prec14a.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy Statement Pursuant to
Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the
Registrant [X]
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Filed by a Party other than the
Registrant [ ]
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Check the appropriate
box:
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[X]
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Preliminary Proxy
Statement
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Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive Proxy
Statement
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Definitive Additional
Materials
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Soliciting Material Pursuant to
240.14a-12
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Chemed
Corporation
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(Name of Registrant as Specified
In Its Charter)
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(Name of Person(s) Filing
Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the
appropriate box):
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[X]
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No fee
required.
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[ ]
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Fee computed on table below per
Exchange Act
Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities
to which transaction applies:
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Aggregate number of securities to
which transaction applies:
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Per unit price or other underlying
value of transaction computed pursuant to Exchange Act Rule 0-11 (set
forth the amount on which the filing fee is calculated and state how it
was determined):
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(4)
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Proposed maximum aggregate value
of transaction:
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(5)
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Total fee
paid:
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[ ]
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Fee paid previously with
preliminary materials.
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Check box if any part of the fee
is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the
Form or Schedule and the date of its
filing.
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(1)
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Amount Previously
Paid:
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(2)
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Form, Schedule or Registration
Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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PRELIMINARY
PROXY STATEMENT – SUBJECT TO COMPLETION
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
MAY 29,
2009
The Annual Meeting of Stockholders of
Chemed Corporation will be held at The Queen City Club, 331 East Fourth Street,
Cincinnati, Ohio, on May 29, 2009, at 11:00 a.m. Eastern Time for the
following purposes:
(2)
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To
ratify the selection of independent accountants by the Audit Committee of
the Board of Directors; and
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(3)
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To
transact any other business properly brought before the
meeting.
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The above matters are described in the
Proxy Statement accompanying this Notice. You are urged, after
reading the Proxy Statement, to vote your shares by proxy using one of the
following methods: (a) complete, sign, date and return your WHITE proxy card in
the postage-paid envelope provided or (b) vote by telephone or vote via the
Internet using the instructions on your WHITE proxy
card. Voting instructions are described in more detail in the Proxy
Statement.
WE ALSO URGE YOU NOT TO VOTE OR SUBMIT
ANY GOLD PROXY CARD SENT TO YOU BY MMI INVESTMENTS, L.P. OR ANY OF ITS
AFFILIATES. YOU CAN REVOKE ANY SUCH PROXY CARD YOU MAY HAVE
PREVIOUSLY SUBMITTED IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED IN THE PROXY
STATEMENT.
Your vote is extremely
important. If you have any questions or require any assistance with
voting your shares, please contact the Board of Directors’ proxy
solicitor:
Innisfree M&A
Incorporated
Stockholders May Call
Toll-Free: (877) 825-8631
Banks and Brokers May Call
Collect: (212) 750-5833
Stockholders of record at the close of
business on March 31, 2009, are entitled to notice of, and to vote at, the
Annual Meeting.
[ ],
2009
PROXY
STATEMENT
This Proxy Statement and the
accompanying WHITE proxy card are
furnished in connection with the solicitation by the Board of Directors (the
“Board” or the “Board of Directors”) of Chemed Corporation (the “Company” or
“Chemed”) of proxies to be used at the Annual Meeting of Stockholders of the
Company to be held at 11:00 a.m. Eastern Time at The Queen City Club, 331
East Fourth Street, Cincinnati, Ohio, on May 29, 2009 (the “Annual Meeting”),
and any adjournments or postponements thereof. The Company’s mailing
address is 2600 Chemed Center, 255 East Fifth Street, Cincinnati, Ohio
45202-4726. The approximate date on which this Proxy Statement and
the enclosed WHITE proxy card are
first being given or sent to stockholders is [●],
2009.
On March 19, 2009, the Company received
notice from MMI Investments, L.P. (“MMI”) stating its intention to nominate five
individuals for election to the Board at the Annual Meeting. The
Company does not know whether MMI, its affiliates and certain other related
parties (collectively, the “MMI Group”) will in fact solicit proxies or nominate
individuals for election as directors at the Annual
Meeting. Nominations by the MMI Group have NOT been endorsed by the
Board. We urge you
NOT to sign or return any gold proxy card that you may receive from the MMI
Group. The Company is not responsible for the accuracy of any
information provided by or relating to the MMI Group contained in any proxy
solicitation materials filed or disseminated by the MMI Group or any other
statements that they may otherwise make.
The Board unanimously recommends that
you vote FOR the election of each of the Board’s nominees named on the
WHITE proxy card accompanying this Proxy
Statement. Please read “How to Vote” for more information on
how to vote or revoke your proxy.
STOCKHOLDERS
ENTITLED TO VOTE
Stockholders
as recorded in the Company’s stock register on March 31, 2009 will be entitled
to notice of and may vote at the Annual Meeting or any adjournments or
postponements thereof. On such date, the Company had outstanding
22,583,072 shares of capital stock, par value $1 per share (“Capital Stock”),
entitled to one vote per share. The list of stockholders entitled to
vote at the meeting will be open to the examination of any stockholder for any
purpose relevant to the meeting during normal business hours for 10 days before
the meeting at the Company’s office in Cincinnati. The list will also
be available during the meeting for inspection by
stockholders.
QUORUM
The Company’s bylaws provide that at
all meetings of stockholders, the holders of record, present in person or by
proxy, of shares of Capital Stock having a majority of the voting power entitled
to vote thereat, is necessary and sufficient to constitute a quorum for the
transaction of business. Abstentions, withheld votes and shares held
of record by a broker or its nominee that are voted on any matter are included
in determining the number of votes present. Broker shares that are
not voted on any matter at the Annual Meeting will not be included in
determining whether a quorum is present.
Your vote is important – we urge you to
vote by proxy even if you plan to attend the Annual Meeting.
HOW
TO VOTE; SUBMITTING YOUR PROXY; REVOKING YOUR PROXY
You may vote your shares either by
voting in person at the Annual Meeting or by submitting a completed
proxy. By submitting a proxy, you are legally authorizing another
person to vote your shares. The enclosed WHITE proxy card designates Messrs. McNamara
and Walsh to vote your shares in accordance with the voting instructions you
indicate on your WHITE proxy card.
If you submit your executed WHITE proxy card designating Messrs. McNamara
and Walsh as the individuals authorized to vote your shares, but you do not
indicate how your shares are to be voted, then your shares will be voted by
these individuals in accordance with the Board’s recommendations, which are
described in this Proxy Statement. In addition, if any other matters
are properly brought up at the Annual Meeting (other than the proposals
contained in this Proxy Statement), then each of these individuals will have the
authority to vote your shares on those other matters in accordance with his or
her discretion and judgment. The Board currently does not know of any matters to
be raised at the Annual Meeting other than the proposals contained in this Proxy
Statement.
We urge you to vote by doing one of the
following:
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Vote by
Mail: You can vote your shares by mail by completing,
signing, dating and returning your WHITE proxy
card in the postage-paid envelope provided. In order for your
proxy to be validly submitted and for your sh∙∙ares to be voted in
accordance with your instructions, we must receive your mailed
WHITE
proxy card by 5:00 p.m. Eastern Time on May 28,
2009.
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Vote by
Telephone: You can also vote your shares by calling the
number (toll-free in the United States and Canada) indicated on your WHITE proxy
card at any time and following the recorded instructions. If
you submit your proxy by telephone, then you may submit your voting
instructions up until 12:00 a.m. Eastern Time on May 29,
2009. If you are a beneficial owner, or you hold your shares in
“street name” as described below, please contact your bank, broker or
other holder of record to determine whether you will be able to vote by
telephone.
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Vote via the
Internet: You can vote your shares via the Internet by
going to the Web site address for Internet voting indicated on your WHITE proxy
card and
following the steps outlined on the secure Web site. If you
submit your proxy via the Internet, then you may submit your voting
instructions up until 12:00 a.m. Eastern Time on May 29, 2009. If you are
a beneficial owner, or you hold your shares in “street name”, please
contact your bank, broker or other holder of record to determine whether
you will be able to vote via the
Internet.
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Please let us know whether you plan to
attend the Annual Meeting by marking the appropriate box on your WHITE proxy card or
by following the instructions provided when you submit your proxy by telephone
or via the Internet.
If your shares are not registered in
your name but in the “street name” of a bank, broker or other holder of record
(a “nominee”), then your name will not appear in the Company’s register of
stockholders. Those shares are held in your nominee’s name, on your behalf, and
your nominee will be entitled to vote your shares. Your nominee is required to
vote your shares in accordance with your instructions. If you do not
give instructions to your nominee, your nominee will be entitled to vote your
shares with respect to “discretionary” items but will not be permitted to vote
your shares with respect to “non-discretionary” items (your shares are treated
as “broker non-votes”).
If the MMI Group solicits proxies to
elect MMI’s nominees to the Board at the Annual Meeting, then the election of
directors will be a “non-discretionary” item for any nominee holding shares on
your behalf. As a result, if you do not provide instructions as to
how your shares are to be voted in the election of directors, your nominee will
not be able to vote your shares in the election of directors, and your shares
will not be voted for any of the Board’s or MMI’s nominees. We urge
you to provide instructions to your nominee so that your votes may be counted on
this important matter. You should vote your shares by following the
instructions provided on the enclosed WHITE proxy card and returning the
WHITE proxy card to your nominee to ensure
that your shares will be voted on your behalf for the Board’s
nominees.
Your proxy is revocable. If
you are a stockholder of record, after you have submitted your WHITE proxy card, you may revoke it by mail
by sending a written notice to be delivered before the Annual Meeting to the
Company’s Secretary at 2600 Chemed Center, 255 East Fifth Street, Cincinnati, Ohio 45202-4726. If you wish to revoke your
submitted WHITE proxy card and submit new voting
instructions by mail, then you must sign, date and mail a new WHITE proxy card with your new voting
instructions, which we must receive by 5:00 p.m. Eastern Time on May
28, 2009. If you are a stockholder of record and
you voted your WHITE proxy card by telephone or via the
Internet, you may revoke your submitted proxy and/or submit new voting
instructions by that same method, which must be received by 12:00 a.m. Eastern Time on May 29, 2009. You also may revoke your WHITE proxy card by attending the Annual
Meeting and voting your shares in person. Atte∙nding the Annual Meeting without
taking one of the actions above will not revoke your proxy. If you are a
beneficial owner, or you hold your shares in “street name” as described above,
please contact your bank, broker or other holder of record for instructions on
how to change or revoke your vote.
THE BOARD RECOMMENDS THAT
YOU DO NOT SIGN OR RETURN ANY GOLD PROXY CARD THAT MAY BE SENT TO YOU BY THE MMI
GROUP, EVEN AS A PROTEST. Withholding authority to vote for
MMI’s nominees on a gold proxy card that the MMI Group may send you is not the
same as voting FOR the Board’s nominees. Even a vote against MMI’s
nominees on its gold proxy card will cancel any previous proxy submitted by
you. If you have previously submitted a gold proxy card that may have
been sent to you by the MMI Group, you may change any vote you may have cast in
favor of MMI’s nominees and vote in favor of the Board’s nominees by completing,
signing, dating and returning the enclosed WHITE proxy card in
the postage-paid envelope provided, or by following the instructions on the
WHITE proxy
card to vote by telephone or via the Internet, or by attending the Annual
Meeting and voting your shares in person.
Your vote is very important to the
Company. If you do not plan to attend the Annual Meeting, we
encourage you to read this Proxy Statement and submit your completed
WHITE proxy card prior to the Annual Meeting
in accordance with the above instructions so that your shares will be
represented and voted in accordance with your
instructions. Even if you plan to attend the Annual
Meeting in person, we recommend that you vote your shares in advance as
described above so that your vote will be counted if you later decide not to
attend the Annual Meeting.
You are entitled to attend the Annual
Meeting only if you are a stockholder of record or a beneficial owner as of the
close of business on March 31, 2009, or if you hold a valid proxy for the
meeting. If you are a stockholder of record, an admission ticket is
attached to the WHITE proxy card
accompanying this Proxy Statement. Please bring this admission ticket with you
to the Annual Meeting. You should be prepared to present photo
identification for admission.
If your shares are held in “street
name”, in order for you to attend the Annual Meeting, you must bring a letter or
account statement showing that you beneficially own the shares held by your
nominee, as well as proper photo identification. Note that even if
you attend the Annual Meeting, you cannot vote the shares that are held by your
nominee unless you have a proxy from your nominee. Rather, you should
vote your shares by following the instructions provided on the enclosed
WHITE proxy card and returning the
WHITE proxy card to your nominee to ensure
that your shares will be voted on your behalf, as described
above.
If you have questions or require any
assistance with voting your shares, please contact the Board’s proxy solicitor,
Innisfree M&A Incorporated at:
Innisfree M&A
Incorporated
Stockholders May Call
Toll-Free: (877) 825-8631
Banks and Brokers May Call
Collect: (212) 750-5833
ELECTION
OF DIRECTORS
In the election of directors, every
stockholder has the right to vote each share of Capital Stock owned by such
stockholder on the record date for as many persons as there are directors to be
elected. Eleven directors are to be elected at the Annual Meeting to
serve until the next Annual Meeting of Stockholders and until their successors
are duly elected and qualified. Cumulative voting is not
permitted. To be elected, a nominee must receive a plurality of the
votes cast at the Annual Meeting. Because MMI has indicated that it
will nominate five candidates for election to the Board, the Company expects
that the number of nominees for election as directors at the Annual Meeting will
exceed the number of directors to be elected at the Annual
Meeting. This excess means that the 11 nominees standing for election
who receive the greatest number of votes cast at the Annual Meeting will be
elected as directors. Only votes cast FOR a nominee will be
counted. Abstentions, votes withheld and broker non-votes will be
excluded entirely from the vote.
NOMINEES
Unless otherwise indicated by your
WHITE proxy
card, if you return a validly completed and executed WHITE proxy card or
vote your WHITE
proxy card by telephone or via the Internet, your shares will be voted FOR the
nominees named below. Each of the nominees named below is a current
director standing for re-election, and each was elected at the Annual Meeting of
Stockholders held on May 19, 2008, except for Messrs. Ernest J. Mrozek and
Thomas P. Rice, who are standing for election for the first time. Mr.
Timothy S. O’Toole and Ms. Sandra E. Laney are not standing for
re-election. As of the date of this Proxy Statement, the Board has no
reason to believe that any of the nominees named below will be unable or
unwilling to serve. Each nominee named below has consented to being
named in this Proxy Statement and to serve if elected.
Kevin
J. McNamara
Director
since 1987
Age:
55
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Mr.
McNamara is President and Chief Executive Officer of the Company and has
held these positions since August 1994 and May 2001,
respectively. Previously, he served as Executive Vice
President, Secretary and General Counsel from November 1993, August 1986
and August 1986, respectively, to August 1994.
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Joel
F. Gemunder
Director
since 1977
Age:
69
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Mr.
Gemunder is President and Chief Executive Officer of Omnicare, Inc.,
Covington, Kentucky (healthcare products and services) (“Omnicare”), and
has held these positions since May 1981 and May 2001,
respectively. Omnicare is a former wholly owned subsidiary of
the Company that became a publicly owned corporation in 1981 and has not
been a Chemed affiliate since at least 1996. He is also a
director of Omnicare and Ultratech Stepper, Inc.
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Patrick
P. Grace
Director
since 1996
Age:
53
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Mr.
Grace is President of MLP Capital, Inc., New York, New York, an investment
holding company which has had several real estate and mining interests in
the southeastern United States. He has held that position since
March 1996. Since October 2008 he is also the co-founder and
Managing Principal of Apollo Philanthropy Partners, L.L.C., New York, New
York (philanthropic advisory services).
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Thomas
C. Hutton
Director
since 1985
Age:
58
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Mr.
Hutton is a Vice President of the Company and has held this position since
February 1988.
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Walter
L. Krebs
Director
from May 1989 to April 1991, May 1995 to May 2003 and since May
2005
Age:
76
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Mr.
Krebs retired as Senior Vice President-Finance, Chief Financial Officer
and Treasurer of Service America Systems, Inc. (home and service
warranties), a then-wholly owned subsidiary of the Company (“Service
America”), in July 1999, having held the position since October
1997. Previously, he was a Director-Financial Services of
DiverseyLever, Inc. (formerly known as Diversey Corporation), Detroit,
Michigan (specialty chemicals) (“Diversey”), from April 1991 to April
1996. Previously, from January 1990 to April 1991, he was
Senior Vice President and the Chief Financial Officer of the Company’s
then-wholly owned subsidiary, DuBois Chemicals, Inc. (specialty chemicals)
(“DuBois”).
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Andrea
R. Lindell
Director
since May 2008
Age:
65
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Ms.
Lindell is Dean and a Professor of the College of Nursing at the
University of Cincinnati, a position she has held since December
1990. Ms. Lindell is also Associate Senior Vice President of
the Medical Center at the University of Cincinnati, a position she has
held since July 1998. From September 1994 to June 2002, she
also held an additional position as Interim Dean of the College of Allied
Health Sciences at the University of Cincinnati. She is a
director of Omnicare.
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Ernest
J. Mrozek
Not
previously a director
Age:
55
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Mr.
Mrozek was Vice Chairman and Chief Financial Officer of the ServiceMaster
Company, Memphis, Tennessee (residential and commercial cleaning, pest,
lawn and other services), from November 2006 to March 2008, when he
retired after the completion of its sale and relocation of its
corporate headquarters. He also served as its President and
Chief Financial Officer from January 2004 to November 2006 and as its
President and Chief Operating Officer from April 2002 to January
2004. He joined the ServiceMaster Company in 1987, prior to
which he spent 11 years with Arthur Andersen & Co., an international
accounting firm. He is a director of G&K Services,
Inc.
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Thomas
P. Rice
Not
previously a director
Age:
59
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Mr.
Rice was Chief Executive Officer of Andrx Corporation, Fort Lauderdale,
Florida (specialty pharmaceuticals) (“Andrx”),
from February 2004 to November 2006, when Andrx was sold to Watson
Pharmaceuticals. Following the sale, Mr. Rice returned as
General Manager and Partner to Columbia Investments LLC, Baltimore,
Maryland, which invests in local businesses in Baltimore and which Mr.
Rice co-founded in January 1996. From January 1999 to March 2003, he
was President and Chief Executive Officer of Chesapeake Biological
Laboratories, Inc., Solomons, Maryland (pharmaceuticals manufacturing)
(“Chesapeake”). Before co-founding Columbia Investments LLC,
Mr. Rice served as Executive Vice President and Chief Operating
Officer of Circa Pharmaceuticals, Inc. Copiague, New York (pharmaceuticals
manufacturing) (“Circa”), from June 1993 to January 1996. Mr.
Rice was also the Chief Financial Officer of Circa from June 1993 to
January 1995. Prior to joining Circa, Mr. Rice spent seven
years as an accountant with Deloitte & Touche LLP, an international
accounting firm. He was a director of Circa from June 1993 to January
1996, a director of Chesapeake from January 1997 to January 1999 and a
director of Andrx from April 2003 to November 2006.
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Donald
E. Saunders
Director
from May 1981 to May 1982, May 1983 to May 1987 and since May
1998
Age:
64
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Mr.
Saunders is a Clinical Faculty Member at the Farmer School of Business,
Miami University, Oxford, Ohio, and has held this position since August
2001. Mr. Saunders retired as President of DuBois, then a
division of Diversey, in October 2000, having held that position since
November 1993.
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George
J. Walsh III
Director
since 1995
Age:
63
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Mr.
Walsh is a partner with the law firm of Thompson Hine LLP, New York, New
York, and has held this position since May 2002. Prior to this
date, Mr. Walsh was a partner with the law firm of Gould & Wilkie LLP,
New York, New York, and held this position since January
1979. Gould & Wilkie merged with Thompson Hine on May 1,
2002. Mr. Walsh was elected the Chairman of the Board of
Directors in March 2009.
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Frank
E. Wood
Director
since 2002
Age:
66
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Mr.
Wood is President and Chief Executive Officer of Secret Communications,
LLC, Cincinnati, Ohio (former owner and operator of radio stations, and
now a venture capital fund), and has held this position since
1994. He is also co-founder and principal of The Darwin Group,
Cincinnati, Ohio (venture capital firm specializing in second-stage
investments), and has held this position since 1998. Since
2000, he has also served as chairman of 8e6 Technologies Corporation,
Orange, California (developer of Internet filtering
software). He is also a director of Tribune
Company.
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The Board unanimously recommends that
you vote FOR the election of each of the above-named nominees.
The
Company has received notice from MMI that it intends to nominate five
individuals for election to the Board at the Annual Meeting. You may
receive proxy solicitation materials from the MMI Group, including an opposition
proxy statement and a gold proxy card. THE BOARD URGES YOU NOT TO
VOTE OR SUBMIT ANY GOLD PROXY CARD SENT TO YOU BY THE MMI GROUP. If you
have previously returned or voted a gold proxy card sent to you by the MMI
Group, you may revoke it by completing, signing, dating and returning the
enclosed WHITE
proxy card in the postage-paid envelope provided, or by following the
instructions on the WHITE proxy card to
vote by telephone or via the Internet, or by attending the Annual Meeting and
voting your shares in person
CORPORATE
GOVERNANCE
Director
Compensation
The Company’s compensation program for
directors who are not employees of the Company consists of annual cash fees and
fully vested stock awards granted pursuant to the Chemed Corporation 1999 Stock
Incentive Plan (as amended, supplemented or otherwise modified as of the date
hereof, the “1999 Incentive Plan”), the Chemed Corporation 2002 Stock Incentive
Plan (as amended, supplemented or otherwise modified as of the date hereof, the
“2002 Incentive Plan”), the Roto-Rooter, Inc. 2004 Stock Incentive Plan (as
amended, supplemented or otherwise modified as of the date hereof, the “2004
Incentive Plan”) and the Chemed Corporation 2006 Stock Incentive Plan (as
amended, supplemented or otherwise modified as of the date hereof, the “2006
Incentive Plan”). Directors
who are not employees of the Company may also participate in the Chemed
Corporation Deferred Compensation Plan for Non-Employee Directors (the “Director
Deferred Compensation Plan”), which is described below. Directors who
are employees of the Company do not receive cash compensation for their service
as directors, but do receive annual fully vested stock awards for such service
pursuant to the 1999 Incentive Plan, the 2002 Incentive Plan, the 2004 Incentive
Plan and the 2006 Incentive Plan.
The Board reviews and sets the cash
compensation for non-employee directors and the fully vested stock awards for
all directors. In making its determination, the Board seeks input
from the Compensation Committee’s independent compensation consultant,
Compensation Strategies, Inc., as well as certain executive officers of the
Company, and considers any such input, including as to the level of compensation
necessary to attract and retain qualified directors, among the factors it
reviews in setting the amount of compensation. Director compensation
is generally reviewed by the Board on an annual basis.
Effective May 16, 2006, each member of
the Board of Directors who is not an employee of the Company is paid an annual
fee of $20,000 and a fee of $3,000 for each Board meeting attended. Mr. Walsh
is paid an additional annual fee of $135,000 for his service as Chairman of the
Board. Each member of the Board’s Audit Committee (other than its
chairman), Compensation/Incentive Committee (the “Compensation Committee”)
(other than its chairman) and Nominating Committee (including its chairman) is
paid an additional annual fee of $10,000, $3,500 and $7,000, respectively, for
his or her service on that Committee. The chair of the Audit
Committee is paid $20,000 per year, and the chair of the Compensation Committee
is paid $5,250 per year. A Committee member also is paid $1,000 for
each Committee meeting (other than meetings of the Nominating Committee)
attended unless the Committee meeting is on the same day as a meeting of the
Board of Directors, in which case Committee members are paid $500 for attendance
at the Committee meeting. Messrs. McNamara, O’Toole and T. C.
Hutton, who are employees of the Company, do not receive cash compensation for
their service as directors, but do receive annual fully vested stock awards, as
detailed below. Each member of the Board of Directors and of a Committee is
additionally reimbursed for reasonable travel expenses incurred in connection
with attendance at Board and Committee meetings.
In May 2008, Messrs. Gemunder, Grace,
Krebs, Saunders and Wood and Ms. Laney and Ms. Lindell each received $33,750 in
the form of a fully vested stock award of 1,000 shares of Capital
Stock. Mr. Walsh also received the cash equivalent of a fully vested
stock award of 1,000 shares of Capital Stock, or $33,750. Mr. Charles
H. Erhart, Jr., who retired as a director in May 2008, received $33,750 in the
form of a fully vested stock award of 1,000 shares of Capital Stock in May 2008
and received an additional fully vested stock award of 2,000 shares of Capital
Stock, valued at $88,600, on August 8, 2008 in recognition of his retirement and
years of service as a director. During 2008, Messrs. McNamara,
O’Toole and T. C. Hutton each received $13,500 in the form of a fully vested
stock award of 400 shares of Capital Stock. Mr. E. L. Hutton, who
served in the non-executive position of Chairman of the Board during 2008 and
who died in March 2009, also received $13,500 in the form of a fully vested
stock award of 400 shares of Capital Stock.
In addition, the Company maintains the
Director Deferred Compensation Plan in which certain directors who are not
employees of the Company or of a subsidiary of the Company
participate. Under such plan, which is not a tax-qualified plan, an
account is established for each participant to which amounts are credited
quarterly at the rate of $4,000 per year. These amounts are used to
purchase shares of Capital Stock, and all dividends are reinvested in Capital
Stock. Each participant is entitled to receive the balance in his or
her account within 90 days following the date he or she ceases to serve as a
director. In 2008, each of Messrs. Gemunder, Grace, Krebs, Saunders,
Walsh and Wood and Ms. Laney received contributions of $4,000; Mr. Erhart
received contributions of $2,000; and Ms. Lindell received contributions of
$3,000, in each case in his or her respective account in the Director Deferred
Compensation Plan.
Directors may participate in the
Company’s health insurance plans by paying rates offered to former employees
under COBRA.
In 2008, the Company provided the
following compensation to directors for their service as directors of the
Company:
DIRECTOR
COMPENSATION-2008 (a)
Name
|
|
Fees
Earned
or
Paid in
Cash
($)
|
|
|
Stock
Awards
($)(b)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
Edward
L. Hutton
|
|
$ |
- |
|
|
$ |
13,500 |
|
|
|
- |
|
|
$ |
13,500 |
|
Charles
H. Erhart, Jr. (c)
|
|
|
38,583 |
|
|
|
124,350 |
|
|
|
- |
|
|
|
162,933 |
|
Joel
F. Gemunder
|
|
|
42,667 |
|
|
|
37,750 |
|
|
|
- |
|
|
|
80,417 |
|
Patrick
P. Grace
|
|
|
59,000 |
|
|
|
37,750 |
|
|
|
- |
|
|
|
96,750 |
|
Thomas
C. Hutton (d)
|
|
|
- |
|
|
|
13,500 |
|
|
|
- |
|
|
|
13,500 |
|
Walter
L. Krebs
|
|
|
52,500 |
|
|
|
37,750 |
|
|
|
- |
|
|
|
90,250 |
|
Sandra
E. Laney (d)
|
|
|
38,000 |
|
|
|
37,750 |
|
|
|
- |
|
|
|
75,750 |
|
Andrea
R. Lindell
|
|
|
29,167 |
|
|
|
36,750 |
|
|
|
- |
|
|
|
65,917 |
|
Donald
E. Saunders
|
|
|
64,500 |
|
|
|
37,750 |
|
|
|
- |
|
|
|
102,250 |
|
George
J. Walsh III
|
|
|
89,917 |
|
|
|
4,000 |
|
|
|
- |
|
|
|
93,917 |
|
Frank
E. Wood
|
|
|
42,012 |
|
|
|
37,750 |
|
|
|
- |
|
|
|
79,762 |
|
(a)
|
The
Director Compensation Table excludes certain executive compensation
figures for (i) Messrs. McNamara and O’Toole, which are disclosed under
the “—Summary
Compensation Table” heading below and (ii) Messrs. E. L. Hutton and T. C.
Hutton and Ms. Laney, which are disclosed under the “Certain Relationships
and Transactions” heading below. Messrs. McNamara,
O’Toole and T. C. Hutton, who are employees of the Company, and
Mr. E. L. Hutton, who was an employee of the Company until his death
in March 2009, only received fully vested stock awards for their service
as directors in 2008.
|
(b)
|
Amounts
for each of Messrs. Gemunder, Grace, Krebs, Saunders and Wood and Ms.
Laney include contributions of $4,000 used to purchase Capital Stock held
in the Director Deferred Compensation Plan and $33,750 in the form of a
fully vested stock award of 1,000 shares of Capital Stock. The
amount included for Mr. Erhart includes contributions of $2,000 used to
purchase Capital Stock held in the Director Deferred Compensation Plan,
$33,750 in the form of a fully vested stock award of 1,000 shares of
Capital Stock and a special fully vested stock award of 2,000 shares of
Capital Stock valued at $88,600. The amount for Mr. Walsh
includes contributions of $4,000 used to purchase Capital Stock held in
the Director Deferred Compensation Plan. The amount for Ms.
Lindell includes contributions of $3,000 used to purchase Capital Stock
held in the Director Deferred Compensation Plan and $33,750 in the form of
a fully vested stock award of 1,000 shares of Capital
Stock. The amounts for Messrs. E. L. Hutton and Mr. T. C.
Hutton include $13,500 in the form of a fully vested stock award of 400
shares of Capital Stock.
|
(c)
|
Mr.
Erhart served as a director until his retirement on May 19,
2008. Following his retirement, Mr. Erhart served as a Director
Emeritus until his death in January 2009. In 2008, Mr. Erhart
received cash fees of $24,583 and contributions of $2,000 used to purchase
Capital Stock held in the Director Deferred Compensation Plan for his
service as a director and $14,000 in cash compensation and $33,750 in the
form of a fully vested stock award of 1,000 shares of Capital Stock in his
capacity as a Director Emeritus. Mr. Erhart received an
additional fully vested stock award of 2,000 shares of Capital Stock,
valued at $88,600, in recognition of his retirement and years of service
as a director.
|
(d)
|
At
December 31, 2008, Mr. T. C. Hutton and Ms. Laney held stock option awards
for the purchase of 46,000 shares and 40,000 shares, respectively, of
Capital Stock, and Mr. Hutton held 2,450 shares of restricted
stock. These stock option and restricted stock awards were
granted to Mr. Hutton and Ms. Laney as compensation while employed by the
Company and not in their capacity as
directors.
|
Directors
Emeriti
The Board of Directors has a policy of
conferring the honorary designation of Director Emeritus upon former directors
who made valuable contributions to the Company and whose continued advice is
believed to be of value to the Board of Directors. The designation as
Director Emeritus is customarily conferred by the Board on an annual basis but
may be conferred at such other times and for such other periods as the Board may
determine. Each Director Emeritus is furnished with a copy of all
agendas and other materials furnished to members of the Board of Directors
generally and is invited to attend all meetings of the Board; however, a
Director Emeritus is not entitled to vote on
any matters presented to the Board. A Director Emeritus is paid an
annual fee of $18,000 and $500 for each meeting attended.
Mr. John M. Mount, who served as a
director of the Company from 1986 to 1991 and from 1994 to 2003, was designated
a Director Emeritus in May 2005. In 2008, the Company paid Mr. Mount
$21,000 in cash fees and granted him $33,750 in the form of a fully vested stock
award of 1,000 shares of Capital Stock for his service as a Director
Emeritus. Since March 1, 2007, he has also received $1,000 per month
as a consultant to the Company. It is anticipated that, at the 2009
annual meeting of the Board of Directors, Mr. Mount will again be designated as
a Director Emeritus. Mr. Erhart, who served as a director from 1970
to 2008, was designated as a Director Emeritus in May 2008. He died
in January 2009. The compensation paid to Mr. Erhart in 2008 as a
Director Emeritus is set forth in footnote (c) to the Director Compensation
Table.
Committees
and Meetings of the Board
The Company has the following
Committees of the Board of Directors: Audit Committee, Compensation Committee
and Nominating Committee.
Audit Committee The Audit
Committee (a) is directly responsible for the appointment, compensation and
oversight of a firm of independent registered accountants to audit the
consolidated financial statements of the Company, (b) reviews and reports to the
Board of Directors on the Company’s annual financial statements and the
independent accountants’ report on such financial statements, (c) meets with the
Company’s senior financial officers, internal auditors and independent
accountants to review audit plans and work regarding the Company’s accounting,
financial reporting and internal control systems and other non-audit services
and (d) confers quarterly with senior management, internal audit staff and the
independent accountants to review quarterly financial results. The
Audit Committee consists of Messrs. Grace, Krebs and Saunders, with Mr. Saunders
serving as chairman. Each member of the Audit Committee is
independent as defined under the listing standards of the New York Stock
Exchange, and the Board of Directors has determined that Mr. Saunders
and Mr. Krebs qualify as “audit committee financial experts” within the meaning
of the applicable United States Securities and Exchange Commission (the “SEC”)
regulations. The Audit Committee met six times during
2008. A copy of the Audit Committee Charter is available at
www.chemed.com.
Compensation Committee The
executive compensation program is administered by the Compensation
Committee. The Compensation Committee makes recommendations to the
Board of Directors concerning (a) base salary and annual cash incentive
compensation for executives of the Company, (b) establishment of incentive
compensation plans and programs generally, (c) adoption and administration of
certain employee benefit plans and programs and (d) additional year-end
contributions by the Company under the Chemed/Roto-Rooter Savings &
Retirement Plan (as amended, supplemented or otherwise modified as of the date
hereof, the “Retirement Plan”). In addition, the Compensation
Committee administers the 1999 Incentive Plan, the 2002 Incentive Plan, the 2004
Incentive Plan, the 2006 Incentive Plan and the Chemed Corporation 1999
Long-Term Employee Incentive Plan (as amended, supplemented or otherwise
modified as of the date hereof, the “1999 Long-Term Incentive Plan” and,
collectively with the 1999 Incentive Plan, the 2002 Incentive Plan, the 2004
Incentive Plan and the 2006 Incentive Plan, the “Stock Incentive Plans”) and the
Chemed Corporation 2002 Executive Long-Term Incentive Plan (as amended,
supplemented or otherwise modified as of the date hereof, the “LTIP”), under
which it reviews and approves the granting of cash, stock option and stock
awards. The Compensation Committee consists of Messrs. Walsh and Wood
and Ms. Lindell, with Mr. Walsh serving as chairman. Each member of
the Compensation Committee is independent as defined under the listing standards
of the New York Stock Exchange. The Compensation Committee met five
times during 2008. A copy of the Compensation Committee Charter is
available on the Company’s Web site, www.chemed.com.
Nominating Committee The
Nominating Committee (a) recommends to the Board of Directors the candidates for
election to the Board at each Annual Meeting of Stockholders of the Company, (b)
recommends to the Board of Directors candidates for election by the Board to
fill vacancies on the Board, (c) considers candidates submitted to the Committee
by directors, officers, employees, stockholders and others and (d) performs such
other functions as may be assigned by the Board. In identifying and
evaluating nominees for director, the Nominating Committee considers candidates
with a wide variety of academic backgrounds and professional and business
experiences. After reviewing the candidates’ backgrounds and
qualifications, the Nominating Committee personally interviews
those candidates it believes merit further consideration. Once it has
completed this process, the Nominating Committee makes its final recommendations
to the Board. Stockholders wishing to submit a candidate for election
to the Board should submit the candidate’s name and a supporting statement to
the Company’s Secretary at 2600 Chemed Center, 255 East Fifth Street,
Cincinnati, Ohio 45202-4726. The Nominating Committee has no formal
policy with regard to the consideration of director candidates recommended by
stockholders because it believes such recommendations are sufficiently rare that
they may be effectively considered on a case-by-case basis. The
Nominating Committee consists of Messrs. Gemunder, Grace and Walsh, with Mr.
Walsh serving as chairman. Each member of the Nominating Committee is
independent as defined under the listing standards of the New York Stock
Exchange. The Nominating Committee met once during 2008. A
copy of the Nominating Committee Charter is available on the Company’s Web site,
www.chemed.com.
In
response to MMI’s announcement that it would nominate five candidates for
election to the Board at the Annual Meeting, the Company approached certain of
its large stockholders to seek their input on the composition of the Board and
to obtain suggestions for potential nominees to stand for election as
independent directors. One of the Company’s largest stockholders
identified three potential nominees. An outside advisor to the
Company also responded to a request by the Company for recommendations and
identified a fourth prospective candidate. In addition, each of the
Chief Executive Officer of the Company and the Chairman of the Board suggested
potential nominees, resulting in a total of six candidates. From
these six potential nominees, the Nomination Committee recommended, and the
Board nominated, Mr. Rice, a candidate recommended by a large stockholder of the
Company, and Mr. Mrozek, the candidate recommended by the Chief Executive
Officer, for election to the Board at the Annual Meeting.
Board Meetings The Board of
Directors has five scheduled meetings a year, at which it reviews and discusses
reports by management on the performance of the Company and its operating
subsidiaries, its plans and properties, as well as immediate issues facing the
Company. The Board also periodically meets during its meetings in
executive session, without executives or management directors
present. Such sessions have been presided over by whichever
non-management director raised a topic for discussion and will, in the future,
be presided over by the Chairman of the Board.
During 2008, there were six meetings of
the Board of Directors. Each director attended at least 75% of the
Board meetings and his or her applicable Committee meetings. While
the Company does not have a formal policy with regard to Board members’
attendance at the Annual Meeting of Stockholders, all members of the Board are
encouraged to attend. Twelve members of the Board attended last
year’s Annual Meeting of Stockholders held on May 19, 2008.
Director Independence The
Board and the Nominating Committee undertake an annual review of director and
nominee independence. They consider transactions and relationships
between each director or nominee or any member of such director’s or nominee’s
immediate family or any other person sharing such director’s or nominee’s home
and the Company and its subsidiaries and affiliates, including those reported
under the heading “Certain Relationships and Transactions” below. The
Board and the Nominating Committee also examine transactions and relationships
between directors and nominees and their respective affiliates and members of
the Company’s senior management and their affiliates. The purpose of
this review is to determine whether any such relationships or transactions are
inconsistent with a determination that the director or nominee is independent
under the New York Stock Exchange corporate governance listing
standards.
As a result of its 2009 review, the
Board and the Nominating Committee affirmatively determined that, under the New
York Stock Exchange listing standards, the following directors and nominees,
constituting a majority of the individuals nominated for election as directors
at the Annual Meeting, are independent of the Company and its management:
Messrs. Gemunder, Grace, Krebs, Mrozek, Saunders, Rice, Walsh and Wood and Ms.
Lindell.
Compensation Committee Interlocks and
Insider Participation The Compensation Committee is comprised of Messrs.
Walsh and Wood and Ms. Lindell. No member of the Compensation
Committee has any direct or indirect material interest in or relationship with
the Company, other than holdings of Capital Stock as set forth under the heading
“Security Ownership of Certain Beneficial Owners and Management” below and as
related to his or her position as a director. During 2008, no
executive officer of the Company served on the compensation committee of any
other entity where an executive officer of such entity also served on the Board
of Directors, and no
executive officer of the Company served on the board of directors of any other
entity where an executive officer of such entity also served on the Compensation
Committee.
Policies and Procedures The
Audit Committee reviews all material transactions with related persons as
identified by management. In February 2007, the Audit Committee
adopted a written policy and set of procedures for reviewing transactions
between the Company and related persons, who include directors, nominees,
executive officers and any person known to be the beneficial owner of more than
5% of the Company’s voting securities (each, a “related person”), any immediate
family member of a related person and any person sharing the household of a
related person. The policy also covers any firm, corporation or other
entity in which any related person is employed or is a partner or principal, or
in which such related person has a 5% or greater beneficial ownership
interest. Prior to entering into a transaction with a related person,
notice must be given to the Secretary of the Company containing (a) the related
person’s relationship to the Company and interest in the transaction, (b) the
material facts of the transaction, (c) the benefits to the Company of the
transaction, (d) the availability of any other sources of comparable products or
services and (e) an assessment of whether the transaction is on terms comparable
to those available to an unrelated third party. If the Company’s
Secretary and Chief Financial Officer determine that it is a related party
transaction, the proposed transaction is submitted to the Audit Committee for
its approval. The policy also provides for the quarterly review of
related person transactions which have not previously been approved or ratified
and any other such transactions which come to the attention of the Company’s
Chief Executive Officer, Chief Financial Officer, Controller or
Secretary. If the transaction is pending or ongoing, it will be
promptly submitted to the Audit Committee for approval. If the
transaction is completed, it will be submitted to the Audit Committee to
determine if ratification or rescission is appropriate. This policy
also covers charitable contributions or pledges by the Company to non-profit
organizations identified with a related person.
Code of Ethics The Board of
Directors has adopted Corporate Governance Principles and Policies on Business
Ethics, which, along with the charters of the Audit, Compensation/Incentive and
Nominating Committees, are available on the Company’s Web site under Corporate
Governance — Governance Documents (www.chemed.com). Printed copies
may be obtained from the Company’s Secretary at 2600 Chemed Center, 255 East
Fifth Street, Cincinnati, Ohio 45202-4726.
Stockholder Communications
Stockholders and others wishing to communicate with members of the Board should
mail such communications to the Company’s Secretary at 2600 Chemed Center, 255
East Fifth Street, Cincinnati, Ohio 45202-4726. The Secretary will
forward these communications to the Board and, if applicable, to specified
individual directors.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
This Compensation Discussion and
Analysis explains the material elements of the compensation of the Company’s
named executive officers. The Company’s named executive officers for
2008 are Mr. McNamara, President and Chief Executive Officer; David P. Williams,
Executive Vice President and Chief Financial Officer; Mr. O’Toole, Executive
Vice President; Spencer S. Lee, Executive Vice President; and Arthur V. Tucker,
Jr., Vice President and Controller.
Overview
of Compensation Program
The executive compensation program is
administered by the Compensation Committee. The membership of the
Compensation Committee is comprised of three independent
directors. The Compensation Committee is responsible for the review,
approval and recommendation to the Board of Directors of matters concerning (a)
base salary and annual cash incentive compensation for executives of the
Company, (b) establishment of incentive compensation plans and programs
generally, (c) adoption and administration of certain employee benefit plans and
programs and (d) additional year-end contributions by the Company under the
Retirement Plan. The recommendations of the Compensation Committee on
such matters must be approved by the non-employee members of the Board of
Directors. The employee members of the Board of Directors are not
present when compensation recommendations are presented to the Board of
Directors and discussed, and such members do not vote on compensation
issues. The Compensation Committee also administers the Stock
Incentive Plans, under which it
reviews and approves the granting of stock option and stock awards, and the
LTIP. The Compensation Committee also has retained the services of
independent compensation consultants to assist and advise it in administering
the executive compensation program. Currently, Compensation
Strategies, Inc., an independent compensation advisory firm, has been retained
by, and reports to, the Compensation Committee. Other than its work
for the Compensation Committee and advising the Board on director compensation,
it does no other work for the Company.
How
Compensation Decisions Are Made
Generally, in February of each year,
certain senior executives of the Company, including the Chief Executive Officer,
prepare recommendations for annual cash incentives and long-term equity awards
to be made to Company employees, other than the Chief Executive Officer, based
on the performance of the employees and the Company during the past
year. The recommendations made by the Chief Executive Officer and
other senior executives to the Compensation Committee, which include detailed
memoranda and tally sheets, take into consideration historical compensation,
including base salaries, annual incentive compensation and long-term equity
awards, performance of the Company as a whole, performance of the individual
business unit for which the employee is responsible and performance of the
individual employee. The Compensation Committee then meets to
determine the long-term equity awards for each executive and to review and
consider the recommendations prepared by the Company’s senior executives in
order to determine the recommendations that the Compensation Committee will make
to the non-employee members of the Board of Directors with respect to the amount
of annual cash incentives for each executive. The Compensation
Committee makes compensation recommendations to the non-employee members of the
Board of Directors regarding the compensation of the Chief Executive Officer
without the input of any Company employees. The Compensation
Committee can exercise its discretion in modifying any recommendations of the
Company’s senior executives.
Base salaries of executives are
reviewed generally by the Compensation Committee every 14 months and approved by
the non-employee members of the Board of Directors. As a component of
the review and approval process, the Compensation Committee and the non-employee
members of the Board consider the recommendations of the Chief Executive Officer
and certain senior executives of the Company as to the base salaries of Company
executives, other than the Chief Executive Officer. The Chief
Executive Officer’s base salary is reviewed and determined without the input of
Company employees. In determining recommended base salaries for the
Company’s executives, the Compensation Committee also considers each executive’s
then-current base salary and total incentive compensation and the individual
performance of each executive during the then-past 14-month period.
The Compensation Committee directly
grants compensation, such as cash, stock option and stock awards, under the
Stock Incentive Plans and the LTIP.
Role of
Executive Officers
The Chief Executive Officer and certain
other senior executives of the Company provide recommendations to the
Compensation Committee concerning compensation of Company executives, other than
the Chief Executive Officer. Additionally, as part of its process,
the Compensation Committee meets with the Chief Executive Officer to obtain
input with respect to compensation decisions, including the performance of the
Company’s senior executives other than the Chief Executive
Officer. In addition to meeting with the Chief Executive Officer, the
Compensation Committee meets in executive session without any Company employees
present.
Objectives
of Compensation Program
The Company’s executive compensation
program is intended to achieve the objectives of aligning executives’ interests
with those of its stockholders by rewarding the executives for long-term growth
in the value of the Capital Stock and encouraging them to hold a significant
amount of the Company’s equity; paying for performance through both cash and
equity-based incentives that, in turn, provide greater rewards for stronger
performance of the Company as a whole and the Company’s business units; paying
competitively in order to attract and retain senior executives; and creating
incentive to maximize the long-term growth of the Company’s
business. To achieve these objectives, the elements of executive
compensation are designed to reward past performance and establish incentive for
future growth.
Elements
of Compensation
The
elements of the Company’s executive compensation program include base salary,
annual cash incentive compensation and long-term incentive compensation in the
forms of stock option awards, restricted stock awards and awards under the LTIP
(in the form of cash and restricted and fully vested stock
awards). Components of compensation that are available generally to
all Company employees, including the Company’s named executive officers, are
defined contribution plans and welfare benefit plans (including life insurance,
health insurance, dental insurance, long-term disability benefits and, in the
case of certain executives, long-term care insurance). In addition,
the Chemed Corporation Excess Benefit Plan No. 1 (as amended, supplemented or
otherwise modified as of the date hereof, the “Excess Benefit Plan”), the Chemed
Corporation Long Term Care Insurance Plan, the Chemed Corporation Supplemental
Pension and Life Insurance Plan (as amended, supplemented or otherwise modified
as of the date hereof, the “Supplemental Pension Plan”), the Chemed Corporation
Supplemental Severance Benefit Plan (as amended, supplemented or otherwise
modified as of the date hereof, the “1986 Severance Plan”) and the Roto-Rooter
Deferred Compensation Plan No. 1 (as amended, supplemented or otherwise modified
as of the date hereof, the “Deferred Compensation Plan”) are available as
components of compensation to executives and other highly compensated
individuals. Base salary, annual cash incentive compensation and
pension and welfare benefit plans are established by the
non-employee members of the Board based on the levels that the Compensation
Committee and such Board members determine are competitive and are intended to
reward executives for current and past performance, while longer-term
incentives, such as stock option awards, restricted stock awards and awards
under the LTIP, are intended to create incentive for future
growth.
Amount of
Each Element of Compensation; Role of Peer Groups; Decisions Concerning
Payments
The Compensation Committee exercises
its discretion in recommending compensation for executives using performance
standards and market studies of a peer group of companies with the assistance of
Compensation Strategies, Inc. The Compensation Committee intends
compensation to be linked directly to personal performance and to the Company’s
overall results, as well as to the results of the specific business units for
which executives are responsible. The Company’s executive
compensation program is focused on rewarding long-term growth.
The Compensation Committee meets as
often as necessary in order to carry out its duties. In 2008, the
Compensation Committee met five times. The Compensation Committee
periodically reviews each executive’s total compensation, including base salary,
annual cash incentive compensation, stock option awards, restricted stock
awards, awards under the LTIP, unrealized stock option award gains, perquisites
and defined contribution plan holdings (including the amounts contributed to
such plans by the Company), as well as such executive’s Capital Stock holdings,
in recommending or setting, as applicable, each element of
compensation. The Compensation Committee balances the types of
compensation for each executive between fixed compensation and performance-based
compensation in such a way that less robust Company performance will result in a
lower total compensation to the executive. For example, compensation levels in
2008 were generally lower than in 2007 due to the achievement in 2007 of EBITDA
and share price targets that resulted in awards pursuant to the LTIP while there
was no such achievement or awards in 2008. In 2008, the total
compensation, as set forth in the Summary Compensation Table, of all the named
executive officers was lower by the following amounts: Mr. McNamara -
7.9%; Mr. Williams - 10.4%; Mr. O’Toole - 19.6%; Mr. Lee - 28.5%; and Mr. Tucker
- 20.5%.
In July 2008, the Compensation
Committee reviewed a market study prepared by Compensation Strategies, Inc. to
determine if the levels and types of compensation paid by the Company to its
management are appropriate in comparison with a peer group of companies and in
the broader market. The Compensation Committee was previously relying
on a market study of compensation prepared in December 2004. The
companies considered to be part of the peer group in the 2008 study
were:
Odyssey Healthcare Inc.
Emeritus Corp.
Healthcare Services Group
Healthways Inc.
Skilled Healthcare Group
Inc.
Amedisys Inc.
Integrated Electrical
Services
Rollins
Inc.
Comfort Systems USA Inc.
Gentiva Health Services
Inc.
Sun Healthcare Group Inc.
Lincare Holdings Inc.
Apria Healthcare Group
Inc.
ABM Industries Inc.
Kindred Healthcare Inc.
Ecolab Inc.
Compensation Strategies, Inc. used
regression analysis to normalize the data on annual revenues of the peer
companies relative to the Company’s annual revenues to ensure
comparability. The market study showed that base salaries at the
Company were comparable to the median level of base salaries for the peer group,
and incentive compensation, which is based on Company performance, was above the
median level. After studying the survey, the Compensation Committee
determined that the level and balance of the Company’s compensation between
fixed and variable incentive compensation were appropriate considering the
relative performance of the Company as compared with the peer
group.
Base Salaries
Base salaries of executives are
reviewed generally by the Compensation Committee every 14 months. In
determining the base salaries it recommends to the non-employee members of the
Board, the Compensation Committee considers recommendations by certain senior
executives of the Company, except with respect to the Chief Executive Officer,
for whom the Compensation Committee makes its determination without the input of
Company employees. In so doing, it considers each executive’s
then-current base salary and total incentive compensation and evaluates the
responsibilities held by each executive, and his or her experience and
performance. Additionally, Compensation Strategies, Inc. has
periodically reviewed base salaries and provided advice to the Compensation
Committee through the peer group studies discussed above. The
Compensation Committee recommends base salaries at levels it believes will
attract and retain qualified executives. In 2008, the annual base
salary received by the named executive officers was increased as
follows: Mr. McNamara - 7.0%; Mr. Williams - 14.7%; Mr. O’Toole -
3.5%; Mr. Lee - 5.1%; and Mr. Tucker - 5.3%.
Annual Cash Incentives
Amounts of annual cash incentive
compensation are recommended by the Compensation Committee to the non-employee
members of the Board based on recommendations by certain senior executives of
the Company, except with respect to the Chief Executive Officer, for whom the
Compensation Committee makes its recommendation without the input of Company
employees. In arriving at annual cash incentive compensation amounts
to recommend, the Compensation Committee endeavors to reward executives whose
performance enhances the operating results of their business unit and of the
Company as a whole. Senior executives’ awards of annual cash
incentive compensation are discretionary and based on the Compensation
Committee’s evaluation of individual, business unit and Company performance
rather than as a set target amount. The Compensation Committee
believes this structure provides a significant incentive for achieving superior
operating performance. The Company’s operating results as compared
with historical results and the performance of relevant competitors (including
the peer group companies listed above) are prinary considerations in determining
annual cash incentive compensation. Sales and earnings growth,
profitability, cash flow
and return on investment are important performance measures in establishing
annual cash incentive compensation amounts. For example, in
establishing annual cash incentive compensation for the executive, management
and senior staff personnel, the Compensation Committee reviewed 2008 profit
performance as compared with both 2006 and 2007 results as one of its primary
criteria. Diluted earnings per share from continuing operations,
excluding early extinguishment of debt and other special items (“Adjusted EPS”),
is one of the metrics considered by the Compensation
Committee.
Long-Term Incentives
The
Compensation Committee grants long-term incentive compensation pursuant to the
Stock Incentive Plans and the LTIP. While long-term incentive
compensation may be paid under the Stock Incentive Plans in the form of stock
option awards and restricted and fully vested stock awards, currently all of the
long-term incentive awards granted pursuant to such plans are in the form of
stock option or restricted stock awards. LTIP awards may be made in
the form of cash and restricted and fully vested stock awards; however,
currently only restricted and fully vested awards are granted under the
LTIP. In granting long-term incentives in the form of stock option
awards, restricted stock awards and LTIP awards, the Compensation Committee
considers as recipients employees who have demonstrated capacity for
contributing to the Company’s goals. In all cases, the long-term
equity awards are intended to encourage employees to act as owners of the
business, further aligning their interests with those of
stockholders.
The Compensation Committee grants stock
option awards with an exercise price at no less than 100% of fair market value
of Capital Stock on the date granted. Historically, the vesting
schedule of stock option awards varied from immediately exercisable to four
annual installments commencing six months after the date an award was
granted. Since 2006, stock option awards vest ratably over three
years, thus providing value to the Company’s employees only if the share price
increases after the date such awards were granted and the employees remain
employed for a significant period of time. Restricted stock awards
generally cliff vest on the fourth anniversary of the date granted, again with
the intent of retaining employees for a significant period of time, and carry
with them voting and dividend rights.
Historically, the Compensation
Committee generally granted stock option awards to executives and non-executive
employees at the annual meeting of the Board of Directors in
May. Beginning in 2009, such annual stock option awards are granted
in February in order to allow the Compensation Committee to consider long-term
incentive awards at the same time that it considers annual incentive
awards. Both long-term incentive awards and annual incentive awards
are granted based on the Compensation Committee’s evaluation of an employee’s
performance during the prior year. The stock option and stock awards
are not granted so as to “time” them before the release of material nonpublic
information that is likely to result in an increase in share price
(“spring-loading”) or delay them until after the release of material nonpublic
information that is likely to result in a decrease in share price
(“bullet-dodging”). The Company does not reprice stock option awards
or replace them if the share price declines after the date such stock option
awards were granted.
The Compensation Committee grants a
greater proportionate amount of stock option and stock awards to those
executives with greater positions of responsibility. The Compensation
Committee considers each employee’s current stock option awards and Capital
Stock holdings and previous stock option and stock awards in granting long-term
equity awards. Other factors considered by the Compensation Committee
in granting stock option and stock awards include base salaries, annual cash
incentive compensation, operating results of the business units and the Company
as a whole, dilutive effects of stock option and stock awards and valuation of
stock option awards under the Black-Scholes valuation method.
In May 2002, the stockholders of the
Company approved the adoption of the LTIP, which covers officers and key
employees of the Company. It was intended to replace the Company’s
restricted stock program under which restricted stock awards were granted which
vested over a period of four or five years. The LTIP is administered
by the Compensation Committee.
Since 2002, the Compensation Committee
has adopted LTIP guidelines that cover the granting of awards based on operating
performance and attainment of target share prices. Each period for
establishing a set of targets for operating performance and share prices is
called a Plan Period, and Plan Periods overlap due to the staggered timing of
the set targets. The third Plan Period began in May 2006 and will expire in
December 2010. The LTIP provides for grants of cash awards and
restricted and fully vested stock awards based on the achievement of certain
targets. However, currently only restricted and fully vested
stock awards are granted, and they are granted in the following
circumstances:
|
-
|
80,000
shares of Capital Stock in the aggregate are to be granted to the
participants in the LTIP if the Company’s cumulative pro forma adjusted
EBITDA reaches $465 million between January 1, 2007 and December 31, 2009,
or if it reaches $604 million between January 1, 2007 and December 31,
2010. The Company discloses pro forma adjusted EBITDA in its
quarterly earnings releases.
|
|
-
|
80,000
shares of Capital Stock in the aggregate are to be granted to the
participants in the LTIP if the share price reaches the following targets
during any 30 trading days out of any 60-day trading period between May
15, 2006 and May 14,
2009:
|
|
-
|
20,000
shares of Capital Stock at $62.00;
|
|
-
|
30,000
shares of Capital Stock at $68.00;
|
|
-
|
30,000
shares of Capital Stock at
$75.00.
|
In addition, the Compensation Committee
maintains discretion with regard to the granting of an additional 25,000 shares
of Capital Stock in the aggregate to the participants in the LTIP under the
current LTIP guidelines.
If the operating performance and share
price targets are met, the Compensation Committee determines the number
of stock awards to be granted to each participant, other than the Chief
Executive Officer, based on the recommendations of certain senior executives of
the Company. The number of stock awards to be granted to the
Chief Executive Officer is determined by the Compensation Committee without the
input of Company employees.
In March 2007, the Compensation Committee granted 100,000 shares of fully vested
Capital Stock in the aggregate to the participants in the LTIP upon attainment
of a cumulative pro forma adjusted EBITDA target of $365 million under the
second Plan Period of the LTIP, covering the period of 2004 to
2007. The shares of Capital Stock granted included an aggregate of
88,000 shares designated for granting upon achievement of the EBITDA performance
target and an aggregate of 12,000 shares granted pursuant to the discretion of
the Compensation Committee for the second Plan Period of the LTIP.
In June 2007, the Compensation
Committee granted 22,200 shares of fully vested Capital Stock in the aggregate
to the participants in the LTIP upon attainment of the $62.00 share price target
under the third Plan Period of the LTIP. The
shares of Capital Stock granted included an aggregate of 20,000 shares
designated for granting upon achievement of the share price target and an
aggregate of 2,200 shares granted pursuant to the discretion of the Compensation
Committee for the third Plan Period.
Neither the cumulative pro forma
adjusted EBITDA target nor the share price targets were attained during
2008. Accordingly, no awards were granted under the LTIP in
2008.
Annual
Incentive Compensation from 2006 to 2008
The
following table summarizes the percentage change in earnings per share and
average annual incentive compensation, including cash and stock option and stock
awards, for the Company’s executive, management and senior staff personnel for
the period from 2006 to 2008.
|
|
Avg.
Annual
%
Variance
|
|
|
2007 vs.
2006
|
2008 vs.
2007
|
2006 -
2008
|
Reported
Diluted EPS
|
15.7%
|
23.2%
|
19.4%
|
Adjusted
EPS
|
60.5
|
5.3
|
30.0
|
Annual
Incentive Compensation
|
60.2
|
(3.5)
|
24.4
|
Annual
incentive compensation for the executive, management and senior staff personnel
increased 24.4% on an average annual basis from 2006 to
2008. Adjusted EPS for the same period increased 30.0% on an average
annual basis. For the one-year period from 2006 to 2007, Adjusted EPS
increased 60.5% and annual incentive compensation increased a commensurate 60.2%
on average for that period. For the one-year period from 2007 to
2008, Adjusted EPS increased a relatively low 5.3% and annual incentive
compensation declined 3.5% on average for that period as a
result. The Compensation Committee intends for incentive compensation
to be set at levels reflective of the operating results of the Company as a
whole and its individual subsidiaries in order to achieve its
pay-for-performance goal and, ultimately, provide greater rewards for stronger
performance of the Company. For example, in 2008, net income
for the Roto-Rooter group declined 15.3% while net income for the VITAS group
increased 5.3%. As a result, for 2008, management recommended a 17.0%
decrease from 2007 annual incentive compensation for Company employees in the
Roto-Rooter group and a 1.0% increase from 2007 annual incentive compensation
for Company employees in the VITAS group.
Perquisites
The Company’s executive compensation
program offers perquisites that are commonly available to senior executives, the
nature and amounts of which are detailed in the All Other Compensation
Table.
Retirement Benefits
The Company maintains the Retirement
Plan, a tax-qualified defined contribution plan, for the benefit of its
employees, including the named executive officers. The Retirement
Plan permits employees to contribute a portion of their pay to the plan on a
pre-tax basis. The Company also provides a matching contribution to
employees who contribute to the plan. The named executive officers participate
in the Retirement Plan within the limits imposed by the Internal Revenue Code
(the “Code”) and the Employee Retirement Income Security Act
(“ERISA”).
The Company also maintains the Excess
Benefit Plan and the Deferred Compensation Plan, which are non-qualified
supplemental savings plans for key employees, including the named executive
officers, whose participation in the Retirement Plan is limited by the Code and
ERISA. Messrs. McNamara, Williams, O’Toole and Tucker participate in
the Excess Benefit Plan, and Mr. Lee participates in the Deferred Compensation
Plan. These plans allow participants to defer up to 50% of their base
salary and up to 85% of their annual cash incentive compensation and income from
stock awards and provide a matching contribution from the
Company. Participants select mutual funds as investments, and amounts
deferred and credited to participant accounts under the plans are credited with
earnings or losses depending on the performance of the selected mutual
funds. Participants may receive the amounts credited to their
accounts at retirement, termination of employment or on a specific date
following termination or retirement and may also elect to receive a portion of
each year’s deferral and earnings on a specific date prior to retirement or
termination of employment. Participants may receive such amounts in a
lump-sum payment or in installment payments.
Each of the named executive officers
also participates in the Supplemental Pension Plan, which provides certain key
employees with a supplemental pension and optional life insurance
benefit. The Company accrues a fixed monthly contribution to each
participant’s account under this plan, and participants’ accounts are credited
with monthly earnings based on an annual interest rate. Participants
have the option to use a portion of this Company contribution to purchase
supplemental term life insurance. Mr. Tucker also participates in the
1986 Severance Plan, which is an unfunded defined contribution plan in which Mr.
Tucker’s account is credited with certain Company contributions that will pay
out upon his death or termination of employment.
Tax Considerations
U.S. federal income tax law prohibits
the Company from taking a deduction for compensation paid to its covered
executive officers over $1,000,000 per executive per year, but exempts certain
performance-based compensation. The Compensation Committee considers
tax regulations in structuring compensation arrangements to achieve
deductibility, except where outweighed by the need for flexibility, or as the
Company otherwise determines is in the best interests of the Company and its
stockholders.
Employment
Agreements; Severance Payments; Change in Control
The Company has employment agreements
with three of its named executive officers: Messrs. McNamara,
Williams and O’Toole. On May 3, 2008 (prior to the 2008 Annual
Meeting of Stockholders), Mr. McNamara entered into a two-year employment
agreement, which will
automatically renew every May 3 beginning May 3, 2010 for a one-year term unless
either party provides 30 days’ prior written notice of
non-renewal. Mr. McNamara’s employment agreement provides for a
lump-sum severance payment, in the event of termination without cause, equal to
five times his then-current base salary plus a pro-rated portion of his average
annual incentive compensation for the then-past three full fiscal
years. In the event of termination without cause, he also would be
entitled to continue to participate in the Company’s welfare benefit plans for
24 months following termination at the then-current rate of
contribution. The employment agreements with Messrs. Williams and
O’Toole, entered into in December 2006 and May 2007, respectively, contain the
same terms as outlined above for Mr. McNamara, except that each of Messrs.
Williams and O’Toole would be entitled to a lump-sum severance payment equal to
two and a half times his then-current base salary and continued participation in
the Company’s welfare benefit plans for 18 months following termination at the
then-current rate of contribution. Such severance payments and
benefits are conditioned upon execution of a general release of claims in favor
of the Company, nondisclosure and, for Mr. McNamara, two-year non-compete and
non-solicitation covenants and, for Messrs. Williams and O’Toole, one-year
non-compete and non-solicitation covenants. If these payments were
subject to the excise taxes imposed by Section 409A of the Code, Messrs.
McNamara, Williams and O’Toole would be entitled to gross-up
payments. The Company does not intend to enter into future employment
agreements that provide for excise tax gross-ups.
For a
termination due to death, disability or retirement, each of Messrs. McNamara,
Williams and O’Toole would be entitled under his employment agreement to a
lump-sum payment equal to the pro-rated portion of the average of his annual
incentive compensation for the then-past three full fiscal
years. Such severance payments under each employment agreement for a
termination due to disability or retirement are conditioned upon execution of a
general release of claims in favor of the Company and a nondisclosure
covenant.
In 2006, the Board of Directors adopted
the Chemed Corporation Senior Executive Severance Policy (as amended,
supplemented or otherwise modified as of the date hereof, the “Senior Executive
Severance Policy”) and the Chemed Corporation Change in Control Severance Plan
(as amended, supplemented or otherwise modified as of the date hereof, the
“Change in Control Plan”), which were intended to replace most of the existing
employment agreements entered into by the Company. Accordingly,
rather than enter into new employment agreements with 12 Company executives,
including Messrs. Lee and Tucker, whose employment agreements had expired or
were about to expire, such executives’ severance and change in control benefits
are now governed by the Senior Executive Severance Policy and the Change in
Control Plan. Messrs. McNamara, Williams and O’Toole are not covered
by the Senior Executive Severance Policy, but are covered by the Change in
Control Plan. However, in the event of a change in control of the
Company, Messrs. McNamara, Williams and O’Toole would not receive benefits under
both their employment agreements and the Change in Control Plan. With
the shift from individual employment agreements to general severance and change
in control plans, the Compensation Committee intended to reduce total payouts to
executives upon termination and move the Company’s executive severance
arrangements more in line with market practices.
Under the Senior Executive Severance
Policy, if an executive is terminated without cause, he or she would be entitled
to a lump-sum payment equal to one and a half times his or her then-current base
salary and a pro-rated portion of his or her average annual incentive
compensation for the then-past three full fiscal years. Such
executive would also be entitled to continued participation in the Company’s
welfare benefit plans for one year following termination of employment at the
then-current rate of contribution. Severance payments and benefits
under the Senior Executive Severance Policy are conditioned upon execution of a
general release of claims in favor of the Company. Additionally, for
a termination without cause or due to disability or retirement, such severance
payments and benefits are conditioned upon nondisclosure and one-year
non-compete and non-solicitation covenants. If payments under the
Senior Executive Severance Policy were subject to the excise taxes imposed by
Section 409A of the Code, participants would be entitled to gross-up
payments. In the event of a change in control of the Company,
participants in the Senior Executive Severance Policy would not receive benefits
under both the Senior Executive Severance Policy and the Change in Control
Plan. For a termination due to death, disability or retirement, each
of the participants in the Senior Executive Severance Policy would be entitled
to a lump-sum payment equal to the pro-rated portion of the average of his or
her annual incentive compensation for the then-past three full fiscal
years.
The Change in Control Plan, described
in additional detail under the “Change in Control of the Company” heading below,
provides for severance payments and benefits in the event of a change in control
of the Company followed
within two years by an executive’s termination of employment either without
cause or for good reason (“double trigger”). Payments under the Change in
Control Plan are triggered by:
|
a)
|
termination
of employment by the Company without cause;
or
|
|
b)
|
termination
of employment by the employee within 90 days of an event giving him or her
good reason to so terminate.
|
The Change in Control Plan would
provide for payments equal to three times the sum of (a) the highest base salary
during the 120-day period prior to the change in control or any time following
the change in control and (b) the average annual incentive compensation for the
then-past three full fiscal years to Messrs. McNamara, Williams and O’Toole, and
two times the sum of (a) the highest base salary during the 120-day period prior
to the change in control or any time following the change in control and (b) the
average annual incentive compensation for the then-past three full fiscal years
to the other participants, all paid in cash in a lump sum within 10 days
following termination. If the termination were to take place in a
fiscal year other than the fiscal year during which the change in control
occurred, each participant would also receive a pro-rated portion of his or her
three-year average annual incentive compensation. Participants would
also receive benefits under the Company’s welfare benefit plans for a period of
three (for Messrs. McNamara, Williams and O’Toole) or two years; a lump-sum cash
payment within 10 days following termination in the amount of employer
contributions to defined contribution plans; perquisites for a period of three
(for Messrs. McNamara, Williams and O’Toole) or two years; and outplacement
assistance up to $25,000. Regardless of whether a participant is
terminated and in addition to the severance benefits set forth above, upon a
change in control, each participant in the Change in Control Plan would receive,
within 10 days following the change in control, a lump-sum cash payment equal to
the average of the participant’s annual incentive compensation for the then-past
three full fiscal years, all unvested portions of stock option and restricted
stock awards would vest in full and the Compensation Committee would allocate
and distribute any shares of Capital Stock then unallocated under the Company’s
equity-based plans (such benefits, “single-trigger”
payments). Payments under the Change in Control Plan, including
single-trigger payments, are conditioned on execution of a general release of
claims in favor of the Company. If payments under the Change in
Control Plan were subject to taxes imposed by Sections 4999 or 409A of the Code,
participants would be entitled to gross-up payments.
Capital
Stock Ownership Guidelines
Executive ownership of Capital Stock
reflects an alignment of the interests of the Company’s executives and directors
with those of its stockholders. All the Company’s non-employee
directors, Vice Presidents, Senior Vice Presidents, Executive Vice Presidents,
Business Unit Presidents and its Chief Executive Officer are required to acquire
and retain a multiple of their base salary or board retainer in shares of
Capital Stock.
The Chief Executive Officer’s required
Capital Stock ownership multiple is five times base salary; for the Chief
Financial Officer, Executive Vice Presidents and Business Unit Presidents, four
times; for Senior Vice Presidents, three times; and for Vice Presidents, two
times base salary. Time-based restricted stock awards count towards
Capital Stock ownership goals. Non-employee directors are required to
retain five times their annual board retainer, which is $20,000, resulting in
required holdings of $100,000 in 2008. These guidelines are
administered by the Compensation Committee. Mr. McNamara currently
holds shares of Capital Stock with a market value of approximately 11 times his
current base salary. All named executive officers have met their
Capital Stock ownership guidelines, and all other executives and directors
subject to the guidelines have either met their ownership requirements or are
pursuing plans that will permit them to achieve them within the time frame
allotted by the guidelines.
Compensation
Committee Report
The Compensation Committee has reviewed
and discussed the Compensation Discussion and Analysis set forth above with the
Company’s management. Based on these reviews and discussions the
Compensation Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in the Company’s 2008 Annual
Report on Form 10-K and the Company’s 2009 Proxy Statement:
George J.
Walsh III, Chairman
Andrea R.
Lindell
Frank E.
Wood
Summary
Compensation Table
The following table shows the
compensation paid to the Chief Executive Officer, the Chief Financial Officer
and the three other most highly compensated executive officers of the Company in
2006, 2007 and 2008 for all services rendered in all capacities to the Company
and its subsidiaries:
SUMMARY
COMPENSATION TABLE
Name
and
Principal
Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)(a)
|
|
|
Option
Awards
($)(a)
|
|
|
Non-Qualified
Deferred Compensation Earnings
($)(b)
|
|
|
All
Other
Compensation
($)(c)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
K.
J. McNamara
|
|
2008
|
|
$ |
713,333 |
|
|
$ |
1,450,000 |
|
|
$ |
458,625 |
|
|
$ |
1,513,716 |
|
|
$ |
2,819 |
|
|
$ |
494,744 |
|
|
$ |
4,633,237 |
|
President
and
|
|
2007
|
|
|
666,667 |
|
|
|
1,350,000 |
|
|
|
1,553,684 |
|
|
|
955,518 |
|
|
|
1,791 |
|
|
|
502,589 |
|
|
|
5,030,249 |
|
CEO
|
|
2006
|
|
|
625,000 |
|
|
|
900,000 |
|
|
|
258,875 |
|
|
|
225,871 |
|
|
|
1,372 |
|
|
|
368,434 |
|
|
|
2,379,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D.
P. Williams
|
|
2008
|
|
|
385,167 |
|
|
|
550,000 |
|
|
|
170,566 |
|
|
|
666,862 |
|
|
|
1,303 |
|
|
|
187,809 |
|
|
|
1,961,707 |
|
Executive
Vice
|
|
2007
|
|
|
335,667 |
|
|
|
475,000 |
|
|
|
748,308 |
|
|
|
422,655 |
|
|
|
827 |
|
|
|
205,788 |
|
|
|
2,188,245 |
|
President
and
|
|
2006
|
|
|
296,750 |
|
|
|
240,000 |
|
|
|
72,138 |
|
|
|
84,706 |
|
|
|
634 |
|
|
|
102,904 |
|
|
|
797,132 |
|
CFO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.
S. O’Toole
|
|
2008
|
|
|
529,167 |
|
|
|
365,000 |
|
|
|
196,923 |
|
|
|
409,100 |
|
|
|
2,484 |
|
|
|
242,393 |
|
|
|
1,745,067 |
|
Executive
Vice
|
|
2007
|
|
|
511,333 |
|
|
|
350,000 |
|
|
|
805,954 |
|
|
|
268,249 |
|
|
|
1,575 |
|
|
|
234,398 |
|
|
|
2,171,509 |
|
President
|
|
2006
|
|
|
435,750 |
|
|
|
225,000 |
|
|
|
101,154 |
|
|
|
84,706 |
|
|
|
1,209 |
|
|
|
187,457 |
|
|
|
1,035,276 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S.
S. Lee
|
|
2008
|
|
|
288,000 |
|
|
|
245,000 |
|
|
|
86,749 |
|
|
|
314,174 |
|
|
|
1,280 |
|
|
|
236,916 |
|
|
|
1,172,119 |
|
Executive
Vice
|
|
2007
|
|
|
274,000 |
|
|
|
314,000 |
|
|
|
575,235 |
|
|
|
207,999 |
|
|
|
812 |
|
|
|
266,857 |
|
|
|
1,638,903 |
|
President
|
|
2006
|
|
|
263,875 |
|
|
|
245,000 |
|
|
|
27,564 |
|
|
|
56,458 |
|
|
|
623 |
|
|
|
157,281 |
|
|
|
750,801 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A.
V. Tucker, Jr.
|
|
2008
|
|
|
183,583 |
|
|
|
166,000 |
|
|
|
86,961 |
|
|
|
281,327 |
|
|
|
803 |
|
|
|
81,251 |
|
|
|
799,925 |
|
Vice
President
|
|
2007
|
|
|
174,417 |
|
|
|
141,000 |
|
|
|
399,943 |
|
|
|
180,802 |
|
|
|
498 |
|
|
|
109,453 |
|
|
|
1,006,113 |
|
and
Controller
|
|
2006
|
|
|
166,875 |
|
|
|
102,000 |
|
|
|
38,044 |
|
|
|
45,167 |
|
|
|
381 |
|
|
|
51,374 |
|
|
|
403,841 |
|
(a)
|
Amounts
represent the expense recognized for stock option and stock awards for the
fiscal year based on the fair value of such awards on the date
granted, as determined in accordance with SFAS 123(R). Stock awards for
Messrs. McNamara and O’Toole include $13,500 for their service as
directors. See Note 3 to the Consolidated Financial Statements included as
Exhibit 13 to the Company’s 2008 Annual Report on Form 10-K for a
description of the assumptions used in determining the fair value on the
date of award.
|
(b)
|
Amounts
represent interest earnings on balances in each named executive officer’s
account under the Supplemental Pension Plan and also, for Mr. Tucker, the
1986 Severance Plan, that are in excess of 120% of the long-term
applicable federal rate as in effect in July 2008.
|
(c)
|
See
“—All
Other Compensation Table” for
details.
|
ALL
OTHER COMPENSATION TABLE
The table below describes each
component of the All Other Compensation column in the Summary Compensation
Table:
|
|
K.J.
McNamara
|
|
|
D.P.
Williams
|
|
|
T.S.
O’Toole
|
|
|
S.S.
Lee
|
|
|
A.V.
Tucker,
Jr.
|
|
Company
contributions to non-qualified deferred compensation plans
(a)
|
|
$ |
368,766 |
|
|
$ |
152,089 |
|
|
$ |
162,866 |
|
|
$ |
137,791 |
|
|
$ |
58,883 |
|
Personal
use of Company aircraft (b)
|
|
|
61,444 |
|
|
|
4,824 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Company
contributions to unfunded supplemental retirement plans
(c)
|
|
|
26,356 |
|
|
|
12,185 |
|
|
|
23,218 |
|
|
|
11,965 |
|
|
|
7,003 |
|
Tax
gross-up on personal use of Company aircraft (d)
|
|
|
14,873 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Personal
use of Company apartment
|
|
|
7,500 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
385 |
|
Company
contribution to 401(k) plan
|
|
|
6,900 |
|
|
|
6,900 |
|
|
|
6,900 |
|
|
|
6,900 |
|
|
|
6,900 |
|
Long-term
care insurance
|
|
|
5,746 |
|
|
|
6,412 |
|
|
|
4,050 |
|
|
|
6,124 |
|
|
|
4,808 |
|
Term
life insurance
|
|
|
3,159 |
|
|
|
2,736 |
|
|
|
3,209 |
|
|
|
1,584 |
|
|
|
2,522 |
|
Personal
use of Company golf club membership
|
|
|
- |
|
|
|
2,663 |
|
|
|
- |
|
|
|
5,342 |
|
|
|
- |
|
Relocation
expenses
|
|
|
- |
|
|
|
- |
|
|
|
42,150 |
|
|
|
- |
|
|
|
- |
|
Payment
of certain housing costs
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
63,695 |
|
|
|
- |
|
Supplemental
life insurance
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,515 |
|
|
|
750 |
|
Total
|
|
$ |
494,744 |
|
|
$ |
187,809 |
|
|
$ |
242,393 |
|
|
$ |
236,916 |
|
|
$ |
81,251 |
|
(a)
|
Represents
Company contributions in 2008 to the Excess Benefit Plan on behalf of each
of Messrs. McNamara, Williams, O’Toole and Tucker and to the Deferred
Compensation Plan on behalf of Mr. Lee.
|
(b)
|
The
value of the use of the Company aircraft was determined by multiplying the
number of flight hours used by the named executive officer by the average
variable cost per hour of operating the aircraft in 2008, which includes
the cost of fuel, repairs and maintenance.
|
(c)
|
Represents
the amount credited in 2008 to each named executive officer’s account
under the Supplemental Pension Plan and also, for Mr. Tucker, under the
1986 Severance Plan.
|
(d)
|
Beginning
in 2009, the Company no longer reimburses for income taxes on personal use
of the Company aircraft.
|
Grants
of Plan-Based Awards
The following table shows stock option
and stock awards granted in 2008 to the named executive officers in the Summary
Compensation Table pursuant to the Stock Incentive Plans.
GRANTS
OF PLAN-BASED AWARDS IN 2008
Name
|
|
Grant
Date
(a)
|
|
All
Other
Stock
Awards:
Number
of
Shares
of
Stock
or
Units
(#)
|
|
|
All
Other
Option
Awards:
Number
of
Securities
Underlying
Options
(#)
|
|
|
Exercise
Or
Base Price
Of
Option
Awards
($/Share)
(b)
|
|
|
Closing
Market
Price
On
Grant
Date
($/Share)
|
|
|
Grant
Date
Fair
Value
of
Award
($)(c)
|
|
K.
J. McNamara
|
|
2/13/2008
|
|
|
9,615 |
|
|
|
- |
|
|
n.a.
|
|
|
$ |
53.38 |
|
|
$ |
507,768 |
|
|
|
5/19/2008
|
|
|
400 |
|
|
|
- |
|
|
n.a.
|
|
|
|
34.01 |
|
|
|
13,500 |
|
|
|
5/19/2008
|
|
|
- |
|
|
|
100,000 |
|
|
$ |
33.75 |
|
|
|
34.01 |
|
|
|
1,117,600 |
|
D.
P. Williams
|
|
2/13/2008
|
|
|
3,900 |
|
|
|
- |
|
|
n.a.
|
|
|
|
53.38 |
|
|
|
205,959 |
|
|
|
5/19/2008
|
|
|
- |
|
|
|
35,000 |
|
|
$ |
33.75 |
|
|
|
34.01 |
|
|
|
391,160 |
|
T.
S. O’Toole
|
|
2/13/2008
|
|
|
5,000 |
|
|
|
- |
|
|
n.a.
|
|
|
|
53.38 |
|
|
|
264,050 |
|
|
|
5/19/2008
|
|
|
400 |
|
|
|
- |
|
|
n.a.
|
|
|
|
34.01 |
|
|
|
13,500 |
|
|
|
5/19/2008
|
|
|
|
|
|
|
32,500 |
|
|
$ |
33.75 |
|
|
|
34.01 |
|
|
|
363,220 |
|
S.
S. Lee
|
|
2/13/2008
|
|
|
1,500 |
|
|
|
- |
|
|
n.a.
|
|
|
|
53.38 |
|
|
|
79,215 |
|
|
|
5/19/2008
|
|
|
|
|
|
|
19,000 |
|
|
$ |
33.75 |
|
|
|
34.01 |
|
|
|
212,344 |
|
A.
V. Tucker, Jr.
|
|
2/13/2008
|
|
|
2,000 |
|
|
|
- |
|
|
n.a.
|
|
|
|
53.38 |
|
|
|
105,620 |
|
|
|
5/19/2008
|
|
|
- |
|
|
|
18,000 |
|
|
$ |
33.75 |
|
|
|
34.01 |
|
|
|
201,168 |
|
(a)
|
All
stock option and stock awards were granted pursuant to the 2006 Incentive
Plan.
|
(b)
|
The
exercise price of stock option awards is the average of the high and low
sale prices of the Capital Stock on the New York Stock Exchange on the
date such stock option awards were granted.
|
(c)
|
Amounts
represent the aggregate fair value of the awards on the date granted,
determined in accordance with SFAS 123(R). See Note 3 to the Consolidated
Financial Statements included as Exhibit 13 to the Company’s 2008 Annual
Report on Form 10-K for the assumptions used in determining the fair value
on the date granted.
|
Narrative
to Summary Compensation Table and Grants of Plan-Based Awards Table
The
following is a description of material factors necessary to understand the
information disclosed in the Summary Compensation Table, the All Other
Compensation Table and the Grant of Plan-Based Awards Table. This
discussion is meant to supplement the information contained in the Compensation
Discussion and Analysis.
Base
Salary and Annual Cash Incentive Compensation in Proportion to Total
Compensation
In 2008, the named executive officers’
base salaries and annual cash incentive compensation represented the following
approximate percentages of their total compensation: Mr. McNamara -
46.7%; Mr. Williams - 47.7% ; Mr. O’Toole - 51.2%; Mr. Lee - 45.5%; and Mr.
Tucker - 43.7%. The Compensation Committee believes that this mix of
compensation balances the objectives of rewarding recent results and motivating
long-term performance. Additionally, in determining the appropriate
combination of compensation, the Compensation Committee places an emphasis on
stock option and stock awards in order to closely align the executives’
interests with those of the Company’s stockholders and reward stronger
performance of the Company.
Employment
Agreements
The Company has employment agreements
with three of its named executive officers: Messrs. McNamara, Williams and
O’Toole. On May 3, 2008, Mr. McNamara entered into a two-year employment
agreement, which provides for his continued employment as a senior executive
officer of the Company through May 2, 2010. The agreement will
automatically renew on each subsequent May 3 for a one-year term unless either
party provides 30 days’ prior written notice of non-renewal. The
agreement provides for a base salary of $700,000 or such higher amount as the
Board of Directors may determine. Mr. McNamara’s current base salary
is $780,000. Mr. McNamara’s employment agreement provides for a
lump-sum severance payment, in the event of termination without cause, equal to
five times his then-current base salary plus a pro-rated portion of his average
annual incentive compensation for the then-past three full fiscal years. He also
will be entitled to continue to participate in the Company’s welfare benefit
plans for 24 months following termination at the then-current rate of
contribution. Such severance payments and benefits are conditioned upon
execution of a general release of claims in favor of the Company, nondisclosure
and two-year non-compete and non-solicitation covenants. If such payments were
subject to the excise taxes imposed by Section 409A of the Code, Mr. McNamara
would be entitled to gross-up payments.
Mr. Williams’s employment agreement,
entered into on December 1, 2006, provided for his employment as a senior
financial executive through November 30, 2008, after which time the term of the
agreement was automatically extended by one year and will be further extended by
one year on each subsequent December 1 unless either party provides 30 days’
prior written notice of non-renewal. The agreement provides for a base salary of
$313,500 or such higher amount as the Board of Directors may
determine. Mr. Williams’s current base salary is
$411,000. Mr. O’Toole’s employment agreement, entered into on May 6,
2007, provides for his employment as a senior executive of the Company through
May 5, 2009, after which time the term of the agreement will be automatically
extended by one year on each subsequent May 6 unless either party provides 30
days’ prior written notice of non-renewal. Neither the Company nor
Mr. O’Toole has given notice of non-renewal. Mr. O’Toole’s agreement
provides for a base salary of $504,500 or such higher amount as the Board of
Directors may determine. Mr. O’Toole’s current base salary is
$550,000.
Each of
Messrs. Williams’s and O’Toole’s agreements is identical in all material
respects to Mr. McNamara’s, except if he were terminated without cause, he would
(a) receive a lump-sum severance payment equal to two and a half times his
then-current base salary plus a pro-rated portion of his average annual
incentive compensation for the then-past three full fiscal years and (b) be
entitled to continue to participate in the Company’s welfare benefit plans for
18 months following termination at the then-current rate of
contribution. Such severance payments and benefits for Messrs.
Williams and O’Toole are conditioned upon execution of a general release of
claims in favor of the Company, nondisclosure and one-year non-compete and
non-solicitation covenants. If such payments were subject to the
excise taxes imposed by Section 409A of the Code, Messrs. Williams and O’Toole
would be entitled to gross-up payments.
The definition of “cause” under each of
the employment agreements is set forth below under the heading “—Termination
Without Cause Prior to and Not in Connection With a Change in Control of the
Company; Termination Due to Death, Disability or Retirement—Employment
Agreements.”
For a
termination due to death, disability or retirement, each of Messrs. McNamara,
Williams and O’Toole would be entitled under his employment agreement to a
lump-sum payment equal to the pro-rated portion of the average of his annual
incentive compensation for the then-past three full fiscal
years. Such severance payments under each employment agreement for a
termination due to disability or retirement are conditioned upon execution of a
general release of claims in favor of the Company and a nondisclosure
covenant.
A more detailed discussion of amounts
that would be payable to Messrs. McNamara, Williams and O’Toole upon termination
is set forth under the heading “—Potential Payments
to Executives Upon Termination or Change in Control”.
Annual
Cash Incentives
Annual cash incentive compensation is
granted at the discretion of the Compensation Committee, subject to approval by
the Board. For 2008, annual cash incentive compensation was awarded
to each of the named executive officers. The amount of the annual
cash incentive compensation awards are set forth in the “Bonus” column of the
Summary Compensation Table. A more detailed discussion of the
criteria that the Compensation Committee considered when recommending the amount
of the 2008 cash incentive compensation is set forth in the Compensation
Discussion and Analysis.
Stock
Incentive Plans
The Company has five Stock Incentive
Plans under which stock option awards to purchase shares of Capital Stock and
awards of restricted and fully vested stock may be granted to key employees: the
1999 Incentive Plan, the 1999 Long-Term Incentive Plan, the 2002 Incentive Plan,
the 2004 Incentive Plan and the 2006 Incentive Plan. The Company
currently grants stock option and restricted stock awards annually to key
employees, including the named executive officers, pursuant to the Stock
Incentive Plans.
All stock option awards granted under
these plans provide for a purchase price equal to the fair market value of the
Capital Stock at the date granted. Fair market value is defined as the mean
between the high
and low sales prices of a share of Capital Stock on the New York Stock
Exchange. Stock option awards granted under the Stock Incentive Plans
are non-qualified and, when vested, are exercisable for fully vested shares of
Capital Stock. Stock option awards granted in 2006, 2007 and 2008
will become exercisable in three equal installments on each of the first three
anniversaries of the date such awards were granted. Vested stock
option awards remain exercisable for three months following termination of the
holder’s employment, except for termination due to death, incapacity or
retirement, in which case vested stock option awards remain exercisable for 15
months following termination. Unvested stock option awards are
forfeited upon termination of employment for any reason. All unvested
stock option awards held by employees will accelerate and vest upon a change in
control of the Company.
Restricted stock awards may not be sold
or otherwise transferred until they vest. If the recipient’s
employment terminates due to death, disability or termination without cause, or
if there is a change in control of the Company, the restrictions on transfer
terminate. With respect to restricted stock awards granted in 2006
and thereafter,
upon the holder’s retirement, the restrictions will lapse as to a fraction of
the restricted stock equal to the length of time, in years, from the date such
awards were granted to the date of the holder’s retirement over the total number
of years over which the award would have vested. Otherwise,
restricted stock awards are forfeited upon the holder’s termination of
employment. Holders receive dividends on restricted stock and are
entitled to vote such stock, whether or not it has vested.
Long Term
Incentive Plan
In 2002, the stockholders approved the
LTIP, which provides for grants of cash awards and restricted and fully vested
stock awards to officers and key employees of the
Company. However, currently only restricted and fully vested
stock awards are granted under the LTIP. Based on guidelines
established by the Compensation Committee, the LTIP permits awards upon the
attainment of certain operating performance goals and target share
prices. However, the performance and share price goals were not
achieved in 2008, and therefore no awards were made pursuant to the LTIP in
2008. A more detailed discussion of the LTIP can be found in the Compensation
Discussion and Analysis.
Other
Plans
The named executive officers
participate in various plans that are generally available to the employees of
the Company, including the Retirement Plan, which is a tax-qualified defined
contribution plan, and the Company’s welfare benefit plans. In
addition, the Company has several non-qualified supplemental savings plans for
key employees (including each of the named executive officers) whose
participation in the Retirement Plan is limited by rules imposed by the Code and
ERISA. These non-qualified supplemental savings plans are discussed in greater
detail in the narrative that follows the Nonqualified Deferred Compensation
Table. The contributions of the Company which were credited into
these plans in 2008 on behalf of each of the named executive officers are set
forth in the Nonqualified Deferred Compensation Table.
Eligible employees, including each of
the named executive officers, also participate in the Supplemental Pension
Plan. Mr. Tucker also accrues a benefit under the 1986 Severance
Plan. The Supplemental Pension Plan and 1986 Severance Plan are supplemental
defined contribution plans and are discussed in greater detail in the narrative
that follows the Nonqualified Deferred Compensation Table. Each named
executive officer’s accrual of benefits under these plans for 2008 is set forth
in the Nonqualified Deferred Compensation Table.
Outstanding
Equity Awards at Year End
The following table shows outstanding
equity awards at 2008 year end held by the named executive officers in the
Summary Compensation Table:
OUTSTANDING
EQUITY AWARDS AT YEAR END 2008
|
|
Option
Awards
|
|
Stock
Awards
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number
of
Shares
or Units
of
Stock
That
Have
Not
Vested
(#)
|
|
|
Market
Value
of
Shares
or
Units of
Stock
That
Have Not
Vested
(h)
($)
|
|
K.
J. McNamara
|
|
|
36,000 |
|
|
|
- |
|
|
$ |
17.93 |
|
5/19/2013
|
|
|
- |
|
|
$ |
- |
|
|
|
|
100,000 |
|
|
|
- |
|
|
|
21.78 |
|
5/17/2014
|
|
|
- |
|
|
|
- |
|
|
|
|
70,000 |
|
|
|
- |
|
|
|
38.13 |
|
3/11/2015
|
|
|
- |
|
|
|
- |
|
|
|
|
46,666 |
|
|
|
23,334 |
(a) |
|
|
51.76 |
|
6/28/2016
|
|
|
- |
|
|
|
- |
|
|
|
|
33,333 |
|
|
|
66,667 |
(b) |
|
|
67.96 |
|
5/21/2017
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
100,000 |
(c) |
|
|
33.75 |
|
5/19/2018
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
n.a.
|
|
|
8,000 |
(d) |
|
|
318,160 |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
n.a.
|
|
|
8,000 |
(e) |
|
|
318,160 |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
n.a.
|
|
|
8,500 |
(f) |
|
|
338,045 |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
n.a.
|
|
|
9,615 |
(g) |
|
|
382,389 |
|
D.
P. Williams
|
|
|
40,000 |
|
|
|
- |
|
|
|
21.78 |
|
5/17/2014
|
|
|
- |
|
|
|
- |
|
|
|
|
25,000 |
|
|
|
- |
|
|
|
38.13 |
|
3/11/2015
|
|
|
- |
|
|
|
- |
|
|
|
|
17,500 |
|
|
|
8,750 |
(a) |
|
|
51.76 |
|
6/28/2016
|
|
|
- |
|
|
|
- |
|
|
|
|
16,666 |
|
|
|
33,334 |
(b) |
|
|
67.96 |
|
5/21/2017
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
35,000 |
(c) |
|
|
33.75 |
|
5/19/2018
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
n.a.
|
|
|
3,250 |
(e) |
|
|
129,253 |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
n.a.
|
|
|
4,500 |
(f) |
|
|
178,965 |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
n.a.
|
|
|
3,900 |
(g) |
|
|
155,103 |
|
T.
S. O’Toole
|
|
|
17,500 |
|
|
|
8,750 |
(a) |
|
|
51.76 |
|
6/28/2016
|
|
|
- |
|
|
|
- |
|
|
|
|
6,666 |
|
|
|
13,334 |
(b) |
|
|
67.96 |
|
5/21/2017
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
32,500 |
(c) |
|
|
33.75 |
|
5/19/2018
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
n.a.
|
|
|
3,250 |
(e) |
|
|
129,253 |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
n.a.
|
|
|
4,500 |
(f) |
|
|
178,965 |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
n.a.
|
|
|
5,000 |
(g) |
|
|
198,850 |
|
S.
S. Lee
|
|
|
19,000 |
|
|
|
- |
|
|
|
16.10 |
|
5/17/2009
|
|
|
- |
|
|
|
- |
|
|
|
|
28,000 |
|
|
|
- |
|
|
|
18.45 |
|
5/20/2012
|
|
|
- |
|
|
|
- |
|
|
|
|
30,000 |
|
|
|
- |
|
|
|
17.93 |
|
5/19/2013
|
|
|
- |
|
|
|
- |
|
|
|
|
34,000 |
|
|
|
- |
|
|
|
21.78 |
|
5/17/2014
|
|
|
- |
|
|
|
- |
|
|
|
|
17,000 |
|
|
|
- |
|
|
|
38.13 |
|
3/11/2015
|
|
|
- |
|
|
|
- |
|
|
|
|
11,666 |
|
|
|
5,834 |
(a) |
|
|
51.76 |
|
6/28/2016
|
|
|
- |
|
|
|
- |
|
|
|
|
6,333 |
|
|
|
12,667 |
(b) |
|
|
67.96 |
|
5/21/2017
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
19,000 |
(c) |
|
|
33.75 |
|
5/19/2018
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
n.a.
|
|
|
1,500 |
(i) |
|
|
59,655 |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
n.a.
|
|
|
3,000 |
(f) |
|
|
119,310 |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
n.a.
|
|
|
1,500 |
(g) |
|
|
59,655 |
|
A.
V. Tucker, Jr.
|
|
|
15,000 |
|
|
|
- |
|
|
|
21.78 |
|
5/17/2014
|
|
|
- |
|
|
|
- |
|
|
|
|
15,000 |
|
|
|
- |
|
|
|
38.13 |
|
3/11/2015
|
|
|
- |
|
|
|
- |
|
|
|
|
9,333 |
|
|
|
4,667 |
(a) |
|
|
51.76 |
|
6/28/2016
|
|
|
- |
|
|
|
- |
|
|
|
|
6,000 |
|
|
|
12,000 |
(b) |
|
|
67.96 |
|
5/21/2017
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
18,000 |
(c) |
|
|
33.75 |
|
5/19/2018
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
n.a.
|
|
|
1,500 |
(e) |
|
|
59,655 |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
n.a.
|
|
|
2,400 |
(f) |
|
|
95,448 |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
n.a.
|
|
|
2,000 |
(g) |
|
|
79,540 |
|
(a)
|
The
remaining unvested stock option awards will vest on June 28,
2009.
|
(b)
|
Half
of the remaining unvested stock option awards will vest on May 21, 2009,
and half of the remaining unvested stock option awards will vest on May
21, 2010.
|
(c)
|
One-third
of the unvested stock option awards will vest on May 19, 2009, one-third
will vest on May 19, 2010 and one-third will vest on May 19,
2011.
|
(d)
|
Award
vested in full on February 18,
2009.
|
(e)
|
Award
vests in full on February 9, 2010.
|
(f)
|
Award
vests in full on December 1, 2010.
|
(g) |
Award
vests in full on February 13, 2012. |
(h) |
Amounts
are based on the $39.77 closing price of the Capital Stock on December 31,
2008. |
(i) |
Award
vests in full on February 13,
2011.
|
Stock
Option Award Exercises and Stock Awards Vested
The table below shows information
concerning the exercise of stock option awards and vesting of restricted stock
awards during 2008 for the named executive officers in the Summary Compensation
Table:
OPTION
EXERCISES AND STOCK VESTED IN 2008
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
Name
|
|
Number
of
Shares
Acquired
on
Exercise
(#)
|
|
|
Value
Realized
on
Exercise
($)
|
|
|
Number
of
Shares
Acquired
on
Vesting
(#)
|
|
|
Value
Realized
on
Vesting
($)
|
|
K.
J. McNamara
|
|
|
40,400 |
|
|
$ |
922,576 |
|
|
|
10,800 |
|
|
$ |
594,236 |
|
D.
P. Williams
|
|
|
30,000 |
|
|
|
720,500 |
|
|
|
5,000 |
|
|
|
279,200 |
|
T.
S. O’Toole
|
|
|
- |
|
|
|
- |
|
|
|
6,400 |
|
|
|
348,540 |
|
S.
S. Lee
|
|
|
19,000 |
|
|
|
600,780 |
|
|
|
4,000 |
|
|
|
223,360 |
|
A.
V. Tucker, Jr.
|
|
|
32,000 |
|
|
|
831,730 |
|
|
|
3,000 |
|
|
|
167,520 |
|
Nonqualified
Defined Contribution and other Nonqualified Deferred Compensation
Plans
The table below shows information
concerning compensation deferred under the Excess Benefit Plan, the Deferred
Compensation Plan, the 1986 Severance Plan and the Supplemental Pension Plan
during 2008 by each of the named executive officers in the Summary Compensation
Table:
NONQUALIFIED
DEFERRED COMPENSATION IN 2008
Name
|
|
Executive
Contributions
in
Last FY
($)
|
|
|
Registrant
Contributions
in
Last FY
($)(a)
|
|
|
Aggregate
Earnings
in
Last FY
($)(b)
|
|
|
Aggregate
Balance
at
Last FYE
($)
|
|
K.
J. McNamara
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess Benefit
Plan
|
|
$ |
- |
|
|
$ |
368,766 |
|
|
$ |
(1,135,538 |
) |
|
$ |
3,033,537 |
|
Supplemental
Pension Plan
|
|
|
- |
|
|
|
26,356 |
|
|
|
8,613 |
|
|
|
139,738 |
|
D.
P. Williams
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess Benefit
Plan
|
|
|
- |
|
|
|
152,089 |
|
|
|
(199,766 |
) |
|
|
431,406 |
|
Supplemental
Pension Plan
|
|
|
- |
|
|
|
12,185 |
|
|
|
3,983 |
|
|
|
64,605 |
|
T.
S. O’Toole
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess Benefit
Plan
|
|
|
- |
|
|
|
162,866 |
|
|
|
(271,974 |
) |
|
|
1,597,946 |
|
Supplemental
Pension Plan
|
|
|
- |
|
|
|
23,218 |
|
|
|
7,588 |
|
|
|
123,101 |
|
S.
S. Lee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
Compensation Plan
|
|
|
22,865 |
|
|
|
137,791 |
|
|
|
(847,222 |
) |
|
|
1,605,397 |
|
Supplemental
Pension Plan
|
|
|
|
|
|
|
11,965 |
|
|
|
3,910 |
|
|
|
63,438 |
|
A.
V. Tucker, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess Benefit
Plan
|
|
|
- |
|
|
|
58,883 |
|
|
|
(139,481 |
) |
|
|
692,325 |
|
Supplemental
Pension Plan
|
|
|
- |
|
|
|
7,003 |
|
|
|
2,288 |
|
|
|
37,129 |
|
1986 Severance
Plan
|
|
|
- |
|
|
|
- |
|
|
|
242 |
|
|
|
3,640 |
|
(a)
|
The
Company’s contributions with respect to 2008 include amounts accrued at
December 31, 2008 and contributed in February 2009. The amounts
reflected herein are reported in the Summary Compensation Table for
2008.
|
|
|
(b) |
To
the extent that earnings reflected herein exceeded 120% of the long-term
applicable federal rate as in effectin July 2008, such earnings are
reported for 2008 in the Summary Compensation
Table. |
The
Excess Benefit Plan and the Deferred Compensation Plan
Each of the named executive officers
participates in either the Excess Benefit Plan or the Deferred Compensation Plan
(collectively, the “Plans”). The Plans are non-qualified supplemental
savings plans that allow participants to defer up to 50% of their base salary
and up to 85% of their annual cash incentive compensation and stock award
income. The Plans also provide the participants with Company matching
contributions which would have been received in the tax-qualified Retirement
Plan had the participant’s participation in the Retirement Plan not
been limited by rules imposed under the Code and ERISA. The Plans offer only
mutual funds as investment options for participant
contributions. Participants select the mutual funds as
investments, and amounts deferred and credited to participant accounts under the
Plans are credited with earnings or losses depending on the performance of the
selected mutual funds. Participants can change their investment
options for both future deferrals and current account balances at any time. The
earnings credited to the accounts of participants are equal to the actual
earnings from the mutual funds in which the participants elect to
invest.
The table below shows the mutual funds
available under the Excess Benefit Plan and the Deferred Compensation Plan and
their annual rates of return for the calendar year ended December 31, 2008, as
reported by the administrator of the Plans.
Name
of Fund
|
Rate
of
Return
|
|
Name
of Fund
|
Rate
of
Return
|
Merrill
Lynch Aggressive Model Portfolio
|
-40.87%
|
|
T.
Rowe Price Equity Income Class II
|
-36.26%
|
Alliance
Bernstein International Value Fund
|
-53.18%
|
|
Vanguard
VIF Equity Index I
|
-36.93%
|
Chemed
Corporation Capital Stock (a)
|
-28.80%
|
|
Vanguard
VIF Mid Cap Index I
|
-41.81%
|
Merrill
Lynch Conservative Model Portfolio
|
-8.32%
|
|
Vanguard
VIF Reit Index
|
-37.25%
|
Goldman
Sachs VIT Mid Cap Value
|
-37.05%
|
|
Vanguard
VIF Short Term Investment Grade
|
-3.45%
|
Lasso
Long and Short Strategic Opportunities Fund
|
-16.52%
|
|
Vanguard
VIF Small Company Growth
|
-39.47%
|
Merrill
Lynch Moderate Model Portfolio
|
-27.13%
|
|
PIMCO
VIT Real Return Admin
|
-7.00%
|
Merrill
Lynch Moderate/Aggressive Model Portfolio
|
-33.99%
|
|
PIMCO
VIT Total Return Admin
|
4.84%
|
Merrill
Lynch Moderate/Conservative Model Portfolio
|
-18.34%
|
|
VK
UIF Mid Cap Growth Portfolio
|
-46.77%
|
Nationwide
NVIT Money Market Fund
|
2.14%
|
|
|
|
Oppenheimer
VA Capital Appreciation Fund
|
-45.52%
|
|
|
|
Oppenheimer
VA Global Securities
|
-40.19%
|
|
|
|
Royce
Capital Small Cap
|
-27.18%
|
|
|
|
(a) The
option of investing in Capital Stock is no longer
available.
Prior to making deferrals in the Plans,
participants must specify the date and manner in which they wish to receive
their distribution from the Plans. Participants may receive the
amounts credited to their accounts at retirement, termination of employment or
on a specific date following termination or retirement. Participants must also
elect whether to receive distributions in a lump sum or in installment payments.
Participants may elect to receive some or all of each year’s deferral and
related earnings on a specific date prior to retirement or termination of
employment (“In-Service Distribution”). In order to satisfy the requirements of
Section 409A of the Code, certain “key employees” may not receive a distribution
from the Plans until six months following a separation from service. In-Service
Distributions are not subject to the six-month delay.
Messrs. McNamara, Williams, O’Toole and
Tucker received Company contributions in the Excess Benefit Plan for the plan
year 2008 in the amounts set forth in the Nonqualified Deferred Compensation
Table. Also as set forth in the Nonqualified Deferred Compensation
Table, Mr. Lee has elected to defer a portion of his 2008 compensation to the
Deferred Compensation Plan and has also received Company contributions in such
plan.
Supplemental
Pension Plan
The Supplemental Pension Plan is an
unfunded defined contribution plan that provides certain key employees with a
supplemental pension and an optional life insurance benefit. Participants’
accounts are credited with a fixed monthly Company contribution. Participants
have the option to use a portion of this Company contribution to purchase
supplemental term life insurance. The Supplemental Pension Plan does not allow
for employee contributions or deferrals. The participants’ accounts are credited
with monthly earnings based on an annual interest rate. This interest rate is
subject to change once a year and is based on then-prevailing interest rates.
Currently this interest rate is 7%. All of the named executive officers are
participants in the Supplemental Pension Plan.
1986
Severance Plan
The 1986 Severance Plan was established
in connection with the Company’s 1986 elimination of its defined benefit
retirement plan and adoption of a defined contribution plan. It is an unfunded
defined contribution plan in which the participants’ accounts are credited with
certain Company contributions. Mr. Tucker is the only named executive
officer who participates in the 1986 Severance Plan.
Potential
Payment to Executives Upon Termination or Change in Control
The following table represents the
amounts of compensation that would be due to each of the named executive
officers upon each of the listed scenarios pursuant to the Company’s plans and
agreements, as if such event had occurred on December 31, 2008. The
amounts shown are estimates of the amounts that would be payable in each
circumstance, and the actual amounts payable will only be determined upon the
actual occurrence of such event.
|
|
K.
J.
McNamara
|
|
|
D.
P.
Williams
|
|
|
T.
S.
O’Toole
|
|
|
S.
S.
Lee
|
|
|
A.
V.
Tucker,
Jr.
|
|
Termination
without Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
payment (a) (b)
|
|
$ |
3,900,000 |
|
|
$ |
1,027,500 |
|
|
$ |
1,375,000 |
|
|
$ |
432,000 |
|
|
$ |
304,125 |
|
Pro-rated
annual incentive compensation (c)
|
|
|
1,387,949 |
|
|
|
446,664 |
|
|
|
436,028 |
|
|
|
298,135 |
|
|
|
176,212 |
|
Welfare
benefit continuation (d)
|
|
|
30,398 |
|
|
|
25,987 |
|
|
|
16,354 |
|
|
|
19,006 |
|
|
|
13,331 |
|
Acceleration
of restricted stock awards
(e)
|
|
|
1,356,754 |
|
|
|
463,321 |
|
|
|
507,068 |
|
|
|
238,620 |
|
|
|
234,643 |
|
Total
|
|
$ |
6,675,101 |
|
|
$ |
1,963,472 |
|
|
$ |
2,334,450 |
|
|
$ |
987,761 |
|
|
$ |
728,311 |
|
Involuntary
Termination for Cause or Voluntary Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
payment
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Welfare
benefit continuation
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Termination
due to Death or Disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro-rated
annual incentive compensation (a) (c)
|
|
$ |
1,387,949 |
|
|
$ |
446,664 |
|
|
$ |
436,028 |
|
|
$ |
298,135 |
|
|
$ |
176,212 |
|
Welfare
benefit continuation
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Acceleration
of restricted stock awards
(e)
|
|
|
1,356,754 |
|
|
|
463,321 |
|
|
|
507,068 |
|
|
|
238,620 |
|
|
|
234,643 |
|
Total
|
|
$ |
2,744,703 |
|
|
$ |
909,985 |
|
|
$ |
943,096 |
|
|
$ |
536,755 |
|
|
$ |
410,855 |
|
Termination
due to Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro-rated
annual incentive compensation (a) (c)
|
|
$ |
1,387,949 |
|
|
$ |
446,664 |
|
|
$ |
436,028 |
|
|
$ |
298,135 |
|
|
$ |
176,212 |
|
Welfare
benefit continuation
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Acceleration
of restricted stock awards
(e)
|
|
|
510,368 |
|
|
|
124,281 |
|
|
|
124,281 |
|
|
|
54,684 |
|
|
|
61,644 |
|
Total
|
|
$ |
1,898,317 |
|
|
$ |
570,945 |
|
|
$ |
560,309 |
|
|
$ |
352,819 |
|
|
$ |
237,856 |
|
Change
in Control with No Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus
payment (a) (g)
|
|
$ |
1,387,949 |
|
|
$ |
446,664 |
|
|
$ |
436,028 |
|
|
$ |
298,135 |
|
|
$ |
176,212 |
|
Acceleration
of stock option and restricted stock awards (f)
|
|
|
1,958,754 |
|
|
|
674,021 |
|
|
|
702,718 |
|
|
|
353,000 |
|
|
|
343,003 |
|
280G
Gross-up payment (h)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total
|
|
$ |
3,346,703 |
|
|
$ |
1,120,685 |
|
|
$ |
1,138,746 |
|
|
$ |
651,135 |
|
|
$ |
519,215 |
|
Qualifying
Termination following or in connection with a Change in
Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
payment (a) (i)
|
|
$ |
6,503,848 |
|
|
$ |
2,572,992 |
|
|
$ |
2,958,083 |
|
|
$ |
1,172,270 |
|
|
$ |
757,923 |
|
Bonus
payment (a) (g)
|
|
|
1,387,949 |
|
|
|
446,664 |
|
|
|
436,028 |
|
|
|
298,135 |
|
|
|
176,212 |
|
Welfare
benefit, perquisite continuation and outplacement
assistance (j)
|
|
|
330,505 |
|
|
|
116,264 |
|
|
|
192,715 |
|
|
|
196,616 |
|
|
|
52,539 |
|
Company
contributions to deferred compensation plans(k)
|
|
|
1,206,066 |
|
|
|
513,522 |
|
|
|
578,952 |
|
|
|
313,312 |
|
|
|
145,572 |
|
Acceleration
of stock option and restricted
stock awards (f)
|
|
|
1,958,754 |
|
|
|
674,021 |
|
|
|
702,718 |
|
|
|
353,000 |
|
|
|
343,003 |
|
280G
Gross-up payment (h)
|
|
|
393,378 |
|
|
|
365,951 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total
|
|
$ |
11,780,500 |
|
|
$ |
4,689,414 |
|
|
$ |
4,868,496 |
|
|
$ |
2,333,333 |
|
|
$ |
1,475,249 |
|
(a)
|
The
amounts shown are based on the following current base salaries and average
annual incentive compensation for the 2005, 2006 and 2007 fiscal years:
for Mr. McNamara, $780,000 base salary and $1,387,949 annual incentive
compensation; for Mr. Williams, $411,000 base salary and $446,664 annual
incentive compensation; for Mr. O’Toole, $550,000 base salary and $436,028
annual incentive compensation; for Mr. Lee, $288,000 base salary and
$298,135 annual incentive compensation; and for Mr. Tucker, $121,650 base
salary and $176,212 annual incentive compensation.
|
(b)
|
The
severance payment is a lump-sum payment equal to: for Mr. McNamara, five
times his base salary; for each of Messrs. Williams and O’Toole, two and a
half times his base salary; and for each of Messrs. Lee and Tucker, one
and a half times his base salary.
|
(c)
|
The
pro-rated annual incentive compensation is equal to a pro-rated portion of
the executive’s average annual incentive compensation for the 2005, 2006
and 2007 fiscal years, as if the termination had occurred on December 31,
2008.
|
(d)
|
The
amounts shown consist of, for the period specified in the employment
agreements of Messrs. McNamara, Williams and O’Toole, or, for Messrs. Lee
and Tucker, in the Senior Executive Severance Policy, the continued
provision of welfare benefits under the Company’s welfare benefit plans.
With respect to these benefits, the amounts shown have been calculated
based upon the current premiums paid by the Company for such
benefits.
|
(e)
|
Upon
termination without cause or due to death or disability, the restricted
stock awards held by each named executive officer will vest in
full. Upon termination due to retirement, the restrictions will
lapse as to a fraction of the restricted stock equal to the length of
time, in years, from the
date granted to the date of retirement over the total number of years over
which the award would have vested. The value of each share of
restricted stock subject to acceleration was determined by multiplying the
number of such restricted shares by $39.77 (the closing price of one share
of Capital Stock on December 31, 2008).
|
(f)
|
The
value of each stock option award subject to acceleration was determined by
multiplying the number of stock option awards by the excess, if any, of
$39.77 (the closing price of one share of Capital Stock on December 31,
2008) over the exercise price of such stock option awards. The
value of each share of restricted stock subject to acceleration was
determined by multiplying the number of such restricted shares by $39.77
(the closing price of one share of Capital Stock on December 31,
2008).
|
(g)
|
The
bonus payment is equal to the executive’s average annual incentive
compensation for the 2005, 2006 and 2007 fiscal years.
|
(h)
|
The
amount of the excise taxes imposed pursuant to Section 4999 of the Code
was determined by multiplying by 20% the “excess parachute payment” that
would arise in connection with payments made to the applicable named
executive officer upon the triggering event. The excess
parachute payment was determined in accordance with the provisions of
Section 280G of the Code. The amount of the gross-up payment
to make each named executive officer whole on an after-tax basis for the
excise taxes imposed under Section 4999 of the Code was determined
assuming a federal tax rate of 36% and 9% combined state and local
tax rates for each named executive officer.
|
(i)
|
The
severance payment is equal to: for each of Messrs. McNamara, Williams and
O’Toole, three times the sum of his current base salary and average annual
incentive compensation for the 2005, 2006 and 2007 fiscal years; for each
of Messrs. Lee and Tucker, two times the sum of his current base salary
and average annual incentive compensation for the 2005, 2006 and 2007
fiscal years. For
a description of the current base salary and average annual incentive
compensation for 2005, 2006 and 2007 for each of the named executive
officers, see footnote (a) to this table above.
|
(j)
|
The
amounts shown assume that Messrs. McNamara, Williams and O’Toole elect to
receive their severance benefits under the Change in Control Plan, which
will result in each receiving greater benefits than he would be entitled
to receive under his employment agreement. Accordingly, the
amounts shown consist of, for the period specified in the Change in
Control Plan, (i) the continued provision of the perquisites (if any)
listed in the All Other Compensation Table at 2008 levels, (ii) the
continued provision of benefits under the Company’s welfare benefit plans,
and (iii) outplacement assistance. With respect to the continued provision
of benefits under the Company’s welfare benefit plans, the amounts shown
have been calculated based upon the current premiums paid by the Company
for such benefits.
|
(k)
|
The
amounts shown equal the amount of Company contributions that would have
been made on the executive’s behalf in the Company’s qualified and
non-qualified defined contribution plans had the executive continued
participation in such plans, at the level in effect on December 31, 2008,
for a three-year period following a Qualifying Termination for Messrs.
McNamara, Williams and O’Toole, and a two-year period following a
Qualifying Termination for Messrs. Lee and
Tucker.
|
Termination
Without Cause Prior to and Not in Connection With a Change in Control of the
Company; Termination Due to Death, Disability or Retirement
Employment
Agreements
The Company has entered into employment
agreements, described in additional detail under the headings “—Compensation
Discussion and Analysis—Employment Agreements; Severance Payments; Change
in Control” and “—Termination
Without Cause Prior to and Not in Connection With a Change in Control of the
Company; Termination Due to Death, Disability or Retirement—Employment
Agreements” above, with each of Messrs. McNamara, Williams and
O’Toole. Pursuant to the terms of these employment agreements, each
of Messrs. McNamara, Williams and O’Toole would be entitled to cash severance
benefits if his employment was terminated without cause or due to termination of
his employment by reason of his death, disability or retirement.
For a termination without cause, Mr.
McNamara would be entitled to a lump-sum payment equal to five times his
then-current base salary plus a pro-rated portion of his average annual
incentive compensation for the then-past three full fiscal years, and each of
Messrs. Williams and O’Toole would be entitled to a lump-sum payment equal to
two and a half times his then-current base salary plus a pro-rated portion of
his average annual incentive compensation for the then-past three full fiscal
years. Mr. McNamara would also be entitled to continue to participate
in the Company’s welfare benefit plans for 24 months following termination at
the then-current rate of contribution. Each of Messrs. Williams and
O’Toole would be entitled to continue to participate in the Company’s welfare
benefit plans for 18 months following termination at the then-current rate of
contribution. Such severance payments and benefits are conditioned
upon execution of a general release of claims in favor of the Company,
nondisclosure and, for Mr. McNamara, two-year non-compete and non-solicitation
covenants and, for Messrs. Williams and O’Toole, one-year non-compete
and non-solicitation covenants.
The definition of “cause” pursuant to
the employment agreements is (a) the willful and repeated failure of the
executive to substantially perform his duties, other than a failure resulting
from physical or mental illness; (b) the executive’s conviction of, or plea of
guilty or nolo contendere to, a felony which is materially and demonstrably
injurious to the Company; or (c) the executive’s engagement in willful gross
misconduct or gross negligence in connection with his employment.
For a termination due to death,
disability or retirement, each of Messrs. McNamara, Williams and O’Toole would
be entitled to a lump-sum payment equal to the pro-rated portion of the average
of his annual incentive compensation for the then-past three full fiscal
years. Such severance payments under each employment agreement for a
termination due to disability or retirement are conditioned upon execution of a
general release of claims in favor of the Company and a nondisclosure
covenant.
If the payments set forth above were
subject to the excise taxes imposed by Section 409A of the Code, Messrs.
McNamara, Williams and O’Toole would be entitled to a gross-up payment. For
purposes of the quantification of possible payments due to Messrs. McNamara,
Williams and O’Toole in each of the scenarios set forth in the table above, it
is assumed that no excise taxes pursuant to Section 409A of the Code would be
imposed. As such, the amounts in the table under the heading
“—Potential Payment to Executives Upon Termination or Change in Control” do not
reflect a gross-up payment with respect to any excise tax pursuant to Section
409A of the Code.
Senior
Executive Severance Policy
The Senior Executive Severance Policy,
described in more detail in the Compensation Discussion and Analysis above,
provides cash severance benefits to participants upon a termination without
cause or due to death, disability
or retirement. The Senior Executive Severance Policy covers 12
employees, including Messrs. Lee and Tucker. Messrs. McNamara,
Williams and O’Toole are not covered by this policy.
For a termination without cause, each
of Messrs. Lee and Tucker would be entitled to a lump-sum payment equal to one
and a half times his then-current base salary plus a pro-rated portion of his
average annual incentive compensation for the then-past three full fiscal
years. Messrs. Lee and Tucker would also be entitled to continue to
participate in the Company’s welfare benefit plans for one year following
termination of employment at the then-current rate of
contribution. The definition of “cause” under the Senior Executive
Severance Policy is identical to the definition of cause under the employment
agreements described above.
For a termination due to death,
disability or retirement, each of Messrs. Lee and Tucker would be entitled to a
lump-sum payment equal to the pro-rated portion of the average of his annual
incentive compensation for the then-past three full fiscal years.
If the payments set forth above were
subject to the excise taxes imposed by Section 409A of the
Code, Messrs. Lee and Tucker would be entitled to a gross-up
payment. For purposes of the quantification of possible payments due
to Messrs. Lee and Tucker upon termination under the Senior Executive Severance
Policy in each of the scenarios set forth in the table above, it is assumed that
no excise taxes pursuant to Section 409A of the Code would be
imposed. As such, the amounts in the table under the heading
“—Potential Payment to Executives Upon Termination or Change in Control” do not
reflect a gross-up payment with respect to any excise tax pursuant to Section
409A of the Code.
Severance payments and benefits under
the Senior Executive Severance Policy are conditioned upon execution of a
general release of claims in favor of the Company. Additionally, for
a termination without cause or due to disability or retirement, such severance
payments and benefits are conditioned upon nondisclosure and one-year
non-compete and non-solicitation covenants.
Equity
Compensation Plans
Pursuant to the Stock Incentive Plans,
all restricted stock awards vest upon the holder’s termination of employment due
to death, disability or termination without cause. With respect to restricted
stock awards granted in 2006 and thereafter, upon the holder’s retirement, the
restrictions will lapse as to a fraction of the restricted stock equal to the
length of time, in years, from the date such awards were granted to the date of
the holder’s retirement over the total number of years over which the award
would have vested. Vested stock option awards granted under the Stock
Incentive Plans remain exercisable for three months following termination of the
holder’s employment, except for termination due to death, incapacity or
retirement, in which case vested stock option awards remain exercisable for 15
months following termination. Unvested stock option awards are
forfeited upon termination of employment for any reason. For a
description of the treatment of outstanding unvested stock option awards and
restricted stock awards upon a change in control of the Company, see the
narrative under the heading “—Potential
Payment to Executives Upon Termination or Change in Control—Change in
Control of the Company” below.
Change
in Control of the Company
Change
In Control Plan
The Change in Control Plan, described
in additional detail in the Compensation Discussion and Analysis, covers 15
executive officers of the Company, including the named executive
officers. However, in the event of a change in control of the
Company, Messrs. McNamara, Williams and O’Toole would not receive benefits under
both their employment agreements and the Change in Control Plan, and the
participants in the Senior Executive Severance Policy would not receive benefits
under both the Senior Executive Severance Policy and the Change in Control
Plan.
Under the Change in Control Plan, a
change in control of the Company means, in general, the occurrence of any one of
the following events: (a) certain acquisitions by a third party of at least 30%
of the then-outstanding Capital Stock; (b) individuals
who constituted the Board of Directors when the plan became effective (the
“Incumbent Board”) cease to constitute at least a majority of the Board
(provided that the Incumbent Board will be deemed to include any director (other
than one elected in certain contested solicitations) whose election, or
nomination by the stockholders for election, to the Board was approved by a
majority of the Board members then comprising the Incumbent Board); (c)
consummation of certain mergers, consolidations and similar transactions
involving the Company unless
the Company is the surviving entity and no person holds 30% or more of the
then-outstanding Capital Stock (except to the extent such ownership existed
prior to the transaction) and individuals who were members of the Incumbent
Board constitute at least a majority of the Board following such transaction;
(d) approval by the Company’s stockholders of a plan for the complete
liquidation or dissolution of the Company or the sale of all or substantially
all of the Company’s assets; or (e) any other transaction that the Compensation
Committee or such other Committee as determined by the Board deems to be a
change in control.
The Change in Control Plan provides for
severance payments and benefits in the event of a change in control of the
Company followed within two years by an executive’s termination of employment
either without cause or for good reason (“double trigger”). Payments
under the Change in Control Plan are triggered by (a) termination of employment
by the Company without cause or (b) termination of employment by the employee
within 90 days of an event giving him or her good reason to so terminate (such
termination without cause or for good reason, a “Qualifying
Termination”). The definition of cause is identical to the definition
of cause in the employment agreements discussed above. Good reason
consists of a material reduction in the nature and scope of the
participant’s responsibilities, authority or duties; a reduction in the
participant’s base
salary below the
participant’s highest base
salary during the 120-day period prior to or any time following a change in
control, annual incentive compensation below the
participant’s average
annual incentive compensation for the then-past three full fiscal years prior to
the change in control, equity-based compensation below that received during the 120-day period prior to the
change in control or in the aggregate level
of employee benefits; a relocation of the participant’s principal work location
by more than 50 miles; or notice of the Company’s intention to cancel or not
renew his employment agreement.
Upon a Qualifying Termination, Messrs.
McNamara, Williams and O’Toole would receive a payment equal to three times, and
Messrs. Lee and Tucker would receive a payment equal to two times, the sum of
(a) such named executive officer’s highest base salary during the 120-day period
prior to or any time following the change in control and (b) the average of such
named executive officer’s annual incentive compensation for the then-past three
full fiscal years prior to the change in control, all paid in cash in a lump-sum
within 10 days following termination. If the Qualifying Termination
were to take place in a fiscal year other than the fiscal year during which the
change in control occurred, each named executive officer would also receive a
pro-rated portion of his three-year average annual incentive
compensation.
Upon a Qualifying Termination,
participants would also be entitled to receive benefits under the Company’s
welfare benefit plans and perquisites for a period of three years (for Messrs.
McNamara, Williams and O’Toole) or two years (for Messrs. Lee and Tucker), and
outplacement assistance up to $25,000. Such perquisites would be provided at a
level comparable to the
level of perquisites
received immediately prior to the Qualifying Termination or the change in
control, whichever would be more favorable to the
participant. If the employee becomes re-employed during the
applicable two-year or three-year period and is eligible to receive comparable benefits
from his new employer, the benefits provided by the Company under its welfare
benefit plans are secondary to those provided by the new employer.
Within 10 days of a Qualifying
Termination, a participant would also be entitled to receive a lump-sum cash
payment in the amount of employer contributions to the participant’s account in
the Company’s qualified and non-qualified defined contribution plans, assuming
the participant’s participation in the plans had continued on the same basis as
immediately prior to the termination for the applicable three-year period (for
Messrs. McNamara, Williams and O’Toole) or two-year period (for Messrs. Lee and
Tucker).
Regardless of whether a participant is
terminated and in addition to the severance benefits set forth above, upon a
change in control, each participant in the Change in Control Plan would receive,
within 10 days following the change in control, a lump-sum payment equal to the
average of the participant’s annual incentive compensation for the then-past
three full fiscal years, and all unvested portions of stock option and
restricted stock awards would vest in full upon the date of the change in
control. In addition, the Change in Control Plan provides that the
Compensation
Committee would allocate and distribute any shares of Capital Stock that are
unallocated as of the date of the change in control under the Company’s
equity-based plans to the participants of such equity-based plans upon the
change in control. The allocation of unallocated shares of Capital
Stock from the Company’s equity-based plans is not included in the
quantification of possible payments due to the named executive officers pursuant
to the Change in Control Plan because the amount of shares of Capital Stock that
would be allocated to each of the named executive officers is at the discretion
of the Compensation Committee. The payments described in this
paragraph are referred to as “single-trigger” payments.
All payments under the Change in
Control Plan are conditioned on execution of a general release of claims in
favor of the Company. If payments under the Change in Control Plan
were subject to taxes imposed by Sections 4999 or 409A of the Code, the
participant would be entitled to a gross-up payment. For purposes of
the quantification of possible payments due to the named executive officers
pursuant to the Change in Control Plan, it is assumed that no excise tax
pursuant to Section 409A of the Code would be imposed. As such, the
amounts in the table under the heading “—Potential Payment
to Executives Upon Termination or Change in Control” do not reflect a gross-up
payment with respect to any excise taxes pursuant to Section 409A of the
Code. The amount of
gross-up payments to which the named executive officers would be entitled with
respect to tax imposed by Section 4999 of the Code are set forth in the
table above under the heading “—Potential Payment to Executives Upon
Termination of Change in Control”, and the assumptions used in determining the
amounts are set forth in footnote (h) of such table.
Equity
Compensation Plans
Pursuant to the Stock Incentive Plans,
upon a change in control of the Company, all outstanding unvested stock option
and restricted stock awards would become fully vested. Under the
Stock Incentive Plans, a change in control of the Company means, in general, the
occurrence of any one of the following events: (a) certain acquisitions by a
third party of at least 30% of the then-outstanding Capital Stock; (b) the
expiration of a tender offer or exchange offer (other than an offer by the
Company) pursuant to which 20% or more of the shares of Capital Stock have been
purchased; (c) approval by the Company’s stockholders of an agreement of merger
or consolidation in which the Company is not the surviving corporation, a plan
for the liquidation of the Company or an agreement for the sale or other
disposition of all or substantially all of the Company’s assets; or (d) during
any period of two consecutive years, individuals who constitute the Board of
Directors at the beginning of such period cease to constitute at least a
majority of the Board (provided that the Board at the beginning of such period
shall be deemed to include any director whose nomination for election was
approved by at least one-half of the persons who were directors (or deemed to be
directors) at the beginning of the two-year period).
Deferred
Compensation Plans
Upon a termination for any reason, each
of Messrs. McNamara, Williams, O’Toole and Tucker would be entitled to the
aggregate balance in his account in the Excess Benefit Plan, and Mr. Lee would
be entitled to the aggregate balance in his account in the Deferred Compensation
Plan. Each of the named executive officers would also be entitled to
the aggregate balance in his account in the Supplemental Pension Plan, and Mr.
Tucker would be entitled to the aggregate balance in his account in the 1986
Severance Plan. The aggregate balances in these accounts for each named
executive officer are set forth in the Non-Qualified Deferred Compensation Table
above.
BACKGROUND
TO THE CONTESTED SOLICITATION
MMI first became a stockholder of the
Company on November 30, 2007, but sold all of its shares of Capital Stock 18
days later. On March 14, 2008, MMI again purchased Capital Stock and
has remained a stockholder of the Company for the past 13
months. While MMI has remained a stockholder of the Company since
March 2008, MMI divested over 22% of its Capital Stock holdings during December
2008.
According
to MMI’s proxy materials, between March 2007 and January 2009 it has attended or
participated in ten industry events, teleconferences and meetings with the
Company’s management. The conversations that the Company’s management
had with MMI’s representatives over this period were routine in nature and scope
and consistent with the types of conversations that the Company’s management has
with many of the Company’s stockholders and potential investors. At
no time during these meetings and calls did MMI present a detailed analysis
regarding its rationale for an immediate separation of the Company’s businesses
or request a private
meeting with management to present such a proposal. Nor did MMI propose to
the Company's management or the Nominating Committee any potential nominees to
the Board for consideration by the Nominating Committee.
In fact,
MMI’s first such proposal to the Company was on February 12, 2009, when MMI sent
a letter to the Board and concurrently put out a press release stating MMI’s
belief that a tax-free spin-off to separate the Company’s two principal
businesses would prove beneficial to the Company and its
stockholders. The Company responded on March 16, 2009 in a letter to
MMI, which explained that the Board had reviewed the structural changes proposed
by MMI, had considered the advice of its outside financial advisors and counsel
on such changes and had determined that executing a separation in the current
market environment would be risky and could impair, rather than create, value
for the Company’s stockholders. The Board also advised MMI that it
had already positioned the Company’s businesses to facilitate a separation when
the time was right.
On March 19, 2009, MMI publicly
announced its intent to nominate a slate of five nominees for election to the
Board at the Annual Meeting. The Board issued a statement on March
20, 2009 reiterating its belief that the interests of the Company’s stockholders
would be best served by maintaining the Company’s existing structure in the
current market. On March 26, 2009, MMI filed a preliminary proxy
statement with the SEC indicating that it was proceeding with its decision to
nominate five individuals for election to the Board at the Annual
Meeting. On April 2, 2009, MMI also sent and publicly released a
letter to the Chairman of the Board raising certain questions about the
Company’s corporate overhead and, on April 9, 2009, MMI filed a revised
preliminary proxy statement with the SEC in respect of the contested
solicitation.
CERTAIN
RELATIONSHIPS AND TRANSACTIONS
Mr. E. L. Hutton, until his death in
March 2009, was non-executive Chairman and a director of the Company and, until
February 2008, was a director of Omnicare. He held the honorary post
of Chairman Emeritus of Omnicare’s Board of Directors until his
death. As retired Chief Executive Officer and an employee of the
Company, Mr. Hutton received the following compensation and perquisites in 2008:
base salary of $325,000; imputed income on the value of the Company’s premium
deposits for his split dollar life insurance policy in the amount of $126,830;
the Company’s contributions to his accounts under the Retirement Plan and the
Excess Benefit Plan in the amount of $41,720; the Company’s premium payment for
his term life insurance in the amount of $2,736; personal use of the Company
aircraft worth an imputed valued of $53,573; reimbursement for income taxes on
his personal use of the Company aircraft worth an imputed value of $11,416 and
use of the Company cars worth an imputed valued of $17,676. The
amount of imputed income with respect to Mr. Hutton’s split dollar life
insurance policy was calculated using the applicable federal rate as of July 1,
2008 times the value of the Company’s premium deposits as of January 1,
2008.
Mr. T. C. Hutton is a Vice
President of the Company and is the son of Mr. E. L.
Hutton. During 2008, Mr. T. C. Hutton received the following
compensation for service to the Company as a Vice President: base salary of
$257,500; annual cash incentive compensation of $94,000; the Company’s
contributions to his accounts under the Excess Benefit Plan in the amount of
$54,718; and the Company’s contributions to his accounts under the Supplemental
Pension Plan in the amount of $12,448. In 2008, the Company
recognized an expense under FAS 123(R) of $156,014 for Mr. Hutton’s stock option
awards and $40,052 for his stock awards.
Mr. Gemunder is a director of the
Company and a director and President and Chief Executive Officer of Omnicare,
and Ms. Laney and Ms. Lindell are directors of the Company and
Omnicare. Mr. Erhart was a director of both companies until their May
2008 annual meetings of stockholders and a Director Emeritus of both companies
until his death.
Ms. Laney receives $15,000 per year as
chairperson of the Chemed Foundation, a charitable organization affiliated with
the Company. Ms. Laney, although not an employee and not receiving a
salary, also has the use of an office and a secretary in her capacity as
President of Jet Resource Inc., a wholly owned subsidiary of the
Company.
In
October 2004, a subsidiary of Vitas Healthcare Corporation (“Vitas”) entered
into a pharmacy services agreement with Omnicare, pursuant to which Omnicare
provides specified pharmacy services for Vitas and its hospice patients in
geographical areas served by both Vitas and Omnicare. The agreement
had an initial term of three years and renews automatically
thereafter for one-year terms. Either party may cancel the agreement
at the end of any term by giving written notice at least 90 days prior to the
end of the term. In June 2004, Vitas entered into a pharmacy services
agreement with excelleRx. The agreement had an initial term of one
year and automatically renews unless either party provides a 90-day written
notice of non-renewal. After June 2004, Omnicare acquired
excelleRx. During 2008, Vitas made purchases of $32.9 million from
Omnicare under these two agreements.
In connection with the August 2001 sale
of assets of the Company’s former subsidiary, Cadre Computer Resources, Inc., to
Cadre Computer Resources Co. (“Cadre Computer”), Cadre Computer subleases 7,800
square feet of office space from the Company at a rate of $15.74 per square foot
plus operating costs. The lease ends April 30, 2016, with either
party able to terminate on six month’s notice after April 30,
2007. During 2008, Messrs. McNamara and E. L. Hutton (until his
death) and Ms. Laney were unpaid directors of Cadre
Computer. Currently, Messrs. McNamara and Williams and Ms. Laney
serve as directors of Cadre Computer. Ms. Laney, who is chairman and
Chief Executive Officer of Cadre Computer, also has a majority ownership
interest in Cadre Computer.
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
This table sets forth information as of
March 31, 2009, with respect to the only persons known to us to beneficially own
more than 5% of the outstanding Capital Stock:
Name
or Address
Of
Beneficial Owner
|
Amount
and Nature of
Beneficial
Ownership
|
Percent
of Class (a)
|
|
|
|
Iridian
Asset Management LLC
276
Post Road West
Westport,
CT 06880-4704
Barclays
Global Investors, NA
400
Howard Street
San
Francisco, CA 94105
|
2,853,256
shares (b)
1,435,625
shares (d)
|
12.8%(c)
6.4%
(e)
|
(a)
For purposes of calculating Percent of Class, all shares of Capital Stock
subject to stock option awards which were exercisable within 60 days of
March 31, 2009, were assumed to have been issued.
(b)
Shared voting power, 2,853,256 shares; shared dispositive power, 2,853,256
shares.
(c)
Information is based on Schedule 13G filed with the SEC on February 4,
2009.
(d)
Shared voting power, 1,090,314 shares; shared dispositive power, 1,435,625
shares.
(e)
Information is based on Schedule 13G filed with the SEC on February 5,
2009.
|
This table shows the shares of Capital
Stock beneficially owned and pledged by all nominees and directors of the
Company, the executive officers named in the Summary Compensation Table and the
Company’s directors and executive officers as a group as of March 31,
2009:
Name
|
Amount
and Nature of
Beneficial
Ownership (a)
|
Percent
of
Class
(b)
|
|
|
|
|
Kevin
J. McNamara
|
189,412
|
Direct
|
|
|
352,665
|
Option
|
|
|
|
Trustee
(c)
|
2.3%
|
|
|
|
|
Joel
F. Gemunder
|
14,476
|
Direct
|
|
|
6,952
|
Trustee
|
|
|
|
|
|
Patrick
P. Grace
|
5,200
|
Direct
|
|
|
|
|
|
Thomas
C. Hutton
|
80,859
|
Direct
|
|
|
34,666
|
Option
|
|
|
170,776
|
Trustee
(c) (d)
|
1.2%
|
|
|
|
|
Walter
L. Krebs
|
14,748
|
Direct
|
|
|
|
|
|
Sandra
E. Laney
|
169,921
|
Direct
|
|
|
40,000
|
Option
|
|
|
22,162
|
Trustee
(c)
|
|
|
|
|
|
Andrea
R. Lindell
|
1,000
|
Direct
|
|
|
|
|
|
Ernest
J. Mrozek
|
|
0
|
|
|
|
|
|
Timothy
S. O’Toole
|
41,440
|
Direct
|
|
|
41,666
|
Option
|
|
|
|
|
|
Thomas
P. Rice
|
|
0 |
|
|
|
|
|
Donald
E. Saunders
|
7,731
|
Direct
|
|
|
|
|
|
George
J. Walsh III
|
3,700
|
Direct
|
|
|
|
|
|
Frank
E. Wood
|
3,400
|
Direct
|
|
|
|
|
|
Spencer
S. Lee
|
35,954
|
Direct
|
|
|
158,665
|
Option
|
|
|
|
|
|
Arthur
V. Tucker, Jr.
|
23,718
|
Direct
|
|
|
57,333
|
Option
|
|
|
|
|
|
David
P. Williams
|
75,747
|
Direct
|
|
|
127,499
|
Option
|
|
|
|
|
|
Directors and Executive |
793,738
|
Direct
|
|
Officers as a Group |
812,494
|
Option |
|
(15
persons)
|
152,610
|
Trustee
(e)
|
7.3%
|
|
|
|
|
(a)
|
Includes
securities beneficially owned by (i) the named persons or group members,
(ii) any organization of which any of the named persons or group members
is an officer, partner or beneficial owner of 10% or more of any class of
equity securities, (iii) any trust or other estate in which any named
person or group member has a substantial beneficial interest, (iv) any
relative or spouse of any named person or group member, or any relative of
such spouse, who has the same home as the named person or group member or
who is a director or officer of the Company or any of its subsidiaries,
and (v) any trust or other estate as to which any named person or group
member serves as trustee or in a similar fiduciary
capacity. Such securities include shares of Capital Stock
allocated as of March 31, 2009, to the account of each named person or
member of the group under the Retirement Plan or, with respect to Mr.
Gemunder, allocated to his account as of March 31, 2009, under the
Omnicare Employees’ Savings and Investment Plan (the “Omnicare Savings
Plan”)). “Direct” refers to securities in categories (i) through (iv) and
“Trustee” to securities in category (v). Where securities would fall into
both “Direct” and “Trustee” classifications, they are included under
“Trustee” only. “Option” refers to shares of Capital Stock which the named
person or group has a right to acquire within 60 days from March 31,
2009. Except as otherwise disclosed in this Proxy Statement, each
director, director nominee and executive officer has sole voting and
investment power over the shares of Capital Stock shown as beneficially
owned.
|
(b)
|
For
purposes of determining the Percent of Class, all shares of Capital Stock
subject to stock option awards which were exercisable within 60 days from
March 31, 2009, were assumed to have been issued. Percent of
Class under 1.0% is not shown.
|
(c)
|
Messrs.
McNamara and T. C. Hutton and Ms. Laney are trustees of the Chemed
Foundation, which holds 123,476 shares of Capital Stock over which the
trustees share both voting and investment power. This number is
included in the total number of “Trustee” shares held by the Directors and
Executive Officers as a Group but is not reflected in the respective
holdings of the individual trustees.
|
(d)
|
The
shares of Capital Stock held by Mr. T. C. Hutton include 126,432 shares of
Capital Stock that were directly held by Mr. E. L. Hutton and 22,162
shares of Capital Stock held by Mr. E. L. Hutton as “Trustee” prior to his
death on March 3, 2009. As of March 31, 2009, such shares are
held in the estate of Mr. E. L. Hutton. Mr. T. C. Hutton is
co-executor of such estate and, as such, has shared voting and dispositive
power of the 148,594 shares previously held by Mr. E. L.
Hutton.
|
(e)
|
Shares
of Capital Stock over which more than one individual holds beneficial
ownership have been counted only once in calculating the aggregate number
of shares of Capital Stock owned by Directors and Executive Officers as a
Group.
|
Section
16(a) Beneficial Ownership Reporting Compliance
During 2008, all reports for the
Company’s executive officers, directors and beneficial owners of more than 10%
of the outstanding shares of Capital Stock required to be filed under Section
16(a) of the Securities Exchange Act of 1934 were filed on a timely basis, with
the exception of Mr. O’Toole, who filed a Form 4 in November 2008 one day late
to reflect one sale of 2,128 shares of Capital Stock, and Mr. Walsh, who filed a
Form 4 three days late in October 2008 to reflect one purchase of 350 shares of
Capital Stock.
RATIFICATION
OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee has selected the
firm of PricewaterhouseCoopers LLP as independent accountants for the Company
and its consolidated subsidiaries for 2009. This firm has acted as
independent accountants for the Company and its consolidated subsidiaries since
1970. Although the submission of this matter to the stockholders is
not required by law or by the bylaws of the Company, the selection of
PricewaterhouseCoopers LLP will be submitted for ratification at the Annual
Meeting. The affirmative vote of the majority of the shares
represented at the meeting, with abstentions having the effect of negative
votes, will be necessary to ratify the selection of PricewaterhouseCoopers LLP
as independent accountants for the Company and its consolidated subsidiaries for
2009. Representatives of PricewaterhouseCoopers LLP are expected to
be present at the Annual Meeting, will have the opportunity to make a statement
if they so desire and are expected to be available to respond to appropriate
questions. The Board unanimously recommends that you vote FOR the
ratification of the Audit Committee’s selection of independent
accountants. If the selection is not ratified at the meeting, the
Audit Committee will reconsider its selection of independent
accountants.
AUDIT
COMMITTEE REPORT
The Audit Committee is appointed by the
Board of Directors to assist the Board in monitoring:
●
|
The
integrity of the Company’s financial
statements.
|
●
|
Compliance
by the Company with legal and regulatory
requirements.
|
●
|
The
independence and performance of the Company’s internal and external
auditors.
|
During 2000, the Audit Committee
developed a charter for the Committee, which was approved by the full Board of
Directors on May 15, 2000. The charter was most recently amended on
November 10, 2006. A copy of the charter is available on the
Company’s Web site, www.chemed.com.
The Company’s management has primary
responsibility for preparing the Company’s financial statements and for the
Company’s financial reporting process. The Company’s independent
accountants, PricewaterhouseCoopers LLP, are responsible for expressing an
opinion on the conformity of the Company’s audited financial statements to
generally accepted accounting principles.
In this context, the Audit Committee
hereby reports as follows:
1.
|
The
Audit Committee has reviewed and discussed the audited financial
statements and management’s report on internal control over financial
reporting with the Company’s
management.
|
2.
|
The
Audit Committee has discussed with the independent accountants the matters
required to be discussed by SAS 61, as amended (Codification of Statements
on Auditing Standard, AU 380), as adopted by the Public Company Accounting
Oversight Board in Rule 3200T.
|
3.
|
The
Audit Committee has received the written disclosures and the letter from
the independent accountants required by the applicable requirements of the
Public Company Accounting Oversight Board regarding the independent
accountants’ communications with the Audit Committee concerning
independence and has discussed with the independent accountants the
independent accountants’
independence.
|
4.
|
Based
on the review and discussion referred to in paragraphs (1) through (3)
above, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2008, for filing with the
SEC.
|
Each of the members of the Audit
Committee is independent as defined under the listing standards of the New York
Stock Exchange.
The undersigned members of the Audit
Committee have submitted this Report.
Donald E. Saunders,
Chairman
Patrick P. Grace
Walter L. Krebs
FEES
PAID TO INDEPENDENT ACCOUNTANTS
Audit
Fees
PricewaterhouseCoopers LLP billed the
Company $1,500,000 for 2007 and $1,560,000 for 2008. The fees were
for professional services rendered for the integrated audit of the Company’s
annual financial statements and of its internal controls over financial
reporting, review of the financial statements included in the Company’s Forms
10-Q and review of documents filed with the SEC.
Audit-Related
Fees
PricewaterhouseCoopers LLP billed the
Company $341,000 and $90,000 for 2007 and 2008, respectively, for audit-related
services. In 2007, $38,000 was related to the adoption of FIN 48,
$218,000 was related to a proposed offering of debt and $85,000 was related to
the audit of one of Vitas’ Florida subsidiaries. In 2008, $90,000 was
related to the audit of one of Vitas’ Florida subsidiaries.
Tax
Fees
No such services were rendered during
2007 or 2008.
All
Other Fees
No such services were rendered during
2007 or 2008.
The Audit Committee has adopted a
policy which requires the Committee’s pre-approval of audit and non-audit
services performed by the independent auditor to assure that the provision of
such services does not impair the auditor’s independence. The Audit
Committee pre-approved all of the audit and non-audit services rendered by
PricewaterhouseCoopers LLP as listed above.
STOCKHOLDER
PROPOSALS
Any stockholder proposals for the 2010
Annual Meeting of Stockholders must be in writing and received by the Secretary
of the Company by [●], 2009 to be
eligible for inclusion in the Company’s proxy statement and accompanying proxy
for such meeting. If a stockholder intends to bring a matter before
the 2010 Annual Meeting of Stockholders other than by submitting a proposal for
inclusion in the Company’s proxy statement and accompanying proxy for such
meeting, the stockholder must provide notice of the proposal to the Secretary of
the Company at Chemed’s principal executive offices not later than [●], 2010 in order
for such notice to be considered timely. In the case of untimely
notice of a proposal, persons named in the proxies solicited by the Company for
the 2010 Annual Meeting of Stockholders (or their substitutes) will be allowed
to use their discretionary voting authority when the proposal is raised at the
meeting without any discussion of the proposal in its proxy
materials.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL
MEETING
The
Proxy Statement and the Company’s 2008 Annual Report are available on the
Company’s Web site at http://ir.chemed.com/phoenix.zhtml?c=72704&p=IROL-seccat.
Information on how to obtain directions
to be able to attend the meeting and vote in person are available by contacting
:
Innisfree M&A
Incorporated
Stockholders May Call
Toll-Free: (877) 825-8631
Banks and Brokers May Call
Collect: (212) 750-5833
—or—
You may
write to us at:
Chemed
Corporation
Investor
Relations
2600
Chemed Center
255 East
Fifth Street
Cincinnati,
Ohio 45202-4726
The Company makes available, free of
charge on its Web site, the Proxy Statement, Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
amendments to these reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably
practicable after these documents are electronically filed with, or furnished
to, the SEC. These documents are posted on the Web site at www.chemed.com. Select
the “SEC Filings” link.
A copy of the Company’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2008 filed with the SEC
(without exhibits) will also be made available to stockholders without charge
upon written request to Chemed Investor Relations, 2600 Chemed Center, 255 East
Fifth Street, Cincinnati, Ohio 45202-4726.
DUPLICATE
ANNUAL
REPORT AND PROXY STATEMENT
If you are a stockholder of record and
share an address with another stockholder and have received only one copy of the
Company’s 2008 Annual Report or Proxy Statement, you may write or
call the Company to request a separate copy of these materials at no cost to
you. In addition, if you are a stockholder of record and share an
address with another stockholder and have received multiple copies of the
Company’s 2008 Annual Report or Proxy Statement, you may write or
call the Company to request delivery of a single copy of such materials in the
future. You may write to the Company at 2600 Chemed Center, 255 East
Fifth Street, Cincinnati, Ohio 45202-4726, Attn: Investor Relations, or call
1-800-2CHEMED or 1-800-224-3633.
OTHER
MATTERS
As of the date of this Proxy Statement,
management has not been notified of any stockholder proposals intended to be
raised at the Annual Meeting outside of the Company’s proxy solicitation process
nor does it know of any other matters which will be presented for consideration
at the Annual Meeting. However, if any other stockholder proposals or
other business should come before the Annual Meeting, the persons named in the
enclosed proxy (or their substitutes) will have discretionary authority to take
such action as is in accordance with their best judgment.
MISCELLANEOUS
The Company will pay all solicitation
expenses in connection with this Proxy Statement and related Company proxy
soliciting material, including the expense of preparing, printing, assembling
and mailing this Proxy Statement and any other material used in the Company’s
solicitation of proxies. Proxies are being solicited through the
mail. Certain executive officers and other employees of the Company named in
Annex A, on behalf of the Company and without additional compensation, may also
solicit proxies personally, by telephone, fax, email or other electronic means.
Stockholders may also be solicited by means of press releases issued by the
Company and posted on its Web site.
In addition, the Company has engaged
Innisfree M&A Incorporated (“Innisfree”) to assist it in connection with
soliciting proxies for a fee estimated not to exceed $[●], plus reasonable
out-of-pocket expenses. The Company has agreed to indemnify Innisfree
against certain liabilities relating to or arising out of the
engagement. Innisfree estimates that approximately [●] of its employees
will assist in this proxy solicitation, which they may conduct personally, by
mail, telephone, fax, email or other electronic means.
The Company will request banks, brokers
and other custodians, nominees and fiduciaries to forward proxy soliciting
material to the beneficial owners of shares held of record by such persons and
obtain their voting instructions. The Company will reimburse such
persons at approved rates for their expenses in connection with the foregoing
activities.
The Company estimates that its expenses
related to the solicitation in excess of those normally spent for an Annual
Meeting of Stockholders in the absence of a proxy contest (and excluding the
salaries and wages of the Company’s regular employees and officers) will be
approximately $[●], of which
$[●] has been
incurred as of the date of this Proxy Statement.
Additional information about persons
who are participants in this proxy solicitation is set forth in Annex
A.
|
Naomi
C. Dallob
Secretary
|
[ ],
2009
|
|
ANNEX A
Information
Regarding Participants
Unless otherwise noted, capitalized
terms used but not defined in this Annex A shall have the meanings ascribed to
them in the Proxy Statement to which this Annex A is attached.
The Company, its directors, its
nominees for directors and certain of its executive officers and employees are
participants in a solicitation of proxies in connection with the Annual
Meeting. The directors, nominees for directors, executive officers
and employees of the Company who are participants in the solicitation (the
“Participants”) are listed below, together with the amount of each class of the
Company’s securities beneficially owned by each of these persons as of March 31,
2009, including the number of securities for which beneficial ownership can be
acquired within 60 days of such date. Except as otherwise noted
below, no Participant listed below owns any securities of the Company other than
shares of Capital Stock, and no Participant listed below owns any securities of
the Company of record that such Participant does not own
beneficially. Except as otherwise noted below, the business address
of each Participant is 2600 Chemed Center, 255 East Fifth Street, Cincinnati,
Ohio 45202-4726.
Name
|
Title
|
Amount
of Capital Stock
Beneficially
Owned (1)
|
|
|
|
|
Kevin J.
McNamara |
Director,
President and Chief Executive Officer |
189,412
|
Direct |
|
|
352,665
|
Option |
|
|
|
Trustee
(2)
|
Joel F. Gemunder
(3)
|
Director
|
14,476
6,952
|
Direct
Trustee
(4)
|
Patrick P. Grace
(5)
|
Director
|
5,200
|
Direct
|
Thomas C. Hutton |
Director
and Vice President |
80,859
|
Direct
(6)
|
|
|
34,666
|
Option |
|
|
170,776
|
Trustee
(2) (7)
|
Walter L.
Krebs
|
Director
|
14,748
|
Direct
|
Sandra E. Laney |
Director |
169,921
|
Direct
(8) |
|
|
40,000
|
Option |
|
|
22,162
|
Trustee
(2)
|
Andrea R. Lindell
(9)
|
Director
|
1,000
|
Direct
|
Ernest J. Mrozek (10)
|
Director
Nominee
|
0
|
|
Timothy S.
O’Toole
|
Director
and Executive Vice President
|
41,440
|
Direct
|
Thomas P. Rice
(11)
|
Director
Nominee
|
0
|
|
Donald E. Saunders
(12)
|
Director
|
7,731
|
Direct
|
George
J. Walsh III (13) |
Chairman
of the Board |
3,700
|
Direct
|
Frank
E. Wood (14) |
Director |
3,400
|
Direct
|
|
Executive
Vice President
|
35,954
158,665
|
Direct Option
|
Arthur V. Tucker, Jr.
|
Vice President and Controller |
23,718
|
Direct
|
|
|
57,333
|
Option |
David P.
Williams
|
Executive
Vice President and Chief Financial Officer
|
75,747
127,499
|
Direct
Option
|
(1)
|
Includes
securities beneficially owned by (a) the participant, (b) any organization
of which the participant is an officer, partner or beneficial owner of 10%
or more of any class of equity securities, (c) any trust or other estate
in which the participant has a substantial beneficial interest, (d) any
relative or spouse of the participant, or any relative of such spouse, who
has the same home as the participant or who is a director or officer of
the Company or any of its subsidiaries and (e) any trust or other estate
as to which the participant serves as trustee or in a similar fiduciary
capacity. Such securities include shares of Capital Stock allocated as of
March 31, 2009, to the account of each participant under the Retirement
Plan or, with respect to Mr. Gemunder, allocated to his account as of
March 31, 2009, under the Omnicare Savings Plan). “Direct” refers to
securities in categories (a) through (d) and “Trustee” to securities in
category (e). Where securities would fall into both “Direct” and “Trustee”
classifications, they are included under “Trustee” only. “Option” refers
to shares of Capital Stock which the named person or group has a right to
acquire within 60 days from March 31,
2009.
|
(2)
|
Messrs. McNamara
and T. C. Hutton and Ms. Laney are trustees of the Chemed Foundation,
which holds 123,476 shares of Capital Stock over which the trustees share
both voting and investment power. This number is not reflected
in the respective
holdings of the individual
trustees.
|
(3)
|
Mr.
Gemunder’s business address is 1600 RiverCenter II, 100 East RiverCenter
Blvd., Covington,
KY 41011.
|
(4) |
The
shares of Capital Stock beneficially owned by Mr. Gemunder include shares
owned by his associate, Amelia Partners, which owns 6,952 shares of
Capital Stock. Amelia Partners’
address is 1600 RiverCenter II, 100 East RiverCenter Blvd., Covington,
KY 41011.
|
(5)
|
Mr.
Grace’s business address is 1100 Park Ave., New York,
NY 10128.
|
(6)
|
The
shares of Capital Stock beneficially owned by Mr. T. C. Hutton include
shares owned by his associates. Such shares include: 3,026 shares owned by
his spouse, Elizabeth H. Hutton; 6,058
shares owned by his son, Thomas S. Hutton; 6,070
shares owned by his daughter, Elizabeth A. Hutton; and
5,900 shares owned by his son, John E. Hutton.
The address shared by the foregoing individuals is 39 Homesdale Road,
Bronxville, NY 10708.
|
(7)
|
The
shares of Capital Stock held by Mr. T. C. Hutton include 126,432 shares of
Capital Stock that were directly held by Mr. E. L. Hutton and 22,162
shares of Capital Stock held by Mr. E. L. Hutton as “Trustee” prior to his
death on March 3, 2009. As of March 31, 2009, such shares are
held in the estate of Mr. E. L. Hutton. Mr. T. C. Hutton is
co-executor of such estate and, as such, has shared voting and dispositive
power of the 148,594 shares previously held by Mr. E. L.
Hutton.
|
(8) |
The
shares of Capital Stock beneficially owned by Ms. Laney include shares
owned by her spouse, D. Michael Laney, who owns 17,200 shares of Capital
Stock. Mr. Laney’s
address is 500 Indian Hill Trail, Cincinnati, OH 45243. |
(9)
|
Ms.
Lindell’s business address is 3110 Vine St., Cincinnati, OH
45219.
|
(10)
|
Mr.
Mrozek has no business address at present.
|
(11) |
Mr.
Rice’s business address is 4209 Buckskin Wood Dr., Ellicott City, MD
21042.
|
(12) |
Mr.
Saunders’s business address is Upham Hall, Miami University, Oxford,
OH 45056.
|
(13)
|
Mr.
Walsh’s business address is 335 Madison Ave., New York,
NY 10017.
|
(14)
|
Mr.
Wood’s business address is 312 Walnut St., Cincinnati,
OH 45202.
|
Information
Regarding Transactions in the Company’s Securities
by
Participants
The following table sets forth
information regarding purchases and sales of the Company’s securities by
Participants during the past two years. No part of the purchase price or market
value of these securities is represented by funds borrowed or otherwise obtained
for the purpose of acquiring or holding such securities.
Name
|
Transaction
Date
|
Amount
of Capital
Stock
|
Transaction
Footnote
|
|
|
|
|
Kevin J.
McNamara
|
05/10/2007
|
(840)
|
(9)
|
|
05/21/2007
|
400
|
(1)
|
|
05/21/2007
|
100,000
|
(2)
|
|
06/27/2007
|
4,000
|
(1)
|
|
06/27/2007
|
(1,598)
|
(6)
|
|
06/28/2007
|
(1,520)
|
(9)
|
|
11/13/2007
|
(7,700)
|
(10)
|
|
11/14/2007
|
(7,300)
|
(10)
|
|
11/16/2007
|
8,500
|
(3)
|
|
01/01/2008
|
(2,256)
|
(6)
|
|
01/01/2008
|
(972)
|
(8)
|
|
02/13/2008
|
9,615
|
(3)
|
|
05/19/2008
|
400
|
(1)
|
|
05/19/2008
|
100,000
|
(2)
|
|
10/24/2008
|
(15,000)
|
(10)
|
|
10/24/2008
|
20,000
|
(5)
|
|
10/24/2008
|
(13,576)
|
(7)
|
|
10/24/2008
|
400
|
(5)
|
|
10/24/2008
|
(260)
|
(7)
|
|
11/10/2008
|
20,000
|
(5)
|
|
11/10/2008
|
(12,997)
|
(7)
|
|
11/12/2008
|
(2,000)
|
(10)
|
|
11/12/2008
|
(2,000)
|
(10)
|
|
11/12/2008
|
(2,000)
|
(10)
|
|
02/20/2009
|
(2,578)
|
(6)
|
|
02/20/2009
|
(1,112)
|
(8)
|
|
02/19/2009
|
11,359
|
(3)
|
|
02/19/2009
|
100,000
|
(2)
|
Joel F.
Gemunder
|
05/21/2007
|
1,000
|
(1)
|
|
05/19/2008
|
1,000
|
(1)
|
Patrick P.
Grace
|
05/21/2007
|
1,000
|
(1)
|
|
05/19/2008
|
1,000
|
(1)
|
Thomas C.
Hutton
|
05/21/2007
|
400
|
(1)
|
|
05/21/2007
|
9,000
|
(2)
|
|
06/27/2007
|
700
|
(1)
|
|
06/27/2007
|
(236)
|
(6)
|
|
11/08/2007
|
14,000
|
(2),
(5)
|
|
11/08/2007
|
(7,646)
|
(7)
|
|
06/19/2007
|
(672)
|
(9)
|
|
06/28/2007
|
(492)
|
(9)
|
|
11/16/2007
|
1,700
|
(3)
|
|
11/28/2007
|
(320)
|
(9)
|
|
01/01/2008
|
(789)
|
(6)
|
|
02/13/2008
|
750
|
(3)
|
|
01/24/2008
|
(243)
|
(9)
|
Name
|
Transaction
Date
|
Amount
of Capital
Stock
|
Transaction
Footnote
|
|
|
|
|
|
03/24/2008
|
(1,291)
|
(9)
|
|
03/24/2008
|
(213)
|
(9)
|
|
05/19/2008
|
400
|
(1)
|
|
05/19/2008
|
9,000
|
(2)
|
|
10/30/2008
|
(6,818)
|
(10)
|
|
02/19/2009
|
909
|
(3)
|
|
02/19/2009
|
9,000
|
(2)
|
Walter L.
Krebs
|
05/21/2007
|
1,000
|
(1)
|
|
05/19/2008
|
1,000
|
(1)
|
Sandra E.
Laney
|
05/18/2007
|
2,000
|
(5)
|
|
05/18/2007
|
(977)
|
(7)
|
|
05/21/2007
|
1,000
|
(1)
|
|
02/29/2008
|
21,000
|
(5)
|
|
02/29/2008
|
(12,309)
|
(7)
|
|
05/19/2008
|
1,000
|
(1)
|
|
05/25/2008
|
(5,132)
|
(12)
|
|
09/30/2008
|
22,042
|
(13)
|
Andrea
R. Lindell
|
05/19/2008
|
1,000
|
(1)
|
Timothy S.
O’Toole
|
05/21/2007
|
400
|
(1)
|
|
05/21/2007
|
20,000
|
(2)
|
|
06/27/2007
|
2,200
|
(1)
|
|
06/27/2007
|
(698)
|
(6)
|
|
10/04/2007
|
(10,000)
|
(10)
|
|
11/16/2007
|
4,500
|
(3)
|
|
01/01/2008
|
(1,700)
|
(6)
|
|
02/13/2008
|
5,000
|
(3)
|
|
05/19/2008
|
400
|
(1)
|
|
05/19/2008
|
32,500
|
(2)
|
|
05/29/2008
|
(10,000)
|
(10)
|
|
09/04/2008
|
(10,000)
|
(10)
|
|
11/17/2008
|
(2,128)
|
(10)
|
|
11/18/2008
|
(7,818)
|
(10)
|
|
02/19/2009
|
5,997
|
(3)
|
|
02/19/2009
|
35,000
|
(2)
|
Donald E.
Saunders
|
05/21/2007
|
1,000
|
(1)
|
|
07/17/2007
|
(300)
|
(10)
|
|
07/17/2007
|
64
|
(4)
|
|
05/19/2008
|
1,000
|
(1)
|
George J. Walsh
III
|
11/20/2007
|
200
|
(11)
|
|
10/13/2008
|
200
|
(11)
|
|
10/14/2008
|
150
|
(11)
|
|
11/25/2008
|
(4,300)
|
(10)
|
Frank E.
Wood
|
05/21/2007
|
1,000
|
(1)
|
|
05/19/2008
|
1,000
|
(1)
|
Spencer S.
Lee
|
05/08/2007
|
6,000
|
(5)
|
|
05/08/2007
|
(3,348)
|
(7)
|
|
05/08/2007
|
(5,036)
|
(10)
|
|
05/09/2007
|
(1,000)
|
(10)
|
|
05/09/2007
|
(200)
|
(10)
|
|
05/09/2007
|
(1,000)
|
(10)
|
|
05/09/2007
|
(800)
|
(10)
|
|
05/21/2007
|
19,000
|
(2)
|
|
06/27/2007
|
1,750
|
(1)
|
|
06/27/2007
|
(625)
|
(6)
|
|
09/19/2007
|
(1000)
|
(10)
|
|
09/24/2007
|
(64)
|
(9)
|
Name
|
Transaction
Date
|
Amount
of Capital
Stock
|
Transaction
Footnote
|
|
|
|
|
|
11/16/2007
|
3000
|
(3)
|
|
01/01/2008
|
(1,531)
|
(6)
|
|
02/13/2008
|
1,500
|
(3)
|
|
05/19/2008
|
19,000
|
(2)
|
|
07/31/2008
|
(1,000)
|
(10)
|
|
07/31/2008
|
(1,000)
|
(10)
|
|
07/31/2008
|
(1,000)
|
(10)
|
|
07/31/2008
|
(1,000)
|
(10)
|
|
09/22/2008
|
19,000
|
(5)
|
|
09/22/2008
|
(11,200)
|
(7)
|
|
10/24/2008
|
(2,000)
|
(10)
|
|
10/31/2008
|
(1,000)
|
(10)
|
|
12/09/2008
|
(100)
|
(9)
|
|
02/19/2009
|
1,817
|
(3)
|
|
02/19/2009
|
19,000
|
(2)
|
Arthur V. Tucker,
Jr.
|
05/10/2007
|
11,000
|
(5)
|
|
05/10/2007
|
(5,845)
|
(7)
|
|
05/11/2007
|
(4,203)
|
(10)
|
|
05/21/2007
|
18,000
|
(2)
|
|
06/27/2007
|
1,100
|
(1)
|
|
06/27/2007
|
(439)
|
(6)
|
|
11/16/2007
|
2,400
|
(3)
|
|
01/01/2008
|
(1,011)
|
(6)
|
|
02/13/2008
|
2,000
|
(3)
|
|
02/27/2008
|
1,000
|
(5)
|
|
02/27/2008
|
(559)
|
(7)
|
|
02/27/2008
|
16,000
|
(5)
|
|
02/27/2008
|
(8,836)
|
(7)
|
|
05/01/2008
|
(3,000)
|
(10)
|
|
05/01/2008
|
(3,000)
|
(10)
|
|
05/19/2008
|
18,000
|
(2)
|
|
07/31/2008
|
15,000
|
(5)
|
|
07/31/2008
|
(10,375)
|
(7)
|
|
08/04/2008
|
(8,582)
|
(10)
|
|
02/19/2009
|
2,408
|
(3)
|
|
02/19/2009
|
18,000
|
(2)
|
David P.
Williams
|
05/21/2007
|
50,000
|
(2)
|
|
06/27/2007
|
2,200
|
(1)
|
|
06/27/2007
|
(658)
|
(6)
|
|
08/03/2007
|
5,000
|
(11)
|
|
11/16/2007
|
4,500
|
(3)
|
|
01/01/2008
|
(1,610)
|
(6)
|
|
02/13/2008
|
3,900
|
(3)
|
|
05/14/2008
|
(6,000)
|
(10)
|
|
05/19/2008
|
35,000
|
(2)
|
|
11/11/2008
|
20,000
|
(5)
|
|
11/11/2008
|
(12,898)
|
(7)
|
|
11/11/2008
|
10,000
|
(5)
|
|
11/11/2008
|
(6,524)
|
(7)
|
|
11/11/2008
|
(5,129)
|
(10)
|
|
11/12/2008
|
(16,671)
|
(10)
|
|
11/13/2008
|
(200)
|
(10)
|
|
02/19/2009
|
4,680
|
(3)
|
|
02/19/2009
|
35,000
|
(2)
|
_____________________
(1) Award
of fully vested stock.
(2) Award
of stock options.
(3) Award
of restricted stock.
(4) Acquisition
upon dividend reinvestment.
(5) Exercise
or conversion of derivative security exempted pursuant to Rule
16b-3.
(6) Payment
of tax obligation.
(7) Payment
of purchase price and tax obligation on stock option award
exercise.
(8) Disposition
pursuant to Rule 16b-3(e) per Domestic Relations Order.
(9) Bona
fide gift.
(10) Open-market
or private sale of non-derivative or derivative security.
(11) Open-market
or private purchase of non-derivative or derivative security.
(12) Distribution
of pension stock to spouse.
(13) Distribution
of stock from the Excess Benefit Plan.
Miscellaneous
Information Concerning Participants
Except as described in this
Annex A or otherwise disclosed in this Proxy Statement, to the Company’s
knowledge:
●
|
No
associate of any Participant beneficially owns, directly or indirectly,
any securities of the Company.
|
●
|
No
Participant beneficially owns, directly or indirectly, any securities of
any subsidiary of the Company.
|
●
|
Since
the beginning of the Company’s last fiscal year, no Participant or any of
his or her associates or immediate family members was a party to any
transaction, or is to be a party to any currently proposed transaction, in
which (a) the Company was or is to be a participant, (b) the
amount involved exceeded or exceeds $120,000 and (c) any such
Participant, associate or immediate family member had or will have a
direct or indirect material
interest.
|
●
|
No
Participant or any of his or her associates has any arrangement or
understanding with any person with respect to any future employment by the
Company or its affiliates, or with respect to any future transactions to
which the Company or any of its affiliates will or may be a
party.
|
●
|
No
Participant is, or was within the past year, a party to any contract,
arrangement or understanding with any person with respect to any
securities of the Company, including, but not limited to, joint ventures,
loan or option arrangements, puts or calls, guarantees against loss or
guarantees of profit, division of losses or profits, or the giving or
withholding of proxies.
|
●
|
No
Participant has any substantial interest, direct or indirect, by security
holdings or otherwise, in any matter to be acted upon at the Annual
Meeting other than, with respect to each nominee, such nominee’s interest
in election to the Board of
Directors.
|
Except as otherwise disclosed in this
Proxy Statement, (a) no occupation carried on by any director during the past
five years was carried on with any corporation or organization that is a parent,
subsidiary or other affiliate of the Company, (b) there are no family
relationships among any of the directors and any executive officer of the
Company, nor is there any arrangement or understanding between any director,
executive officer and any other person pursuant to which that director or
executive officer was selected as a director or executive officer of the
Company, as the case may be and (c) there are no material proceedings in which
any director or executive officer of the Company is a party adverse to the
Company or any of its subsidiaries, or has a material interest adverse to the
Company or any of its subsidiaries.
ANNEX
A
PRELIMINARY
PROXY – SUBJECT TO COMPLETION
This
Proxy is Solicited on Behalf of the Board of Directors of Chemed Corporation for
the
2009
Annual Meeting of Chemed Corporation Stockholders
May 29,
2009, 11:00 a.m. Eastern
Time
The Queen
City Club, 331 East Fourth Street
Cincinnati,
Ohio
YOUR
VOTE IS IMPORTANT
Please
take a moment now to vote your common shares of Chemed
Corporation
for the upcoming Annual Meeting of Stockholders.
PLEASE
VOTE TODAY!
PLEASE
REVIEW THE PROXY STATEMENT
AND
VOTE TODAY IN ONE OF THREE EASY WAYS
(See
reverse side for instructions)
WHITE
PROXY CARD
This
Proxy is Solicited on Behalf of the Board of Directors of Chemed Corporation for
the
2009
Annual Meeting of Chemed Corporation Stockholders
The
undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated [●], 2009, and
revoking all prior proxies, hereby appoints Messrs. McNamara and Walsh, and each
of them as Proxy Holders with full power of substitution, to act and vote the
shares that the undersigned is entitled to vote at the Annual Meeting of
Stockholders (including any adjournments or postponements) of CHEMED CORPORATION
to be held on May 29, 2009, at 11:00 a.m. Eastern Time at The Queen City
Club, 331 East Fourth Street, Cincinnati, Ohio, with all powers the undersigned
would possess if personally present, on the proposals described in the Proxy
Statement, including the election of directors, and, in accordance with their
discretion, on any other business that may come before the meeting.
The
shares represented by this instrument of proxy will be voted. Where a
choice is specified, the proxy will be voted as directed. You are
encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE
SIDE, but you need not mark any boxes if you wish to vote in accordance with the
Board of Directors’ recommendations. If no direction is
made, the Proxy will be
voted: (a) “FOR” all of the
Company’s director nominees
in Proposal 1 and (b) “FOR” Proposal 2.
The Proxy Holders cannot vote your shares unless you sign and return this
card.
(CONTINUED
AND TO BE SIGNED ON THE REVERSE SIDE)
THERE
ARE THREE WAYS TO VOTE: BY INTERNET, TELEPHONE OR MAIL
Internet
and telephone voting is available 24 hours a day, seven days a
week
through 12:00 AM Eastern Time on May
29,
2009.
Your
Internet or telephone vote authorizes the named proxies to vote your shares in
the same manner
as
if you marked, signed and returned your proxy card.
INTERNET
https://www.proxyvotenow.com/che
|
TELEPHONE
1-866-860-0412
in
the U.S. or Canada
1-215-521-1344
outside
the U.S. and Canada
|
MAIL
|
● Go to the Web site address listed
above.
● Have your WHITE PROXY CARD
ready.
● Follow the simple instructions
that appear on your
computer
screen.
|
● Use any
telephone.
● Have your WHITE PROXY
CARD
ready.
● Follow the simple recorded
instructions.
|
● Mark, sign and date your
WHITE PROXY
CARD.
● Detach your WHITE PROXY
CARD.
● Return your WHITE PROXY
CARD in the
postage-paid
envelope
provided.
|
Please
Vote, Sign, Date and Return Promptly in the Enclosed Postage-
Paid
Envelope
(continued
from other side)
DETACH PROXY CARD HERE TO VOTE BY
MAIL
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL THE NOMINEES
LISTED (PROPOSAL 1) AND FOR PROPOSAL
2.
PROPOSAL
1 — To elect 1. Kevin J. McNamara, 2. Joel F. Gemunder, 3. Patrick P.
Grace, 4. Thomas C. Hutton, 5. Walter L. Krebs, 6. Andrea R.
Lindell, 7. Ernest J. Mrozek, 8. Thomas P. Rice, 9. Donald E. Saunders,
10. George J. Walsh III and 11. Frank E. Wood.
|
PROPOSAL
2 — Ratification of Audit Committee’s selection of PricewaterhouseCoopers
LLP as independent accountants for 2009.
|
FOR
o
|
AGAINST
o
|
ABSTAIN
o
|
FOR
ALL
|
WITHHOLD
FROM
ALL
|
FOR
ALL, WITH
EXCEPTIONS
|
|
o
|
o
|
o
|
Please
sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please
also give your full title. If a corporation, please sign in full corporate
name by an authorized officer. If a partnership, please sign in full
partnership name by an authorized person.
o Please indicate
by marking this box if you also intend to attend the 2009 Annual Meeting
of Stockholders.
|
INSTRUCTIONS: To withhold
authority to vote for any individual Nominee(s) mark the “FOR ALL,
WITH EXCEPTIONS” box and write the number of the
excepted nominee(s) in the space below.
|
|
Dated:
|
,2009
|
Signature:
|
|
Title
or Authority:
|
|
Signature
(if held jointly):
|
|
|
|
|
PLEASE
SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE
TODAY.
|