Nordson Corporation DEF 14A
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
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Registrant x
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Proxy Statement
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Confidential, for Use of the
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x Definitive
Proxy Statement
o Definitive
Additional Materials
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o Soliciting
Material Pursuant Rule 14a-12
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NORDSON CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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pursuant to Exchange Act
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TABLE OF CONTENTS
NORDSON CORPORATION
Notice of 2006
Annual Meeting
and Proxy Statement
Edward P. Campbell
Chairman and
Chief Executive Officer
January 20, 2006
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders to be held at the Spitzer Conference Center,
1005 North Abbe Road, Elyria, Ohio, at 9:30 a.m. on
Tuesday, February 21, 2006. We hope that you will be able
to attend.
The Notice of Annual Meeting of Shareholders and the Proxy
Statement, which are included in this booklet, describe the
matters to be acted upon at the meeting. Regardless of the
number of shares you own, your vote on these matters is
important. Whether or not you plan to attend the meeting, I urge
you to mark your choices on the enclosed proxy card and to sign
and return it in the envelope provided. If you later decide to
vote in person at the meeting, you will have an opportunity to
revoke your proxy and vote by ballot.
I look forward to seeing you at the meeting.
Sincerely,
EDWARD P. CAMPBELL
Chairman and
Chief Executive Officer
NORDSON CORPORATION
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
The Annual Meeting of Shareholders of Nordson Corporation will
be held at the Spitzer Conference Center, 1005 North Abbe Road,
Elyria, Ohio, at 9:30 a.m. on Tuesday, February 21,
2006. The purposes of the meeting are:
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1. |
To elect four directors to the class whose term expires in 2009; |
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2. |
To transact any other business that may properly come before the
meeting. |
Shareholders of record at the close of business on
December 30, 2005 are entitled to notice of and to vote at
the meeting.
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For the Board of Directors |
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ROBERT E. VEILLETTE |
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Secretary |
January 20, 2006
NORDSON CORPORATION
PROXY STATEMENT
The Board of Directors of Nordson Corporation requests your
proxy for use at the Annual Meeting of Shareholders to be held
on February 21, 2006, and at any adjournments of that
meeting. This Proxy Statement is to inform you about the matters
to be acted upon at the meeting.
If you attend the meeting, you can vote your shares by ballot.
If you do not attend, your shares can still be voted at the
meeting if you sign and return the enclosed proxy card. Shares
represented by a properly signed card will be voted in
accordance with the choices marked on the card. If no choices
are marked, the shares will be voted to elect the nominees
listed below. You may revoke your proxy before it is voted by
giving notice to Nordson in writing or orally at the meeting.
However, your presence at the Annual Meeting, without any
further action on your part, will not revoke your previously
granted proxy.
This Proxy Statement and the enclosed proxy card are being
mailed to shareholders on or about January 20, 2006.
Nordsons executive offices are located at 28601 Clemens
Road, Westlake, Ohio 44145, telephone number (440) 892-1580.
ELECTION OF DIRECTORS
Nordsons Board of Directors is composed of eleven
directors, divided into two classes of four members and one
class of three members. The terms of these classes as of the
2006 Annual Meeting will expire in 2007, 2008 and 2009. Each of
the directors serves for a term of three years and until a
successor is elected. The Board of Directors met five times
during the last fiscal year.
The name and age of each of the four nominees for election as
directors for terms expiring in 2009, as well as present
directors whose terms will continue after the meeting, appear
below together with his or her principal occupation for at least
the past five years, the year each became a director of the
Company and certain other information. The information is as of
January 20, 2006.
Nominees For Terms Expiring in
2009
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Name |
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Age |
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Present Principal Employment and Prior Business Experience |
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Director Since |
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William P. Madar
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66 |
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Mr. Madar served as Chairman of the
Board of Nordson from October 1997 through March 2004 and was
Vice Chairman and Chief Executive Officer from August 1996 to
October 1997. Mr. Madar is a director of Brush Engineered
Materials, Inc., a producer and supplier of beryllium and
related products, specialty metal systems and precious metal
products, and The Lubrizol Corp., a manufacturer of specialty
chemicals.
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1985 |
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William W. Colville
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71 |
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Mr. Colville was Senior Vice
President Law, General Counsel and Secretary of
Owens-Corning Fiberglas Corp. from 1984 until December 1994 and
served as a legal consultant to Owens-Corning from January 1995
until October 2000. Owens-Corning manufactures glass fiber
products and related materials. Mr. Colville is a director
of Owens-Corning.
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1988 |
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2
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Name |
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Age |
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Present Principal Employment and Prior Business Experience |
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Director Since |
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Edward P. Campbell
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56 |
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Mr. Campbell has served as Chairman
and Chief Executive Officer of Nordson since March 12,
2004. He served as President and Chief Executive Officer of
Nordson from November 1997 to March 2004 and as President and
Chief Operating Officer of Nordson from August 1996 to October
1997. He is a director of KeyCorp, a financial services company,
and OMNOVA Solutions, Inc., a manufacturer of specialty
chemicals, emulsion polymers and decorative and building
products.
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1996 |
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Dr. David W. Ignat
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64 |
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Dr. Ignat was the Scientific Editor
and General Manager of Nuclear Fusion, a research
journal published by the International Atomic Energy Agency,
from 1996 through 2002. From 2000 through 2001, he was a
consultant to the Princeton Plasma Physics Laboratory, Princeton
University.
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2002 |
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Present Directors Whose Terms Expire in
2007
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Name |
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Age |
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Present Principal Employment and Prior Business Experience |
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Director Since |
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William D. Ginn
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82 |
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Mr. Ginn is a retired former
partner with the law firm of Thompson Hine LLP. As a retired
former partner of Thompson Hine LLP, Mr. Ginn does not
receive any compensation from nor does he render any services to
or on behalf of the firm. At the time the Board of Directors
adopted the mandatory retirement age for directors,
Mr. Ginn had already reached age 75 and was exempted
from this requirement.
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1959 |
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Stephen R. Hardis
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70 |
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Mr. Hardis served as Chairman and
Chief Executive Officer of Eaton Corporation from January 1996
through July 2000. Eaton produces automation systems and
equipment, capital and consumer goods components, aerospace and
defense systems, and automotive components. Mr. Hardis is a
director of Lexmark International, Inc., a manufacturer and
seller of computer printer products; Marsh & McLennan
Cos., a provider of insurance and reinsurance, consulting, and
investment advisory and management services; American Greetings
Corporation, a creator, manufacturer and distributor of greeting
cards and special occasion products; The Progressive
Corporation, an insurance holding company;
STERIS Corporation, a maker of technologies to control
infection and contamination; and Axcelis Technologies, Inc., a
producer of ion implantation equipment used in the semiconductor
manufacturing industry.
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1984 |
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William L. Robinson
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64 |
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For the last six years,
Mr. Robinson has been a professor of law at the University
of the District of Columbias David A. Clarke School of
Law. In 2000, Mr. Robinson was a visiting professor of law
at the University of Maryland School of Law.
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1995 |
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Benedict P. Rosen
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69 |
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Mr. Rosen has served as Chairman of
AVX Corporation since July 1997 and was Chief Executive Officer
of AVX Corporation from July 1997 through July 2001. AVX is an
international producer of electronic components.
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1999 |
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3
Present Directors Whose Terms Expire in
2008
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Name |
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Age |
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Present Principal Employment and Prior Business Experience |
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Director Since |
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Peter S. Hellman
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56 |
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Mr. Hellman was elected President
and Chief Financial and Administrative Officer of Nordson on
March 12, 2004. Mr. Hellman served as Executive Vice
President and Chief Financial and Administrative Officer of
Nordson from February 2000 to March 2004. From 1995 through
February 1999, Mr. Hellman was President and Chief
Operating Officer of TRW Inc., where he also served on its board
of directors and as a member of the management committee. TRW
was a provider of advanced technology products and services for
the automotive, aerospace and information systems markets.
Mr. Hellman serves as a director of Qwest Communications
International Inc., a leading provider of voice, video and data
services, and Baxter International Inc., a global medical
products and services company.
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2001 |
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Mary G. Puma
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48 |
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Ms. Puma is Chairman of the Board
and Chief Executive Officer of Axcelis Technologies, Inc., a
producer of ion implantation equipment used in the semiconductor
manufacturing industry. Previous to her election as President
and Chief Executive Officer of Axcelis in January 2002,
Ms. Puma served as Axcelis President and Chief
Operating Officer from May 2000 to January 2002 and as Vice
President of Semiconductor Equipment Operations of Eaton
Corporation from January 1999 to May 2000.
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2001 |
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Joseph P. Keithley
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57 |
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Mr. Keithley is Chairman of the
Board, President and Chief Executive Officer of Keithley
Instruments, Inc., a provider of measurement solutions to the
semiconductor, fiber optics, telecommunications and electronics
industries. He has served as Chairman of the Board of Keithley
Instruments since 1991, as CEO since 1993 and as President since
1994. Mr. Keithley is also a director of Brush Engineered
Materials, Inc., a producer and supplier of beryllium and
related products, specialty metal systems and precious metal
products.
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2001 |
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In accordance with the Companys Governance Guidelines
regarding retirement of a director, Dr. Glenn R. Brown
retired from Nordsons Board of Directors on May 24,
2005. Dr. Brown served as a director of the Company from
1986 until his retirement in May 2005. With
Dr. Browns retirement, the Board of Directors now has
eleven members.
No shareholder or group that beneficially owns 5% or more of
Nordsons outstanding Common Shares has recommended a
candidate for election as a director at the 2006 Annual Meeting
of the Shareholders.
Corporate Governance, Committees of the
Board of Directors, and Attendance
The Board of Directors has adopted the Nordson Corporation
Governance Guidelines (the Guidelines). The
Guidelines were amended by action of the Board of Directors on
December 7, 2005, pursuant to a recommendation from the
Governance and Nominating Committee, to provide for share
ownership guidelines for directors and executive officers. The
amended Guidelines (found at Appendix A to this Proxy
Statement) as well as the committee charters referenced therein
are available for review in the Corporate Governance
section of the Companys website: www.nordson.com.
The Company has a Code of Business and Ethical Conduct (the
Code) that addresses the Companys commitment
to honesty, integrity and the ethical behavior of the
Companys directors, officers and
4
employees with current and potential customers, consumers,
fellow employees, competitors, government and self-regulatory
agencies, investors, the public, the media and anyone else with
whom the Company has or may have contact. Violations of any of
the standards of the Code will be met with appropriate
disciplinary action, up to and including termination of
employment. Retaliation against any director, officer or
employee who files a report concerning what he or she reasonably
believes to be conduct that violates the Code is strictly
prohibited. The Code is posted in the Corporate
Governance section of the Companys website:
www.nordson.com.
Independent Directors
The Board of Directors has affirmatively determined that each
director, except for Messrs. Campbell and Hellman, is an
independent director within the meaning of the
independence standards of the National Association of Securities
Dealers (NASD). The Guidelines provide that the
Board of Directors will be comprised of a majority of
independent directors and that only those directors or nominees
who meet the listing standards of the NASD will be considered
independent. The Guidelines also provide that the independent
directors of the Board will meet in executive session no less
than two times a year. The independent directors met two times
during the last fiscal year.
Committees and Meetings of the Board of Directors
Meetings of the Board. The Companys Board of
Directors has five regularly scheduled meetings each year.
Special meetings are held as necessary. In addition, management
and the directors communicate informally on a variety of topics,
including suggestions for Board or Committee agenda items,
recent developments and other matters of interest to the
directors. The Board monitors overall corporate performance and
the integrity of the Companys financial controls and legal
compliance procedures. The Board of Directors considers it
important to continually evaluate and improve the effectiveness
of the Board and its committees. The Board and each of its
standing committees conduct an annual self-evaluation. The
Governance and Nominating Committee oversees the Boards
self-evaluation process.
Audit Committee. The Audit Committee presently consists
of five members, Messrs. Colville, Ginn, Madar,
Dr. Ignat and Ms. Puma. The Companys securities
are quoted on the National Association of Securities Dealers
Automated Quotations National Market System. All members of the
Audit Committee meet the independence standards of the NASD. The
Board of Directors has designated William P. Madar and
Mary G. Puma as audit committee financial
experts pursuant to the SECs final rules
implementing Section 407 of the Sarbanes-Oxley Act. The
Audit Committee is responsible for:
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reviewing the proposed audit programs (including both
independent and internal audits) for each fiscal year, the
results of these audits, and the adequacy of the Companys
systems of internal accounting control; |
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the appointment, compensation, and oversight of the independent
auditors for each fiscal year; |
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the approval of all permissible audit and non-audit services to
be performed by the independent auditors; |
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the establishment of procedures for the receipt, retention, and
treatment of complaints received by the Company regarding
accounting, internal accounting controls, or auditing
matters; and |
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the approval of all related-party transactions. |
A more detailed discussion of the purposes, duties, and
responsibilities of the Audit Committee is found in the
Committees charter included in this Proxy Statement as
Attachment 1 to the Guidelines. The Committee has discussed with
the independent auditors the auditors independence from
management and the Company, including the matters in written
disclosures required by the Independence Standards Board, and
considered the compatibility of non-audit services with the
auditors independence. The Audit Committee Report to the
Board of Directors is attached to this Proxy Statement as
Appendix B. The Audit Committee met six times during the
last fiscal year.
5
Compensation Committee. The present members of the
Compensation Committee are Messrs. Hardis, Keithley,
Robinson and Rosen. All members of the Compensation Committee
meet the NASD independence standards. The Compensation Committee
is responsible for approving executive officer compensation and
for administering the incentive and equity participation plans
which make up the variable compensation paid to executive
officers including Nordsons 2004 Long-Term Performance
Plan (the Performance Plan), 2004 Management
Incentive Compensation Plan, Deferred Compensation Plan, and
Long-Term Incentive Plan. The Committee also administers
employee stock plans and other benefit plans, including the
Companys Excess Defined Benefit Pension Plan and Excess
Defined Contribution Retirement Plan. During the last fiscal
year, the Compensation Committee met seven times.
Governance and Nominating Committee. The present members
of the Governance and Nominating Committee are
Messrs. Colville, Ginn, Hardis and Rosen. All members of
the Governance and Nominating Committee meet the NASD
independence standards. The purpose of the Governance and
Nominating Committee is to ensure that the Board of Directors
and its committees are appropriately constituted so that the
Board and directors may effectively meet their fiduciary
obligations to shareholders and the Company. A more detailed
discussion of the purposes, duties, and responsibilities of the
Governance and Nominating Committee is found in the
Committees charter which is available for review in the
Corporate Governance section of the Companys
website: www.nordson.com. The Governance and Nominating
Committee met three times during the last fiscal year.
Pension and Finance Committee. The present members of the
Pension and Finance Committee are Messrs. Keithley, Madar,
Robinson, Dr. Ignat and Ms. Puma. The purpose of the
Pension and Finance Committee is to provide oversight of the
named fiduciaries (the Company and the Companys
Administrative Committee for Qualified Retirement Plans)
administration of the Nordson Corporation Salaried and
Hourly-Rated Employees Savings Trust (NEST)
and Salaried and Hourly-Rated Employees Pension Plans (the
Plans), including oversight of the Companys
and Administrative Committees selection and evaluation of
the performance of investment managers that have investment
management authority over assets of the NEST and the Plans.
During the last fiscal year, the Pension and Finance Committee
met two times.
Directors are expected to attend the Annual Meeting of
Shareholders and all Board of Directors meetings and meetings of
committees on which a director serves. During the last fiscal
year each director attended at least seventy-five percent of the
meetings of the Board of Directors and of the committees on
which he or she served. All directors except Mr. Keithley
attended the 2005 Annual Meeting of the Shareholders.
Compensation of Directors
Nordson pays non-employee directors a fee of $7,500 per
quarter and $1,500 for each Board meeting attended. Each
non-employee director is also paid $1,000 for each committee
meeting attended. The Chairperson of the Audit Committee
receives an additional $1,250 per quarter. The Chairperson
of the Compensation Committee receives an additional
$1,000 per quarter with Chairpersons of other committees
receiving an additional $750 per quarter.
6
The following table sets forth the actual total compensation
paid to each director for services provided as a director,
including any amounts payable for committee participation for
the last fiscal year and fiscal year 2004.
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2004 |
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2005 |
Director |
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($) |
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($) |
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Dr. Glenn R. Brown (1)
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42,000 |
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39,500 |
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Edward P. Campbell (2)
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n/a |
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n/a |
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William W. Colville
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45,000 |
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44,000 |
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William D. Ginn
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44,000 |
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48,500 |
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Stephen R. Hardis
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46,000 |
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53,500 |
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Peter S. Hellman (2)
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n/a |
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n/a |
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Dr. David W. Ignat
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45,000 |
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46,500 |
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Joseph P. Keithley
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45,000 |
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48,000 |
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William P. Madar (3)
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68,000 |
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47,500 |
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Mary G. Puma
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48,000 |
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50,500 |
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William L. Robinson
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45,000 |
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48,500 |
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Benedict P. Rosen
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45,000 |
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51,500 |
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(1) |
Dr. Brown was paid for only a portion of fiscal year 2005
due to his retirement from Nordsons Board of Directors on
May 24, 2005. |
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(2) |
As employees of the Company, Messrs. Campbell and Hellman
do not receive directors fees. |
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(3) |
Includes fees paid to Mr. Madar in 2004 as Chairman of the Board. |
Non-employee directors may defer all or part of their fees until
retirement under the Performance Plan. The fees may be deferred
as cash and credited with interest at a U.S. Treasury rate,
or they may be translated into stock equivalents based on the
market price of Nordson Common Shares when the fees are earned
and credited with additional stock equivalents when dividends
are paid.
Non-employee directors annually are granted an option to
purchase 2,500 Nordson Common Shares and receive
500 restricted Nordson Common Shares. The option vests six
months from the date of grant and must be exercised no later
than ten years from the date of grant. Restrictions on transfer
of Nordson Common Shares expire six months from the date of
grant.
Effective December 7, 2005, the Company established stock
ownership guidelines for directors and executive officers as a
way to align more closely the interests of the directors and
executive officers with those of the Companys
shareholders. Directors and executive officers are now required
to own the following amount of Nordson Common Shares:
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Directors
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5 times annual retainer |
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Chief Executive Officer
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5 times base salary |
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President
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3 times base salary |
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Other Executive Officers
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2 times base salary |
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The foregoing ownership targets are to be achieved within five
years of joining the Board or, for executive officers, within
five years after being hired or promoted to an executive officer
position. Current directors and executive officers are to
achieve the target stock ownership within five years after
December 7, 2005, the date the ownership guidelines were
adopted by the Board.
7
Ownership of Nordson Common Shares
The following table shows the number and percent of Nordson
Common Shares beneficially owned on December 30, 2005 by
each of the directors, including nominees; each of the executive
officers named in the Summary Compensation Table set forth on
page 14; any persons known to Nordson to be the beneficial
owner of more than 5% of Nordson Common Shares; and by all
directors and executive officers as a group.
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Name |
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Number of Shares (1) |
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Percent |
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Edward P. Campbell (2)
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926,519 |
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2.7 |
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William W. Colville
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42,892 |
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0.1 |
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William D. Ginn (3)(4)(5)
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529,796 |
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1.6 |
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Stephen R. Hardis
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94,173 |
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0.3 |
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Peter S. Hellman (2)
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324,904 |
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1.0 |
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Dr. David W. Ignat
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1,611,198 |
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4.8 |
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Joseph P. Keithley
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19,215 |
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0.1 |
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William P. Madar
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216,466 |
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0.7 |
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Mary G. Puma
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14,415 |
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* |
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William L. Robinson
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35,480 |
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0.1 |
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Benedict P. Rosen
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36,980 |
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0.1 |
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Donald J. McLane (2)
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350,488 |
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1.0 |
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Michael Groos (2)
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18,538 |
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0.1 |
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Robert A. Dunn, Jr. (2)
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110,079 |
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0.3 |
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Eric T. Nord (6)
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2,849,146 |
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8.6 |
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Columbia Wanger Asset Management LP
(7)
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2,579,700 |
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7.7 |
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Barclays Global Investors, N.A. (8)
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1,931,505 |
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5.8 |
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All directors and executive
officers as a group (17 people) (9)
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4,472,773 |
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12.8 |
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(1) |
Except as otherwise stated in notes (2) through
(6) below, beneficial ownership of the shares held by each
of the directors, executive officers and affiliates consists of
sole voting power and sole investment power, or of voting power
and investment power that is shared with the spouse of the
director, executive officer or affiliate. Beneficial ownership
of the shares held by the non-employee directors includes the
right to acquire shares on or before February 28, 2006
under the Stock Option provisions of the Performance Plan and
the Directors Deferred Compensation provisions of the
Performance Plan in the following amounts: Mr. Colville,
36,947 shares; Mr. Ginn, 0 shares;
Mr. Hardis, 66,860 shares; Dr. Ignat,
11,360 shares; Mr. Keithley, 17,215 shares;
Mr. Madar, 28,144 shares; Ms. Puma,
12,415 shares; Mr. Robinson, 33,234 shares; and
Mr. Rosen, 33,068 shares. |
|
|
(2) |
These include the right to acquire shares on or before
February 28, 2006 in amounts as follows: Mr. Campbell,
723,676 shares; Mr. Hellman, 279,113 shares;
Mr. McLane, 268,113 shares; Mr. Groos,
6,938 shares; and Mr. Dunn, 90,638 shares. With
respect to Mr. Campbell, the number of shares include
21,164 stock equivalent units held by Mr. Campbell under
the Nordson Corporation Deferred Compensation Plan. |
|
(3) |
These include 130,910 shares held by Mr. Ginn as
trustee of various trusts for the grandchildren of Eric Nord. |
|
(4) |
These include 349,145 shares held by the Eric and Jane Nord
Foundation. As a trustee of this foundation, Mr. Ginn has
shared voting power and shared investment power with respect to
these shares. |
|
(5) |
These include 12,000 shares held by the Ginn Family Fund.
As a trustee of this fund, Mr. Ginn has shared voting power
and shared investment power with respect to these shares. |
|
(6) |
On November 9, 2004, the Board of Directors named
Mr. Nord to the honorary position of Chairman Emeritus of
Nordson. Mr. Nord has sole voting power and sole investment
power with respect to |
8
|
|
|
1,846,162 of these shares, has shared voting power and shared
investment power with respect to 981,261 of these shares, and
has the right to acquire 21,723 shares on or before
February 28, 2006. Mr. Nords business address is
c/o Nordson Corporation, 28601 Clemens Road, Westlake, Ohio
44145. |
|
(7) |
Based on most recent 13F filings; Columbia Wanger Asset
Management LP is a registered investment advisor and is located
at 227 West Monroe Street, Suite 3000, Chicago,
Illinois 60606. |
|
(8) |
Based on most recent 13F filings; Barclays Global Investors,
N.A., is a registered investment advisor and is located at 45
Fremont Street, San Francisco, California 94105. |
|
(9) |
Beneficial ownership of the shares held by each of the directors
and executive officers as a group consists of sole voting power
with respect to 143,150 shares, sole voting and sole
investment power with respect to 2,252,125 shares, shared
voting power and shared investment power with respect to
361,145 shares, and the right to acquire
1,716,353 shares on or before February 28, 2006. |
As of December 30, 2005, present and former directors,
officers and employees of Nordson and their families
beneficially owned over 12 million Nordson Common Shares,
representing 36.2% of the outstanding shares. Nordson is party
to an agreement that, with some exceptions, gives Nordson a
right of first refusal with respect to proposed sales of Nordson
Common Shares by Eric Nord, individually or as testamentary
trustee, Mr. Ginn, as trustee, and The Nord Family
Foundation.
Section 16(a) Beneficial Ownership
Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires directors and executive officers of Nordson and persons
who own more than ten percent of Nordsons Common Shares to
file reports of ownership and changes in ownership of Nordson
Common Shares held by them with the Securities and Exchange
Commission. Copies of these reports must also be provided to the
Company.
Based on its review of these reports, the Company believes that,
during the fiscal year ended October 30, 2005, all reports
were filed on a timely basis by reporting persons.
COMPENSATION OF EXECUTIVE
OFFICERS
Compensation Committee Report on
Executive Compensation
The Compensation Committee (the Committee) of the
Board of Directors, each member of which satisfies the
independence standards of the NASD, is responsible for approving
executive management compensation and for administering the
incentive and equity participation plans which make up the
variable compensation paid to executive officers
(Officers). The Committee also administers employee
stock plans and certain other benefit plans.
The Committee and the Board of Directors believe that the
executive management compensation program should support the
goals and objectives of the Company. These goals and objectives
should balance the importance of annual financial performance
with the equally important creation and protection of long-term
fundamentals, which support long-term growth and profitability.
Nordsons executive management compensation program:
|
|
|
|
|
establishes compensation performance objectives that are
directly linked to corporate goals; |
|
|
|
provides a high degree of leverage between compensation and
corporate performance; |
|
|
|
creates long-term incentives directly linked to shareholder
returns; and |
|
|
|
is designed to attract, retain and motivate key executives. |
The Companys executive compensation program consists of
base salary, annual cash bonuses, stock awards, and long-term
incentive awards. All of these components are designed with the
objective of attracting and retaining executives and motivating
management to meet and exceed Company growth and profitability
goals. In determining the total amount and mix of the
compensation package for each Officer,
9
the Committee utilizes external competitive information provided
by independent executive compensation consultants. The Committee
also considers the overall value to the Company of each Officer
based upon individual performance and past and expected
contribution by each Officer towards the achievement of the
Companys performance goals.
Total Cash Compensation
The cash compensation program is designed to provide each
Officer with varying amounts of total cash compensation
depending upon both the individual performance of the Officer
and the financial performance of Nordson compared to the
financial performance of similar industrial companies. The
intent is to establish a direct correlation between
Nordsons financial performance and Officer compensation
such that the percentile ranking of Officer total cash
compensation will generally correlate with the percentile
ranking of Nordsons performance.
This correlation is established by setting Officer base salaries
at approximately the median of similarly sized industrial
company base salaries, and varying the annual cash bonus awards
according to Nordsons financial performance and each
Officers individual performance. Although the annual cash
bonus awards are generally set based upon the degree to which
Nordson met its financial targets and individual Officers met
their performance goals, these targets and goals and the
corresponding bonus payments are periodically calibrated so as
to have Officer total cash compensation at various levels of
performance generally correlate with external market
compensation and performance.
Base Salary
Officer base salaries are targeted at approximately the
50th percentile salary for similar positions within
similarly sized industrial companies. The Committee reviews the
competitiveness of the base salary of each Officer annually and,
if appropriate, salaries are changed based upon individual
performance and competitive position.
Annual Cash Bonus
Officer annual bonuses are funded primarily based upon corporate
and individual performance with payment amounts determined by
reference to one or more of the performance factors set forth in
the Management Incentive Compensation Plan. For fiscal year
2005, the Board of Directors and the Committee set two
quantitative performance measures: (1) earnings per share
growth and (2) after-tax return on capital. Threshold,
target and maximum performance levels are established for each
measure. No bonus is earned if the actual performance is less
than threshold; a bonus of increasing amount is earned as actual
performance exceeds threshold; and a maximum bonus is earned if
actual performance equals or exceeds the maximum level. In
addition to performance against these corporate measures, the
Committee evaluates the performance of each Officer against
established individual performance measures. Over time, actual
bonus awards can vary from no bonus being paid to the maximum
bonus being paid, but will generally average around target
levels. During fiscal year 2005 earnings per share grew 24%,
which exceeded the maximum performance level for this measure.
After-tax return on capital, using the Committee methodology
that applies a capital charge for unamortized goodwill, was 31%,
which exceeded the maximum performance level for this measure.
After considering managements very strong performance
against corporate and individual measures, the Committee
approved cash bonus awards for Mr. Campbell and the four
other most highly compensated Officers as indicated in the
Summary Compensation Table on page 14.
Though payment of annual bonuses are based primarily on
pre-established performance measures, the Committee may,
however, choose to modify measures, change payment levels or
otherwise exercise discretion to reflect the external economic
environment and individual Officer or Company performance.
10
Long-Term Incentives
Long-term incentives consist of stock options, restricted stock
and performance-based cash or stock awards granted under the
Long-Term Incentive Plan. The Committee believes that through
the use of stock and performance-based cash or stock awards,
Officer interests are directly tied with those of the
Companys shareholders.
Officers are granted stock options annually with an exercise
price equal to the average of the high and low price quoted for
Nordson Common Shares on the date of grant. These options are
not fully exercisable until four years following the date of
grant, expire in ten years, and, at the Committees sole
discretion, are subject to (i) a clawback
(profit disgorgement) where an Officer acts inconsistent with
the non-compete provision of his or her employee agreement
following termination of employment or (ii) forfeiture in
the event an Officers employment is terminated due to a
criminal act, fraud or other such behavior inconsistent with the
Companys Code of Business and Ethical Conduct. The stock
option award is designed to reinforce a long-term perspective
and to help retain key executives. Officers receive cash or
stock awards under the Long-Term Incentive Plan based solely on
corporate performance over three-year performance periods.
Awards vary based on the degree to which corporate performance
exceeds predetermined threshold, target and maximum performance
levels at the end of a performance period. No award will occur
unless the Company achieves certain threshold performance
objectives. The Committee may, however, choose to modify
measures, change payment levels or otherwise exercise discretion
to reflect the external economic environment and individual or
Company performance.
For awards granted pursuant to the Long-Term Incentive Plan, the
Committee chooses specific measures for each successive
three-year performance period. In fiscal year 2002, the
Committee established performance measures for the 2003-2005
performance period applicable to all Officers based on
cumulative earnings per share and a reduction in day sales of
inventory during the three-year period. For the 2003-2005
performance period, performance exceeded the maximum performance
levels for both cumulative earnings per share and inventory
reduction during the three-year period. Cumulative earnings per
share for the three-year period were $4.91, representing an
average compound annual rate of growth of 43%. Day sales of
inventory were reduced by 19% during the three-year period. This
reduction was achieved despite a 30% increase in sales and the
continuing effect of strengthening foreign currencies over the
period to inflate the stated value of inventory held at
international locations. Also, the award granted under the
Long-Term Incentive Plan was adjusted to reflect the performance
of Nordsons share price during the three-year performance
period. The Companys share price grew 42% from fiscal year
end 2002 to fiscal year end 2005. Awards granted for the
2003-2005 performance period are presented in the Summary
Compensation Table on page 14.
The Committee has established performance measures for the
2004-2006, 2005-2007 and 2006-2008 performance periods
applicable to all Officers based on cumulative earnings per
share and cumulative revenue. The 2004-2006 and 2005-2007
awards, if any, will be granted in the form of cash. The
2006-2008 award, if any, will be granted in the form of Nordson
Common Shares.
Deferred Compensation Plan
The Deferred Compensation Plan provides Officers and key
employees of Nordson with an opportunity to defer receipt of
cash compensation (base salary and incentive compensation).
Participants may elect to defer all or part of their cash
compensation (base salary and incentive compensation) for a
period of years or until retirement. Participants can select
from seven investment funds from which the earnings on their
deferred cash compensation account will be determined.
Chief Executive Officer Compensation
The fiscal year 2005 compensation for Mr. Campbell was
earned pursuant to the arrangements described above. The
Committee approved a fiscal year 2005 base salary increase for
Mr. Campbell after considering both his overall performance
in this key strategic leadership role and the competitiveness of
his base salary in comparison to the marketplace.
11
In determining the annual bonus to be paid to Mr. Campbell,
the Committee considered the Companys excellent
performance against the corporate financial measures of earnings
per share growth and after-tax return on capital and other
performance measures. His bonus payment reflects that corporate
financial performance exceeded the maximum performance levels
against the earnings per share growth and after-tax return on
capital measures. In addition, the Company had a number of
significant financial, commercial and operational achievements
including:
|
|
|
|
1. |
Sales growth to a record $839 million; |
|
|
2. |
Expansion of operating margins to 14.5% of sales to a record
$122 million; |
|
|
3. |
Continuing excellent cash flow management resulting in over
$80 million of free cash flow after investments in working
capital and capital expenditures and the payment of
dividends; and |
|
|
4. |
Significant progress in driving revenue growth through the
development of new applications and new markets for Nordson
technology. |
Mr. Campbell was granted stock options and long-term
incentive performance units based upon the factors described in
earlier sections of this Report. As described above, for the
2003-2005 performance period under the Long-Term Incentive Plan,
performance exceeded the maximum performance levels for both
cumulative earnings per share and a reduction in day sales of
inventory during the three-year period. Cumulative earnings per
share for the three-year period were $4.91, representing an
average compound annual rate of growth of 43%. Day sales of
inventory were reduced by 19% during the three-year period. This
reduction was achieved despite a 30% increase in sales and the
continuing effect of strengthening foreign currencies over the
period to inflate the stated value of inventory held at
international locations. Also, the award granted under the under
the Long-Term Incentive Plan was adjusted to reflect the
performance of Nordsons share price during the three-year
performance period. The Companys share price grew 42% from
fiscal year end 2002 to fiscal year end 2005. An award was
granted to Mr. Campbell under the Long-Term Incentive Plan
and is presented in the Summary Compensation Table on
page 14.
The Compensation Committees philosophy with respect to the
award of incentive compensation to all Officers, including the
chief executive officer, is to link incentive compensation to
achievement of established performance measures. This philosophy
has been consistently followed during Mr. Campbells
tenure as chief executive officer of the Company. While the cash
bonuses paid to Mr. Campbell for fiscal years 2003-2005
have been at maximum due to exceptional performance during these
years, cash bonuses paid to Mr. Campbell over the eight
years he has been chief executive officer have been consistent
with those paid to chief executive officers of similarly
performing industrial companies over that same period.
Deduction Limitation on Executive Compensation
Under Section 162(m) of the Internal Revenue Code, the
Company may not deduct annual compensation in excess of
$1 million paid to certain employees, generally its Chief
Executive Officer and its four other most highly compensated
executive officers, unless that compensation qualifies as
performance-based compensation. Compensation that is considered
qualified performance-based compensation generally
does not count toward Section 162(m)s $1 million
deduction limit.
In general, the Companys policy is to preserve the federal
income tax deductibility of compensation it pays to its
executives. Accordingly, the Committee has taken appropriate
actions, to the extent it believes feasible, to preserve the
deductibility of annual incentive, long-term performance, and
stock awards. The Committee believes that the Management
Incentive Compensation Plan is a performance driven compensation
plan and therefore satisfies the requirements for exemption
under Internal Revenue Code Section 162(m). However,
notwithstanding this general policy, the Committee will continue
to retain the discretion to authorize payments that may not be
deductible if it believes that they are in the best interests of
both the Company and its shareholders.
12
The annual incentive payments the Committee awarded to Officers
in fiscal year 2005 were subject to, and made in accordance with
performance-based provisions of the Management Incentive
Compensation Plan. In addition and pursuant to the
Committees expectation, Mr. Campbell and
Mr. Hellman voluntarily elected to defer the awards granted
for the 2003-2005 performance period pursuant to the Deferred
Compensation Plan.
The Committee will continue to monitor its compensation policy
for deductibility under Section 162(m), including
encouraging deferrals of otherwise non-deductible payments.
Compensation Committee of the Board of
Directors:
|
|
|
Stephen R. Hardis, Chairman |
|
Joseph P. Keithley |
|
William L. Robinson |
|
Benedict P. Rosen |
January 20, 2006
13
Summary Compensation Table
The following table sets forth individual compensation
information for Edward P. Campbell and the four other most
highly compensated Officers whose total annual salary and bonus
for the fiscal year ended October 30, 2005 exceeded
$100,000:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Compensation |
|
Long-Term Compensation Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
Securities |
|
|
|
|
Name |
|
|
|
|
|
Annual |
|
Restricted |
|
Underlying |
|
L-TIP |
|
All Other |
And Principal |
|
|
|
Salary |
|
Bonus |
|
Compensation |
|
Stock |
|
Options/ |
|
Payouts |
|
Compensation |
Position |
|
Year |
|
($) |
|
($) (1) |
|
($) (2) |
|
($) (3) |
|
SARs (#) |
|
($) (4) |
|
($) (5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward P. Campbell
|
|
|
2005 |
|
|
|
690,000 |
|
|
|
1,380,000 |
|
|
|
|
|
|
|
490,512 |
|
|
|
62,400 |
|
|
|
1,925,000 |
|
|
|
58,297 |
|
Chairman of the Board &
|
|
|
2004 |
|
|
|
665,000 |
|
|
|
1,330,000 |
|
|
|
|
|
|
|
498,780 |
|
|
|
85,000 |
|
|
|
2,463,175 |
|
|
|
64,564 |
|
Chief Executive Officer
|
|
|
2003 |
|
|
|
640,000 |
|
|
|
1,280,000 |
|
|
|
|
|
|
|
419,040 |
|
|
|
85,000 |
|
|
|
0 |
|
|
|
18,436 |
|
|
Peter S. Hellman
|
|
|
2005 |
|
|
|
484,000 |
|
|
|
767,000 |
|
|
|
|
|
|
|
232,250 |
|
|
|
26,450 |
|
|
|
962,500 |
|
|
|
24,833 |
|
President &
|
|
|
2004 |
|
|
|
468,000 |
|
|
|
735,000 |
|
|
|
|
|
|
|
235,535 |
|
|
|
36,000 |
|
|
|
1,098,955 |
|
|
|
46,749 |
|
Chief Financial &
|
|
|
2003 |
|
|
|
452,000 |
|
|
|
714,000 |
|
|
|
|
|
|
|
197,880 |
|
|
|
36,000 |
|
|
|
0 |
|
|
|
7,848 |
|
Administrative Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald J. McLane
|
|
|
2005 |
|
|
|
347,000 |
|
|
|
481,000 |
|
|
|
|
|
|
|
143,066 |
|
|
|
15,450 |
|
|
|
577,500 |
|
|
|
16,695 |
|
Senior Vice President
|
|
|
2004 |
|
|
|
336,000 |
|
|
|
490,000 |
|
|
|
|
|
|
|
145,478 |
|
|
|
21,000 |
|
|
|
530,530 |
|
|
|
29,360 |
|
|
|
|
2003 |
|
|
|
327,000 |
|
|
|
422,000 |
|
|
|
|
|
|
|
122,220 |
|
|
|
21,000 |
|
|
|
0 |
|
|
|
9,384 |
|
|
Michael Groos
|
|
|
2005 |
|
|
|
411,265 |
|
|
|
355,964 |
|
|
|
|
|
|
|
115,196 |
|
|
|
11,750 |
|
|
|
462,000 |
|
|
|
0 |
|
Vice President (6)
|
|
|
2004 |
|
|
|
380,664 |
|
|
|
342,963 |
|
|
|
|
|
|
|
117,768 |
|
|
|
16,000 |
|
|
|
363,792 |
|
|
|
0 |
|
|
|
|
2003 |
|
|
|
331,522 |
|
|
|
294,198 |
|
|
|
|
|
|
|
98,940 |
|
|
|
16,000 |
|
|
|
0 |
|
|
|
0 |
|
|
Robert A.
Dunn, Jr. |
|
|
2005 |
|
|
|
296,000 |
|
|
|
414,400 |
|
|
|
|
|
|
|
102,190 |
|
|
|
9,550 |
|
|
|
385,000 |
|
|
|
20,400 |
|
Vice President
|
|
|
2004 |
|
|
|
284,000 |
|
|
|
398,000 |
|
|
|
|
|
|
|
103,913 |
|
|
|
13,000 |
|
|
|
333,476 |
|
|
|
10,621 |
|
|
|
|
2003 |
|
|
|
270,000 |
|
|
|
378,000 |
|
|
|
|
|
|
|
87,300 |
|
|
|
13,000 |
|
|
|
0 |
|
|
|
7,804 |
|
|
|
(1) |
Bonus amounts paid to all Officers as a group for 2005 was
$4,526,614. |
|
(2) |
The Officers named above receive various perquisites provided by
or paid for by the Company. These perquisites include financial
planning services, annual physicals, memberships in social and
professional clubs, and car allowances. No Officer received
perquisites with a cumulative value of $50,000 or more. |
|
(3) |
Amounts reported represent the dollar value on the date of
grant. With respect to the grant of restricted Nordson Common
Shares to Officers, restrictions on transfer expire four years
after date of grant. As of the fiscal year ended
October 30, 2005, there were 183,400 restricted Nordson
Common Shares outstanding having an aggregate value of
$5,544,717. Dividends on these restricted shares are paid to the
individuals in cash or into the Companys dividend
reinvestment plan, at the election of such individual. |
|
(4) |
L-TIP is
the abbreviation for the Nordson Corporation Long-Term Incentive
Plan. Performance-based elements of the
L-TIP are discussed in
the Compensation Committee Report on Executive Compensation and
the Long-Term Incentive Compensation table on pages 11 and
16, respectively. Fiscal year 2002 was the first year an award
could have been granted under the Long-Term Incentive Plan.
Because performance during fiscal year 2002 fell short of the
threshold levels, no awards were granted for the 2001-2003
performance period to any Officer under the Long-Term Incentive
Plan. |
|
(5) |
Includes in each case, employer matching and allocations made to
the Nordson Corporation Employees Savings Trust Plan
and the Deferred Compensation Plan. Mr. Groos does not
participate in these Plans. |
|
(6) |
Mr. Groos salary and bonus are stated in
U.S. Dollars and reflect the average annual Euro exchange
rate in effect during each of the fiscal years noted. |
14
Option/SAR Grants in Last Fiscal
Year
The following table sets forth information regarding individual
grants of stock options/ SARs made during the fiscal year ended
October 30, 2005 to each Officer named in the Summary
Compensation Table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants |
|
|
|
|
|
|
|
|
|
Number of |
|
% of Total |
|
Exercise |
|
|
|
|
|
|
Securities |
|
Options/SARs |
|
or |
|
|
|
|
|
|
Underlying |
|
Granted to |
|
Base |
|
|
|
Grant Date |
|
|
Options/SARs |
|
Employees in |
|
Price |
|
Expiration |
|
Present Value |
Name |
|
Granted (#) (1)(2)(3) |
|
Fiscal Year |
|
($/Share) |
|
Date |
|
($) (4) |
|
|
|
|
|
|
|
|
|
|
|
Edward P. Campbell
|
|
|
62,400 |
|
|
|
18.2 |
% |
|
|
37.16 |
|
|
|
11/9/2014 |
|
|
|
758,160 |
|
Peter S. Hellman
|
|
|
26,450 |
|
|
|
7.7 |
% |
|
|
37.16 |
|
|
|
11/9/2014 |
|
|
|
321,367 |
|
Donald J. McLane
|
|
|
15,450 |
|
|
|
4.5 |
% |
|
|
37.16 |
|
|
|
11/9/2014 |
|
|
|
187,717 |
|
Michael Groos
|
|
|
11,750 |
|
|
|
3.4 |
% |
|
|
37.16 |
|
|
|
11/9/2014 |
|
|
|
142,762 |
|
Robert A.
Dunn, Jr.
|
|
|
9,550 |
|
|
|
2.8 |
% |
|
|
37.16 |
|
|
|
11/9/2014 |
|
|
|
115,425 |
|
|
|
(1) |
Options were awarded for 156,500 Nordson Common Shares to all
Officers as a group. Options were awarded for 25,000 Nordson
Common Shares to all non-employee directors as a group and for
161,480 Nordson Common Shares to non-Officer employees as a
group. |
|
(2) |
All options awarded to Officers named in the Summary
Compensation Table on page 14 become exercisable beginning
one year after the grant date at a rate of 25% per year on
a cumulative basis. The exercise price was equal to the fair
market value on the date of grant. The exercise price and tax
withholding obligations related to the exercise may be paid by
cash, delivery of currently-owned shares, by offset of the
underlying shares, or any combination thereof. |
|
(3) |
No stock appreciation rights (SARs) were granted to
any employee other than stock appreciation rights (Limited
Rights) that become exercisable only upon the occurrence
of a change in control of Nordson. The Board of Directors,
acting upon the recommendation of the Governance and Nominating
Committee, has terminated the Restated Shareholders Rights Plan
(poison pill) effective December 31, 2005. |
|
(4) |
These values were calculated using a Black-Scholes option
pricing model. The Black-Scholes model is a complicated
mathematical formula which is widely used and accepted for
valuing traded stock options. The actual value, if any, an
Officer may realize will depend on the excess of the stock price
over the exercise price on the date the options are exercised,
and no assurance exists that the value realized by an Officer
will be at or near the value estimated by the Black-Scholes
model. The following assumptions were used in these calculations: |
|
|
|
|
(a) |
Expected life of option: 7 years; |
|
|
|
|
(b) |
Volatility factor: 29.7%; |
|
|
|
|
(c) |
Assumed risk-free rate of interest: 3.88% |
|
|
|
|
(d) |
Assumed dividend yield: 1.7%; |
|
|
|
|
(e) |
No reduction in the value calculated has been made for possible
forfeitures. |
15
Long-Term Incentive
Compensation
The following table sets forth information concerning the
Companys Long-Term Incentive Plan for the 2005-2007
performance period. For the 2005-2007 performance period, the
Committee established performance measures based on cumulative
earnings per share and cumulative revenue during the three-year
period.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL
YEAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated future payouts under |
|
|
Number of |
|
Performance or |
|
non-stock price-based plans |
|
|
shares, units or |
|
other period until |
|
|
|
|
other rights (#) |
|
maturation or |
|
Threshold |
|
Target |
|
Maximum |
Name |
|
(1) |
|
payout |
|
(#) |
|
(#) |
|
(#) |
|
|
|
|
|
|
|
|
|
|
|
Edward P. Campbell
|
|
|
18,350 |
|
|
|
2005-2007 |
|
|
|
0 |
|
|
|
18,350 |
|
|
|
36,700 |
|
Peter S. Hellman
|
|
|
9,200 |
|
|
|
2005-2007 |
|
|
|
0 |
|
|
|
9,200 |
|
|
|
18,400 |
|
Donald J. McLane
|
|
|
5,500 |
|
|
|
2005-2007 |
|
|
|
0 |
|
|
|
5,500 |
|
|
|
11,000 |
|
Michael Groos
|
|
|
4,400 |
|
|
|
2005-2007 |
|
|
|
0 |
|
|
|
4,400 |
|
|
|
8,800 |
|
Robert A.
Dunn, Jr.
|
|
|
3,650 |
|
|
|
2005-2007 |
|
|
|
0 |
|
|
|
3,650 |
|
|
|
7,300 |
|
|
|
(1) |
52,800 share equivalent units were awarded to all Officers
as a group. |
For the Long-Term Incentive Plan 2003-2005 performance period,
the Compensation Committee established performance measures
based on cumulative earnings per share and inventory reduction
during the three-year period. Performance during this period
exceeded maximum performance levels for both measures. Awards
were granted under the Long-Term Incentive Plan and are
presented in the Summary Compensation Table on page 14.
Messrs. Campbell, Hellman, McLane, Groos, and Dunn were
participants in the Long-Term Incentive Plan for the 2003-2005
performance period.
Aggregated Option/ SAR Exercises in
Last Fiscal Year and Fiscal Year-End Option/ SAR
Values
The following table sets forth information regarding each
exercise of stock options/ SARs during the fiscal year ended
October 30, 2005, by each Officer named in the Summary
Compensation Table, and the value of unexercised stock options/
SARs held by each Officer named in the Summary Compensation
Table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
Number of |
|
Unexercised |
|
|
|
|
|
|
Unexercised |
|
In-the-Money |
|
|
|
|
|
|
Options/SARS at |
|
Options/SARs at |
|
|
Shares |
|
Value |
|
FY-End (#) |
|
FY-End (2) ($) |
|
|
acquired on |
|
realized |
|
Exercisable/ |
|
Exercisable/ |
Name |
|
exercise (#) |
|
(1) ($) |
|
Unexercisable |
|
Unexercisable |
|
|
|
|
|
|
|
|
|
Edward P. Campbell
|
|
|
70,000 |
|
|
|
1,068,550 |
|
|
|
729,750/216,650 |
|
|
|
9,240,603/1,712,072 |
|
Peter S. Hellman
|
|
|
-0- |
|
|
|
-0- |
|
|
|
234,500/91,450 |
|
|
|
2,954,160/720,422 |
|
Donald J. McLane
|
|
|
-0- |
|
|
|
-0- |
|
|
|
240,750/54,700 |
|
|
|
3,120,113/439,250 |
|
Michael Groos
|
|
|
756 |
|
|
|
6,842 |
|
|
|
62,000/41,750 |
|
|
|
610,060/336,020 |
|
Robert A.
Dunn, Jr.
|
|
|
-0- |
|
|
|
-0- |
|
|
|
72,750/34,800 |
|
|
|
795,513/227,411 |
|
|
|
(1) |
Represents the difference between the option exercise price and
the fair market value of a Common Share on the Nasdaq National
Market System on the date of exercise. |
|
(2) |
Based on the fair market value of Nordson Common Shares of
$37.32 on the Nasdaq National Market System on October 28,
2005. The ultimate realization of profit on the sale of the
shares underlying such options is dependent upon the market
price of such shares on the date of sale. |
16
Salaried Employees Pension
Plan
Benefits under the Salaried Employees Pension Plan are
based on average annual compensation (salaries, commissions and
incentive bonuses) for the highest 5 years during the last
10 years of employment prior to retirement. The following
table shows the annual benefit payable under the Plan at
age 65.
|
|
|
|
|
|
|
|
|
|
|
|
|
Final |
|
|
Average |
|
Years of Benefit Service |
Annual |
|
|
Compensation |
|
10 |
|
15 |
|
20 |
|
25 |
|
30 |
|
|
|
|
|
|
|
|
|
|
|
$ |
100,000 |
|
|
12,035
|
|
18,054
|
|
24,070
|
|
30,089
|
|
36,108
|
|
200,000 |
|
|
29,169
|
|
43,758
|
|
58,338
|
|
72,927
|
|
87,516
|
|
300,000 |
|
|
47,499
|
|
71,256
|
|
94,998
|
|
118,755
|
|
142,512
|
|
400,000 |
|
|
65,829
|
|
98,754
|
|
131,659
|
|
164,583
|
|
197,508
|
|
500,000 |
|
|
84,164
|
|
126,258
|
|
168,327
|
|
210,422
|
|
252,516
|
|
700,000 |
|
|
120,824
|
|
181,254
|
|
241,648
|
|
302,078
|
|
362,508
|
|
900,000 |
|
|
157,488
|
|
236,256
|
|
314,976
|
|
393,744
|
|
472,512
|
|
1,100,000 |
|
|
194,153
|
|
291,258
|
|
388,305
|
|
485,411
|
|
582,516
|
|
1,300,000 |
|
|
230,813
|
|
346,254
|
|
461,626
|
|
577,067
|
|
692,508
|
|
1,500,000 |
|
|
267,477
|
|
401,256
|
|
534,954
|
|
668,733
|
|
802,512
|
|
1,700,000 |
|
|
304,142
|
|
456,258
|
|
608,283
|
|
760,400
|
|
912,516
|
|
1,900,000 |
|
|
340,802
|
|
511,254
|
|
681,604
|
|
852,056
|
|
1,022,508
|
|
2,100,000 |
|
|
377,466
|
|
566,256
|
|
754,932
|
|
943,722
|
|
1,132,512
|
|
2,300,000 |
|
|
414,131
|
|
621,258
|
|
828,261
|
|
1,035,389
|
|
1,242,516
|
|
2,500,000 |
|
|
450,791
|
|
676,254
|
|
901,582
|
|
1,127,045
|
|
1,352,510
|
The amounts shown in the table represent the annual benefit
(after reduction for Social Security payments) payable to an
employee for life. Certain surviving spouse benefits are also
available under the Pension Plan, as well as early retirement
benefits. The table has been prepared without regard to benefit
limitations imposed by the Internal Revenue Code of 1986, as
amended (the Internal Revenue Code). The years of
benefit service credited under the Pension Plan as of
October 30, 2005 for the Officers named in the Summary
Compensation Table who continue to participate in the Pension
Plan are as follows:
Mr. Campbell 17 years;
Mr. Hellman 5 years;
Mr. McLane 30 years; and
Mr. Dunn 34 years. Mr. Groos is
not included in the Pension Plan but is covered by a pension
arrangement that is specific to Nordson Deutschland GmbH, a
wholly owned subsidiary of Nordson.
Excess Defined Benefit Pension Plan,
Excess Defined Contribution Retirement Plan, and Deferred
Compensation Plan
The Internal Revenue Code limits the benefits provided under the
Salaried Employees Pension Plan, the amount that an
employee can contribute to the Employees Savings
Trust Plan, and the amount that Nordson can contribute on
behalf of an employee under the Employees Savings
Trust Plan.
The Excess Defined Benefit Pension Plan provides for the
payment, out of Nordsons general funds, of the amount by
which certain participants benefits under the Salaried
Employees Pension Plan would exceed the limitations
applicable to that Plan. The terms of payment under the Excess
Defined Benefit Pension Plan are the same as those under the
Salaried Employees Pension Plan.
The table above does not reflect benefit limitations imposed by
the Internal Revenue Code, and shows the aggregate annual
pension benefits payable under both the Salaried Employees
Pension Plan and the Excess Defined Benefit Pension Plan.
The Excess Defined Contribution Retirement Plan provides for the
payment, out of Nordsons general funds, of the amount by
which the participants contributions under the
Employees Savings Trust Plan and Nordsons
contributions to the Employees Savings Trust Plan
would exceed the limitations applicable to that Plan. Salaried
employees who are designated by the Committee and who
participate in the
17
Employees Savings Trust Plan are eligible to
participate in the Excess Defined Contribution Retirement Plan.
Effective January 1, 2005, the Officers were no longer
permitted to participate in the Excess Defined Contribution
Retirement Plan. Based on a recommendation from the Compensation
Committee, the Board of Directors adopted the 2005 Deferred
Compensation Plan. Benefits formerly provided to Officers under
the provisions of the Excess Defined Contribution Retirement
Plan will be provided by the 2005 Deferred Compensation Plan. In
addition to permitting Officers to defer all or a portion of
their base salary and incentive compensation, the 2005 Deferred
Compensation Plan provides for the payment, out of
Nordsons general funds, of the amount by which the
Officers contributions under the Employees Savings
Trust Plan and Nordsons contributions to the
Employees Savings Trust Plan would exceed the
limitations applicable to that Plan.
Benefits under the 2005 Deferred Compensation Plan will be paid
either in lump sum or in annual installments over a five, ten or
fifteen year period at the election of the Officer.
The portions of Nordsons contributions under the 2005
Deferred Compensation Plan allocated to the accounts of the
Officers named in the Summary Compensation Table except
Mr. Groos who does not participate in this Plan, and to all
current Officers as a group during the fiscal year ended
October 30, 2005 are as follows: Mr. Campbell
$37,566; Mr. Hellman $18,533; Mr. McLane
$10,396; Mr. Dunn $0; and all current Officers as a
group $78,162.
18
Performance Graph
The following is a graph which compares the five-year cumulative
return from investing $100 on October 27, 2000 in each of
Nordson Common Shares, the S&P MidCap 400 Index and the
S&P MidCap 400 Industrial Machinery Index, with dividends
assumed to be reinvested.
TOTAL SHAREHOLDER RETURNS
INDEXED RETURNS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2000 | |
|
2001 | |
|
2002 | |
|
2003 | |
|
2004 | |
|
2005 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
NORDSON CORPORATION
|
|
|
100.00 |
|
|
|
87.74 |
|
|
|
95.34 |
|
|
|
103.15 |
|
|
|
132.67 |
|
|
|
143.96 |
|
S&P MIDCAP 400
|
|
|
100.00 |
|
|
|
87.55 |
|
|
|
83.37 |
|
|
|
108.99 |
|
|
|
121.02 |
|
|
|
142.37 |
|
S&P MIDCAP 400 INDUSTRIAL
MACHINERY INDEX
|
|
|
100.00 |
|
|
|
126.47 |
|
|
|
109.70 |
|
|
|
141.81 |
|
|
|
170.26 |
|
|
|
182.69 |
|
Assumes $100 invested on October 27, 2000 in Nordson Common
Shares, the S&P MidCap 400 Index, and the S&P MidCap 400
Industrial Machinery Index. Total return assumes reinvestment of
dividends.
19
Agreements with Officers and
Directors
Nordson has agreed to provide Mr. Campbell with
supplemental pension benefits in order to restore some of the
benefits he would have received if he had remained with his
former employer. Mr. Campbell is a participant in the
Salaried Employees Pension Plan described on page 17,
but his benefits under this plan will be modified to recognize
his prior service with his former employer. His average
annual compensation under this plan will be determined as
the average of his compensation during his 36 consecutive
highest paid months (instead of 60), and he will be eligible for
the full pension benefit at age 60. He may retire prior to
age 60 commencing at age 55, but his benefit will be
reduced 5% per year for retirement before age 60. His
benefit will also be reduced by the amount of any pension
benefit payment he receives from the pension plan of his former
employer. Mr. Campbell had 11 years of employment with
his former employer.
On October 30, 1998 the Committee approved Employment
Agreements with the Officers that would be effective upon a
change in control of the Company. These agreements specify
events constituting a change in control, as well as certain
circumstances in which a change in control may be
undone.
Upon the occurrence of a change in control, the agreements will
provide for a 24-month
contract period during which the Officer is to hold
substantially the same position with the same duties and
responsibilities as immediately prior to the change in control.
Each agreement provides that total compensation is to continue
during the contract period at a level not less than the level in
effect immediately prior to the change in control (or on the
date two years prior to the change in control, if higher) and
for continued participation in benefit plans applicable to
executive personnel.
In addition, if following a change in control the Officers
employment is terminated by the Company without cause or by the
executive for good reason (even if termination
occurs after expiration of the
24-month contract
period), then the Officer is to be provided supplemental
retirement benefits which reflect an additional five years of
age and service credit under the Companys Salaried
Employees Pension Plan and the Excess Defined Benefit
Pension Plan, if the Officer is eligible to participate in that
Plan.
Further, if the Officers employment is terminated without
cause or by the Officer for good reason during the
24-month contract
period, the Officer will receive severance compensation until
the later of the expiration of the
24-month contract
period or the date which is not less than twelve months
(24 months for Mr. Campbell) after the termination of
employment. Total compensation is to be continued in effect as
well as coverage under certain of the Companys benefit
plans, including continued service credit under the
Companys Salaried Employees Pension Plan and the
Excess Defined Benefit Pension Plan, if applicable.
An Officer is to use reasonable efforts to seek other suitable
employment, and the Companys obligation to provide
continued payments of total compensation and benefits is offset
in some circumstances by compensation and benefits provided by a
subsequent employer.
As a condition of receiving payments, the Officer must not
disclose confidential information relating to the Company or its
business and is subject to certain noncompetition restrictions.
The agreements also provide for a tax
gross-up payment to any
Officer, in the event payments under the agreements are deemed
excess parachute payments under applicable tax regulations and
require the payment of excise taxes, in such amounts as are
necessary to place the Officer in the same position as if such
tax were not imposed.
As part of Mr. Groos employment agreement with
Nordson Deutschland GmbH, a wholly owned subsidiary of Nordson
Corporation, Mr. Groos participates in a pension program
sponsored by Nordson Deutschland GmbH. Nordson Deutschland GmbH
has agreed to accelerate Mr. Groos age 65 normal
retirement date under the pension plan by one-half year for each
year Mr. Groos remains employed beyond age 50. As a
consequence, Mr. Groos would at age 60 be entitled to
retire with an age 65 pension benefit.
Effective September 13, 2005 the Company entered into a
Release of Claims Agreement with Mark C. Gacka. Mr. Gacka
resigned his position as Vice President, Pacific South and
Japan. In exchange for a complete release of all claims, Nordson
agreed to (i) continue Mr. Gackas base salary
through March 31,
20
2006; (ii) continue health care coverage at the
Companys expense through March 31, 2006;
(iii) pay a prorated portion of the difference between
Mr. Gackas fiscal 2005 target and actual bonus under
the terms of the 2004 Management Incentive Compensation Plan;
and (iv) pay a prorated portion of the difference between
Mr. Gackas target and actual payouts for the fiscal
2003-2005 performance period under the terms of the Long-Term
Incentive Plan.
CERTAIN TRANSACTIONS
Mr. Campbell, Chairman of the Board of Directors and chief
executive officer, is also a director of KeyCorp. KeyCorp and
the Company have a longstanding relationship since 1954. KeyCorp
currently acts as agent for the Companys 2004
$200 million Revolving Credit Facility. KeyCorp also serves
the Companys cash management activities and acts as
trustee for several trusts managed by the Company.
INDEPENDENT AUDITORS
Ernst & Young LLP or a predecessor has served as
Nordsons independent auditors since 1935. A representative
of Ernst & Young LLP is expected to be present at the
annual meeting. The representative will be given an opportunity
to make a statement if desired and to respond to questions
regarding Ernst & Young LLPs examination of
Nordsons financial statements and records for the fiscal
years ended October 31, 2004 and October 30, 2005.
Fees Paid to Ernst & Young LLP
The following table shows the fees paid or accrued by the
Company for audit and other services provided by
Ernst & Young LLP for the fiscal years ended
October 31, 2004 and October 30, 2005:
|
|
|
|
|
|
|
|
|
|
|
FY 2004 | |
|
FY 2005 | |
|
|
| |
|
| |
Audit Fees (1)
|
|
$ |
658,000 |
|
|
$ |
1,753,000 |
|
Audit-Related Fees (2)
|
|
$ |
223,000 |
|
|
$ |
94,000 |
|
Tax Fees (3)
|
|
$ |
93,000 |
|
|
$ |
8,000 |
|
All Other Fees (4)
|
|
$ |
11,000 |
|
|
$ |
0 |
|
|
|
(1) |
Audit services of Ernst & Young LLP consisted of the
audit of the annual consolidated financial statements of the
Company, the quarterly review of interim financial statements,
and the audit of managements assessments of internal
controls over financial reporting. |
|
(2) |
Audit-Related Fees generally include fees for statutory,
employee benefit plan, business acquisitions, and accounting
consultations, services related to Securities and Exchange
Commission registration statements and out-of-pocket expenses. |
|
(3) |
Tax Fees generally include fees for tax planning and compliance
consulting. |
|
(4) |
All Other Fees represent fees for employee benefit consulting
services. |
The Audit Committees pre-approval policies and procedures
are found in the Committees charter included in this Proxy
Statement as Attachment 1 to the Guidelines. Following the
effective date of the SECs final rule regarding
Strengthening the Commissions Requirements Regarding
Auditor Independence, all of the audit-related and other
services provided by Ernst & Young LLP were
pre-approved in accordance with the Audit Committees
policies and procedures.
21
GENERAL
Voting at the Meeting
Shareholders of record at the close of business on
December 30, 2005 are entitled to vote at the meeting. On
that date, a total of 33,288,599 Nordson Common Shares were
outstanding. Each share is entitled to one vote.
Voting for directors will be cumulative if any shareholder gives
notice in writing to the President, a Vice President or the
Secretary of Nordson at least 48 hours before the time set
for the meeting and an announcement of the notice is made at the
beginning of the meeting by the Chairman or the Secretary, or by
or on behalf of the shareholder giving the notice. If cumulative
voting is in effect, Nordsons shareholders will be
entitled to cast, in the election of directors, a number of
votes equal to the product of the number of directors to be
elected multiplied by the number of shares that each shareholder
is voting. Nordsons shareholders may cast all of these
votes for one nominee or distribute them among several nominees,
as they see fit. If cumulative voting is in effect, shares
represented by each properly signed proxy card will also be
voted on a cumulative basis, with the votes distributed among
the nominees in accordance with the judgment of the persons
named in the proxy card.
Under Ohio law, directors are elected by a plurality of the
votes of shareholders of the corporation present at a meeting at
which a quorum is present, and proposals are adopted or approved
by the vote of a specified percentage of the voting power of the
corporation. Abstentions and broker non-votes are tabulated in
determining the votes present at a meeting. Consequently, an
abstention or a broker non-vote may have the same effect as a
vote against a director nominee or a proposal, as each
abstention or broker non-vote would be one less vote in favor of
a director nominee or a proposal.
If any of the nominees listed on pages 2 and 3 becomes
unable or declines to serve as a director, each properly signed
proxy card will be voted for another person recommended by the
Board of Directors. However, the Board has no reason to believe
that any nominee will be unable or will decline to serve as a
director.
The Board of Directors knows of no other matters that will be
presented at the meeting other than as described in this Proxy
Statement. However, if other matters do properly come before the
meeting, the persons named in the proxy card will vote on these
matters in accordance with their best judgment.
Shareholder Director Nominations,
Proposals and Communications
Any shareholder who wishes to submit a candidate for election as
director or a proposal to be considered for inclusion in next
years Proxy Statement should send the nomination or
proposal to the Secretary of Nordson for receipt on or before
September 22, 2006. A shareholder may nominate a candidate
for election as a director at next years Annual Meeting of
the Shareholders provided the shareholder (i) is a
shareholder of the Company of record at the time of giving of
the notice for the meeting, (ii) is entitled to vote at the
meeting in the election of directors, and (iii) has given
timely written notice of the nomination to the Secretary. The
Governance and Nominating Committee will assess the
qualifications of the candidate according to criteria set out in
the Governance Guidelines. Additionally, under Nordsons
Regulations, a shareholder must submit a candidate for election
as director or a proposal for consideration at next years
Annual Meeting of Shareholders, no earlier than
November 22, 2006 and no later than December 22, 2006.
For a candidate to be considered for election as a director or
for business to be properly requested by a shareholder to be
brought before an annual meeting of shareholders, the
shareholder must comply with all of the requirements of
Nordsons Regulations, not just the timeliness requirements
described above.
The Company has established procedures to permit confidential
communications by shareholders to the Board of Directors
regarding the Company. Shareholders may communicate directly
with the Board of Directors by mail at the following address:
Mr. Benedict Rosen, Director, c/o Secretary, Nordson
Corporation, 28601 Clemens Road, Westlake, Ohio 44145.
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Nordson will bear the expense of preparing, printing and mailing
this Notice and Proxy Statement. In addition to requesting
proxies by mail, officers and regular employees of Nordson may
request proxies by telephone or in person. Nordson will ask
custodians, nominees and fiduciaries to send proxy material to
beneficial owners in order to obtain voting instructions.
Nordson will, upon request, reimburse them for their reasonable
expenses for mailing the proxy material.
Nordsons Annual Report to Shareholders, including
financial statements for the fiscal year ended October 30,
2005, is being mailed to shareholders of record with this Proxy
Statement.
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For the Board of Directors |
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ROBERT E. VEILLETTE |
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Secretary |
January 20, 2006
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APPENDIX A
NORDSON CORPORATION
GOVERNANCE GUIDELINES
The following Governance Guidelines (Guidelines),
along with the charters of the Committees of the Board of
Directors, provide the framework for the governance of Nordson
Corporation.
The Board of Directors is classified, with three classes of four
Directors. The number of Directors may be changed by the
shareholders or by a vote of the majority of Directors then in
office. Directors are elected for three-year terms and the terms
of each of the classes expire in consecutive years. Directors
may be added to a class and in such case, will hold office for
the remainder of the term in office of that class. In the event
of a vacancy in the Board of Directors, the Directors then in
office may elect a Director to serve the remainder of the term
of a Director whose resignation, removal, or death resulted in
the vacancy. A majority of the Directors must meet the National
Association of Securities Dealers (NASD) standards
for independence.
The Board should represent a broad spectrum of individuals with
experience who are able to contribute to the success of the
Company. To that end, the Board should seek candidates having
(a) deep concern for society and a view of the role of a
corporation in society which is consistent with the traditional
values of the Company, (b) senior operating experience with
industrial corporations, and (c) a broad understanding of
and direct experience in international business. Consideration
of potential new members should include the issues of
independence, diversity, and skills necessary to the perceived
needs of the Board at a particular time.
The Governance and Nominating Committee of the Board of
Directors will arrange for orientation for new directors and
Directors will engage in continuing education programs as deemed
necessary by the Committee.
The Board holds an organizational meeting after each Annual
Meeting of Shareholders at which time officers are elected. The
Annual Meeting and the Organizational Meeting of the Board are
held between February 15 and March 15 of each year.
Otherwise, the Board may establish regular meetings at such
times and places as it may decide. Board of Directors meetings
are generally held five times each year. Dates are determined in
advance. A majority of Directors then in office constitutes a
quorum for Board of Directors meetings. Several meetings during
each year are preceded or followed by an Audit and/or
Compensation Committee Meeting.
The Chairperson of the Board and the Chief Executive Officer (if
the Chairperson is not the Chief Executive Officer) will
establish the agenda for each Board meeting. Each Director is
free to suggest the inclusion of item(s) on the agenda.
Information and data that is important to the Boards
understanding of the Companys business will be distributed
in writing to the Board before each Board of Directors meeting.
Management will make every attempt to see that this material is
as brief as possible while still providing the desired
information.
Directors are expected to attend the Annual Meeting of
Shareholders and all Board of Directors meetings and meetings of
Committees on which the Director serves. If a Director
determines that it is not possible to attend a meeting, the
Director is expected to give notice of that fact as early as
practicable. If a Director cannot attend a Board meeting due to
an inability to be at the site of that meeting but is otherwise
able to participate, it may be possible for the Director to
participate by telephone if advance arrangements are
made. Proxy rules require the Company to identify in the Proxy
those Directors who did not attend 75% of the scheduled
Directors meetings and any meetings of Committees on which
the Director serves.
The Board may establish an Executive Committee, a Finance
Committee, or other committees each consisting of not less than
three Directors. Directors are expected to serve on one or more
committees and where feasible, to rotate such service among the
various committees as members and Chairpersons on a periodic
basis. The Board of Directors acting on the recommendation of
the Governance and Nominating Committee will determine the
appropriate period of service for Committee members and
Chairpersons.
Currently, the Board has established four standing committees:
A. Audit Committee: The Audit Committee reviews the
proposed audit program (including both independent and internal
audits) for each fiscal year, the results of these audits, and
the adequacy of Nordsons systems of internal accounting
control. The Committee also is responsible for (i) the
appointment, compensation, and oversight of the independent
auditors for each fiscal year, (ii) the approval of all
permissible non-audit services to be performed by the
independent auditors, (iii) the establishment of procedures
for the receipt, retention, and treatment of complaints received
by the Company regarding accounting, internal accounting
controls, or auditing matters, and (iv) the approval of all
related-party transactions.
All members of the Audit Committee must meet the NASD standards
for independence. Committee members must be able to read and
understand fundamental financial statements, including the
Companys balance sheet, income statement and cash flow
statement. The Audit Committee will have at least one member who
meets the definition of audit committee financial
expert as promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934. The role
of the audit committee financial expert will be that of
assisting the Audit Committee in overseeing the audit process,
not auditing the Company.
No member of the Audit Committee may receive any payment from
the Company other than payment for services as a Director or
member of a Committee of the Board of Directors or be an
affiliated person of the Company or any of its subsidiaries.
Audit Committee members will inform the Chairman of the
Committee and Chief Executive Officer prior to or upon accepting
an audit committee appointment of another board of directors.
See Attachment 1 to these Guidelines for the Audit
Committee Charter.
B. Compensation Committee: The Compensation
Committee of the Board of Directors is responsible for approving
executive officer compensation and for administering the
incentive and equity participation plans which make up the
variable compensation paid to executive officers. The
Compensation Committee also administers employee stock plans and
other benefit plans. All members of the Compensation Committee
must meet the NASD standards for independence. See
Attachment 2 to these Guidelines for the Compensation
Committee Charter.
C. Governance and Nominating Committee: The purpose
of the Governance and Nominating Committee is to ensure that the
Board of Directors and its committees are appropriately
constituted so that the Board and directors may effectively meet
their fiduciary obligations to shareholders and the Company. To
accomplish this purpose, the Governance and Nominating Committee
shall:
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Identify individuals qualified to become Board members and
recommend to the Board the director nominees for the next annual
meeting of shareholders and candidates to fill vacancies in the
Board; |
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(b) |
Recommend to the Board annually the directors to be appointed to
Board committees; |
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(c) |
Annually review and, when warranted, adjust Director and
Committee member compensation; |
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(d) |
Monitor and evaluate annually how effectively the Board and the
Company have implemented the policies and principles of these
Guidelines; and |
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Adopt revisions to the Guidelines where revisions are warranted
based upon the annual evaluation and recommend revisions to the
Board of Directors for approval. |
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All members of the Governance and Nominating Committee must meet
the NASD standards for independence. See Attachment 3 to
these Guidelines for the Governance and Nominating Committee
Charter.
D. Pension and Finance Committee: The Pension and
Finance Committee is responsible for providing oversight of the
named fiduciaries (the Company and the Companys
Administrative Committee for Qualified Retirement Plans)
administration of the Nordson Corporation Salaried and
Hourly-Rated Employees Savings Trust (NEST) and
Salaried and Hourly-Rated Employees Pension Plans (the
Plans), including oversight of the Companys
and Administrative Committees selection and evaluation of
the performance of investment managers (as that term is defined
in Section 3(38) of ERISA) having investment management
authority over the assets, or portion thereof, of the NEST and
the Plans. A more detailed discussion of the purposes, duties
and responsibilities of the Pension and Finance Committee are
found in the Committee charter included as Attachment 4 to
the Guidelines.
In addition to these Standing Committees, the Executive
Committee acts to make necessary decisions between periodic
Directors meetings. This Committee may exercise all powers
of the Board in managing and controlling the business of the
Company except declaring dividends, electing officers or filling
vacancies among the Directors or in any committee of the
Directors. The Executive Committee shall report on all of its
activities to the Board at the next Board meeting where its
actions are subject to revision or alteration. Directors who do
not serve as members of the Executive Committee and who are able
to attend meetings of the Executive Committee are welcome to
attend and are entitled to vote.
Each Committee of the Board of Directors is authorized to retain
its own counsel and other advisors, at Company expense, if and
to the extent necessary to carry out its responsibilities.
The Board of Directors has adopted a mandatory retirement
policy. Under this policy, a Director, other than those
Directors who were age 75 on July 27, 2001, is
expected to retire at the conclusion of the Directors meeting
immediately prior to the Directors 75th birthday.
The Board of Directors has determined that a change in
employment status should not affect a Directors status as
a member of the Board unless the change in employment status
creates a conflict of interest or prevents a Director from
performing his or her duties as a Director. A Director whose
employment status has changed is to inform the Chairperson of
the Governance and Nominating Committee and the Chief Executive
Officer of the change in status.
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7. |
Membership on Other Boards |
Directors must be willing to devote sufficient time to carrying
out their duties and responsibilities effectively and avoid
actual or potential conflicts of interest that may arise from
serving on other boards of directors. To that end, each Director
has the responsibility to inform the Chairperson of the
Governance and Nominating Committee and the Chief Executive
Officer prior to accepting invitations to serve as a director on
other boards of directors.
The non-executive Chairperson of the Board (or the Chairperson
of the Compensation Committee if the Chairperson of the Board is
not an independent Director) will serve in the capacity of
Presiding Director for purposes of chairing regularly scheduled
meetings of independent Directors or for other responsibilities
that the independent Directors as a whole might designate from
time to time.
A-3
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9. |
Executive Sessions of Independent Directors |
The independent Directors of the Board will meet in Executive
Session no less than two (2) times a year.
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10. |
Assessing Board and Committee Performance |
Under the auspices of the Governance and Nominating Committee,
members of the Board of Directors will conduct an annual
self-assessment of the effectiveness of the Board. Each Standing
Committee of the Board also conducts a self-assessment. The
annual self-assessment review process should consider, among
other matters, meeting agenda items and presentations, advance
distribution of meeting materials, interim communication to
Directors, access to and communications with senior management,
and the Boards and each Committees contribution as a
whole with consideration to areas in which the Directors believe
a better contribution could be made.
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11. |
Evaluation of the Chief Executive Officer |
The independent Directors will conduct an annual evaluation of
the Chief Executive Officer, which evaluation should be
communicated to the Chief Executive Officer by the Presiding
Director and the Chairperson of the Compensation Committee (or
another member of the Presiding Directors choosing if the
Presiding Director is the Chairperson of the Compensation
Committee).
To facilitate the evaluation, the Chief Executive Officer will
prepare a listing of a few of the priorities that need attention
during the fiscal year. The evaluation should consider aspects
of corporate performance such as progress toward meeting goals
and the capacity of the Company to do so in the future. The
evaluation should use a combination of objective and subjective
criteria.
The evaluation will be considered by the Compensation Committee
in the course of its deliberations when establishing the Chief
Executive Officers compensation.
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12. |
Succession Planning/ Management Development |
At least every other year, the Chief Executive Officer shall
report to the Board on succession planning and the
Companys program for management development.
There should also be available, on a continuing basis, the Chief
Executive Officers recommendation as to his/her successor
should he/she be unexpectedly disabled and be unable to carry on
his/her duties as Chief Executive Officer.
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13. |
Board Access to Senior Management and Independent
Advisors |
Directors have complete access to Nordsons management.
Each Director has the responsibility to inform the Chief
Executive Officer of the nature of communications with
management and to provide copies of any written communication to
the Chief Executive Officer.
The Board encourages management to bring managers into Board
meetings who (a) can provide additional insight into the
items being discussed because of personal involvement in these
areas and/or (b) represent managers with future potential
that management believes should be given exposure to the Board.
The Board, at its discretion, may engage and consult with
independent advisors to assist the Board in carrying out its
oversight responsibilities.
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14. |
Board Interaction with Institutional Investors |
The Board believes that the management speaks for Nordson and it
is inappropriate for individual Directors to communicate
separately to investors except with the full knowledge and at
the request of management. Directors who receive inquiries
should direct the investor to the Chief Financial Officer.
A-4
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15. |
Director Compensation |
The Chief Executive Officer will report annually to the
Governance and Nomination Committee on the status of Board of
Directors compensation in relation to a peer group of
U.S. manufacturing companies. The Governance and Nomination
Committee is authorized to establish reasonable compensation for
Directors and/or a reasonable fee for attendance at any meeting
of the Directors. A Director who is a full-time employee of the
Company does not receive compensation for his or her services as
a Director.
The Chairperson of the Board of Directors, other independent
Directors and Committee chairpersons receive an annual retainer
and per meeting remuneration for each Board and Committee
meeting attended. Each independent Director is eligible to
receive an option for Nordson Corporation Common Shares under
the Companys 2004 Long-Term Performance Plan.
Travel expenses incurred in attending all meetings are
reimbursed. Air travel is based on round-trip actual airfare
from the Directors home to meeting locations. A Director
is encouraged to select the class of travel commensurate with
the situation, such as first class for long trips. Other
expenses, such as hotels, meals, local transportation and
similar expenses are also reimbursed.
Independent Directors are also covered under the Companys
(a) health care (medical, dental and prescription drug)
plan with coverage being secondary to any health care plan under
which a Director is also covered, (b) life insurance plan;
and (c) business travel and accident insurance plan.
The Company maintains a Deferred Compensation Plan under which a
Director may elect to defer all or a portion of his/her fees
until retirement. Fees may be deferred as cash or translated
into stock equivalent units.
Directors are eligible to participate in The Nordson Corporation
Foundation Matching Gift Program.
To reinforce the importance of aligning the financial interests
of Nordsons Directors, executives and shareholders,
Nordson Directors and executive officers are required to hold a
minimum number of shares of Nordson Common Stock.
Directors are required to hold shares of Nordson Common Stock
with a value equal to five (5) times the amount of the
annual retainer paid to Directors. The Companys Chief
Executive Officer is required to hold Nordson Common Stock
having a dollar value at least equal to five (5) times base
salary. Nordsons President (if the President is not also
the CEO) or Chief Operating Officer is required to hold Nordson
Common Stock having a dollar value at least equal to three
(3) times base salary, while other Nordson executive
officers are required to hold Nordson Common Stock having a
dollar value at least equal to two (2) times base salary.
Directors are required to achieve the share ownership
requirement within five years of election to the Board, or, in
the case of Directors serving at the time the ownership
requirements were adopted, within five years of the date of
adoption. Likewise, newly elected or promoted executive officers
will have up to five years to meet the applicable ownership
requirements after their election or promotion, or in the case
of executive officers in office at the time the ownership
requirements were adopted, within five years of the date of
adoption.
Equity interests that count toward satisfaction of the ownership
requirement include:
Directors: Shares owned outright by the Director, or his
or her spouse and dependent children; shares held in trust for
the benefit of the Director or his or her family; shares of
Restricted Stock; stock equivalent units held in deferred
compensation accounts which may be distributed only in the form
of Common Shares; or other individual retirement accounts.
Executive Officers: Shares owned outright by the
Executive Officer, or his or her spouse and dependent children;
shares held in trust for the benefit of the Executive Officer or
his or her family; shares of Restricted
A-5
Stock; shares held in deferred compensation accounts; and shares
held in the NEST (Nordson ESOP Fund and Nordson Stock Fund) or
other individual retirement accounts.
In the event a Director or executive officer is unable to
achieve a share ownership requirement within the established
time period, the Director or executive officer will meet with
the Chairman of the Governance & Nominating Committee or
Chief Executive Officer, respectively, to develop a plan to
achieve the share ownership requirement.
A-6
ATTACHMENT 1
CHARTER OF THE
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
I. Organization and
Functioning
There shall be a committee of the Board of Directors to be known
as the Audit Committee (the Committee). The
Committee shall be comprised of at least three Directors who
shall be appointed by the Board after considering the
recommendation of the Governance and Nominating Committee. The
Committee shall only include directors who satisfy the
independence standards of the National Association of Securities
Dealers (NASD) and are free of any relationship
that, in the opinion of the Board, would interfere with their
exercise of independent judgment as a Committee member.
Committee members must be able to read and understand
fundamental financial statements, including the Companys
balance sheet, income statement and cash flow statement. The
Audit Committee will have at least one member who meets the
definition of audit committee financial expert as
promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934. The role of the audit committee
financial expert will be that of assisting the Audit Committee
in overseeing the audit process, not auditing the Company.
The Board shall designate one member of the Committee as its
Chairperson. The Committee shall meet at least four times each
year and hold such other meetings from time to time as may be
called by its Chairperson or any two members of the Committee. A
majority of the members of the Committee shall constitute a
quorum of the Committee. A majority of the members in attendance
shall decide any question brought before any meeting of the
Committee. At least once during the course of the year, the
Committee will meet with Company management and the independent
auditors in separate executive sessions to discuss the results
of the independent auditors annual examination of the
Companys financial statements.
No member of the Committee may receive directly or indirectly
any consulting, advisory, or other compensatory fee from the
Company other than dividends and payment for services as a
Director or member of a Committee of the Board of Directors as
provided for in Section 15, Director Compensation, of the
Governance Guidelines of the Company, or be an affiliated person
of the Company or any of its subsidiaries.
The Committee shall keep minutes of its proceedings that shall
be signed by the person whom the Chairman designates to act as
secretary of the meeting. The minutes of a meeting shall be
approved by the Committee at its next meeting, shall be
available for review by the entire Board, and shall be filed as
permanent records with the Secretary of the Company.
The Committee shall have the authority, to the extent it deems
necessary or appropriate, to retain special legal, compensation
or other consultants to advise the Committee. The Committee may
request any officer or employee of the Company or the
Companys outside counsel to attend a meeting of the
Committee or to meet with any member of, or consultants to, the
Committee.
The Chairperson shall at each meeting of the Board following a
meeting of the Committee report to the full Board on the matters
considered at the last meeting of the Committee.
At least annually and in Executive Session, the Board shall
provide the Committee with an evaluation of the Committees
performance.
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II. |
Statement of Purposes |
Recognizing that the Companys outside auditors have
ultimate accountability to the Board of Directors of the
Company, the Committee shall assist Board of Directors oversight
of: (a) the integrity of the Companys financial
statements, (b) the Companys compliance with legal
and regulatory requirements, (c) the independent
auditors qualifications and independence; (d) the
performance of the Companys internal audit function and
independent auditors.
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III. |
Specific Duties and Responsibilities |
The Committee shall have the following duties and
responsibilities:
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(a)
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Retain and, where warranted in the
Committees judgment, terminate independent auditors
selected to audit the financial statements of the Company.
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(b)
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Approve of all permissible
non-audit services to be performed by the independent auditors.
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(c)
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At least annually, obtain and
review a report by the independent auditor describing:
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(1) the audit firms
internal quality-control procedures;
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(2) any material issues raised
by the most recent internal quality-control review, or peer
review, of the audit firm, or by any inquiry or investigation by
governmental or professional authorities, within the preceding
five years, respecting one or more independent audits carried
out by the audit firm, and any steps taken to deal with any such
issues; and
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(3) (for the purpose of
assessing the auditors independence) all relationships
between the independent auditor and the Company.
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(d)
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Meet with the independent auditors
and financial management of the Company to review the scope of
the proposed audit for the current year and the audit procedures
to be utilized, and at the conclusion thereof review such audit,
including any comments or recommendations of the independent
auditors.
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(e)
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Review with the Companys
management, the Companys internal auditors and the
Companys independent auditors the adequacy and
effectiveness of the accounting and financial controls,
including the Companys Business Ethics Questionnaire.
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(f)
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Review the annual internal audit
plan of the Company.
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(g)
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On an ongoing basis, review a
summary of findings from completed internal audits and a
progress report on the internal audit plan, with a summary
report of any deviations from the plan.
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(h)
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The Committee Chairperson shall
discuss the annual audited financial statements and quarterly
financial statements with management and the independent
auditor. Based on the issues identified, the Chairperson may
elect to ask the Committee for its review.
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(i)
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Review with the independent auditor
any significant accounting alternatives and any audit problems
or difficulties and managements response thereto.
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(j)
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Drafts of earnings press releases,
as well as financial information and earnings guidance provided
to analysts, shall be distributed to members of the Committee in
a timely fashion; the Chairperson will discuss the draft with
management including any observations made by other Committee
members.
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(k)
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Submit the minutes of all meetings
of the Committee to, or discuss the matters considered at each
Committee meeting with, the Board of Directors.
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(l)
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Investigate any matter brought to
the Committees attention within the scope of its duties,
with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
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(m)
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Establish procedures for the
receipt, retention, and treatment of complaints received by the
Company regarding accounting, internal accounting controls, or
auditing matters.
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(n)
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Approve of all related-party
transactions.
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(o)
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Review and approve the report that
SEC rules require be included in the Companys annual proxy
statement.
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(p)
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Pursuant to Section 10 of the
Companys Governance Guidelines, conduct an annual
self-assessment of the Committees performance with respect
to the requirements of this Charter and recommend any proposed
changes to the Board of Directors. In conjunction therewith, the
Committee shall review and assess the adequacy of this Charter
annually and recommend any proposed changes to the Board for
approval.
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(q)
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Monitor and evaluate the
effectiveness of the Companys Code of Business and Ethical
Conduct and adopt revisions to the Code where revisions are
warranted based upon the annual evaluation and recommend any
such revisions to the Board of Directors for approval.
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The Committees function is one of oversight and review.
While the Committee shall have the responsibilities and powers
set forth in this Charter, it shall not be the duty of the
Committee to assume the respective duties and responsibilities
of the independent and internal auditors and management of the
Company including but not limited to planning or conducting
audits or determining that the Companys financial
statements are complete and accurate and in accordance with
generally accepted accounting principles. Further, it is not
expected nor required that the Committee will conduct
investigations or resolve disagreements, if any, between
management of the Company and the independent auditor.
1-3
APPENDIX B
AUDIT COMMITTEE REPORT
January 20, 2006
To: The Board of Directors of Nordson Corporation
Our Committee has reviewed and discussed the audited financial
statements of the Company for the year ended October 30,
2005 (the Audited Financial Statements). In
addition, we have discussed with Ernst & Young LLP
(E&Y), the principal independent registered
public accounting firm for the Company, the matters required by
Codification of Statements on Auditing Standards No. 61.
The Committee also has received the written disclosures and the
letter from E&Y required by Independence Standards Board
Standard No. 1. We have discussed with E&Y its
independence from the Company, including the compatibility of
non-audit services with E&Ys independence.
Based on the foregoing review and discussions and relying
thereon, we have recommended to the Companys Board of
Directors the inclusion of the Audited Financial Statements in
the Companys Annual Report on
Form 10-K for the
year ended October 30, 2005.
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Audit Committee |
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Mary G. Puma, Chairman |
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William W. Colville, Esq. |
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William D. Ginn |
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Dr. David W. Ignat |
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William P. Madar |
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN
YOUR PROXY.
c/o National City Bank
Corporate Trust Operations
Locator 5352
P. O. Box 92301
Cleveland, OH 44101-4301
(Continued from other side)
You are encouraged to specify your choices by marking the appropriate box, but you need not
mark any box if you wish to vote in accordance with the Board of Directors recommendations. The
Proxies cannot vote your shares unless you sign and return this card. Unless otherwise specified,
this Proxy will be voted FOR the election as Directors of the nominees noted on the reverse side.
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DATE:
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, 2006 |
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Signature(s) of shareholder(s)
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NOTE: Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please give
full title as such. |
PLEASE DATE, SIGN AND RETURN IN THE ENCLOSED ENVELOPE NO POSTAGE NECESSARY.
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YOUR VOTE IS IMPORTANT |
Regardless of whether you plan to attend the Annual Meeting
of Shareholders, you can be sure your shares are
represented at the meeting by promptly returning
your proxy in the enclosed envelope.
NORDSON CORPORATION
Annual Meeting of Shareholders to be held on February 21, 2006
This Proxy is Solicited by the Board of Directors
At the Annual Meeting of Shareholders of NORDSON CORPORATION to be held on February 21, 2006,
and at any adjournment, MARY G. PUMA, STEPHEN R. HARDIS, WILLIAM L. ROBINSON, and each of them,
with full power of substitution and resubstitution, are hereby authorized to represent me and vote
all my shares on the following matters:
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Election of four Directors. |
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FOR all nominees listed below
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WITHHOLD AUTHORITY |
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(except as marked to the contrary below).
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to vote for all nominees listed below. |
Instruction: To withhold authority to vote for any individual nominee, place a line through the nominees name listed below.
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William P. Madar
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Edward P. Campbell
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William W. Colville
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Dr. David W. Ignat |
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2. |
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Any other matter that may properly come before the meeting. |
(Continued, and to be signed, on reverse side)
c/o National City Bank
Corporate Trust Operations
Locator 5352
P. O. Box 92301
Cleveland, OH 44101-4301
(Continued from other side)
You are encouraged to specify your choices by marking the appropriate box. Unless otherwise
specified, your share interest will be voted by the Trustee in the same proportions as it
votes shares for which it receives express instructions.
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DATE:
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, 2006 |
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Signature(s) of shareholder(s)
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NOTE: Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please give
full title as such. |
PLEASE DATE, SIGN AND RETURN IN THE ENCLOSED ENVELOPE NO POSTAGE NECESSARY.
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YOUR VOTE IS IMPORTANT |
Regardless of whether you plan to attend the Annual Meeting
of Shareholders, you can be sure your shares are
represented at the meeting by promptly returning
your voting instruction card in the enclosed envelope.
NORDSON CORPORATION
Annual Meeting of Shareholders to be held on February 21, 2006
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To: |
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New York Life Trust Company, as Trustee for the Nordson Employees Savings Trust Plan
and the Nordson Hourly-Rated Employees Savings Trust Plan. |
Pursuant to Article XIII, Section 13.18 of the Plan in which the undersigned is a
Participant, the undersigned hereby directs the Trustee to vote as designated below (in
person or by proxy) the undersigneds entire proportionate interest in Nordson Corporation
Common Shares held by the Plan in which the undersigned is a Participant on the record date
at the Annual Meeting of Shareholders of NORDSON CORPORATION to be held on February 21,
2006, and at any adjournment, on the following matters:
1. |
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Election of four Directors. |
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q
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FOR all nominees listed below
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q
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WITHHOLD AUTHORITY |
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(except as marked to the contrary below).
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to vote for all nominees listed below. |
Instruction: To withhold authority to vote for any individual nominee, place a line through the nominees name listed below.
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William P. Madar
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Edward P. Campbell
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William W. Colville
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Dr. David W. Ignat |
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Any other matter that may properly come before the meeting. |
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CONFIDENTIAL VOTING INSTRUCTION CARD
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(Continued, and to be signed, on reverse side) |