FORM 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
Filed by the
Registrant x
Filed by a Party other than the
Registrant o
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Check the appropriate box:
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o Preliminary
Proxy Statement
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o
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Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
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x Definitive
Proxy Statement
o Definitive
Additional Materials
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)
Payment of Filing Fee (Check the appropriate box):
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x
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No fee required.
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o
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
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(1) |
Title of each class of securities to which transaction applies:
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Applicable
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(2) |
Aggregate number of securities to which transaction applies:
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Applicable
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(3) |
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(Set forth the amount on which the filing fee is calculated and
state how it was determined):
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Not
Applicable
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(4) |
Proposed maximum aggregate value of transaction:
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Applicable
(5) Total fee paid:
Not
Applicable
o Fee
paid previously with preliminary materials.
o Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the
date of its filing.
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(1) |
Amount Previously Paid:
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(2) |
Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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Edward P. Campbell
Chairman, President
and
Chief Executive
Officer
January 16, 2009
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 17, 2009. 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 vote your shares by telephone, the Internet or by mail.
Instructions regarding all three methods of voting accompany
your proxy card. 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, President 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 17,
2009. The purposes of the meeting are:
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1.
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To elect the five directors recommended by the Board of
Directors to the class whose term expires in 2012;
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2.
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To ratify the appointment of Ernst & Young LLP as our
independent registered public accounting firm for the fiscal
year ending October 31, 2009 ; and
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3.
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To transact any other business that may properly come before the
meeting.
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Shareholders of record at the close of business on
December 26, 2008 are entitled to notice of and to vote at
the meeting.
For the Board of Directors
ROBERT E. VEILLETTE
Vice President, General Counsel
and Secretary
January 16, 2009
NORDSON
CORPORATION
PROXY
STATEMENT
This proxy statement is furnished in connection with the
solicitation of Proxies by the Board of Directors of Nordson
Corporation to be used at the Annual Meeting of Shareholders to
be held on February 17, 2009 and any adjournment or
postponement of that meeting. The time, place and purposes of
the Annual Meeting are stated in the Notice of Annual Meeting of
Shareholders that accompanies this proxy statement.
The accompanying proxy is solicited by our Board of Directors.
All validly executed proxies received by our Board of Directors
pursuant to this solicitation will be voted at the Annual
Meeting, and the directions contained in such proxies will be
followed. If no directions are given, the proxy will be voted
(i) FOR the election of the five nominees listed on the
proxy; and (ii) FOR the ratification of the appointment of
Ernst & Young LLP as our independent registered public
accounting firm for the fiscal year ending October 31, 2009.
This proxy statement will inform you about the matters to be
acted upon at the meeting.
If you are a shareholder of record, you may vote in one of the
following three ways whether or not you plan to attend the
Annual Meeting: (1) by completing, signing and dating the
accompanying proxy card and returning it in the enclosed
postage-prepaid envelope, (2) by completing your proxy
using the toll-free telephone number listed on the proxy card,
or (3) by completing your proxy on the Internet at the
address listed on the proxy card. It is important that you vote
your shares whether or not you attend the meeting in person. If
you attend the Annual Meeting, you may vote in person even if
you have previously returned your proxy card or completed your
proxy by phone or on the Internet. Shares represented by proxy
will be voted in accordance with the instructions you provide to
the individuals named on the proxy. If you provide no
instructions, the shares will be voted to elect the nominees
listed below whose term expires in 2012 and for Proposal 2
described in this proxy statement. The proxies cannot be voted
for a greater number of persons than the number of nominees. You
may revoke your proxy before it is voted by giving notice to us
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.
If you participate in our 401(k) plan
and/or our
Employee Stock Ownership Plan (ESOP), you may vote the amount of
shares credited to your account as of the record date for the
Annual Meeting. You may vote by instructing New York Life
Investment Management, the trustee of the 401(k) and ESOP plans,
pursuant to the instruction card being delivered with this proxy
statement to plan participants. The trustee will vote your
shares in accordance with your duly executed instructions if
received in a timely manner. If you do not send timely
instructions, the non-voted whole and fractional shares will be
voted by the trustee in the same proportion that it votes the
whole and fractional shares for which it did receive timely
voting instructions.
No matter what method you ultimately decide to use to vote
your shares, we urge you to vote promptly.
Even after you have submitted your proxy card, you may change
your vote at any time before the proxy is exercised by filing
either a notice of revocation or a duly executed proxy bearing a
later date with our Corporate Secretary; however, no such
revocation or subsequent proxy will be effective unless and
until written notice of the revocation or subsequent proxy is
received by us at or prior to the Annual Meeting.
For 401(k) and ESOP shares, you may revoke previously given
voting instructions on or before February 10, 2009 by
filing either a written notice of revocation or a properly
completed and signed voting instruction card bearing a later
date with the trustee.
This proxy statement and the enclosed proxy card are being
mailed to shareholders on or about January 16, 2009.
Nordsons executive offices are located at 28601 Clemens
Road, Westlake, Ohio 44145, telephone number
(440) 892-1580.
Important Notice
Regarding the Availability of Proxy Materials for the Annual
Meeting of Shareholders to be held on February 17,
2009:
The proxy statement, proxy card and annual report to
shareholders for the fiscal year ended October 31, 2008 are
available at our website: www.nordson.com.
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INFORMATION
ABOUT THE ANNUAL MEETING
Voting
at the Meeting
Shareholders of record at the close of business on
December 26, 2008 are entitled to vote at the meeting. On
that date, a total of 33,525,692 of our 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, our 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. Our
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 submitted proxy will also be voted on a cumulative
basis, with the votes distributed among the nominees in
accordance with the judgment of the persons named on 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, unless otherwise specified in an Ohio
corporations Articles of Incorporation, 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. An
affirmative vote of a majority of the shares represented at the
meeting will be required to ratify the appointment of
Ernst & Young LLP as our independent registered public
accounting firm.
If any of the nominees for terms expiring in 2012 becomes unable
or declines to serve as a director, each properly submitted
proxy 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 and Proposals
Any shareholder who wishes to submit for inclusion in next
years proxy statement a candidate for election as director
or a proposal to be considered should send the nomination or
proposal for consideration
c/o Secretary,
Nordson Corporation, 28601 Clemens Road, Westlake, Ohio 44145
for receipt on or before September 26, 2009. A shareholder
may nominate a candidate for election as a director at the 2010
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 Nordson Corporations Governance Guidelines,
which are included in this proxy statement as Appendix B.
Additionally, under our Regulations, a shareholder may submit a
proposal for consideration at next years Annual Meeting of
Shareholders, but not for inclusion in the proxy statement, if
the shareholder provides written notice no earlier than
November 19, 2009 and no later than December 19, 2009.
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 our
Regulations, not just the timeliness requirements described
above.
We will bear the expense of preparing, printing and mailing this
notice and proxy statement. Our officers and regular employees
may request proxies by contacting us by mail, telephone or in
person. We will ask
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custodians, nominees and fiduciaries to send proxy material to
beneficial owners in order to obtain voting instructions. Upon
request, we will reimburse them for their reasonable expenses
for mailing the proxy material. Our Annual Report to
Shareholders, including financial statements for the fiscal year
ended October 31, 2008, is being mailed to shareholders of
record with this proxy statement.
CORPORATE
PHILOSOPHY
Corporate
Purpose
We strive to be a vital, self-renewing, worldwide organization
which, within the framework of ethical behavior and enlightened
citizenship, grows and produces wealth for our customers,
employees, long-term shareholders and communities.
Corporate
Goals
We operate for the purpose of creating balanced, long-term
benefits for all of our constituencies: customers, employees,
long-term shareholders and communities.
We do not expect every quarter to produce increased sales,
earnings and earnings per share, or to exceed the comparative
prior years quarter. We do expect to produce long-term
gains. When short-term swings occur, we do not intend to alter
our basic objectives in efforts to mitigate the impact of these
natural occurrences.
We achieve growth by seizing market opportunities with existing
products and markets, investing in systems to maximize
productivity and pursuing growth markets. We augment this
strategy through product line additions, engineering, research
and development, and acquisition of companies that can serve
multinational industrial markets.
Customers
We create benefits for our customers through a Package of
Values®,
which includes carefully engineered, durable products; strong
service support; the backing of a well-established worldwide
company with financial and technical strengths; and a corporate
commitment to deliver what was promised.
We strive to provide genuine customer satisfaction; it is the
foundation upon which we continue to build our business.
Employees
Complementing our business strategy is the objective to provide
opportunities for employee self-fulfillment, growth, security,
recognition and equitable compensation.
We meet this goal through our Human Resources departments
facilitation of employee training and leadership training and
the creation of on-the-job growth opportunities. The result is a
highly qualified and professional management team capable of
meeting corporate objectives.
We recognize the value of employee participation in the planning
process. Strategic and operating plans are developed by all
business units and divisions, resulting in a sense of ownership
and commitment on the part of employees in accomplishing our
objectives. In addition, employees participate in Lean
initiatives to continuously improve our processes.
We are an equal opportunity employer.
Communities
We are committed to contributing approximately 5 percent of
domestic pretax earnings to human services, education and other
charitable activities, particularly in communities where we have
major facilities.
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Since our founding, we have held the belief that business, as a
corporate citizen, has a social responsibility to share its
success with the communities in which it operates and its
employees live. With this operating philosophy, in 2008, we
contributed $3.7 million to nonprofit organizations
operating in the areas of education, civic affairs, human
welfare and arts and culture. In addition, our employees also
showed their community commitment by volunteering through our
Time n Talent program. In 2008, employees spent nearly
8,200 hours strengthening their communities and supporting
individuals and families in need.
CORPORATE
GOVERNANCE
Director
Independence
Our Governance 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 NASDAQ Stock
Market LLC (NASDAQ) standards for independence will
be considered independent. Our Board of Directors has
affirmatively determined that Mr. Colville, Mr. Ginn,
Mr. Hardis, Dr. Ignat, Mr. Keithley,
Mr. Madar, Mr. Merriman, Ms. Puma,
Mr. Robinson, and Mr. Rosen are independent directors.
The independent directors constitute a majority of the Board,
and the only director who is not independent is Mr. Edward
P. Campbell, our President and Chief Executive Officer.
Governance
Guidelines
On December 10, 2008, our Board of Directors adopted the
revised Nordson Corporation Governance Guidelines. The
Governance Guidelines incorporate best governance practices in
the area of other board memberships, executive sessions of the
independent directors and director recruitment and performance
guidelines. Our Governance Guidelines also set out in detail the
roles of the chairman of the board and the presiding director,
including that of the presiding director in the event the
chairman of the board is not an independent director.
Code
of Business and Ethical Conduct
We have a Code of Business and Ethical Conduct that addresses
our commitment to honesty and integrity and the ethical behavior
of our directors, officers and employees with current and
potential customers, fellow employees, competitors, government
and self-regulatory agencies, investors, the public, the media
and anyone else with whom we have 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.
Director
Nominating Process
The Governance and Nominating Committee annually reviews the
appropriate experience, skills and characteristics required of
Board members in the context of the current membership of the
Board. This assessment includes, among other relevant factors in
the context of the perceived needs of the Board at that time,
issues of experience, reputation, judgment, diversity and skills.
Our Board of Directors has established a process for the
identification and selection of candidates for director. The
Governance and Nominating Committee, in consultation with the
Chairman of the Board, periodically examines the composition of
the Board. If the Governance and Nominating Committee determines
that adding a new director is advisable, the Committee initiates
the search, working with other directors, management and, if it
deems appropriate or necessary, a search firm retained to assist
in the search. The Governance and Nominating Committee considers
all appropriate candidates proposed by management, directors and
shareholders. Information regarding potential candidates is
presented to the Governance and Nominating Committee, and the
Committee evaluates the candidates based on the needs of the
Board at that time and issues of experience, reputation,
judgment, diversity and skills, as set forth in our Governance
Guidelines and Director Recruitment and Performance Guidelines.
Potential candidates are evaluated
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according to the same criteria, regardless of whether the
candidate was recommended by shareholders, the Governance and
Nominating Committee, another director, management, a search
firm or another third party. The Governance and Nominating
Committee submits any recommended candidate(s) to the full Board
of Directors for approval and recommendation to our shareholders.
In evaluating the suitability of individuals for Board
membership, the Governance and Nominating Committee evaluates
each individual in the context of our Director Recruitment and
Performance Guidelines, with the objective of recommending a
group of directors that can best perpetuate the success of our
business and represent shareholder interests through the
exercise of sound judgment, using its diversity of experience.
The Director Recruitment and Performance Guidelines were adopted
by the Board of Directors on December 6, 2006 upon
recommendation of the Governance and Nominating Committee and
are a crucial element of our Governance Guidelines. In
determining whether to recommend a director for re-election, the
Committee also considers the directors past attendance at
meetings and participation in and contributions to the
activities of the Board. The Committee does not distinguish
between nominees recommended by shareholders and other nominees.
Shareholders wishing to suggest candidates to the Governance and
Nominating Committee for consideration as directors must submit
a written notice to the Secretary, who will present the notice
to the Governance and Nominating Committee. Our Regulations set
forth the procedures a shareholder must follow to nominate
directors. These procedures are summarized in the
Shareholder Director Nominations and Proposals and
Shareholder Communications with the Board of
Directors sections of this proxy statement.
Shareholder
Communications with the Board of Directors
Shareholders may communicate with the Board, a Board committee,
the presiding independent director, the non-employee directors
as a group, or individual directors by sending written
communications addressed to the Board of Directors, a Board
committee or such individual director or directors,
c/o Secretary,
Nordson Corporation, 28601 Clemens Road, Westlake, Ohio
44145. Shareholders may also communicate directly with the Board
of Directors by mail through the Chairperson, Governance and
Nominating Committee,
c/o Secretary,
Nordson Corporation, 28601 Clemens Road, Westlake, Ohio 44145.
Each communication should specify the applicable addressee or
addressees to be contacted as well as the general topic of the
communication. Our secretary will initially receive and process
communications before forwarding them to members of the Board to
whom the communication is directed, or if the communication is
not directed to any specific member(s) of the Board, to the
Chairperson of the Governance and Nominating Committee. We
generally will not forward a shareholder communication that is
primarily commercial in nature, relates to an improper or
irrelevant topic, or requests general information about us.
Concerns about accounting or auditing matters or possible
violations of our Code of Business and Ethical Conduct should be
reported pursuant to the procedures outlined in the Code.
Presiding
Director
The Presiding Director presides over all meetings of the
non-employee directors held in executive session. The Presiding
Director also has other authority and responsibilities that are
described in the Governance Guidelines. Stephen R. Hardis
currently serves as our Presiding Director.
Executive
Sessions
Pursuant to our Governance Guidelines, non-employee directors of
the Board meet in regularly scheduled executive sessions without
management. The Presiding Director chairs all regularly
scheduled executive sessions, and also has authority to convene
meetings of the non-employee directors at any time with
appropriate notice. In fiscal year 2008, Mr. Hardis
conducted an executive session at each of the meetings of the
Board.
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Attendance
at the Annual Meeting of Shareholders
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 attended the 2008 Annual
Meeting of the Shareholders.
Annual
Self-Assessments
The Board of Directors conducts an annual self-assessment to
determine, among other matters, whether the Board and the
Committees are functioning effectively. The independent
directors also undertake a peer assessment of other independent
directors as part of this self-assessment process. The standing
committees Audit, Compensation, and Governance and
Nominating are also required to each conduct an
annual self-assessment. The Governance and Nominating Committee
is responsible for overseeing this self-assessment process. The
Board and the three standing Committees each conducted the
self-assessments described above during fiscal year 2008.
Certain
Relationships and Related Transactions; Review, Approval or
Ratification of Related Transactions
There were no transactions between us and our officers,
directors or any person related to our officers or directors, or
with any holder of more than 5% of our common shares, either
during fiscal year 2008 or up to the date of this proxy
statement, in which any such person has a direct or indirect
material interest. We review all transactions between us and any
of our officers and directors. Our Code of Business and Ethical
Conduct, which applies to directors, officers and all employees,
emphasizes the importance of avoiding situations or transactions
in which personal interests interfere with our best interests or
those of our shareholders. In addition, our Related Persons
Transactions Policy includes procedures for discussing and
assessing relationships, including business, financial, familial
and nonprofit, among us and our officers and directors, to the
extent that they may arise. The Board reviews any transaction
with a director to determine, on a
case-by-case
basis, whether a conflict of interest exists. The Board ensures
that all directors voting on such a matter have no interest in
the matter and discusses the transaction with counsel as deemed
necessary. The Board will generally delegate the task of
discussing, reviewing and approving transactions between us and
any of our officers or directors to the Audit Committee. We
define related persons transactions generally as
transactions in which the self-interest of the employee, officer
or director may be at odds or conflict with our interests, such
as doing business with entities that are or may be controlled or
significantly influenced by such persons or their immediate
family members. Any related persons transactions concerning the
company and any of our directors or officers including those
that are reportable under Item 404(a) of
Regulation S-K
of the Securities Exchange Act of 1934, are to be disclosed to
and approved by the Audit Committee. It is our policy to avoid
related person transactions and related person transactions
involving our officers are generally prohibited.
Mr. Campbell, Chairman of the Board of Directors, President
and Chief Executive Officer, is also a director of KeyCorp. We
and KeyCorp have had a banking relationship since 1954. KeyCorp
currently acts as agent for our $400 million revolving
credit facility. KeyCorp also serves as our cash manager and
acts as trustee for several trusts managed by us.
Governance
Documents
All of our current corporate governance documents and policies,
including our Governance Guidelines, Director Recruitment and
Performance Guidelines, committee charters, Code of Business and
Ethical Conduct and Related Persons Transaction Policy are
available at www.nordson.com/corporate/governance and in
print to any shareholder who requests them. The annual report
and this proxy statement are also available at
www.nordson.com. Upon request, copies of the annual
report will be mailed to you (at no charge) by contacting
Corporate Communications, 28601 Clemens Road, Westlake, Ohio
44145.
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MEETINGS
AND COMMITTEES OF THE BOARD OF DIRECTORS
Board of Directors. Our 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 our financial controls and legal compliance procedures. In
fiscal year 2008, our Board of Directors met five times in
regular session. An executive session of independent directors
occurred at each meeting.
The Board has three standing committees: an Audit Committee, a
Compensation Committee, and a Governance and Nominating
Committee. The table below provides current committee membership
and fiscal year 2008 committee meeting information:
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Director
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Audit
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Compensation
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Governance & Nominating
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William W. Colville
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X
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X
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William D. Ginn
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X
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Stephen R. Hardis
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X
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*
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X
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David W. Ignat
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X
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Joseph P. Keithley
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X
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X
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*
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William P. Madar
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X
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*
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Michael J. Merriman, Jr.
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X
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Mary G. Puma
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X
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X
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William L. Robinson
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X
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Benedict P. Rosen
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X
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X
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Total meetings in fiscal year 2008
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5
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6
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4
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* Committee Chairperson
Audit Committee. All members of the Audit
Committee meet the NASDAQ independence standards. The Board of
Directors has designated Mr. Madar and Ms. 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 our 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 us regarding accounting,
internal accounting controls, or auditing matters; and
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the approval of all related-persons transactions.
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A more detailed discussion of the purposes, duties, and
responsibilities of the Audit Committee is found in the
Committees charter, which is available at
www.nordson.com/corporate/governance. 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 at Appendix A
of this proxy statement.
Compensation Committee. All members of the
Compensation Committee meet the NASDAQ independence standards.
The Committee is responsible for setting and approving
compensation for our executive officers and for administering
the incentive and equity participation plans under which we pay
variable compensation to our executive officers. The Committee
also administers employee equity and qualified and non-qualified
retirement
8
benefit plans. A more detailed discussion of the purposes,
duties, and responsibilities of the Committee is found in the
Committees charter which is available at
www.nordson.com/corporate/governance.
The Committee takes steps to enhance significantly its ability
to carry out its responsibilities effectively to ensure that we
maintain strong links between executive compensation and
performance. Examples of these steps are:
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holding executive sessions (without our management present) at
every regularly scheduled Committee meeting;
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engaging an outside compensation consultant to advise on
executive compensation issues, including peer benchmarking data;
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realigning compensation structures based on examination of peer
group compensation structures and levels and peer group
financial performance; and
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strengthening the link between executive officer annual pay and
shareholder value by basing incentive pay on the achievement of
financial measures and additional specific objectives and
modifying the mix of compensation elements to increase the
allocation of compensation linked to corporate financial
performance.
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For each fiscal year, the Committee determines:
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base salary adjustments (which are typically retroactive to the
beginning of the fiscal year if the Committee meeting occurs
after the beginning of the fiscal year);
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payouts for the previous fiscal years annual cash
incentive plan and completed three-year performance period under
the long-term incentive plan; and
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performance measures and levels for the prospective annual cash
incentive plan and the prospective long-term incentive plan
three-year performance period.
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The Committee seeks to set base salaries at the median for
comparable positions at companies in our peer group, but then
adjusts individual executive officer base salaries based on
performance and seniority. Furthermore, total compensation,
including base salary, annual cash incentive compensation, and
long-term equity-based incentive compensation is intended to
vary with our performance in comparison to absolute financial
measures and to the performance of our peers. Performance
measures and target award levels are adjusted periodically based
on peer compensation and financial performance data with the
intent to cause percentile compensation to correlate generally
to percentile performance relative to our peer group across a
multi-year business cycle.
In years with outstanding performance at the maximum levels
established for our annual cash incentive and long-term
equity-based incentive plan, we would expect total direct
compensation (base salary, annual cash incentive compensation
and long-term incentive awards) to exceed the
75th percentile of our peer group. Correspondingly, in
years with weak performance below the established threshold
levels, we would expect total direct compensation to be as low
as the 10th percentile of our peer group.
With respect to annual and long-term incentive compensation, the
Committee believes selecting the appropriate performance
measures is critical to our paying for performance
philosophy. The Committee bases its awards to our executive
officers each year on a number of factors, including:
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the executive officers position with us and total
compensation package;
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the executive officers performance of his or her
individual responsibilities;
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the equity participation levels of comparable executives at
comparable companies; and
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the executive officers contribution to our financial
performance.
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The Committee also has the authority to engage outside executive
compensation consultants, to determine the scope of the
consultants services and to terminate the
consultants engagement. As described in the
9
Compensation Discussion and Analysis section of this proxy
statement, the Committee engaged Mercer for fiscal year 2008.
The compensation consultant reports directly to the Chairperson
of the Committee and provides the Committee with information and
analysis related to executive compensation including:
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a competitive compensation review of the actual base salary,
annual incentive and long-term incentive awards our Chief
Executive Officer and other executive officers receive;
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executive compensation trend data;
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observations on the design of our annual and long-term incentive
programs;
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peer group financial performance review and compensation market
analysis of our peer companies; and
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a comprehensive report detailing our performance relative to our
peer group with respect to earnings per share growth and return
on capital.
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Our Chief Executive Officer and Vice President, Human Resources
review Mercers analyses and assessments, develop initial
recommendations for base salary adjustments and incentive
compensation for our executive officers (other than our Chief
Executive Officer) for the next fiscal year, and present
managements initial recommendations to the Committee.
Details of the role our Chief Executive Officer and Vice
President, Human Resources are found in the Compensation
Discussion and Analysis section of this proxy statement under
the caption Role of Executive Officers.
The equity element of annual director compensation is determined
by the Governance and Nominating Committee. The equity grants
are made by the Compensation Committee pursuant to its authority
under the 2004 Long-Term Performance Plan.
Governance and Nominating Committee. All
members of the Governance and Nominating Committee meet the
NASDAQ 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 each director may effectively meet their fiduciary
obligations to shareholders and to us. 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 at
www.nordson.com/corporate/governance.
Effective February 17, 2008, our Board of Directors
dissolved the Pension and Finance Committee. The oversight
responsibility for the adequacy of financial statements
pertaining to our benefit plans, including reserves, statement
of funding obligations and underlying economic assumptions has
been transferred to the Audit Committee. Oversight of the
investment policy with respect to tax-qualified pension and
retirement plans funds held in trust and financial performance
of the investment managers for those funds has been assumed by
the Compensation Committee.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS WHOSE TERM EXPIRES IN 2012
NOMINEES
AND OTHER DIRECTORS
Our Board of Directors is composed of eleven directors divided
into three classes. The terms of these classes as of the 2009
Annual Meeting will expire in 2010, 2011, and 2012. Each of the
directors serves for a term of three years and until a successor
is elected. In anticipation of a director retirement in fiscal
year 2010 according to the director retirement guidelines of our
Governance Guidelines, the Board has determined to temporarily
increase the size of the class of directors whose terms expire
in 2012 from four to five and leave one vacancy in the class of
2010.
The Governance and Nominating Committee is responsible for
identifying and evaluating nominees for director and for
recommending to the Board a slate of nominees for election at
the Annual Meeting of Shareholders. The Governance and
Nominating Committee has recommended to the Board, and the Board
has approved, the persons named as nominees for terms expiring
in 2012 and, unless otherwise marked, a proxy will be voted for
such nominees. Each of the nominees currently serves as a
director. Messers. Campbell, Colville, Madar and Dr. Ignat
were last elected by the shareholders at the 2006 Annual
Meeting.
10
Mr. Merriman was elected to the Board of Directors on
August 19, 2008 as a member of the class of directors whose
terms expire in 2009. Mr. Merriman was also appointed to
serve as a member of the Compensation Committee. Under our
Regulations, a director who is elected by the Board of Directors
is required, if nominated, to stand for election at the next
regularly scheduled Annual Meeting of Shareholders.
The name and age of each of the five nominees for election as
directors for terms expiring in 2012, 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 16, 2009.
Nominees
For Terms Expiring in 2012
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Director
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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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Since
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Edward P. Campbell
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59
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Mr. Campbell has served as Chairman and Chief Executive Officer
of Nordson since March 12, 2004. The Board of Directors elected
Mr. Campbell to the additional position of President, Nordson
Corporation effective January 2, 2008, the date Peter S. Hellman
resigned as a member of the Board of Directors and retired as
President and Chief Financial Officer of Nordson. 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 products.
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1996
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William W. Colville
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74
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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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Dr. David W. Ignat
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67
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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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William P. Madar
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69
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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. He was
President and Chief Executive Officer of Nordson from February
1986 through August 1996. 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 Corporation, a manufacturer of
specialty chemicals.
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1985
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11
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Director
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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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Since
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Michael J. Merriman, Jr.
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52
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Mr. Merriman was appointed an Operating Advisor of Resilience
Capital Partners LLC in June 2008. Resilience is a private
equity firm focused on principal investing in lower middle
market underperforming and turnaround situations. Mr. Merriman
is a business consultant for Product Launch Ventures, LLC, a
company that he founded in 2004 to pursue consumer product
opportunities and provide business advisory services. Mr.
Merriman served as a director and as President and Chief
Executive Officer of The Lamson & Sessions Co., a
manufacturer of thermoplastic conduit, fittings and electrical
switch and outlet boxes from November 2006 to November 2007.
Mr. Merriman is a director of American Greetings Corporation, a
designer, manufacturer and seller of greeting cards and other
social expression products and was its Senior Vice President and
Chief Financial Officer from September 2005 until November
2006. Mr. Merriman served as President and Chief Executive
Officer of Royal Appliance Manufacturing Co., a developer,
assembler and marketer of a full line of cleaning products for
home and commercial use, from 1995 until April 2004 and a
director of Royal Appliance Manufacturing Co. from October 1993
until April 2004. Mr. Merriman is a director of RC2 Corporation,
a manufacturer of pre-school toys and infant products, and
OMNOVA Solutions Inc., a manufacturer of specialty chemicals,
emulsion polymers and decorative products.
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2008
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Present
Directors Whose Terms Expire in 2010
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Director
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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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Since
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William D. Ginn
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85
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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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Benedict P. Rosen
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72
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Mr. Rosen served as Chairman of AVX Corporation from July 1997
through July 2008, 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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12
Present
Directors Whose Terms Expire in 2011
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Director
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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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Since
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Stephen R. Hardis
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73
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Mr. Hardis served as Chairman and Chief Executive Officer of
Eaton Corporation from January 1996 until his retirement in 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; The Progressive Corporation, an
insurance holding company; 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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Joseph P. Keithley
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60
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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
Chief Executive Officer 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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Mary G. Puma
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50
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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.
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2001
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William L. Robinson
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67
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For the last nine years, Mr. Robinson has been a professor of
law at the University of the District of Columbias David
A. Clarke School of Law, currently in the capacity of
Distinguished Professor of Law.
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1995
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No shareholder or group that beneficially owns 5% or more of our
outstanding common shares has recommended a candidate for
election as a director at the 2009 Annual Meeting of the
Shareholders.
BOARD
OF DIRECTORS RECOMMENDATION:
THE
BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE
FOR
THE DIRECTORS NOMINATED BY THE BOARD.
PROXIES
SOLICITED BY THE BOARD WILL BE VOTED FOR ALL NOMINEES UNLESS
SHAREHOLDERS SPECIFY A CONTRARY VOTE.
13
Director
Compensation
Directors who are also our employees do not receive compensation
for their services as directors. We structure director
compensation to attract and retain qualified non-employee
directors and to further align the interests of directors with
the interests of our long-term shareholders by linking a
substantial portion of their compensation to the performance of
our common shares. Following is a description of our
compensation program for non-employee directors in fiscal year
2008.
Determining Director Compensation. The
Governance and Nominating Committee periodically reviews a
competitive analysis of non-employee director compensation
prepared by Mercer and makes recommendations to the Board of
Directors on compensation for our non-employee directors,
including their cash retainers and annual equity grants. Each
component of director compensation is described below.
Board Retainer. Our non-employee directors
receive an annual cash retainer of $55,000. Directors do not
receive any meeting or attendance fees.
Committee Retainer. In addition to the annual
cash retainer, the chairpersons of the Compensation and
Governance and Nominating Committees each receive a cash
retainer of $5,000 each year. The Audit Committee chairperson
receives a cash retainer of $10,000 each year. The Presiding
Director receives a cash retainer of $5,000 each year.
Equity Grant. For fiscal year 2008 and
pursuant to the Nordson Corporation 2004 Long-Term Performance
Plan, which was approved by the shareholders at the 2004 Annual
Meeting, each non-employee director was granted 1,323 restricted
common shares. The dollar value of the grant, made at the fair
market value of $52.91 per share on the date of grant, is
$70,000.
Directors may elect to defer receipt of the restricted common
shares under the terms of the Directors Deferred Compensation
Plan. The election to defer must be made prior to the effective
date of the grant and deferral is in the form of restricted
share units.
The terms of the grant are:
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Restriction Period:
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Two year restriction on transfer. Restriction will lapse upon
the retirement, disability, or death of a director. For
directors who do not defer the receipt of the restricted shares,
the shares are fully transferable upon lapse of the restriction
period.
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Voting:
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Non-deferred Shares: Recipients that do not defer receipt of the
restricted shares are permitted to vote all shares during the
restriction period.
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Deferred Shares: Recipients that defer receipt do not have
voting rights on these restricted share units.
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Dividends:
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Non-deferred Shares: Dividends are payable to recipients in cash.
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Deferred Shares: Dividends are deferred as share equivalent
units under the Directors Deferred Compensation Plan.
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Deferred Compensation Program. Under the
Directors Deferred Compensation Plan, non-employee directors may
elect to defer all or a portion of their annual cash retainer
and restricted share grant into a non-qualified, unfunded
deferred compensation program. At the election of the director,
amounts deferred under the Directors Deferred Compensation Plan
will earn a return equivalent to the return on an investment in
(i) an interest-bearing account, earning interest based on
the 10-year
Treasury bill constant maturity rate or (ii) a stock
equivalent account, earning a return based on our common share
price and accruing dividend equivalents. Any restricted share
grant that a non-employee director elects to defer is
automatically invested into a restricted stock unit account with
dividends credited to the directors stock equivalent unit
account. The amounts deferred, dividend equivalents and any
appreciation or accrued interest are paid in cash or in our
common shares, as applicable, on dates selected by the director.
We do not pay above market rates or preferential rates under
this deferred compensation plan.
Group Medical and Dental Insurance
Plan. Non-employee directors also may elect to
participate in the companys group welfare plan, which
provides medical and dental insurance coverage to our employees.
Non-employee directors may obtain medical and dental coverage on
the same terms as our employees. For
14
fiscal year 2008, we paid a total of $23,482 in equivalent
insurance premiums for our non-employee directors that
participated in the group medical plan, Messrs. Colville,
Ginn and Madar. In addition and pursuant to our agreement with
Mr. Madar, Mr. Madar received $6,116 for reimbursement
of Medicare premiums.
Charitable Gifts Matching Program for Non-Employee
Directors. Non-employee directors may participate
in our employee matching gift program involving contributions of
cash or publicly-traded stock made to cultural, educational,
social, medical or health-related charitable organizations that
are exempt from federal income tax. Ms. Puma,
Dr. Ignat and Messrs. Colville, Ginn, Hardis, Madar,
Robinson and Rosen participated in this program. We made
contributions totaling $50,900 during fiscal year 2008.
Director
Compensation Table for Fiscal Year 2008
The following table sets forth the total compensation paid to
each non-employee director for services provided as a director
for fiscal year 2008.
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Fees Earned or Paid
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All Other Compen-
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in Cash (2),(3)
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Stock Awards (4),(5)
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sation (6)
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Total
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Name (1)
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$
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$
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$
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$
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W. Colville
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55,000
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67,076
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29,209
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151,285
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W. Ginn
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55,000
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67,076
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15,770
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137,846
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S. Hardis
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65,000
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67,076
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35,917
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167,993
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D. Ignat
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55,000
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67,076
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20,099
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142,175
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J. Keithley
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60,000
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67,076
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8,384
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135,460
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W. Madar
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62,500
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67,076
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40,868
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170,444
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M. Merriman
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11,000
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1,752
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48
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12,800
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M. Puma
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57,500
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67,076
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8,811
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133,387
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W. Robinson
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55,000
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67,076
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13,744
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135,820
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B. Rosen
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56,250
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67,076
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20,061
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143,387
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(1) |
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Edward P. Campbell, Chairman, President and Chief Executive
Officer and Peter S. Hellman, who retired as our President and
Chief Financial and Administrative Officer and resigned from our
Board of Directors on January 2, 2008, are not included in
this table because they are named executive officers and
received no additional compensation in their capacities as
directors. |
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(2) |
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Messrs. Hardis and Keithley received $5,000 as committee
chairpersons. Mr. Madar assumed the role of chairperson of
the Audit Committee on February 19, 2008 and received
$7,500, representing a prorata amount of the annual Audit
Committee chairperson retainer. Ms. Puma received $2,500,
representing a prorata amount of the annual Audit Committee
chairperson retainer corresponding with the period in fiscal
year 2008 when she served as chairperson of the Audit Committee.
Mr. Rosen received $1,250, representing a prorata amount of
the annual Governance & Nominating Committee
chairperson retainer corresponding with the period in fiscal
year 2008 when he served as chairperson of the Governance and
Nominating Committee. Mr. Hardis also received $5,000 as
Presiding Director. Mr. Merriman received a cash payment of
$11,000, representing a pro-rata portion of his non-employee
director annual cash retainer of $55,000. |
15
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(3) |
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The following table represents the fiscal year 2008 cash
compensation deferred by each director under the Directors
Deferred Compensation Plan: |
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Amount of Cash Retainer
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Amount of Cash Retainer
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Deferred to Stock
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Deferred to Cash Account
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Equivalent Unit Account
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Director
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($)
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($)
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W. Colville
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W. Ginn
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S. Hardis
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65,000
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D. Ignat
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55,000
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J. Keithley
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60,000
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W. Madar
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M. Merriman
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M. Puma
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W. Robinson
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27,500
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B. Rosen
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56,250
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(4) |
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This column shows the dollar amount recognized for financial
statement reporting purposes of restricted shares granted on
November 22, 2006 and December 5, 2007 in accordance
with Statement of Financial Accounting Standards
No. 123(R), Share-Based Payment
(SFAS No. 123(R)) for fiscal year 2008. On
November 22, 2006, 1,435 restricted shares were granted to
each of the directors then in office under our 2004 Long-Term
Performance Plan who did not elect to defer the grant. The
number of shares was determined by dividing $70,000 by the
average of the high and low price of our common shares on
November 22, 2006 $48.77. On December 5,
2007, 1,323 restricted shares were granted to each of the
directors then in office under our 2004 Long-Term Performance
Plan who did not elect to defer the grant. The number of shares
was determined by dividing $70,000 by the closing price of our
common shares on December 5, 2007 $52.91. For
financial reporting purposes the dollar value of the grant is
amortized straight-line over the period earned (24 months
from the date of grant). Effective August 26, 2008,
Mr. Merriman was granted 264 restricted shares (the
equivalent of $14,000), representing his pro-rata portion of the
annual equity compensation ($70,000) paid to non-employee
directors for fiscal year 2008. Our closing share price on
August 26, 2008 was $53.10. |
|
(5) |
|
Messrs. Hardis, Keithley, Madar and Robinson elected to
defer the fiscal year 2007 restricted share grant to their
respective restricted stock unit account. Messrs. Ginn,
Hardis, Keithley, Robinson and Rosen elected to defer the fiscal
year 2008 restricted share grant to their respective restricted
stock unit account. |
16
|
|
|
(6) |
|
This column reflects the dividend equivalents credited to the
directors stock equivalent unit accounts in the Directors
Deferred Compensation Plan in fiscal year 2008 for directors
that deferred compensation. The amount credited to
Dr. Ignats account is attributable to interest
earnings on his deferred cash account ($12,086) and dividends on
his stock equivalent unit account ($2,013). Amounts also reflect
the equivalent health care insurance premiums and matching
gifts. All three components of the column are presented in the
following table: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends or
|
|
|
|
|
|
|
|
|
|
Interest Credited
|
|
|
|
|
|
|
|
|
|
to Non-qualified
|
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
Equivalent
|
|
|
|
|
|
|
Compensation
|
|
|
Insurance Premium
|
|
|
Matching Gift
|
|
Director
|
|
Accounts
|
|
|
($)
|
|
|
($)
|
|
|
W. Colville
|
|
|
15,894
|
|
|
|
9,615
|
|
|
|
3,700
|
|
W. Ginn
|
|
|
2,018
|
|
|
|
4,752
|
|
|
|
9,000
|
|
S. Hardis
|
|
|
29,917
|
|
|
|
|
|
|
|
6,000
|
|
D. Ignat
|
|
|
14,099
|
|
|
|
|
|
|
|
6,000
|
|
J. Keithley
|
|
|
8,384
|
|
|
|
|
|
|
|
0
|
|
W. Madar
|
|
|
19,137
|
|
|
|
15,731
|
|
|
|
6,000
|
|
M. Merriman
|
|
|
48
|
|
|
|
|
|
|
|
0
|
|
M. Puma
|
|
|
2,811
|
|
|
|
|
|
|
|
6,000
|
|
W. Robinson
|
|
|
8,044
|
|
|
|
|
|
|
|
5,700
|
|
B. Rosen
|
|
|
11,561
|
|
|
|
|
|
|
|
8,500
|
|
We did not award any stock options to directors in fiscal year
2008. We do not have a non-equity incentive compensation plan
for directors nor do we sponsor a defined benefit (pension plan)
for directors. Mr. Madar receives a pension benefit as a
company retiree.
17
PROPOSAL 2:
RATIFY THE APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Appointment
of Independent Registered Public Accounting Firm for Fiscal Year
2009
Ernst & Young LLP served as our independent registered
public accounting firm for the fiscal year ended
October 31, 2008. In addition to the engagement to audit
our financial statements and internal control over financial
reporting and to review the financial statements included in our
quarterly reports on
Form 10-Q,
Ernst & Young was also engaged by us during fiscal
2008 to perform certain audit-related services.
The Audit Committee has appointed Ernst & Young to
serve as our auditors for the fiscal year ending
October 31, 2009. Although shareholder ratification of the
appointment of Ernst & Young is not required, the
Board of Directors believes that submitting the appointment to
our shareholders for ratification is a matter of good corporate
governance. If our shareholders do not ratify the appointment of
Ernst & Young, the Audit Committee will reconsider the
appointment. We expect that a representative of
Ernst & Young will be present at the 2009 Annual
Meeting to respond to appropriate questions from shareholders
and to make a statement if he or she desires to do so.
As provided in the Audit Committees Charter, the Audit
Committee is responsible for directly appointing, retaining,
terminating and overseeing our independent registered public
accounting firm. While we have a long-standing relationship with
Ernst & Young, the Audit Committee continuously
evaluates the independence and effectiveness of
Ernst & Young and its personnel, and the cost and
quality of its audit and audit-related services.
Required
Vote
The affirmative vote of a majority of the shares represented at
the 2009 Annual Meeting of Shareholders and entitled to vote on
this proposal will be required to ratify the Audit
Committees appointment of our independent registered
public accounting firm. Abstentions will have the effect of a
vote against ratification of the appointment of the independent
registered public accounting firm.
Pre-Approval
of Audit and Non-Audit Services
At the start of each fiscal year, our Audit Committee
pre-approves the audit services, audit-related services and tax
services, if any, together with specific details regarding such
services anticipated to be required for such fiscal year
including, as available, estimated fees. The Audit Committee
reviews and, if it deems them appropriate, pre-approves those
services. The Audit Committee reviews the services provided to
date and actual fees against the estimates, and such fee amounts
may be updated for presentation at the regularly scheduled
meetings of the Audit Committee. Additional pre-approval is
required before actual fees for any service can exceed the
originally pre-approved amount. The Audit Committee may also
revise the list of pre-approved services and related fees from
time to time. All of the services described below under the
captions Audit Fees and Audit-Related
Fees with respect to fiscal year 2008 were pre-approved in
accordance with this policy.
If we seek to engage our independent registered public
accounting firm for other services that are not considered
subject to general pre-approval as described above, then the
Audit Committee must approve such specific engagement as well as
the estimated fees. Such engagement will be presented to the
Audit Committee for pre-approval at its next regularly scheduled
meeting. If the timing of the project requires an expedited
decision, then we may ask the chairperson of the Audit Committee
to pre-approve such engagement. Any such pre-approval by the
chairperson is then reported to the full Audit Committee for
ratification at the next Audit Committee meeting. In any event,
pre-approval of any engagement by the Audit Committee or the
chairperson of the Audit Committee is required before our
independent registered public accounting firm may commence any
engagement. Additional pre-approval is required before any fees
can exceed approved fees for any such specifically-approved
services.
18
Fees
Paid to Ernst & Young LLP
The following table shows the fees we paid or accrued for audit
and other services provided by Ernst & Young LLP for
the fiscal years ended October 31, 2008 and
October 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
FY 2008
|
|
|
FY 2007
|
|
|
Audit Fees (1)
|
|
$
|
1,657,361
|
|
|
$
|
1,917,984
|
|
Audit-Related Fees (2)
|
|
$
|
5,288
|
|
|
$
|
35,140
|
|
Tax Fees (3)
|
|
$
|
|
|
|
$
|
|
|
|
|
|
(1) |
|
Audit services of Ernst & Young consisted of the audit
of our annual consolidated financial statements, the quarterly
review of interim financial statements, the audit of
managements assessments of internal controls over
financial reporting and statutory audits required
internationally. |
|
(2) |
|
Audit-Related Fees generally include fees for employee benefit
plans, business acquisitions, accounting consultations and
services related to Securities and Exchange Commission
registration statements. |
|
(3) |
|
Tax Fees generally include fees for tax planning and compliance
consulting. Ernst & Young did not provide tax planning
or compliance consulting services in fiscal years 2008 and 2007. |
RECOMMENDATION
REGARDING PROPOSAL 2:
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR RATIFICATION OF THE
AUDIT COMMITTEES APPOINTMENT OF ERNST & YOUNG
LLP AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING
OCTOBER 31, 2009.
19
Ownership
of Nordson Common Shares
The following table shows the number and percent of our common
shares beneficially owned on December 26, 2008 by each of
the directors, including nominees; each of the executive
officers named in the Summary Compensation Table for fiscal year
2008; any persons known to us to be the beneficial owner of more
than 5% of our common shares; and by all directors and executive
officers as a group.
|
|
|
|
|
|
|
|
|
Name
|
|
Number of Shares (1)
|
|
|
Percent
|
|
|
Edward P. Campbell (2) (3)
|
|
|
714,918
|
|
|
|
2.1
|
|
William W. Colville
|
|
|
31,863
|
|
|
|
0.1
|
|
William D. Ginn (4)
|
|
|
501,632
|
|
|
|
1.5
|
|
Stephen R. Hardis
|
|
|
99,568
|
|
|
|
0.3
|
|
Dr. David W. Ignat
|
|
|
1,516,817
|
|
|
|
4.5
|
|
Joseph P. Keithley
|
|
|
16,771
|
|
|
|
|
*
|
William P. Madar
|
|
|
93,125
|
|
|
|
0.3
|
|
Michael J. Merriman, Jr.
|
|
|
2,700
|
|
|
|
|
*
|
Mary G. Puma
|
|
|
22,155
|
|
|
|
0.1
|
|
William L. Robinson
|
|
|
22,354
|
|
|
|
0.1
|
|
Benedict P. Rosen
|
|
|
20,764
|
|
|
|
0.1
|
|
Peter S. Hellman (2)
|
|
|
267,356
|
|
|
|
0.8
|
|
Michael Groos (2)
|
|
|
35,963
|
|
|
|
0.1
|
|
Robert A. Dunn, Jr. (2)
|
|
|
55,861
|
|
|
|
0.2
|
|
John J. Keane (2)
|
|
|
63,613
|
|
|
|
0.2
|
|
Gregory A. Thaxton (2)
|
|
|
10,983
|
|
|
|
|
*
|
Jane Nord (5)
|
|
|
2,010,202
|
|
|
|
6.0
|
|
Jennifer Savage (6)
|
|
|
2,028,498
|
|
|
|
6.1
|
|
Columbia Wanger Asset Management LP (7)
|
|
|
2,043,700
|
|
|
|
6.1
|
|
Neuberger Berman Inc. (8)
|
|
|
2,615,371
|
|
|
|
7.8
|
|
All directors and executive officers as a group (22 people)
(9)
|
|
|
3,586,534
|
|
|
|
10.3
|
|
|
|
|
* |
|
Less than 0.1%. |
|
(1) |
|
Except as otherwise stated in notes (2) through
(4) 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 24, 2009
under the provisions of the 2004 Long-Term Performance Plan and
the Directors Deferred Compensation Plan in the following share
equivalent unit and restricted share unit amounts:
Mr. Colville, 29,105 shares; Mr. Ginn,
2,436 shares; Mr. Hardis, 55,408 shares;
Dr. Ignat, 16,296 shares; Mr. Keithley,
13,448 shares; Mr. Madar, 27,529 shares;
Mr. Merriman, 2,436 shares; Ms. Puma,
17,397 shares; Mr. Robinson, 17,574 shares; and
Mr. Rosen, 16,342 shares. Restricted share units
convert to share equivalent units on a one-to-one basis two
years after the grant date. The share equivalent units convert
to common shares on a one-to-one basis at the time of a
directors retirement, death or disability. |
|
(2) |
|
These include the right to acquire shares through the exercise
of stock options on or before February 24, 2009 and the
settlement of performance units awarded by the Compensation
Committee on December 4, 2008 in amounts as follows:
Mr. Campbell, 375,824 shares; Mr. Hellman,
243,017, Mr. Keane, 59,094 shares; Mr. Groos,
22,425 shares; Mr. Dunn, 38,739 shares, and
Mr. Thaxton, 8,252. Settlement of the performance units
occurred on January 9, 2009. |
|
(3) |
|
With respect to Mr. Campbell, the number of shares includes
22,083 share equivalent units he holds under the Nordson
Corporation 2005 Deferred Compensation Plan. The share
equivalent units convert to common shares on a one-to-one basis
at the time of Mr. Campbells retirement or
termination of employment pursuant to the distribution
provisions of the Plan. |
20
|
|
|
(4) |
|
These include 12,000 shares held by the Ginn Family Fund.
As a trustee of the Ginn Family Fund, Mr. Ginn has shared
voting power and shared investment power with respect to these
shares. The shares held by the Ginn Family Fund are pledged as
security. These also include 481,340 shares held by
Mr. Ginn as nominated successor trustee of The Walter Nord
Trust. As of the record date, Mr. Ginn has sole voting and
investment power with respect to these shares. |
|
(5) |
|
These shares include 308,582 shares held jointly by
Ms. Nord and her children as trustees of the Eric and Jane
Nord Foundation and 881,268 shares held jointly by
Ms. Nord and Ms. Savage as co-trustees of the Eric T.
Nord Main Trust dated April 1, 2003. Ms. Nord has
shared voting and investment power with respect to these shares. |
|
(6) |
|
The shares include: (a) 132,144 shares held by the
Eric Nord & Jane Nord Grandchildren Trusts dated
December 9, 1993, of which Ms. Savage is the sole
trustee, (b) 881,268 shares held by the Eric T. Nord
Main Trust dated April 1, 2003, of which Ms. Savage is
a co-trustee, (c) 15,086 shares held by the Emily
Nord & TK McClintock Trust dated December 19,
2002, of which Ms. Savage is a co-trustee, and
(d) 1,000,000 shares owned by the Jane B. Nord Grantor
Retained Annuity Trust dated December 10, 2008, of which
Ms. Savage is the sole trustee. Ms. Savage has shared
voting and investment power with respect to all shares held by
trusts for which she serves as a co-trustee. Ms. Savage is
a partner with Thompson Hine LLP, which has in the past provided
and continues to provide legal services to us. |
|
(7) |
|
Based on most recent Form 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 a Schedule 13G filed jointly on February 12,
2008 by Neuberger Berman Inc. and Neuberger Berman, LLC. These
entities have sole voting power of 41,765 of these shares,
shared voting power of 1,486,934 of these shares and shared
investment power of all of these shares, and are located at 605
Third Avenue, New York, New York 10158. |
|
(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 8,350 shares, sole voting and sole
investment power with respect to 2,507,221 shares, shared
voting power and shared investment power with respect to
12,000 shares, and the right to acquire
1,058,963 shares on or before February 24, 2009. |
As of December 26, 2008, our present and former directors,
officers and employees and their families beneficially owned
over 10 million Nordson Common Shares, representing 31% of
the outstanding shares. We are party to an agreement that, with
some exceptions, gives us a right of first refusal with respect
to proposed sales of our common shares by members of the Nord
family and The Nord Family Foundation.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires our directors and executive officers and persons who
own more than ten percent of our common shares to file reports
of ownership and changes in ownership of our common shares held
by them with the Securities and Exchange Commission. Copies of
these reports must also be provided to us.
Based on our review of these reports, we believe that, during
the fiscal year ended October 31, 2008, all reports were
filed on a timely basis by reporting persons.
Share
Ownership Guidelines for Directors
The Board strongly believes that the directors should have a
meaningful ownership interest in the company and has implemented
share ownership guidelines for directors. The ownership
guidelines require directors to own a minimum of five times
their annual cash retainer in common shares (shares held in the
form of stock equivalent units or restricted share units qualify
as shares owned under the guidelines). Newly elected directors
have five years within which to achieve the share ownership
requirement. All directors except Mr. Merriman have met the
share ownership guidelines as of the date of this proxy
statement. With his election as a director occurring on
August 26, 2008, Mr. Merriman will have until August
2013 to reach his required share ownership. Our share ownership
guidelines may be reviewed at
www.nordson.com/corporate/governance.
21
EXECUTIVE
COMPENSATION
COMPENSATION
DISCUSSION AND ANALYSIS
Introduction
We have written this Compensation Discussion and Analysis to
provide you with the clearest and most concise description
possible of the material factors and analysis that lie beneath
our compensation policies and decisions for our most senior
executive officers. We have included tables and related
narratives in the Summary Compensation for Fiscal Years 2008 and
2007 section of this proxy statement that will show you the
types and amounts of compensation and benefits we pay to our
most senior executive officers. In this section, we discuss and
analyze the reasons why we paid our most senior executive
officers the types of compensation and benefits described in the
tables and narratives for 2008. We also discuss and analyze how
we determined the specific amounts of compensation and benefits
to pay our most senior executive officers.
After you read this section, you should have a clear and
complete picture of our executive compensation program and how
it operates for the following executive officers, who we refer
to in this proxy statement as our named executive officers for
fiscal year 2008:
|
|
|
|
|
Edward P. Campbell, Chairman of the Board and President and
Chief Executive Officer;
|
|
|
|
Peter S. Hellman, former President, Chief Financial and
Administrative Officer;
|
|
|
|
Gregory A. Thaxton, Vice President, Chief Financial Officer;
|
|
|
|
Robert A. Dunn, Jr., Senior Vice President;
|
|
|
|
John J. Keane, Senior Vice President; and
|
|
|
|
Michael Groos, Vice President.
|
This Compensation Discussion and Analysis discloses future
company performance targets and goals. You should read and
understand these targets and goals only as they relate to our
executive compensation program. We are not providing these
targets and goals as guidance or as statements of
managements expectations or estimates of our current or
future results.
Executive
Summary
We have a strong pay-for-performance philosophy, which seeks to
reward the achievement of performance goals and align our
executive officers interests with those of our
shareholders. Our performance in fiscal year 2008 exceeded
expectations for revenue, earnings per share, operating margin
and income and return on equity:
|
|
|
|
|
Sales growth of 13% to a record $1.1 billion in sales;
|
|
|
|
Diluted earnings per share grew a record 29% to $3.43 per share;
|
|
|
|
Operating margin grew to 17% of sales;
|
|
|
|
Operating income grew to a record $190.3 million; and
|
|
|
|
Return on equity increased to 20%.
|
This record performance was reflected in the total compensation
paid to the named executive officers.
Each of the named executive officers except Mr. Hellman
participated in our annual cash incentive program, which had a
growth in earnings per share target of 8% and return on invested
capital target of 15%. Our actual earnings per share and return
on invested capital both exceeded their respective maximum
performance measure, resulting in a maximum award payout to the
named executive officers. All of the named executive officers
participated in the long-term incentive plan for the fiscal year
2006-2008
performance period, which had threshold, target and maximum
goals of cumulative earnings per share of $6.82, $7.15, and
$8.08 and cumulative revenue of $2,778,900,000, $2,914,500,000,
and $3,290,600,000. Actual performance for the
22
2006-2008
performance period exceeded the maximum earnings per share
measure and was between the target and maximum for the
cumulative revenue measure, resulting in long-term incentive
plan payouts that were 164% of target.
All named executive officers except Mr. Hellman received
equity awards (non-qualified and incentive stock options) in
fiscal year 2008 that were designed to contribute to our total
direct compensation target of approximately the
65th percentile of our peer group. Stock options granted on
November 4, 2004 and later have exercise prices that as of
December 26, 2008 were below the market price of our common
shares and these stock options will not provide compensation to
executives until the stock price increases above the exercise
prices.
We adopted the Amended and Restated 2004 Nordson Corporation
Management Incentive Compensation Plan and the Amended and
Restated 2004 Nordson Corporation Long-Term Performance Plan,
which our shareholders approved at the 2008 Annual Meeting.
These plans are intended to allow the Compensation Committee to
structure executive officer incentive compensation to maximize
our ability to deduct compensation payments for tax purposes.
Following an independent review of the employment agreements
with our executive officers that become effective upon a
change-in-control
and during its December 10, 2008 meeting, our compensation
committee approved retention agreements for our executive
officers (other than our Chief Executive Officer) that more
closely aligned the benefits afforded an executive officer in
the event of a change in control with those benefits offered by
our peer group. The retention agreements, which replace the
present employment agreements, are discussed in the Change
in Control Severance Agreements section of this
Compensation Discussion and Analysis.
SUMMARY
OF FISCAL YEAR 2008 COMPENSATION ELEMENTS
The table below summarizes the elements of our fiscal year 2008
executive compensation program for our named executive officers.
|
|
|
|
|
Element
|
|
Description
|
|
Purpose
|
|
Base Salary
|
|
Fixed annual cash component based on
competitive market analysis; and adjustments are based on an
individuals current and expected performance and pay
relative to the market
Targeted at the median of peer group or
salary survey data
|
|
Foundation of total direct compensation;
recognizes the level of job scope and complexity; recognizes the
level of current performance and sustained performance; and
helps us retain and motivate exceptional executive talent
|
|
|
|
|
|
Annual Incentive
|
|
Annual performance-based cash
opportunity; and amount earned will vary relative to the
targeted level based on company, business unit and individual
results
Total cash compensation (base salary
plus performance-based cash compensation) targeted at the
65th percentile
of peer group. Actual payout varies based on actual annual
performance
|
|
Motivates executives to achieve annual
financial, operating and individual performance objectives
|
23
|
|
|
|
|
Element
|
|
Description
|
|
Purpose
|
|
Long-Term Incentive
|
|
|
|
|
Stock options
|
|
Performance-based equity award with
value tied to share price; amounts earned/realized will vary
from grant date price based on actual share price at exercise;
and generally vest in 25% annual installments over four years
Sum of long-term incentive (stock
options and performance shares) targeted at the
65th percentile
of peer group
|
|
Creates a strong financial incentive for
achieving or exceeding long-term performance goals; encourages a
significant equity stake in the company; and aligns executive
and shareholder interests
|
|
|
|
|
|
Performance shares
|
|
Performance-based equity award
opportunity; and amounts earned/realized will vary from
grant-date price based on actual financial and share price
performance
Sum of long-term incentive (stock
options and performance shares) targeted at the
65th percentile
of peer group
|
|
Strengthens alignment of our executive
teams interests with those of our shareholders; rewards
long-term achievement of specific company goals; and encourages
a significant equity stake in the company
|
|
|
|
|
|
Retirement Benefits
|
|
|
|
|
401(k) defined contribution plan
|
|
Qualified defined contribution plan is a
standard tax-qualified benefit provided to our U.S.-based
employees; is subject to limitations on compensation under the
Internal Revenue Code; and includes a company match element
|
|
Provides tax-deferred vehicle for
retirement income accumulation
|
|
|
|
|
|
Deferred compensation
|
|
Income deferral and 401(k) restoration
plan; includes a company match element
|
|
Provides tax-deferred vehicle for
retirement income accumulation; and restores benefits that are
limited by the Internal Revenue Code in the qualified plan for
our most highly paid executives
|
|
|
|
|
|
Defined benefit pension plan
|
|
Qualified defined benefit plan is a
standard tax-qualified benefit provided to our U.S.-based
employees; and subject to limitations on benefits under the
Internal Revenue Code
|
|
Provides tax-deferred vehicle for
retirement income accumulation
|
24
|
|
|
|
|
Element
|
|
Description
|
|
Purpose
|
|
Non-qualified supplemental executive
retirement plan (defined benefit)
|
|
Supplemental pension restoration plan;
intended to replace 55% of an executive officers income
|
|
Restores pension benefits that are
limited by the Internal Revenue Code in the qualified plan
|
|
|
|
|
|
Health and Other Welfare Benefits
|
|
Broad-based employee benefits program
available to our U.S.-based employees, including health, life
insurance and disability plans
|
|
Provides eligible employees with a
competitive fringe benefit package
|
|
|
|
|
|
Benefits Upon Termination Following
Change-in-Control
|
|
Contingent component; and only payable
if an executive officers employment is terminated
following a change-in-control event
|
|
Provides incentive and security to our
executive officers in the transition following a
change-in-control and helps us retain key executive talent
during critical times of significant corporate risk
|
|
|
|
|
|
Perquisites
|
|
Annual executive physical exam,
supplemental long-term disability insurance, tax planning or
preparation services, country and professional club expenses and
automobile allowance
|
|
Provides competitive benefits to promote
the health, well-being and financial security of the executive
officers; and provides a venue for business meetings or business
entertainment
|
Mr. Groos does not participate in the 401(k) defined
contribution plan, which is available to
U.S.-based
employees only. Mr. Groos participates in the statutory
pension plan and other social and welfare (health) benefit plans
sponsored by his employer, Nordson Deutschland GmbH, a
wholly-owned subsidiary of the company. The benefits provided
under these Nordson Deutschland GmbH plans are available to all
employees of Nordson Deutschland GmbH. Mr. Groos also
participates in a supplemental pension plan that is described
later in this Compensation Discussion and Analysis under the
caption Supplemental Executive Retirement Plan (Defined
Benefit).
The following provides a brief overview of the topics that we
discuss in detail in this Compensation Discussion and Analysis:
|
|
|
|
|
the philosophy and objectives of our executive compensation
program;
|
|
|
|
the compensation process and procedures where we discuss
(a) the respective roles of the Compensation Committee, the
executive compensation consultant and management in establishing
executive compensation and (b) the allocation of executive
compensation between short-term and long-term elements, between
cash and non-cash elements and between different forms of
non-cash elements;
|
|
|
|
a detailed discussion of how we set base salary and annual and
long-term incentive compensation for executive officers for
fiscal year 2008;
|
|
|
|
a review of non-cash based benefits provided to our executive
officers;
|
|
|
|
a discussion of severance and other benefits our executive
officers would receive upon termination of employment;
|
|
|
|
a review of perquisites that executive officers receive;
|
|
|
|
a statement of our equity grant policy; and
|
|
|
|
a discussion of our share ownership policy for executive
officers.
|
25
Philosophy
and Objectives
Our executive compensation program philosophy is that we should
pay our named executive officers for their work on our behalf in
ways that align their personal financial interests with the
investment interests of our shareholders, with a specific focus
on paying for performance. To us, paying for
performance means that we pay our named executive officers
different types and amounts of compensation based on their
successful implementation of our strategic objectives and the
degree to which our annual operational and financial objectives
are achieved. By basing executive pay primarily on the
achievement of these corporate objectives, we establish a direct
link between executive compensation and the long-term interests
of our shareholders.
The core objectives of our executive compensation program are to:
|
|
|
encourage and reward named executive officer performance that
achieves or exceeds our significant financial and operational
performance goals without encouraging the taking of excessive
risks that could be detrimental to the interests of our
long-term shareholders;
|
|
|
encourage and reward our named executive officers for their
experience, expertise, level of responsibility, seniority,
leadership qualities, advancement, individual accomplishment and
other significant contributions that enhance shareholder value
and our success;
|
|
|
retain and motivate highly-talented and ethical individuals who
are focused on helping us achieve long-term success; and
|
|
|
provide compensation packages that are competitive when compared
to pay arrangements offered by companies with which we compete
to attract talented executive employees.
|
Compensation
Process and Procedures
Role of the
Compensation Committee
The Compensation Committee of our Board of Directors, which we
refer to in this section of the proxy statement as the
Committee, has primary responsibility for designing our
executive compensation program and for making compensation
decisions under the program. In fulfilling its duties and
responsibilities, the Committee each year seeks input, advice
and recommendations from an executive compensation consultant
and other resources, including recommendations from our Chief
Executive Officer, on the compensation and performance of our
executive officers. The Committee is not bound by the input,
advice or recommendations it receives. Instead, the Committee at
all times exercises independent judgment in its executive
compensation decisions. We provide more detailed information
about the Committees processes and procedures for making
compensation decisions under the Corporate Governance section of
this proxy statement and in the narratives to the compensation
tables in the next major section of this proxy statement.
The Committee meets in executive session to determine all
elements of our Chief Executive Officers total
compensation base salary, annual incentive
compensation, and long-term equity-based incentives. Our Chief
Executive Officer does not offer the Committee any
recommendations for his compensation.
Role of the
Compensation Consultant
The Committee has engaged Mercer, an internationally recognized
human resources consulting firm, as its outside executive
compensation consultant for fiscal year 2008. Mercer reports
directly to the Chairman of the Committee. Mercer provides
relevant market data, advice, alternatives and recommendations
to the Committee with regard to the compensation of executive
officers. Specifically, the Committee asks Mercer to collect and
analyze proxy data for our peer group, which is a term we use to
describe a particular group of companies that meet certain
specific criteria and are picked as companies comparable to us
in terms of compensation practices. While no single company in
our peer group competes with us across all of our businesses, we
believe that our peer companies as a group operate in markets
and compete for executive talent in a manner sufficiently
similar to us. As a result, our peer group is an appropriate
group of companies against which the Committee can establish
performance goals, evaluate performance and establish
compensation. We provide more detailed information about
Mercers instructions, responsibilities, processes and
26
interaction with the Committee under the discussion of how the
Committee determined executive compensation for fiscal year 2008
later in this Compensation Discussion and Analysis.
Role of Executive
Officers
Our Chief Executive Officer and Vice President, Human Resources
review Mercers analyses and assessments, develop initial
recommendations for base salary adjustments and incentive
compensation for our named executive officers (other than our
Chief Executive Officer) for the next fiscal year, and present
managements initial recommendations to the Committee. More
specifically, our Chief Executive Officer and Vice President,
Human Resources have the following roles in preparing
managements initial recommendations for the Committee:
|
|
|
Chief Executive Officer
|
|
Vice President, Human Resources
|
|
provides annually to the Committee a
self-assessment of his performance for the fiscal year;
|
|
develops written background and
supporting materials for review by the Committee prior to its
meetings;
|
attends the Committees meetings
but is not present during executive sessions;
|
|
attends the Committees meetings
but is not present during executive sessions;
|
attends an annual review by Mercer of
our executive officer compensation compared to that paid by
members of our peer group companies;
|
|
attends an annual review by Mercer of
our executive officer compensation compared to that paid by
members of our peer group companies; and
|
makes recommendations to the Committee
about designs for and, if warranted, changes to our annual and
long-term incentive programs;
|
|
makes recommendations to the Committee
about designs for and, if warranted, changes to our annual and
long-term incentive programs.
|
provides the Committee each year with
an assessment of each executive officers performance
compared to pre-established performance goals; and
|
|
|
recommends annually to the Committee
base salary adjustments, target award levels under the annual
incentive plan, and long-term incentive awards.
|
|
|
With respect to the assessment of executive officers
performance, at the beginning of each fiscal year, our executive
officers provide our Chief Executive Officer with a list of
their individual goals and objectives for the upcoming year. For
executive officers in charge of one of our business segments,
their individual goals include elements of corporate financial
performance and business segment operational measures such as
segment revenue growth and operating income. Our Chief Executive
Officer approves these individual objectives at the beginning of
the fiscal year, and then reviews them at the end of the fiscal
year in order to determine whether an adjustment, if any, should
be made to an individual executive officers payout under
the annual incentive compensation program.
The Committee reviews our Chief Executive Officers
recommendations regarding adjustments to payouts under the
annual incentive compensation program and discusses them with
Mercer. The Committee believes that this review helps ensure
that our Chief Executive Officers compensation
recommendations are in line with the executive compensation
programs stated philosophy and objectives, and are
reasonable when compared to our competitive market.
Allocation of
Executive Compensation
In line with our paying for performance philosophy,
our executive compensation program is designed to allocate a
greater proportion of our named executive officers total
compensation (as compared to that for other employees) to
elements that are based on both short-term and long-term
corporate performance. Each of the performance-based elements of
compensation within those categories is directly tied to
appreciation of our share price
and/or to
significant financial and operational performance goals. More
than one-half of the
27
targeted total compensation for our executive officers is,
therefore, at risk and may significantly fluctuate
from year to year based on our financial, operational and share
performance.
Stock options provide a return to the recipient only if our
share price increases. The annual cash incentive compensation
and long-term incentive compensation elements of our executive
compensation program provide a return to our executive officers
only if we meet certain financial and operational performance
goals.
The total compensation mix for our named executive officers is
consistent with the mix of compensation elements within our peer
group. Our Chief Executive Officer receives a higher proportion
of his total compensation allocated to performance-based
components than non-performance-based components, and more
allocated to equity-based compensation than cash-based
compensation compared to our other named executive officers.
This compensation mix approach is consistent with that used for
chief executive officers within the peer group.
The Committee structures the program in this manner because
executive officers have greater responsibility and influence
over the performance of our business. The Committee does not
have any formal policies or guidelines with respect to the
allocation of executive compensation between short-term and
long-term elements, cash and non-cash elements or different
forms of non-cash elements. In practice, however, the Committee
has taken the following approaches:
Allocation
Between Short-Term and Long-Term Compensation Elements
The Committee considered the input, advice and recommendations
from Mercer for fiscal year 2008 to set each named executive
officers compensation for fiscal year 2008. For base
salary, the Committee accepted Mercers recommendation to
set a target for each named executive officer at approximately
the median of either his or her comparable position within our
peer group or salaries for similar positions at similarly-sized
companies using salary survey data. The amount of target annual
incentive compensation for each named executive officer was set
such that each named executive officers base salary plus
target annual bonus was approximately equal to the
65th percentile
of peer group annual cash compensation for executive officers
with comparable responsibilities. We chose this benchmark
because our performance targets are estimated to be at the
65th percentile of the peer group performance over a
business cycle. The Committee also reviewed peer group data in
setting target long-term compensation, which includes both
long-term incentive awards and stock options. Target long-term
compensation was set for each named executive officer at
approximately the 65th percentile of peer group long-term
compensation.
Allocation
Between Different Forms of Non-Cash Compensation
Elements
Taking into account Mercers recommendation, the Committee
allocates 50% of the total target value of each named executive
officers long-term incentive compensation to stock options
and 50% to long-term incentive performance shares. The Committee
takes this approach to balance the allocation between
performance shares, which are earned based on long-term
financial, operational and strategic measures, and stock
options, the value of which is based on long-term performance of
our common shares. The Committee does not allocate an unbalanced
percentage to stock options to avoid any appearance that the
executive compensation program is a positive or negative
indicator of current common share value or anticipated common
share performance.
Analysis
of Fiscal Year 2008 Compensation Decisions
Initial
Process and Considerations
Each year, the Committee instructs the consultant to analyze the
proxy statement data of our peer group of companies and other
broad surveys and assess competitive market compensation data
relating to salary, annual incentive and long-term incentive in
the context of the purpose and objectives of the executive
compensation program. The Committee provided Mercer with
preliminary instructions regarding the objectives of the fiscal
year 2008 executive compensation program and the parameters of
the competitive review of
28
executive total direct compensation programs to be conducted by
Mercer. In particular, the Committee instructed Mercer to:
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|
|
test both the competitiveness of our executive officer
compensation packages within the market and the reasonableness
of the packages given our performance relative to our peer
group, as measured by diluted earnings per share and return on
average capital;
|
|
|
|
benchmark all components of compensation, including base salary,
total target compensation (base salary plus cash incentive
compensation), total actual cash compensation and equity-based
long-term incentive awards;
|
|
|
|
assess the continued applicability of our peer group;
|
|
|
|
assess the alignment between executive officer compensation and
our financial performance; and
|
|
|
|
analyze our internal compensation model and guidelines and
compare them to our peer group and actual compensation
practices. For purposes of analyzing our performance against
that of our peer group, the Committee instructed Mercer to
organize its analysis around our business segments and general
corporate executive positions.
|
The Committee then discussed Mercers assessment and its
recommendations.
We established our peer group by selecting companies with
revenues ranging in size from approximately one-half to two
times our revenue, a significant portion of their business
located or transacted internationally and a business focus on
precision industrial manufacturing. Our peer group for fiscal
year 2008 executive compensation decisions did not change from
fiscal year 2007, and again consisted of:
|
|
|
Actuant Corp.
|
|
Graco Inc.
|
Albany International Corp.
|
|
Idex Corp.
|
Ametek Inc.
|
|
Kulicke & Soffa Industries Inc.
|
Barnes Group Inc.
|
|
Milacron Inc.
|
Donaldson Inc.
|
|
Novellus Systems Inc.
|
Drew Industries Inc.
|
|
Robbins & Myers Inc.
|
Esterline Technologies Corp.
|
|
Roper Industries Inc.
|
Gerber Scientific Inc.
|
|
Watts Water Technologies Inc.
|
Primary
Compensation Allocation
Our total compensation program is designed to overall provide
65th percentile
total compensation relative to the peer group for
65th percentile
performance, but that specific elements may vary from the target
positioning by individual. The consultant provides the Committee
with benchmark data with respect to all elements of an executive
officers total direct compensation: base salary, annual
cash incentive compensation, and long-term equity-based
incentive compensation. Included as benchmark data are
longer-term reviews of our performance and compensation paid to
our executive officers compared to that of our peer group. The
Committees practice is to set performance levels that will
be retained through a complete ten-year business cycle, not just
for periods of one or three years. Therefore, it is expected
that positioning of target performance levels relative to actual
peer company performance will vary through a business cycle.
The following table summarizes the allocation, on a percentage
basis, among the following primary elements of compensation for
our named executive officers for fiscal year 2008: base salary;
payouts under the annual cash incentive plan; performance share
payouts for the
2006-2008
performance period under the long-term
29
performance plan (valued using the fair market value of Nordson
common shares on the date the payout is determined); and the
grant date fair value of stock options granted in fiscal year
2008:
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Element
|
|
Campbell
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Hellman
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|
Thaxton
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|
|
Dunn
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Groos
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Keane
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|
Base Salary
|
|
|
16.4
|
%
|
|
|
25.0
|
%
|
|
|
36.9
|
%
|
|
|
26.3
|
%
|
|
|
33.3
|
%
|
|
|
22.8
|
%
|
Annual Cash Incentive
|
|
|
32.7
|
%
|
|
|
0.0
|
%
|
|
|
40.5
|
%
|
|
|
36.8
|
%
|
|
|
33.3
|
%
|
|
|
32.0
|
%
|
Long-Term Incentive
|
|
|
50.9
|
%
|
|
|
75.0
|
%
|
|
|
22.6
|
%
|
|
|
36.8
|
%
|
|
|
33.3
|
%
|
|
|
45.2
|
%
|
Mr. Hellman did not participate in the annual cash
incentive plan for fiscal year 2008 due to his retirement in
January 2008.
Base
Salary
In general, we pay base salaries each year to our named
executive officers to recognize and reward their experience,
expertise, level of responsibility, seniority, leadership
qualities, advancement, individual accomplishment, and other
significant contributions to the enhancement of shareholder
value and our success. Paying competitive base salaries also
helps us attract, motivate and retain highly-talented and
ethical individuals.
The Committee established base salaries for fiscal year 2008 for
each of the named executive officers after considering
Mercers annual review of base salaries for comparable
positions within our peer group and our Chief Executive
Officers annual performance reviews of the named executive
officers. For fiscal year 2008, the named executive officers
received the base salaries included in the Salary
column of the Summary Compensation Table for Fiscal Years 2008
and 2007 in this proxy statement. Those amounts reflect the
following increases in base salaries compared to base salaries
at the end of fiscal year 2007:
|
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|
|
|
|
|
|
|
|
|
|
|
|
Increase in $ from
|
|
|
|
% Increase from
|
|
|
Fiscal Year 2007
|
|
Name
|
|
Fiscal Year 2007 Base Salary
|
|
|
Base Salary
|
|
|
Edward P. Campbell
|
|
|
3.4
|
%
|
|
|
25,000
|
|
Peter S. Hellman
|
|
|
|
|
|
|
|
|
Gregory A. Thaxton
|
|
|
15.8
|
%
|
|
|
30,000
|
|
Robert A. Dunn, Jr.
|
|
|
3.6
|
%
|
|
|
12,000
|
|
Michael Groos
|
|
|
2.1
|
%
|
|
|
10,445
|
|
John J. Keane
|
|
|
3.4
|
%
|
|
|
10,000
|
|
Mr. Hellman retired as our President and Chief Financial
and Administrative Officer on January 2, 2008 and did not
receive an increase in his base salary for fiscal year 2008.
Mr. Groos base salary increase was 7,000 . The
Euro to US dollar conversion rate for this table
was 1 = US$1.4921.
The Committee met in executive session to determine
Mr. Campbells fiscal year 2008 base salary.
Mr. Campbell did not offer the Committee any recommendation
as to an adjustment to his base salary. The Committees
salary decisions for each named executive officer was based on
both the average increase being paid to all executive officers
and the amount being paid to the named executive officers
peer group counterparts, with an objective of moving each named
executive officers base salary more toward the median base
salary paid to their counterparts in our peer group. When
establishing fiscal year 2008 base salaries for each of the
named executive officers, the Committee also took into
consideration the amounts it was setting as the named executive
officers annual incentive compensation and long-term
incentive compensation opportunities (as discussed further
below). These actions produced the resulting proportions of base
salary, annual incentive and long-term incentive opportunity
shown in the table above for each of the named executive
officers, and allowed the Committee to meet its general
objective of setting total short-term compensation (base salary
and annual incentive compensation) and long-term incentive
compensation opportunities at the 65th percentile of total
short-term and long-term incentive compensation paid to the peer
group officers.
30
An additional element affecting compensation for Mr. Groos
is that he operates in Europe and his cash compensation is paid
in Euros. The strength of the Euro relative to the
U.S. dollar has worked to increase Mr. Groos
compensation relative to executives in our peer group who are
paid in U.S. dollars.
Annual
Incentive Compensation
We pay annual incentive compensation to help fulfill our
philosophy of paying for performance. Our named executive
officers earn annual incentive compensation only when we satisfy
key performance criteria that are aligned with the investment
interests of our long-term shareholders. When we achieve our
performance goals, our shareholders should benefit in terms of
their investment, and our named executive officers benefit by
receiving annual incentive compensation. By tying annual
incentive compensation achievement to the achievement of
performance goals, the Committee views this portion of the named
executive officers compensation as significantly at
risk, and as a way to balance our short-term and long-term
objectives. The annual incentive component of our compensation
program also supports our core objective of providing total
compensation opportunities to our named executive officers that
are competitive within our talent market and help us attract,
hire and retain outstanding executive talent.
In general, target annual cash incentive compensation
opportunities are established by the Committee as a percentage
of each named executive officers base salary and, in
combination with base salary, are targeted at the
65th percentile of total short-term compensation paid by
our peer group. For fiscal year 2008, the target annual cash
incentive compensation opportunities for our named executive
officers as a percentage of their base salaries were as follows:
Mr. Campbell, 100%; Mr. Thaxton, 55%; Mr. Dunn,
70%; Mr. Groos, 50% and Mr. Keane, 70%. The Committee
did not set a target annual cash incentive opportunity for
Mr. Hellman given his pending (January
2008) retirement. Instead, under his retirement arrangement
with us, Mr. Hellman was paid $66,554, representing a pro
rata share of his target annual incentive compensation
opportunity for fiscal year 2008 had he been employed through
the end of fiscal year 2008, using his fiscal year 2007 80% of
base salary target annual incentive opportunity to determine
such amount.
The Committee also establishes the performance measures
applicable for annual incentive compensation opportunities. The
degree of achievement of annual incentive opportunities is
determined based on the degree to which we achieve specific
quantifiable performance targets established by the Committee
for each applicable performance measure. The specific
performance targets for the annual cash incentive plan reflect
our annual short term operating plan objectives. In this way,
the Committee directly and materially links annual cash
incentive compensation to achievement in the performance
measures. In the Committees judgment, annual performance
targets are set with sufficient difficulty to produce
performance above the median level with the intent of our
shareholders receiving an above-average return on our investment
in executive compensation.
For fiscal year 2008, based on its review of Mercers
analysis and assessment, the Committee established two
performance measures by which to measure annual incentive
compensation achievement and payouts: return on capital and
diluted earnings per share growth. The Committee considers
earnings per share growth and return on capital to be
performance measures critical to our financial performance and
profitable growth because each of these measures offers the
proper balance between growth and profitability. As a result,
the Committee has weighted each performance measure evenly in
terms of determining annual incentive compensation payouts. More
specifically:
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Return on capital measures the amount of profitability per unit
of capital invested by management to generate earnings and is
also easily compared to peer group companies performance.
Under the Committees methodology of calculating return on
capital, a capital charge is applied to unamortized goodwill,
and capital is net of cash, marketable securities and
unamortized goodwill.
|
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|
Diluted earnings per share growth measures the rate at which
management has succeeded in increasing the profits per unit of
ownership by shareholders. Earnings per share growth is easily
compared among peers and the measure is commonly used by the
investment community to communicate performance. The formula we
utilize for diluted earnings per share is net income divided by
weighted average common diluted shares outstanding.
|
31
The Committee believes the choice of these performance measures
aligns the interests of our named executive officers with those
of our shareholders because achieving greater return on capital
and earnings per share growth over time will drive improved
shareholder return and foster maximum value for our assets.
For fiscal year 2008, the Committee established threshold,
target and maximum quantitative performance levels for each
performance measure as follows:
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Measure
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
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|
Return on Capital
|
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6
|
%
|
|
|
15
|
%
|
|
|
23
|
%
|
Diluted Earnings Per Share Growth
|
|
|
0
|
%
|
|
|
8
|
%
|
|
|
16
|
%
|
For the diluted earnings per share performance measure, the
corresponding diluted earnings per share levels were:
threshold $2.76 per share; target $2.98
per share; and maximum $3.20 per share. Actual
performance for the diluted earnings per share performance was
$3.43 per share and actual performance for the return on capital
performance measure was 27%.
The following table sets forth the following information for
fiscal year 2008 annual incentive compensation for each of our
named executive officers: potential payout for achievement of
each performance measure at threshold, target and maximum
levels; corporate performance against combined target levels;
actual payout as a percentage of target annual incentive
compensation opportunity; and actual payouts (rounded to the
nearest thousand dollars):
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Corporate
|
|
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|
Potential Payout ($)
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|
|
Potential Payout ($) for
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|
|
Performance
|
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|
for Return on Capital
|
|
|
Diluted Earnings per Share
|
|
|
Against
|
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|
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|
|
Performance Measure
|
|
|
Performance Measure
|
|
|
Target
|
|
|
|
|
Name
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
(%)
|
|
|
Payout ($)
|
|
|
Edward P. Campbell
|
|
|
191,250
|
|
|
|
382,500
|
|
|
|
765,000
|
|
|
|
191,250
|
|
|
|
382,500
|
|
|
|
765,000
|
|
|
|
200
|
%
|
|
|
1,530,000
|
|
Gregory A. Thaxton
|
|
|
30,250
|
|
|
|
60,500
|
|
|
|
121,000
|
|
|
|
30,250
|
|
|
|
60,500
|
|
|
|
121,000
|
|
|
|
200
|
%
|
|
|
242,000
|
|
Robert A. Dunn, Jr.
|
|
|
60,550
|
|
|
|
121,100
|
|
|
|
242,200
|
|
|
|
60,550
|
|
|
|
121,100
|
|
|
|
242,200
|
|
|
|
200
|
%
|
|
|
484,000
|
|
Michael Groos(1)
|
|
|
63,601
|
|
|
|
127,201
|
|
|
|
254,401
|
|
|
|
63,601
|
|
|
|
127,201
|
|
|
|
254,401
|
|
|
|
200
|
%
|
|
|
509,000
|
|
John J. Keane
|
|
|
52,500
|
|
|
|
105,000
|
|
|
|
210,000
|
|
|
|
52,500
|
|
|
|
105,000
|
|
|
|
210,000
|
|
|
|
200
|
%
|
|
|
420,000
|
|
|
|
|
(1) |
|
The dollar amount of Mr. Groos payment reflects the
average annual Euro U.S. dollar exchange rate for
fiscal year 2008: 1 = US$ 1.4921. |
Based on our achieving performance that exceeded the specific
quantitative maximum performance levels established for each
performance measure, and after considering Mercers and
Mr. Campbells analysis and assessment, the Committee
determined individual payouts under the annual incentive
compensation plan for Messrs. Thaxton, Dunn, Groos and
Keane would be at the maximum amount. The Committee did not
exercise any discretion to adjust downward the payout based on
individual executive officer performance.
For Mr. Campbell, the Committee also considered
Mr. Campbells involvement in leading the company to
achieve the following performance records:
|
|
|
|
|
Revenue grew to a record $1.1 billion, an increase of
13 percent over fiscal year 2007 revenue;
|
|
|
|
Operating income grew to a record $190.3 million, an
increase of 25 percent over fiscal year 2007 operating
income;
|
|
|
|
Operating margin grew to 17% of sales, an increase of
2 percent over fiscal year 2007 operating margin;
|
|
|
|
Diluted earnings per share grew to a record $3.43, an increase
of 29 percent over fiscal year 2007 diluted earnings per
share;
|
|
|
|
Return on invested capital was a record 23%; and
|
|
|
|
Total selling and administrative expenses as a percent of sales
was less than 40% of sales for the first time since 1980.
|
32
The amount of cash incentive compensation paid to each named
executive officer for fiscal year 2008 is included in the
Non-Equity Incentive Plan Compensation column of the
Summary Compensation Table for Fiscal Years 2008 and 2007 in
this proxy statement.
Long-Term
Incentive Compensation
We pay long-term incentive compensation to also help fulfill our
philosophy of paying for performance. As with our short-term
incentive compensation, our named executive officers earn
long-term incentive compensation only when we satisfy key
performance criteria that are aligned with the investment
interests of our long-term shareholders. Due to this at
risk form of compensation, when we achieve our long-term
performance goals, our shareholders should benefit in terms of
their investment, and our named executive officers will benefit
by receiving their long-term incentive compensation. The
long-term incentive component of our compensation program also
supports our core objective of providing total compensation
opportunities to our named executive officers that are
competitive within our talent market and help us attract and
retain outstanding executive talent.
Our named executive officers receive long-term incentive
compensation consisting of both long-term incentive awards in
the form of three-year performance share opportunities and stock
options. The measures we set for the three-year performance
period are based on our long-term strategic objectives.
Performance share awards and stock options work together to
align the long-term financial interests of our executive
officers with those of our long-term shareholders. In general,
the Committee bases the target amount of the long-term incentive
awards and the number of stock options granted to our named
executive officers on similar compensation for persons holding
comparable positions within our peer group, as reflected in
Mercers annual peer group analysis and assessment.
Long-Term
Incentive Plan
Fiscal Year
2006-2008
Performance Period. Based upon Mercers
annual assessment and review, the Committee established the
following threshold, target, and maximum cumulative earnings per
share growth and cumulative revenue growth performance measures
for the fiscal year
2006-2008
performance period:
|
|
|
|
|
|
|
|
|
|
|
|
|
Measure
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Cumulative Earnings Per Share Growth
|
|
|
5
|
%
|
|
|
7.5
|
%
|
|
|
14
|
%
|
Cumulative Revenue Growth
|
|
|
5
|
%
|
|
|
7.5
|
%
|
|
|
14
|
%
|
For the cumulative earnings per share growth measure, the
corresponding cumulative earnings per share levels were:
threshold $6.82 per share; target $7.15
per share; and maximum $8.08 per share. For the
cumulative revenue growth measure, the corresponding revenue
levels were: threshold $2,777,900,000;
target $2,914,500,000; and maximum
$3,290,600,000.
These measures were chosen because they offer a balance between
growth and profitability. As a result, the Committee weighted
each performance measure evenly in terms of determining
2006-2008
performance period payouts. More specifically,
|
|
|
|
|
Cumulative earnings per share growth measures the rate at which
management has succeeded in growing profits on a sustained basis
over a three-year period. It is the constant percentage by which
earnings per share would need to grow over a base period amount
during a three-year period such that the sum of earnings per
share calculated at such constant growth rate for such three
years is equal to the sum of the actual earnings per share
earned over the same three-year period. It is a superior measure
of sustained earnings growth because it is influenced by the
earnings performance during each year of the performance period
rather than simply a compound growth rate that compares the
final years earnings to the base period amount.
|
|
|
|
Cumulative revenue growth is a similar measure to cumulative
earnings per share growth except that it measures the rate at
which management has succeeded in growing revenue on a sustained
basis over a three-year period. While the growth in profits and
profitability are of primary importance, management is
|
33
|
|
|
|
|
also expected to grow our size and scale, and cumulative revenue
growth is an effective measure of their success in doing so.
|
The Committee believes these two measures together align the
interests of our named executive officers with those of our
shareholders because achieving sustained earnings per share
growth and revenue growth over time will drive improved
shareholder return and foster maximum value for our assets.
For the fiscal year
2006-2008
performance period, which has just come to a close, performance
exceeded the maximum performance level for cumulative earnings
per share growth and was between target and maximum performance
level for cumulative revenue growth during the three-year
period. Cumulative earnings per share for the three-year period
were $8.89, which is equivalent to a constant annual growth rate
of 19.3% over the three-year performance period after adjusting
for the change in accounting for the expensing of stock options.
Cumulative revenue for the three-year period was
$3,016.6 million, which is equivalent to a constant annual
growth rate of 9.3% over the three-year performance period. We
included revenue from discontinued operations during the years
in which we owned these operations. In calculating cumulative
earnings per shares growth, we reduced both base year and fiscal
year 2005 diluted earnings per share by $.08 to reflect on a
consistent basis the effect of the accounting charge for stock
options that began with fiscal year 2006.
In determining the actual payout of performance shares for the
2006-2008
performance period we reviewed the actual performance against
the pre-established threshold, target and maximum measures for
each performance element. The following table sets forth the
following information for the
2006-2008
performance period for each of our named executive officers:
potential payout (in number of shares) at threshold, target and
maximum levels; corporate performance as a multiple of the
target level; and actual payouts (rounded to the nearest whole
share):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
|
|
|
|
|
|
|
Potential Payout (# Shares)
|
|
|
as Multiple of
|
|
|
Payout
|
|
Name
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Target
|
|
|
(# Shares)
|
|
|
Edward P. Campbell
|
|
|
13,000
|
|
|
|
26,000
|
|
|
|
52,000
|
|
|
|
1.64
|
|
|
|
42,536
|
|
Peter S. Hellman(1)
|
|
|
4,333
|
|
|
|
8,667
|
|
|
|
17,333
|
|
|
|
1.64
|
|
|
|
14,179
|
|
Gregory A. Thaxton(2)
|
|
|
300
|
|
|
|
600
|
|
|
|
1,200
|
|
|
|
1.64
|
|
|
|
982
|
|
Robert A. Dunn, Jr.
|
|
|
2,350
|
|
|
|
4,700
|
|
|
|
9,400
|
|
|
|
1.64
|
|
|
|
7,689
|
|
Michael Groos
|
|
|
2,800
|
|
|
|
5,600
|
|
|
|
11,200
|
|
|
|
1.64
|
|
|
|
9,162
|
|
John J. Keane
|
|
|
3,250
|
|
|
|
6,500
|
|
|
|
13,000
|
|
|
|
1.64
|
|
|
|
10,634
|
|
|
|
|
(1) |
|
The potential payouts for the fiscal year
2006-2008
performance period represent Mr. Hellmans
proportionate share of the fiscal year
2006-2008
payout. Under the Compensation Committee Rules governing the
Long Term Incentive Plan, Mr. Hellmans proportionate
share of the fiscal year
2006-2008
payout is determined by multiplying the payout by a fraction,
the numerator which is the number of months Mr. Hellman was
employed as an executive officer during the performance period
(28 months) and the denominator being 36 months. |
|
(2) |
|
Mr. Thaxtons payout is based on an award made prior
to his being elected an executive officer. |
Fiscal Year
2007-2009
Performance Period. Using the same process as was
used to establish the threshold, target, and maximum cumulative
earnings per share growth and cumulative revenue growth
performance measures for the fiscal year
2006-2008
performance period, the Committee has established the following
threshold, target, and maximum cumulative earnings per share
growth and cumulative revenue growth performance measures for
the fiscal year
2007-2009
performance period:
|
|
|
|
|
|
|
|
|
|
|
|
|
Measure
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Cumulative Earnings Per Share Growth
|
|
|
5
|
%
|
|
|
7.5
|
%
|
|
|
14
|
%
|
Cumulative Revenue Growth
|
|
|
5
|
%
|
|
|
7.5
|
%
|
|
|
14
|
%
|
For the cumulative earnings per share growth measure, the
corresponding cumulative earnings per share levels are:
threshold $8.77 per share; target $9.20
per share; and maximum $10.39 per share. For
34
the cumulative revenue growth measure, the corresponding revenue
levels are: threshold $2,973,200,000;
target $3,119,400,000; and maximum
$3,522,000,000.
The following table provides information for the fiscal year
2007-2009
performance period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Payout (# Shares)
|
|
Name
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Edward P. Campbell
|
|
|
11,200
|
|
|
|
22,400
|
|
|
|
44,800
|
|
Peter S. Hellman
|
|
|
1,700
|
|
|
|
3,400
|
|
|
|
6,800
|
|
Gregory A. Thaxton
|
|
|
1,275
|
|
|
|
2,550
|
|
|
|
5,100
|
|
Robert A. Dunn, Jr.
|
|
|
2,800
|
|
|
|
5,600
|
|
|
|
11,200
|
|
Michael Groos
|
|
|
2,400
|
|
|
|
4,800
|
|
|
|
9,600
|
|
John J. Keane
|
|
|
2,800
|
|
|
|
5,600
|
|
|
|
11,200
|
|
The Committee anticipated Mr. Hellmans retirement by
granting Mr. Hellman fewer long-term incentive
plan shares at the beginning of the fiscal year
2007-2009
performance period. Consequently, no reduction in the potential
payout will be required as a result of his retirement.
In February 2008, Mr. Dunn was promoted to Senior Vice
President. At the time of his promotion and to bring
Mr. Dunn to the target performance level established for
our other Senior Vice President, John J. Keane, Mr. Dunn
was awarded an additional 1,500 shares under the long-term
incentive plan which shares are included in the table above.
Fiscal Year
2008-2010
Performance Period. Again, using the same process
as was used to establish the threshold, target, and maximum
cumulative earnings per share growth and cumulative revenue
growth performance measures for the fiscal year
2007-2009
performance period, the Committee has established the following
threshold, target, and maximum cumulative earnings per share
growth and cumulative revenue growth performance measures for
the fiscal year
2008-2010
performance period:
|
|
|
|
|
|
|
|
|
|
|
|
|
Measure
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Cumulative Earnings Per Share Growth
|
|
|
5
|
%
|
|
|
7.5
|
%
|
|
|
14
|
%
|
Cumulative Revenue Growth
|
|
|
5
|
%
|
|
|
7.5
|
%
|
|
|
14
|
%
|
For the cumulative earnings per share growth measure, the
corresponding cumulative earnings per share levels are:
threshold $9.14 per share; target $9.59
per share; and maximum $10.82 per share. For the
cumulative revenue growth measure, the corresponding revenue
levels are: threshold $3,289,000,000;
target $3,451,000,000; and maximum
$3,896,000,000.
Any payouts for the fiscal year
2008-2010
performance period will be in the form of unrestricted shares.
The following table provides information for the fiscal year
2008-2010
performance period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Payout (# Shares)
|
|
Name
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Edward P. Campbell
|
|
|
9,825
|
|
|
|
19,650
|
|
|
|
39,300
|
|
Peter S. Hellman
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory A. Thaxton
|
|
|
1,225
|
|
|
|
2,450
|
|
|
|
4,900
|
|
Robert A. Dunn, Jr.
|
|
|
2,418
|
|
|
|
4,835
|
|
|
|
9,670
|
|
Michael Groos
|
|
|
2,075
|
|
|
|
4,150
|
|
|
|
8,300
|
|
John J. Keane
|
|
|
2,418
|
|
|
|
4,835
|
|
|
|
9,670
|
|
The Committee did not grant Mr. Hellman any performance
shares for the
2008-2010
performance period with his pending retirement in January 2008.
Stock
Options
Stock options represent the high-risk and potential high-return
component of our total long-term incentive program, as the
realizable value of each option can fall to zero if the share
price is lower than the exercise price
35
established on the date of grant. The size of stock option
grants for our executive officers is based primarily on the
target dollar value of the award translated into a number of
underlying shares based on the estimated economic value on the
date of grant, as determined using the Black-Scholes option
pricing formula. As a result, the number of shares underlying
stock option awards will typically vary from year to year, as it
is dependent on the price of our common stock on the date of
grant. The stock options also function as a retention incentive
for executive officers as the options vest ratably over the
four-year period following the date of grant.
The Committee uses Mercers annual analysis and assessment
to set the target dollar values of long-term incentives at the
65th percentile of similar compensation awarded by the peer
group. The Committee sets the value of stock options to be
granted at approximately 50% of the value of total long-term
incentives granted to each named executive officer, with the
other 50% being granted in the form of performance shares.
The following table provides the number of stock options granted
to our named executive officers in fiscal year 2008:
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
|
Grant Date
|
|
Name
|
|
(# Shares)
|
|
|
Fair Value ($)
|
|
|
Edward P. Campbell
|
|
|
55,750
|
|
|
|
809,490
|
|
Peter S. Hellman
|
|
|
|
|
|
|
|
|
Gregory A. Thaxton
|
|
|
6,800
|
|
|
|
98,736
|
|
Robert A. Dunn, Jr.
|
|
|
13,800
|
|
|
|
200,376
|
|
Michael Groos
|
|
|
11,700
|
|
|
|
169,884
|
|
John J. Keane
|
|
|
13,800
|
|
|
|
200,376
|
|
The Committee did not grant Mr. Hellman stock options for
fiscal year 2008, but instead, during its December 5, 2007
meeting, awarded Mr. Hellman a cash payment of $125,000,
representing the lost economic value of the stock option grant
Mr. Hellman would have received for fiscal year 2007 had he
retired in February 2007 as he initially intended. The lost
economic value was determined using the estimated fiscal year
2007 stock option grant that Mr. Hellman would have
received for fiscal year 2007 (29,335 shares); the portion
of that grant that would have vested on December 5, 2007
(7,334 shares) and applying a Black-Scholes value of $17.22 per
share. This payment was made concurrent with the payment of
Mr. Hellmans fiscal year 2008 cash bonus on
January 11, 2008. At the request of the Board of Directors,
Mr. Hellman continued to serve as President and Chief
Financial and Administrative Officer from February 28, 2007
through January 2, 2008.
The Committee does not grant long-term incentive awards or stock
options to our executive officers in anticipation of the release
of significant positive earnings announcements or other material
non-public information likely to result in changes to the price
of our common shares. Similarly, the Committee does not time the
release of material non-public information based on stock option
grant dates. Since the fiscal year 2006 stock option grant, the
grants are subject to (1) profit disgorgement provisions
(commonly known as a clawback) when an executive
officer acts inconsistently with the non-compete provision of
his employee agreement following termination of employment, or
(2) forfeiture in the event an executive officers
employment is terminated due to a criminal act, fraud or other
such behavior inconsistent with our Code of Business and Ethical
Conduct. The invoking of the clawback or forfeiture provision is
solely at the Committees discretion. To date, the
Committee has not had the need to exercise its discretion in
seeking profit disgorgement or forfeiture from any former
executive officer.
Fiscal Year
2009 Compensation Actions
At the Committees December 4, 2008 meeting, the
Committee also established 2009 fiscal year base salaries and
incentive compensation targets. The base salary increases for
the named executive officers ranged from 2.1% to 20%. Subsequent
to this action, and in response to managements
recommendation that all employee merit increases for 2009 be
deferred in response to global financial and economic
conditions, the Committee rescinded the merit portion of the
base salary increases for the named executive officers,
effective December 12, 2008. The Committee did maintain a
15% increase to Mr. Thaxtons base
36
salary in consideration of Mr. Thaxtons current base
salary being in the lower quartile compared to his peer group.
Performance targets for the annual incentive plan were
established using the process discussed above under the caption
Annual Incentive Compensation. As was the case in
fiscal year 2008, the measures are earning per share growth and
return on capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
Measure
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Return on Capital
|
|
|
6
|
%
|
|
|
15
|
%
|
|
|
23
|
%
|
Diluted Earnings Per Share Growth
|
|
|
0
|
%
|
|
|
10
|
%
|
|
|
20
|
%
|
For the diluted earnings per share performance measure, the
corresponding diluted earnings per share levels were:
threshold $3.43 per share; target $3.77
per share; and maximum $4.12 per share.
For fiscal year 2009, the specific performance levels that the
Committee established for the earnings per share growth and
return on capital performance measures are substantially
uncertain to be achieved. The threshold-level goals are
generally established to be stretch but attainable goals. To us,
this means that, in light of our historical performance,
although attainment of this performance level is uncertain, it
can reasonably be anticipated that threshold performance may be
achieved for fiscal year 2009, while the target and maximum
levels represent increasingly challenging and aggressive levels
of performance. To provide further context, we achieved the
following annual incentive compensation results during the past
three years: for earnings per share growth, threshold
performance in 2005, maximum performance in 2006, slightly above
target performance in 2007 and maximum performance in 2008; and
for return on capital, threshold performance in 2005, just below
maximum performance in 2006, target performance in 2007 and
maximum performance in 2008.
The Committee also established the following threshold, target,
and maximum cumulative earnings per share growth and cumulative
revenue growth performance measures for the fiscal year
2009-2011
Long-Term Incentive Plan performance period:
|
|
|
|
|
|
|
|
|
|
|
|
|
Measure
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Cumulative Earnings Per Share Growth
|
|
|
4
|
%
|
|
|
8
|
%
|
|
|
14
|
%
|
Cumulative Revenue Growth
|
|
|
5
|
%
|
|
|
7.5
|
%
|
|
|
14
|
%
|
For the cumulative earnings per share growth measure, the
corresponding cumulative earnings per share levels were:
threshold $11.14 per share; target
$12.03 per share; and maximum $13.45 per share. For
the cumulative revenue growth measure, the corresponding revenue
levels were: threshold $3,723,000,000;
target $3,906,000,000; and maximum
$4,411,000,000.
The Committee has generally reviewed, analyzed and discussed our
executive compensation incentive programs in the context of how
the current global economic and financial situation might affect
the program and concluded that no modifications to the executive
compensation programs need to be made at this time. Furthermore,
the Committee does not believe that any aspects of the incentive
compensation program encourage the named executive officers to
take unnecessary and excessive risks.
Other
Benefits and Compensation
For fiscal year 2008, our named executive officers also
participated in the non-cash benefit and compensation programs
discussed below. We offer these programs to our named executive
officers to provide competitive fringe benefits, to help us
attract, hire and retain talented executive employees and to
provide an incentive for our employees to save for their
retirement income needs.
Medical,
Disability and Life Insurance Benefits (Welfare
Benefits)
We sponsor a health care plan for
U.S.-based
employees that provides medical, vision and dental insurance and
prescription drug coverage. We also offer group life insurance
and short- and long-term disability plans that cover all
U.S. non-union employees. Mr. Groos welfare
benefits are mandated by German social law and
37
include health insurance and participation in statutory social
security and pension plans, as further discussed above.
Retirement
Benefits
401(k) Plan. We sponsor a 401(k) tax-qualified
retirement savings plan for
U.S.-based
employees. All of our employees who work a minimum of
1,000 hours in a calendar year are eligible to participate
in the 401(k) plan immediately upon employment. Our named
executive officers participate in the 401(k) plan on the same
basis as other employees.
We match employee contributions $0.50 on the dollar for the
first 6% of contributed compensation. We believe the matching
contribution helps us compete effectively for management talent
because many other companies offer a similar match. Employee
contributions to the 401(k) plan vest immediately, while
matching contributions vest in increments based on years of
service, with participants being fully vested after three years
of service.
For fiscal year 2008, our match for each named executive officer
was as follows:
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401(k)
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Name
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Match ($)
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Edward P. Campbell
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5,718
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Peter S. Hellman
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7,419
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Gregory A. Thaxton
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6,753
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Robert A. Dunn, Jr.
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6,900
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Michael Groos
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John J. Keane
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6,900
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As an employee of Nordson Deutschland GmbH, Mr. Groos does
not participate in the 401(k) plan. Instead, Mr. Groos
participates in a Nordson Deutschland GmbH pension plan that is
described in the narrative to the Pension Benefits for Fiscal
Year 2008 table in this proxy statement. The amounts of our
matching contributions to the 401(k) accounts of our named
executive officers are included in the All Other
Compensation column of the Summary Compensation Table for
Fiscal Years 2008 and 2007 in this proxy statement.
Deferred Compensation Plan. We sponsor a
non-qualified unfunded and unsecured deferred compensation plan
for
U.S.-based
executive officers. We believe this type of plan helps us
compete effectively for executive talent because many other
companies offer this type of plan.
The primary benefit to participants of the deferred compensation
plan is that most taxes are deferred on deferred amounts until
the plan account balance is distributed, so savings accumulate
on a pre-tax basis. Prior to the beginning of each fiscal year,
our named executive officers may elect to defer up to 100% of
their base salary and cash incentive compensation, including
their long-term incentive payout. There is no maximum dollar
limit on the amount that may be deferred each year. Participants
can select from a number of investment alternatives, including
equity and fixed income alternatives. For interest earning
investments, the deferred cash amounts earn interest that is
compounded quarterly on the last day of each fiscal quarter. The
applicable interest rate, which is not considered to be an
above market interest rate, is determined as of the
beginning of each fiscal year. Distributions are made in either
a lump sum or installments based upon the participants
election.
The Internal Revenue Service places limits on amounts that
highly compensated employees, such as our named
executive officers, may contribute to 401(k) plans.
Correspondingly, because of these limits, matching contributions
to the 401(k) plan accounts of highly compensated employees in
fiscal year 2008 were limited. In order to restore any matching
contribution amount that may have been forgone by our named
executive officers because of this limitation, we provide named
executive officers the opportunity to capture this potentially
lost match. This restoration match is made to the named
executive officers who defer all or a portion of their base
salary under our deferred compensation plan.
38
During fiscal year 2008, the amounts deferred by each named
executive officer and our matching contribution on those amounts
were as follows:
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Amount
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Company
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Name
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Deferred ($)
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Match ($)
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Edward P. Campbell
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2,971,424
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58,471
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Peter S. Hellman
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50,091
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32,700
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Gregory A. Thaxton
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21,061
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1,388
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Robert A. Dunn, Jr.
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301,116
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16,197
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Michael Groos
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John J. Keane
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165,750
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12,498
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Mr. Groos participates in a deferred compensation
arrangement with Nordson Deutschland GmbH. Nordson Deutschland
GmbH does not provide a match under this arrangement. A detailed
description of our current and historical deferred compensation
plans and information regarding contributions to those plans is
provided in the Non-Qualified Deferred Compensation for Fiscal
Year 2008 table and the accompanying narrative and footnotes in
this proxy statement.
Defined Benefit Pension Plan. We sponsor a
tax-qualified pension plan for
U.S.-based
salaried employees the Nordson Corporation Salaried
Employees Pension Plan. The pension plan is designed to work
together with social security benefits to provide employees with
30 years of service with retirement income that is
approximately 55% of eligible compensation, subject to the
Internal Revenue Service maximum monthly benefit.
For employees of our international subsidiaries, we provide
pension or retirement benefits in accordance with local
statutory requirements or practice. A detailed description of
our pension plans for
U.S.-based
employees is provided in the narrative and footnotes to the
Pension Benefits for Fiscal Year 2008 table in this proxy
statement.
Supplemental Executive Retirement Plan (Defined
Benefit). The Supplemental Executive Retirement
Plan (Defined Benefit) is an unfunded, non-qualified plan that
provides benefits similar to the qualified defined benefit
pension plan, but without the Internal Revenue Code earnings
limitations. This plan is designed to provide retirement
benefits to
U.S.-based
eligible participants as a replacement for those retirement
benefits reduced by regulations under the Internal Revenue Code.
Together, the pension plan and supplemental executive retirement
plan are intended to provide the executive officers with
retirement income equivalent to that provided to all other
employees under the pension plan.
As part of the incentive for Mr. Campbell to leave his
former employer, we agreed to provide him 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 pension plan, but his
benefits will be supplemented to recognize his prior service
with his former employer. His average annual
compensation 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 eleven years of employment with his former
employer. The value of this benefit is included in the Pension
Benefits for Fiscal Year 2008 table of this proxy statement. On
December 10, 2008, the Committee approved a letter
agreement with Mr. Campbell incorporating the agreement to
provide Mr. Campbell with this supplemental pension benefit
as well as the incorporation of provisions designed to bring the
supplemental pension benefit arrangement into compliance with
Section 409A of the Internal Revenue Code.
Mr. Groos participates in a supplemental pension plan
sponsored by Nordson Deutschland GmbH, our wholly-owned
subsidiary, as part of his employment agreement with Nordson
Deutschland GmbH. Under the terms of the plan, Nordson
Deutschland GmbH has agreed to accelerate Mr. Groos
age 65 normal retirement date by one-half year, for each
year Mr. Groos remains employed beyond age 50.
Therefore, at age 60,
39
Mr. Groos would be entitled to retire with an age 65
pension benefit. Mr. Groos does not receive any benefits
under this supplemental plan if he retires prior to attaining
age 60. The Committee approved the plan in order to retain
Mr. Groos services through age 60.
Mr. Groos is age 57 as of the date of this proxy
statement.
Change-in-Control
Severance Agreements
The Committee believes that the occurrence, or potential
occurrence, of a
change-in-control
transaction in which we are the target could create substantial
uncertainty regarding the continued employment of our named
executive officers. In order to attract and retain top executive
talent, the Committee believes that we must agree to provide
certain benefits and compensation if an executive officers
employment or service is terminated without cause in connection
with a
change-in-control.
Equity awards granted to executives provide for accelerated
vesting, or lapse of restrictions, upon a
change-in-control.
The Committee believes that accelerating these equity awards
upon a
change-in-control
is appropriate to minimize the risk that executive officers
might favor a transaction based on the likely impact on the
executive officers equity awards, to increase the
likelihood that the executives will remain with us after
becoming aware of a pending or threatened
change-in-control,
and due to the increased likelihood that executives may be
terminated by a successor through no fault of their own.
In addition, we believe that a termination by the executive for
good reason may be conceptually the same as a termination by us
without cause in certain circumstances. Recognizing that, in the
context of a
change-in-control,
potential acquirers would otherwise have an incentive to
constructively terminate our named executive officers
employment to avoid paying severance, we believe it is
appropriate to provide severance benefits in these circumstances
as well.
In fiscal year 2008, the Compensation Committee initiated a
review of our
change-in-control
employment agreements with our executive officers to
(1) determine if the benefits afforded to executive
officers upon a
change-in-control
were competitive with respect to the peer group and (2) to
ensure the employment agreements conformed to the rules and
guidance under Internal Revenue Code Section 409A with
respect to deferred compensation payments. Based on the results
of the review and the recommendations of Mercer with respect to
the competitiveness of our post-change-in-control executive
compensation and severance benefits, the Compensation Committee,
on December 10, 2008, approved Change in Control Retention
Agreements for our executive officers other than
Mr. Campbell. These retention agreements replaced the
employment agreements previously entered into with executive
officers. The retention agreements define the total compensation
opportunity for executive officers for the two-year period
following a
change-in-control
and severance benefits that would be made in the event that the
executive was to be terminated within the two-year retention
period without cause or for good reason, each as defined in the
retention agreement. With respect to Mr. Campbell, the
Committee did not replace the employment agreement entered into
between Mr. Campbell and us on October 30, 1998 as the
severance payments due upon a post-change-in-control termination
without cause or for good reason were consistent with that of
the Change in Control Retention Agreement. However,
Mr. Campbells agreement was amended on
December 10, 2008 to ensure his agreement conformed to the
rules and guidance under Internal Revenue Code Section 409A
with respect to deferred compensation payments and, consistent
with Change in Control Retention Agreements, to remove the
obligation to mitigate (seek other employment and offset the
severance payment with compensation from new employment) in the
event of a severance qualifying termination of employment.
We believe our
change-in-control
policy is consistent with that of companies disclosing such
provisions as reported in public filings and as periodically
reported in various surveys. The Committee considers the salary
and incentive compensation amounts offered under the retention
agreements to be reasonable and appropriate for executive
officers who may not be in a position to obtain readily
comparable employment. We do not believe that named executive
officers should be entitled to receive cash severance benefits
merely because a
change-in-control
transaction occurs. The payment of cash severance benefits is
only triggered by an actual or constructive termination of
employment.
40
Mr. Campbells
Severance Arrangement
With respect to Mr. Campbell, at the time he was elected
our chief executive officer, the Committee provided
Mr. Campbell with an assurance that he would receive
severance equal to two times his base salary and annual cash
incentive in the event his employment was involuntarily
terminated. These payments will be
grossed-up
in the event excise taxes are levied on the payments. The
Committee provided this benefit based on the benefit afforded
Mr. Campbells predecessor and for purposes of
retaining Mr. Campbells services as chief executive
officer. On December 12, 2007, the Committee clarified its
assurance, providing that the severance payment would be made
only for a termination without cause. Cause for this
purpose is defined as committing an act of fraud, embezzlement,
theft or other similar criminal act constituting a felony and
involving company business. In addition, the Committee clarified
that the severance arrangement does not apply in the event of a
termination of Mr. Campbells employment following a
change-in-control.
In that case, the severance provision of
Mr. Campbells employment agreement would be
operative. On December 10, 2008, the Committee approved a
letter agreement with Mr. Campbell reflecting the
Committees December 12, 2007 clarifications, as well
as the incorporation of provisions designed to bring the
severance arrangement into compliance with Section 409A of
the Internal Revenue Code.
For a more detailed description of the severance and other
benefits payable upon termination or a
change-in-control,
refer to the narrative and footnotes accompanying the Potential
Payments Upon Termination or
Change-in-Control
tables of this proxy statement.
EXECUTIVE
PERQUISITES
During fiscal year 2008, we provided various executive
perquisites to each of our named executive officers. We provided
these perquisites to promote the business objectives facilitated
by each perquisite described below and to reward our named
executive officers for their experience, expertise, level of
responsibility, seniority, leadership qualities and advancement.
We also use these perquisites to help ensure that our executive
compensation program remains competitive to help us attract and
retain top executive talent. Attributed costs of these
perquisites for our named executive officers during fiscal year
2008 are included in the All Other Compensation
column of the Summary Compensation Table for Fiscal Years 2008
and 2007 in the next major section of this proxy statement.
Private Clubs. We reimburse
Messrs. Campbell and Keane for expenses associated with
private club memberships. In addition, we provide all named
executive officers with memberships to airline travel clubs. We
provide these memberships to encourage entertainment of business
colleagues and customers, engaging in social interaction with
peers from other companies, local leadership and the community
and holding business meetings at offsite locations.
Financial Planning, Tax Preparation and Estate
Planning. We pay or reimburse our executive
officers for financial, estate and tax planning and tax
preparation fees and expenses. Beginning in fiscal year 2008,
the maximum reimbursement is $5,000 per calendar year. We
provide this perquisite to assist our named executive officers
in obtaining high-quality financial counseling enabling them to
concentrate on business matters rather than on personal
financial planning.
Executive Physicals. We pay for annual
physicals for
U.S.-based
named executive officers. Mr. Groos does not receive a
corresponding benefit. We provide this perquisite as part of the
overall preventive medicine program to help promptly identify
and address medical issues and to preserve our investment in the
named executive officers by encouraging them to maintain healthy
lifestyles and be proactive in addressing actual or potential
health issues.
Automobiles. We do not provide company cars to
executive officers, except for Mr. Groos, and do not
reimburse for business mileage driven by executive officers.
Instead, we provide executive officers a car allowance. For
Mr. Campbell, the allowance was $16,000 for fiscal year
2008. For other executive officers, the allowance for fiscal
year 2008 was $12,000. Mr. Groos is provided a company car,
as that benefit is typically provided in Germany to senior
executives at Mr. Groos level. The value of
Mr. Groos use of a company car in fiscal year 2008 was
$28,889.
41
EQUITY
GRANT POLICY
Our Board of Directors has delegated to the Committee the
authority to grant equity awards to executive officers under our
current equity plan. It is the Committees policy that
neither the Committee nor members of our management shall
backdate or manipulate any equity awards, or manipulate the
timing of public releases of material information or equity
awards with the intent of benefiting any award recipient. The
Committee believes establishing fixed dates for equity grants is
an important measure to ensure the integrity of the equity grant
process.
We grant equity-based awards under the shareholder-approved 2004
Nordson Corporation Long-Term Performance Plan. Awards are
effective on the date that the Committee approves the award. The
Committee has delegated limited authority to our Chief Executive
Officer to approve equity awards, excluding grants made to
executive officers. Equity grants approved by our Chief
Executive Officer in any quarter will be effective the first day
of the month following public disclosure of quarterly earnings
for that quarter. In the event the effective date of the grant
is a Saturday, Sunday or holiday, the effective date of grant
will be the first subsequent day our common shares are traded.
Such grants will be reported to the Committee at the
Committees next regularly scheduled meeting. In fiscal
year 2008, Mr. Campbell did not approve any stock option or
restricted share grants.
There were 843,000 Nordson common shares available for grant
under the Long-term Performance Plan as of October 31,
2008. All outstanding and unvested options become fully
exercisable, and restrictions on any granted shares lapse, upon
a
change-in-control.
Outstanding option awards are forfeited if a named executive
officer is terminated for a violation of our Code of Business
and Ethical Conduct or competes with us within one year of
departure.
SHARE
OWNERSHIP GUIDELINES
Effective October 7, 2005, and after a thorough review of
survey data of equity ownership practices of those companies in
the peer group provided by Mercer and other national surveys, we
set share ownership requirements for our executive officers to
emphasize our executive compensation programs objective of
aligning the individual financial interests of our executive
officers with the investment interests of our long-term
shareholders. We require our executive officers to own the
following amount of our common shares:
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Chief Executive Officer
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5 times base salary
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President (if other than the CEO)
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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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Newly elected or promoted executive officers will have up to
five years to meet the ownership requirements after their
election or promotion, or in the case of executive officers in
office at the time we adopted the ownership requirements, within
five years of the date of adoption. The share ownership
requirements are available for review at
www.nordson.com/corporate/governance.
Executive officers who have not satisfied the share ownership
requirements by the end of the five-year period or who have not
shown progress (as subjectively determined by the Committee)
toward the required ownership level prior to the end of such
five-year period will be expected to retain 100% of the shares
acquired through exercise of options, lapse of transfer
restrictions on restricted shares or long term incentive share
awards, net of shares tendered to cover the exercise price of
the options or taxes due on the exercise of the options or the
lapse of a restriction period until the share ownership
requirement is achieved or there is progress towards the
ownership requirement. The Committee reviews annually the actual
stock ownership of each executive officer compared to the
applicable stock ownership guideline, including the number of
vested stock options, deferred stock equivalent units in
deferred compensation plans and stock ownership in the Nordson
Corporation Employee Stock Ownership Plan, each of which count
as valid forms of stock ownership under the ownership guidelines.
The Committee expects the executive officers in office at the
time the Guidelines were established to achieve their respective
share ownership requirements by the end of fiscal year 2010. The
Committee has concluded that executive officers that have been
elected since the adoption of the Guidelines are making progress
42
toward fulfillment of their respective ownership requirements by
taking actions such as deferring long-term performance plan
share grants, exercising and holding net stock option grants and
increasing account balances in the 401(k) Nordson Stock Fund.
ACCOUNTING
AND TAX CONSIDERATIONS
The Committee continuously reviews and evaluates the impact of
tax laws, accounting changes and similar factors affecting our
executive compensation program. For example, our recent adoption
of Statement of Financial Accounting Standards No. 123
(Revised 2004), Share-Based Payment, which results
in recognition of compensation expense for stock incentives, and
the recent enactment of Section 409A of the Internal
Revenue Code, which impacts deferred compensation arrangements,
are considered as we contemplate future changes to the program.
In addition, the Committee attempts to structure the program to
maximize its ability to deduct compensation payments for tax
purposes. The Committee takes into account whether particular
elements are performance-based compensation under
Section 162(m) of the Internal Revenue Code.
Section 162(m) sets a limit of $1,000,000 on the amount we
can deduct for compensation paid to each of the chief executive
officer and the three other most highly compensated executive
officers other than the chief financial officer. This limit does
not apply to compensation that qualifies as
performance-based compensation under
Section 162(m). Base salary does not qualify as
performance-based compensation under
Section 162(m). The Committee attempts to ensure that
incentive compensation qualifies as fully deductible
performance-based compensation. The Committee has
established a requirement that executive officers will defer
base salary and payouts under the annual cash incentive plan and
long-term incentive plan to avoid the loss of deductibility by
us to the extent that non-performance-based compensation under
Section 162(m) exceeds $1,000,000.
COMPENSATION
COMMITTEE REPORT
The Compensation Committee has reviewed and discussed with
management the Compensation Discussion and Analysis that appears
in this proxy statement. Based on such review and discussion, we
recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in the companys
definitive proxy statement on Schedule 14A and incorporated
by reference into the companys Annual Report on
Form 10-K
for the fiscal year ended October 31, 2008, each as filed
with the Securities and Exchange Commission.
Compensation Committee
Stephen R. Hardis, Chairman
Joseph P. Keithley
Michael J. Merriman, Jr.
William L. Robinson
Benedict P. Rosen
January 16, 2009
43
SUMMARY
COMPENSATION FOR FISCAL YEARS 2008 AND 2007
The following narratives, tables, footnotes and supplemental
tables present the components of total compensation for our
named executive officers for the fiscal years ended
October 31, 2008 and October 31, 2007. Also described
below are the contracts, plans, and arrangements providing for
payments to our named executive officers in connection with a
termination of their employment with us, including in connection
with a
change-in-control
of the company. The value realized by the named executive
officers in fiscal year 2008 from exercised stock options and
vested restricted shares presented in the Option Exercises and
Stock Vested During Fiscal Year 2008 table in this proxy
statement. Target annual and long-term incentive awards for
fiscal year 2008 are presented in the Grants of Plan-Based
Awards During Fiscal Year 2008 table of this proxy statement.
The individual components of the total compensation reflected in
the Summary Compensation Table are:
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Salary. Base salary earned by a named
executive officer during fiscal years 2008 and 2007. Any amount
of base salary deferred by a named executive officer is
identified in footnote 1 to the table below.
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Bonus. Other than the cash payment to
Mr. Hellman as described in the Compensation Discussion and
Analysis and in footnote 2 accompanying the table below, we did
not award any annual non-performance-based discretionary cash
incentives to our named executive officers for fiscal years 2008
and 2007. The payouts under our annual incentive compensation
plan are included in the amounts presented in the
Non-equity Incentive Plan Compensation column of the
table below.
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Stock Awards. The awards disclosed in the
Stock Awards column consist of restricted share
grants and performance share grants under our 2004 Long-Term
Performance Plan for the fiscal year
2006-2008,
2007-2009
and
2008-2010
performance periods. The dollar amounts for the awards represent
the grant-date fair value-based compensation expense recognized
in fiscal years 2008 or 2007 under SFAS No. 123(R) for
each named executive officer, as reported in our audited
financial statements contained in our Annual Report on
Form 10-K.
Details about the Long-Term Performance Plan awards are included
in the narrative accompanying the Grant of Plan-Based Awards
During Fiscal Year 2008 table below.
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Option Awards. The awards disclosed in the
Option Awards column consist of option grants in
fiscal years 2008 and 2007 (to the extent such awards remained
unvested in whole or in part at the beginning of fiscal year
2008 or 2007). The dollar amounts for the awards represent the
grant-date fair value-based compensation expense recognized in
fiscal years 2008 and 2007 under SFAS No. 123(R) for
each named executive officer, as reported in our audited
financial statements contained in our Annual Report on
Form 10-K
for fiscal years 2008 and 2007. Details about the option awards
made during fiscal year 2008 are included in the narrative
accompanying the Grants of Plan-Based Awards During Fiscal Year
2008 table.
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Non-Equity Incentive Plan Compensation. The
amounts disclosed under the Non-Equity Incentive Plan
Compensation column represent compensation earned during
fiscal year 2008 under the annual cash incentive plan and during
fiscal year 2007 under the annual cash incentive and fiscal year
2005-2007
long term incentive plan. Further information concerning the
annual incentive plan may be reviewed in the Compensation
Discussion and Analysis section of this proxy statement under
the caption Annual Incentive Compensation.
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Change in Pension Value. The amounts disclosed
in the Change in Pension Value and Non-Qualified Deferred
Compensation Earnings column represent solely any
actuarial increase during fiscal years 2008 and 2007 in the
pension value provided under our qualified pension plan,
non-qualified supplemental executive retirement (defined
benefit) plan and 2005 Deferred Compensation Plan. We do not pay
above-market or preferential rates on the non-qualified deferred
compensation of our named executive officers. A narrative
discussion about our pension plans and non-qualified deferred
compensation plan, our contributions to the qualified and
non-qualified supplemental executive retirement pension plans
and the estimated actuarial increase in the value of the plans
accompanies the Pension
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Benefits for Fiscal Year 2008 table and the Non-qualified
Deferred Compensation for Fiscal Year 2008 table below.
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All Other Compensation. The amounts disclosed
in the All Other Compensation column represent the
combined value of the named executive officers perquisites
and our matching contributions to the qualified deferred
compensation 401(k) plan and non-qualified deferred compensation
plan for fiscal years 2008 and 2007. These perquisites include
payments for tax preparation services, executive physicals, club
memberships, and car allowances.
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Summary
Compensation Table For Fiscal Years 2008 and 2007
In this section we provide certain tabular and narrative
information regarding the compensation of our principal
executive and financial officers and our three other most highly
compensated executive officers for the fiscal years ended
October 31, 2008 and October 31, 2007, as applicable.
For additional information regarding compensation of the named
executive officers, see the Compensation Discussion and
Analysis section of this proxy statement. Mr. Thaxton
was not a named executive officer in fiscal year 2007, and
therefore information on his fiscal year 2007 compensation is
not included:
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Pension
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Value & Non-
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|
Non-Equity
|
|
|
Qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Deferred
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Plan Compen-
|
|
|
Compensation
|
|
|
Compen-
|
|
|
|
|
Name and Principal
|
|
|
|
|
Salary(1)
|
|
|
Bonus(2)
|
|
|
Awards (3)
|
|
|
Awards (4)
|
|
|
sation (5)
|
|
|
Earnings (6)
|
|
|
sation (7)
|
|
|
Total
|
|
Position
|
|
Year
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Edward P. Campbell
|
|
|
2008
|
|
|
|
765,000
|
|
|
|
|
|
|
|
1,840,859
|
|
|
|
855,569
|
|
|
|
1,530,000
|
|
|
|
|
|
|
|
56,146
|
|
|
|
5,047,574
|
|
Chairman and Chief Executive Officer
|
|
|
2007
|
|
|
|
740,000
|
|
|
|
|
|
|
|
1,270,619
|
|
|
|
853,478
|
|
|
|
1,723,816
|
|
|
|
2,954,096
|
|
|
|
65,130
|
|
|
|
7,607,139
|
|
Peter S. Hellman
|
|
|
2008
|
|
|
|
174,308
|
|
|
|
191,554
|
|
|
|
84,813
|
|
|
|
32,537
|
|
|
|
|
|
|
|
200,809
|
|
|
|
18,360
|
|
|
|
702,381
|
|
Former President, Chief Financial and Administrative Officer
|
|
|
2007
|
|
|
|
515,000
|
|
|
|
|
|
|
|
586,357
|
|
|
|
267,799
|
|
|
|
906,729
|
|
|
|
666,265
|
|
|
|
55,099
|
|
|
|
2,997,249
|
|
Gregory A. Thaxton
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice President and Chief Financial Officer
|
|
|
2008
|
|
|
|
220,000
|
|
|
|
|
|
|
|
154,226
|
|
|
|
60,293
|
|
|
|
242,000
|
|
|
|
29,340
|
|
|
|
24,869
|
|
|
|
730,728
|
|
Robert A. Dunn, Jr.
|
|
|
2008
|
|
|
|
346,000
|
|
|
|
|
|
|
|
426,291
|
|
|
|
183,148
|
|
|
|
484,000
|
|
|
|
87,879
|
|
|
|
28,192
|
|
|
|
1,555,510
|
|
Senior Vice President
|
|
|
2007
|
|
|
|
329,157
|
|
|
|
|
|
|
|
237,571
|
|
|
|
158,760
|
|
|
|
440,079
|
|
|
|
990,406
|
|
|
|
30,443
|
|
|
|
2,186,416
|
|
Michael Groos (8)
|
|
|
2008
|
|
|
|
508,803
|
|
|
|
|
|
|
|
395,816
|
|
|
|
178,277
|
|
|
|
508,803
|
|
|
|
|
|
|
|
31,152
|
|
|
|
1,622,851
|
|
Vice President
|
|
|
2007
|
|
|
|
448,729
|
|
|
|
|
|
|
|
278,153
|
|
|
|
173,512
|
|
|
|
441,149
|
|
|
|
1,058,529
|
|
|
|
28,675
|
|
|
|
2,428,747
|
|
John J. Keane
|
|
|
2008
|
|
|
|
300,000
|
|
|
|
|
|
|
|
452,840
|
|
|
|
194,310
|
|
|
|
420,000
|
|
|
|
|
|
|
|
35,589
|
|
|
|
1,402,739
|
|
Senior Vice President
|
|
|
2007
|
|
|
|
290,000
|
|
|
|
|
|
|
|
307,370
|
|
|
|
179,847
|
|
|
|
388,079
|
|
|
|
198,331
|
|
|
|
35,613
|
|
|
|
1,399,240
|
|
|
|
|
(1) |
|
This column includes amounts of base salary each named executive
officer deferred into the 2005 Deferred Compensation Plan in
fiscal years 2008 and 2007: Mr. Campbell
$683,902 and $14,163; Mr. Hellman $10,458 and
$103,865; Mr. Thaxton $21,061;
Mr. Dunn $29,276 and $18,265; and
Mr. Keane $23,975 and $21,722. Mr. Groos
did not defer any base salary in fiscal years 2008 or 2007.
Mr. Hellmans base salary reflects his fiscal year
2007 base salary prorated based on the number of days in fiscal
year 2008 during which he was employed and payout for the unused
portion of his calendar year 2008 paid time off (35 days). |
|
(2) |
|
The cash payment to Mr. Hellman that is reported in this
column is the sum of two non-performance-based discretionary
payments awarded to Mr. Hellman by the Compensation
Committee on December 5, 2007. The first payment, in the
amount of $66,554,was paid to Mr. Hellman in recognition of
his service with us as President and Chief Financial and
Administrative Officer from November 1, 2007 through
January 2, 2008 and represents a pro rata share of his
target annual incentive compensation opportunity for fiscal year
2008 had he been employed through the end of fiscal year 2008,
using his fiscal year 2007 80% of base salary target annual
incentive opportunity to determine this payment. The second
payment in the amount of $125,000 is the equivalent of the
vested portion of a stock option grant that Mr. Hellman
would have received in December 2006 had he not announced his
intention to retire in February 2007. At |
45
|
|
|
|
|
the Board of Directors request, Mr. Hellman continued
in his role of President and Chief Financial and Administrative
Officer from February 2007 through January 2008. |
|
(3) |
|
This column represents the dollar amount we recognized for
financial statement reporting purposes for the fiscal years
ended October 31, 2008 and October 31, 2007, in
accordance with SFAS No. 123(R), for stock awards
granted under the 2004 Long-Term Performance Plan for fiscal
year
2006-2008,
2007-2009
and
2008-2010
for fiscal year 2008 and the fiscal year
2006-2008
and
2007-2009
performance periods for fiscal year 2007. Amortization of the
fiscal year 2004 restricted share grant is considered in the
amounts for fiscal year 2008 and 2007. The amounts reported have
been adjusted to eliminate service-based forfeiture assumptions
used for financial reporting purposes. |
|
|
|
The other assumptions used in calculating these amounts are set
forth in Note 13, Stock-based compensation, to the
consolidated financial statements included in our Annual Reports
on
Form 10-K
for the fiscal years ended October 31, 2008 and
October 31, 2007. With respect to Mr. Hellman, the
amount reported for fiscal year 2008 represents the dollar
amount we recognized for financial statement reporting purposes
for the fiscal year ended October 31, 2008, in accordance
with SFAS No. 123(R), for stock awards granted under
the 2004 Long-Term Performance Plan for fiscal year
2006-2008
and
2007-2009
performance periods and amortization of the fiscal year 2004
restricted share grant covering the service period through
Mr. Hellmans retirement date . |
|
(4) |
|
This column represents the dollar amount we recognized for
financial statement reporting purposes for the fiscal years
ended October 31, 2008 and 2007, in accordance with
SFAS No. 123(R), for stock options granted in fiscal
years 2008 and 2007 and includes amounts from awards granted
prior to fiscal years 2008 and 2007 that had not vested in whole
or in part at the beginning of the respective fiscal year. |
|
|
|
Mr. Hellman was not granted any stock options for fiscal
year 2008. |
|
|
|
The table below lists the assumptions used in fiscal 2008 to
estimate the values of the options granted to the named
executive officers and included in this column as of
October 31, 2008: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
Expected Life (in
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
Granted
|
|
|
Exercise Price
|
|
|
years)
|
|
|
Dividend Yield
|
|
|
Volatility
|
|
|
Risk-Free Rate
|
|
|
2004
|
|
|
164,200
|
|
|
$
|
27.71
|
|
|
|
7.0
|
|
|
|
2.19
|
%
|
|
|
0.298
|
|
|
|
3.88
|
%
|
2005
|
|
|
120,900
|
|
|
$
|
37.16
|
|
|
|
7.0
|
|
|
|
1.70
|
%
|
|
|
0.297
|
|
|
|
3.88
|
%
|
2006
|
|
|
156,800
|
|
|
$
|
38.98
|
|
|
|
7.6
|
|
|
|
1.94
|
%
|
|
|
0.279
|
|
|
|
4.58
|
%
|
2007
|
|
|
116,400
|
|
|
$
|
49.03
|
|
|
|
8.0
|
|
|
|
1.63
|
%
|
|
|
0.285
|
|
|
|
4.57
|
%
|
2008
|
|
|
101,850
|
|
|
$
|
52.91
|
|
|
|
6.1
|
|
|
|
1.41
|
%
|
|
|
0.261
|
|
|
|
3.62
|
%
|
|
|
|
|
|
The assumptions listed in this table slightly differ from those
presented in the table to footnote 3 to the Summary Compensation
Table in our 2008 proxy statement due to the inclusion of
Mr. Thaxton as a named executive officer for fiscal year
2008. The differences result from the difference in the vesting
period for stock option grants awarded to Mr. Thaxton prior
to his election as an executive officer (five year vesting
period) in February 2006 and those awarded to him since February
2006 (four year vesting period). |
|
|
|
See Grants of Plan-Based Awards in Fiscal Year 2008
for information with respect to the stock options granted in
fiscal year 2008 and Outstanding Equity Awards at 2008
Fiscal Year End for information with respect to the stock
options granted prior to fiscal year 2008. Amounts reflect our
accounting for these grants and do not correspond to the actual
values that may be recognized by our named executive officers. |
|
(5) |
|
The amounts in this column for fiscal year 2008 represent the
total non-equity incentive plan compensation we recognized
during fiscal year 2008 under our annual cash incentive plan
only. Commencing with the fiscal year
2006-2008
performance period, payouts are in performance shares. |
|
|
|
Mr. Hellman did not participate in our non-equity incentive
compensation plan in fiscal year 2008. |
|
|
|
The amounts in this column for fiscal year 2007 represent the
total non-equity incentive plan compensation we recognized
during fiscal year 2007 under our annual cash incentive plan and
the fiscal year
2005-2007
long-term incentive plan. The components of the column amount
for fiscal year 2007 for our named executive officers are: |
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
|
Total Non-Equity
|
|
FY2007
|
|
Fiscal Year 2007 Annual
|
|
|
2005-2007 Long-Term
|
|
|
Incentive Plan
|
|
Name
|
|
Incentive Plan ($)
|
|
|
Incentive Plan ($)
|
|
|
Compensation ($)
|
|
|
Edward P. Campbell
|
|
|
1,100,000
|
|
|
|
623,816
|
|
|
|
1,723,816
|
|
Peter S. Hellman
|
|
|
594,000
|
|
|
|
312,729
|
|
|
|
906,729
|
|
Robert A. Dunn, Jr.
|
|
|
316,000
|
|
|
|
124,079
|
|
|
|
440,079
|
|
Michael Groos
|
|
|
291,550
|
|
|
|
149,599
|
|
|
|
441,149
|
|
John J. Keane
|
|
|
264,000
|
|
|
|
124,079
|
|
|
|
388,079
|
|
|
|
|
(6) |
|
The amounts entered in this column were determined using
interest rate and mortality rate assumptions consistent with
those used in our financial statements and include amounts that
the named executive officer may not currently be entitled to
receive because such amounts are not vested. |
The following tables provide further details to the increases or
decreases by plan during fiscal years 2008 and 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Supplemental
|
|
|
Deferred
|
|
|
|
|
FY2008
|
|
Change in Pension
|
|
|
Pension Plan Value
|
|
|
Compensation Plan
|
|
|
|
|
Name
|
|
Plan Value ($)
|
|
|
($)
|
|
|
Earnings ($)
|
|
|
Total ($)
|
|
|
Edward P. Campbell
|
|
|
(41,128
|
)
|
|
|
456,504
|
|
|
|
(5,790,742
|
)
|
|
|
(5,375,366
|
)
|
Peter S. Hellman
|
|
|
(9,162
|
)
|
|
|
|
|
|
|
209,971
|
|
|
|
200,809
|
|
Gregory A. Thaxton
|
|
|
7,221
|
|
|
|
29,181
|
|
|
|
(7,062
|
)
|
|
|
29,340
|
|
Robert A. Dunn, Jr.
|
|
|
(56,515
|
)
|
|
|
31,826
|
|
|
|
112,568
|
|
|
|
87,879
|
|
Michael Groos
|
|
|
(198,931
|
)
|
|
|
|
|
|
|
|
|
|
|
(198,931
|
)
|
John J. Keane
|
|
|
(34,260
|
)
|
|
|
(22,435
|
)
|
|
|
(115,175
|
)
|
|
|
(171,870
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
|
|
|
Deferred
|
|
|
|
|
FY2007
|
|
Change in Pension
|
|
|
Pension Plan Value
|
|
|
Compensation Plan
|
|
|
|
|
Name
|
|
Plan Value ($)
|
|
|
($)
|
|
|
Earnings ($)
|
|
|
Total ($)
|
|
|
Edward P. Campbell
|
|
|
60,314
|
|
|
|
1,268,297
|
|
|
|
1,625,485
|
|
|
|
2,954,096
|
|
Peter S. Hellman
|
|
|
24,825
|
|
|
|
390,522
|
|
|
|
250,918
|
|
|
|
666,265
|
|
Robert A. Dunn, Jr.
|
|
|
28,509
|
|
|
|
714,650
|
|
|
|
247,247
|
|
|
|
990,406
|
|
Michael Groos
|
|
|
185,254
|
|
|
|
873,275
|
|
|
|
|
|
|
|
1,058,529
|
|
John J. Keane
|
|
|
13,671
|
|
|
|
154,389
|
|
|
|
30,271
|
|
|
|
198,331
|
|
|
|
|
|
|
We are presenting the change in deferred compensation plan
earnings in the above tables even though we do not provide
guaranteed, above-market or preferential earnings on
compensation deferred under our deferred compensation plan for
U.S.-based
named executive officers. We did not pay or accrue any expense
for earnings on Mr. Groos deferred compensation since
Mr. Groos deferred compensation arrangement does not
require us to pay earnings on the balance of
Mr. Groos deferred compensation account. The fiscal
year 2008 change for Mr. Campbell is (5,375,366), for
Mr. Groos (198,931), and for Mr. Keane (171,870) but
are not included in the table as they are negative amounts. |
|
|
|
For more information regarding our deferred compensation plans,
see the Non-qualified Deferred Compensation for Fiscal
Year 2008 section of this proxy statement. For more
information regarding accrued benefits under our defined benefit
pension plans, see the Pension Benefits for Fiscal Year
2008 section of this proxy statement. |
47
|
|
|
(7) |
|
The following tables describes each component of the All
Other Compensation column in the Summary Compensation
Table for fiscal year 2008: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
Dividends
|
|
|
Company
|
|
|
|
|
|
|
|
|
|
Contribu-
|
|
|
Related to
|
|
|
Match of
|
|
|
Total All Other
|
|
|
|
Total
|
|
|
tions to Tax
|
|
|
Share-Based
|
|
|
Charitable
|
|
|
Compen-
|
|
|
|
Perquisites (a)
|
|
|
Qualified Plans
|
|
|
Plans (b)
|
|
|
Contributions (c)
|
|
|
sation
|
|
Name
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Edward P. Campbell
|
|
|
33,845
|
|
|
|
5,718
|
|
|
|
9,636
|
|
|
|
6,947
|
|
|
|
56,146
|
|
Peter S. Hellman
|
|
|
3,800
|
|
|
|
7,419
|
|
|
|
1,141
|
|
|
|
6,000
|
|
|
|
18,360
|
|
Gregory A. Thaxton
|
|
|
18,061
|
|
|
|
6,753
|
|
|
|
|
|
|
|
55
|
|
|
|
24,869
|
|
Robert A. Dunn, Jr.
|
|
|
19,184
|
|
|
|
6,900
|
|
|
|
2,008
|
|
|
|
100
|
|
|
|
28,192
|
|
Michael Groos
|
|
|
28,889
|
|
|
|
|
|
|
|
2,263
|
|
|
|
|
|
|
|
31,152
|
|
John J. Keane
|
|
|
23,181
|
|
|
|
6,900
|
|
|
|
2,008
|
|
|
|
3,500
|
|
|
|
35,589
|
|
|
|
|
(a) |
|
Perquisites for fiscal year 2008: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
|
|
|
|
|
|
Executive
|
|
|
Car
|
|
|
|
|
|
|
Planning
|
|
|
Club Dues
|
|
|
Physicals
|
|
|
Allowance
|
|
|
Total
|
|
Name
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Perquisites
|
|
|
Edward P. Campbell
|
|
|
3,800
|
|
|
|
14,045
|
|
|
|
|
|
|
|
16,000
|
|
|
|
33,845
|
|
Peter S. Hellman
|
|
|
3,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,800
|
|
Gregory A. Thaxton
|
|
|
3,500
|
|
|
|
325
|
|
|
|
2,236
|
|
|
|
12,000
|
|
|
|
18,061
|
|
Robert A. Dunn, Jr.
|
|
|
4,500
|
|
|
|
300
|
|
|
|
2,384
|
|
|
|
12,000
|
|
|
|
19,184
|
|
Michael Groos
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,889
|
|
|
|
28,889
|
|
John J. Keane
|
|
|
4,700
|
|
|
|
6,481
|
|
|
|
|
|
|
|
12,000
|
|
|
|
23,181
|
|
|
|
|
(b) |
|
Dividends paid for restricted share awards in fiscal year 2007
to the named executive officers were: Mr. Campbell:
$21,840; Mr. Hellman: $10,325; Mr. Dunn: $4,550;
Mr. Groos: $5,145; and Mr. Keane: $4,550. Dividends
paid on the restricted share awards in fiscal year 2008 to the
named executive officers were: Mr. Campbell: $9,636;
Mr. Hellman: $1,141; Mr. Dunn: $2,008; Mr. Groos:
$2,263; and Mr. Keane: $2,008. Mr. Thaxton was not
granted restricted shares in fiscal year 2005. These amounts are
included in the All Other Compensation column in the
Summary Compensation Table for Fiscal Year 2008. |
|
(c) |
|
The amounts in this columns represent matching contributions to
the named executive officers under our employee matching gift
program during fiscal year 2008. This program allows employees
to contribute to qualified charitable organizations and we
provide a matching contribution in an equal amount, up to an
aggregate maximum amount of $6,000 per calendar year, for
contributions made by each employee during the calendar year. |
|
|
|
(8) |
|
Mr. Groos compensation is based in Euros. The
conversion rate used for purposes of converting the Euros earned
by Mr. Groos into U.S. dollars for purposes of his base
salary and cash incentive payout for fiscal year 2008 in this
table was: 1 = $1.4921. For fiscal year 2007, the
conversion rate was 1 = $1.3435. |
GRANTS
OF PLAN-BASED AWARDS DURING FISCAL YEAR 2008
We granted annual performance-based cash awards to the named
executive officers under our shareholder-approved 2004
Management Incentive Compensation Plan (referred to in the
following table as the MICP). We also granted stock
options and multi-year equity-based incentive awards to our
named executive officers under our shareholder-approved 2004
Long-Term Performance Plan. These awards are referred to in the
following table as Options and
LTIP, respectively.
Annual Performance-Based Cash Awards. The
Compensation Committee establishes threshold, target, and
maximum performance measures at the beginning of a fiscal year.
Payouts are determined by actual fiscal year performance against
the pre-established measures and individual named executive
officer performance.
Stock Options. Our 2004 Long Term Performance
Plan allows for grants of incentive and non-qualified statutory
stock options. Stock options have a term of ten years, become
exercisable over a four year period at
48
the rate of 25% per year, beginning one year from the grant date
and may not have an exercise price lower than the closing price
of our common shares on the grant date. Each option permits the
optionee to (i) pay for the exercise price with previously
owned common shares and (ii) satisfy tax-withholding
obligations with shares acquired upon exercise.
Information with respect to each of these awards on a
grant-by-grant
basis is set forth in the table. Stock options are granted with
an exercise price equal to the fair market value of our common
shares on the date of grant.
Multi-Year Equity-Based Performance
Awards. The Compensation Committee may approve
long-term incentive awards for executive officers based on
three-year cumulative performance measures as selected by the
Compensation Committee. If the target measure is achieved, the
executive officers receive a payout of 100% of the award. For
the fiscal year
2006-2008
performance period and thereafter, awards are paid in our common
shares. The payout will vary based upon the actual three-year
performance. However, the three-year performance threshold must
be achieved before any payout is made.
Grants
of Plan-Based Awards During Fiscal Year 2008 Table
The following table, footnotes, and narrative present the
components of the plan-based grants made to our named executive
officers during fiscal year 2008. Mr. Hellman did not
receive any grants in fiscal year 2008.
|
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|
|
|
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|
|
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|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under Non-equity
|
|
|
Estimated Future Payouts Under Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan Awards(1)
|
|
|
Incentive Plan Awards(2)
|
|
|
|
|
|
|
|
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All Other
|
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Option
|
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|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Exercise or
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Base Price of
|
|
|
FV of Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Option
|
|
|
and Option
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Options(3)
|
|
|
Awards
|
|
|
Awards(4)
|
|
|
|
|
Name
|
|
Plan
|
|
|
Grant Date
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
#
|
|
|
$/sh
|
|
|
$
|
|
|
|
|
|
Edward P. Campbell
|
|
|
MICP
|
|
|
|
Dec. 5, 2007
|
|
|
|
382,500
|
|
|
|
765,000
|
|
|
|
1,530,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP
|
|
|
|
Dec. 5, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,825
|
|
|
|
19,650
|
|
|
|
39,300
|
|
|
|
|
|
|
|
|
|
|
|
997,041
|
|
|
|
|
|
|
|
|
Options
|
|
|
|
Dec. 5, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,750
|
|
|
|
52.91
|
|
|
|
809,490
|
|
|
|
|
|
Gregory A. Thaxton
|
|
|
MICP
|
|
|
|
Dec. 5, 2007
|
|
|
|
60,500
|
|
|
|
121,000
|
|
|
|
242,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP
|
|
|
|
Dec. 5, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,225
|
|
|
|
2,450
|
|
|
|
4,900
|
|
|
|
|
|
|
|
|
|
|
|
124,313
|
|
|
|
|
|
|
|
|
Options
|
|
|
|
Dec. 5, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,800
|
|
|
|
52.91
|
|
|
|
98,736
|
|
|
|
|
|
Robert A. Dunn, Jr.
|
|
|
MICP
|
|
|
|
Dec. 5, 2007
|
|
|
|
121,100
|
|
|
|
242,200
|
|
|
|
484,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP
|
|
|
|
Dec. 5, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,418
|
|
|
|
4,835
|
|
|
|
9,670
|
|
|
|
|
|
|
|
|
|
|
|
245,328
|
|
|
|
|
|
|
|
|
Options
|
|
|
|
Dec. 5, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,800
|
|
|
|
52.91
|
|
|
|
200,376
|
|
|
|
|
|
Michael Groos
|
|
|
MICP
|
|
|
|
Dec. 5, 2007
|
|
|
|
127,201
|
|
|
|
254,402
|
|
|
|
508,803
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP
|
|
|
|
Dec. 5, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,075
|
|
|
|
4,150
|
|
|
|
8,300
|
|
|
|
|
|
|
|
|
|
|
|
210,571
|
|
|
|
|
|
|
|
|
Options
|
|
|
|
Dec. 5, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,700
|
|
|
|
52.91
|
|
|
|
169,884
|
|
|
|
|
|
John J. Keane
|
|
|
MICP
|
|
|
|
Dec. 5, 2007
|
|
|
|
105,000
|
|
|
|
210,000
|
|
|
|
420,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTIP
|
|
|
|
Dec. 5, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,418
|
|
|
|
4,835
|
|
|
|
9,670
|
|
|
|
|
|
|
|
|
|
|
|
245,328
|
|
|
|
|
|
|
|
|
Options
|
|
|
|
Dec. 5, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,800
|
|
|
|
52.91
|
|
|
|
200,376
|
|
|
|
|
|
|
|
|
(1) |
|
These columns show the dollar value of the potential payout for
our named executive officers under the MICP at threshold, target
or maximum performance. The measures and potential payouts are
described in greater detail in the Compensation Discussion and
Analysis section of this proxy statement under the caption
Annual Incentive Compensation. |
|
(2) |
|
These columns show the potential number of shares to be paid out
for our named executive officers under the LTIP at threshold,
target or maximum performance. The measures and potential
payouts are described in more detail in the Compensation
Discussion and Analysis section of this proxy statement under
the caption Long Term Incentive Compensation. The
dollar amount recognized for financial reporting purposes in
fiscal year 2008 for these performance awards is included in the
Stock Awards column of the Summary Compensation
Table for Fiscal Year 2008. |
|
(3) |
|
The amounts in this column reflect the aggregate value of the
award on the grant date determined in accordance with
SFAS No. 123(R). |
|
(4) |
|
For FAS 123R purposes, we use the Black-Scholes option
pricing model to calculate the fair value of stock options. The
key assumptions for the Black-Scholes valuation method include
the expected life of the option, stock price volatility, the
risk-free interest rate, dividend yield and exercise price. The
exercise price of stock options granted under our Long Term
Performance Plan is the fair market value of our |
49
|
|
|
|
|
common shares on the date of grant. The following table sets
forth the FAS 123R assumptions used in the calculation of
the amounts for stock option awards presented in the table: |
|
|
|
a. |
|
Expected Volatility: 26.1% |
|
b. |
|
Risk-Free Interest Rate: The rate available at the time the
grant was made on zero-coupon U.S. Government issues with a
remaining term equal to the expected life: 3.62%. |
|
c. |
|
Dividend Yield: 1.41% based on the historical dividend yield. |
|
d. |
|
Expected Life: 6.1 years. |
OUTSTANDING
EQUITY AWARDS AT FISCAL 2008 YEAR-END
The following table, footnotes and narrative describe equity
awards granted to our named executive officers under our 2004
Long Term Performance Plan that were outstanding as of the end
of fiscal year 2008:
|
|
|
|
|
Non-Qualified Stock Options (disclosed under the Option
Awards columns). Consist of annual stock
option grants made to our named executive officers. Stock
options have a term of ten years and become exercisable over a
four year period at the rate of 25% per year, beginning one year
from the grant date.
|
|
|
|
|
|
Restricted Share Awards (disclosed under the Stock
Awards columns). Consists of restricted
share grants made to our named executive officers for fiscal
year 2005. The restrictions on transfer of these common shares
expired four years from the date of grant, November 9, 2008.
|
|
|
|
|
|
Fiscal Year
2007-2009
Performance Incentive Awards (disclosed as LTIP
awards under the Stock Awards
columns). The fiscal year
2007-2009
performance period began on November 1, 2007 and concludes
on October 31, 2009. The payout of these awards will be in
the form of our unrestricted common shares. The ultimate value
of the awards will depend on the number of shares earned and the
price of our common shares at the time payouts are made.
|
|
|
|
|
|
Fiscal Year
2008-2010
Performance Incentive Awards (disclosed as LTIP
awards under the Stock Awards
columns). The fiscal year
2008-2010
performance period began on November 1, 2008 and concludes
on October 31, 2010. The payout of these awards will be in
the form of our unrestricted common shares. The ultimate value
of the awards will depend on the number of shares earned and the
price of our common shares at the time payouts are made.
|
Outstanding
Equity Awards At Fiscal 2008 Year-End Table
The following table sets forth information with respect to
option awards, restricted share awards and performance share
awards held by our named executive officers as of
October 31, 2008.
|
|
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|
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|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
Plan
|
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|
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|
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|
|
|
|
|
|
Equity
|
|
|
Awards:
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Market or
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Plan Awards:
|
|
|
Payout
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Number of
|
|
|
Value of
|
|
|
|
|
|
|
Unexer-
|
|
|
Unexer-
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
Unearned
|
|
|
Unearned
|
|
|
|
|
|
|
cised
|
|
|
cised
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
Shares, Units
|
|
|
Shares,
|
|
|
|
|
|
|
Options -
|
|
|
Options -
|
|
|
Option
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
or Other
|
|
|
Units or
|
|
|
|
|
|
|
Exercis-
|
|
|
Unexercis-
|
|
|
Exercise
|
|
|
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Rights Not
|
|
|
Other Rights
|
|
|
|
|
|
|
able(1)
|
|
|
able
|
|
|
Price
|
|
|
Option
|
|
|
Vested
|
|
|
Vested (2)
|
|
|
Vested
|
|
|
Not Vested
|
|
|
|
|
Name
|
|
#
|
|
|
#
|
|
|
$/sh
|
|
|
Expiration Date
|
|
|
#
|
|
|
$
|
|
|
#
|
|
|
$
|
|
|
|
|
|
Edward P. Campbell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
LTIP(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,800
|
|
|
|
1,654,464
|
|
|
|
|
|
2008
LTIP(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,300
|
|
|
|
1,451,349
|
|
|
|
|
|
Restricted Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9-Nov-04(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,200
|
|
|
|
487,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Awards:
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Market or
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Plan Awards:
|
|
|
Payout
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Number of
|
|
|
Value of
|
|
|
|
|
|
|
Unexer-
|
|
|
Unexer-
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
Unearned
|
|
|
Unearned
|
|
|
|
|
|
|
cised
|
|
|
cised
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
Shares, Units
|
|
|
Shares,
|
|
|
|
|
|
|
Options -
|
|
|
Options -
|
|
|
Option
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
or Other
|
|
|
Units or
|
|
|
|
|
|
|
Exercis-
|
|
|
Unexercis-
|
|
|
Exercise
|
|
|
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Rights Not
|
|
|
Other Rights
|
|
|
|
|
|
|
able(1)
|
|
|
able
|
|
|
Price
|
|
|
Option
|
|
|
Vested
|
|
|
Vested (2)
|
|
|
Vested
|
|
|
Not Vested
|
|
|
|
|
Name
|
|
#
|
|
|
#
|
|
|
$/sh
|
|
|
Expiration Date
|
|
|
#
|
|
|
$
|
|
|
#
|
|
|
$
|
|
|
|
|
|
Stock Options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9-Dec-02
|
|
|
85,000
|
|
|
|
|
|
|
|
27.78
|
|
|
|
9-Dec-2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3-Nov-03
|
|
|
85,000
|
|
|
|
|
|
|
|
27.71
|
|
|
|
3-Nov-2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9-Nov-04(5)
|
|
|
46,800
|
|
|
|
15,600
|
|
|
|
37.16
|
|
|
|
9-Nov-2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14-Nov-05(6)
|
|
|
36,800
|
|
|
|
36,800
|
|
|
|
38.99
|
|
|
|
14-Nov-2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22-Nov-06(7)
|
|
|
15,875
|
|
|
|
47,625
|
|
|
|
48.77
|
|
|
|
22-Nov-2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5-Dec-07(8)
|
|
|
|
|
|
|
55,750
|
|
|
|
52.91
|
|
|
|
5-Dec-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter S. Hellman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
LTIP(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,800
|
|
|
|
251,124
|
|
|
|
|
|
Stock Options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6-Nov-00
|
|
|
40,000
|
|
|
|
|
|
|
|
28.50
|
|
|
|
6-Nov-2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5-Nov-01
|
|
|
80,000
|
|
|
|
|
|
|
|
23.07
|
|
|
|
5-Nov-2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9-Dec-02
|
|
|
36,000
|
|
|
|
|
|
|
|
27.78
|
|
|
|
9-Dec-2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3-Nov-03
|
|
|
36,000
|
|
|
|
|
|
|
|
27.71
|
|
|
|
3-Nov-2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9-Nov-04(5)
|
|
|
19,837
|
|
|
|
|
|
|
|
37.16
|
|
|
|
9-Nov-2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14-Nov-05(6)
|
|
|
17,000
|
|
|
|
|
|
|
|
38.99
|
|
|
|
14-Nov-2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory A. Thaxton
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
LTIP(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,100
|
|
|
|
188,343
|
|
|
|
|
|
2008
LTIP(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,900
|
|
|
|
180,957
|
|
|
|
|
|
Stock Options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4-Nov-02(9)
|
|
|
240
|
|
|
|
|
|
|
|
26.27
|
|
|
|
4-Nov-2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3-Nov-03(9)
|
|
|
240
|
|
|
|
240
|
|
|
|
27.71
|
|
|
|
3-Nov-2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9-Dec-04(9)
|
|
|
240
|
|
|
|
480
|
|
|
|
36.91
|
|
|
|
9-Dec-2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7-Dec-05(9)
|
|
|
360
|
|
|
|
1,080
|
|
|
|
38.50
|
|
|
|
7-Dec-2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22-Nov-06(7)
|
|
|
1,825
|
|
|
|
5,475
|
|
|
|
48.77
|
|
|
|
22-Nov-2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5-Dec-07(8)
|
|
|
|
|
|
|
6,800
|
|
|
|
52.91
|
|
|
|
5-Dec-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert A. Dunn, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
LTIP#1(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,200
|
|
|
|
302,826
|
|
|
|
|
|
2007
LTIP#2(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
110,790
|
|
|
|
|
|
2008
LTIP(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,670
|
|
|
|
357,113
|
|
|
|
|
|
Restricted Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9-Nov-04(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,750
|
|
|
|
101,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9-Nov-04(5)
|
|
|
7,162
|
|
|
|
2,388
|
|
|
|
37.16
|
|
|
|
9-Nov-2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14-Nov-05(6)
|
|
|
6,700
|
|
|
|
6,700
|
|
|
|
38.99
|
|
|
|
14-Nov-2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22-Nov-06(7)
|
|
|
2,875
|
|
|
|
8,625
|
|
|
|
48.77
|
|
|
|
22-Nov-2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20-Feb-07(9)
|
|
|
1,125
|
|
|
|
3,375
|
|
|
|
55.62
|
|
|
|
20-Feb-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5-Dec-07(8)
|
|
|
|
|
|
|
13,800
|
|
|
|
52.91
|
|
|
|
5-Dec-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Groos
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
LTIP(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,600
|
|
|
|
354,528
|
|
|
|
|
|
2008
LTIP(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,300
|
|
|
|
306,519
|
|
|
|
|
|
Restricted Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9-Nov-04(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,100
|
|
|
|
114,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9-Nov-04(5)
|
|
|
|
|
|
|
2,938
|
|
|
|
37.16
|
|
|
|
9-Nov-2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14-Nov-05(6)
|
|
|
|
|
|
|
8,000
|
|
|
|
38.99
|
|
|
|
14-Nov-2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22-Nov-06(7)
|
|
|
|
|
|
|
10,200
|
|
|
|
48.77
|
|
|
|
22-Nov-2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5-Dec-07(8)
|
|
|
|
|
|
|
11,700
|
|
|
|
52.91
|
|
|
|
5-Dec-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John J. Keane
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
LTIP(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,200
|
|
|
|
413,616
|
|
|
|
|
|
2008
LTIP(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,670
|
|
|
|
357,113
|
|
|
|
|
|
Restricted Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9-Nov-04(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,750
|
|
|
|
101,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Awards:
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Market or
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Plan Awards:
|
|
|
Payout
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Number of
|
|
|
Value of
|
|
|
|
|
|
|
Unexer-
|
|
|
Unexer-
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
Unearned
|
|
|
Unearned
|
|
|
|
|
|
|
cised
|
|
|
cised
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
Shares, Units
|
|
|
Shares,
|
|
|
|
|
|
|
Options -
|
|
|
Options -
|
|
|
Option
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
or Other
|
|
|
Units or
|
|
|
|
|
|
|
Exercis-
|
|
|
Unexercis-
|
|
|
Exercise
|
|
|
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Rights Not
|
|
|
Other Rights
|
|
|
|
|
|
|
able(1)
|
|
|
able
|
|
|
Price
|
|
|
Option
|
|
|
Vested
|
|
|
Vested (2)
|
|
|
Vested
|
|
|
Not Vested
|
|
|
|
|
Name
|
|
#
|
|
|
#
|
|
|
$/sh
|
|
|
Expiration Date
|
|
|
#
|
|
|
$
|
|
|
#
|
|
|
$
|
|
|
|
|
|
Stock Options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4-Nov-02(11)
|
|
|
960
|
|
|
|
|
|
|
|
26.27
|
|
|
|
4-Nov-2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3-Nov-03
|
|
|
13,000
|
|
|
|
|
|
|
|
27.71
|
|
|
|
3-Nov-2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9-Nov-04(5)
|
|
|
7,162
|
|
|
|
2,388
|
|
|
|
37.16
|
|
|
|
9-Nov-2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14-Nov-05(6)
|
|
|
9,000
|
|
|
|
9,000
|
|
|
|
38.99
|
|
|
|
14-Nov-2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22-Nov-06(7)
|
|
|
4,000
|
|
|
|
12,000
|
|
|
|
48.77
|
|
|
|
22-Nov-2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5-Dec-07(8)
|
|
|
|
|
|
|
13,800
|
|
|
|
52.91
|
|
|
|
5-Dec-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents vested stock options granted to our named executive
officers for fiscal years
2000-2008.
As of October 31, 2008, none of the options granted to any
of our named executive officers during fiscal year 2008 had
vested. |
|
(2) |
|
Based on the closing price of our common shares on
October 31, 2008 $36.93 per share. |
|
(3) |
|
These performance shares were granted in November 22, 2006
and December 5, 2007, respectively, and are earned upon
achievement of performance goals over the fiscal year
2007-2009
and
2008-2010
performance periods. The award granted on December 5, 2007
is reported in the Grants of Plan-Based Awards During Fiscal
Year 2008 table. |
|
(4) |
|
Consist of restricted shares from the November 9, 2004
grant. These shares vested on November 9, 2008. With
respect to Mr. Hellman, under the terms of the 2004 Long
Term Performance Plan, at the time of his retirement,
restrictions lapsed on 4,948 shares representing the number
of months (38) in the total service period covering the
grant (48 months) that Mr. Hellman provided services
to us. We recognized the compensation expense for the two months
in fiscal year 2008 that Mr. Hellman was employed prior to
his retirement. |
|
(5) |
|
The options are exercisable in four equal annual installments
(25% of grant per year), commencing November 9, 2005. |
|
(6) |
|
The options are exercisable in four equal annual installments
(25% of grant per year), commencing November 14, 2006. |
|
(7) |
|
The options are exercisable in four equal annual installments
(25% of grant per year), commencing November 22, 2007. |
|
(8) |
|
The options are exercisable in four equal annual installments
(25% of grant per year), commencing December 5, 2008. |
|
(9) |
|
Consist of stock options granted November 4, 2002,
November 3, 2003, December 9, 2004 and
December 7, 2005 under the Key Employee Stock Option
Program. Under this program, the Compensation Committee may
grant stock options to key employees other than executive
officers. Mr. Thaxton was not an executive officer on the
date these options were granted. The options became exercisable
in five equal annual installments (20% of grant per year),
commencing November 4, 2003, November 3, 2004,
December 9, 2005 and December 7, 2006, respectively. |
|
(10) |
|
Consist of an additional long term incentive award for the
fiscal year
2007-2009
performance period and stock options granted February 20,
2007, the date Mr. Dunn was promoted to Senior Vice
President. |
|
(11) |
|
Consist of stock options granted November 4, 2002 under the
Key Employee Stock Option Program. Under this program, the
Compensation Committee may grant stock options to key employees
other than executive officers. Mr. Keane was not an
executive officer on the date these options were granted. The
options became exercisable in five equal annual installments
(20% of grant per year), commencing November 4, 2003. |
52
OPTION
EXERCISES AND STOCK VESTED DURING FISCAL YEAR 2008
The following table sets forth information with respect to the
stock options exercised by our named executive officers and
restricted shares that vested during fiscal year 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
|
Number of Shares
|
|
|
Value Realized on
|
|
|
|
Exercise
|
|
|
Exercise (1)
|
|
|
Acquired on Vesting
|
|
|
Vesting (2)
|
|
Name
|
|
#
|
|
|
$
|
|
|
(#)
|
|
|
($)
|
|
|
Edward P. Campbell
|
|
|
192,000
|
|
|
|
8,975,040
|
|
|
|
18,000
|
|
|
|
955,620
|
|
Peter S. Hellman
|
|
|
67,500
|
|
|
|
3,046,636
|
|
|
|
8,500
|
|
|
|
451,265
|
|
Gregory A. Thaxton
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert A. Dunn, Jr.
|
|
|
26,000
|
|
|
|
1,131,070
|
|
|
|
3,750
|
|
|
|
199,088
|
|
Michael Groos
|
|
|
24,212
|
|
|
|
818,154
|
|
|
|
4,250
|
|
|
|
225,633
|
|
John J. Keane
|
|
|
|
|
|
|
|
|
|
|
3,750
|
|
|
|
199,088
|
|
|
|
|
(1) |
|
The Value Realized on Exercise is the difference between the
market price of our common shares on date of exercise and the
exercise price of the option. |
|
(2) |
|
The fair market value of the restricted share grant that lapsed
on November 3, 2007 was $53.09 per share. |
PENSION
BENEFITS FOR FISCAL YEAR 2008
The following table and narrative set forth the actuarial
present value of, and other information about, the benefits
accumulated by each of our named executive officers for fiscal
year 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Years
|
|
|
Present Value of
|
|
|
Payments
|
|
|
|
|
|
Credited
|
|
|
Accumulated
|
|
|
During Last
|
|
|
|
|
|
Service
|
|
|
Benefit (1)
|
|
|
Fiscal Year
|
|
Name
|
|
Plan Name
|
|
#
|
|
|
$
|
|
|
$
|
|
|
Edward P. Campbell
|
|
Salaried Employees Pension Plan
|
|
|
20.5
|
|
|
|
388,479
|
|
|
|
|
|
|
|
Supplemental Executive Retirement Plan (Defined Benefit) (2),(3)
|
|
|
31.5
|
|
|
|
13,277,729
|
|
|
|
|
|
Peter S. Hellman
|
|
Salaried Employees Pension Plan
|
|
|
8.8
|
|
|
|
144,144
|
|
|
|
|
|
|
|
Supplemental Executive Retirement Plan (Defined Benefit) (4)
|
|
|
8.8
|
|
|
|
|
|
|
|
1,365,267
|
|
Gregory A. Thaxton
|
|
Salaried Employees Pension Plan
|
|
|
19.0
|
|
|
|
133,507
|
|
|
|
|
|
|
|
Supplemental Executive Retirement Plan (Defined Benefit)
|
|
|
19.0
|
|
|
|
29,181
|
|
|
|
|
|
Robert A. Dunn, Jr.
|
|
Salaried Employees Pension Plan
|
|
|
37.0
|
|
|
|
633,437
|
|
|
|
|
|
|
|
Supplemental Executive Retirement Plan (Defined Benefit)
|
|
|
37.0
|
|
|
|
2,413,127
|
|
|
|
|
|
Michael Groos
|
|
Statutory Pension Plan (5)
|
|
|
29.3
|
|
|
|
2,349,361
|
|
|
|
|
|
John J. Keane
|
|
Salaried Employees Pension Plan
|
|
|
16.0
|
|
|
|
125,634
|
|
|
|
|
|
|
|
Supplemental Executive Retirement Plan (Defined Benefit)
|
|
|
16.0
|
|
|
|
246,319
|
|
|
|
|
|
|
|
|
(1) |
|
The actuarial assumptions used to determine the present value of
the accumulated benefit at October 31, 2008 are: |
|
|
|
|
|
measurement date of October 31;
|
|
|
|
retirement at age 65;
|
|
|
|
discount rate of 8.0%;
|
53
|
|
|
|
|
rate of compensation increases are 4.5% (before age 30); 3.5%
(ages 30-45) and 2.51% (age 46 and above) for the qualified
pension plan and the non-qualified excess defined benefit plans;
and the RP 2000 Mortality Table for both males and females
(post-retirement only).
|
|
|
|
(2) |
|
Under the arrangement described in the Compensation Discussion
and Analysis section of this proxy statement under the caption
Supplemental Executive Retirement Plan (Defined
Benefit), and in the narrative following these footnotes,
Mr. Campbell is credited with 30 years of service as
of October 31, 2007, the maximum number of years of credit
available under this plan. |
|
(3) |
|
Of the present value of accumulated benefit amount, $9,139,350
represents the benefit to Mr. Campbell of the agreement to
provide him a supplemental benefit discussed in the Compensation
Discussion and Analysis section of this proxy statement under
the caption Supplemental Executive Retirement Plan
(Defined Benefit) and in the narrative following these
footnotes. |
|
(4) |
|
Following his retirement and in accordance with the provisions
of the Supplemental Executive Retirement Plan (Defined Benefit),
Mr. Hellman received a distribution of $1,365,267 from the
Supplemental Executive Retirement Plan (Defined Benefit). This
distribution was made in accordance with the rules governing
distributions to covered persons under
Section 409A of the Internal Revenue Code. |
|
(5) |
|
The present value of Mr. Groos statutory pension plan
is based on an age 60 retirement including the value of the
supplemental pension arrangement with Mr. Groos. Specifics
of the arrangement are discussed in the Compensation Discussion
and Analysis section of this proxy statement under the caption
Supplemental Executive Retirement Plan (Defined
Benefit) and in the narrative following these footnotes. |
We sponsor the Nordson Corporation Salaried Employees Pension
Plan, a qualified defined benefit pension plan for our
U.S.-based
salaried employees, including our
U.S.-based
named executive officers. Benefits under the pension plan are
based on a final average pay, which means the
monthly average of the highest aggregate compensation (base
salary and annual incentive cash payment) for 60 months of
the 120 most recent consecutive months prior to retirement.
Normal retirement age under the pension plan is age 65.
Employees who retire on or after age 55 may begin receiving
their benefit immediately with a 6% reduction in the benefit for
every year prior to age 65 that the benefit begins.
Employees become 100% vested in their benefit at the earlier of
age 55, or after five years of service.
If the employee dies prior to receiving the vested benefit, the
surviving spouse, if any, will receive a 50% survivor annuity
for the rest of the surviving spouses life. Benefits under
the pension plan become payable on the first of the month
following retirement, normally at age 65, absent any
election by a participant to commence the payment of benefits at
a different time. Benefits are payable in one of the following
ways:
|
|
|
|
|
Life Only Annuity. If a participant is not
married or has been married less than 12 months when
payments begin and does not elect an optional payment method, he
or she will receive the full amount of his or her benefit in
equal monthly installments for the rest of his or her life.
Payments begin on the first of the month following the
retirement date. After death, no additional payments are made.
|
|
|
|
50% Joint & Survivor Annuity. If a
participant is married for at least 12 months when payments
begin, he or she will receive his or her benefit as a 50%
Joint & Survivor Annuity, absent election of (and
spousal consent for) an optional payment form. Under this
option, a participant will receive a reduced monthly benefit
during his or her lifetime. After the participants death,
his or her spouse receives a benefit equal to 50% of the monthly
benefit the participant was receiving. If the spouse dies before
the participant, but after the participant begins receiving
payments, the participant will continue to receive the same
benefit amount during his or her lifetime and no additional
payments are made after death.
|
|
|
|
100% (or 75%) Joint & Survivor
Annuity. A participant will receive a reduced
lifetime benefit under this option. The participant names a
beneficiary and chooses the percentage of his or her benefit to
continue to that individual after the participants death.
After death, the beneficiary receives the percentage of benefit
elected (100% or 75%) for the remainder of his or her life. The
participants age at the date the benefit commences, the
beneficiarys age and the percentage elected to continue
after death affect the amount of the benefit received during the
participants lifetime.
|
54
|
|
|
|
|
10 Year Certain Annuity. A participant
will receive a reduced lifetime benefit in equal monthly
installments with payments guaranteed for at least ten years
under this option. Payments continue for the rest of the
participants life even if he or she lives longer than the
period of time elected. However, if the participant receives
less than 120 payments before death, the same monthly benefit
continues to the beneficiary until the combined total number of
installment payments are made.
|
|
|
|
Level Income Option. This option allows a
participant to receive an increased monthly payment from the
pension plan initially if a participant retires early and begins
receiving payments from the pension plan before he or she is
eligible for social security benefits. After social security
benefits begin, the monthly payment from the pension plan is
reduced. This option does not provide any survivor benefit and,
therefore, no benefit is payable after death.
|
Mr. Groos is a participant in the Alter Pensionplan, the
defined benefit pension plan sponsored by Nordson Deutschland
GmbH. The benefit is 0.5% of base salary under the German social
security contribution ceiling and 1.5% of base salary above the
ceiling. There is a reduction if benefits are received prior to
normal retirement age (age 65). Mr. Groos
supplemental pension arrangement with Nordson Deutschland GmbH
will provide benefits that are reduced for retirement at
age 60. This plan has been closed to new participants since
fiscal year 2005.
Supplemental
Executive Retirement Plan (Defined Benefit)
We also provide a supplemental executive retirement defined
(pension) benefit for our
U.S.-based
named executive officers through the Nordson Corporation
Supplemental Executive Retirement Plan (Defined Benefit), which
is a non-qualified excess pension plan.
This supplemental plan is designed to work in conjunction with
our qualified pension plan. The pension benefit outlined above
for our qualified pension plan is calculated as if there were no
compensation limits under the Internal Revenue Code. Then, the
maximum benefit allowable is paid out under our qualified
pension plan and the balance is paid out under the supplemental
plan.
In addition to the benefit payout alternatives listed above,
under the supplemental plan, our named executive officers may
elect their benefit to be paid in a lump sum following
termination of employment.
Benefits under the supplemental plan are unsecured and are
payable from our general assets. Payments will be delayed if and
to the extent payment within six months of the termination of
employment will result in the imposition of additional taxes on
the named executive officer pursuant to Section 409A of the
Internal Revenue Code. Payments delayed due to Section 409A
rules will accrue interest during the deferral period at the
10-year
Treasury bill rate in effect on the first business day of the
supplemental plan year in which the delayed payment period
commences.
We have agreed to provide Mr. Campbell with an additional
non-qualified pension benefit under the supplemental plan in
order to restore some of the benefit he would have received if
he had remained with his former employer. Mr. Campbell is a
participant in the qualified pension plan, but his benefit will
be modified to recognize his prior service with his former
employer. His average annual compensation under the
supplemental 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 eleven years of employment with his former
employer.
For the purpose of retaining Mr. Groos services as
the senior manager for our European operations, we agreed to
provide Mr. Groos with a supplemental pension
arrangement with Nordson Deutschland GmbH. This arrangement
permits Mr. Groos to accelerate his retirement age (65)
under the Alter Pensionplan described above by one-half year for
each year Mr. Groos remains employed with Nordson
Deutschland GmbH after reaching age 50.
55
NON-QUALIFIED
DEFERRED COMPENSATION FOR FISCAL YEAR 2008
The following table sets forth the contributions, earnings,
withdrawals or distributions and aggregate balances for the
named executive officers participating in our deferred
compensation plans for fiscal year 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
|
|
Contributions
|
|
|
Contributions
|
|
|
Earnings in
|
|
|
With-
|
|
|
Balance at
|
|
|
|
|
|
in Last
|
|
|
in Last
|
|
|
Last Fiscal
|
|
|
drawals /
|
|
|
Last Fiscal
|
|
|
|
|
|
Fiscal Year(1)
|
|
|
Fiscal Year
|
|
|
Year
|
|
|
Distributions(2)
|
|
|
Year End
|
|
Name
|
|
Plan Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Edward P. Campbell
|
|
Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
(2,553,733
|
)
|
|
|
|
|
|
|
4,681,722
|
|
|
|
2005 Deferred Compensation Plan
|
|
|
2,971,424
|
|
|
|
58,471
|
|
|
|
(3,237,009
|
)
|
|
|
|
|
|
|
6,275,273
|
|
Peter S. Hellman
|
|
Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
102,025
|
|
|
|
610,546
|
|
|
|
2,520,071
|
|
|
|
2005 Deferred Compensation Plan
|
|
|
50,091
|
|
|
|
32,700
|
|
|
|
107,946
|
|
|
|
3,995,233
|
|
|
|
|
|
Gregory A. Thaxton
|
|
Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 Deferred Compensation Plan
|
|
|
21,061
|
|
|
|
1,388
|
|
|
|
(7,062
|
)
|
|
|
|
|
|
|
23,023
|
|
Robert A. Dunn, Jr.
|
|
Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
45,514
|
|
|
|
|
|
|
|
1,342,804
|
|
|
|
2005 Deferred Compensation Plan
|
|
|
301,116
|
|
|
|
16,197
|
|
|
|
67,054
|
|
|
|
|
|
|
|
1,818,520
|
|
Michael Groos
|
|
Nordson Deutschland Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,454,659
|
|
|
|
Compensation Arrangement (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John J. Keane
|
|
Deferred Compensation Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005 Deferred Compensation Plan
|
|
|
165,750
|
|
|
|
12,498
|
|
|
|
(115,175
|
)
|
|
|
|
|
|
|
414,031
|
|
|
|
|
(1) |
|
This column includes amounts of base salary each named executive
officer deferred in fiscal year 2008:
Mr. Campbell $683,902;
Mr. Hellman $10,458;
Mr. Thaxton $21,061; Mr. Dunn
$29,276; Mr. Groos $0; and
Mr. Keane $23,975. These amounts deferred are
included in the Salary column of the Summary
Compensation Table for Fiscal Year 2008 and also noted in
footnote number 1 to that table. |
|
(2) |
|
Mr. Hellman elected to have his balances in his deferred
compensation accounts distributed in fiscal year 2008 under the
distribution provisions of the respective plans. |
|
(3) |
|
The conversion rate used for purposes of converting Euros
contributed by Mr. Groos to his deferred compensation
arrangement account to U.S. dollars is the Euro to US dollar
exchange rate on October 31, 2008: 1 = $1.2744. |
Deferred
Compensation Plans
Under the 2005 Deferred Compensation Plan, our named executive
officers may elect to defer up to 100% of their base pay, annual
cash incentive and long term incentive payout each year. A named
executive officer may elect to invest in a number of investment
accounts designated by the Compensation Committee including an
account comprised of units of our common shares. The cash
investment accounts mirror the investment funds and investment
returns provided under the qualified defined contribution 401(k)
plan, although the plans are not linked. A named executive
officer may elect to transfer investment funds each
30 days, the same as under the 401(k) plan.
The number of units credited to the share unit account is based
on the closing price of our common shares on the day the share
units are credited to the account and includes additional share
units credited for quarterly dividends paid on our common shares.
A named executive officer can elect to receive payment in the
form of a single lump sum payment or periodic payments over a
period of 5, 10 or 15 years. At least 12 months prior
to a distribution, a named executive officer may make an
election to change the payment date or form of payment, provided
that the distribution occurs at least five years after the
original date of distribution.
The Compensation Committee may accelerate the distribution of
part or all of one or more of a participants accounts for
reasons of a severe financial hardship that cannot be met using
other financial resources. If a participant dies, payment will
be made to the participants beneficiary. For all
distributions, cash will be paid with respect to the cash
accounts and our common shares will be issued equal to the
number of share units in the participants share unit
account.
56
Deferrals to the Deferred Compensation Plan, the predecessor
plan to the 2005 Deferred Compensation Plan, were not permitted
after December 31, 2004. In order to permit deferrals and
payouts that complied with Section 409A of the Internal
Revenue Code, we adopted the 2005 Deferred Compensation Plan
effective for deferrals by the named executive officers after
January 1, 2005. On December 10, 2008, the
Compensation Committee adopted the Amended and Restated 2005
Deferred Compensation Plan to bring the plan into compliance
with final rules issued under Section 409A.
The investment options under the Deferred Compensation Plan and
the 2005 Deferred Compensation were identical for fiscal year
2007 and 2008. There were seven investment funds that a named
executive officer could choose with annual rates of return for
the year ended October 31, 2008 ranging from (49.0044) to
3.72%.
|
|
|
|
|
|
|
|
|
Investment Funds
|
|
2007 Return %
|
|
|
2008 Return %
|
|
|
Investment Contract
|
|
|
4.00
|
%
|
|
|
3.72
|
|
Money Market
|
|
|
4.95
|
%
|
|
|
2.6526
|
|
Large Cap Value
|
|
|
12.72
|
%
|
|
|
(35.6132
|
)
|
Large Cap Blend
|
|
|
14.35
|
%
|
|
|
(25.572
|
)
|
Large Cap Growth
|
|
|
22.09
|
%
|
|
|
(35.9894
|
)
|
International Equity Index
|
|
|
33.52
|
%
|
|
|
(49.0044
|
)
|
Nordson Stock (includes dividends)
|
|
|
17.845
|
%
|
|
|
(29.03
|
)
|
Mr. Groos
Deferred Compensation Plan
Nordson Deutschland GmbH has a deferred compensation arrangement
with Mr. Groos. Under the terms of the arrangement, which
was effective October 1, 1998, Mr. Groos is permitted
annually to renounce (refuse to receive) all or a portion of the
payouts under the annual incentive compensation plan and long
term incentive compensation plan prior to the payouts being
made. The renounced amount is applied to the purchase of a life
insurance policy. The face value of the policy is equal to the
amount renounced by Mr. Groos. Nordson Deutschland GmbH is
the named insured of this policy. Coincidental with the
procurement of the insurance policy, Nordson Deutschland GmbH
issues a contractual commitment (in other words, a lien) in
favor of Mr. Groos for the proceeds of the insurance
policy. The proceeds of the insurance policy will be distributed
to Mr. Groos upon his retirement or his estate in the event
of his death prior to retirement.
POTENTIAL
PAYMENTS UPON TERMINATION OR
CHANGE-IN-CONTROL
The following narrative describes payments to each named
executive officer or his or her beneficiaries that would be
triggered by the occurrence of a loss of employment in each of
the following situations: death, disability, retirement,
termination without cause or for good reason, and termination in
connection with a
change-in-control.
Payments
Made Upon All Terminations
A named executive officer will receive the following payments
upon a termination of employment due to death, disability,
retirement, termination without cause or for good reason or
termination in connection with a
change-in-control:
|
|
|
|
|
base salary earned but not yet paid as of the date of
termination;
|
|
|
|
annual cash incentive payout earned but not yet paid as of the
date of termination; and
|
|
|
|
long term incentive payouts for the most recently completed
three-year performance period not yet paid as of the date of
termination.
|
Payouts of account balances of the qualified defined benefit
pension plan and the 401(k) plan would be made under the payout
provisions of those plans.
57
Payments
Upon Death
Upon loss of employment due to the death of a named executive
officer, in addition to the payments described above, the estate
of a named executive officer would receive the following:
|
|
|
|
|
a payout of the named executive officers entire deferred
compensation account balance; and
|
|
|
|
pro-rated payouts for the fiscal year
2007-2009
and fiscal year
2008-2010
long-term incentive plan performance periods. Payouts would be
determined at the conclusion of the respective performance
period. However, for purposes of determining the payouts for the
table, we have assumed expected performance.
|
Payments
Upon Long-Term Disability
Upon incurring a long-term disability resulting in a loss of
employment with us, our
U.S.-based
named executive officers will receive all the payments described
above in the Payments Made Upon All Terminations and
the following:
|
|
|
|
|
monthly benefits under the long-term disability plan;
|
|
|
|
24 months of health care coverage based on the applicable
COBRA rates for the named executive officer;
|
|
|
|
a payout of the named executive officers entire deferred
compensation account balance; and
|
|
|
|
pro-rated payouts for the fiscal year
2007-2009
and fiscal year
2008-2010
long-term incentive plan performance periods. Payouts would be
determined at the conclusion of the respective performance
period. However, for purposes of determining the payouts for the
table, we have assumed expected performance.
|
The disability benefit payable under the long-term disability
plan is funded through a group life insurance policy. Any
amounts due to a named executive officer above the maximum
annual disability payment provided by the long-term disability
policy ($25,000 per month) would be paid from our general assets.
Mr. Groos receives a long-term disability benefit under the
pension plan sponsored by Nordson Deutschland GmbH.
Payments
Upon Retirement
Upon a loss of employment due to retirement, our named executive
officers will receive the payments described above under
Payments Made Upon All Terminations and the
following:
|
|
|
|
|
payout of the named executive officers deferred
compensation account balances in accordance with the named
executive officers distribution election; and
|
|
|
|
pro-rated payouts for the fiscal year
2007-2009
and fiscal year
2008-2010
long-term incentive plan performance periods. Payouts would be
determined at the conclusion of the respective performance
period. However, for purposes of determining the payouts for the
table, we have assumed expected performance.
|
Payments
Upon Termination for Cause or Good Reason or Voluntary
Termination
Upon a termination for cause or for good reason or a voluntary
termination, the named executive officer receives the payments
described above under Payments Made Upon All
Terminations. No additional or enhanced payments would be
made to a named executive officer.
On December 12, 2007, the Compensation Committee of the
Board of Directors clarified the assurance made to
Mr. Campbell upon his election as chief executive officer
by providing that the payment of two times base salary and
annual cash incentive applies only in the instance of an
involuntary termination other than for cause. Cause
is defined as committing an act of fraud, embezzlement, theft or
other similar criminal act constituting a felony and involving
our business.
58
Payments
Upon Termination Without Cause or for Good Reason
Upon a termination without cause or for good reason of a named
executive officer, the named executive officer will receive the
payments described above under Payments Made Upon All
Terminations. We have no contractual obligation to provide
severance payments or benefits to a named executive officer
whose employment is terminated without cause or for good reason,
other than with respect to Mr. Campbell under his severance
arrangement and for all named executive officers, in the
instance of a termination without cause or for good reason
following a
change-in-control.
If any negotiated severance arrangement were entered into
between us and a named executive officer, we would require the
named executive officer to sign a general release and waiver of
claims against us and would typically require compliance with
confidentiality and non-compete restrictions. Any
agreed-upon
severance payment will generally be made in equal installments
over regular payroll periods subject to delay in the
commencement of payments required by Section 409A of the
Internal Revenue Code.
Payments
in Connection with a
Change-in-Control
A
change-in-control
occurs if and when:
|
|
|
|
|
subject to certain exceptions, any person (as such
term is used in Sections 13(d)(3) and 14(d)(2) of the
Securities Exchange Act of 1934) is or becomes a beneficial
owner, directly or indirectly, of securities representing 25% or
more of the combined voting power of our then outstanding
securities eligible to vote for the election of the board of
directors;
|
|
|
|
during any period of 24 consecutive months, individuals who at
the beginning of such
24-month
period were our directors, which we refer to as the incumbent
board, cease to constitute at least a majority of the board of
directors, unless the election, or nomination for election, of
any person becoming a director subsequent to the beginning of
such
24-month
period was approved by a vote of at least two-thirds of the
incumbent board;
|
|
|
|
our shareholders approve a plan of complete liquidation or
dissolution;
|
|
|
|
all or substantially all of our assets are sold in a single
transaction or a series of related transactions to a single
purchaser or a group of affiliated purchasers; or
|
|
|
|
we are merged with another corporation and, as a result,
securities representing less than 50% of the combined voting
power of the surviving or resulting corporations
securities (or of the securities of a parent corporation in case
of a merger in which the surviving or resulting corporation
becomes a wholly-owned subsidiary of the parent corporation) are
owned in the aggregate by holders of our securities immediately
prior to such merger or consolidation.
|
A
change-in-control
results in has the following effects under our various executive
compensation plans:
|
|
|
|
|
any outstanding unvested stock options held by a named executive
officer vest and become exercisable immediately upon a
change-in-control; and
|
|
|
|
any outstanding long term performance plan performance units
vest immediately in the event of a
change-in-control.
|
Payments
Upon a Qualifying Termination Following a
Change-in-Control
Each of the
change-in-control
employment agreements in effect on October 31, 2008 and
discussed in the Compensation Discussion and Analysis section of
this proxy statement under the caption Change in Control
Severance Agreements requires two triggering events before
any severance payments are made to the named executive officers:
|
|
|
|
|
change-in-control
(as defined above); and
|
|
|
|
subsequent termination of the employment of the named executive
officer without cause or for good reason.
|
59
Each
change-in-control
employment agreement provides that, if the employment of the
named executive officer is terminated during the two years
following a
change-in-control
by us without cause (as defined in the agreements)
or by the named executive officer for good reason
(as described below), the named executive officer would receive
the following:
|
|
|
|
|
severance pay of up to two times the named executive
officers annual base salary and annual cash incentive
compensation;
|
|
|
|
cash payment equal to the Black-Scholes value of up to two years
of stock option grants;
|
|
|
|
continuation of welfare benefits (e.g., medical, life insurance,
disability coverage) for up to two years;
|
|
|
|
car allowance for up to two years;
|
|
|
|
up to two years of financial planning, country, professional and
travel club expense reimbursement; and
|
|
|
|
if applicable, a gross up payment to offset the
effect, if any, of the excise tax imposed by Section 4999
of the Internal Revenue Code on such severance payments.
|
In addition, each named executive officer would receive five
additional years of age and two additional years of service
credit under the defined benefit pension plan and excess defined
benefit pension plan.
Good reason for termination of employment by the
named executive officer includes, without limitation, a
reduction in duties, compensation, or benefits, relocation, or
termination of employment by the executive for any or no reason
during the
180-day
period beginning on the 91st day after the
change-in-control.
Potential
Payments Upon Termination Or
Change-In-Control
Tables
The following tables present additional or enhanced payments to
each named executive officer in the event of a loss of
employment due to death, disability, retirement, termination
without cause or for good reason or a qualifying termination
following a
change-in-control.
The tables also identify the additional or enhanced benefits
that would be received upon a
change-in-control.
There is no table depicting additional or enhanced payments to
Mr. Hellman in the event of a change-of-control or a
termination of employment due to death, long-term disability,
retirement, involuntary termination without cause or following a
change-in-control
since Mr. Hellman was not employed on the last day of the
fiscal year.
In determining the amounts reflected in the following tables, we
used the following general assumptions and principles:
|
|
|
|
|
each of the triggering events occurred on October 31, 2008
(including the
change-in-control
and the qualifying termination following a
change-in-control);
|
|
|
|
no amounts for base salaries, annual cash incentives or the
fiscal year
2006-2008
long-term performance plan payout are included in the following
tables because the amounts are already earned as of
October 31, 2008 and are not affected or enhanced by any of
the triggering events;
|
|
|
|
amounts were calculated based on each named executive
officers age, compensation and years of service as of
October 31, 2008;
|
|
|
|
the value of our common shares on October 31, 2008 was
$36.93 per share;
|
|
|
|
no amounts were included for account balances in our qualified
defined contribution 401(k) plan because this plan is available
to all
U.S.-based
salaried employees who have worked the minimum amount of hours
required to receive this benefit; and
|
|
|
|
no amounts were included for account balances under our deferred
compensation plans because these amounts, which are reported
under the Aggregate Balance at Last Fiscal Year End
column in the Non-qualified Deferred Compensation for Fiscal
Year 2008 table of this proxy statement, would not be enhanced
in connection with any triggering event.
|
60
|
|
|
|
|
accelerated stock options were valued at an amount per share
equal to the difference between $36.93 and the grant price per
share for each of the accelerated stock options. The exercise
price of all outstanding and unvested stock options were below
the closing price of our common shares on October 31,
2008; and
|
|
|
|
the value of the long term incentive plan payout was determined
using an expected performance payout at $36.93 per share.
|
Not included in the tables are payments each named executive
officer earned or accrued prior to termination, such as the
balances under the deferred compensation plans, accrued
retirement benefits, previously vested options and restricted
shares. For information about these previously earned and
accrued amounts, see the following tables located elsewhere in
this proxy statement:
|
|
|
|
|
Summary Compensation Table for Fiscal Year 2008;
|
|
|
|
Outstanding Equity Awards at Fiscal 2008 Year-End table;
|
|
|
|
Option Exercises and Stock Vested During Fiscal Year 2008
table; and
|
|
|
|
Pension Benefits for Fiscal Year 2008 table.
|
We would not be required to make any excise or related income
tax gross up payments on account of the additional or enhanced
payments presented in the tables.
61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Following
|
|
|
|
Death, Disability
|
|
|
(without Cause or
|
|
|
Change-in-
|
|
|
Change-in-
|
|
|
|
and Retirement
|
|
|
for Good Reason)
|
|
|
Control
|
|
|
Control
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Edward P. Campbell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance (Cash)
|
|
|
|
|
|
|
4,590,000
|
|
|
|
|
|
|
|
6,208,980
|
|
Restricted Shares
|
|
|
487,476
|
|
|
|
|
|
|
|
487,476
|
|
|
|
|
|
Long-Term Performance
Plan Awards FY
2007-2009
&
FY 2008-2010
|
|
|
1,275,519
|
|
|
|
|
|
|
|
1,275,519
|
|
|
|
|
|
Excess Defined Pension Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,216,004
|
|
Health Care Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,012
|
|
Outplacement Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory A. Thaxton
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance (Cash)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,121,472
|
|
Stock Options
|
|
|
|
|
|
|
|
|
|
|
2,222
|
|
|
|
|
|
Long-Term Performance
Plan Awards FY
2007-2009
&
FY 2008-2010
|
|
|
149,751
|
|
|
|
|
|
|
|
149,751
|
|
|
|
|
|
Excess Defined Pension Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,996
|
|
Health Care Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,462
|
|
Outplacement Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert A. Dunn, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance (Cash)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,060,752
|
|
Restricted Shares
|
|
|
101,558
|
|
|
|
|
|
|
|
101,558
|
|
|
|
|
|
Long-Term Performance
Plan Awards FY
2007-2009
&
FY 2008-2010
|
|
|
314,016
|
|
|
|
|
|
|
|
314,016
|
|
|
|
|
|
Excess Defined Pension Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,151,621
|
|
Health Care Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,812
|
|
Outplacement Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Groos
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance (Cash)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,371,768
|
|
Restricted Shares
|
|
|
114,483
|
|
|
|
|
|
|
|
114,483
|
|
|
|
|
|
Long-Term Performance
Plan Awards FY
2007-2009
&
FY 2008-2010
|
|
|
272,063
|
|
|
|
|
|
|
|
272,063
|
|
|
|
|
|
Excess Defined Pension Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
391,290
|
|
Outplacement Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,778
|
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Qualifying
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
Following
|
|
|
|
Death, Disability
|
|
|
(without Cause or
|
|
|
Change-in-
|
|
|
Change-in-
|
|
|
|
and Retirement
|
|
|
for Good Reason)
|
|
|
Control
|
|
|
Control
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
John J. Keane
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance (Cash)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,840,752
|
|
Restricted Stock
|
|
|
101,558
|
|
|
|
|
|
|
|
101,558
|
|
|
|
|
|
Long-Term Performance
Plan Awards FY
2007-2009
&
FY 2008-2010
|
|
|
317,265
|
|
|
|
|
|
|
|
317,265
|
|
|
|
|
|
Excess Defined Pension Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
243,887
|
|
Health Care Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,754
|
|
Outplacement Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
Perquisites
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,962
|
|
63
APPENDIX A
AUDIT COMMITTEE
REPORT
January 16, 2009
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 31,
2008 (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, as
amended, as adopted by Public Accounting Oversight Board in
PCAOB Rule 3526 .
The Committee also has received the written disclosures and the
letter from E&Y required by the applicable requirements of
the Public Company Accounting Oversight Board regarding the
independent accountants communications with the audit
committee concerning independence. We have discussed with
E&Y its independence from management and 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 our Board of Directors the
inclusion of the Audited Financial Statements in our Annual
Report on
Form 10-K
for the year ended October 31, 2008.
Audit Committee
William P. Madar, Chairman
William W. Colville
William D. Ginn
Dr. David W. Ignat
Mary G. Puma
APPENDIX B
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 two classes of four
Directors and one class of three 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 NASDAQ Stock Market LLC Rules for
director independence. The Chief Executive Officer of the
company who serves as a member of the Board of Directors is
expected to retire from the Board of Directors upon his or her
leaving the employ of the company. A former Chief Executive
Officer may be eligible to serve as a member of the Board of
Directors upon expiration of three years from the date the
former Chief Executive Officer leaves the employ of the company.
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. At its December 6,
2006 meeting, the Board of Directors adopted Director
Recruitment and Performance Guidelines embodying and expanding
upon the criteria noted above for use in identifying and
recruiting directors for the Board of Directors. The Director
Recruitment and Performance Guidelines are attached as
Attachment A to these Governance Guidelines.
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.
The Chairman 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.
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.
During the Organizational Meeting of the Directors, the Board of
Directors, acting on the recommendation of the Governance and
Nominating Committee, will:
|
|
|
|
(a)
|
elect a Chairman of the Board;
|
|
|
|
|
(b)
|
elect a Chief Executive Officer;
|
|
|
|
|
(c)
|
elect executive and non-executive officers of the company;
|
|
|
|
|
(d)
|
establish Committees of the Board of Directors; and
|
|
|
|
|
(e)
|
appoint Committee members and Chairpersons.
|
The Chairman of the Boards responsibilities are described
in Attachment B to these Governance Guidelines, Role of the
Chairman of the Board. In the event that the Chairman of the
Board is not an independent director under the NASDAQ Stock
Market LLC Rules for director independence, the Committee will
recommend to the Board of Directors an independent director to
be elected and assume the role of Presiding Director. The
Presiding Director responsibilities are described in Attachment
C to these Governance Guidelines, Role of the Presiding
Director.
The Board of Directors presently has established three 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, (iv) the
approval of all related-party transactions and
(v) oversight and review of financial statements pertaining
to the Companys benefit plans, including reserves,
statement of funding obligations and underlying assumptions.
All members of the Audit Committee must meet the NASDAQ Stock
Market LLC Rules for director 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 Compa