BELOIT Corporation, a manufacturer of mechanical and electrical
products. He served as President and Chief Executive Officer from 1986
until 2002, and as Chairman from 1986 until 2006. Mr. Packard is also a
director of The First National Bank & Trust Company of Beloit and
Manitowoc Company.
|
|
*
|
Nominees
for election to terms expiring in 2013
|
|
|
(1)
|
Notwithstanding
that his term expires in 2012, Mr. Adam is expected to resign
at the annual meeting to be held in 2011, which is when Mr. Adam will be
72 years old. Pursuant to current Company policy, directors
should resign from office effective upon the date of the Company’s annual
meeting that soonest follows their having attained 72 years of
age.
|
Vote
Required
A
shareholder may mark the accompanying form of proxy to (i) vote in favor of
all nominees, (ii) withhold votes from all nominees, or (iii) vote in
favor of one or more nominees while withholding votes from one or more specified
nominees. If a quorum is present at the Annual Meeting, the three directors
receiving the greatest number of votes will be elected. As there are
precisely three nominees, any director receiving any votes will be
elected.
Pursuant
to newly-amended New York Stock Exchange (“NYSE”) Rule 452, the uncontested
election of directors is no longer a routine matter and, therefore, may not be
voted upon by brokers without instruction from beneficial owners. Consequently,
proxies submitted by brokers for shares beneficially owned by other persons may
not, in the absence of specific instructions from such beneficial owners, vote
the shares in favor of a nominee or withhold votes from a nominee at the
brokers’ discretion.
Shares
represented by proxies not marked with respect to the election of directors
(whether submitted by shareholders or by brokers) will be voted FOR the election
of Messrs. Burgstahler, Donovan and Johnson as directors of the Company in
accordance with the Board of Directors’ recommendation below.
The Board of Directors recommends a
vote FOR the election of Messrs. Burgstahler, Donovan and Johnson as
directors of the Company.
CORPORATE
GOVERNANCE
Independence
The NYSE
corporate governance rules require that the Board of Directors of a listed
company consist of a majority of independent directors. The Company’s Board of
Directors currently has, and previously has had, a majority of independent
directors. Seven of the eight current members of the Board of Directors are
independent; only Mr. Johnson is not.
Pursuant
to the NYSE corporate governance rules, the Board of Directors has adopted
categorical independence standards to provide assistance in the determination of
director independence. The categorical standards are set forth below and provide
that a director will not qualify as an independent director if:
(i) The
director is, or has been within the last three years, an employee of the
Company, or an immediate family member of the director is, or has been within
the last three years, an executive officer of the Company;
(ii) The
director has received, or has an immediate family member who has received,
during any twelve month period within the last three years, more than $120,000
in direct compensation from the Company, other than director and committee fees
and pension or other forms of deferred compensation for prior service (provided
such compensation is not contingent in any way on continued
service);
(iii) The
director is a current partner or employee of the Company’s external audit firm,
or was within the past three years a partner or employee of such firm and
personally worked on the Company’s audit within that time;
(iv) The
director has an immediate family member who (a) is a current partner of a
firm that is the Company’s external auditor, (b) is a current employee of
such firm and participates in the firm’s audit, assurance or tax compliance (but
not tax planning) practice or (c) was within the past three years a partner
or employee of such firm and personally worked on the Company’s audit within
that time;
(v) The
director or an immediate family member is, or has been within the last three
years, employed as an executive officer of another company where any of the
Company’s present executive officers at the same time serves or served on that
company’s compensation committee;
(vi) The
director is a current employee, or an immediate family member is a current
executive officer, of a company that has made payments to, or received payments
from, the Company for property or services in an amount which, in any of the
last three fiscal years, exceeded the greater of $1 million or 2% of such
other company’s consolidated gross revenues; or
(vii) The
director or an immediate family member is a current officer, director or trustee
of a charitable organization where the Company’s annual discretionary charitable
contributions to the charitable organization are more than the greater of (i) 2%
of that organization’s total annual charitable receipts, or
(ii) $1,000,000.
For
purposes of the categorical standards, immediate family member includes a
director’s spouse, parents, children, siblings, mothers and fathers-in-law, sons
and daughters-in-law, brothers and sisters-in-law, and anyone (other than
domestic employees) who shares the director’s home.
The Board
of Directors has affirmatively determined, assisted by the categorical
independence standards set forth above, that none of the outside Directors has a
material relationship with the Company (either directly or as a partner,
shareholder, officer, employee or trustee of an organization that has a
relationship with the Company). In making its determination, the Board of
Directors considered relevant facts and circumstances, including commercial,
industrial, banking, consulting, legal, accounting, charitable and familial
relationships, and considered the issue not merely from the standpoint of a
director, but also from that of persons or organizations with which a director
has an affiliation.
Applying
the categorical independence standards, the Board of Directors has determined
that each of Messrs. Adam, Bradford, Burgstahler, Donovan, Jenkins, Lochner
and Packard is independent as required by the NYSE corporate governance
rules.
Meetings
and Fees
The Board
of Directors held six meetings during fiscal 2009. All of the Company’s
directors attended at least 75% of the aggregate number of meetings of each of
(i) the Board of Directors and (ii) Committees of the Board of which
they were members throughout fiscal 2009.
In fiscal
2009, directors who were not employees of the Company received (a) an
annual retainer of $35,000, payable in cash or shares of the Company’s Common
Stock, at the director’s option; (b) a fee of $1,500 payable for each Board
and Committee meeting attended in person; (c) a fee of $1,000 for each
Board and Committee meeting attended by telephone; and (d) annual fees
payable to Chairmen of Committees of the Board as follows: (i) Audit
Committee Chairman, $10,000; (ii) Directors Affairs/Corporate Governance
Committee Chairman, $6,500; and (iii) Compensation Committee Chairman,
$6,500. Board members also receive reimbursement for travel expenses and the
stock options referred to below.
In
September 2008, the Board approved an increase in the annual retainer to $40,000
that was to become effective on March 23, 2009. However, in
light of the wage freeze imposed by the Company at the outset of fiscal year
2009, the Board subsequently unanimously resolved to forego such increase and to
maintain the amount of the annual retainer at $35,000 for fiscal year
2009. Although the Company lifted the wage freeze in early fiscal
2010, in light of the fact that most of the Company’s senior management will not
receive wage increases in 2010, the Board has agreed not to institute the
increase in the annual retainer at this time. The Board will revisit
this issue when and if wage increases for senior management occur.
Pursuant
to the Company’s Deferred Compensation Plan for Directors, a non-employee
director may elect to defer receipt of the director’s fees to which he is
entitled and to be paid the amounts so deferred, plus interest thereon at the
prime rate announced quarterly by JP Morgan Chase Bank, or its successor, either
when the participant ceases being a director of the Company or at the time the
participant reaches a specified age. None of the Company’s directors deferred
any portion of the fees payable during fiscal 2009.
Under the
Company’s 2009 Incentive Plan, on the date a person first becomes a non-employee
director, and annually thereafter on the date of each annual meeting of
shareholders, such person has the option to receive a grant of shares of the
Company’s Common Stock with an aggregate fair market value equal to and in lieu
of the amount of the annual retainer for non-employee directors.
The 2009
CLARCOR Incentive Plan provides that the Directors Affairs/Corporate Governance
Committee each year will determine the number and form of equity incentive
grants payable to directors. Under the Company’s 2004 Incentive
Plan (the predecessor to the 2009 Incentive Plan), each non-employee director
was automatically granted, on the date of each annual meeting of shareholders,
options to purchase 7,500 shares of Common Stock at an option exercise
price equal to the fair market value of a share of Common Stock on the date of
grant. The Directors Affairs/Corporate Governance
Committee has determined not to deviate from historical practice in 2010 and,
consequently, on March 23, 2010 each director will receive options to purchase
7,500 shares of Common Stock at an option exercise price equal to the fair
market value of a share of Common Stock on such date. These options
will be granted pursuant to the 2009 Incentive Plan.
All
options granted to directors as described above vest immediately on the date of
grant and have a ten year term. Shares acquired upon exercise of an option may
not be sold or transferred during the six month period following the date of
grant of such option. The following table sets forth the compensation paid to
the Company’s non-employee directors during fiscal year 2009:
DIRECTOR
COMPENSATION FOR FISCAL YEAR 2009
Name
|
|
Fees Earned or
Paid in Cash (1)
($)
|
|
|
Stock
Awards (2)
($)
|
|
|
Option
Awards (3)
($)
|
|
|
Change in
Pension
Value &
Non-Qualified
Deferred
Earnings
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
J. Marc Adam
|
|
|
20,500 |
|
|
|
43,924 |
|
|
|
59,550 |
|
|
|
0 |
|
|
|
0 |
|
|
|
123,974 |
|
James
W. Bradford
|
|
|
23,000 |
|
|
|
43,924 |
|
|
|
59,550 |
|
|
|
0 |
|
|
|
0 |
|
|
|
126,474 |
|
Robert
J. Burgstahler
|
|
|
36,500 |
|
|
|
43,924 |
|
|
|
59,550 |
|
|
|
0 |
|
|
|
0 |
|
|
|
139,974 |
|
Paul
Donovan
|
|
|
26,500 |
|
|
|
43,924 |
|
|
|
59,550 |
|
|
|
0 |
|
|
|
0 |
|
|
|
129,974 |
|
Robert
H. Jenkins
|
|
|
29,000 |
|
|
|
43,924 |
|
|
|
59,550 |
|
|
|
0 |
|
|
|
0 |
|
|
|
132,474 |
|
Philip
R. Lochner, Jr
|
|
|
59,500 |
|
|
|
— |
|
|
|
59,550 |
|
|
|
0 |
|
|
|
0 |
|
|
|
119,050 |
|
James
L. Packard
|
|
|
31,500 |
|
|
|
43,924 |
|
|
|
59,550 |
|
|
|
0 |
|
|
|
0 |
|
|
|
134,974 |
|
(1)
|
Represents
the amount of cash compensation earned by each director in fiscal 2009 for
Board and Committee service.
|
(2)
|
All
stock awards reflected in this column represent the stock awarded to a
director at his election in lieu of cash compensation for his annual
retainer. The amounts shown in this column represent the expense
recognized by the Company in accordance with Accounting Standards
Codification (“ASC”) 718 for financial reporting purposes in fiscal 2009
for restricted stock grants made during fiscal 2008 and fiscal 2009,
disregarding for this purpose estimates of forfeitures related to
service-based vesting conditions. See Footnote N of the Company’s
consolidated financial statements for the three years ended November 30,
2009, included in our Annual Report on Form 10-K for the year ended
November 28, 2009 filed with the Securities and Exchange Commission on
January 22, 2010 (the “2009 Annual Report”), for the assumptions made in
determining ASC 718 values. The grant date fair value of the restricted
stock grants made to each non-employee director during fiscal 2009 was
$35,004. There were no unvested restricted stock units or unvested
restricted stock held by any non-employee director as of the end of fiscal
2009. The number of shares of stock held by each non-employee director of
the Company as of the end of fiscal 2009 are set forth in the column
entitled “Shares Owned Outright” in the table entitled “Security Ownership
— Management” under the heading “BENEFICIAL OWNERSHIP OF THE COMPANY’S
COMMON STOCK”.
|
(3)
|
Represents
the expense recognized by the Company in accordance with ASC 718 for
financial reporting purposes in fiscal 2009 for stock option grants,
disregarding for this purpose the estimates of forfeitures related to
service-based vesting conditions. The assumptions used in the calculation
of these amounts were as follows:
|
|
Grant Date
|
|
Volatility
(%)
|
|
|
Expected
Life
(Years)
|
|
|
Risk-Free
Interest
Rate
|
|
|
Dividend
Yield
|
|
Directors
|
3/23/2009
|
|
|
23.6 |
|
|
|
9.58 |
|
|
|
2.68 |
|
|
|
.96 |
|
See also
Footnote N of the Company’s consolidated financial statements for the three
years ended November 30, 2009, included in our 2009 Annual Report, for the other
assumptions made in determining ASC 718 values. The grant date fair value of the
stock options granted in fiscal 2009 to each non-employee director (determined
using a Black-Scholes methodology employing the assumptions set forth in the
table immediately above) was $7.94 per option and $416,850 for all
directors in the aggregate ($59,550 per director). The number of vested stock
options held by each non-employee director of the Company as of the end of
fiscal 2009 are set forth in the column entitled “Vested Stock Options” in the
table entitled “Security Ownership — Management” under the heading
“BENEFICIAL OWNERSHIP OF THE COMPANY’S COMMON STOCK”. No non-employee
director had any unvested stock options at the end of fiscal 2009.
Stock
Ownership Guidelines
The
Company has established stock ownership guidelines for non-employee directors.
Under these guidelines, all non-employee directors, after a five-year period,
should own Company common stock with a value of five times the annual retainer
(currently $35,000). Shares subject to in-the-money options granted to a
non-employee director count toward the fulfillment of these guidelines. These
guidelines are not mandatory, but are intended to convey expectations regarding
the expected levels of stock ownership by directors. The Company has
no official policy that specifies the consequences for failing to meet the
guidelines within a reasonable period of time. The determination of
such consequences in any particular instance would be a matter for the Directors
Affairs/Corporate Governance Committee and Board of Directors to
decide.
The
Directors Affairs/Corporate Governance Committee oversees these guidelines and
reviews each director’s standing in respect of the same once per
year. In January of 2010, this Committee determined that all of
the Company’s directors currently comply with the Guidelines based on their
respective years as a director of the Company.
Committees
of the Board of Directors
During
fiscal 2009, the standing committees of the Board of Directors were the
Directors Affairs/Corporate Governance Committee, the Audit Committee and the
Compensation Committee. Each of these Committees is discussed
below.
Directors Affairs/Corporate
Governance Committee. The Directors Affairs/Corporate
Governance Committee currently consists of five directors: James L. Packard,
Chairman, J. Marc Adam, James W. Bradford, Jr., Robert H. Jenkins, and
Philip R. Lochner, Jr. Each of these directors is independent as such term
is defined in the NYSE corporate governance rules.
The Board
has adopted a Charter for the Committee. A current copy of that Charter is
available on the Company’s website: www.clarcor.com. The
Charter provides, among other things, that the Committee will make
recommendations to the full Board regarding changes to the size and composition
of the Board or any committee thereof; identify individuals that the Committee
believes are qualified to become Board members and recommend that the Board
select such nominee or nominees to stand for election; and identify individuals
for appointment to the Board to fill vacancies on the Board.
The
Charter of the Committee requires the Committee to review and evaluate any
stockholder nominees for director. The Committee has no specific policy with
regard to the minimum qualifications of director candidates. The Company’s
By-laws (available on the Company’s website) were last amended on January 16,
2010 and provide that notice of any proposed nomination by a shareholder for
election of a person to the Board shall be delivered to or mailed and received
at the principal executive offices of the Company no less than 120 days nor
more than 150 days prior to the anniversary of the prior year’s Annual
Meeting of Shareholders. Section 2.12 of the By-laws specifies the
information to be included by a shareholder in such a notice.
Messrs. Burgstahler,
Donovan and Johnson are the current nominees recommended by the Committee for
election to the Board. All of these individuals are standing for reelection by
the shareholders.
In the
past the Committee has reviewed potential candidates for election to the Board
recommended primarily by Board members or third party search firms. The process
has included a review of the candidate’s qualifications and interviews with the
candidate. No different process would be applied with respect to nominees
recommended by holders of the Company’s Common Stock.
The
Directors Affairs/Corporate Governance Committee met four times during fiscal
2009.
Audit
Committee. The Audit Committee was established by the Board in
accordance with applicable provisions of the Securities Exchange Act of 1934, as
amended, and applicable NYSE requirements. The Audit Committee currently
consists of five directors: Messrs. Robert J. Burgstahler, Chairman, J.
Marc Adam, Paul Donovan, Philip R. Lochner, Jr., and James L. Packard. Mr.
Lochner replaced James W. Bradford, Jr. on the Audit Committee in June
2009. Each of the directors who serves or served on the Audit
Committee at any time during fiscal 2009 is independent and financially literate
as such terms are defined in the NYSE corporate governance rules. Further,
Mr. Burgstahler and Mr. Donovan have previously served as the chief
financial officers of publicly-held corporations. Based on these and other
factors, the Board has determined that Mr. Burgstahler and Mr. Donovan
are each an “audit committee financial expert” as such term is defined in
applicable rules of the Securities and Exchange Commission.
The Board
has adopted a Charter for the Audit Committee. A current copy of that Charter is
available on the Company’s website: www.clarcor.com.
The
purposes of the Committee include assisting Board oversight of the integrity of
the Company’s financial statements, its compliance with legal and regulatory and
filing requirements, the selection of an independent auditor, determination of
the independent auditor’s qualifications and independence and the performance of
the Company’s internal audit function and independent auditors. The Committee
discusses with management and the Company’s independent auditors the Company’s
annual audited financial statements, quarterly financial statements, earnings
press releases, and management’s assessment of internal control over financial
reporting .
The Audit
Committee met eight times during fiscal 2009.
Compensation
Committee. The Compensation Committee currently consists of
four directors: Messrs. Robert H. Jenkins, Chairman, James W.
Bradford, Jr., Robert J. Burgstahler, and Paul Donovan. Mr.
Bradford replaced Philip R. Lochner, Jr. on the Compensation Committee in
June 2009. Each of the directors who serves or served on the
Compensation Committee at any time during fiscal 2009 is independent as such
term is defined in the listing standards of the NYSE.
The Board
has adopted a written Charter for the Committee. A current copy of that Charter
is available on the Company’s website: www.clarcor.com.
The
purposes of the Committee include discharging the Board’s responsibilities
relating to compensation of the Company’s executive officers and reviewing and
making recommendations to the Board with respect to compensation plans, policies
and programs. The Committee annually reviews and approves corporate goals and
objectives relevant to the compensation of the Company’s Chief Executive Officer
and determines and approves the compensation level of the Chief Executive
Officer and the Company’s other executive officers and approves grants and
awards of restricted stock units and stock options under the Company’s incentive
plans. From time to time the Committee consults with outside compensation
experts in exercising its responsibilities. All of the foregoing are described
in greater detail in the Compensation Discussion and Analysis
below.
The
Compensation Committee met five times during fiscal 2009.
Executive
Sessions of the Board; Communications with the Board
The
Company’s Corporate Governance Guidelines (available on the Company’s website)
provide that at each meeting of the Board of Directors the independent directors
shall meet separately from the management of the Company. Mr. Johnson, a
director and the Chairman, President and Chief Executive Officer of the Company,
does not attend these executive sessions. Under the Guidelines, these sessions
are chaired on a rotating basis by the chairperson of one of the standing
committees of the Board (currently the Audit Committee, the Compensation
Committee and the Directors Affairs/Corporate Governance
Committee).
The Board
has adopted a process for holders of the Company’s common stock and other
interested parties to send written communications to the Board. Such
communications should be sent to the Corporate Secretary at CLARCOR Inc., 840
Crescent Centre Drive, Suite 600, Franklin, Tennessee 37067. The Corporate
Secretary will forward all such communications to the Chairman of the Director
Affairs/Corporate Governance Committee of the Board. That Committee will
determine whether any such communication will be distributed to the full Board
or, if requested by the sender, only to the non-management
directors.
The Board
has adopted a policy which recommends that all directors personally attend each
annual and special meeting of the shareholders of the Company. At the last
Annual Meeting of Shareholders, held on March 23, 2009, all of the
directors were in attendance.
Code
of Ethics
The
Company has adopted a Code of Ethics for Senior Financial Officers applicable to
the Company’s Chief Executive Officer, Chief Financial Officer, Chief Accounting
Officer, Internal Audit Director, and any other person performing the duties of
such officials. The Code of Ethics for Senior Financial Officers is available on
the Company’s website at www.clarcor.com.
Compensation
Committee Interlocks and Insider Participation
During
fiscal 2009, the Compensation Committee of the Board of Directors was composed
of Robert H. Jenkins, James W. Bradford, Jr., Robert J.
Burgstahler, Paul Donovan and Philip R. Lochner, Jr., with Mr. Bradford
replacing Mr. Lochner in June 2009. None of these persons has at any
time been an officer or employee of the Company or any of its subsidiaries. In
addition, there are no relationships among our executive officers, members of
the Compensation Committee or entities whose executives serve on the Board of
Directors or the Compensation Committee that require disclosure under applicable
regulations of the SEC.
Certain
Transactions
We are
not aware of any related party transactions between the Company and any of our
directors, executive officers, 5% stockholders or their family members since the
beginning of the last fiscal year which require disclosure under Item 404
of Regulation S-K under the Securities Exchange Act of 1934 (“Item 404
Transactions”).
Each
year, the Company requires its directors and executive officers to complete a
questionnaire, one of the purposes of which is to disclose any related-party
transactions with the Company, including any potential Item 404
Transactions. No such transactions were disclosed during or in respect of fiscal
2009. The Company does not have a history of engaging in related-party
transactions with its directors or executive officers or their respective
related persons or affiliates and does not have a formal or other written policy
regarding the analysis or approval of such transactions. Even in the absence of
a formal policy, any material proposed related-party transaction, including any
Item 404 Transaction irrespective of materiality, would be brought before
the Board or a specially designated Committee thereof (with any interested
director recusing him or herself from the proceedings) to be specifically
considered and approved before the Company would knowingly engage in any such
transaction.
BENEFICIAL
OWNERSHIP OF THE COMPANY’S COMMON STOCK
Certain
Beneficial Owners
The
following table sets forth the ownership according to the most recent filings of
Schedules 13G and 13D and amendments thereto (as described in footnote 5 to the
table), as applicable, by the beneficial owners which, as of the record date for
this meeting, own beneficially more than 5% of the Company’s common
stock.
Name and Address of Beneficial Owner
|
|
Shares
Beneficially
Owned
|
|
|
Percent
of
Class (1)
|
|
|
|
|
|
|
|
|
Neuberger
Berman Group LLC (2)
Neuberger
Berman LLC
Neuberger
Berman Management LLC
Neuberger
Berman Equity Funds
605
Third Avenue
New
York, NY 10158
|
|
|
6,434,555
|
|
|
|
12.8 |
% |
|
|
|
|
|
|
|
|
|
Columbia
Wanger Asset Management, L.P. (3)
227 West
Monroe Street, Suite 3000
Chicago,
Illinois 60606
|
|
|
3,370,000
|
|
|
|
6.7 |
% |
|
|
|
|
|
|
|
|
|
Gabelli
Funds, LLC (4)
GAMCO
Asset Management Inc.
One
Corporate Center
Rye,
NY 10580
|
|
|
3,240,116 |
|
|
|
6.4 |
% |
|
|
|
|
|
|
|
|
|
Barclays
Global Investors, N.A. (5)
Barclays
Global Fund Advisors
Barclays
Global Investors, LTD
400
Howard Street
San
Francisco, CA 94105
|
|
|
3,272,755 |
|
|
|
6.5 |
% |
(1)
|
Based
on 50,416,773 shares outstanding at January 15,
2010.
|
(2)
|
Based
upon a Schedule 13G filed with the SEC on June 11, 2009 reporting: (i)
Neuberger Berman Group LLC and Neuberger Berman LLC each have sole voting
power with respect to 1,000 shares, shared voting power with respect to
5,442,022 shares and shared dispositive power with respect to 6,434,555
shares; (ii) Neuberger Berman Management LLC has shared voting and
dispositive power with respect to 5,442,022 shares; and (iii) Neuberger
Berman Equity Funds has shared voting and dispositive power with respect
to 5,421,622 shares.
|
(3)
|
Based
upon a Schedule 13G filed with the SEC on February 6, 2009 reporting sole
voting power with respect to 3,238,000 shares and sole dispositive power
with respect to 3,370,000 shares.
|
(4)
|
Based
upon a Schedule 13D filed with the SEC on March 6, 2009 reporting: (i)
Gabelli Funds, LLC has sole voting and dispositive power with respect to
804,000 shares; and (ii) GAMCO Asset Management Inc. has sole voting power
with respect to 2,388,716 shares and sole dispositive power with respect
to 2,436,116 shares.
|
(5)
|
Based
upon a Schedule 13G filed with the SEC on February 5, 2009 reporting: (i)
Barclays Global Investors, N.A. has sole voting power with respect to
928,357 shares and sole dispositive power with respect to 1,098,475
shares; (ii) Barclays Global Fund Advisors has sole voting power with
respect to 1,562,362 shares and sole dispositive power with respect to
2,140,366 shares; and (iii) Barclays Global Investors, LTD has sole voting
power with respect to 1,410 shares and sole dispositive power with respect
to 33,914 shares.
|
Directors
and Executive Officers
The
following table provides information concerning the shares of Common Stock of
the Company beneficially owned as of January 15, 2010 by all directors, the
executive officers named in the “Summary Compensation Table” and by all
directors and executive officers of the Company as a group.
SECURITY
OWNERSHIP — MANAGEMENT
Class
|
|
Name
|
|
Shares
Owned
Outright (1)
|
|
|
Vested
Stock
Options (2)
|
|
|
Restricted
Stock
Units (3)
|
|
|
Total
|
|
|
Percent
of
Class (4)
|
|
Common
Stock
|
|
J.
Marc Adam
|
|
|
56,120 |
|
|
|
75,000 |
|
|
|
|
|
|
131,120 |
|
|
|
* |
|
Common
Stock
|
|
James
W. Bradford, Jr.
|
|
|
6,646 |
|
|
|
31,250 |
|
|
|
|
|
|
37,896 |
|
|
|
* |
|
Common
Stock
|
|
Robert
J. Burgstahler
|
|
|
14,880 |
|
|
|
69,534 |
|
|
|
|
|
|
84,414 |
|
|
|
* |
|
Common
Stock
|
|
Paul
Donovan
|
|
|
9,226 |
|
|
|
52,500 |
|
|
|
|
|
|
61,726 |
|
|
|
* |
|
Common
Stock
|
|
Robert
H. Jenkins
|
|
|
27,814 |
|
|
|
67,500 |
|
|
|
|
|
|
95,314 |
|
|
|
* |
|
Common
Stock
|
|
Norman
E. Johnson
|
|
|
562,145 |
|
|
|
815,987 |
|
|
|
93,482 |
|
|
|
1,471,614 |
|
|
|
2.92 |
% |
Common
Stock
|
|
David
J. Lindsay
|
|
|
60,561 |
|
|
|
162,913 |
|
|
|
|
|
|
|
223,474 |
|
|
|
* |
|
Common
Stock
|
|
Philip
R. Lochner, Jr
|
|
|
24,234 |
|
|
|
67,500 |
|
|
|
|
|
|
|
91,734 |
|
|
|
* |
|
Common
Stock
|
|
James
L. Packard
|
|
|
26,232 |
|
|
|
75,000 |
|
|
|
|
|
|
|
101,232 |
|
|
|
* |
|
Common
Stock
|
|
Sam
Ferrise
|
|
|
44,648 |
|
|
|
170,180 |
|
|
|
|
|
|
|
214,828 |
|
|
|
* |
|
Common
Stock
|
|
Bruce
A. Klein
|
|
|
179,547 |
|
|
|
290,668 |
|
|
|
|
|
|
|
470,215 |
|
|
|
* |
|
Common
Stock
|
|
Richard
M. Wolfson
|
|
|
1,387 |
|
|
|
36,375 |
|
|
|
573 |
|
|
|
38,335 |
|
|
|
* |
|
All
Directors and Executive Officers as a
Group (12 persons total)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,021,902 |
|
|
|
5.98 |
% |
*
|
Less
than one percent.
|
|
|
(1)
|
All
shares are directly owned except as follows: Mr. Johnson – includes
113,418 shares owned by Mr. Johnson’s wife; Mr. Lindsay – includes 31,354
shares held by a family trust and 9,158 shares owned by Mr. Lindsay’s
wife; and Mr. Donovan – all 9,226 shares owned by Mr. Donovan’s
wife.
|
|
|
(2)
|
Includes
all shares subject to unexercised stock options granted pursuant to the
Company’s Incentive Plans which vested by January 15, 2010 or which
will vest within 60 days from January 15,
2010.
|
|
|
(3)
|
Includes
all restricted stock units granted under the Company’s Incentive Plans
(i) which vested prior to January 15, 2010 and which have been
deferred, or (ii) which will vest (irrespective of any deferral
election by the grantee) within 60 days from January 15,
2010.
|
|
|
(4)
|
Based
on 50,416,773 shares outstanding at January 15,
2010.
|
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a)
of the Securities Exchange Act of 1934 requires the Company’s executive officers
and directors and persons who beneficially own more than 10% of the outstanding
shares of the Company’s common stock to file reports of ownership and changes in
ownership with the SEC and the NYSE. Based solely on our review of those forms
and certain written representations from reporting persons, we believe that in
fiscal 2009 all of our executive officers, directors and greater than 10%
beneficial owners were in compliance with all applicable filing
requirements.
COMPENSATION
OF EXECUTIVE OFFICERS AND OTHER INFORMATION
Compensation
Discussion and Analysis
Overview
Through
its compensation policies, the Company seeks to attract and retain high quality
leadership and to assure that the executive officers and senior management of
the Company are compensated in a manner consistent with their performance,
shareholder interests, internal equity considerations, competitive practice and
the applicable requirements of regulatory bodies. The Compensation Committee of
the Board of Directors (the “Committee”) reviews and approves the compensation
policies and practices of the Company, particularly in respect of executive
officers and other members of senior management. All of the members of the
Committee are independent directors, and none of them has at any time been an
officer or employee of the Company or any of its subsidiaries.
Compensation
Philosophy
The key
principles listed below are reflected in structuring the compensation packages
for the Chief Executive Officer and the other executive officers of the Company.
None of these principles is accorded any specific weight or, as a matter of
policy, considered as being more important than the others.
Pay
for Performance
A high
percentage of an executive’s total compensation is linked to the performance of
the Company and its stock as well as the executive’s individual performance in
attaining the Company’s objectives. This structure is designed to reward both
short-term and long-term performance and align the interests of management with
the long-term interests of the Company’s
shareholders.
Competitiveness
Though
such comparisons are often not straight-forward, our executives’ total
compensation packages are designed to be competitive with the median
compensation levels of those of executives occupying comparable positions in
comparable companies. Elements of the packages are also designed to allow an
opportunity to earn more than median compensation levels when the Company
outperforms comparable companies. The Company believes that the opportunity to
achieve earnings in excess of peers provides a significant challenge and
incentive to the executive officers of the Company.
Executive
Ownership
A major
component of our executive compensation is equity-based in the form of stock
options and restricted stock units. As a result, our executive officers’
interests are directly linked with our shareholders’ interests. The Company
believes that equity-based compensation properly balances the rewards for
long-term versus short-term results.
Management
Development
The
compensation packages are also designed to attract and retain quality executives
with the skills and other competencies required to meet the Company’s objectives
and to enhance shareholder value.
Establishing
Compensation for Executive Officers
The
Committee is responsible for all matters relating to executive
compensation. To assist it in this endeavor, the Committee engages
independent compensation consulting firms to (i) review on a regular basis
relevant market and other data regarding executive compensation and review
holistically from time to time the compensation programs for the Company’s
executive officers, and (ii) otherwise to advise the Committee on matters of
executive compensation. Since fiscal year 2008, the Committee has
engaged the consulting firm of Frederic W. Cook & Co., Inc. (“FWC”) as its
independent advisor on matters of executive
compensation. Notwithstanding this engagement, the Committee
considers the input of outside consultants such as FWC to be but one of several
factors in evaluating and establishing the Company’s compensation programs and
the compensation paid to senior management. These other factors include but are
not limited to the recommendations of the Company’s Chief Executive Officer; the
performance of the Company, its operating units and their respective executives;
market factors such as the health of the economy and of the industries served by
the Company; the availability of executive talent generally; executives’ length
of service; internal assessments and recommendations regarding particular
executives; and the succession planning initiatives of the Company.
In
considering the competitiveness of the Company’s compensation levels, the
Committee refers to outside data for benchmarking purposes, including data in
respect of a defined “peer group” of companies that the Company
believes approximate the Company in one or more meaningful ways, which may
include such other companies’ revenues, market capitalization, operational and
geographical structure, and industries/markets, as well as third party
considerations (e.g., as where members of the financial community treat a
particular company as being a Company peer). As explained below, peer
group data is not the only external data the Company considers for benchmarking
purposes, and, as explained above, benchmarking itself is but one of the factors
the Committee considers in establishing executive compensation.
The
Company believes that the selection of a peer group to be used for executive
compensation benchmarking purposes is something that requires reconsideration
every year or two. As a general rule, the Company expects to change
certain members of the peer group from one period to another, as the Company
refines its benchmarking criteria and as the Company and members of the peer
group change in ways that make comparisons less or more
appropriate.
For
fiscal 2009, based in part on FWC’s recommendation, the Company revised the peer
group to better approximate the Company. The 2009 Peer Group was
comprised of the following companies:
2009 Peer Group
|
|
Astec
Industries, Inc.
|
Dresser-Rand
Group Inc.
|
IDEX
Corporation
|
Tecumseh
Products Company
|
Brady
Corporation
|
EnPro
Industries, Inc.
|
Kaydon
Corporation
|
The
Toro Company
|
Chart
Industries, Inc.
|
ESCO
Technologies Inc.
|
MSC
Industrial Direct Co., Inc.
|
Valmont
Industries, Inc.
|
CIRCOR
International, Inc.
|
GATX
Corporation
|
Nordson
Corporation
|
Wabtec
Corporation
|
Donaldson
Company, Inc.
|
Graco
Inc.
|
Robbins
& Myers, Inc.
|
|
In
addition to the peer group data, the Company also used compensation survey data
that was provided by FWC and drawn from surveys of thousands of companies for
its benchmarking analysis. The Company believes that using both
proxy and survey data provides a more comprehensive set of data on which to base
comparisons of compensation practices and programs. Because it
derives from SEC filings, the Company believes that proxy data is more
transparent, but comes from a more limited sample size and may be more difficult
to correlate to positions other than the Chief Executive Officer and Chief
Financial Officer. Survey data, on the other hand, comes from a much
larger sample size and may be more easily correlated to certain executive
positions, but necessarily includes companies outside of a defined peer
group.
Using the
proxy and survey data provided by FWC, the Committee asked FWC to prepare a
comprehensive competitive assessment of the annual salary, target total cash
compensation and target total direct compensation (which consists of the sum of
annual salary, target annual cash incentives and the value of annual long-term
incentive awards) for each of the Company’s executives, including the named
executive officers. The results of this analysis showed that the
Company’s total compensation levels were generally conservative – i.e., falling
below the median compensation levels of the companies within the peer group and
the survey groups — with several executives, including Mr. Wolfson and Mr.
Lindsay, falling significantly below the median, particularly with respect to
target cash compensation.
The
Committee used this assessment as its starting point in making 2009 compensation
decisions in respect of the executive officers and also considered various other
factors with respect to these individuals, including their respective importance
to the Company, their respective expected future contribution to the Company,
their respective skill sets and performance to date, competitive pressures
(i.e., “hire-away” risk), tenure, and the difficulty and cost of
replacement. Based on these considerations, the Committee authorized:
(i) the increase of Mr. Lindsay’s salary from $192,816 to $210,000 and an
increase in his target bonus from 35% of salary to 40%; (ii) the increase of Mr.
Wolfson’s salary from $250,000 to $275,000 and an increase in his target bonus
from 35% of salary to 40%; (iii) the increase of Mr. Johnson’s target bonus from
80% of salary to 85%; and (iv) the increase in the salary and/or the target
bonus rates of certain other members of senior management other than the named
executive officers. Mr. Johnson, Mr. Ferrise and Mr. Klein were
authorized to receive normal cost of living salary increases of approximately 3%
in 2009, and Mr. Ferrise’s and Mr. Klein’s target bonus levels remained
unchanged from their 2008 levels.
Notwithstanding
the Committee’s authorization with respect to salary increases, shortly after
the beginning of fiscal year 2009, the Company implemented a wage and salary
freeze for all Company employees effective as of the beginning of the fiscal
year. The named executive officers recommended to the Committee, and
the Committee agreed, that the named executive officers should be treated no
differently than any other employee with respect to the wage and salary
freeze. Consequently, the salary increases for each of the executive
officers mentioned above were either not implemented, or if they had been
implemented, were discontinued in January of 2009.
Components of Executive Pay
The
following is a discussion of each of the individual components of the Company’s
executive compensation program.
Annual Salary. The
Company believes it is appropriate to provide its executives with a level of
base salary commensurate with their respective experience, responsibilities and
accomplishments. The Committee generally approves the salaries for the executive
officers on an annual basis at a meeting of the Committee held early in the
first quarter of the fiscal year. Based on the considerations previously
discussed, the Committee approved increases to the annual salaries of the
Company’s named executive officers at the outset of fiscal 2009, but these
increases were not implemented, or if implemented, were ceased in January
2009. As a result, the salaries of the named executive officers were
as follows:
Name
|
|
Fiscal
2009
Annual Salary
|
|
|
Fiscal
2008
Annual Salary
|
|
|
Percentage
Increase
|
|
Norman
E. Johnson
|
|
$ |
725,000 |
|
|
$ |
725,000 |
|
|
|
0
|
|
Sam
Ferrise
|
|
$ |
346,112 |
|
|
$ |
346,112 |
|
|
|
0
|
|
Bruce
A. Klein
|
|
$ |
321,360 |
|
|
$ |
321,360 |
|
|
|
0
|
|
Richard
M. Wolfson
|
|
$ |
250,000 |
|
|
$ |
250,000 |
|
|
|
0
|
|
David
J. Lindsay
|
|
$ |
192,816 |
|
|
$ |
192,816 |
|
|
|
0
|
|
Performance-based cash incentive
compensation. The Company believes that a substantial portion
of an executive officer’s cash compensation should be incentive-based.
Therefore, the Company has implemented a cash incentive program that provides
executive officers with the opportunity to earn cash incentive compensation for
the achievement of annual goals. Such incentive-based cash
compensation is contemplated under the Company’s 2009 Incentive Plan, which was
approved by the shareholders of the Company on March 23, 2009.
For
fiscal year 2009, the Company intended that any incentive cash compensation paid
would satisfy any applicable requirements as performance-based compensation
within the meaning of Section 162(m) of the Internal Revenue Code of 1986,
as amended. Accordingly, during the first fiscal quarter of 2009 the Company
established and the Committee approved maximum target payouts for cash incentive
compensation for the named executive officers that were based on the Company’s
budgeted fiscal 2009 net earnings. The maximum target payout for
Mr. Johnson was established at 3.12% of net earnings and for each of the
other named executive officers at 1.04% of net earnings.
Recognizing
that these targets would likely result in the named executive officers receiving
cash incentive amounts in excess of historical levels, the Committee indicated
to management that it expected to use its discretion to reduce the cash
incentive compensation payable to the executives for fiscal 2009 to levels
substantially below the foregoing maximum amounts. The Committee further
communicated to the executives to expect that it would set final cash incentive
compensation in accordance with historical practice by using the CLARCOR Value
Added Incentive model (“CVA Model”). The CVA Model is
discussed in detail below. The Company uses the CVA Model for purposes of
determining cash incentive compensation not only for the named executive
officers, but also for approximately 100 senior management employees of the
Company and its various subsidiaries.
In
December 2009, the Committee confirmed that it would exercise its discretion and
apply the CVA Model to the named executive officers (and certain other
individuals holding senior positions at the Company or certain of its
subsidiaries). Using the CVA Model, the Committee determined that
none of the named executive officers (and only three members of the other
individuals the Committee considered) would receive cash incentive payouts in
respect of fiscal 2009. The Committee’s approach to 2009 is
discussed in greater detail further below.
The
CVA Model and CVA Formula
Pursuant
to the CVA Model, annual cash incentive awards are based upon the achievement of
specified corporate and operating unit goals using an objective formula (the
“CVA Formula”), although the Committee retains discretion to make adjustments as
discussed below. The CVA Formula effectively measures the
amount by which the Company's after-tax earnings exceed the Company’s cost of
capital in relation to the assets under management’s control. As a result, the
CVA Model is designed to reward the effective deployment of the Company’s
capital.
The CVA
Formula is as follows:
(Budgeted
Operating Profit x 61%) – (Budgeted Net Managed Assets x 13.2%) = Target
CVA
In the
CVA Formula, the 61% factor represents a deemed 39% tax rate, and the 13.2%
factor represents the Company’s deemed cost of capital. These numbers
are held constant from year to year so as to allow for meaningful comparisons
across years, and do not necessarily reflect the Company’s actual tax rate or
cost of capital in any given year. For fiscal 2009, budgeted
operating profit and budgeted net managed assets for the Company were
approximately $149 million and $42 million, respectively, and Target CVA was
therefore approximately $36 million.
The
variable factors in the CVA Formula are the Company’s budgeted operating profit
and its budgeted net managed assets. These amounts are drawn directly
from the Company’s annual budget, which is reviewed and approved by the Board of
Directors. As a general rule, the budgets of each significant
operating unit and the Company as a whole contemplate that revenue and profit
will grow over prior year levels, although this is not always the
case.
It should
be noted that the Company’s annual budget is used solely for purposes of
internal management, including compensation considerations and calculations at
both the business unit and consolidated levels, and the assumptions underlying
the Company’s annual budget often differ from the assumptions underlying the
Company’s publicly issued earnings guidance. Moreover, the annual
budget is typically finalized in mid-December, when the Company does not
have the benefit of actual results for either the prior fiscal year or the first
month of the current fiscal year, whereas earnings guidance is typically issued
in mid-January and is informed by both. Finally, earnings guidance is
a measure of earnings per share, while the CVA Formula is based
on operating profit and net managed assets. Accordingly, the
annual budget may not be consistent with the Company’s publicly issued guidance
and should not be considered reflective thereof.
Payouts
under the CVA Model are stratified into “Levels” of CVA
performance. “Level 1” represents the entry point – i.e., the
Level that must be achieved before payouts can occur. “Level 6” represents
the achievement of Target CVA under the CVA Formula and “Level 10” represents
the achievement of some point in excess of Target CVA, as discussed in the next
paragraph. Only the target percentage of an individual’s salary
differs among employees whose incentive compensation is determined through the
use of the CVA Model (e.g., for some members of senior management, the
achievement of target CVA may equate to a payout equal to 25% of their salary,
while for the named executive officers it ranges between 40% and
85%.)
The
Company establishes, and the Committee approves, the Target CVA “Level 6” each
year by applying the CVA Formula to the Company’s budgeted pre-tax operating
profit and its budgeted net managed assets for that
year. The Company then establishes “Level 1” and
“Level 10” by applying a particular percentage approved by the Committee to the
Company’s budgeted pre-tax operating profit, and then running the resulting
number through the CVA Formula. In fiscal 2009, “Level 1” and “Level
10” were established by multiplying the Company’s budgeted pre-tax operating
profit by 85% and 110%, respectively, and then applying the CVA Formula, as
follows:
Level*
|
|
Budgeted 2009 Operating
Profit
|
|
Resulting CVA**
|
|
|
|
|
|
1
|
|
$149
million x 85% = $127 million
|
|
$ 22 million
|
6
|
|
$149
million
|
|
$ 36 million
|
10
|
|
$149
million x 110% = $164 million
|
|
$ 45 million
|
* The
differences between Levels not shown (e.g., between Levels 1 and 2 and between
Levels 8 and 9) are calculated on a straight-line basis.
** These
numbers, and the numbers mentioned throughout this section, are the Company’s
consolidated numbers, which are the numbers used in respect of all of the named
executive officers other than Mr. Ferrise, whose CVA performance is assessed 80%
at the subsidiary level and 20% at the consolidated level.
The
Committee does not have any formal method for establishing the Level 1 and Level
10 percentages, but may consider a variety of factors, including management’s
recommendations, the economic climate, the Committee’s perception of how likely
the Company or a subsidiary is to achieve its overall budget, and the prior
years’ performance of the Company and its subsidiaries. For fiscal
2009, the Committee based its decision largely on management’s
recommendations.
With
respect to determining payouts above Level 10 (which are historically infrequent
– particularly at the corporate level), the CVA Model is designed to strike a
balance between incentivizing management (including the named executive
officers) to continue to achieve as much as possible (i.e., no cap or ceiling)
while recognizing that at least some portion of such achievement may be due to
reasons beyond management’s control or influence (e.g., a dramatic demand
improvement in a key end-market of a particular subsidiary). This is
achieved by calculating the difference between Levels beyond Level 10 (e.g.,
from Level 10 to Level 11 and from Level 11 to Level 12, etc.) on a
straight-line basis, but limiting the amount of extra reward that an employee
receives above Level 10 to a fixed additional percentage of his or her payout at
Level 10. (This fixed additional percentage was 10% in fiscal
2009.) In other words, the relative benefit to an individual for
achieving Level 10 is greater than the benefit of achieving beyond Level
10. The table below entitled “Potential Cash Incentive Payments To
Named Executive Officers In Respect Of Fiscal 2009” illustrates this
concept.
The fixed
additional percentage for moving above Level 10 (10% in fiscal 2009) is
established each year by the Committee and is applicable to the named executive
officers and all of the approximately 100 senior management employees whose
incentive cash compensation is ultimately determined under the CVA
Model. The Committee does not have any formal method for
establishing this fixed percentage, but may consider a variety of factors,
including management’s recommendations, the Committee’s sense of how much of any
incremental operating profit should be shared with management versus the
Company’s shareholders, the economic climate, the Committee’s perception of how
likely the Company or a significant subsidiary is to achieve its overall budget,
and the prior years’ performance of the Company and significant
subsidiaries. For fiscal 2009, the Committee based its decision
largely on management’s recommendations.
As
indicated above, the two variable elements of the CVA Formula are the Company’s
operating profit and the amount of “net managed assets”, which include current
and long-term assets and liabilities deemed largely to be under the control of
management. To encourage management to accurately budget capital
spending each year, and to discourage any attempt to artificially inflate CVA
performance by deferring such budgeted capital spending into a future year, the
Company adjusts the Company’s net managed assets upward (which lowers CVA) if
management fails to achieve at least 80% of budgeted capital
spending. It does this by deeming a portion of such spending to have
occurred for purposes of calculating CVA achievement for the year in
question.
At the
end of the fiscal year, the Company calculates the CVA achievement for that year
for each of its subsidiaries and for the Company on a consolidated basis, by
drawing each of these numbers from the Company’s independently audited financial
statements. No payment to any individual, including the named
executive officers, occurs until the audit is complete.
The
Committee retains discretion to modify or eliminate the CVA Model and the CVA
Formula or any of the elements thereof in respect of any given fiscal
year. For example, the Committee may approve budgeted levels of
operating profit or net managed assets (the two variable inputs in the CVA
Formula) that are more conservative or aggressive than previous years’ levels
and may include or exclude particular items of revenue, expense, assets or
liabilities in determining the final calculations of cash incentive payments and
calculations under the CVA Model. The Committee does not exercise
this discretion often (historically once every few years) and does not follow
any formula or give a pre-determined weight to any individual factor in doing
so.
At
management’s request in light of the Company’s 2009 wage freeze, the Committee
did not make any such adjustments in respect of fiscal year 2009 (e.g., to take
into account the severe economic downturn) and, as a result, no awards were
granted to the named executive officers or to the majority of the approximately
100 members of senior management whose incentive compensation is based on the
CVA Model.
The
Company believes that the historical results of the CVA Model support its view
that the budgeted performance numbers are realistic targets which are neither
overly aggressive nor easy to achieve. The following table shows the
Company’s CVA achievement over the previous 10 fiscal years:
Fiscal Year
|
|
CVA Level
|
|
2000
|
|
|
7.3
|
|
2001
|
|
|
0
|
|
2002
|
|
|
8.6
|
|
2003
|
|
|
12.1
|
|
2004
|
|
|
10.7
|
|
2005
|
|
|
9.4
|
|
2006
|
|
|
5.7
|
|
2007
|
|
|
1.8
|
|
2008
|
|
|
5.7
|
|
2009
|
|
|
0
|
|
Ten
Year Average
|
|
|
6.1
|
|
The range
of possible CVA awards payable in respect of fiscal 2009 for each named
executive officer is shown in the following table:
POTENTIAL
CASH INCENTIVE PAYMENTS TO NAMED EXECUTIVE OFFICERS IN RESPECT OF FISCAL
2009
Attainment
of Budgeted
Performance (1)
(2)
|
|
Percentage
of
Annual
Salary
Payable
to
Mr. Johnson
|
|
|
Percentage
of
Annual
Salary
Payable
to
Mr. Ferrise
|
|
|
Percentage
of
Annual
Salary
Payable
to
Mr. Lindsay
|
|
|
Percentage
of
Annual
Salary
Payable
to
Mr. Klein
|
|
|
Percentage
of
Annual
Salary
Payable
to
Mr. Wolfson
|
|
Less
than 85%
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
85%
(Level 1)
|
|
|
10%
|
|
|
|
10%
|
|
|
|
10%
|
|
|
|
10%
|
|
|
|
10%
|
|
100%
(Level 6)
|
|
|
85%
|
|
|
|
50%
|
|
|
|
40%
|
|
|
|
50%
|
|
|
|
40%
|
|
110%
(Level 10)
|
|
|
212.5%
|
|
|
|
125%
|
|
|
|
100%
|
|
|
|
125%
|
|
|
|
100%
|
|
120%
(Level 14) (3)
|
|
|
297.5%
|
|
|
|
175%
|
|
|
|
140%
|
|
|
|
175%
|
|
|
|
140%
|
|
(1)
|
Payment
of cash incentive awards between the indicated percentages of budgeted
performance (i.e., between Levels) is calculated on a straight line
basis.
|
(2)
|
The
minimum level of budgeted performance (i.e., the “entry point” or
Level 1) and the excess percentage above target for fixing Level
10 are established each year by the Committee. For fiscal 2009,
they were 85% and 110%,
respectively.
|
(3)
|
The
last row of this table is included for reference purposes to demonstrate
what happens when budgeted performance increases beyond Level
10, in this case to a hypothetical Level 14. (It
should be noted that no executive officer of the Company has ever achieved
payout at Level 14; the example is for illustrative purposes
only.) Taking Mr. Johnson as an example, the table shows that
he would increase his payout by approximately an additional 128% of salary
(approximately 32% per Level) by moving four Levels above target from
Level 6 to Level 10, but he would receive only an additional 85% of salary
(21.25% per Level, or 10% of his payout of 212.5% at Level 10) for moving
an additional four levels from Level 10 to Level 14. As
indicated previously, the fixed percentage payable for moving beyond Level
10 (i.e., the 10% of Level 10 payout used in fiscal 2009 and in the
example above) is established each year by the
Committee.
|
Long-term equity incentive
compensation. The Company’s equity-based awards program
encourages executives to work towards making business decisions that, over the
long term, should increase the price of the Company’s stock, thereby aligning
the interests of executives and shareholders. All equity-based awards are made
pursuant to the provisions of incentive plans approved by the Company’s
shareholders. Equity-based awards include a combination of stock options and
restricted stock units.
The
Committee typically approves equity-based awards to eligible employees
(including the named executive officers) only once per year. The annual award is
typically made at the first Committee meeting of the fiscal year, which is
normally held within the first three weeks of the fiscal year and scheduled a
year in advance of the meeting date, and after the Committee has received input
from outside advisors and the recommendations of the Chief Executive Officer
(with respect to awards made to executive officers other than himself). The
Committee may make an exception to this general policy in the event that a new
executive officer is hired or an executive officer receives a
promotion. As a practical matter, the Committee considers and
individually approves equity awards made to approximately 10 to 15 of the
Company’s most senior executives (including the Chief Executive Officer, the
Chief Financial Officer and all other executive officers of the Company), and
then approves a pool of equity-based incentives to be granted to other
individuals throughout the Company at the discretion of the Chief Executive
Officer.
Once
granted, options are not repriced or “reloaded”. Although “incentive” stock
options may be granted under the Company’s 2009 Incentive Plan, in practice all
options granted are “non-qualified” options.
Grants of
both stock options and restricted stock units normally vest annually in equal
installments over four years in order to encourage executive officers’ continued
service to the Company. Until the restricted stock units vest, the recipient
does not have any rights as a shareholder of the Company other than the right to
receive a cash payment equal to the dividends payable on the underlying shares
of common stock. The Company values stock option grants by calculating their
Black-Scholes values on the date of grant and the value of restricted stock
units by calculating their aggregate market value as of the date of
grant. While the Company has no formal policy in this regard,
over the past several years the Company has awarded executive officers
approximately 75% of the value of their equity-based compensation in the form of
stock options and 25% in the form of restricted stock units, with the number of
stock options remaining generally consistent (+/- 15%) from year to year
irrespective of the market price of the Company’s shares, and the number of
restricted stock units being determined by reference to such market price and to
the executive’s salary. The value of equity-based awards is included
in the Company’s analysis of the executive officer’s total direct compensation
and is considered as part of the Company’s benchmarking process.
At the
outset of fiscal year 2009 (on December 14, 2008), non-qualified options for the
purchase of the Company’s common stock and restricted stock units were granted
to our named executive officers pursuant to the Company’s equity incentive plans
as follows:
Name
|
|
Shares
Subject to Time-
Based
Vesting Option
Grant
|
|
|
Exercise
Price (1)
|
|
|
Number
of Time-Based
Vesting
Restricted Stock
Units
|
|
Norman
E. Johnson
|
|
|
120,000
|
|
|
$ |
32.78 |
|
|
|
15,750
|
|
Bruce
A. Klein
|
|
|
40,000
|
|
|
$ |
32.78 |
|
|
|
3,862
|
|
Sam
Ferrise
|
|
|
35,000
|
|
|
$ |
32.78 |
|
|
|
4,153
|
|
David
J. Lindsay
|
|
|
22,000
|
|
|
$ |
32.78 |
|
|
|
1,750
|
|
Richard
M. Wolfson
|
|
|
25,000
|
|
|
$ |
32.78 |
|
|
|
2,292
|
|
(1)
|
Each
option has an exercise price equal to the fair market value of our common
stock at the time of grant, as determined by the closing price of the
stock on the date of the grant, or the most recent closing price if the
market is not open on the grant
date.
|
Grants of
time vested restricted stock units are not deemed “performance based
compensation” under Section 162(m) of the Internal Revenue Code and an
executive officer will realize at least some value from the grant of such units
even if the market value of the Company’s common stock declines over the vesting
period.
Perquisites. The
Company’s officers receive the following limited perquisites, which the
Committee annually reviews and which the Company believes are important to
attracting and retaining executive talent, including the named executive
officers:
|
•
|
Company-paid
physicals, the results of which are shared with the Company. These
Company-paid physicals are also provided to various members of senior
management outside of the named executive officer
group.
|
|
•
|
Reimbursement
of an amount up to 3% of the executive’s base salary for financial
planning, tax preparation and estate planning provided by service
providers acceptable to the Company, as well as a “gross up” of the
incremental tax cost. It should be noted that the named executive officers
typically do not avail themselves of the full value of the financial
planning perquisite each year. In practice, therefore, the Company
typically expends less than $15,000 per year on this perquisite in any
given year for all of the named executive officers as a group. With
respect to the gross-up, this will be eliminated beginning in fiscal
2011.
|
|
•
|
A
leased car and payment of attendant operating costs (e.g., gas, insurance,
repairs/maintenance) as well as a “gross up” of the incremental tax cost.
This benefit is provided to all officers of a certain level of the Company
and its significant domestic subsidiaries, and not just the named
executive officers. With respect to the gross-up, this
will be eliminated beginning in fiscal
2011.
|
No
executive officer other than the Chief Executive Officer may use Company
aircraft for non-business purposes, although on rare occasions the Company may
ask an executive officer other than the Chief Executive Officer to bring his or
her spouse on a business trip. In such case, IRS regulations may
require the Company to treat this as a personal benefit to the executive
(depending on the number of Company personnel on the aircraft) and the Company
would bear the expense of providing such benefit. This did not occur
with any named executive officer in fiscal 2009.
Although
the Company does not have a written policy regarding the non-business use of
Company aircraft by the Chief Executive Officer, such non-business use occurs
infrequently. The cost of any non-business flight is borne by the
Company, but an amount calculated in accordance with applicable IRS regulations
is included in the Chief Executive Officer’s gross income for the year and he
bears all associated taxes. Mr. Johnson, the Company’s Chief
Executive Officer, did not use the Company plane during fiscal 2009 for
non-business purposes, although his spouse accompanied him on one business trip
when no other Company personnel were on the aircraft and, thus, the flight was
deemed a personal benefit in accordance with applicable IRS regulations and the
Company paid the costs associated therewith.
The value
of the perquisites and other benefits payable to the named executive officers is
set forth in the “Summary Compensation Table” under the heading “All Other
Compensation.”
Executive
Insurance Benefits
The
Company pays the premiums for supplemental life insurance policies owned by each
of Messrs. Johnson, Klein and Lindsay (and another member of management who
is not an executive officer) which will pay their respective beneficiaries an
amount equal to approximately two times their respective base salaries upon
their death. The Company also pays the incremental tax cost to these executives
(i.e., a gross-up) to offset any negative personal income tax consequences
associated with the Company’s payment of the premiums. In addition, the Company
itself owns life insurance policies on each of Messrs. Johnson, Klein and
Lindsay (and another member of management who is not an executive officer) which
will pay their respectively named beneficiaries an additional amount equal to
approximately two times their respective base salaries, with any remainder going
to the Company. The foregoing supplemental life insurance benefits are provided
to the above-named individuals in order to compensate them for the loss of a
benefit provided under a legacy supplemental life insurance program that is no
longer in effect.
The
Company also provides each of Messrs. Johnson, Ferrise, Klein, Lindsay and
Wolfson (and certain other members of management who are not executive officers)
with supplemental disability insurance coverage totaling between approximately
75% and 110% of their respective cash compensation in the event they are
disabled. The precise level of coverage depends on the nature and severity of
the disability. Under the disability program available to employees generally,
this amount would otherwise be capped at 50%. Executives have the
option of declaring the Company paid amounts as taxable income, and any
executives electing to do so would pay the associated taxes themselves (i.e.,
there is no gross up). In the event of a disability, executives who
elected this option would receive the resulting benefits free of income
tax. The Company believes that the provision of the extra insurance
coverage described above to the Company’s named executive officers is an
important element in attracting and retaining executive officers.
The value
of the Company-paid insurance premiums and any associated gross-ups described
above are included in the “Summary Compensation Table” under the heading “All
Other Compensation” and further broken down in the table entitled “All Other
Compensation”.
Retirement
Plans
The
Company’s various retirement plans serve an important role in retaining the
Company’s executives. The Company balances the effectiveness of these plans as a
compensation and retention tool with the cost of providing them. A full
description of these plans and the named executive officers’ participation
therein is set forth in this Proxy statement under the heading “Retirement
Plans”, and the estimated total annual retirement benefits payable to the named
executive officers is described in the Pension Benefits Table.
Employment
and Change of Control Agreements
When
Mr. Johnson was named Chairman and Chief Executive Officer of the Company
in 2000, the Company entered into an amended employment agreement with
Mr. Johnson. As disclosed on Form 8-K filed with the SEC on
January 23, 2008, Mr. Johnson’s employment agreement was amended again on
January 23, 2008 when Mr. Johnson voluntarily agreed to give up a right to
receive a special bonus associated with the Company having achieved certain
revenue and profitability targets. As disclosed on Form 8-K filed
with the SEC on December 30, 2008, Mr. Johnson’s employment agreement was
amended again on December 29, 2008 principally so as to ensure compliance with
Section 409A of the Internal Revenue Code of 1986 (“409A”).
Mr.
Johnson’s employment agreement, as amended, provides that Mr. Johnson will
be employed as the Company’s Chairman, President and Chief Executive Officer.
Mr. Johnson is entitled to receive an annual salary (currently $725,000),
and to have such salary increased annually at the discretion of the Committee.
Mr. Johnson is eligible to participate in all executive incentive plans and
in all employee benefit and retirement plans available within the Company, as
well as all perquisites made available to executive officers of the Company.
Mr. Johnson’s agreement, as amended, expires on the date of the 2010 Annual
Meeting. His agreement is extended automatically each year thereafter unless the
agreement is terminated by the Board.
The
termination provisions of Mr. Johnson’s agreement and the economic
consequences of termination and change of control of the Company are discussed
further below under the heading “Potential Payments Upon Termination or Change
of Control”.
The
Company has entered into Change of Control Agreements with each of the named
executive officers and with various members of management other than the named
executive officers. The change of control provisions of these
agreements and the economic consequences of such a change of control for each of
the named executive officers are discussed further below under the heading
“Potential Payments Upon Termination or Change of Control.”
The
Company believes that the protections afforded through the termination and
change of control provisions of the Company’s agreements with the Company’s
named executive officers are an important element in attracting and retaining
executive officers.
Stock
Ownership Guidelines
The
Company has established stock ownership guidelines for executive officers. These
guidelines require that executive officers, after a five-year period from the
time they become executive officers, own Company common stock with a value
ranging from a minimum of two times annual salary for officers at the level of
corporate vice president to a minimum of four times annual salary for the
Company’s Chief Executive Officer. In each case, shares subject to in-the-money
options granted to an officer as well as grants of restricted stock units
(irrespective of any deferral election by the officer or vesting) count toward
the fulfillment of these guidelines. These guidelines are not
mandatory, but are intended to convey expectations regarding the expected levels
of stock ownership by executive officers. The Company has no official
policy that specifies the consequences for failing to meet the guidelines within
a reasonable period of time. The determination of such consequences
in any particular instance would be a matter for the Board of Directors or the
Committee to decide.
The
Committee oversees these guidelines and reviews each covered executive’s
standing in respect of the same once per year. In January of
2010, the Committee determined that all of the Company’s executives currently
comply with the guidelines based on their respective years of employment of the
Company.
Compensation
Decisions for 2010
During
fiscal 2009, the Company undertook several decisions in respect of executive
compensation for 2010, as follows:
Composition of Peer
Group.
In June
2009, the Company determined that Tecumseh Products should be removed from its
peer group due to its decline in market capitalization, and that Pall
Corporation should be added due to its industry overlap with the Company and
because it is widely considered as a Company peer by the financial
community. No other changes to the peer group were made.
Salaries
In
December of 2009, shortly after the start of the Company’s 2010 fiscal year, the
Company’s Chief Executive Officer, Mr. Johnson, informed the Committee that the
Company would cease its 2009 wage freeze, but that there would be no roll-back
or recapture of salary increases that had been approved for 2009 but not
implemented, and that the average increase across the Company’s domestic
operating units would be lower than in years past. In light of this,
Mr. Johnson recommended that most members of senior management, including
himself and all of the named executive officers other than Mr. Wolfson, forego
any salary increase for 2010 and maintain their salaries at 2008
levels. As for Mr. Wolfson, Mr. Johnson noted that his cash
compensation remained well below median and that his performance justified an
increase of 4%. The Committee agreed with Mr. Johnson’s
recommendations and, consequently, the base salaries of all of the named
executive officers other than Mr. Wolfson remain frozen at their 2008
levels.
Equity
Grants
With
respect to equity-based incentives, on December 13, 2009 (which is at the outset
of fiscal 2010), the Committee approved grants of stock options and restricted
stock units (at the last closing date price of $32.30) to the named executive
officers as follows:
Fiscal
Year 2010 Option and Restricted Stock Unit Grants
Name
|
|
Stock
Options
(#)
|
|
|
Restricted
Stock
Units (#)
|
|
Norman
E. Johnson
|
|
|
120,000 |
|
|
|
14,617 |
|
Bruce
A. Klein
|
|
|
40,000 |
|
|
|
3,624 |
|
Sam
Ferrise
|
|
|
35,000 |
|
|
|
3,906 |
|
David
J. Lindsay
|
|
|
22,000 |
|
|
|
1,556 |
|
Richard
M. Wolfson
|
|
|
25,000 |
|
|
|
2,097 |
|
Modification
of Executive Retirement Plan
As
discussed in greater detail under the heading “Retirement Plans” below, the
Company maintains a 1994 Executive Retirement Plan (“SERP”), which was amended
and restated with an effective date of January 1, 2008 solely to comply with
409A. Only Mr. Johnson and Mr. Klein participate in the
SERP. Under the terms of the SERP, Mr. Klein and Mr. Johnson will be
eligible to receive a lump sum payment of their respective benefits under the
SERP when they retire. The amount of these payouts is calculated with
reference to an interest rate published on a monthly basis by the Pension
Benefit Guaranty Corporation (“PBGC rate”) in effect on the date of their
respective retirements.
To avoid
creating incentives for Mr. Johnson or Mr. Klein to retire based upon the PBGC
rate in effect at any given time, the Committee recommended to the Board and the
Board resolved to amend the SERP to switch to a 3-year average PBGC rate rather
than the “spot” rate in effect on the date of an executive’s retirement, and
authorized the Company to modify the plan documentation associated with the SERP
to reflect this change. Because this change could negatively
impact Messrs. Johnson and Klein (i.e., they could receive less than they would
have otherwise received had the change not been implemented), their consent was
required in order for the change to take effect. Both Messrs. Johnson
and Klein granted such consent voluntarily.
Deductibility
of Executive Compensation
In
establishing executive compensation, the Company considers its deductibility
under Section 162(m) of the Internal Revenue Code, which provides that the
Company may not deduct non-performance based compensation of more than
$1,000,000 that is paid to certain individuals. The Company believes that
compensation paid under its incentive plans is generally fully deductible for
federal income tax purposes other than with respect to amounts realized in
respect of time based vested restricted stock units. However, in certain
situations, the Committee may approve compensation that will not meet these
requirements in order to ensure competitive levels of total compensation for its
executive officers.
Compensation
Committee Report
The
Compensation Committee of the Company has reviewed and discussed the
Compensation Discussion and Analysis with management and, based on such review
and discussions, the Compensation Committee recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in this
Proxy Statement.
Robert H.
Jenkins, Chairman
James W.
Bradford, Jr.
Robert J.
Burgstahler
Paul
Donovan
The
foregoing report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference the Proxy
Statement into any filing under the Securities Act of 1933 or the Exchange Act,
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under such
acts.
SUMMARY
COMPENSATION TABLE
Name
and Principal Position
|
|
Year
|
|
Salary (1)
($)
|
|
|
Stock
Awards (2)
($)
|
|
|
Option
Awards (3)
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation (4)
($)
|
|
|
Change
in
Pension
Value
and
Non
Qualified
Deferred
Compensation
Earnings (5)
($)
|
|
|
All
Other
Compensation (6)
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Norman
E. Johnson
|
|
2009
|
|
|
725,962 |
|
|
|
516,285 |
(7)
|
|
|
864,000 |
(7)
|
|
|
— |
|
|
|
4,276,625 |
|
|
|
219,049 |
|
|
|
6,601,921 |
|
Chairman,
President and Chief Executive Officer
|
|
2008
|
|
|
723,077 |
|
|
|
655,113 |
(7)
|
|
|
1,497,207 |
(7)
|
|
|
551,129 |
|
|
|
— |
|
|
|
213,359 |
|
|
|
3,639,885 |
|
|
|
2007
|
|
|
696,154 |
|
|
|
540,954 |
|
|
|
915,343 |
|
|
|
144,730 |
|
|
|
75,638 |
|
|
|
201,374 |
|
|
|
2,574,193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce
A. Klein
|
|
2009
|
|
|
321,731 |
|
|
|
126,596 |
(7)
|
|
|
288,000 |
(7)
|
|
|
— |
|
|
|
1,802,980 |
|
|
|
81,584 |
|
|
|
2,620,891 |
|
Vice
President – Finance and Chief Financial Officer
|
|
2008
|
|
|
320,640 |
|
|
|
115,240 |
(7)
|
|
|
379,193 |
(7)
|
|
|
153,394 |
|
|
|
— |
|
|
|
84,178 |
|
|
|
1,052,645 |
|
|
|
2007
|
|
|
311,077 |
|
|
|
227,256 |
(7)
|
|
|
430,608 |
(7)
|
|
|
51,763 |
|
|
|
343,056 |
|
|
|
90,761 |
|
|
|
1,454,521 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sam
Ferrise
|
|
2009
|
|
|
346,511 |
|
|
|
124,393 |
|
|
|
229,199 |
|
|
|
— |
|
|
|
67,667 |
|
|
|
33,912 |
|
|
|
801,682 |
|
President,
Baldwin Filters, Inc.
|
|
2008
|
|
|
345,088 |
|
|
|
117,349 |
|
|
|
162,094 |
|
|
|
100,821 |
|
|
|
— |
|
|
|
40,192 |
|
|
|
765,544 |
|
|
|
2007
|
|
|
331,815 |
|
|
|
114,931 |
|
|
|
125,074 |
|
|
|
155,217 |
|
|
|
— |
|
|
|
41,024 |
|
|
|
768,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
J. Lindsay
|
|
2009
|
|
|
193,477 |
|
|
|
50,794 |
|
|
|
142,666 |
|
|
|
— |
|
|
|
223,795 |
|
|
|
43,725 |
|
|
|
654,457 |
|
Vice
President – Chief Administrative Officer
|
|
2008
|
|
|
192,384 |
|
|
|
47,366 |
|
|
|
100,569 |
|
|
|
64,737 |
|
|
|
— |
|
|
|
60,361 |
|
|
|
465,417 |
|
|
|
2007
|
|
|
186,646 |
|
|
|
46,585 |
|
|
|
79,301 |
|
|
|
26,410 |
|
|
|
12,882 |
|
|
|
45,089 |
|
|
|
396,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
M. Wolfson
|
|
2009
|
|
|
250,962 |
|
|
|
49,124 |
|
|
|
155,330 |
|
|
|
— |
|
|
|
— |
|
|
|
35,093 |
|
|
|
490,509 |
|
Vice
President – General Counsel and Corporate Secretary
|
|
2008
|
|
|
247,969 |
|
|
|
30,339 |
|
|
|
106,361 |
|
|
|
83,442 |
|
|
|
— |
|
|
|
29,772 |
|
|
|
497,883 |
|
|
|
2007
|
|
|
222,938 |
|
|
|
14,336 |
|
|
|
55,289 |
|
|
|
31,546 |
|
|
|
— |
|
|
|
25,042 |
|
|
|
349,151 |
|
__________
(1)
|
The
amounts shown in this column are before any deferrals under the terms of
the Deferred Compensation Plan. Additional information about deferred
amounts can be found in the table entitled, “Nonqualified Deferred
Compensation in Fiscal Year
2009”.
|
(2)
|
The
amounts in this column represent the expense recognized by the Company for
financial statement reporting purposes for restricted stock units for
fiscal year 2009, calculated in accordance with ASC 718 (disregarding for
this purpose the estimate of forfeitures related to service-based vesting
conditions), and thus include amounts corresponding to restricted stock
unit awards granted prior to fiscal 2009 but which vested in fiscal 2009.
See also Footnote N of the Company’s consolidated financial statements for
the three years ended November 30, 2009, included in our 2009 Annual
Report, for the other assumptions made in determining ASC
718 values.
|
(3)
|
The
amounts shown in this column represent the expense recognized for
financial statement reporting purposes for stock options for fiscal year
2009, calculated in accordance with ASC 718 (disregarding for
this purpose the estimate of forfeitures related to service-based vesting
conditions), and thus include amounts corresponding to option awards
granted prior to fiscal 2009 but which vested in fiscal 2009. Assumptions
used in the calculation of these amounts
follow:
|
Grant Date
|
|
Volatility
(%)
|
|
|
Expected
Life
(Years)
|
|
|
Risk-Free
Interest
Rate
(%)
|
|
|
Dividend
Yield
(%)
|
|
1/27/2006
|
|
|
20.7
|
|
|
6
|
|
|
|
4.50
|
|
|
|
0.96
|
|
12/17/2006
|
|
|
20.5
|
|
|
6
|
|
|
|
4.52
|
|
|
|
0.89
|
|
12/16/2007
|
|
|
20.2
|
|
|
6
|
|
|
|
3.88
|
|
|
|
0.85
|
|
12/14/2008*
|
|
|
23.8
|
|
|
6
|
|
|
|
1.98
|
|
|
|
0.96
|
|
12/14/2008**
|
|
|
24.9
|
|
|
5
|
|
|
|
1.55
|
|
|
|
0.96
|
|
*
Applicable to grants made to all named executive officers other than Norman
Johnson and Bruce Klein.
**
Applicable to grants made to Norman Johnson and Bruce Klein.
See also
Footnote N of the Company’s consolidated financial statements for the three
years ended November 30, 2009, included in our 2009 Annual Report, for the other
assumptions made in determining ASC 718 values.
(4)
|
Payment
for 2009 performance under the terms of the CVA Plan and the CVA Model,
both of which are described in detail under the heading of Performance-Based Cash
Incentive Compensation
in the Compensation Discussion and
Analysis.
|
(5)
|
Amounts
consist of the change in annual actuarial present value of pension
benefits, as also reported in the table entitled “Pension Benefits for
Fiscal Year 2009”. The increase is the result of decreases in
the discount and lump-sum interest rates. The Deferred
Compensation Plan does not provide for above-market or preferential
earnings.
|
(6)
|
See
the table immediately below which describes each component of the “All
Other Compensation” column for fiscal
2009.
|
(7)
|
Mr.
Klein turned 60 years of age during fiscal year 2007 and Mr. Johnson
turned 60 years of age during fiscal year 2008, which is the age at which
each can voluntarily retire. Upon voluntary retirement, all
unvested stock options and restricted stock units would immediately vest.
Consequently, under ASC 718 the Company was required to immediately
expense all stock options and restricted stock units, irrespective of any
time-based vesting to which such grants may otherwise have been
subject.
|
ALL
OTHER COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perquisites and
Personal Benefits(5)
|
|
|
|
|
|
|
401(k)
Match (1)
($)
|
|
|
Insurance
Premiums
Paid (2)
($)
|
|
|
Dividends
Paid (3)
($)
|
|
|
Tax
Gross-
Ups (4)
($)
|
|
|
Company
Car
($)
|
|
|
Financial
Planning
($)
|
|
|
Physical
Exam
($)
|
|
|
Non-Business
Aircraft
Usage
($)
|
|
|
Total
All
Other
Compensation
($)
|
|
Norman
E. Johnson
|
|
|
3,675 |
|
|
|
81,056 |
|
|
|
46,746 |
|
|
|
52,059 |
|
|
|
23,219 |
|
|
|
5,050 |
|
|
|
6,502 |
|
|
|
742 |
|
|
|
219,049 |
|
Bruce
A. Klein
|
|
|
3,675 |
|
|
|
44,565 |
|
|
|
3,316 |
|
|
|
15,832 |
|
|
|
11,642 |
|
|
|
— |
|
|
|
2,554 |
|
|
|
— |
|
|
|
81,584 |
|
Sam
Ferrise
|
|
|
9,800 |
|
|
|
5,180 |
|
|
|
3,490 |
|
|
|
2,309 |
|
|
|
12,333 |
|
|
|
800 |
|
|
|
— |
|
|
|
— |
|
|
|
33,912 |
|
David
J. Lindsay
|
|
|
3,675 |
|
|
|
15,316 |
|
|
|
1,431 |
|
|
|
7,959 |
|
|
|
13,109 |
|
|
|
1,185 |
|
|
|
1,050 |
|
|
|
— |
|
|
|
43,725 |
|
Richard
M. Wolfson
|
|
|
9,800 |
|
|
|
87 |
|
|
|
1,870 |
|
|
|
2,292 |
|
|
|
13,272 |
|
|
|
— |
|
|
|
7,772 |
|
|
|
— |
|
|
|
35,093 |
|
__________
(1)
|
Mr. Johnson,
Mr. Klein and Mr. Lindsay are participants in the Company’s
original 401(k) plan which matches $.50 for each dollar contributed, up to
the first 3% of eligible compensation; Mr. Ferrise and
Mr. Wolfson are participants in the new 401(k) plan which matches
$1.00 for each dollar contributed, up to the first 3% of eligible
compensation and $.50 for each dollar contributed up to the next 2% of
eligible compensation. As discussed, the match under these
plans is now discretionary and occurs following the end of the fiscal
year. The amounts in this column were thus paid after the end
of fiscal 2009, but since they correspond to contributions made by the
officers during fiscal 2009, they are included in this
column.
|
(2)
|
Premiums
paid for supplemental executive life insurance and supplemental executive
long term disability insurance.
|
(3)
|
Amounts
represent dividends paid on unvested restricted stock units and deferred
restricted stock units. There is academic debate about whether
such amounts are already reflected in the closing stock price (i.e., the
fair market value) of these units. To the extent they are, then
these amounts are effectively being double counted and should not be
included in this table (and thus they should also be excluded from the
Summary Compensation Table). However, in the interest of
greater transparency, the Company has elected to separately identify these
dividend payments.
|
(4)
|
Amounts
represent reimbursements for the payment of taxes for one or more of the
following items: (i) financial planning, tax preparation and estate
planning services; (ii) leased vehicle; and (iii) life insurance
premiums.
|
(5)
|
All
amounts shown are valued at the incremental cost to the Company of
providing the benefit. The incremental cost of the Company aircraft use
for a non-business flight is calculated by multiplying the aircraft’s
hourly variable operating cost by a trip’s flight time, which includes any
flight time of an empty return flight. Variable operating costs include:
(1) landing, parking, crew travel and flight planning services
expense; (2) supplies, catering and crew traveling expenses;
(3) aircraft fuel and oil expenses; (4) maintenance, parts, and
external labor (inspections and repairs); and (5) any customs,
foreign permit and similar fees. Fixed costs that do not vary based upon
usage are not included in the calculation of direct operating
cost.
|
GRANTS
OF PLAN-BASED AWARDS FOR FISCAL YEAR 2009
|
|
|
|
|
|
All
Other
|
|
|
All
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
Grant
|
|
|
|
|
|
Estimated
Possible Payouts
|
|
Awards:
|
|
|
Awards:
|
|
|
|
|
|
Date
Fair
|
|
|
|
|
|
Under
Non-Equity Incentive
|
|
Number
of
|
|
|
Number
of
|
|
|
Exercise
or
|
|
|
Value
of
|
|
|
|
|
|
Plan Awards(1)
|
|
Shares
of
|
|
|
Securities
|
|
|
Base
Price
|
|
|
Stock
and
|
|
|
|
|
|
|
|
Stock
or
|
|
|
Underlying
|
|
|
of
Option
|
|
|
Option
|
|
|
|
|
|
Threshold (2)
|
|
|
Target (3)
|
|
|
Maximum (4)
|
|
Units (5)
|
|
|
Options (6)
|
|
|
Awards (7)
|
|
|
Awards (8)
|
|
Name
|
|
Grant
Date
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
Norman
E. Johnson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
Cash Incentive Plan
|
|
|
N/A |
|
|
72,500 |
|
|
|
616,250 |
|
|
|
1,540,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock Units
|
|
12/14/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,750 |
|
|
|
|
|
|
|
|
|
|
516,285 |
|
Stock
Options
|
|
12/14/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000 |
|
|
|
32.78 |
|
|
|
864,000 |
|
Bruce
A. Klein
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
Cash Incentive Plan
|
|
|
N/A |
|
|
32,136 |
|
|
|
160,680 |
|
|
|
401,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock Units
|
|
12/14/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,862 |
|
|
|
|
|
|
|
|
|
|
|
126,596 |
|
Stock
Options
|
|
12/14/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
|
32.78 |
|
|
|
288,000 |
|
Sam
Ferrise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
Cash Incentive Plan
|
|
|
N/A |
|
|
34,611 |
|
|
|
173,056 |
|
|
|
432,640 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock Units
|
|
12/14/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,153 |
|
|
|
|
|
|
|
|
|
|
|
136,135 |
|
Stock
Options
|
|
12/14/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000 |
|
|
|
32.78 |
|
|
|
273,700 |
|
David
J. Lindsay
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
Cash Incentive Plan
|
|
|
N/A |
|
|
19,282 |
|
|
|
77,126 |
|
|
|
192,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock Units
|
|
12/14/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,750 |
|
|
|
|
|
|
|
|
|
|
|
57,365 |
|
Stock
Options
|
|
12/14/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,000 |
|
|
|
32.78 |
|
|
|
172,040 |
|
Richard
M. Wolfson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
Cash Incentive Plan
|
|
|
N/A |
|
|
25,000 |
|
|
|
100,000 |
|
|
|
250,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock Units
|
|
12/14/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,292 |
|
|
|
|
|
|
|
|
|
|
|
75,132 |
|
Stock
Options
|
|
12/14/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
32.78 |
|
|
|
195,500 |
|
_________
(1)
|
The
amounts in these columns represent the range of potential payouts for
fiscal year 2009 under the CVA Model as described in the Compensation
Discussion and Analysis. The “Non-Equity Incentive Plan Compensation”
column of the “Summary Compensation Table” reflects the amount actually
paid to each named executive officer for performance under the CVA Plan,
which for fiscal year 2009 was $0.
|
(2)
|
The
amount shown as Threshold in this column represents payout of the named
executive officer at “Level 1” under the CVA
Model.
|
(3)
|
The
amount shown as Target in this column represents payout of the named
executive officer at “Level 6” under the CVA
Model.
|
(4)
|
The
amount shown as Maximum in this column represents payout of the named
executive officer at “Level 10” under the CVA Model. As discussed in
the description of the CVA Model in the Compensation Discussion and
Analysis, it is possible for an executive to exceed Level 10, but
this happens infrequently.
|
(5)
|
The
amounts shown in this column represent restricted stock units granted
under the 2004 Plan on December 14, 2008, as described in the
Compensation Discussion and Analysis. Restricted stock units reflected in
this column vest over a four year period at the rate of 25% per year,
beginning one year from the grant
date.
|
(6)
|
The
amounts shown in this column represent stock options granted under the
2004 Plan on December 14, 2008, as described in the Compensation
Discussion and Analysis. Stock options reflected in this column vest over
a four year period at the rate of 25% per year, beginning one year from
the grant date.
|
(7)
|
Each
option has an exercise price equal to the fair market value of common
stock at December 12, 2008 – the most recent previous closing price for
the Company’s stock, as the market was not open on the grant
date.
|
(8)
|
The
amounts in this column represent the grant date fair value in accordance
with ASC 718. The restricted stock unit fair value is $32.78 per unit. The
stock option fair value is $7.82 per share for all Officers excluding Mr.
Johnson and Mr. Klein. The stock option fair value is $7.20 per share for
Mr. Johnson and Mr. Klein. See Footnote N of the Company’s consolidated
financial statements for the three years ended November 30, 2009, included
in our 2009 Annual Report, for the assumptions made in determining ASC 718
values.
|
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END 2009
|
|
Option Awards (1)
|
|
Stock Awards (2)
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
Number
of
|
|
|
Value
of
|
|
|
|
|
|
|
|
Shares
or
|
|
|
Shares
or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units
of
|
|
|
Units
of
|
|
|
|
|
|
Number
of Securities
|
|
|
Option
|
|
|
|
|
|
Stock
Held
|
|
|
Stock
Held
|
|
|
|
|
|
Underlying
Unexercised
|
|
|
Exercise
|
|
Option
|
|
|
|
That
Have
|
|
|
That
Have
|
|
|
|
|
|
Options (#)
|
|
|
Price
|
|
Expiration
|
|
|
|
not
Vested
|
|
|
not
Vested (3)
|
|
Name
|
|
Grant Date
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
Date
|
|
Grant Date
|
|
|
(#)
|
|
|
($)
|
|
Norman
E. Johnson
|
|
12/16/2001
|
|
|
27,500 |
|
|
|
|
|
|
13.75 |
|
12/15/2011
|
|
|
|
|
|
|
|
|
|
|
|
12/15/2002
|
|
|
60,000 |
|
|
|
|
|
|
16.15 |
|
12/14/2012
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2003
|
|
|
90,000 |
|
|
|
|
|
|
22.80 |
|
12/13/2013
|
|
|
|
|
|
|
|
|
|
|
|
6/30/2004
|
|
|
66,316 |
|
|
|
|
|
|
22.57 |
|
12/16/2010
|
|
|
|
|
|
|
|
|
|
|
|
6/30/2004
|
|
|
41,986 |
|
|
|
|
|
|
22.57 |
|
12/15/2011
|
|
|
|
|
|
|
|
|
|
|
|
6/30/2004
|
|
|
24,832 |
|
|
|
|
|
|
22.57 |
|
12/14/2012
|
|
|
|
|
|
|
|
|
|
|
|
12/12/2004
|
|
|
120,000 |
|
|
|
|
|
|
26.08 |
|
12/11/2014
|
|
|
|
|
|
|
|
|
|
|
|
6/21/2005
|
|
|
19,520 |
|
|
|
|
|
|
28.96 |
|
12/16/2010
|
|
|
|
|
|
|
|
|
|
|
|
6/21/2005
|
|
|
18,321 |
|
|
|
|
|
|
28.96 |
|
12/15/2011
|
|
|
|
|
|
|
|
|
|
|
|
6/21/2005
|
|
|
21,567 |
|
|
|
|
|
|
28.96 |
|
12/14/2012
|
|
|
|
|
|
|
|
|
|
|
|
6/21/2005
|
|
|
25,945 |
|
|
|
|
|
|
28.96 |
|
12/13/2013
|
|
|
|
|
|
|
|
|
|
|
|
11/18/2005
|
|
|
120,000 |
|
|
|
|
|
|
28.79 |
|
11/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
12/17/2006
|
|
|
60,000 |
|
|
|
60,000 |
|
|
|
33.75 |
|
12/16/2016
|
|
12/17/2006
|
|
|
6,217 |
|
|
|
198,944 |
|
|
|
12/16/2007
|
|
|
30,000 |
|
|
|
90,000 |
|
|
|
36.48 |
|
12/15/2017
|
|
12/16/2007
|
|
|
9,375 |
|
|
|
300,000 |
|
|
|
12/14/2008
|
|
|
|
|
|
|
120,000 |
|
|
|
32.78 |
|
12/13/2018
|
|
12/14/2008
|
|
|
15,750 |
|
|
|
504,000 |
|
Bruce
A. Klein
|
|
12/16/2001
|
|
|
10,000 |
|
|
|
|
|
|
|
13.75 |
|
12/15/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
12/15/2002
|
|
|
22,000 |
|
|
|
|
|
|
|
16.15 |
|
12/14/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2003
|
|
|
33,000 |
|
|
|
|
|
|
|
22.80 |
|
12/13/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
7/8/2004
|
|
|
25,830 |
|
|
|
|
|
|
|
22.20 |
|
12/16/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
7/8/2004
|
|
|
15,392 |
|
|
|
|
|
|
|
22.20 |
|
12/15/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
7/8/2004
|
|
|
9,184 |
|
|
|
|
|
|
|
22.20 |
|
12/14/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
12/12/2004
|
|
|
44,000 |
|
|
|
|
|
|
|
26.08 |
|
12/11/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
6/21/2005
|
|
|
7,554 |
|
|
|
|
|
|
|
28.96 |
|
12/16/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
6/21/2005
|
|
|
6,662 |
|
|
|
|
|
|
|
28.96 |
|
12/15/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
6/21/2005
|
|
|
7,908 |
|
|
|
|
|
|
|
28.96 |
|
12/14/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
6/21/2005
|
|
|
9,513 |
|
|
|
|
|
|
|
28.96 |
|
12/13/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
11/18/2005
|
|
|
39,625 |
|
|
|
|
|
|
|
28.79 |
|
11/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
12/17/2006
|
|
|
20,000 |
|
|
|
20,000 |
|
|
|
33.75 |
|
12/16/2016
|
|
12/17/2006
|
|
|
1,769 |
|
|
|
56,608 |
|
|
|
12/16/2007
|
|
|
10,000 |
|
|
|
30,000 |
|
|
|
36.48 |
|
12/15/2017
|
|
12/16/2007
|
|
|
2,369 |
|
|
|
75,808 |
|
|
|
12/14/2008
|
|
|
|
|
|
|
40,000 |
|
|
|
32.78 |
|
12/13/2018
|
|
12/14/2008
|
|
|
3,862 |
|
|
|
123,584 |
|
Sam
Ferrise
|
|
12/14/2003
|
|
|
35,000 |
|
|
|
|
|
|
|
22.80 |
|
12/13/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
12/12/2004
|
|
|
35,000 |
|
|
|
|
|
|
|
26.08 |
|
12/11/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
6/23/2005
|
|
|
6,458 |
|
|
|
|
|
|
|
29.09 |
|
4/1/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
6/23/2005
|
|
|
6,222 |
|
|
|
|
|
|
|
29.09 |
|
12/15/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
11/18/2005
|
|
|
35,000 |
|
|
|
|
|
|
|
28.79 |
|
11/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
12/17/2006
|
|
|
17,500 |
|
|
|
17,500 |
|
|
|
33.75 |
|
12/16/2016
|
|
12/17/2006
|
|
|
1,769 |
|
|
|
56,608 |
|
|
|
12/16/2007
|
|
|
8,750 |
|
|
|
26,250 |
|
|
|
36.48 |
|
12/15/2017
|
|
12/16/2007
|
|
|
2,551 |
|
|
|
81,632 |
|
|
|
12/14/2008
|
|
|
|
|
|
|
35,000 |
|
|
|
32.78 |
|
12/13/2018
|
|
12/14/2008
|
|
|
4,153 |
|
|
|
132,896 |
|
David
J. Lindsay
|
|
12/16/2001
|
|
|
23,000 |
|
|
|
|
|
|
|
13.75 |
|
12/15/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
12/15/2002
|
|
|
23,000 |
|
|
|
|
|
|
|
16.15 |
|
12/14/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2003
|
|
|
23,000 |
|
|
|
|
|
|
|
22.80 |
|
12/13/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
12/12/2004
|
|
|
23,000 |
|
|
|
|
|
|
|
26.08 |
|
12/11/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
6/21/2005
|
|
|
16,588 |
|
|
|
|
|
|
|
28.96 |
|
12/16/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
11/18/2005
|
|
|
21,700 |
|
|
|
|
|
|
|
28.79 |
|
11/17/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
12/17/2006
|
|
|
10,850 |
|
|
|
10,850 |
|
|
|
33.75 |
|
12/16/2016
|
|
12/17/2006
|
|
|
710 |
|
|
|
22,720 |
|
|
|
12/16/2007
|
|
|
5,425 |
|
|
|
16,275 |
|
|
|
36.48 |
|
12/15/2017
|
|
12/16/2007
|
|
|
1,015 |
|
|
|
32,480 |
|
|
|
12/14/2008
|
|
|
|
|
|
|
22,000 |
|
|
|
32.78 |
|
12/13/2018
|
|
12/14/2008
|
|
|
1,750 |
|
|
|
56,000 |
|
Richard
M. Wolfson
|
|
1/27/2006
|
|
|
2,250 |
|
|
|
750 |
|
|
|
34.40 |
|
1/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
12/17/2006
|
|
|
10,850 |
|
|
|
10,850 |
|
|
|
33.75 |
|
12/16/2016
|
|
12/17/2006
|
|
|
849 |
|
|
|
27,168 |
|
|
|
12/16/2007
|
|
|
5,425 |
|
|
|
16,275 |
|
|
|
36.48 |
|
12/15/2017
|
|
12/16/2007
|
|
|
1,316 |
|
|
|
42,112 |
|
|
|
12/14/2008
|
|
|
|
|
|
|
25,000 |
|
|
|
32.78 |
|
12/13/2018
|
|
12/14/2008
|
|
|
2,292 |
|
|
|
73,344 |
|
(1)
|
All
stock option awards become exercisable over a four-year period at the rate
of 25% per year, beginning one year from the grant date, except for the
following grants which became exercisable immediately: (i) the
12/12/2004 grants to Messrs. Johnson, Klein, Ferrise and Lindsay;
(ii) the 11/18/2005 grants to Messrs. Johnson, Klein, Ferrise,
and Lindsay; and (iii) the 6/30/2004 and 6/21/2005 grants to
Mr. Johnson; the 7/8/2004 and 6/21/2005 grants to Mr. Klein; the
6/23/2005 grants to Mr. Ferrise and the 6/21/2005 grants to
Mr. Lindsay. The grants referred to in item (iii) immediately above
represent reload options. Under current company practice and the terms of
the 2009 Incentive Plan, reload options are no longer
granted.
|
(2)
|
All
Stock Awards are restricted stock units. The restricted stock units vest
over a four-year period at the rate of 25% per year, beginning one year
from the grant date indicated. The plan provides for a deferral feature
that allows participants to defer the receipt of the underlying shares for
any number of full years up to ten or until the termination of employment.
At the end of fiscal 2009, Mr. Johnson had deferred a total of 93,482
units.
|
(3)
|
Valued
at the closing price of $32.00 on November 27, 2009, the last trading
day of the fiscal year.
|
OPTION
EXERCISES AND STOCK VESTED DURING FISCAL YEAR 2009
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name of Executive Officer
|
|
Number of
Shares
Acquired
on Exercise
(#)
|
|
|
Value
Realized
Upon
Exercise (1)
($)
|
|
|
Number of
Shares
Acquired
on Vesting
(#)
|
|
|
Value
Realized
on
Vesting (2)
($)
|
|
Norman
E. Johnson
|
|
|
141,579 |
|
|
|
1,961,747 |
|
|
|
10,927 |
(3)
|
|
|
358,345 |
(3)
|
Bruce
A. Klein
|
|
|
24,138 |
|
|
|
292,852 |
|
|
|
3,666 |
|
|
|
119,813 |
|
Sam
Ferrise
|
|
|
0 |
|
|
|
0 |
|
|
|
3,791 |
|
|
|
123,961 |
|
David
J. Lindsay
|
|
|
15,433 |
|
|
|
165,129 |
|
|
|
1,534 |
|
|
|
50,151 |
|
Richard
M. Wolfson
|
|
|
0 |
|
|
|
0 |
|
|
|
864 |
|
|
|
28,676 |
|
__________
(1)
|
Calculated
by multiplying the number of shares of common stock issued upon exercise
of stock options by the difference between the option exercise price and
the closing price of the Company’s common stock on the day immediately
preceding the date of exercise.
|
(2)
|
Calculated
using the closing price of the stock on the date of
vesting.
|
(3)
|
Mr. Johnson
elected to defer receipt of the shares vesting in December 2008 until the
termination of his employment with the
Company.
|
Retirement
Plans
Certain
employees of the Company and its subsidiaries, including several of the named
executive officers, are eligible to receive benefits under the CLARCOR Inc.
Pension Plan (the “Pension Trust”). The amount of the Company’s contribution to
the Pension Trust in respect to a specified person cannot be individually
calculated.
The
Pension Trust provides benefits calculated under a Social Security step-rate
formula based on career compensation. Benefits are payable for life with a
guarantee of 120 monthly payments. The formula accrues an annual benefit
each plan year equal to the sum of (a) plan year compensation up to
age 65 covered compensation in effect each December multiplied by 0.012
plus (b) any excess of such plan year compensation over age 65 covered
compensation (subject to Internal Revenue limitations applicable to all
qualified retirement plans) multiplied by 0.0175. The aggregate of all annual
accruals plus the benefit accrued at November 30, 1989 under prior plans is
the amount of annual pension.
Estimated
annual retirement benefits payable under the Pension Trust at normal retirement
(age 65) for each of the Named Executive Officers are reflected in the
tables below. Such annual retirement benefits are not subject to any reduction
for Social Security amounts.
Effective
January 1, 2004, the Board adopted a program pursuant to which the pension
benefits payable under the Pension Trust to most employees of the Company were
frozen. As to these employees, no further benefits will accrue under the Pension
Trust. As a substitute benefit the Company implemented a new 401(k) plan (the
“New 401(k) Plan”) which is available to substantially all United States
employees of the Company and its subsidiaries. Until it was amended in fiscal
2009, the New 401(k) Plan provided that the Company will match all contributions
by a participant up to 3% of his or her compensation and 50% of the next 2% of
such compensation contributed. Following the amendment, such match is
no longer mandatory but rather discretionary on the part of the
Company.
The
Company offered employees who were both at least 40 years old and had
10 years of service the option of continuing to participate in the Pension
Trust or adopting the New 401(k) Plan. Those employees electing to continue
participation in the Pension Trust also are eligible to continue to participate
in the Company’s previously established 401(k) Plan (the “Old 401(k) Plan”).
Under the Old 401(k) Plan, the Company will match 50% of contributions by a
participant up to 3% of his or her compensation. Messrs. Johnson and
Lindsay elected to continue to participate in the Pension Trust and will
therefore continue to accrue benefits under that program. Messrs. Ferrise
and Klein were not eligible to continue to participate in the Pension Trust, and
Mr. Wolfson was not with the Company. However, Mr. Klein continued to
participate in the Old 401(k) Plan. The amounts currently payable to
Messrs. Ferrise and Klein pursuant to the Pension Trust will not increase
or decrease in the future.
Effective
December 1, 1994, the Company established two new retirement plans for
officers and senior executives of the Company: the 1994 Supplemental Pension
Plan and the 1994 Executive Retirement Plan. Both plans were amended effective
in January of 2008 to comply with 409A, and the 1994 Executive Retirement Plan
was amended on December 14, 2009 to alter the applicable interest rate used to
calculate lump sum payments (see discussion under the heading “Compensation
Decisions for 2010” above.)
The 1994
Supplemental Pension Plan is intended to preserve benefits lost by reason of the
maximum limitations on compensation and benefits imposed on tax qualified
retirement plans by the Internal Revenue Code of 1986. The 1994 Executive
Retirement Plan provides a monthly benefit to a participant equal to
(a) 65% of his average monthly compensation with respect to the three
consecutive fiscal years for which he received the highest compensation, reduced
by (b) his monthly normal retirement benefit provided by the Pension Trust.
A minimum of 15 years of service after attainment of the age of 40 is
required to earn a full benefit of 65% of compensation at retirement. The annual
benefit is payable as a life annuity commencing at age 65 with payments for
15 years guaranteed. Benefits in both of the 1994 plans are also payable as
lump sums. Assumptions for determination of equivalence are defined in the plans
and current assumptions are included in the assumptions table below.
Messrs. Johnson and Klein are participants in both of the 1994 plans.
Messrs. Ferrise and Lindsay are participants in the 1994 Supplemental
Pension Plan, but Mr. Ferrise’s participation is currently frozen.
Mr. Wolfson is not a participant in either plan. Such annual retirement
benefits are not subject to reduction for Social Security amounts.
The table
below sets forth the following pension benefit information with respect to the
Company’s named executive officers under the Pension Trust and the 1994
Supplemental Pension Plan and 1994 Executive Retirement Plan:
PENSION
BENEFITS FOR FISCAL YEAR 2009
Name
|
|
Plan Name
|
|
Number
of
Years
Credited
Service
(#)
|
|
|
Present
Value
of
Accumulated
Benefit
(1)
$
|
|
|
Payouts
During
Last
Fiscal
Year
$
|
|
Norman
E. Johnson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Trust
|
|
|
18
|
|
|
|
551,823 |
|
|
|
0
|
|
|
|
Supplemental/Executive
Retirement Plans (2)
|
|
|
18
|
|
|
|
13,334,563 |
|
|
|
0
|
|
Bruce
A. Klein
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Trust
|
|
|
8
|
|
|
|
217,552 |
|
|
|
0
|
|
|
|
Supplemental/Executive
Retirement Plans (2)
|
|
|
14
|
|
|
|
5,330,403 |
|
|
|
0
|
|
Sam
Ferrise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Trust
|
|
|
2
|
|
|
|
32,947 |
|
|
|
0
|
|
|
|
Supplemental
Pension Plan
|
|
|
2
|
|
|
|
100,634 |
|
|
|
0
|
|
David
J. Lindsay
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Trust
|
|
|
22
|
|
|
|
367,115 |
|
|
|
0
|
|
|
|
Supplemental
Pension Plan
|
|
|
22
|
|
|
|
101,182 |
|
|
|
0
|
|
Richard
M. Wolfson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Trust
|
|
|
N/A
|
|
|
|
N/A |
|
|
|
N/A
|
|
|
|
Supplemental
Pension Plan
|
|
|
N/A
|
|
|
|
N/A |
|
|
|
N/A
|
|
__________
(1)
|
The
assumptions utilized to calculate the Present Value of Accumulated Benefit
are as follows:
|
|
|
Pension Plan
|
|
|
Executive
Retirement Plan
|
|
|
Supplemental
Pension Plan
|
|
Normal
Retirement Age
|
|
|
65
|
|
|
|
65
|
|
|
|
65
|
|
Discount
Rate Before Retirement
|
|
|
5.50%
|
|
|
|
2.50%
|
|
|
|
2.50%
|
|
Discount
Rate After Retirement
|
|
|
5.50%
|
|
|
|
2.50%
|
|
|
|
2.50%
|
|
Mortality
Table After Retirement
|
|
|
RP-2000
|
|
|
|
UP84
|
|
|
|
UP84
|
|
(2)
|
The
Company and its actuaries do not separate the Supplemental Pension Plan
and Executive Retirement Plans, but rather consider them as a single plan
for purposes of calculating the payment amounts. This is because the
Executive Retirement Plan “sits on top of” the Supplemental Pension Plan,
whereby amounts payable to the executive under the Supplemental Pension
Plan are credited against amounts payable under the Executive Retirement
Plan. Since the Executive Retirement Plan provides for larger payouts than
the Supplemental Pension Plan, the effective result is that the executive
receives the amounts due under the Executive Retirement
Plan.
|
Deferred
Compensation Plan
The
Company has a Deferred Compensation Plan, pursuant to which the Company’s
executive officers may elect to defer receipt of cash compensation and vested
restricted stock units for any number of years up to ten or the executive’s
separation from the Company. Any deferred cash amounts are invested in the same
funds available to all employees participating in the 401(k) plan other than
Company stock and the investment choices/allocations are made by the executive.
The Company does not pay any above-market or preferential interest to the
executive, and any invested amounts are subject to the same market risks as any
other investments under the Company’s 401(k) plan.
The table
below sets forth the following information with respect to the Company’s named
executive officers under the Deferred Compensation Plan with respect to fiscal
2009:
NONQUALIFIED
DEFERRED COMPENSATION IN FISCAL 2009
Name
|
|
Plan
|
|
Executive
Contributions
in
Last
FY (1)
($)
|
|
|
Company
Contributions
in
Last
FY
($)
|
|
|
Aggregate
Earnings
in
Last
FY (4)
($)
|
|
|
Aggregate
Withdrawals
/Distributions
($)
|
|
|
Aggregate
Balance
at
Last
FYE
($)
|
|
Norman
E. Johnson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
Compensation
|
|
|
0 |
|
|
|
0 |
|
|
|
213,581 |
|
|
|
80,418 |
|
|
|
878,605 |
(5)
|
|
|
Restricted
Stock Unit (2)
|
|
|
283,841 |
(3)
|
|
|
0 |
|
|
|
(19,519 |
) |
|
|
0 |
|
|
|
2,991,424 |
(6)
|
Bruce
A. Klein
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
Compensation
|
|
|
0 |
|
|
|
0 |
|
|
|
25 |
|
|
|
968,764 |
|
|
|
0 |
|
|
|
Restricted
Stock Unit (2)
|
|
|
0 |
|
|
|
0 |
|
|
|
3,681 |
|
|
|
163,396 |
|
|
|
0 |
|
Sam
Ferrise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
Compensation
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
Restricted
Stock Unit (2)
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
David
J. Lindsay
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
Compensation
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
Restricted
Stock Unit (2)
|
|
|
0 |
|
|
|
0 |
|
|
|
10,373 |
|
|
|
460,458 |
|
|
|
0 |
|
Richard
M. Wolfson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
Compensation
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
Restricted
Stock Unit (2)
|
|
|
28,676 |
(3)
|
|
|
0 |
|
|
|
(3,473 |
) |
|
|
38,850 |
|
|
|
0 |
|
__________
(1)
|
The
amounts in this column with respect to deferred compensation are also
included in the “Salary” column in the “Summary Compensation
Table”.
|
(2)
|
The
Incentive Plans allow for deferral of restricted stock units for any
number of full years up to ten or until termination of
employment.
|
(3)
|
Amounts
represent the number of units which vested and were deferred in fiscal
year 2009, valued at the closing stock price on the vesting date. Of the
restricted stock unit values shown for Mr. Johnson and Mr. Wolfson, $0 and
$0, respectively, are also included in the entries for Mr. Johnson and Mr.
Wolfson under the “Stock Awards” column in the “Summary Compensation
Table.”
|
(4)
|
For
the Deferred Compensation Plan, earnings are based solely on the results
of the investment choices made by the named executive officer. The
investment choices are the same funds available to all employees
participating in the New 401(k) plan. For restricted stock units, earnings
are calculated as follows: i) number of restricted stock units
deferred in fiscal 2009 valued at the change in the closing stock price
from the date of vesting to the end of fiscal 2009 plus, ii) the
number of restricted stock units that were deferred prior to fiscal 2009,
valued by the change in the closing stock price on the first day of fiscal
year 2009 to the last day of fiscal year 2009. None of the amounts
reflected in the “Aggregate Earnings in Last FY” column have been reported
as compensation in the “Summary Compensation Table” as a result of the
fact that above-market or preferential earnings are not available in
connection with the items described
above.
|
(5)
|
The
following amount was reported as compensation to the executive in the
Summary Compensation Tables in prior years’ proxy statements:
Mr. Johnson — $901,259.
|
(6)
|
Amount
represents the total number of vested restricted stock units deferred as
of the end of fiscal 2009, valued at the closing stock price on the last
day of the fiscal year. The following amount was reported as compensation
to the executive in the Summary Compensation Tables in prior years’ proxy
statements: Mr. Johnson —
$1,701,466.
|
Potential
Payments Upon Termination or Change in Control
Termination
without “Cause” or for “Good Reason”
Mr. Johnson’s
employment agreement terminates automatically upon his death or, at the
Company’s option, upon his disability and can be terminated by the Company for
“Cause” or by Mr. Johnson for “Good Reason”. Under the agreement, “Cause”
means a fraud, misappropriation or intentional material damage to property or
business of the Company or commission of a felony, and “Good Reason” means any
of the following:
|
•
|
a
material adverse reduction in the nature or scope of Mr. Johnson’s
authority, duties or responsibilities, as he may determine in good
faith;
|
|
|
a
relocation of more than
35 miles;
|
|
|
a
reduction in total compensation, compensation plans, benefits or
perquisites from those provided for under the employment
agreement;
|
|
|
the
breach by the Company of any other provision of the employment
agreement;
|
|
|
a
failure by the Board to renew the agreement unless it provides
Mr. Johnson with three years’ prior notice;
or
|
|
|
a
good faith by Mr. Johnson that, as a result of a change in control, he is
unable to exercise the authority, power, function or duties contemplated
by the employment agreement.
|
If
Mr. Johnson elects to terminate his agreement other than for “Good Reason”
he must provide the Company with 6 months’ prior notice. If the Company
terminates the agreement other than for Cause or Mr. Johnson terminates for
Good Reason, Mr. Johnson will be entitled to receive (i) a termination
payment equal to three times the sum of his annual salary and annual cash
incentive payment, with the annual cash incentive payment being equal to the
highest received by Mr. Johnson over the immediately preceding three years
or his target incentive compensation for the year in question, whichever is
greater; (ii) continuation of Company-provided benefits for three years;
and (iii) vesting of all unvested equity grants.
Mr. Johnson’s
employment agreement does not provide for any special payments or extensions of
benefits in the event the agreement terminates due to Mr. Johnson’s death
or disability or his normal retirement.
None of
the other named executive officers have an employment agreement which
contemplates a contractual right to severance. Based on the Company’s past
practice, however, the Company likely would provide base salary and health and
welfare benefits for up to 12 months in the event a named executive officer
was terminated without cause.
The value
of the termination payments as of the last business day of fiscal 2009 are set
forth in the following table entitled “Potential Payments Upon Termination or
Change in Control.”
Termination
in Connection with a Change of Control
All of
the named executive officers and various other members of senior management at
the Company and its significant business units have Change of Control (“CIC”)
agreements. The Company believes that the protections afforded through the CIC
agreements are an important element in attracting and retaining senior
management personnel, including executive officers. The CIC agreements contain
restrictive covenants not to compete with the Company, solicit Company employees
or disclose confidential information of the Company for defined
periods.
The
“change of control” provisions of the CIC agreements become effective upon the
occurrence of any of the following: (i) the acquisition by any person,
entity or group (other than from the Company) of 30% or more of the outstanding
securities of the Company which are entitled to vote generally in the election
of directors, provided that the persons who were shareholders of the Company
immediately prior to such transaction do not immediately thereafter own more
than 60% of the Company’s common stock; (ii) individuals who, at the date
of the agreement, constitute the Board of Directors of the Company (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board, provided that any person becoming a director after the date of the CIC
agreements whose election or nomination was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board will be considered
as though such person was a member of the Incumbent Board;
(iii) consummation of a reorganization, merger or consolidation, in each
case in respect of which the persons who were shareholders of the Company
immediately prior to such transaction do not immediately thereafter own more
than 60% of the securities entitled to vote generally in the election of
directors of the entity resulting from such transaction; or (iv) approval
by the shareholders of the Company of a liquidation or dissolution of the
Company or the sale of all or substantially all of its assets.
The CIC
agreements with the named executive officers provide that the Company agrees to
employ these officers, and the officers agree to remain in the employ of the
Company, from the date of a change in control to the earlier to occur of the
third anniversary of such change in control or the officer’s normal retirement
date at a rate of compensation at least equal to the highest monthly base salary
which the officer was paid during the 36 calendar months immediately prior to
the change in control.
In
addition, during that three year period the Company agrees to provide employee
benefits which the named executive officer received (or had the right to
receive) during the 12 months immediately prior to the date of the change in
control. In the event that employment is terminated at any point during the
36 months following a change in control, then, in addition to any accrued
and unpaid salary, benefits and vacation time, the terminated officer is
entitled to: (i) a lump-sum cash payment equal to three times the sum of
the officer’s annual salary and annual cash incentive payment, with the annual
cash incentive payment being equal to the average incentive payment received by
the executive over the immediately preceding three years or his target incentive
for the year in question, whichever is greater (“Annual Bonus”);
(ii) continued health and welfare benefits and perquisites for the three
year period following termination; (iii) a lump sum payment equal to the
pension benefits the terminated officer would have earned during the three year
period after the termination; (iv) a pro-rata share of the Annual Bonus
corresponding to the year of termination; and (v) the vesting of all
outstanding and unvested equity awards (i.e., stock options and restricted stock
units). If any of such agreements subjects the officer to excise tax under
Section 4999 of the Internal Revenue Code, the Company will pay such
officer an additional amount calculated so that after payment of all taxes,
interest and penalties, the officer retains an amount of such additional payment
equal to such excise tax, provided, however, that if excise tax can be avoided
by reducing the payouts to the executive by no more than 10% of what he would
otherwise receive, then the payouts will be reduced.
The
agreements define “termination” to mean termination of employment by the Company
for reasons other than death, disability, cause or retirement. “Termination”
also includes resignation by the officer after: (a) a material adverse
reduction in the nature or scope of his authorities, duties or responsibilities,
following a change in control, as determined in good faith by the officer;
(b) relocation of the officer to a location more than 35 miles away
from the officer’s current place of employment; (c) a reduction in
compensation or benefits after a change in control; (d) a breach by the Company
of any provision of the agreement; or (e) a good faith determination by the
officer that, as a result of the change in control, he is unable to exercise the
authority, power, function and duties contemplated by the
agreement.
The value
of the severance and change in control benefits payable to the Company’s named
executive officers as of the last business day of fiscal 2009 are set forth in
the following table entitled “Potential Payments Upon Termination or Change in
Control.”
Potential
Payments Upon Termination or Change in Control Table
The following table presents
potential payments to each Named Executive Officer as if the officer’s employment had been
terminated as of the last business day of fiscal 2009.
Name
|
|
Severance
Pay
($)
|
|
|
Equity
with
Accelerated
Vesting
(3)
($)
|
|
|
Retirement
Plan
Benefits:
Pension
Plan
(Qualified
&
SERP)
($)
|
|
|
Continued
Perquisites
and
Benefits
(8)
($)
|
|
|
Excise
Tax
Gross-Up
($)
|
|
|
Total
($)
|
|
Norman
E. Johnson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
0 |
|
|
|
1,002,944 |
|
|
|
13,886,386 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
14,889,330 |
|
Disability
|
|
|
0 |
|
|
|
1,002,944 |
|
|
|
13,886,386 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
14,889,330 |
|
Retirement
|
|
|
0 |
|
|
|
1,002,944 |
(4)
|
|
|
13,886,386 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
14,889,330 |
|
Voluntary
|
|
|
0 |
|
|
|
0 |
|
|
|
13,886,386 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
13,886,386 |
|
Involuntary
(for Cause)
|
|
|
0 |
|
|
|
0 |
|
|
|
13,886,386 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
13,886,386 |
|
Without
Cause or for Good Reason
|
|
|
4,023,750 |
(1)
|
|
|
1,002,944 |
|
|
|
13,886,386 |
(5)
|
|
|
629,272 |
|
|
|
0 |
|
|
|
19,542,352 |
|
Change
in Control
|
|
|
4,023,750 |
(1)
|
|
|
1,002,944 |
|
|
|
16,363,692 |
(6)
|
|
|
629,272 |
|
|
|
0 |
|
|
|
22,019,658 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce
A. Klein
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
0 |
|
|
|
256,000 |
|
|
|
5,547,955 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
5,803,955 |
|
Disability
|
|
|
0 |
|
|
|
256,000 |
|
|
|
5,547,955 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
5,803,955 |
|
Retirement
|
|
|
0 |
|
|
|
256,000 |
(4)
|
|
|
5,547,955 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
5,803,955 |
|
Voluntary
|
|
|
0 |
|
|
|
0 |
|
|
|
5,547,955 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
5,547,955 |
|
Involuntary
(for Cause)
|
|
|
0 |
|
|
|
0 |
|
|
|
5,547,955 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
5,547,955 |
|
Without
Cause or for Good Reason
|
|
|
321,360 |
(2)
|
|
|
0 |
|
|
|
5,547,955 |
|
|
|
0 |
|
|
|
0 |
|
|
|
5,869,315 |
|
Change
in Control
|
|
|
1,446,120 |
(1)
|
|
|
256,000 |
|
|
|
6,320,927 |
(6)
|
|
|
324,572 |
|
|
|
0 |
|
|
|
8,347,619 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sam
Ferrise
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
0 |
|
|
|
271,136 |
|
|
|
133,581 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
404,717 |
|
Disability
|
|
|
0 |
|
|
|
271,136 |
|
|
|
133,581 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
404,717 |
|
Retirement
|
|
|
0 |
|
|
|
0 |
|
|
|
133,581 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
133,581 |
|
Voluntary
|
|
|
0 |
|
|
|
0 |
|
|
|
133,581 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
133,581 |
|
Involuntary
(for Cause)
|
|
|
0 |
|
|
|
0 |
|
|
|
133,581 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
133,581 |
|
Without
Cause or for Good Reason
|
|
|
346,112 |
(2)
|
|
|
0 |
|
|
|
133,581 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
479,693 |
|
Change
in Control
|
|
|
1,557,504 |
(1)
|
|
|
271,136 |
|
|
|
133,581 |
(5)
|
|
|
165,979 |
|
|
|
0 |
|
|
|
2,128,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
J. Lindsay
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
0 |
|
|
|
111,200 |
|
|
|
468,297 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
579,497 |
|
Disability
|
|
|
0 |
|
|
|
111,200 |
|
|
|
468,297 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
579,497 |
|
Retirement
|
|
|
0 |
|
|
|
0 |
|
|
|
468,297 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
468,297 |
|
Voluntary
|
|
|
0 |
|
|
|
0 |
|
|
|
468,297 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
468,297 |
|
Involuntary
(for Cause)
|
|
|
0 |
|
|
|
0 |
|
|
|
468,297 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
468,297 |
|
Without
Cause or for Good Reason
|
|
|
192,816 |
(2)
|
|
|
0 |
|
|
|
468,297 |
(5)
|
|
|
0 |
|
|
|
0 |
|
|
|
661,113 |
|
Change
in Control
|
|
|
809,826 |
(1)
|
|
|
111,200 |
|
|
|
596,277 |
(7)
|
|
|
186,605 |
|
|
|
0 |
|
|
|
1,703,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
M. Wolfson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
0 |
|
|
|
142,624 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
142,624 |
|
Disability
|
|
|
0 |
|
|
|
142,624 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
142,624 |
|
Retirement
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Voluntary
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Involuntary
(for Cause)
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Without
Cause or for Good Reason
|
|
|
250,000 |
(2)
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
250,000 |
|
Change
in Control
|
|
|
1,050,000 |
(1)
|
|
|
142,624 |
|
|
|
0 |
|
|
|
152,690 |
|
|
|
488,058 |
|
|
|
1,833,372 |
|
__________
(1)
|
Amount
represents three times the sum of (a) base salary in effect at the
time of termination and (b) the average annual incentive plan payment
paid to the executive over the immediately preceding three years or the
executive’s target annual incentive for the year of termination, whichever
is higher. These amounts would be paid in a lump sum to the
executive.
|
(2)
|
Amount
represents one year of base pay. The Company does not have a formal
severance pay plan; however, past practice suggests one year would be the
maximum payment. This likely would be paid in accordance with the
Company’s regular payroll practices (i.e., every two weeks and not in lump
sum).
|
(3)
|
Amounts
in this column represent the value of accelerating the vesting on unvested
stock options and restricted stock units based on the closing stock price,
$32.00 per share, on the last trading day of fiscal 2009. All unvested
stock options were out of the money on the last trading day of fiscal
2009; therefore, this column does not reflect any amounts with respect to
the acceleration of stock
options.
|
(4)
|
Stock
options and restricted stock units vest upon an employee’s retirement
after he or she turns 60. Mr. Klein and Mr. Johnson were the
only named Executive Officers who were 60 prior to the end of the fiscal
year.
|
(5)
|
Represents
the present value at the end of fiscal 2009 of the Supplemental/Executive
Retirement Plan lump sum benefit payable at normal retirement (age
65) plus the present value of the Pension Trust
benefit.
|
(6)
|
Mr. Johnson
and Mr. Klein’s Executive Retirement Plans provide for up to five
additional years of service credit for purposes of calculating the benefit
and the actuarial reduction for early
retirement.
|
(7)
|
Mr. Lindsay
is credited with three additional years for purposes of calculating his
Supplemental Retirement Plan benefit in a change in
control.
|
(8)
|
Represents
the value (equal to the expense recognized by the Company in the
preparation of its financial statements) of continued coverage for three
years for the following benefits: (i) medical and dental;
(ii) life insurance; (iii) long-term disability;
(iv) 401(k) match; (v) company car; (vi) financial planning
services; (vii) executive physical; and (viii) tax
gross-ups.
|
Equity
Compensation Plan Information
The following table sets forth
aggregated information about the Company’s 2009 Incentive Plan as of the last
day of fiscal 2009, the only Company plan under which equity securities of the
Company are authorized for issuance:
Plan category
|
|
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(a)
|
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
|
|
|
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(c)
|
|
Equity
compensation plans approved by security holders
|
|
|
3,296,663 |
(1) |
|
$ |
27.43 |
(2)
|
|
|
3,258,042 |
(3)
|
Equity
compensation plans not approved by security holders
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total
|
|
|
3,296,663 |
(1) |
|
$ |
27.43 |
(2)
|
|
|
3,258,042 |
(3)
|
|
(1)
|
Includes
3,229,187 vested and unvested stock options and 67,476 unvested restricted
stock units. Restricted stock units which have vested but the
receipt of which has been deferred by the recipient are not
included. Shares available under the 2009 Plan are
reduced by one (1) share for each full-value award (i.e., restricted stock
unit) granted and by one and seven tenths (1.7) for each stock option
granted.
|
|
(2)
|
The
weighted average exercise price does not take into account the shares
issuable upon vesting of outstanding unvested restricted stock units,
which have no exercise price.
|
|
(3)
|
An
additional 420,525 stock options and 34,128 restricted stock units were
granted on December 14, 2009, i.e., after the end of fiscal year
2009.
|
The
following table sets forth information relating to grants of stock options and
restricted stock units/director share grants by the Company in fiscal years
2007, 2008 and 2009:
Fiscal Year
|
|
Stock Options Granted
|
|
|
Restricted Stock Units and
Director
Shares Granted (1)
|
|
|
|
|
|
|
|
|
2009
|
|
|
486,025 |
|
|
|
44,666 |
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
477,900 |
|
|
|
31,899 |
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
453,525 |
|
|
|
34,523 |
|
(1)
|
Although
shares granted to directors came from the pool of shares available under
the 2004 and 2009 Incentive Plans, these shares were granted in lieu of
the directors’ annual cash retainer. As such, these
shares were effectively “purchased” by the directors at full value on the
date of grant.
|
REPORT
OF THE AUDIT COMMITTEE
The
Company’s Board of Directors’ Audit Committee is comprised of five directors,
all of whom are independent as such term is defined in the listing standards of
the NYSE. The Audit Committee reviews the Company’s financial reporting process
and its system of internal financial controls on behalf of the Board of
Directors. Management of the Company has the primary responsibility for the
financial statements and the reporting processes of the Company, including the
system of internal controls, the presentation of the financial statements and
the integrity of the financial statements. Management has represented to the
Audit Committee that the Company’s financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America (“GAAP”) and that its internal controls over financial reporting were
effective as of November 28, 2009. The Company’s auditors,
PricewaterhouseCoopers LLP, are engaged to audit the Company’s financial
statements and to express an opinion on the conformity of such audited financial
statements to GAAP and on the effectiveness of the Company’s internal controls
over financial reporting. Members of the Audit Committee rely on the information
provided to them and on the representations made by management and the
information, representations, opinions and communications of the Company’s
auditors.
In this
context, the Audit Committee has reviewed and discussed the Company’s system of
internal controls over financial reporting and its audited financial statements
with management and the Company’s auditors. The Audit Committee has discussed
with the Company’s auditors the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communications with Audit Committees), as
amended. In addition, the Audit Committee has received from the Company’s
auditors the written disclosures and the letter required by the
applicable requirements of the Public Company Accounting Oversight Board
regarding the auditor’s communications with the Audit Committee concerning
independence, and discussed with the auditors their independence from the
Company and its management. While the activities of the Audit Committee are
designed to provide an additional level of review, such activities cannot
provide absolute assurance that the audit of the Company’s financial statements
and of the effectiveness of the Company’s internal controls over financial
reporting has been carried out in accordance with generally accepted auditing
standards, that the financial statements are presented in accordance with GAAP
or that the Company’s auditors are in fact independent.
In
reliance on the reviews and discussions referred to above and subject to the
limitations set forth above, the Audit Committee recommended to the Board of
Directors, and the Board has approved, that the audited financial statements be
included in the Company’s Annual Report on Form 10-K for the fiscal year
ended November 28, 2009, for filing with the SEC.
Audit
Committee
Robert J.
Burgstahler, Chairman
J. Marc
Adam
Paul
Donovan
Philip R.
Lochner, Jr.
James L.
Packard
The
foregoing report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference the Proxy
Statement into any filing under the Securities Act of 1933 or the Exchange Act,
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under such
acts.
PROPOSAL NO. 2 —
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED ACCOUNTING FIRM
Information
About Our Independent Registered Public Accounting Firm
The Audit
Committee of our Board of Directors has appointed PricewaterhouseCoopers, LLP
(“PWC”) as the independent registered public accounting firm to audit the
Company’s consolidated financial statements for fiscal year 2010. PWC (or its
predecessor firms) has been the independent registered public accounting firm
for the Company for over 80 years. Notwithstanding its selection, the Audit
Committee, in its discretion, may appoint another independent registered public
accounting firm at any time during the year if the Audit Committee believes that
such a change would be in the best interest of the Company and its stockholders.
The submission of this matter for approval by stockholders is not legally
required; however, the Board of Directors believes that seeking stockholder
ratification of the selection of the independent registered accounting firm is
good corporate practice. If the appointment is not ratified by our stockholders,
the Audit Committee will consider whether it should appoint another independent
registered public accounting firm. A representative of PWC is expected to be
present at the 2010 Annual Meeting and will have an opportunity to make a
statement if he or she desires to do so, and will respond to appropriate
questions from stockholders.
Amounts
Paid to PricewaterhouseCoopers LLP
The
following table presents fees for professional services rendered by PWC for the
audit of the Company’s consolidated financial statements as of and for the
fiscal years ended November 28, 2009 and November 29, 2008, and fees billed for
other services rendered by PricewaterhouseCoopers LLP during those periods. All
numbers have been rounded to the nearest thousand, and any failure to sum
correctly on the “Total” line is due to such rounding.
|
|
Years Ended
|
|
|
|
November 28, 2009
|
|
|
November 29, 2008
|
|
Audit
Fees
|
|
$ |
1,353,000 |
|
|
$ |
1,560,000 |
|
Audit-Related
Fees
|
|
|
9,000 |
(1)
|
|
|
— |
|
Tax
Fees
|
|
|
15,000 |
(2)
|
|
|
28,000 |
(2)
|
All
other Fees
|
|
|
106,000 |
(3)
|
|
|
15,000 |
(4)
|
Total
|
|
$ |
1,483,000 |
|
|
$ |
1,603,000 |
|
__________
|
(1)
|
For
work in connection with SEC filings related to the Company’s 2009
Incentive Plan
|
|
(2)
|
For
work in connection with the tax-related corporate restructuring of a
non-U.S. subsidiary.
|
|
(3)
|
For
accounting work performed in connection with the Company’s Chinese
operations and subsequent
acquisitions
|
|
(4)
|
For
work in connection with information technology systems review
work associated with the acquisition of Perry Equipment
Corporation.
|
Audit
Committee Pre-Approval Process
The
charter of the Audit Committee provides that the Audit Committee is responsible
for the appointment, compensation and oversight of the work of the independent
auditors and must approve in advance any non-audit services to be performed by
the independent auditors. The Audit Committee reviews each proposed engagement
to determine whether the provision of services is compatible with maintaining
the independence of the independent auditors. Pre-approval is detailed as to the
particular service or category of services and is generally subject to a
specific budget. All of the fees shown above were pre-approved by the Audit
Committee.
Vote
Required
A
shareholder may mark the accompanying form of proxy to: (i) vote for the
ratification of the appointment of PWC; (ii) abstain from voting; or
(iii) vote against the ratification of the appointment of PWC. If a quorum
is present at the Annual Meeting, ratification of the appointment of PWC
requires the affirmative vote of a majority of the shares of Common Stock of the
Company present in person or represented by proxy at the meeting and entitled to
vote with respect to the ratification of the appointment of PWC. Shares
represented by proxies which are marked to indicate abstention from this matter
will be considered as present and entitled to vote and will therefore be
equivalent to a vote against the ratification of PWC’s appointment. The shares
represented by such proxies will also be counted for purposes of establishing a
quorum at the Annual Meeting and will be able to vote with respect to other
matters, including the election of directors.
The
ratification of the appointment of PWC is a routine matter and may be voted upon
by brokers without instruction. Consequently, proxies submitted by brokers for
shares beneficially owned by other persons may, in the absence of specific
instructions from such beneficial owners, vote the shares for or against the
ratification of the appointment of PWC at the brokers’ discretion.
Shares
represented by proxies not marked with respect to the ratification of the
appointment of PWC (whether submitted by shareholders or by brokers) will be
voted FOR the ratification of the selection of in accordance with the Board of
Directors’ recommendation below.
The Board of Directors recommends a
vote FOR the ratification of the selection of PWC.
MISCELLANEOUS
Internet
Website
The
Company’s Internet address is www.clarcor.com. The
Company makes available, free of charge, on this website, its Annual Report on
Form 10-K, its Quarterly Reports on Form 10-Q, its Current Reports on
Form 8-K and amendments to such reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act as soon as reasonably
practicable after such forms are electronically filed with the SEC. In addition,
the following corporate governance documents can be found on this website:
(a) charters for the Audit Committee, the Director Affairs/Corporate
Governance Committee and the Compensation Committee of the Board of Directors;
(b) Code of Conduct; (c) Code of Ethics for Chief Executive Officer
and Senior Financial Officers; (d) Corporate Governance Guidelines;
(e) Disclosure Controls and Procedures; (f) Procedures Regarding
Reports of Misconduct or Alleged Misconduct; (g) the Company’s Insider Trading
Policy; and (h) the Company’s By-laws. Copies of all of these documents can
also be obtained, free of charge, upon written request to the Corporate
Secretary, CLARCOR Inc., 840 Crescent Centre Drive, Suite 600, Franklin, TN
37067.
As
indicated on the first page, this Proxy Statement and all attachments are
available free of charge at : www.clarcorproxy.com.
Other
Business
The Board
of Directors has no knowledge of any matters, other than as set forth in this
Proxy Statement, upon which action is to be taken at the meeting. In the event
any such matters are brought before the meeting, the persons named in the
enclosed form of proxy will vote proxies received by them as they deem best with
respect to all such matters.
Proposals
of Security Holders for 2011 Annual Meeting of Shareholders
Under the
rules and regulations of the SEC, any proposal which a shareholder of the
Company intends to present at the Annual Meeting of Shareholders to be held in
2011 and which such shareholder desires to have included in the Company’s proxy
materials for such meeting must be received by the Secretary of the Company not
less than 120 calendar days before the date of this year’s proxy statement, or
October 15, 2010. If a shareholder wishes to present a proposal at the
Annual Meeting of Shareholders to be held in 2011 but not include it in the
Company’s proxy materials or submit a nomination for director, such proposal
must be received by the Secretary of the Company not less than 120 days nor
more than 150 days prior to the anniversary date of this year’s annual
meeting. Since the 2010 Annual Meeting of Shareholders of the Company is
expected be held on March 23, 2010, written notice of any such proposal
must be received by the Company no earlier than October 24, 2010 and no
later than November 23, 2010. In addition, such proposal must meet certain other
requirements that are set forth in the Company’s By-Laws. A copy of the
Company’s By-Laws may be obtained on the Company’s website or without charge
from the Secretary of the Company.
Expense
of Solicitation of Proxies
The
expense of solicitation of proxies, including printing and postage, will be paid
by the Company. In addition to the use of the mail, proxies may be solicited
personally, or by telephone, by officers and regular employees of the Company.
The Company has employed D. F. King & Co., Inc. to solicit proxies for
the Annual Meeting from brokers, bank nominees and other institutional holders.
The Company has agreed to pay $10,500
plus the out-of-pocket expenses of D. F. King & Co., Inc., for these
services. The Company will reimburse brokers and other persons holding stock in
their names, or in the name of nominees, for their expenses for sending proxy
material to principals and obtaining their proxies.
By
Order of the Board of Directors
|
|
-s-
Richard M. Wolfson,
|
Richard
M. Wolfson,
|
|
Secretary
|
Franklin,
Tennessee
February 12,
2010
(PROXY
CARD)