UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Bruker Corporation | ||||
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BRUKER CORPORATION
40 Manning Road
Billerica, MA 01821
(978) 663-3660
Dear Stockholder:
On behalf of the board of directors and management of Bruker Corporation, I would like to invite you to attend our Annual Meeting of Stockholders to be held on Friday,Wednesday, May 18, 201220, 2015 at 9:0030 a.m., Local Time, at the offices of Nixon Peabody LLP, 100 Summer Street, Boston, Massachusetts.
The Notice of Annual Meeting of Stockholders and Proxy Statement, which describe the formal business to be conducted at the meeting, and Proxy Card accompany this letter. The Company's Annual Report to Stockholders is also enclosed for your information.
All Stockholders are invited to attend the Meeting. To ensure your representation at the Meeting, however, you are urged to vote by proxy by completing, dating and returning the enclosed Proxy Card. A postage-paid envelope is enclosed for that purpose. Regardless of the number of shares you own, your careful consideration of, and vote on, the matters before the Stockholders is important.
I look forward to your participation and thank you for your continued support.
Sincerely, | ||
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Frank H. Laukien, Ph.D. Chairman, President and Chief Executive Officer |
BRUKER CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
Notice is hereby given that the Annual Meeting of the Stockholders of Bruker Corporation will be held on Wednesday, May 18, 2012,20, 2015, at 9:0030 a.m., Local Time, at the offices of Nixon Peabody LLP, 100 Summer Street, Boston, Massachusetts, for the following purposes:
The board of directors has fixed the close of business on March 30, 201227, 2015 as the record date for the determination of stockholders entitled to notice of and to vote at this Annual Meeting and at any adjournment or postponement thereof.
By order of the board of directors | ||
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Frank H. Laukien, Ph.D. Chairman, President and Chief Executive Officer |
Billerica, Massachusetts
April 13, 201214, 2015
All stockholders are invited to attend the meeting. Whether or not you plan to attend, you can ensure that your shares are represented at the meeting by promptly voting and submitting your proxy by telephone or by the internet, or by completing, dating and returning the enclosed Proxy Card in the enclosed postage-paid envelope. Your shares cannot be voted unless you vote by telephone or internet, date, sign and return the enclosed Proxy Card, or attend the meeting in person. Regardless of the number of shares you own, your careful consideration of, and vote on, the matters before the stockholders is important. Even if you have given your proxy, you may still vote in person if you attend the meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you will not be permitted to vote in person at the meeting unless you first obtain a proxy issued in your name from the record holder.
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 18, 2012:20, 2015:
This Proxy Statement and the accompanying Annual Report are available via the Internet at:http://ir.bruker.com
BRUKER CORPORATION
PROXY STATEMENT
This proxy statement and the enclosed proxy card are furnished in connection with the solicitation of proxies by the board of directors of Bruker Corporation (the "Company") for use at the 20122015 Annual Meeting of Stockholders (the "2012"2015 Annual Meeting") to be held on May 18, 2012,20, 2015, at the time and place set forth in the notice of the meeting and at any adjournments thereof. The approximate date on which this proxy statement and form of proxy are first being sent to stockholders is April 13, 2012.14, 2015.
The holders of a majority in interest of all of the Company's common stock, par value $.01 per share ("Common Stock") issued, outstanding and entitled to vote are required to be present in person or be represented by proxy at the 20122015 Annual Meeting in order to constitute a quorum for the transaction of business. Each share of Common Stock outstanding on the record date will be entitled to one vote on all matters.
For Proposal No. 1, the four candidates for election as Class II and Class III directors at the 20122015 Annual Meeting who receive the highest number of affirmative votes will be elected.elected to serve in the respective class. For Proposal No. 2, the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal 2012,2015, the affirmative vote of holders of a majority of the shares of Common Stock represented in person or by proxy and entitled to vote on the proposal will be required for approval.
Because abstentions with respect to any matter are treated as shares present or represented and entitled to vote for the purposes of determining whether that matter has been approved by the stockholders, abstentions have the same effect as negative votes for each proposal other than the election of directors.
If the enclosed proxy card is properly executed and returned, it will be voted in the manner instructed by the stockholder. If a proxy card is properly submitted but contains no instructions, the shares represented thereby will be voted FOR allthe nominees for director in Proposal No. 1 and FOR ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal 20122015 in Proposal No. 2. In addition, if other matters come before the meeting, the persons named in the accompanying proxy and acting thereunder will have discretion to vote on those matters in accordance with their best judgment. Any person signing the enclosed form of proxy has the power to revoke it by voting in person at the meeting or by giving written notice of revocation to the Secretary of the Company at any time before the proxy is exercised. Please note, however, that if your shares are held of record by a broker, bank or nominee and you wish to vote at the meeting, you will not be permitted to vote in person unless you first obtain a proxy issued in your name from the record holder.
If shares are held in the "street name" of a broker or other nominee, the broker or nominee may not be permitted to exercise voting discretion with respect to certain of the proposals to be acted upon. If the broker or nominee is not given instructions as to how to vote such shares, the broker has authority under New York Stock Exchange rules to vote those shares for or against "routine" matters, such as the ratification of accounting firms. Brokers cannot vote on their customers' behalf on "non-routine" proposals such as the election of directors and the advisory vote on the compensation of the Company's named executive officers.directors. These rules apply notwithstanding the fact that shares of the Company's Common Stock are traded on the NASDAQ Global Select Market. If the brokerage firm lacks discretionary voting power with respect to an item that is not a routine matter and you do not provide voting instructions (a "broker non-vote"), such shares will be counted for purposes of establishing a quorum to conduct business at the 20122015 Annual Meeting, but will not be counted for purposes of determining whether stockholder approval of any particular matter has been obtained.
The Company will bear the cost of the solicitation. Although it is expected that the solicitation will be primarily by mail, regular employees or representatives of the Company (none of whom will receive any extra compensation for their activities) may also solicit proxies by telephone, telecopierfacsimile and in
person and arrange for brokerage houses and other custodians, nominees and fiduciaries to send proxies and proxy materials to their principals at the expense of the Company.
The Company's 20112014 Annual Report, including the Company's audited financial statements for the fiscal year ended December 31, 2011,2014, is being mailed to stockholders concurrently with this proxy statement.
The Company's principal executive offices are located at 40 Manning Road, Billerica, Massachusetts 01821, and ourits telephone number is (978) 663-3660.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on March 30, 201227, 2015 are entitled to notice of and to vote at the meeting.2015 Annual Meeting. On March 30, 2012,27, 2015, the Company had outstanding and entitled to vote 166,092,519168,870,601 shares of Common Stock. Each outstanding share of Common Stock entitles the record holder to one vote. Broadridge Financial Solutions, Inc. will tabulate all votes that are received prior to the date of the 2015 Annual Meeting. The inspector of elections, who will be one of our employees or one of our attorneys, will receive Broadridge's tabulation, tabulate all other votes, and certify the voting results.
Bruker Corporation was incorporated in Massachusetts as Bruker Federal Systems Corporation. In February 2000, we reincorporated in Delaware as Bruker Daltonics Inc. In July 2003, we merged with Bruker AXS Inc., and we were the surviving corporation in that merger. In connection with that merger, we changed our name to Bruker BioSciences Corporation and formed two operating subsidiaries, Bruker Daltonics and Bruker AXS, into which we transferred substantially all of their respective assets and liabilities, except cash. In July 2006, weWe acquired Bruker Optics Inc., also a company under common control. In February 2008, we acquired in July 2006 and the Bruker BioSpin group of companies which we sometimes refer to as the Bruker BioSpin Group, also a group of companies under common control.in February 2008. In connection with the Bruker BioSpin acquisition, we changed our name to Bruker Corporation. Our fivefour principal operating segments are Bruker BioSpin, Bruker Daltonics,CALID, Bruker MAT, Bruker Optics,Nano and Bruker Energy & Supercon Technologies, or BEST.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The first proposal on the agenda for the 20122015 Annual Meeting is the election of Marc A. Kastner and Gilles J. Martin to serve as Class II directors for a two-year term beginning at the 2015 Annual Meeting and ending at our 2017 Annual Meeting of Stockholders or until a successor has been duly elected and qualified and the election of Richard D. Kniss, Joerg C. Laukien, William A. Linton and Chris van Ingen to serve as Class III directors for a three-year term beginning at the 20122015 Annual Meeting and ending at our 20152018 Annual Meeting of Stockholders or until a successor has been duly elected and qualified. The Company's Certificate of Incorporation, as amended, provides that the board of directors shall consist of three classes of directors with overlapping three-year terms. One class of directors is to be elected each year for a three-year term. Directors are assigned to each class in accordance with a resolution or resolutions adopted by the board of directors, each class consisting, as nearly as possible, of one-third the total number of directors. There are currently thirteenten members of our board of directors, consisting of four Class I directors serving terms expiring at the Company's Annual Meeting of Stockholders in 2016, one Class II director serving a term expiring at the Company's Annual Meeting of Stockholders in 2017 and five Class III directors serving terms expiring at the Company's Annual Meeting of Stockholders in 2015. There is currently one vacancy within the class of Class II directors.
Effective as of the 2015 Annual Meeting, in conjunction with the expiration of the terms of the five current Class III directors, the classes will be adjusted to consist of four Class I directors, three
Class II directors and four Class III directors, leaving an additional vacancy within the class of Class II directors.
At the 20122015 Annual Meeting, four nominees will be elected as Class III directors to serve for a termterms expiring at the 20152018 Annual Meeting of Stockholders. TheAdditionally, although our bylaws provide that vacancies may remain unfilled or may be filled by a majority vote of the directors then in each of Class I andoffice, two nominees will be elected as Class II are servingdirectors to serve for terms expiring at the Company's2017 Annual Meeting of Stockholders to fill the two vacancies in 2013 and 2014, respectively.the class of Class II directors.
ThreeMarc A. Kastner, one of the nominees for Class II director, previously served as a director of the Company from February 2013 to the expiration of his term in May 2014. Dr. Kastner was not nominated for election to an additional term at the Company's 2014 Annual Meeting of Stockholders because at that time his appointment to serve as Director of the Office of Science of the U.S. Department of Energy was awaiting confirmation by the United States Senate. Having not yet received Senate confirmation, Dr. Kastner withdrew his name from consideration in early 2015, thus making him again eligible for service on our board of directors. Gilles J. Martin, the other nominee for Class II director, is currently serving as a Class III director. Each of the nominees for Class III director, Richard D. Kniss, Joerg C. Laukien, and William A. Linton are currently Class III directors. One of the nominees for Class III director,and Chris van Ingen, has been nominated to fill the vacancy that will be created by the retirement of Tony W. Keller, who has servedis currently serving as a Class III director since 2008, at the expiration of his current term.director. All nominees were unanimously approved by our board of directors, including unanimous approval by our independent
directors, upon the unanimous recommendation of the Nominating Committee, which is comprised of three independent directors.
Unless marked otherwise, proxies received will be votedFOR the election of each of the four nominees for the office of director. If any such nominee is unwilling or unable to serve as a nominee for the office of director at the time of the 20122015 Annual Meeting, the proxies may be voted either (1) for a substitute nominee who shall be designated by the present board of directors to fill such vacancy or (2) for the other nominees only, leaving a vacancy. Alternatively, the size of the board of directors mayif no such nominee is designated, a vacancy will be reduced so that there is no vacancy.created in Class II or Class III, as applicable. The board of directors has no reason to believe that any of the nominees will be unwilling or unable to serve if elected as a director.
The Board of Directors recommends a vote FOR the election of eachMarc A. Kastner and Gilles J. Martin to serve as Class II directors and FOR the election of the nominees for Director.Richard D. Kniss, Joerg C. Laukien, William A. Linton and Chris van Ingen to serve as Class III directors.
Certain Information Regarding Directors and Nominees
The biographies of the nominee and each of the nominees andour continuing directors below contain information regarding each person's service as a director, business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes or skills that caused the board of directors to determine that the person should serve as a director of the Company in 2012.Company.
Nominees for Election to a Three-YearTwo-Year Term Expiring at the 20152017 Annual Meeting
Marc A. Kastner, Ph.D. | Age 69 | Director from February 2013 to May 2014 | ||
Dr. Kastner currently serves as President of the Science Philanthropy Alliance, whose goal is to increase private funding for fundamental research. He is on leave as Donner Professor of Science at Massachusetts Institute of Technology ("MIT"), a position he has held since 1989. Since joining the MIT Department of Physics in 1973, Dr. Kastner has served in a variety of senior faculty and leadership roles at MIT, including as Dean of the MIT School of Science from July 2007 to December 2014, Head of the MIT Department of Physics from 1998 to 2007, Director of MIT's Center for Materials Science and Engineering from 1993 to 1998 and as Associate Director of MIT's Consortium for Superconducting Electronics from 1989 to 1992. Dr. Kastner previously served a term on the Company's board of directors from February 2013 to May 2014. Dr. Kastner has received numerous awards for his scientific research and scholarship and currently serves on a number of research and scientific advisory boards. Dr. Kastner holds a Ph.D. in Physics from the University of Chicago. Dr. Kastner brings to the board significant expertise in recent and emerging scientific, technological and research funding trends, as well as in academic and government research markets, from which the Company derives approximately half of its revenues today. Moreover, Dr. Kastner has extensive organizational and management experience in non-profit institutions and insights into U.S. government research management and priorities. | ||||
Gilles J. Martin, Ph.D. | Age 51 | Director Since 2014 | ||
Dr. Martin is Chairman and Chief Executive Officer of the Eurofins Scientific Group, a Luxembourg-based international life sciences company with approximately 15,000 employees in laboratories located in 35 countries. The Eurofins Scientific Group provides a range of analytical testing services to clients across multiple industries. Dr. Martin is also a director of Eurofins Scientific SE, Analytical Bioventures SCA and certain of their affiliates. Dr. Martin founded the original Eurofins Scientific Nantes food authenticity laboratory in 1988 and is a past President of the French Association of private analytical laboratories, or APROLAB, and the North American Technical Committee for Juice and Juice Products. Dr. Martin holds a Ph.D. in Statistics and Applied Mathematics from Ecole Centrale, Paris, and a Master of Science from Syracuse University. As Chairman and Chief Executive Officer of Eurofins Scientific, the largest group of independent food testing laboratories in the world, Dr. Martin is and has been involved throughout his career with many generations of analytical instruments and their suppliers. Dr. Martin brings extensive international business and management experience in the life-science and analytical testing industries to the board, including specialized expertise in the environmental testing, food safety analysis and pharmaceutical clinical research markets. Dr. Martin also brings an entrepreneurial perspective to the board. |
Nominees for Election to a Three-Year Term Expiring at the 2018 Annual Meeting | ||||
Richard D. Kniss | Age | Director Since 2003 | ||
Mr. Kniss joined the Company's board of directors in July 2003 in connection with the merger of Bruker Daltonics and Bruker AXS, having served on the Bruker AXS board of directors since June 2001. Mr. Kniss was Senior Vice President and General Manager for Agilent Technologies, Chemical Analysis Group, a producer of gas and liquid chromatographs, mass spectrometers and spectrophotometers, from August 1999 until March 2001. Prior to the spin-off of Agilent from the Hewlett Packard Company, from 1995 to 1999, Mr. Kniss was Vice President and General Manager of the Chemical Analysis Group for Hewlett Packard. From 2004 to 2008, Mr. Kniss served as chairman of the board of directors of AviaraDx, Inc. (formerly Arcturus Bioscience, Inc.), a life-science tools company acquired by BioMerieux. Mr. Kniss holds a B.S. from Brown University and a M.B.A. from Stanford University. Mr. Kniss has a strong executive background in the life sciences and analytical instruments industries, as well as experience in corporate governance and public company executive compensation matters. Mr. Kniss is the chairman of the Company's Compensation Committee. | ||||
Joerg C. Laukien | Age | Director Since 2005 | ||
Mr. Joerg Laukien |
William A. Linton | Age | Director Since 2000 | ||
Dr. Linton serves as the lead director of our board of directors. He was appointed lead director in March 2004 by the independent members of the board of directors. As lead director, Dr. Linton performs the usual responsibilities of a lead director including acting as a liaison between management and the board of directors. Since 1978, Dr. Linton has served as the Chairman, President and Chief Executive Officer of Promega Corporation, Madison, Wisconsin, a privately held life science supply company |
Chris van Ingen | Age | Director Since 2012 | ||
Chris van Ingen has served as an advisor to various life | ||||
Directors Continuing in Office until the | ||||
Wolf-Dieter Emmerich, Ph.D. | Age | Director Since 2007 | ||
Dr. Emmerich currently serves as a consultant to Erich Netzsch Holding, the parent company of Netzsch Instruments, a developer and manufacturer of high-precision instruments for thermal analysis and thermophysical properties measurement headquartered in Selb, Germany. Netzsch's products are employed in research and quality control in a range of industrial applications. Dr. Emmerich joined Netzsch Instruments Ltd. in 1970. Dr. Emmerich assumed worldwide responsibility for the Analyzing and Testing business unit in 1980 and was appointed to serve on the Executive Board of the Netzsch Group in 1995. He served the Netzsch Group in a variety of capacities until his retirement in 2005. Dr. Emmerich |
Brenda J. Furlong | Age | Director Since 2007 | ||
From July 2003 to August 2006, Ms. Furlong served as Managing Director and Head of Fixed Income of Columbia Management Group, the primary investment management division of Bank of America Corporation. Prior to joining Columbia Management, Ms. Furlong was with The Hartford Financial Services Group, where she served as Chief Investment Officer and was President of Hartford Investment Management Company from October 1999 to November 2001, and also served as Senior Vice | ||||
Frank H. Laukien, Ph.D. | Age | Director Since 1991 | ||
Dr. Frank H. Laukien has been the Chairman, President and Chief Executive Officer of the Company since February 1991 and is |
Richard A. Packer | Age | Director Since 2007 | ||
Since November 1999, Mr. Packer has been the Chief Executive Officer and a director of ZOLL Medical Corporation, a | ||||
Stephen W. Fesik, Ph.D. | Age | Director Since 2008 | ||
Dr. Fesik is currently a Professor in the Department of Biochemistry at Vanderbilt University School of Medicine. He is also a member of the | ||||
Under our bylaws, the chairman of the Company's board of directors has the power to preside at all meetings of the board. Dr. Frank Laukien, our Chief Executive Officer and President, serves as the Chairman of our board of directors and has done so throughout the time we have been a public company. Although the board believes that the combination of the Chairman and Chief Executive Officer roles is appropriate in the current circumstances, the board does not have a fixed policy regarding the combination or separation of the offices of Chairman and Chief Executive Officer. Our board of directors believes that it should have the flexibility to make these determinations at any given point in time in the way that it considers best to provide appropriate leadership for the Company at that time. The Chief Executive Officer is appointed by our board to manage the Company's daily affairs and operations. Dr. Laukien's extensive industry knowledge and long history of direct involvement in the Company's operations make him best suited to serve as Chairman in order to (i) lead the board in productive discussions on important matters affecting the Company; (ii) create a firm link between management and the board and promote the development and implementation of corporate strategy; (iii) determine necessary and appropriate agenda items for meetings of the board with input from the independent lead director and board committee chairpersons; and (iv) determine and manage the amount of time and information devoted to discussion and analysis of agenda items and other matters that may come before the board. Additionally, his significant equity ownership, at over 23% of the outstanding shares of the Company's common stock, means that he has a close and direct alignment of interests with the interests of our other shareholders. While we believe that having a unified Chairman and Chief Executive Officer is appropriate and in the best interests of the Company and its shareholders at this time, our board structure also fosters strong oversight by independent directors. Since 2004, an independent lead director has been appointed by the independent directors to ensure an independent leadership contact. The lead director's responsibilities include: (i) consulting with the Chairman regarding agenda items for board meetings; (ii) chairing executive sessions of the independent directors; (iii) calling executive sessions of the independent directors of the board and advising the Chairman and Chief Executive Officer of actions or deliberations at such sessions; (iv) acting as a liaison between the independent directors and the full board, as necessary; and (iv) establishing, in consultation with the Chairman and Chief Executive Officer and any appropriate board committees, procedures to govern the board's work, ensuring that the board of directors is appropriately approving strategy and supervising management's progress. Dr. William Linton has served in the role of lead director since the position was established in 2004. There are the heading "Transactions with Related Persons," and determined that During As described below, the board of directors has three standing committees: an Audit Committee, a Compensation Committee and a Nominating Committee. Audit Committee. The Audit Committee of the board of directors is currently comprised of Brenda J. Furlong, Richard A. Packer, and The Audit Committee provides assistance to the board of directors in fulfilling its legal and fiduciary obligations with respect to matters involving the accounting, auditing, treasury, financial reporting and internal control functions of the Company and its subsidiaries. The Audit Committee works extensively with the independent auditors, pre-approves all audit and non-audit services provided to the Company by its independent auditors, reviews the performance of the independent auditors and replaces or terminates the independent auditors when circumstances warrant. The Audit Committee is also charged with establishing and monitoring procedures for (i) the receipt, retention or treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and (ii) the confidential submission by the Company's employees of concerns regarding questionable accounting or auditing matters. None of the members of the Audit Committee has participated in the preparation of any financial statements of the Company at any time during the last three fiscal years. The Audit Committee's charter is available on the Company's website at http://ir.bruker.com under the "Corporate Governance" section. Compensation Committee. The Compensation Committee, which is comprised of Wolf-Dieter Emmerich, Stephen W. Fesik and Richard D. Kniss, all of whom meet the independence requirements of the NASDAQ Listing Rules, met compensation of these executive officers. The Compensation Committee reviews these performance evaluations and recommendations and Richard M. SteinAge 60Director Since 2000Mr. Stein has served as the Company's secretary since 2000. Mr. Stein has been a partner with Nixon Peabody LLP, a law firm, or a predecessor entity, Hutchins, Wheeler & Dittmar, since January 1993. Mr. Stein holds a B.A. degree from Brandeis University and a J.D. from Boston College Law School. He has extensive experience in corporate and securities law and corporate governance matters.Charles F. Wagner, Jr.Age 44Director Since 2010Mr. Wagner served as Executive Vice President of Finance and Administration and Chief Financial Officer of Progress Software Corporation, a provider of enterprise software located in Bedford, Massachusetts, from November 2010 to March 2012. Prior to joining Progress Software, Mr. Wagner served as Vice President and Chief Financial Officer of Millipore Corporation, a global provider of products and services in the life science tools market, from 2007 until July 2010, when Millipore was acquired by Merck KGaA. Mr. Wagner joined Millipore in 2002 and from 2003 to 2007 served as Vice President, Strategy and Corporate Development. From 1997 to 2002, he served in various roles at Bain & Company after having served as Manager, Accounting Analysis, at Millipore from 1995 to 1996 and as Manager at Coopers & Lybrand from 1990 to 1995. Since 2010, Mr. Wagner has served as a director of Bruker Energy & Supercon Technologies, Inc., where he is a member of the Audit Committee. Mr. Wagner holds a B.S. from Boston College and a M.B.A. from Harvard Business School. Mr. Wagner brings to the board considerable financial and management experience with publicly-traded companies, as well as expertise in financial analysis and strategic planning and development. Mr. Wagner is a financial expert on the Company's Audit Committee.Bernhard WanglerAge 61Director Since 2000Mr. Wangler has been a German tax consultant and principal partner with Kanzlei Wangler in Karlsruhe, Germany since July 1983. He has been a Certified Public Accountant in Germany since 1984. Mr. Wangler holds a Master of Economics and Commerce degree and a M.B.A. from the University of Mannheim, Germany. Mr. Wangler has extensive experience in strategic planning and international tax and finance matters.TheOur Chairman and Chief Executive Officer consults periodically with the lead director on governance matters and on issues facing the Company. In addition, the lead director serves as the principal liaison between the Chairman and the independent directors and presides at executive sessions of independent directors at regularly scheduled in-person board meetings. The board of directors believes that this approach appropriately and effectively complements the Company's combined Chairman and Chief Executive Officer.
BOARD MEETINGS, COMMITTEES AND COMPENSATIONthirteencurrently ten members of our board of directors. A majorityEight of our current directors, namely Wolf-Dieter Emmerich, Stephen W. Fesik, Brenda J. Furlong, Richard D. Kniss, William A. Linton, Gilles J. Martin, Richard A. Packer, and Charles F. Wagner, Jr.,Chris van Ingen, meet the independence requirements of the NASDAQ Stock Market LLC, or NASDAQ, listing standards. All of our director nominees, other than Mr. Joerg Laukien, are independent under such standards. In addition, ourmaking its independence determinations, the board of directors hasconsidered, among other things, relevant transactions between the Company and entities associated with the independent directors, as further described in this proxy statement undernew director nominee Chris van Ingen qualifies as independent under these standards.none have any relationship with the Company or other relationships that would impair the directors' independence.2011,2014, the board of directors of the Company held sixfive meetings. EachOur incumbent directors, on average, attended over 98 percent of board and committee meetings during 2014. No director otherattended less than Mr. Kniss and Dr. Linton, attended at least 75 percent of the total number of 2014 meetings of the board of directors and board committees of which he or she was a member in 2011. Mr. Kniss attended 67% of the total number of meetings of the board of directors and all of the meetings of the board committees of which he was a member and Dr. Linton attended 67% of the meetings of the board of directors.member. It is the policy of our board of directors that at least two directors, including at least one independent director, attend our Annual Meeting, either in person or by telephonic conference. Three directors attended our 20112014 Annual Meeting.Charles F. Wagner, Jr.,Chris van Ingen, each of whom satisfysatisfies the applicable independence requirements of the rules and regulations of the SEC and NASDAQ. Under these rules, we are required to have an Audit Committee consisting of at least three independent members. The Audit Committee met fiveseven times during 20112014 in regular session. During 2011,From time to time, the Audit Committee also met periodically in connection with its internal investigation intoheld meetings or teleconferences to discuss certain topics, including, but not limited to, the Company's review of legal compliance matters at thecertain of its subsidiaries operating in China and Hong Kong operations of the Company's Bruker Optics subsidiary.Kong. Ms. Furlong, Chair of the Audit Committee, and Mr. Wagner each qualifies as an audit committee financial expert pursuant to applicable SEC rules and regulations.onceeight times during 2011. In addition to this meeting, members of the Compensation Committee communicated periodically throughout the year regarding compensation-related matters.2014. Mr. Kniss is the Chairman of the Compensation Committee. The Compensation Committee (i) administers the Company's stock optionincentive plan; (ii) determines the chief executive officer's salary, bonus, and equity based compensation; (iii) oversees the executive compensation program for the Company's other executive officers; and (iv) determines such compensation, reviews general policy matters relating to compensation and employee benefits and makes recommendations concerning these matters to the board of directors. From time to time, the Company expects that various of its senior executive officers will provide analysis and recommendations to the Compensation Committee on compensation issues, as requested by the Compensation Committee. In particular, the Chief Executive Officer annually evaluates the performance of the Chief Financial Officer andexecutive officers who report directly to him, including, without limitation, the Chief OperatingFinancial Officer, and makes recommendations to the Compensation Committee regarding such executive officers' compensation. Additionally, the Chief Financial Officer provides the Chief Executive Officer input on the annual evaluations of the performance of the Company's other executive officers and makes recommendations to the Compensation Committee regarding theif the Committee deems appropriate, adoptsdiscusses the recommendations with our Chief Executive Officer and Chief Financial Officer. In some cases, these discussions may lead to adjustments to an executive officer's performance evaluation and compensation recommendation. In other cases in which the Compensation deems it appropriate, the evaluations and management recommendations may be approved by the Compensation Committee with little toor no change. Our Chief Executive Officer, Chief Financial Officer and the DirectorGlobal Vice President of Human Resources may routinely attend meetings of the Compensation Committee to provide information relating to matters the Compensation Committee is considering. The Compensation Committee may, from time to time, meet in executive session without any executive officers present. The Compensation Committee's charter is available on the Company's website at http://ir.bruker.com under the "Corporate Governance" section.
Nominating Committee. The Nominating Committee is comprised of Wolf-Dieter Emmerich, William A. Linton and Richard A. Packer, all of whom meet the independence requirements of the NASDAQ Listing Rules. Mr. Packer is the Chairman of the Nominating Committee. The purpose of the Nominating Committee is to assist the board in identifying and recruiting individuals qualified to become board members, consistent with criteria approved by the board, and to recommend to the board nominees for election to the office of director at the next annual meeting of stockholders, or for election to fill any vacancies between annual meetings. While the board of directors retains responsibility for selecting nominees and recommending them for election by the Company's stockholders, the Nominating Committee is responsible for developing and implementing a process to identify qualified and willing candidates for recommendation to the board. The Nominating Committee is assisted by non-voting advisors from our board, including Dr. Frank Laukien, our Chairman, President, CEO and largest stockholder, and Mr. Joerg Laukien, a director and significant stockholder. The role of the advisors is to provide input to the Nominating Committee as major shareholders of the Corporation. The Nominating Committee's charter is available on the Company's website at http://ir.bruker.com under the "Corporate Governance" section.
The Nominating Committee met twothree times during 2011.2014. In addition to these meetings, members of the Nominating Committee communicated periodically throughout the year regarding candidates for director and director nomination matters. At a meeting held in March 2012,February 2015, the Nominating Committee unanimously recommended each of the current slate of nominees for director to the full board of directors.
In addition to the standing committees described above, in 2013 the board of directors established a temporary BEST Special Committee, comprised of Chris van Ingen, Frank Laukien and Joerg Laukien, to focus on key issues relating to the Company's Bruker Energy and Supercon Technologies division.
On March 3, 2004, the Company adopted a policy by board resolution governing the nomination of directors, according to which the full board of directors approves all nominees for board membership. All nominees must also be approved by a majority of the Company's independent directors. Upon recommendation of the Nominating Committee, the qualifications of candidates will be reviewed by at least a majority of the independent directors of the Company, as well as the full board of directors. Stockholders may recommend director candidates for inclusion by the board of directors in the slate of nominees which the board recommends to stockholders for election as described below.
The process followed to identify and evaluate potential candidates includes requests to board members and others for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates and interviews of selected candidates by the members of the Nominating Committee, the independent directors and the board.
The Nominating Committee, the independent directors and the board are each authorized to retain advisers and consultants and to compensate them for their services. No such advisers or consultants were retained for this purpose during fiscal year 2011.2014.
The Company does not have a formal policy with regard to the consideration of diversity in identifying director nominees, but strives to identify and recruit director candidates with a variety of complementary skills and backgrounds so that, as a group, the board will possess the appropriate talent, skills and expertise to oversee the Company's business. When considering a potential director candidate, the Nominating Committee evaluates the entirety of each candidate's experience and qualifications. The Nominating Committee looks for personal and professional integrity, demonstrated ability and judgment and business experience.
In considering whether to recommend any candidate for inclusion in the board's slate of recommended director nominees, the board and the independent directors apply the criteria which are set forth in a resolution of the board approved and adopted on March 3, 2004.
These criteria include, but are not limited to, the following:
The board and the independent directors may also consider the following for some of the director nominees:
In evaluating candidates recommended by the Nominating Committee, the board and the independent directors do not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees. We believe that the backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow the board to fulfill its responsibilities.
Although the Company does not have a specific policy with respect to the nomination of directors by stockholders, the Nominating Committee will consider nominations made by stockholders. The Company believes that it is not necessary to have a policy for director nominations by stockholders because the board of directors, including the Nominating Committee and the independent directors, is
able to effectively locate and evaluate potential candidates for nomination to the board of directors due to the directors' intimate knowledge of the Company and the life science industry. However, stockholders may communicate directly with the Nominating Committee of the board of directors by written communication submitted to Richard M. Stein at the address set forth below under "Stockholder Communications." Mr. Stein shall be primarily responsible for monitoring the communications and providing summaries or copies of such communications to the Nominating Committee or the board of directors as he deems appropriate, and, as described below, will submit communications to the Nominating Committee or the board of directors, as appropriate, relating to corporate governance matters and long-term corporate strategy. Stockholders may use this process to suggest potential nominations to the board of directors. Such suggested nominations shall be forwarded to the Nominating Committee and the proposed candidates shall be evaluated using substantially the same process and applying the same criteria as used and applied in evaluating candidates submitted by board members. Nominations must be received by the Company within the timeframe set forth herein under "Time for Submission of Stockholder Proposals."
At the 20122015 Annual Meeting, stockholders will be asked to consider the re-election of Richard D. Kniss, Joerg C. Laukien, and William A. Linton and the election of Chris van Ingen to serve as Class III directors and the election of Marc A. Kastner and Gilles J. Martin to serve as Class II directors. AllEach of the nominees for director areis standing for election or re-election following the unanimous recommendation for nomination first by the Nominating Committee, and then by the full board of directors, including the unanimous approval of all of the Company's independent directors.
ROLE OF THE BOARD IN RISK OVERSIGHT
Our board of directors considers general oversight of the Company's risk management efforts to be a responsibility of the entire board. The Audit and Compensation Committees assist the board in carrying out this responsibility by focusing on specific key areas of risk that our business faces. The board's role in risk oversight includes receiving regular reports from members of senior management on areas of material risk to the Company, or to the success of a particular project or endeavor under consideration, including operational, financial, legal and regulatory, strategic and reputational risks. The full board of directors, or the Audit Committee in the case of financial and compliance risks that are within the oversight of the Audit Committee or the Compensation Committee in the case of matters relating to our compensation policies and practices, receives these reports from members of management to enable the board or the Audit or Compensation Committee, as applicable, to understand the Company's risk identification, risk management, and risk mitigation strategies. To facilitate this process and assist the Audit Committee in fulfilling its responsibility for monitoring legal
and compliance risks, our director of internal audit, who reports directly to our Chief Financial Officer,Senior Vice President, Corporate Finance and Accounting, also has a dotted line reporting relationship to the chairperson of the Audit Committee. The Audit Committee chairperson is authorized to give instructions and assignments directly to the director of internal audit, as to which assignments the director of internal audit reports directly and only to the Audit Committee chairperson. When a report is evaluated at the Audit Committee level, the chairperson of the Audit Committee subsequently reports on the matter to the full board to ensure coordination of the board's risk oversight activities. Our board of directors also believes that risk management is an integral part of our strategic planning process, which addresses, among other things, the risks and opportunities facing the Company.
We pay the non-employee members of our board of directors a mix of cash and share-based compensation based on the determination of the Compensation Committee. Employee directors, including Dr. Frank Laukien Dr. Dirk Laukien and Mr. Joerg Laukien, receive compensation only as employees of the Company and receive no additional compensation for service as a director. Dr. Tony Keller, who retired as an employee effective March 31, 2010, receives compensation for his ongoing service to the Bruker BioSpin Group and receives no additional cash compensation as a director of the Company. Directors are reimbursed
for reasonable out-of-pocket expenses incurred in attending meetings of the board or committees thereof.board committees.
Components of Director Compensation
Effective April 1, 2014, our board of directors approved a change in the annual retainer paid to non-employee directors, increasing the amount to $40,000 annually, after consideration of a survey of director compensation at comparable public companies and comparison of the survey results to the Company's director compensation practices established in 2012. During 2011,2014, directors other than the employee directors and Dr. Tony Keller were paid cash compensation according to the following schedule:
Annual Retainer: | ||||
Board Service | $ | 26,000 | ||
Audit Committee Service | $ | 18,000 | ||
Audit Committee Chair | $ | 10,000 | ||
Compensation Committee Service | $ | 8,000 | ||
Compensation Committee Chair | $ | 5,000 | ||
Attendance Fees per Board meeting | $ | 1,500 |
Effective April 1, 2012, the Compensation Committee approved the following changes to non-employee director cash compensation after consideration of a survey of director compensation at comparable public companies. Except as indicated below, cash compensation payable to non-employee directors will remain unchanged from the schedule in effect throughout 2011.
Annual Retainer: | ||||||||||||||
| Director Compensation in Effect January 1, 2014 | Change to Director Compensation Effective April 1, 2014 | Total Retainer for the Year Ended December 31, 2014 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Board Service | $ | 30,000 | $ | 30,000 | $ | 40,000 | $ | 37,500 | ||||||
Audit Committee Service | $ | 18,000 | — | $ | 18,000 | |||||||||
Audit Committee Chair | $ | 15,000 | $ | 15,000 | — | $ | 15,000 | |||||||
Compensation Committee Service | $ | 8,000 | — | $ | 8,000 | |||||||||
Compensation Committee Chair | $ | 5,000 | — | $ | 5,000 | |||||||||
Nominating Committee Service | $ | 2,000 | $ | 2,000 | — | $ | 2,000 | |||||||
Nominating Committee Chair | $ | 3,000 | $ | 3,000 | — | $ | 3,000 | |||||||
BEST Special Committee Service | $ | 9,000 | — | $ | 9,000 | |||||||||
BEST Special Committee Chair | $ | 6,000 | — | $ | 6,000 | |||||||||
Attendance Fees per Board meeting | $ | 1,500 | — | $ | 1,500 |
In addition to the cash component of director compensation, share-based awards are made annually to non-employee directors as a component of their compensation. On January 5, 2011,2014, the Company granted each non-employee director, other than Mr. Richard Stein and Mr. Kastner, an annual equity award consisting of an option to purchase 6,00010,000 shares of common stock. The 20112014 option grants vest ratably in annual installments over three years on the anniversary of the grant date, beginning on January 5, 2012.2015. On January 5, 2012,2015, annual equity awards were granted to all non-employee directors other than Mr. Stein.directors. The 20122015 grants to non-employee directors again consisted of an option to purchase 6,00010,000 shares of common stock. The 2012 grants veststock, which option vests ratably in annual installments over three years on the anniversary of the grant date, beginning on January 5, 2013. Effective for grants beginning in 2013,
the Compensation Committee has approved an increase in the number of shares covered by the annual grants to non-employee directors, other than Mr. Stein so long as he remains a partner at Nixon Peabody LLP, to 10,000 shares from 6,000 shares.2016.
Dr. Emmerich, Ms. Furlong, Dr. Keller, Dr. Frank Laukien, Mr. Joerg Laukien, Mr. Wagner and Mr. van Ingen also serve as members of the board of directors of Bruker Energy & Supercon Technologies, Inc., or BEST, a wholly-owned subsidiary of the Company. As non-employee directors of BEST, Dr. Emmerich, Ms. Furlong, Mr. Wagner and Mr. van Ingen are each entitled to receive $15,000 as an annual retainer, payable in four equal quarterly installments per annum, as well as meeting fees of $1,000 per meeting attended. Dr. Emmerich receives additional compensation of $7,500 per year for service as chair of the Compensation Committee of the BEST board of directors and $10,000 per year for service on the BEST Audit Committee. Ms. Furlong receives additional compensation of $15,000 per year for service as chair of the Audit Committee of the BEST board of directors. Mr. van Ingen receives additional compensation of $10,000 per year for service as the Executive Chairman of the BEST board of directors and $5,000 per year for service on the BEST Compensation Committee. Mr. Wagner receives additional compensation of $10,000 per year for service on the Audit Committee of the BEST board of directors.
The following table provides information concerning the compensation paid by us to each of our non-employee directors for the fiscal year ended December 31, 2011.2014. The compensation received bypaid to Dr. Frank Laukien, our President and Chief Executive Officer, is shown in the 2011 Summary Compensation Table on page 3047 of this proxy statement. The compensation paid in 2014 to each of Dr. Dirk Laukien and Mr. Joerg Laukien as employeesan employee of the Company as well as to Dr. Keller for his service to the Bruker BioSpin Group, is described in this proxy statement under the heading "Transactions"Transactions with Related Persons" beginning on page 33 of this proxy statement.Persons."
20112014 Director Compensation Table
Name | Fees Earned or Paid in Cash | Option Awards(1) | Total | Fees Earned or Paid in Cash | Option Awards(1) | Total | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Wolf-Dieter Emmerich | $ | 79,500 | $ | 53,820 | $ | 133,320 | $ | 53,500 | $ | 102,700 | $ | 156,200 | ||||||||
Stephen W. Fesik | $ | 41,500 | $ | 53,820 | $ | 95,320 | $ | 53,000 | $ | 102,700 | $ | 155,700 | ||||||||
Brenda J. Furlong | $ | 97,000 | $ | 53,820 | $ | 150,820 | $ | 78,000 | $ | 102,700 | $ | 180,700 | ||||||||
Chris van Ingen | $ | 78,000 | $ | 102,700 | $ | 180,700 | ||||||||||||||
Marc A. Kastner(2) | $ | 15,995 | — | $ | 15,995 | |||||||||||||||
Richard D. Kniss | $ | 45,000 | $ | 53,820 | $ | 98,820 | $ | 58,000 | $ | 102,700 | $ | 160,700 | ||||||||
William A. Linton | $ | 32,000 | $ | 53,820 | $ | 85,820 | $ | 47,000 | $ | 102,700 | $ | 149,700 | ||||||||
Gilles J. Martin(3) | $ | 44,000 | $ | 116,200 | $ | 160,200 | ||||||||||||||
Richard Packer | $ | 53,000 | $ | 53,820 | $ | 106,820 | $ | 68,000 | $ | 102,700 | $ | 170,700 | ||||||||
Richard M. Stein | $ | 35,000 | — | $ | 35,000 | |||||||||||||||
Charles F. Wagner, Jr.(4) | $ | 82,000 | $ | 53,820 | $ | 135,820 | ||||||||||||||
Bernhard Wangler | $ | 35,000 | $ | 53,820 | $ | 88,820 | ||||||||||||||
Richard M. Stein(4) | $ | 15,995 | — | $ | 15,995 | |||||||||||||||
Bernhard Wangler(5) | $ | 15,995 | $ | 102,700 | $ | 118,695 |
As of December 31, 2011, the2014, our non-employee directors held the following aggregate vested and unvested options to purchase common stock of the Company:
Name | Number of Vested Options | Number of Unvested Options | Number of Vested Options | Number of Unvested Options | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Wolf-Dieter Emmerich | 14,940 | 12,060 | 37,560 | 20,440 | ||||||||||
Stephen W. Fesik | 8,940 | 12,060 | 28,260 | 18,740 | ||||||||||
Brenda J. Furlong | 11,940 | 12,060 | 34,560 | 20,440 | ||||||||||
Chris van Ingen | 9,900 | 20,100 | ||||||||||||
Richard D. Kniss | 25,090 | 12,060 | 31,260 | 18,740 | ||||||||||
William A. Linton | 26,690 | 12,060 | 31,260 | 18,740 | ||||||||||
Gilles J. Martin | — | 10,000 | ||||||||||||
Richard Packer | 11,940 | 12,060 | 31,260 | 18,740 | ||||||||||
Richard M. Stein(3) | 2,250 | — | ||||||||||||
Charles F. Wagner, Jr.(4) | 990 | 8,010 | ||||||||||||
Bernhard Wangler | 38,690 | 12,060 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial ownership of the Company's common stock as of March 30, 2012April 3, 2015 by (i) each person who is known by the Company to own beneficially more than 5% of the Company's common stock, (ii) each of our directors and nominees for director, (iii) each named executive officer of the Company, as defined in "Summaryunder the heading "Summary of Executive Compensation," and (iv) all directors and executive officers who served as directors or executive officers as of March 30, 2012April 3, 2015 as a group. Unless otherwise noted, the address of each beneficial owner is c/o Bruker Corporation, 40 Manning Road, Billerica, Massachusetts 01821.
Beneficial Owners | Amount and Nature of Beneficial Ownership(1) | Percent of Class(1) | |||||
---|---|---|---|---|---|---|---|
Named Executive Officers, Directors and Director Nominees | |||||||
Frank H. Laukien(2) | 38,934,445 | 23.4 | % | ||||
William J. Knight(3) | 288,350 | * | |||||
Brian P. Monahan(4) | 112,750 | * | |||||
Dirk D. Laukien(5) | 15,862,972 | 9.6 | % | ||||
Joerg C. Laukien(6) | 18,089,795 | 10.9 | % | ||||
Brenda J. Furlong(7) | 18,940 | * | |||||
William A. Linton(8) | 64,690 | * | |||||
Richard M. Stein(9) | 5,849 | * | |||||
Bernhard Wangler(10) | 50,190 | * | |||||
Richard D. Kniss(11) | 54,116 | * | |||||
Wolf-Dieter Emmerich(12) | 20,940 | * | |||||
Richard A. Packer(13) | 21,940 | * | |||||
Tony W. Keller(14) | 55,320 | * | |||||
Stephen W. Fesik(15) | 14,940 | * | |||||
Charles F. Wagner, Jr.(16). | 2,970 | * | |||||
Chris van Ingen | — | — | |||||
All executive officers and directors as a group (18 persons)(17) | 73,543,457 | 44.3 | % |
Beneficial Owners | Amount and Nature of Beneficial Ownership(1) | Percent of Class(1) | |||||
---|---|---|---|---|---|---|---|
Named Executive Officers, Directors and Director Nominees | |||||||
Frank H. Laukien(2) | 39,343,151 | 23.3 | % | ||||
Charles F. Wagner, Jr.(3) | 129,900 | * | |||||
Mark R. Munch(4) | 110,475 | * | |||||
Thomas W. Bachmann(5) | 30,550 | * | |||||
Juergen Srega(6) | 78,838 | * | |||||
Wolf-Dieter Emmerich(7) | 46,200 | * | |||||
Stephen W. Fesik(8) | 36,900 | * | |||||
Brenda J. Furlong(9) | 44,200 | * | |||||
Chris van Ingen(10) | 16,500 | * | |||||
Marc A. Kastner | — | * | |||||
Richard D. Kniss(11) | 76,076 | * | |||||
Joerg C. Laukien(12) | 18,203,595 | 10.8 | % | ||||
William A. Linton(13) | 86,650 | * | |||||
Gilles J. Martin(14) | 3,300 | * | |||||
Richard A. Packer(15) | 58,900 | * | |||||
All executive officers and directors as a group (17 persons)(16) | 58,309,922 | 34.4 | % |
Beneficial Owners | Amount and Nature of Beneficial Ownership(1) | Percent of Class(1) | Amount and Nature of Beneficial Ownership(1) | Percent of Class(1) | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5% Beneficial Owners(18) | ||||||||||||||
T. Rowe Price Associates, Inc.(19) | 18,286,620 | 11.0 | % | |||||||||||
5% Beneficial Owners | ||||||||||||||
T. Rowe Price Associates, Inc.(17) | 26,104,810 | 15.5 | % | |||||||||||
100 E. Pratt Street | ||||||||||||||
Baltimore, MD 21202 | ||||||||||||||
FMR LLC(18) | 13,057,329 | 7.7 | % | |||||||||||
245 Summer Street | ||||||||||||||
Boston, MA 02210 |
voting power and shared investment power; and 201,702 shares held as custodian for the benefit of a minor child of his, as to which Dr. Laukien has sole voting and investment power. Does not include 6,920 shares held by Dr. Laukien's adult son, 6,920 shares held in trust for his daughter,each of Dr. Laukien's two adult children, or 550551 shares held by his spouse, in each case as to which Dr. Laukien disclaims beneficial ownership.
TheOur executive officers are designated annually by the board of directors. In February 2015, our board of directors designated the persons listed below as the Company's executive officers are:for the fiscal year ending December 31, 2015. Each of these executive officers served as executive officers of the Company throughout the fiscal year ended December 31, 2014.
Name | Age | Position | |||
---|---|---|---|---|---|
Frank H. Laukien, Ph.D. | Chairman, President | ||||
| Executive Vice President and Chief Financial Officer | ||||
Anthony L. Mattacchione | 52 | Senior Vice President, Corporate Finance and Accounting | |||
Michael G. Knell | Vice President of Finance and Chief Accounting Officer | ||||
Thomas W. Bachmann. | 56 | President, Bruker BioSpin Group | |||
Mark R. Munch, Ph.D. | President, Bruker Nano | ||||
| President, Bruker CALID Group and | ||||
|
|
Our executive officers are elected by the board of directors and serve until their successors have been duly elected and qualified. In March 2012, our board of directors designated the persons listed above as the Company's executive officers. Throughout the fiscal year ended December 31, 2011, our executive officers were Dr. Frank Laukien, Mr. William Knight and Mr. Brian Monahan. Our board of directors determined that the Company had no other executive officers in 2011. For biographical information relating to Dr. Laukien, who serves as both an executive officer and a director of the Company, please see "Certain"Certain Information Regarding Directors and Nominees"Nominees" above. Biographical information relating to our current non-director executive officers is presented below.
William J. Knight.Charles F. Wagner, Jr. Mr. KnightWagner has served as the Company's Executive Vice President and Chief Financial Officer since June 2011July 2012. From November 2010 to March 2012, Mr. Wagner was the Executive Vice President of Finance and alsoAdministration and Chief Financial Officer of Progress Software Corporation, a provider of enterprise software located in Bedford, Massachusetts. Mr. Wagner served as InterimVice President and Chief OperatingFinancial Officer of Millipore Corporation, a global provider of products and services in the life science tools market, from June 20112007 until July 2010, when Millipore was acquired by Merck KGaA. Mr. Wagner joined Millipore in 2002 and from 2003 to February 2012.2007 served as Vice President, Strategy and Corporate Development. From February1997 to 2002, he served in various roles at Bain & Company after having served as Manager, Accounting Analysis, at Millipore from 1995 to 1996 and as Manager at Coopers & Lybrand from 1990 to 1995. Mr. Wagner served as a director of the Company and member of the Audit Committee from August 2010 to June 2011,2012. Additionally, from 2010 to March 2013, Mr. KnightWagner served as a director of Bruker Energy & Supercon Technologies, Inc., where he was a member of the Audit Committee. Since April 2014, Mr. Wagner has served as a director and chairman of the Audit Committee of Good Start Genetics, Inc. Mr. Wagner holds a B.S. from Boston College and a M.B.A. from Harvard Business School.
Anthony L. Mattacchione. Mr. Mattacchione joined the Company as Senior Vice President, Corporate Finance and Accounting, in February 2013. Mr. Mattacchione is responsible for the Company's Chief Operating Officer.global finance and accounting functions, including treasury, tax, shared financial services, internal controls and internal audit. Prior to assuming the role of Chief Operating Officer, Mr. Knight served as Chief Financial Officer from October 2004 until February 2010 and as Treasurer from October 2004 to March 2009. Before joining the Company, Mr. KnightMattacchione served as Chief Financial Officer of Anika Therapeutics, Inc.,EMD Millipore Corporation, a providersubsidiary of therapeutic products,Merck KGaA, since July 2010 and as Vice President, Controller and Chief Accounting Officer of Millipore Corporation from 2002 to 2004. He also servedApril 2006 until his appointment as Chief Financial Officer of Zycos,EMD Millipore following the acquisition of Millipore by Merck KGaA. From 1990 to April 2006, Mr. Mattacchione served in various financial roles at Gerber Scientific, Inc., including as Treasurer, Corporate Controller and Chief Accounting Officer. Mr. Mattacchione was a developer of DNA-based therapeutic products,senior auditor at Price Waterhouse LLP from 20001988 to 2002, and as Chief Financial Officer of NMT Medical, Inc., a provider of cardiovascular and neurological medical devices, from 1998 to 2000. 1990.
Mr. KnightMattacchione is a Certified Public Accountant in the State of Connecticut and holds a B.B.A.M.B.A. in Accountingfinance from the University of Wisconsin.Connecticut and a B.S. in accounting from Central Connecticut State University.
Michael G. Knell. Mr. Knell joinedhas served as the Company asCompany's Vice President of Finance and Chief Accounting Officer insince March 2012. In this position, Mr. Knell serves as the Company's principal accounting officer, reporting to the Company's Chief Financial Officer. Prior to joining the Company, Mr. Knell was with Ernst & Young LLP in its Boston office, where since 1998 he served in various roles, including most recently as Partner—AssurancePartner-Assurance Services and as a senior manager of Assurance Services from 2006 until his promotion to partner in July 2011. Mr. Knell's audit experience at Ernst & Young included service for a variety of clients in the retail, consumer products and manufacturing industries. Mr. Knell is a Certified Public Accountant in Massachusetts and holds a Bachelor of Science degree in Business Administration from the State University of New York at Buffalo.
Thomas W. Bachmann. Mr. Bachmann joined the Company as President, Bruker BioSpin Group, in August 2013. In this position Mr. Bachmann is responsible for management of the global operations of our Bruker BioSpin Group, which manufactures and distributes the Company's analytical and preclinical magnetic resonance instrumentation. Prior to joining the Company, Mr. Bachmann most recently served from 2005 to 2012 as Chief Executive Officer of Tecan Group in Switzerland, a leading global provider of complex laboratory instrumentation and integrated liquid-handling workflow solutions for life science research and diagnostics. From 2002 until 2004, he was CEO of the Arbonia-Forster Group's Steel Systems Business, a global provider of building supplies. From 1985 until 2002, Mr. Bachmann served in various roles as global Sales and Marketing Director, Business Unit Director and Senior Vice President of Corporate Development at Rieter Holding, a global provider of textile machinery and plants, as well as an automotive supplier of acoustic and thermal insulation systems. Mr. Bachmann holds a B.S. in Mechanical Engineering and an Executive MBA from IMD Business School in Switzerland. As previously reported in our Current Report on Form 8-K filed with the SEC on February 2, 2015, on January 30, 2015, Mr. Bachmann submitted his resignation, effective as of July 2015, in order to pursue other interests. We expect that Mr. Bachmann will continue to serve as President of the Bruker BioSpin Group until the effective date of his resignation.
Mark R. Munch, Ph.D. Dr. Munch has served since September 2012 as President, Bruker Nano Group (formerly known as the Bruker MAT Group), with responsibility for management of the global operations of our Bruker Nano Group, which manufactures and distributes the Company's advanced analytical X-ray technologies and spark-optical emission spectroscopy, atomic force microscopy and stylus and optical metrology instrumentation used in non-destructive molecular, materials and elemental analysis. Dr. Munch has also served as President of Bruker Nano, Inc., a wholly-owned subsidiary of the Company, since October 2010. Prior to joining Bruker Nano, Inc., from February 2008
to October 2010 Dr. Munch was Executive Vice President of Veeco Instruments Inc. Dr. Munch has also served as a Senior Vice President of Coherent, Inc. from February 2006 to January 2008 and as President and Chief Executive Officer of Cooligy, Inc., a subsidiary of Emerson Electric, from 2004 to 2006. Dr. Munch's background includes over 23 years of experience in marketing, product development, operations and sales, as well as experience in managing significant business units of multi-national corporations. Dr. Munch holds a Bachelor of Science degree in Chemical Engineering from the University of Colorado and a Master of Science degree and Ph.D. in Chemical Engineering from Stanford University.
Burkhard Prause, Ph.D.Juergen Srega. Dr. Prause has servedMr. Srega joined the Company as President, Bruker CALID Group in January 2013. In this position Mr. Srega is responsible for management of the global operations of our Bruker CALID Group, which manufactures and Chief Executive Officer of BEST since April 2008distributes the Company's mass spectrometry and was elected to servechromatography instruments for life science and applied markets, as well as analytical instruments for chemical, biological, radiological, nuclear and explosives detection and research and process instruments based on infrared and Raman molecular spectroscopy technologies. Mr. Srega also serves as a director of BEST in April 2012. He has also served as a
Managing Director of Bruker EASDaltonik GmbH, and Bruker HTS GmbH since January 2005, RI Research Instruments GmbH since December 2008, and Bruker ASC GmbH since March 2009. Prior to that time, Dr. Prause served as Product Manager for Bruker BioSpin MRI GmbH. Before joining Bruker BioSpin MRI GmbH in 2002, Dr. Prause was a senior staff scientist at the Max-Planck Institute in Tubingen, Germany. Dr. Prause currently serves as a director of CCAS (the Coalition for the Commercial Application of Superconductors), and from 2006 to 2010, Dr. Prause served as Vice Chairman of ivSupra, a German superconductor industry coalition. Dr. Prause holds a Ph.D. in Physics from the University of Notre Dame.
Stephan Westermann. Mr. Westermann was named Executive Vice President–Order Execution, Production & Logisticsan indirect wholly-owned subsidiary of the Bruker Scientific Instruments segment and Executive Vice President–Operations of the Bruker BioSpin GroupCompany located in February 2012. SinceGermany. Prior to joining the Company, in September 2006, Mr. Westermann hasSrega served since 1996 in a variety of senior financial and operations management roles at Thermo Fisher Scientific Inc., a global provider of analytical instruments, equipment, reagents and consumables, software and services for research, analysis, discovery and diagnostics headquartered in the Company's Bruker MATWaltham, Massachusetts. At Thermo Fisher Scientific, Mr. Srega led a number of significant operating divisions, including as Vice President and Bruker BioSpin operating divisions.General Manager Biomarkers, BRAHMS GmbH, from 2011 to 2012, Vice President and General Manager Scientific Instruments Division Global Products from 2005 to 2011 and Vice President and General Manager Advanced MS from 1996 to 2004. Prior to joining the Company, he held management positions at Battenfeld Gloucester Engineering Co. in Massachusetts from 2003 to 2006 and1996, Mr. Srega was controller of SMSwith Badenwerk AG, a German manufacturerpower utility company located in Karlsruhe, Germany, from 1988 to 1995 and an employee of metallurgical plant and rolling mill technology solutions,Bruker GmbH from 19951980 to 2003.1988. Mr. WestermannSrega holds a Masters degreeB.A. in BusinessFinance from Nord Akademie in Hamburg, Germany and a B.A. in Engineering from theKarlsruhe University of SiegenApplied Sciences in Karlsruhe, Germany.
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis ("CD&A") describes the principles, objectives, and features of our executive compensation program, which is generally applicable to each of our senior officers. However, this CD&A focuses primarily on the program as applied to our Chief Executive Officer and the other executive officers listed below and included in the Summary Compensation Table, whom we refer to collectively in this proxy statement as the "named executive officers."
Executive Overview
Our executive compensation program is designed to attract, motivate, retain and retainreward the individuals that lead the Company. Our approach to compensation for our executive officers targets a mix of competitive salaries, performance-based cash incentive awards linked to corporate and individual objectives and long-term equity incentive awards. We believe that our compensation policies and practices are effectively designed to motivate and reward performance, and that the mix of compensation elements creates incentives that are closely aligned with increasing shareholder value.value without encouraging excessive or unnecessary risk-taking.
In fiscal year 2011,Our business strategy is to create value for our year-over-yearstockholders based on our ability to innovate and generate revenue grew by over 26% to $1.65 billiongrowth, both organically and gross profit grew by approximately 24% to $752 million from $604 million. Revenue growth was driven both by organic growththrough acquisitions. Achieving improvements in our existing businesses and acquisitions completed in 2010 and 2011. Operating and gross profit margins, decreased, however, becauseoperating margins and cash flow are also critical to our success. In 2014, our revenues declined by approximately 2% to $1.81 billion from $1.84 billion, reflecting a difficult economic environment in certain of our key markets, as well as the impact of changes in foreign exchange rates. Included in 2014 revenues were a decrease of approximately $25.4 million from the impact of foreign exchange due to the strengthening of the mixU.S. Dollar versus the Japanese Yen, Russian Ruble and other currencies, and an increase of products sold and higher operating expenses as we continued to focus on integrating acquisitions completed in 2010 and, to a lesser extent, 2011. As a result, despite the strong revenue growth and increase in gross profits on an absolute basis, our earnings per share on a GAAP basis declined to $0.55 in 2011 from $0.58 in 2010. Excluding charges relatingapproximately $2.9 million attributable to recent acquisitions and divestitures. Adjusted for changes in foreign exchange rates and our recent acquisitions and divestitures, our 2014 revenues decreased by $8.0 million, or 0.4%. Our gross profit declined and our gross profit margin for fiscal 2014 dropped to 42.2% from 43.8% for fiscal 2013. On a non-GAAP basis, excluding the effects of acquisition-related costs and restructuring charges totaling, in the aggregate, $44.4 million and $27.3 million for the year ended December 31, 2014 and 2013, respectively, our gross profit margins declined approximately 60 basis points to 44.7% for fiscal 2014,
compared to 45.3% for fiscal 2013. Our operating income for fiscal 2014 declined to $105.4 million, or 5.8% of revenues, from $148.2 million, or 8.1% of revenues, for fiscal 2013. Adjusted for acquisition-related costs and other non-recurring expenses,charges totaling, in the aggregate, $79.0 million and $57.3 million in 2014 and 2013, respectively, our adjustednon-GAAP operating margin declined by approximately 100 basis points to 10.2% in 2014 from 11.2% in 2013. However, as a result of a combination of improvements in our inventory management programs and the favorable effects of foreign exchange on our operating costs, our working capital ratio improved significantly, with working capital per dollar of revenue of $0.384 in 2014 compared to $0.447 in 2013.
We remained focused in 2014 on various initiatives aimed at reducing our operating costs and improving our operating efficiency. For example, in 2014 we commenced a plan to divest certain assets and implement a restructuring program in the Bruker CALID Group's CAM division as a result of management's conclusion that the CAM business would be unable to achieve acceptable financial performance in the next two years. In the second half of 2014, we completed the sale of certain assets of the CAM division, including the Inductively Coupled Plasma-Mass Spectrometry (ICP-MS) product line and the Gas Chromatography (GC) and GC Single Quadrupole Mass Spectrometry (GC-SQ-MS) sales and manufacturing business. Restructuring and other one-time charges in connection with this plan totaled approximately $24 million in 2014, which was partially offset by a gain we recognized on the sale of the product lines of $8 million. As a result of lower revenues, adverse changes in foreign exchange rates, costs relating to our restructuring initiatives and investments in infrastructure improvements, our GAAP earnings per share increased by $0.09declined to $0.86$0.33 per share in 2011, which was less than2014 from $0.48 per share in 2013 and our 2011 adjusted2014 non-GAAP earnings per share fell to $0.75 from $0.77 for 2013.
Although we significantly exceeded our goal for improvement in our working capital ratio, we did not fully achieve the other financial goals established by the Compensation Committee for 2014. However, our management team made significant progress on a number of $0.93.
strategic initiatives that we believe will benefit the Company and ultimately contribute to positive shareholder value creation. Consequently, consistent with our pay for performance philosophy, the 2014 cash incentive awards approved for our executive officers reflected these mixed results and were below targeted award amounts. Highlighted below are some of the key actions and decisions with respect to our executive compensation programs for fiscal year 2011,2014, as approved by the Compensation Committee:
In June 2011, Mr. Monahan resigned from his position as the Company's Chief Financial Officer and, until April 2012, served as Vice President of Strategic & Financial Planning. Mr. Knight, who was serving as Chief Operating Officer, was appointed interim Chief Financial Officer upon Mr. Monahan's resignation. Mr. Knight's appointment as Chief Financial Officer was made permanent in September 2011 and he continued to serve as Chief Operating Officer until February 2012. There were no changes to Mr. Knight's or Mr. Monahan's compensation arrangements in 2011 as a result of these developments.
2014 Say on Pay Vote
In May 2014, our stockholders cast an advisory vote on the Company's executive compensation decisions and policies as disclosed in the proxy statement for the 2014 Annual Meeting of Stockholders. Over 98% percent of the shares voted on the matter at the 2014 Annual Meeting of Stockholders approved the compensation decisions and policies described in the 2014 proxy statement. The Compensation Committee considered this result in 2014 and determined that it was not necessary to make any material changes to the Company's compensation policies and practices in response to the most recent advisory vote. However, the Compensation Committee regularly reviews the compensation programs of our executive officers to ensure that they achieve our objectives. At the Company's 2011 Annual Meeting of Stockholders, our stockholders voted on a proposal on the frequency of future stockholder advisory votes regarding the compensation of the Company's named executive officers. A frequency of once every three years received the highest number of votes cast, as well as a majority of the votes cast on the proposal. Consistent with these results, our stockholders will next be asked to cast an advisory vote regarding executive officer compensation at the Company's 2017 Annual Meeting of Stockholders.
Executive Compensation Philosophy and Process
Key Considerations in Setting Compensation
Our key objectives in structuring and determining executive compensation are to:
To achieve these objectives, we have embraced a compensation philosophy that seeks to align compensation with our strategic objectives and reward our executive officers for meeting certain performance goals. Executive compensation is based in part on a pay-for-performance philosophy, through annual incentive bonus awards which emphasize both company and individual performance measures that correlate closely with the achievement of our short and long term performance objectives. To motivate our executive officers, we focus on cash compensation in the form of salary and bonus,annual performance incentives, a portion of which is tied to the individual's performance, and we augment this cash compensation annually with equity grants. In structuring executive compensation, the Compensation Committee focuses on our goal of long-term enhancement of stockholder value through grants of equity incentive awards with extended multi-year vesting schedules.
Role of the Compensation Process and MethodologyCommittee
Our executive compensation program is administered by the Compensation Committee of the board of directors. The Compensation Committee oversees the Company's equity incentive plan, including determining overall option and restricted stock option plan,award guidelines and aggregate share usage and dilution levels, determines the chief executive officer'sChief Executive Officer's salary, target and actual bonus, and equity-based compensation, oversees the executive compensation program for our other executive officers, including reviewing and approving the overall values and forms of compensation for the named executive officers listed in the 2011 Summary Compensation Table included in this proxy statement as well as for other officers, reviews general policy matters relating to compensation and employee benefits and makes recommendations concerning these matters to the board of directors.
In May 2011, our stockholders cast an advisory vote on the Company's executive compensation decisions and policies as disclosed in the proxy statement for the 2011 Annual Meeting of Stockholders. Over 99 percent of the shares voted on the matter were cast in support of the compensation decisions and policies as disclosed. The Compensation Committee consideredconducts the annual performance evaluation of our Chief Executive Officer. Generally, the process begins with the Chief Executive Officer completing a self-evaluation, which is submitted to the Compensation Committee for review and discussion. As part of this resultreview, the Chairman of the Compensation Committee may solicit views from other members of our board of directors, after which the Chairman of the Compensation Committee provides feedback to the Chief Executive Officer. The Compensation Committee uses this evaluation along with market data in setting the Chief Executive Officer's compensation.
For executive officers other than our Chief Executive Officer, the Compensation Committee relies primarily on input and determined thatrecommendations from our Chief Executive Officer in the case of our Chief Financial Officer and Group presidents. In the case of our other executive officers who report directly to our Chief Executive Officer, the Compensation Committee relies primarily on the input and recommendations from our Chief Financial Officer. Our Chief Executive Officer and our Global Vice President of Human Resources also may contribute input to the Compensation Committee in connection with its evaluation of executive officers' performance objectives and performance of the executive officers against those objectives to assist it was not necessary at this timein making appropriate decisions regarding salary and incentive awards. The Global Vice President of Human Resources may also provide market analyses and other relevant market intelligence to make any materialthe Compensation Committee as part of its evaluation and deliberations.
Prior to the end of the first quarter of each fiscal year, the Compensation Committee reviews and approves changes to our executive officers' total target cash compensation, including base salary and target incentive compensation. During the Company'sfirst quarter of each fiscal year, the Compensation Committee also reviews recommendations from management on the most recently completed fiscal year short-term incentive compensation policiesprograms relative to anticipated corporate and practices in responseindividual performance. Additionally, during the first quarter of each fiscal year, the Compensation Committee reviews and makes recommendations to the advisory vote.full board of directors regarding any changes to board compensation. The Compensation Committee generally reviews recommendations for long-term equity incentive awards during the second and third quarters of the fiscal year.
The Compensation Committee annually assesses competitive market compensation for our executive officers using a variety of external sources, including cash compensation data derived from an independent source, Salary.com's CompAnalyst Executive,sources for a reference group of publicly-traded companies in the same or similar industries. Although individual pay is driven largely by individual and corporate performance considerations, the Compensation Committee useshas historically used reference group data as a "market check" to help ensure that individual cash compensation levels remain reasonable and competitive. WhileIn September 2013, the companies in the reference group vary in terms of size, with some being significantly larger than us and others being significantly smaller than us, the Compensation Committee believes that a reference group consisting of competitors of various sizes provides useful insight for their consideration of compensation levels, including information about the range and median of competitive salaries and cash bonuses. Our management provides input on companies considered for inclusion in the reference
group, but the Compensation Committee makes the final determination as to the reference group selection. The companies that are included in the reference group are reviewed annually by management and the Compensation Committee and can change from year to year as market conditions warrant.
In establishing and evaluating fiscal 2011 compensation for our executive officers, the Compensation Committee determined that the competitive assessment of reference group data compiled in 2010 continuedCompany retained independent consulting firm Radford Consulting, or Radford, to provide a relevant context for its evaluation of the over-all competitiveness ofsupport in evaluating the Company's executive compensation programs. The Compensation Committee therefore referredlevels and practices, particularly with respect to total direct compensation, internal pay equity, pay for performance alignment, and long-term incentive award levels, and types of equity vehicles and processes, including the 2010 assessment as one sourceimpact of market information in its determinations of executive salary and cash incentive bonus award opportunities for fiscal year 2011.overall shareholder dilution resulting from equity awards.
The reference group considered by the Compensation Committee for its evaluation of the recommended base pay and annual incentive bonus targets of our Chief Executive Officer and Chief Financial Officer included:
The Compensation Committee considered market capitalization and revenue,retains the discretion to approve awards in additionexcess of those calculated to certain qualitative factors, to be appropriate for evaluatinghave been earned under the competitiveness of potential cash compensation, including the target level ofpre-established cash incentive bonuses,plans of our executive officers' compensation relativeofficers in recognition of exceptional individual performance or contributions to the compensation of executives in similar functions at these companies. In general,Company performance. Additionally, the Compensation Committee considered the median compensation levelsmay exercise its discretion not to approve cash incentive plan awards calculated to have been earned under a pre-established cash incentive plan of the companiesan executive officer in the reference groupevent the Compensation Committee determines that such executive officer has violated Company policies or has failed to be appropriate competitive comparisons,meet minimum performance expectations of an executive officer in light of our relative marketthat executive's position. The following, which reflects the data compiled in 2010 for the reference group, compares the Company to the selected reference group for these key metrics and compares the 2011 potential cash compensation, including the target level of cash incentive bonuses, of our Chief Executive Officer, Dr. Laukien, and Chief Financial Officer as of January 1, 2011, Mr. Monahan, to the median cash compensation of comparable executives in the reference group (dollars in billions, except total cash compensation):
| Market Capitalization | Revenue | Total Cash Compensation | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Reference Group, range | $0.1 – $19.5 | $0.0 – $10.1 | ||||||||
Reference Group, median | $1.5 | $0.8 | ||||||||
Chief Executive Officer | $ | 925,056 | ||||||||
Chief Financial Officer | $ | 661,905 | ||||||||
Bruker Corporation | $2.1 | $1.7 | ||||||||
2011 Salary and Target Cash Incentive Bonus: | ||||||||||
Chief Executive Officer | $ | 983,500 | ||||||||
Chief Financial Officer | $ | 410,500 |
A broader group of companies, primarily in the fields of healthcare and biotechnology, was selected in 2010 as a reference group for reviewing potential cash compensation, including the target level of the cash incentive bonus, of the Chief Operating Officer. The Compensation Committee believed that an expanded group was useful because many of the companies in the Chief Executive Officer and Chief Financial Officer reference group did not have chief operating officers. A broader reference group provided the Compensation Committeemay also recoup excess payments made resulting from a financial restatement which results from material non-compliance with additional data to assess the reasonableness and competitiveness of our Chief Operating Officers' salary and target cash incentive bonus compensation.
The reference group considered by the Compensation Committee for its evaluation of the recommended 2011 base pay and annual incentive bonus targets of our Chief Operating Officer as of January 1, 2011, Mr. Knight, included:accepted financial requirements or reporting standards.
In assessing and approving the recommended compensation potential of our Chief Operating Officer, the Compensation Committee considered the compensation levels of chief operating officers within companies in the reference group in light of our relative market position, including the fact that a number of the companies in the reference group were considerably smaller in terms of market capitalization. The following, which reflects the data compiled in 2010 for the reference group, compares the Company to the selected reference group for these key metrics and compares the 2011 potential cash compensation, including the target level of cash incentive bonus, of our Chief Operating Officer to the median cash compensation of comparable executives in the reference group (dollars in billions, except total cash compensation):
| Market Capitalization | Revenue | Total Cash Compensation | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Reference Group, range | $0.0 – $19.5 | $0.0 – $10.1 | ||||||||
Reference Group, median | $0.7 | $0.1 | ||||||||
Chief Operating Officer | $ | 461,641 | ||||||||
Bruker Corporation: | $2.1 | $1.7 | ||||||||
2011 Salary and Target Cash Incentive Bonus: | ||||||||||
Chief Operating Officer | $ | 512,100 |
Role of Management
The Chief Executive Officer, with the assistance of the Chief Financial Officer, is responsible for making recommendations to the Compensation Committee for our company-wideCompany-wide financial performance goals and their respective weightings. He is also responsible for making recommendations to the bonusCompensation Committee for the individual incentive goals and weightings for the Company's other executive officers. The Chief Executive Officer is also responsible for developing and providing a proposal to the Compensation Committee for his own bonuscash incentive plan, including the goals, weightings and target levels. The Compensation Committee reviews the recommendations of the Chief Executive Officer and Chief Financial Officer and determines the final bonusincentive plan structure and goals for each of the executive officers, including threshold performance and target bonusincentive payment levels. After the close of the fiscal year, the Chief Executive Officer, assisted by the Chief Financial Officer, provides the Compensation
Committee with his assessment of the performance of the other executive officers against their respective bonus goals and proposed bonuscash incentive payout. When determining the bonuscash incentive plan payout for theour executive officers, the Compensation Committee, while considering the recommendations of the Chief Executive Officer and Chief Financial Officer, makes the final determination based on its assessment of theeach executive officer's performance relative to thehis or her performance-based goals.
The determinationChief Executive Officer, Chief Financial Officer and Global Vice President of Human Resources participate in Compensation Committee meetings, at the request of the bonus earned is generally made withinCompensation Committee, to provide background information and explanations supporting compensation recommendations, including the first quarter after the endresults of annual performance evaluations our Chief Executive Officer and Chief Financial Officer conduct on our other named executive officers.
Role of Compensation Consultants
In light of the fiscal year, allowing time to assessgrowth in recent years in the achievementsize of the bonus goals. On occasion,Company and its global operations, changes in the competitive landscape as a result of industry consolidation and changes in the Company's own organizational and management structure, the Compensation Committee and management have worked with compensation consultants to, among other things, provide market surveys, observations and recommendations regarding our executive compensation program relative to other similarly situated public companies.
In September 2013, management retained Radford to provide support to management and the Compensation Committee, including the selection of a new peer group of companies and expanded peer group survey data, as well as analysis and advice on the Company's executive compensation structure, program design and market practices. Services provided during fiscal 2013 by Radford under its engagement with the Company included working with the Company to develop a new peer group to be used for compensation assessments, analyzing the Company's executive compensation pay levels and practices, including the Company's share allocation and utilization as compared with selected peer companies, and providing advice with respect to incentive plan design changes. The analyses and recommendations provided by Radford were among the inputs considered in the evaluation of the Company's compensation process, program design and executive compensation determinations for 2014.
Aon and Aon Hewitt, affiliates of Radford, also provided human resources consulting services to the Company in 2013 for which services they received aggregate fees of $118,000 in 2014. For its services as an executive compensation consultant to the Company, Radford received aggregate fees of $52,000 in 2014, and an additional bonuses$64,946 for non-executive compensation consulting and surveys. The Compensation Committee has assessed the independence of Radford and determined that Radford is independent and that no conflicts of interest existed during fiscal 2014 or exist currently. The Compensation Committee has the authority to retain, compensate and terminate any consultants or advisers it deems necessary to assist it in excessthe fulfillment of those calculatedits responsibilities.
Peer Group Review and Market Data
In establishing and evaluating fiscal 2014 compensation for our executive officers, as well as for executive officers hired in 2014, the Compensation Committee utilized survey market data and peer group analysis provided by Radford. The Compensation Committee believes that it is important to have been earned have been awardedconsider compensation practices of companies that are comparable to us in terms of revenue, market capitalization, employees, global reach, and industry. The market data provided by Radford was based on published survey sources, including Radford's Global Technology Survey and Hewitt's Total Compensation Management Database, as well as recent proxy statements of the Company's peer group companies. The Compensation Committee references ranges of the market data provided, including the 25th, 50th, and 75th percentiles, considering all of these sources in determining the appropriate level of compensation for our executive officers.
For fiscal 2014 compensation evaluations, the peer group identified by Radford and referenced by the Compensation Committee was comprised of 17 other companies in recognitionthe scientific tools, instruments, and services industries. The Compensation Committee believes that a peer group consisting of exceptional individualcompetitors of various sizes provides useful insight for their consideration of compensation levels, including information about the range and median of competitive salaries, cash bonuses and long-term incentives. In 2013, at the time Radford compiled data for the peer group companies, the companies in the peer group ranged in size on a revenue basis from approximately $800 million to $3.3 billion with a median of $2 billion as compared to our revenue of $1.8 billion and a median number of employees of 6,200 compared to our 6,400. The peer group considered by the Compensation Committee for its evaluation of 2014 base salary and annual cash incentive targets of our executive officers included:
• AMETEK, Inc. | • KLA-Tencor Corporation | |
• Bio-Rad Laboratories, Inc. | • Mettler-Toledo International Inc. | |
• C.R. Bard, Inc. | • OSI Systems, Inc. | |
• Charles River Laboratories International, Inc. | • Pall Corporation | |
• FEI Company | • PerkinElmer, Inc. | |
• FLIR Systems, Inc. | • Sigma-Aldrich Corporation | |
• Haemonetics Corporation | • Varian Medical Systems, Inc. | |
• Hologic, Inc. | • Waters Corporation | |
• Illumina Inc. |
In general, in light of our relative market position, the Compensation Committee considered the range and median compensation levels of the companies in the peer group to be appropriate competitive comparisons for our executive officers when evaluating and approving 2014 compensation packages.
Executive Compensation Components and 2014 Compensation Determinations
Consistent with our compensation objectives and philosophy, when setting compensation for our named executive officers the Compensation Committee focuses on providing a competitive and complementary mix of components, including base salary, annual incentive compensation and long-term equity incentive awards, designed to work together to reward performance or contributionsand create incentives that encourage behavior consistent with the overall interests of the Company.
In determining compensation packages for our named executive officers, the Compensation Committee seeks to company performance.strike an appropriate balance between fixed and variable compensation and between short-and long-term compensation. We believe that making a significant portion of our named executive officers' compensation variable and long-term supports our pay-for-performance executive compensation philosophy, while also mitigating potential excessive risk-taking behavior.
Components of Executive Compensation
Total direct compensation consists of cash compensation in the form of annual base salary and annual incentive bonus awards, as well as long-term incentive compensation in the form of stock option and restricted stock grants.
Annual Base Salary. Base salaries are determined based on a variety of factors, including each officer's levelslevel of responsibility, experience and potential, performance and a comparison of salaries paid to peers within the Company and to those with similar roles at other similarly situated companies. Base salaries are set at levels that the Compensation Committee believes are reasonably competitive to allow us to attract and retain qualified managers.
executives. Base salaries are reviewed annually and may be adjusted after considering the various factors described above. The Chief Executive Officer makes base salary recommendations to the Compensation Committee for the Company's other executive officers. When setting the base salaries of the executive officers, the Compensation Committee, while considering the recommendations of the Chief Executive Officer, makes the final determination based on the factors listed above and the executive officer's performance during the previous year. The Compensation Committee also evaluates the performance of and sets the salary for the Chief Executive Officer.
Annual Cash Incentive Awards. Annual incentive awards in the form of performance-based cash incentive bonuses for the Chief Executive Officer and our other executive officers are based upon management's success in meeting our financial and strategic goals. Typically, specificSpecific criteria for these bonuses have been determinedawards are based on a combination of quantitative financial and qualitative and quantitativeindividual measures established each year by the Compensation Committee after consultation with management. The specific individual goals vary for each executive officer based on their responsibilities and role within our companyCompany and may include financial or strategic measures, including, among others, revenue growth, gross profit and operating profit margin improvement, working capital ratio improvements, achieving return on invested capital goals, meeting earnings per share targets, identifying and developing new product and market opportunities and furthering or achieving other strategic initiatives. The individual goals are intended to reward performance which results in our Company meeting or exceeding its financial or operational goals.
The Compensation Committee also considers the mix of performance goals in order to balance the incentives created to mitigate risks that may be associated with a particular performance goal. In 2011,2014, for example, the executive officers'cash incentive plans established for our corporate level officers, including our Chief Executive Officer and Chief Financial Officer, consisted of a revenue target goal was combined with grosstargets for non-GAAP operating profit margin improvement, operating margin improvement, working capital and non-GAAP earnings per share, such that the combination of goals that emphasized cost reductionprofit and cash flow improvements as well as top-line performance. Cashrevenue growth performance based on the business plan approved by our board of directors. For our Group presidents, the financial metrics included revenue growth, operating and gross profit, improvements in working capital, and linkage to the overall Bruker profit results to ensure alignment and teamwork across the leadership team. Through a mix of quantitative financial metrics and qualitative individual goals, cash incentive bonus awards reflect both the individual's performancecontributions compared withto his or her specific performance goals for the year and the overall performance of our company.Company or the particular operations under the executive officer's leadership.
Long-Term Incentives.Incentive Awards. Equity incentive compensation in the form of stock options and restricted stock is designed to provide long-term incentives to executive officers and other employees, to
encourage the executive officers and other employees to remain with us and to enable recipients to develop and maintain a long-term stock ownership position in theour common stock, which in turn motivates the recipient to focus on creating long-term enhancement into stockholder value. The Company's 2010 Incentive Compensation Plan is the vehicle used for grants of stock options and restricted stock to our executive officers and other employees. Company management evaluates the efficacy of our long-term incentive compensation on an ongoing basis, and may from time to time provideprovides input and recommendations to the Compensation Committee with regard to the optimal form and extent of equity incentives to be granted to employees, including the executive officers.
While generally granted on an annual basis, all optionsStock option and restricted stock grants are discretionary and may be granted by the Compensation Committee at any time. Our company hasHistorically, we have not adopted performance-vesting,awarded equity incentive compensation with performance-based vesting, meaning that individual vesting is not based upon the achievement of
any specific goals or objectives. However, increases in stock price provide the only value available to executives from stock options, and increases in shareholder value deliver higher values in restricted stock. The Compensation Committee does, however, consider thealso considers individual and Company'sCompany performance in determining the value of total and individual equity awards. The Compensation Committee has determined that equity compensation awards to executives and all other employees should be based upon the economic value of the grant award and should be considered part of the overall compensation package in determining award levels. In making specific grants to executives, the Compensation Committee evaluates each executive officer's total equity compensation package. The Compensation Committee also generally reviews the option and restricted stock holdings of each of the executive officers as well, including vesting and exercise price and the then current value of such options or restricted stock.stock, in addition to the impact of those values under various stock price scenarios. We consider long-term equity compensation to be an integral part of a competitive executive compensation package as both a way to reinforce the individual's commitment to the Company and an important mechanism to align the interests of management with those of our stockholders. Annual grants are generally made in the first or second quarter of each year. In 2011, the Compensation Committee awarded stock options to the named executive officers during the third quarter.
Mix of Compensation
In accordance with our pay-for-performance philosophy, variable compensation in the form of short-term cash incentive compensation and long-term equity incentive awards are intended to be a significant portion of overall compensation, with this at-risk component increasing as a percentage of overall compensation potential as the individual officer's responsibility increases. For example, almost 80% of the Chief Executive Officer's total compensation is variable or "at risk." Similarly, over two-thirds of the other NEO total compensation is comprised of variable pay.
Specifically, in 2011 over 50%2014 approximately 57% of our Chief Executive Officer's total potential cash compensation and approximately 30% of each of our other named executive officers' total potential cash compensation, was at risk through his short-term cash incentive programs.program. Additionally, recognizing the importance of providing further incentives directly linked to the performance of our common stock and aligned with shareholder interests, in 2014 the Compensation Committee approved market competitive long-term incentive awards to our executive officers, including awards to Dr. Laukien, our Chief Executive Officer, and Mr. Wagner, our Chief Financial Officer, of stock options and restricted stock grants valued at the time of the respective awards at over 250% and 210% of base salary, respectively, subject in each case to time-based vesting and continued employment. Equity awards for the other named executive officers ranged from 107% to 155% of base salary, signifying strong alignment with shareholder interests. Equity compensation comprised approximately half of both the Chief Executive and Chief Financial Officers total direct compensation, which includes base salary, annual bonus and long-term incentives. Long-term incentives as a percent of total direct compensation for the other named executive officers ranged from 41% to 52%.
The following charts and table illustrate the mix of base salary, short-term cash incentive bonus and long-term incentive awards provided in the compensation packages of our Chief Executive Officer ("CEO"), and our named executive officers other than our Chief Executive Officer ("Other NEOs").
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| CEO Pay Mix | Other NEO Average Pay Mix | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Element | Value | % of Total Direct Compensation | Value(1) | % of Total Direct Compensation | ||||||||
Base Salary | $ | 600,000 | 21% | $ | 419,061 | 32 | % | |||||
Bonus | $ | 800,000 | 28% | $ | 287,934 | 20 | % | |||||
Long Term Incentives | $ | 1,471,741 | 51% | $ | 681,477 | 48 | % | |||||
Total Direct Compensation | $ | 2,871,741 | 100% | $ | 1,388,472 | 100 | % |
Fiscal 20112014 Base Salaries
BaseAnnual base salaries of our executive officers are reviewed annuallyapproved by the Compensation Committee for each of our named executive officers for 2014 were as follows:
| 2014 Base Salary | 2013 Base Salary | % Change | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Dr. Frank Laukien | $ | 600,000 | $ | 550,000 | 9.1 | % | ||||
Mr. Wagner | $ | 510,000 | $ | 491,000 | 3.9 | % | ||||
Mr. Srega | $ | 372,260 | (1) | $ | 371,896 | (2) | (3) | |||
Dr. Munch | $ | 400,000 | $ | 380,000 | 5.3 | % | ||||
Mr. Bachmann | $ | 393,984 | (4) | $ | 388,404 | (5) | (3) |
For fiscal 2011,2014, the Compensation Committee approved a 2%9.1% salary increase for each ofDr. Laukien, our Chief Executive Officer. The Compensation Committee considered this adjustment appropriate based on the named executive officers. As a result,updated peer group data reviewed by the Compensation Committee, as Dr. Laukien's base salary and total compensation potential was, increasedand after the increase continued to $433,500 from $425,000,be, significantly below the market median for chief executive officers of the Company's compensation peer group.
Based on Mr. Knight'sWagner's positive performance evaluation and comparison to market data, the Compensation Committee determined that his base salary wasfor fiscal 2014 should be increased by 3.9%.
The Compensation Committee determined that, based on Dr. Munch's performance evaluation and the comparison to $362,100 from $355,000 and Mr. Monahan'scompensation paid to executives in comparable positions according to market data reviewed by the Compensation Committee, Dr. Munch's base salary wasfor fiscal 2014 should be increased to $280,500 from $275,000.by 5.3%. Base salaries for Messrs. Srega and Bachmann reflect the Compensation Committee's assessment of competitive market levels and internal pay equity. As Messrs. Srega and Bachmann joined the Company in late 2012 and 2013, respectively, they did not receive base salary increases in 2014.
Cash Incentive Plans and Review of Fiscal 20112014 Performance
FollowingAnnual cash incentive compensation supports the Compensation Committee's pay-for-performance philosophy and aligns individual goals with Company goals. Under the annual incentive plans, executive officers are eligible for cash awards based on a review in 2009combination of the Company's cash incentive planattainment of pre-established financial performance metrics and structure,achievement of individual qualitative goals. Consistent with its past practice, the Compensation Committee revisedstructured our executive officers' 2014 cash incentive plans as follows:
The Compensation Committee sets the performance metrics as well as the performance thresholds and targets for each metric after consultation with management. The two primary classifications of
performance goals utilized in the annual incentive plans are quantitative financial goals and individual qualitative performance goals. UnderEach performance metric represents part of the methodology adopted bytotal incentive award calculation, with the Compensation Committeequantitative financial goals accounting for, years beginning with 2010,in the paymentaggregate, 70% of the target award potential and the individual qualitative performance goals accounting for, in the aggregate, 30% of the total incentive award potential. Payments for cash incentive bonuses linked to the achievement of pre-established quantitative performance goals will beare calculated based on percentage achievement of the quantitative target goal,
withgoal. While there is no threshold or maximum. In cases where anmaximum payout for any individual quantitative financial goal, improvement metric is less than 1%, the payout for achievement of that goal will be 100% uptotal incentive award payouts, after combining both financial and qualitative portions, are subject to a full 1.0% improvement, and pro-rata for achievement in excessmaximum amount of 1.0%. If the less than 1% goal is not achieved, then for each 0.1% shortfall the payment will be reduced by 10%. For example, for a goal of 0.5% improvement in operating margin, achievement of a 0.8% improvement would result in a 100% payment200% of the target with respect to that goal, achievement of a 1.1% improvement would result in a 110% payment of the target with respect to that goal and achievement of a 0.4% improvement would result in a 90% payment of the target with respect to that goal.individual's incentive award target.
Payments for individual qualitative goals will beare made in a range of 50%0% to 100%125%, with 50% of the target amount payable if the Compensation Committee determines that a qualitative goal was partially achieved, 75% of the target amount payable if the Compensation Committee determines that a qualitative goal was substantiallymostly achieved, and 100% of the target amount payable if the Compensation Committee determines that a qualitative goal was fully achieved. For example, if an executive officer achieves 30%substantially or completely achieved and, with respect to up to 15% of a quantitative performance goal then the 2010 cash incentive bonus will include an amount equal to 30%goals, 125% of the target amount allocated to that goal. Ifpayable if the Compensation Committee determines that the executive officer has made substantial progress toward achievingperformance exceeded a qualitative performance goal, the cash incentive bonus payment will include an amount equal to 75% of the target amount allocated to that goal. In order to provide additional motivation to the executive officers, and to reward outstanding corporate performance, the Compensation Committee has not set a maximum amount that can be earned in the event that the executive officers exceed their quantitative goals in the performance-based incentive plans. Bonus awards linked to individual
Individual qualitative goals however, are generally set as stretch but attainable goals, with over-achievement of goals anticipated to occur in very limited circumstances, such that only up to 15% of such goals may be limited to 100%awarded with payout of 125% for outstanding performance. Additionally, the target bonus amount allocated to each of those goals. The Compensation Committee may, in theirits discretion, award cash incentive bonuses above the target level in the event it determines that an executive officer has delivered exceptional performance. Effective in 2014, the cash incentive compensation plans of our executive officers all operate under a common set of performance metrics and calculation methodologies, with goals adjusted at the Corporate or Group level to reflect individual areas of responsibility. Moreover, each Group president also has a portion of his financial quantitative goals tied to the overall profitability of the Company, creating additional alignment, unity of purpose, and teamwork across the Company.
20112014 Cash Incentive Plans
Setting Incentive Target Levels. The Company believesCompensation Committee establishes cash incentive plans for our executive officers, including each of our named executive officers, which are designed to provide meaningful performance incentives, relative to both fixed cash compensation in the form of salary and overall potential cash compensation, consistent with the Company's strategic goals and objectives and each individual executive officer's responsibilities. The following table summarizes the 2014 cash incentive target levels approved for each of our named executive officers and the relationship of performance-based cash compensation at target levels to base salary and total potential cash compensation.
| Target Level | % of Base Salary at Target Achievement | % of Total Potential Cash Compensation at Target Achievement | ||||
---|---|---|---|---|---|---|---|
Dr. Frank Laukien | $ | 800,000 | 133% | 57% | |||
Mr. Wagner | $ | 510,000 | 100% | 50% | |||
Mr. Srega(1) | $ | 204,743 | 55% | 35% | |||
Dr. Munch | $ | 240,000 | 60% | 38% | |||
Mr. Bachmann(2) | $ | 196,992 | 50% | 33% |
When setting individual target incentive levels for fiscal 2014, the Compensation Committee reviewed, for each named executive officer, individual target awards applicable in fiscal 2013, the total cash compensation established for fiscal 2013 and the projected cash compensation for fiscal 2014, considering how the total cash compensation of each named executive officer compared to peer group and related market data, and the responsibilities of each named executive officer. Additionally, the Committee considered long-term incentive target levels, to take into account a total direct compensation view, so that revenue growth and enhanced operating efficiency are critical to our success and will be key drivers of delivering value to our shareholders. Theno one element was determined in isolation, but rather the entire total compensation picture was considered. Based upon this review, as well as the increase in Dr. Laukien's 2014 base salary, the Compensation Committee determined that the quantitativehis cash incentive targets set forth below, effective for 2011, provided balanced incentivestarget should be adjusted to provide both a meaningful increase in his total cash compensation potential and served asto maintain an appropriate mix of short-term fixed and variable compensation. As a result, Dr. Laukien's cash incentive target was raised to $800,000 from $700,000, or to 133% of base salary from 127% of base salary, which represented a modest increase in Dr. Laukien's relative amount of "at risk" potential cash compensation. The Compensation Committee also determined that a greater amount of Mr. Srega's potential cash compensation should be tied to performance incentives in light of his current responsibilities and increased his cash incentive target to $204,743 from $185,948, or from 50% of base salary to 55% of base salary. Additionally, in light of its review of peer group data and the overall compensation of each other named executive officer, the Compensation Committee determined to maintain Mr. Wagner's cash incentive target at 100% of base salary for 2014. Given that Mr. Bachmann was new to the Company in August 2013, his compensation remained unchanged for fiscal 2014.
Setting Performance Goals and Thresholds. The Compensation Committee establishes specific Corporate level quantitative financial performance goals for our executive officers with corporate responsibilities, including named executive officers Dr. Laukien and Mr. Wagner, and Group level quantitative performance goals for our executive officers with Group level management responsibilities, including Mr. Srega, Mr. Bachmann and Dr. Munch, based on key Corporate, Group or divisional business plan goals for the fiscal year. In addition to goals tied to Group level financial performance, each of our Group Presidents has a portion of his incentive award potential linked directly to our profitability at the Corporate level, creating additional alignment with the overall strategic objectives of the Company. Quantitative performance goals generally reflect targeted growth over the results achieved in the prior year for the relevant metric, with a threshold level of current year performance required for any cash incentive payout that is typically equal to the prior year performance. However, in the case of business plan goals for which only modest or no growth is forecast, performance thresholds may be set at 95% of the business plan goal, which may result in a performance threshold
that is less than the results achieved in the prior year. For example, because our 2014 business plan included goals of less than 5% currency-adjusted revenue growth at the Corporate and Bruker CALID and Bruker Nano Group levels, the performance thresholds for Dr. Laukien's, Mr. Wagner's, Mr. Srega's and Dr. Munch's quantitative targets fortied to revenue growth at the Corporate or Group level, as applicable, was set at 95% of the relevant business plan goal. As a result, the threshold level of 2014 revenue needed to earn any portion of their goals linked to revenue growth, on a currency-adjusted basis, was slightly below 2013 results.
For purposes of measuring our executive officers' performance relative to their respective cash incentive plan financial objectives, it is our practice to exclude from our financial results the impact of significant one-time or extraordinary events, such as acquisitions or divestitures. Consistent with that practice and because during 2014 we decided to restructure the CAM division and exit or divest businesses relating to two of that division's three main product lines, the Compensation Committee determined that it was appropriate to exclude the financial results of the CAM division from our overall corporate financial results for 2013 and 2014 for purposes of determining 2014 cash incentive payouts linked to Corporate level quantitative financial goals established for our executive officers. However, CAM division financial results were considered for purposes of determining Mr. Srega's Group level incentive award payout because, as President of the Bruker CALID Group, he was responsible for the performance of the CAM division and also received in November 2014 a special cash incentive award in connection with his contributions to achieving the Company's strategic goals. Quantitative factors provided 70%asset sales completed as part of total cash incentive compensation potential, with the remaining 30% allocated to individual qualitative factorsCAM division restructuring.
The following tables provide a summary of the specific Corporate level financial goals and performance thresholds established by the Compensation Committee annuallyfor our executive officers' 2014 cash incentive plans, as well as the adjustments that were considered by the Compensation Committee for purposes of determining incentive award payouts for our executive officers' 2014 performance relative to these goals. Due to the volatility of changes in foreign exchange rates during 2014, the Revenue Goal table also shows the difference between the Company's reported results and those same results translated using the foreign exchange rates approved as part of the Company's business plan in January 2014.
Revenue Goal
($ millions)
| 2013 | 2014 | |||||
---|---|---|---|---|---|---|---|
Reported Revenues | 1,839.4 | 1,808.9 | |||||
Reported Revenues at Business Plan 2014 Foreign Exchange Rates | 1,842.4 | ||||||
CAM Division Revenues at Business Plan Foreign Exchange Rates | (102.1 | ) | (81.2 | ) | |||
Adjusted revenues excluding CAM Division | 1,737.3 | 1,761.2 | |||||
2014 Business Plan Goal Excluding CAM Division | 1,799.5 | ||||||
2014 Performance Threshold Excluding CAM Division | 1,709.5 |
Non-GAAP Operating Profit Goal
($ millions)
| 2013 | 2014 | |||||
---|---|---|---|---|---|---|---|
Reported Non-GAAP Operating Profit | 205.5 | 184.4 | |||||
CAM Division Non-GAAP Operating Loss | (23.6 | ) | (26.6 | ) | |||
Non-GAAP Operating Profit Excluding CAM Division | 229.1 | 211.0 | |||||
2014 Business Plan Goal Excluding CAM Division | 256.1 | ||||||
2014 Performance Threshold Excluding CAM Division | 229.1 |
Non-GAAP EPS Goal
($ millions)
| 2013 | 2014 | |||||
---|---|---|---|---|---|---|---|
Reported Non-GAAP EPS | 0.77 | 0.75 | |||||
CAM Division EPS Impact | (0.14 | ) | (0.16 | ) | |||
Non-GAAP EPS Excluding CAM Division | 0.91 | 0.91 | |||||
2014 Business Plan Goal Excluding CAM Division | 0.97 | ||||||
2014 Performance Threshold Excluding CAM Division | 0.91 |
Working Capital Per Dollar of Revenue Goal
($ millions)
| 2013 | 2014 | |||||
---|---|---|---|---|---|---|---|
Reported Working Capital Per Dollar of Revenue | 0.447 | 0.384 | |||||
Adjusted, Excluding CAM Division | 0.440 | 0.384 | |||||
2014 Business Plan Goal Excluding CAM Division | 0.415 | ||||||
2014 Performance Threshold Excluding CAM Division | 0.440 |
2014 Cash Incentive Award Determinations
2014 Corporate Level Performance Goals
Dr. Frank Laukien
Mr. Wagner
Quantitative Performance Goals
(70% of Target Bonus Potential)
2014 Corporate Level Performance Goals(1) | Weighting | Performance Threshold | 2014 Performance(2) | % of Incentive Goal Achieved | % of Total Incentive Target Earned | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
• $90.0 million Currency-Adjusted Revenue Growth | 15 | % | 95%(3) | $51.7 million Currency-Adjusted Revenue Growth | 57.4% | 8.6% | |||||
• $27.0 million Non-GAAP Operating Profit Improvement (adjusted for acquisition and restructuring charges) | 20 | % | 100%(4) | $18.3 million decrease in | 0.0% | 0.0% | |||||
• $0.06 Increase in Non-GAAP Earnings Per Share (adjusted for acquisition and restructuring charges) | 15 | % | 100%(4) | $0.00 increase in Non- | 0.0% | 0.0% | |||||
• $0.03 Reduction in Working Capital Ratio (adjusted for acquisition and restructuring charges) | 20 | % | 100%(4) | $0.056 Reduction | 224.0% | 44.8% | |||||
Total | 70 | % | 76.3% | 53.4% |
For 2014, the Compensation Committee established quantitative financial performance targets that represented 70% of each named executive officer's total incentive award target. The Corporate level goals for these executive officers emphasized key elements of our strategy for providing value to our stockholders, with management. Specific 2011a mix of goals that focus on generating revenue growth, improving efficiency and profitability, and working capital reduction. As summarized in the table above, Dr. Laukien and
Mr. Wagner partially achieved the currency-adjusted revenue growth goal and significantly exceeded the working capital ratio improvement goal of the Company's 2014 business plan, which together accounted for 50% of the potential incentive award payment for Corporate level quantitative goals, but did not meet or exceed the threshold performance level for targeted non-GAAP operating profit or non-GAAP earnings per share improvements, resulting in no award earned for such goals. As a result of the challenges to the Company's financial performance in 2014 and consistent with our pay-for-performance philosophy, the cash incentives earned by Dr. Laukien and Mr. Wagner for the quantitative financial performance portion of their 2014 cash incentive plans was equal to approximately 76% of their cash incentive targets linked to quantitative goals, or approximately 53% of their respective total cash incentive targets.
In addition to the quantitative financial performance goals, the Compensation Committee established specific individual qualitative performance goals for our executive officers with respect to organizational, strategic and other predominantly, although not exclusively, non-financial focuses of corporate or individual development. The individual qualitative goals and weightings established by the Compensation Committee to measure and reward our named executive officers' performance in 2014, as well as the performance achieved relative to these qualitative goals and resulting payout percentages, are described below.
Individual Qualitative Performance Goals
(30% of the named executive officers were as follows:Target Bonus Potential)
2011 Cash Incentive Targets | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|
| Target Level | % of Base Salary at Target Achievement | % of Total Potential Cash Compensation at Target Achievement | |||||||
Frank H. Laukien | $ | 550,000 | 127 | % | 56 | % | ||||
William J. Knight | $ | 150,000 | 41 | % | 29 | % | ||||
Brian P. Monahan | $ | 130,000 | 46 | % | 32 | % |
Named Executive Officer | 2014 Individual Qualitative Goals | Weighting | 2014 Performance | % of Total Incentive Target Earned | ||||
---|---|---|---|---|---|---|---|---|
Dr. Frank Laukien | • Organizational development initiatives | 5% | Mostly achieved | 3.75% | ||||
• Operational Excellence initiatives | 10% | Mostly achieved | 7.50% | |||||
• New product innovation | 5% | Mostly achieved | 3.75% | |||||
• Fix low-profit divisions | 7.5% | Mostly achieved | 5.63% | |||||
• Capital deployment | 2.5% | Partially achieved | 1.25% | |||||
Total | 30% | 21.88% | ||||||
Mr. Wagner | • Accounting and reporting practices | 7.5% | Fully achieved | 7.50% | ||||
• Corporate functions initiatives | 7.5% | Fully achieved | 7.50% | |||||
• Business effectiveness initiatives | 7.5% | Fully achieved | 7.50% | |||||
• Development of HR organization and practices | 7.5% | Fully achieved | 7.50% | |||||
Total | 30% | 30.00% |
Based upon its consideration of reference group bonus information and other market reference sources, theThe Compensation Committee determined thatconsidered each of the 2010 target bonus levels established forcorporate level executive officers' achievements in meeting their individual qualitative goals and the substantial progress made during 2014 with respect to a variety of strategic, organizational and infrastructure initiatives implemented under their leadership. Dr. Laukien was rewarded for mostly achieving goals linked to management development, as well as the Company's outsourcing and Mr. Knight continuedrestructuring initiatives, new product innovation and divisional performance, in addition to be within a reasonable and competitive range relativepartially achieving goals linked to their responsibilities. As a result, the target bonus levels of these executive officers were not changed for 2011. Mr. Monahan's bonus target for 2011 was set at $130,000, a 4% increase over his 2010 bonus target of $125,000, basedcapital deployment. Based on the Compensation Committee's assessment that Mr. Wagner fully achieved his qualitative goals, including those relating to consolidation and shared services, as well as tax and audit developments, global IT projects, and human resources programs, Mr. Wagner earned 100% of competitive market levels.his potential incentive payments allocated to individual qualitative goals. Awards earned by the executive officers for these individual qualitative performance goals, totaling 73% of potential for Dr. Laukien and 100% of potential for Mr. Wagner, reflect the strength of their individual performance against these objectives during 2014.
2014 Bruker CALID Group Performance Goals
2011 Mr. Srega
Quantitative Goals:Performance Goals
(70% of Target Bonus Potential)
2014 Bruker CALID Group (CALID) Performance Goals(1) | Weighting | Performance Threshold | 2014 Performance(2) | % of Incentive Goal Achieved | % of Total Incentive Target Earned | |||||
---|---|---|---|---|---|---|---|---|---|---|
• $30.1 million CALID Currency-Adjusted Revenue Growth | 15% | 95%(3) | Currency-Adjusted Revenue $19.3 million below Threshold | 0.0% | 0.0% | |||||
• $19.4 Million CALID Non-GAAP Adjusted Gross Profit Improvement (adjusted for acquisition and restructuring charges) | 15% | 100%(4) | $9.2 million decrease in Adjusted Gross Profit | 0.0% | 0.0% | |||||
• $17.3 Million CALID Non-GAAP Adjusted Operating Profit Improvement (adjusted for acquisition and restructuring charges) | 15% | 100%(4) | $6.2 million decrease in Adjusted Operating Profit | 0.0% | 0.0% | |||||
• $0.03 Reduction in CALID Working Capital Ratio (adjusted for acquisition and restructuring charges) | 15% | 100%(4) | $0.066 Reduction | 227.6% | 16.7% | |||||
• $27.0 million Corporate Non-GAAP Operating Profit Improvement (adjusted for acquisition and restructuring charges)(5) | 10% | 100%(4) | $18.3 million decrease in Operating Profit(5) | 0.0% | 0.0% | |||||
Total | 70% | 48.7% | 34.1% |
As President of the Bruker CALID Group, Mr. Srega's incentive plan included quantitative financial performance goals directly relating to his leadership of the Bruker CALID Group. As summarized in the table above, our Bruker CALID Group significantly exceeded the quantitative financial performance goal relating to working capital management, but did not achieve any of the other performance thresholds or Group financial goals for 2014. As a result, the cash incentive award payout earned by Mr. Srega for the quantitative financial performance portion of his 2014 cash incentive plan opportunity was equal to approximately 49% of his cash incentive target linked to quantitative goals, or approximately 34% of his total cash incentive target.
Individual Qualitative Performance Goals
(30% of Target Bonus Potential)
2011 Company Performance Goals | Weighting | 2011 Performance | % of Target Bonus Potential Awarded | |||||||
---|---|---|---|---|---|---|---|---|---|---|
• $261.0 Million Currency-Adjusted Revenue Growth Target | 20 | % | $ | 327.3 | 125 | % | ||||
• 0.4% BSI Segment Adjusted Gross Margin Improvement | 10 | % | (0.4 | )% | 0 | % | ||||
• 0.9% BSI Segment Adjusted Operating Margin Improvement | 10 | % | (2.2 | )% | 0 | % | ||||
• $0.16 Increase in Earnings Per Share, excluding acquisition charges | 10 | % | $ | 0.09 | 56 | % | ||||
• $0.03 Reduction in BSI Segment Working Capital Ratio | 20 | % | $ | 0.02 | 67 | % | ||||
Total | 70 | % | 63 | % |
Named Executive Officer | 2014 Individual Qualitative Goals | Weighting | 2014 Performance | % of Total Incentive Target Earned | ||||
---|---|---|---|---|---|---|---|---|
Mr. Srega | • CAM division restructuring | 10% | Special bonus awarded | N/A | ||||
• LSC organizational development initiatives | 10% | Partially achieved | 5.0% | |||||
• Operational Excellence initiatives | 5% | Achieved | 5.0% | |||||
• Bruker Detection division organizational development initiatives | 5% | Partially achieved | 2.5% | |||||
Total | 30% | 12.5% |
Based on our financial results for 2011, the Company exceeded its revenue goal by 25%, but did not fully meet or exceed any of the remaining four quantitativeThe Compensation Committee considered Mr. Srega's performance with respect to his individual qualitative goals including theand determined that Mr. Srega achieved his goals relating to gross profit margin improvement, operating margin improvement, earnings per shareOperational Excellence initiatives and working capital improvement. As shownpartially achieved his goals relating to organizational development initiatives in the tableBruker CALID Group's Life Sciences and Clinical (LSC) division and the Bruker Detection division. As a result, Mr. Srega earned an incentive award payout equal to 42% of the portion of his cash incentive target attributable to individual qualitative goals. In addition, in 2014 the Compensation Committee approved one-time cash incentive awards to Mr. Srega in the aggregate amount of $344,933. The Company recommended the awards to Mr. Srega pursuant to special incentive plans established by the Company to recognize the contributions of certain management and Bruker CALID Group operations personnel to the successful closing of the divestitures of certain assets of the CAM division's ICP-MS and GC/GC-SQ-MS businesses. Amounts payable to Mr. Srega under these special incentive plans were based on the amount of proceeds from the respective asset sale and management's assessment of his significant individual contributions to the transaction. These one-time cash incentive awards to Mr. Srega approved by the Compensation Committee in November 2014 consisted of an award in the amount of $245,969 relating to the ICP-MS product line divestiture and an award in the amount of $98,964 relating to the divestiture of the GC/GC-SQ-MS sales and manufacturing business.
2014 Bruker Nano Group Performance Goals
Dr. Munch
Quantitative Performance Goals
(70% of Target Bonus Potential)
2014 Bruker Nano Group (NANO) Performance Goals(1) | Weighting | Performance Threshold | 2014 Performance(2) | % of Incentive Goal Achieved | % of Incentive Target Earned | |||||
---|---|---|---|---|---|---|---|---|---|---|
• $26.2 million NANO Currency-Adjusted Revenue Growth | 15% | 95%(3) | $4.7 million Currency-Adjusted Revenue Growth | 17.8% | 2.7% | |||||
• $22.4 million NANO non-GAAP Adjusted Gross Profit Improvement (adjusted for acquisition and restructuring charges) | 15% | 100%(4) | $7.7 million decrease in Adjusted Gross Profit | 0.0% | 0.0% | |||||
• $23.1 million NANO Adjusted Operating Profit Improvement (adjusted for acquisition and restructuring charges) | 15% | 100%(4) | $6.1 million decrease in Adjusted Operating Profit | 0.0% | 0.0% | |||||
• $0.081 Reduction in NANO Working Capital Ratio (adjusted for acquisition and restructuring charges) | 15% | 100%(4) | $0.028 decrease in Working Capital Ratio | 34.6% | 5.2% | |||||
• $27 million Corporate Non-GAAP Operating Profit Improvement (adjusted for acquisition and restructuring charges)(5) | 10% | 100%(4) | $18.3 million decrease in Corporate Operating Profit(5) | 0.0% | 0.0% | |||||
Total | 70% | 11.3% | 7.9% |
As President of the targeted improvement in the Company's earnings per share and 67%Bruker Nano Group, Dr. Munch's incentive plan included quantitative financial performance goals relating to his leadership of the targeted improvement inBruker Nano Group. Dr. Munch partially achieved his goals with respect to the Company'scurrency-adjusted revenue growth and the working capital ratio, which accounted for 10% and 20%, respectively, of each executive officer's cash incentive bonus potential. However, as a result of increased operating costs and a shift in the mix of products sold toward lower margin products, the Companybut did not achieve the performance thresholds or any portion of the goals relating to gross margin and operating margin improvement, which together represented 20% of each executive officer'sBruker Nano Group profitability. Accordingly, the cash incentive bonus potential. The Compensation Committee considered these results and determined thataward payout earned by Dr. Munch for the quantitative financial performance portion of bonus targets linked to the quantitative goals would be included in bonus awards at levels commensurate to our performance relative to each of those goals. Accordingly, the Compensation Committee approved awards totaling 63% ofhis 2014 cash incentive targetsplan opportunity was equal to
approximately 11% of his cash incentive target linked to quantitative goals, to eachor approximately 8% of Dr. Laukien, Mr. Knight and Mr. Monahan for relative achievement of the combined Company-wide quantitative financial performance goals in 2011. Totalhis total cash incentive bonus payments to our executive officers for 2011 also included amounts awarded for achievement of the following individual qualitative goals.target.
2011 Individual Qualitative Goals:Performance Goals
(30% of Target Bonus Potential)
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Named Executive Officer | 2014 Individual Qualitative Goals | Weighting | 2014 Performance | % of Total Incentive Target Earned | ||||
---|---|---|---|---|---|---|---|---|
Dr. Munch | • Marketing and sales initiatives | 5% | Achieved | 5.0% | ||||
• AXS product development programs | 10% | Mostly achieved | 7.5% | |||||
• Product development programs | 10% | Mostly achieved | 7.5% | |||||
• Organizational development initiatives | 5% | Achieved | 5.0% | |||||
Total | 30% | 25.0% |
In determining the amount of each named executive officer's total bonus award for 2011, the Compensation Committee also evaluated the officer's performance against his individual qualitative goals.
The Compensation Committee considered Dr. Laukien's achievements in meeting his organizational development goals related to the streamlining the structure of certain divisional management functions and the development of certain key senior managers and determined that, as the goals had been substantially achieved, Dr. Laukien should be awarded 75% of his target bonus linked to these goals. The Compensation Committee also considered progress madeMunch's performance with respect to various strategic operationalindividual qualitative goals relating to marketing and financialsales, organizational and product development initiatives including integrationwithin the Bruker Nano Group. After consideration of businesses acquired in fiscal 2010 and financing of the operations of BEST, and determined that Dr. Laukien should be awarded 50% of the target bonus associated with each of those goals based on partial achievement. In recognition of hisMunch's performance relative to thesehis individual qualitative performance goals, the Compensation Committee awardeddetermined that Dr. Laukien, in aggregate, 58%Munch achieved his goals with respect to management leadership and organizational development, as well as mostly achieved his goals regarding product development. Accordingly, he earned a cash incentive award equal to approximately 83% of the portion of his target cash incentive bonus potential attributable to his individual qualitative goals.
2014 Bruker BioSpin Group Performance Goals
Mr. Bachmann
Quantitative Performance Goals
(70% of Target Bonus Potential)
2014 Bruker BioSpin Group (BBIO) Performance Goals(1) | Weighting | Performance Threshold(2) | 2014 Performance(3) | % of Incentive Goal Achieved | % of Incentive Target Earned | |||||
---|---|---|---|---|---|---|---|---|---|---|
• $36.1 million BBIO Currency-Adjusted Revenue Growth | 15% | 100% | $9.8 million increase in Currency-Adjusted Revenue Growth | 27.1% | 4.1% | |||||
• $28 million BBIO non-GAAP Adjusted Gross Profit Improvement (adjusted for acquisition and restructuring charges) | 15% | 100% | $7 million decrease in non-GAAP Adjusted Gross Profit | 0.0% | 0.0% | |||||
• $26.8 million BBIO Adjusted Operating Profit Improvement (adjusted for acquisition and restructuring charges) | 15% | 100% | $2.9 million decrease in Adjusted Operating Profit | 0.0% | 0.0% | |||||
• $0.063 Reduction in BBIO Working Capital Ratio (adjusted for acquisition and restructuring charges) | 15% | 100% | $0.069 decrease | 109.5% | 16.4% | |||||
• $35.5 million Corporate Non-GAAP Operating Profit Improvement (adjusted for acquisition and restructuring | 10% | 100% | $0.4 million decrease in non-GAAP Operating Profit(4) | 0.0% | 0.0% | |||||
Total | 70% | 29.3% | 20.5% |
As President of the Bruker BioSpin Group, Mr. Bachmann's incentive plan included quantitative financial performance goals relating to his leadership of the Bruker BioSpin Group. Mr. Bachmann partially achieved his goals with respect to the currency-adjusted revenue growth and exceeded his goals regarding the working capital ratio. However, he did not achieve the performance threshold or any portion of the goals relating to profitability of the Bruker BioSpin Group. As a result, the cash incentive award payout earned by Mr. Bachmann for the quantitative financial performance portion of his 2014 cash incentive plan opportunity was equal to approximately 29% of his cash incentive target linked to quantitative goals, or $96,250. For 2011, including both quantitative and qualitative factors, Dr. Laukien was awarded aapproximately 21% of his total cash incentive bonustarget.
Individual Qualitative Performance Goals
(30% of $338,463, equal to approximately 62% of his total target cash incentive bonus.Target Bonus Potential)
Named Executive Officer | 2014 Individual Qualitative Goals | Weighting | 2014 Performance | % of Total Incentive Target Earned | ||||
---|---|---|---|---|---|---|---|---|
Mr. Bachmann | • Global organizational development | |||||||
initiatives | 10% | Achieved | 10.00% | |||||
• Research and development projects | 5% | Mostly achieved | 3.75% | |||||
• Strategic development initiatives | 5% | Mostly achieved | 3.75% | |||||
• Outsourcing activities | 5% | Achieved | 5.00% | |||||
• Service business development | 5% | Mostly Achieved | 3.75% | |||||
Total | 30% | 26.25% |
The Compensation Committee considered Mr. Knight's achievements in meetingBachmann's performance with respect to individual qualitative goals relating to organizational and product development and operational initiatives within the Bruker BioSpin Group. After consideration of Mr. Bachmann's performance relative to his individual qualitative goals, the Compensation Committee determined that Mr. Bachmann achieved his goals with respect to global organizational development initiatives, including developing and implementing a strong leadership culture and new global BBIO organization, and also achieved his goals related to operational cost savings initiatives and, based on insufficient progress toward realizing such cost savings,outsourcing activities. In addition, the Committee determined that Mr. Knight should not be awarded any portion ofBachmann mostly achieved his target bonus linkedgoals regarding research and development, strategic development and service business development. Accordingly, Mr. Bachmann earned a cash incentive award equal to these goals. The Compensation Committee also considered progress made with respect to various information technology initiatives, including the establishment of an information technology management infrastructure and the transition of acquired businesses to the Company's information technology platform, and determined that Mr. Knight should be awarded 100% of the target bonus associated with those goals. The Compensation Committee also considered substantial progress made with respect to improving inventory turns in the Scientific Instruments segment, and determined that Mr. Knight should be awarded 75% of the target bonus associated with those goals. In recognition of his performance relative to these individual qualitative performance goals, the Compensation Committee awarded Mr. Knight, in aggregate, 58%approximately 88% of the portion of his target cash incentive bonus potential attributable to his individual qualitative goals, or $26,250. For 2011, including both quantitative and qualitative factors, Mr. Knight was awarded aapproximately 26% of his total cash incentive bonustarget.
Determining Incentive Award Payments. Following review of $92,308, equalthe performance of our named executive officers in fiscal 2014, the Compensation Committee approved awards to approximately 62%the named executive officers based on their respective percentage achievement of his total target cash incentive bonus.2014 financial quantitative and individual qualitative performance goals as follows: Dr. Laukien—75.3%; Mr. Wagner—83.4%; Mr. Srega—46.6%; Dr. Munch—32.9%; and Mr. Bachmann—46.75%. The actual award payments to our named executive officers are reported in the "Non-Equity Incentive Plan Compensation" column of the Summary Compensation Table in this proxy statement.
2014 Long-Term Incentive Awards
The Compensation Committee considered Mr. Monahan's achievementsuses long-term incentive compensation in meeting his goals relatedthe form of equity awards to financing of the Company's operations and various strategic accounting initiatives and determineddeliver competitive compensation that based on the successful conclusion of amendmentsrecognizes employees for their contributions to the Company's primary credit facilities in May 2011,Company and aligns the closinginterests of a private placement note offering in January 2012named executive officers with shareholders by focusing them on long-term growth and successful development of enhanced management reporting capabilities for accounting managers, Mr. Monahan should be awarded 100% of his target bonus linked to each of these goals. The Compensation Committee also considered progress made with respect to certain tax strategies and determined that Mr. Monahan should be awarded 75% of the target bonus associated with that goal. In recognition of his performance relative to these individual qualitative performance goals, the Compensation Committee awarded Mr. Monahan, in aggregate, 92% of the portion of his target cash incentive bonus attributable to qualitative goals, or $34,375. For 2011, including both quantitative and qualitative factors, Mr. Monahan was awarded a total cash incentive bonus of $89,750, equal to approximately 69% of his total target cash incentive bonus.
2011 Long-Term Incentive Awardsstock price performance.
In September 2011,During 2014, upon consideration of a variety of factors, including the individual responsibilities and performance of each of our executive officers, our stock price, competitive market practices, including shareholder total potential dilution and annual equity run rate percentages, and outstanding equity awards held by our executive officers, the Compensation Committee granted optionsapproved long-term incentive awards to purchase 15,000certain of our executive officers, including: awards of 42,311 shares of our commonrestricted stock to each of
Dr. Laukien and Mr. Knight and options to purchase 9,00057,657 shares of ourcommon stock to Dr. Laukien valued at approximately $1,471,741 on the date the awards were granted; awards of 25,895 shares of restricted stock and options to purchase 49,400 shares of common stock to Mr. Monahan.Wagner valued at approximately $1,071,005 on the date the awards were granted; awards of 16,925 shares of restricted stock and options to purchase 32,288 shares of common stock to Dr. Munch valued at approximately $700,011 on the date the awards were granted; awards of 13,298 shares of restricted stock and options to purchase 25,369 shares of common stock to Mr. Srega valued at approximately $550,003 on the date the awards were granted; and awards
of 13,700 shares of restricted stock and options to purchase 11,227 shares of common stock to Mr. Bachmann valued at approximately $405,017 on the date the awards were granted.
The Company uses a mix of stock options and restricted stock awards to balance the increased performance orientation of stock options and the retentive qualities of restricted stock. The Compensation Committee believes this mix to be reasonable in light of market practices and the overall level of pay for our executives. In general, while no specific ratio is targeted, the Compensation Committee endeavors to deliver approximately 50% of the value in stock options and 50% of the value in restricted stock. In 2014, Dr. Laukien's awards consisted of 42% stock options and 58% restricted stock because the 2010 Incentive Compensation Plan limits the number of shares of restricted stock that can be granted to an individual to one hundred thousand shares in any one given year. The value of Mr. Bachmann's awards consisted of 30% stock options and 70% restricted stock based on provisions of his employment agreement. The values of awards to all other executive officers consisted of 50% stock options and 50% restricted stock.
Executive Benefits
In 2011,2014, our named executive officers were eligible for the same level and offering of benefits made available to other employees, including the Company's 401(k) plan and welfare benefit programs.programs, or those comparable local benefit programs for our overseas executives. We generally do not provide additional benefits or perquisites to our executive officers, except as follows:
For fiscal 2012,Dr. Munch is provided an automobile allowance based on the Compensation Committee approvednature of his responsibilities.
Employment Contracts, Termination of Employment and Change in Control Arrangements
AlthoughOn June 5, 2012, the Company does not currently have an employmententered into a letter agreement with anyMr. Wagner which sets forth certain terms of its executive officers, it did issue a letter offeringMr. Wagner's employment to William J. Knight, who now serves as ourExecutive Vice President and Chief Financial Officer.Officer of the Company. Under the terms of the offer letter agreement, Mr. KnightWagner's target cash compensation includes the following elements: (i) an annual base salary, which was initially set at $475,000 for 2012; (ii) a cash incentive bonus plan, with an initial target of $500,000 set for 2012; and (iii) for 2012, other cash compensation, including benefits, of $25,000, in each case subject to proration. The letter agreement further provides that Mr. Wagner will receive an annual equity award with a value of $1,000,000 pursuant to the Company's 2010 Incentive Compensation Plan. During the term of his employment, Mr. Wagner will be eligible to participate in all customary employee benefit plans or programs of the Company generally available to the Company's employees and/or executive officers.
Additionally, the letter agreement provides that Mr. Wagner's employment with the Company is at will and may be terminated by either Mr. Wagner or the Company at any time with or without notice
and for any or no reason or cause. Mr. Wagner will be entitled to a continuationlump sum severance payment equal to six months of his then current base salary, or $255,000 as of December 31, 2014, under certain conditions, including (i) in the event there is a change in the voting control of the Company and benefitshis employment is terminated, voluntarily or involuntarily, within six months after such change of control or (ii) in the event Mr. Wagner's employment is terminated at any time without cause. Under the terms of the letter agreement, Mr. Wagner may not agree to work for any company that designs, makes or sells non-clinical magnetic resonance instrumentation or mass spectrometry instrumentation for a period of threesix months following resignation or termination of his employment by the Company.
On June 25, 2012, the Company entered into a letter agreement with Mr. Srega which sets forth certain terms of Mr. Srega's employment as President of the Bruker CALID Group. Under the terms of the letter agreement, Mr. Srega's target cash compensation includes the following elements: (i) an annual base salary set at 280,000 euros, or approximately $371,896, for 2013, subject to annual review and (ii) a cash incentive bonus plan with target of 50% of base salary. Mr. Srega was also entitled to an initial cash bonus payment of 100,000 euros, or approximately $132,820, and an initial equity grant consisting of restricted stock valued at $400,000 and options to purchase 90,000 shares of common stock upon commencement of employment, as well as reimbursement of certain relocation expenses. The letter agreement also provides that, beginning in 2014, Mr. Srega is entitled to receive an annual equity award with a value of $550,000 pursuant to the Company's 2010 Incentive Compensation Plan. During the term of his employment, Mr. Srega will be eligible to participate in all customary employee benefit plans or programs of the Company generally available to the Company's employees and/or executive officers. Additionally, the Company assumed a personal pension scheme for Mr. Srega's benefit carried forward in part from his former employer. The personal pension scheme is funded by contributions made by Bruker Daltonik GmbH and voluntary contributions by Mr. Srega, if any, during the term of his employment.
Mr. Srega will be entitled to a lump sum severance payment equal to six months of his then current base salary, or approximately $170,380 as of December 31, 2014, in the event there is a change in the voting control of the Company and his employment is terminated, voluntarily or involuntarily, within twelvesix months after such change of control.
On December 3, 2013, Bruker Corporation and Bruker BioSpin AG, a salewholly-owned subsidiary Swiss subsidiary of allBruker Corporation, entered into a letter agreement with Mr. Bachmann which sets forth certain terms of Mr. Bachmann's employment as President of the Bruker BioSpin Group. Under the terms of the letter agreement, Mr. Bachmann's target cash compensation includes the following elements: (i) an annual base salary set at 360,000 Swiss Francs, or substantially all of our business to a third party. The offer letter also providesapproximately $393,984, for anticipated annual grants of options to purchase 50,000 shares of our common stock,2014, subject to the approvalannual review and (ii) a cash incentive bonus plan with target of the Compensation Committee.
The Company has agreed to provide severance payments to50% of base salary. Mr. Knight equal to six months' salary in the event of termination of employment without cause. Prior to his voluntary departure from employment by the Company in April 2012, Mr. MonahanBachmann was also entitled to severance paymentsan initial equity grant consisting of 14,000 shares of restricted stock and options to purchase 11,400 shares of common stock upon commencement of employment. The letter agreement also provides that, beginning in 2014, Mr. Bachmann is entitled to receive an annual equity award with a value equal to six months'100% of annual base salary pursuant to the Company's 2010 Incentive Compensation Plan. During the term of his employment, Mr. Bachmann will be eligible to participate in all customary employee benefit plans or programs of the Company generally available to the Company's employees and/or executive officers. Additionally, as an employee of Bruker BioSpin AG, during the term of his employment, Mr. Bachmann is entitled to participate in the eventBruker BioSpin AG pension fund scheme and other local benefit plans generally available to Swiss employees. The letter agreement contains customary one-year non-competition and two-year non-solicitation provisions and may be terminated by either party upon six month's written notice. In January 2015, Mr. Bachmann submitted notice of termination of employment without cause.to the Company, effective July 2015.
Under the terms of the awards of options and restricted common stock granted under the 2010 Incentive Compensation Plan, unvested amounts are forfeited if the grantee's employment or business relationship with our company is terminated for any reason, other than in the event of death or
disability. The board of directors does, however, have the power and the rightauthority to accelerate vesting of any and all unvested amounts in the event of a change in control of Bruker Corporation.
Section 162(m) Limitations
Section 162(m) of the U.S. Internal Revenue Code limits the tax deductibility by a corporation of compensation in excess of $1,000,000 paid to the Chief Executive Officer and any other of its four most highly compensated executive officers. However, compensationCompensation which qualifies as "performance-based" is excludedmay qualify for exclusion from the $1,000,000 limit if, among other requirements, the compensation is payable only upon attainment of pre-established, objective performance goals under a plan approved by stockholders.
The Compensation Committee does not presently expect total cash compensation payable for salaries to exceed the $1,000,000 limit for any individual executive. Having considered the requirements of Section 162(m), the Compensation Committee believes that stock option grants to date meet the requirement that such grants be "performance-based" and are, therefore, exempt from the limitations on deductibility. Base salaries, awards under our executive officers' cash incentive plans, any other bonus payments and compensation in the form of restricted stock awards, however, are generally subject to the $1,000,000 limit on tax deductible compensation.
The Compensation Committee and management consider the accounting and tax effects of various compensation elements when designing our annual incentive and equity compensation plans and making other compensation decisions. Although we have undertaken to qualify certain components of our incentive compensation to executive officers for the performance exception to non-deductibility, these considerations are secondary to meeting the overall objectives of the executive compensation program. The Compensation Committee will continue to monitor the compensation levels potentially payable under our cash compensation programs, but intends to retain the flexibility
necessary to provide total cash compensation in line with competitive practice and our compensation philosophyphilosophy. Under certain circumstances, such as the payment of cash bonus awards and our best interests.the granting of restricted stock awards, the Committee may decide to award executive compensation in an amount and form that is not deductible under Section 162(m).
Other Benefit Plans
In October 2009, the Boardboard of Directorsdirectors of BEST adopted the Bruker Energy & Supercon Technologies, Inc. 2009 Stock Option Plan, or the BEST Plan. The BEST Plan provides for the issuance of up to 1,600,000 shares of BEST common stock in connection with awards under the plan. The BEST Plan allows a committee of the BEST board of directors to grant incentive stock options and non-qualified stock options to key employees and directors of the Company. The size of each grant is determined by the value of the BEST stock and BEST stock options at the time, the likely growth in that value and the importance of the individual to growing the value of the Company in the future. The BEST Plan is tied exclusively to increases in BEST's estimated value regardless of the Company's performance as a whole. As of December 31, 2011, 800,0002014, 470,000 incentive stock options and non-qualified stock options had been awarded and were outstanding, with vesting periods of three to five years. As a director of BEST, Dr. Frank Laukien participates in the BEST Plan and on October 1, 2009, was awarded an optionPlan. Dr. Laukien holds options to purchase 10,000 shares of BEST, atwhich have an exercise price equal to the fair market value of BEST at the time of grant, subject to three-year vesting.$3.50 per share and expire October 1, 2019.
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K, promulgated under the Securities Act of 1933, as amended. Based on such review and discussions, the Compensation Committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this Proxy Statement on Schedule 14A.
Submitted by the Compensation Committee of Bruker Corporation's Board of Directors.
Richard D. Kniss, Chairman Wolf-Dieter Emmerich Stephen W. Fesik |
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Mr. Kniss and Drs. Emmerich and Fesik serve as members of the Compensation Committee. Mr. Kniss and Drs. Emmerich and Fesik were not officers or employees of the Company or any of its subsidiaries during fiscal year 2011.2014. None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving as a member of our Compensation Committee. In addition, none of our executive officers serves as a member of the compensation committee of any entity that has one or more of its executive officers serving as a member of our Boardboard of Directors.directors.
SUMMARY OF EXECUTIVE COMPENSATION
The following table summarizes the compensation earned by theour President, Chief Executive Officer and Chairman, our Chief Financial Officer and the Company's otherour next three most highly compensated executive officers (thein fiscal 2014 (our "named executive officers") for the years ended December 31, 2011, 20102014, 2013 and 2009.2012.
2011 Summary Compensation Table
Name and Principal Position | Year | Salary | Bonus | Non-Equity Incentive Plan Awards | Option Awards(1) | All Other Compensation | Total | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Frank H. Laukien | 2011 | $ | 433,337 | — | $ | 338,463 | $ | 112,950 | $ | 7,350 | (3) | $ | 892,100 | |||||||||
Chairman, President and | 2010 | $ | 423,366 | $ | 50,000 | (2) | $ | 702,728 | — | $ | 7,350 | (3) | $ | 1,183,444 | ||||||||
Chief Executive Officer | 2009 | $ | 318,750 | — | $ | 459,048 | $ | 25,200 | (4) | $ | 6,750 | (3) | $ | 809,748 | ||||||||
William J. Knight | 2011 | $ | 361,964 | — | $ | 92,308 | $ | 104,400 | $ | 8,250 | (6) | $ | 566,922 | |||||||||
Chief Financial Officer | 2010 | $ | 355,000 | $ | 20,000 | (2) | $ | 195,403 | — | $ | 8,250 | (6) | $ | 578,653 | ||||||||
and Former Chief Operating Officer(5) | 2009 | $ | 297,277 | — | $ | 132,349 | $ | 344,000 | $ | 6,750 | (6) | $ | 780,376 | |||||||||
Brian P. Monahan | 2011 | $ | 280,394 | — | $ | 89,750 | $ | 62,640 | $ | 7,350 | (7) | $ | 440,134 | |||||||||
Former Chief Financial | 2010 | $ | 275,000 | $ | 20,000 | (2) | $ | 162,836 | — | $ | 7,350 | (7) | $ | 465,186 | ||||||||
Officer and Vice President of Strategic and Financial Planning(8) | 2009 | $ | 193,154 | — | $ | 168,818 | $ | 688,000 | $ | 6,750 | (7) | $ | 1,056,722 |
Name and Principal Position | Year | Salary | Bonus | Stock Awards(1) | Option Awards(2) | Non-Equity Incentive Plan Awards | Change in Pension Value and Non-Qualified Deferred Compensation Earnings | All Other Compensation | Total | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Frank H. Laukien, Ph.D. | 2014 | $ | 598,654 | — | $ | 874,991 | $ | 596,750 | $ | 602,319 | — | $ | 7,800 | (3) | $ | 2,680,514 | ||||||||||||
Chairman, | 2013 | $ | 547,562 | — | $ | 687,492 | $ | 658,859 | $ | 316,750 | — | $ | 6,117 | $ | 2,216,780 | |||||||||||||
President | 2012 | $ | 444,129 | — | $ | 1,206,000 | — | $ | 202,973 | — | $ | 7,500 | $ | 1,860,602 | ||||||||||||||
and Chief Executive Officer | ||||||||||||||||||||||||||||
Charles F. Wagner, Jr. | 2014 | $ | 509,488 | — | $ | 535,509 | $ | 535,496 | $ | 425,416 | — | $ | 7,800 | (3) | $ | 2,013,709 | ||||||||||||
Executive Vice | 2013 | $ | 490,631 | — | $ | 515,549 | $ | 515,546 | $ | 245,000 | — | $ | 7,500 | $ | 1,774,226 | |||||||||||||
President and | 2012 | $ | 275,865 | (4) | — | $ | 999,998 | $ | 87,270 | (5) | $ | 200,000 | — | $ | 1,005 | $ | 1,564,138 | |||||||||||
Chief | ||||||||||||||||||||||||||||
Financial Officer | ||||||||||||||||||||||||||||
Juergen Srega | 2014 | $ | 372,260 | $ | 344,943 | $ | 275,003 | $ | 275,000 | $ | 81,712 | — | $ | 105,076 | (7) | $ | 1,453,994 | |||||||||||
President, | 2013 | $ | 371,896 | $ | 132,820 | $ | 399,998 | $ | 893,700 | $ | 112,747 | — | $ | 142,438 | $ | 2,069,242 | ||||||||||||
Bruker | ||||||||||||||||||||||||||||
CALID Group(6) | ||||||||||||||||||||||||||||
Mark R. Munch, Ph.D. | 2014 | $ | 399,462 | — | $ | 350,009 | $ | 350,002 | $ | 78,842 | — | $ | 16,200 | (9) | $ | 1,194,515 | ||||||||||||
President, | 2013 | $ | 380,000 | $ | 50,000 | (8) | $ | 344,600 | $ | 665,005 | $ | 50,730 | — | $ | 16,400 | $ | 1,506,735 | |||||||||||
Bruker Nano | 2012 | $ | 345,370 | — | — | — | $ | 169,075 | $ | 15,900 | $ | 530,345 | ||||||||||||||||
Group | ||||||||||||||||||||||||||||
Thomas W. Bachmann(10) | 2014 | $ | 393,984 | — | $ | 283,316 | $ | 121,702 | $ | 90,193 | $ | 42,787 | $ | 13,780 | (11) | $ | 945,762 | |||||||||||
President, Bruker | ||||||||||||||||||||||||||||
BioSpin Group |
20112014 Grants of Plan-Based Awards
The following table sets forth certain information with respect to individual grants of plan-based awards to the named executive officers during the fiscal year ended December 31, 2011.2014.
| | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | | Grant Date Fair Value of Stock and Option Awards ($)(2) | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | | Grant Date Fair Value of Stock and Option Awards ($)(2) | ||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Exercise or Base Price of Option Awards ($/SH)(2) | | Exercise or Base Price of Option Awards ($/SH)(2) | ||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($)(1) | Target ($)(1) | Maximum ($)(1) | Grant Date Fair Value of Stock and Option Awards ($)(2) | Grant Date | Threshold ($)(1) | Target ($)(1) | Maximum ($)(1) | Grant Date Fair Value of Stock and Option Awards ($)(2) | ||||||||||||||||||||||||||||||||||||||||
Frank H. Laukien | 0 | 550,000 | — | 0 | 800,000 | 1,600,000 | ||||||||||||||||||||||||||||||||||||||||||||
9/9/2011 | 15,000 | 13.805 | 112,950 | 8/08/2014 | 42,311 | 57,657 | (3) | 22.748 | 1,471,741 | |||||||||||||||||||||||||||||||||||||||||
William J. Knight | 0 | 150,000 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Charles F. Wagner, Jr. | 0 | 510,000 | 1,020,000 | |||||||||||||||||||||||||||||||||||||||||||||||
9/9/2011 | 15,000 | 12.55 | 104,400 | 8/08/2014 | 25,895 | 49,400 | 20.68 | 1,071,005 | ||||||||||||||||||||||||||||||||||||||||||
Brian P. Monahan | 0 | 130,000 | — | |||||||||||||||||||||||||||||||||||||||||||||||
Juergen Srega | 0 | 204,743 | 409,362 | |||||||||||||||||||||||||||||||||||||||||||||||
9/9/2011 | 9,000 | 12.55 | 62,640 | 8/08/2014 | 13,298 | 25,369 | 20.68 | 550,003 | ||||||||||||||||||||||||||||||||||||||||||
Mark R. Munch | 0 | 240,000 | 480,000 | |||||||||||||||||||||||||||||||||||||||||||||||
8/08/2014 | 16,925 | 32,288 | 20.68 | 700,011 | ||||||||||||||||||||||||||||||||||||||||||||||
Thomas W. Bachmann | 0 | 196,992 | 393,876 | |||||||||||||||||||||||||||||||||||||||||||||||
8/08/2014 | 13,700 | 11,227 | 20.68 | 405,017 |
dollars at a conversion rate of CHF 1.00 = $1.0944, which represents the 2014 average midpoint rate as published on www.oanda.com.
Outstanding Equity Awards Atat December 31, 20112014
The following table provides information concerning outstanding equity incentive plan awards, including unexercised options and stock that has not vested, and equity incentive plan awards for each of our named executive officer outstandingofficers as of the end of our most recently completed fiscal year. Each outstanding award is represented
| Option Awards | Stock Awards | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Option Grant Date | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price | Option Expiration Date | Stock Award Grant Date | Number of Shares of Stock That Have Not Vested | Market Value of Shares of Stock That Have Not Vested(1) | |||||||||||||||
Frank H. Laukien(2) | 9/09/2011 | 11,250 | 3,750(3) | $ | 13.805 | 09/09/2016 | 8/13/2012 | 60,000(4) | $ | 1,177,200 | |||||||||||||
8/30/2013 | 15,569 | 46,705(5) | $ | 22.04 | 08/30/2018 | 8/30/2013 | 25,729(4) | $ | 504,803 | ||||||||||||||
8/08/2014 | — | 57,657(6) | $ | 22.748 | 8/08/2019 | 8/08/2014 | 42,311(7) | $ | 830,142 | ||||||||||||||
Charles F. Wagner, Jr. | 8/10/2010 | 3,000 | — | $ | 13.52 | 08/10/2020 | 8/02/2012 | 44,014(8) | $ | 863,555 | |||||||||||||
1/05/2011 | 6,000 | — | $ | 16.09 | 01/05/2021 | 8/30/2013 | 19,294(4) | $ | 378,548 | ||||||||||||||
1/05/2012 | 3,960 | 2,040(3) | $ | 12.77 | 01/05/2022 | 8/08/2014 | 25,895(7) | $ | 508,060 | ||||||||||||||
8/13/2012 | 3,300 | 1,700(3) | $ | 12.06 | 08/13/2022 | ||||||||||||||||||
8/30/2013 | 11,675 | 35,023(5) | $ | 20.04 | 08/30/2023 | ||||||||||||||||||
8/08/2014 | — | 49,400(6) | $ | 20.68 | 8/08/2024 | ||||||||||||||||||
Mark R. Munch | 11/01/2010 | 60,000 | 15,000(3) | $ | 14.80 | 11/01/2020 | 5/07/2013 | 16,000(7) | $ | 313,920 | |||||||||||||
8/30/2013 | 15,059 | 45,177(5) | $ | 20.04 | 08/30/2023 | 8/08/2014 | 16,925(7) | $ | 332,069 | ||||||||||||||
8/08/2014 | — | 32,288(6) | $ | 20.68 | 8/08/2024 | ||||||||||||||||||
Juergen Srega | 4/03/2013 | 18,000 | 72,000(6) | $ | 18.57 | 04/03/2023 | 4/03/2013 | 17,232(7) | $ | 338,092 | |||||||||||||
8/08/2014 | — | 25,369(6) | $ | 20.68 | 8/08/2024 | 8/08/2014 | 13,298(7) | $ | 260,907 | ||||||||||||||
Thomas W. Bachmann | 8/19/2013 | 2,850 | 8,550(5) | $ | 19.56 | 8/19/2023 | 8/19/2013 | 11,200(7) | $ | 219,744 | |||||||||||||
8/08/2014 | — | 11,227(6) | $ | 20.68 | 8/08/2024 | 8/08/2014 | 13,700(7) | $ | 268,794 |
| Option Awards | Stock Awards | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price | Option Expiration Date | Number of Shares of Stock That Have Not Vested | Market Value of Shares of Stock That Have Not Vested | |||||||||||||
Frank H. Laukien(1) | 75,000 | — | $ | 8.75 | 08/01/12 | — | — | ||||||||||||
75,000 | 25,000 | (2) | $ | 13.21 | 05/07/13 | — | — | ||||||||||||
15,000 | (3) | $ | 13.805 | 09/09/16 | — | — | |||||||||||||
150,000 | 40,000 | ||||||||||||||||||
William J. Knight | 125,000 | — | $ | 3.16 | 10/25/14 | — | — | ||||||||||||
40,000 | 10,000 | (4) | $ | 7.95 | 08/01/17 | — | — | ||||||||||||
30,000 | 20,000 | (5) | $ | 12.01 | 05/07/18 | — | — | ||||||||||||
20,000 | 30,000 | (6) | $ | 11.10 | 11/05/19 | — | — | ||||||||||||
15,000 | (7) | $ | 12.55 | 09/09/21 | — | — | |||||||||||||
215,000 | 75,000 | ||||||||||||||||||
Brian P. Monahan | 2,500 | — | $ | 5.28 | 04/26/14 | — | — | ||||||||||||
5,250 | — | $ | 4.87 | 06/30/14 | — | — | |||||||||||||
48,000 | 12,000 | (4) | $ | 7.95 | 08/01/17 | — | — | ||||||||||||
9,000 | 6,000 | (5) | $ | 12.01 | 05/07/18 | — | — | ||||||||||||
40,000 | 60,000 | (6) | $ | 11.10 | 11/05/19 | — | — | ||||||||||||
9,000 | (7) | $ | 12.55 | 09/09/21 | — | — | |||||||||||||
104,750 | 87,000 | ||||||||||||||||||
20112014 Option Exercises and Stock Vested
The following table provides information regarding the number of shares acquired by our named executive officers upon the vesting of restricted stock awards for each named executive officer during fiscal 2011. These restricted stock awards were granted in prior fiscal years and are not related to performance in fiscal 2011. No options were exercised by the value realized at that time before payment of any applicable withholding taxes and brokerage commission. None of our named executive officers exercised options during fiscal 2011.2014.
| Stock Awards | Stock Awards | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Shares Acquired on Vesting (#) (1) | Value Realized on Vesting ($) (2) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | ||||||||||
Frank H. Laukien | 6,650 | 106,990 | 28,577 | 573,770 | ||||||||||
William J. Knight | 1,670 | 26,870 | ||||||||||||
Brian P. Monahan | 1,000 | 16,090 | ||||||||||||
Charles F. Wagner, Jr. | 28,439 | 627,671 | ||||||||||||
Juergen Srega | 4,308 | 100,075 | ||||||||||||
Mark R. Munch | 4,000 | 82,400 | ||||||||||||
Thomas W. Bachmann | 2,800 | 57,120 |
Retirement Plan for Mr. Srega. A personal pension scheme established for Mr. Srega's benefit, which was in part carried forward from his former employer, is funded by contributions made by Bruker Daltonik GmbH and voluntary contributions by Mr. Srega, if any, during the term of his employment. The personal pension scheme has three components: a contribution-based plan of Bruker Daltonik GmbH (the "Bruker Daltonik Plan"); a pension fund guarantee (the "Guarantee Plan"); and a cash value life insurance policy (the "Life Insurance Policy"). The Bruker Daltonik Plan provides for monthly Company contributions in the amount of €5,500 (approximately $80,223 per year) and a lifetime monthly retirement benefit based on the value of accumulated capital beginning at age 67 or a lump-sum payment. In the event of termination of employment or death prior to age 67, the Bruker Daltonik Plan provides for a reduced benefit to be determined based on the cash assets of the plan at such time. Mr. Srega may also elect to receive a reduced benefit beginning at age 62 in the event of early retirement. The Guarantee Plan provides an inflation hedge and an additional monthly retirement benefit, commencing December 1, 2019, with an annually increasing benefit based on Guarantee Plan earnings or, at Mr. Srega's election, a lump-sum payment. The Guarantee Plan is funded by annual Company contributions during the term of employment in amounts which increase annually by the same percentage as the upper earnings limit established under German law for pension insurance contributions. In the event of death prior to December 1, 2019, the Guarantee Plan provides for a lump-sum payment in an amount to be determined based on the plan assets at such time. In the event of death on or after December 1, 2019, benefits will terminate effective November 30, 2024. If Mr. Srega's employment terminates prior to the eligible retirement age, Mr. Srega may elect to continue funding through personal contributions or the Guarantee Plan may be transferred to a subsequent employer. Under the Life Insurance Policy, which matures on November 1, 2019, Mr. Srega is entitled to receive at the earlier of death or maturity a payment in the amount €53,028 (approximately $64,455), adjusted for increases in the value of accumulated surplus and reserves, if any. In the event Mr. Srega's employment terminates prior to the maturity date, other than by reason of
death, the Life Insurance Policy and continued funding obligations are to be transferred Mr. Srega. Amounts payable in euros are converted to U.S. dollars at the average midpoint conversion rate of €1.0=$1.2155 as of December 31, 2014. Mr. Srega may also make voluntary contributions to the personal pension scheme during the term of his employment.
Swiss Pension Plan. As an employee of our BioSpin AG subsidiary in Switzerland, Mr. Bachmann is eligible to participate in a defined benefit plan available to all employees of our subsidiaries in Switzerland, which we refer to as the Swiss Pension Plan. Mr. Bachmann participates in the plan on the same terms and conditions as all other Swiss employees and does not receive any additional supplemental executive pension contributions. The Swiss Pension Plan is a cash balance based pension arrangement, under which we contribute an annual amount based on a percentage of salary and the participant's age. Employees may also make contributions based on a percentage of salary and age. Additionally, participants are allocated annual savings and interest credits based on age and account value, respectively. Payments to participants are based on accumulated capital in the participant's plan account and may be taken as a lump sum or annuity at normal retirement, beginning at age 65. Participants may also elect to receive a reduced benefit beginning at age 58 in the event of early retirement. In the event of premature death and disability, the Swiss Pension Plan also provides for payments in the form of an annuity based on a percentage of the participant's salary or as a lump-sum based on accumulated plan account assets.
Information about our contributions to the personal pension scheme of Mr. Srega and the Swiss Pension Plan in which Mr. Bachmann is a participant is provided in the Summary Compensation Table above under the column entitled "All Other Compensation" and the related footnotes.
The following table provides information about the estimated present value of accumulated benefits for Mr. Bachmann under the Swiss Pension Plan. The amount reported as the present value of accumulated benefit represents the U.S. dollar equivalent of the present value of the accumulated pension benefit in Swiss Francs, based on the average midpoint conversion rate of CHF 1.0 =$1.0106 as of December 31, 2014.
Name | Plan Name | Number of Years of Credited Service(#) | Present Value of Accumulated Benefit ($) | ||||||
---|---|---|---|---|---|---|---|---|---|
Thomas W. Bachmann(1) | Swiss Pension Plan | 1.33 | $ | 89,461 |
The calculation of actuarial present value in the table above is generally consistent with the methodology and assumptions outlined in our audited financial statements, except that benefits are reflected without consideration of compensation increases or pre-retirement mortality. Specifically, present value amounts were determined based on a discount rate of 1.10% and an expected return on plan assets of 2.90%. Further information on our accounting for pension plans may be found in Note 13 to our 2014 audited financial statements included in the Company's Annual Report on Form 10-K filed with the SEC on February 27, 2015. No payments were made to Mr. Bachmann under
the Swiss Pension Plan during 2014. Further information on the Swiss Pension Plan is included above under the heading"Pension Benefits—Retirement Plan."
2014 Non-Qualified Deferred Compensation Table
The following table provides information about 2014 activity relating to the personal pension scheme established for Mr. Srega. All amounts reported are as of December 31, 2014 and are converted from euros to U.S. dollars at the 2014 average midpoint conversion rate of €1.0 =$1.3295.
Name | Executive Contributions in Last Fiscal Year ($) | Registrant Contributions in Last Fiscal Year ($)(1) | Aggregate Earnings in Last Fiscal Year ($)(2) | Aggregate Balance at Last Fiscal Year-End ($)(3) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Juergen Srega | 0 | 88,412 | (8,259 | ) | 320,794 |
There were no withdrawals or distributions from Mr. Srega's personal pension scheme during 2014. Further information on the personal pension scheme established for Mr. Srega is included above under the heading"Pension Benefits—Retirement Plan."
Potential Payments upon Termination or Change-in-Control
The following information describes and quantifies certain compensation and benefits that would have been payable under existing agreements, plans, and arrangements if the named executive officer's employment had terminated on December 31, 2014, given his compensation and service levels as of that date. These benefits are in addition to the benefits to which the named executive officer was already entitled or in which he was vested as of such date, as well as certain benefits that are generally available to salaried employees. Due to the number of factors that affect the nature and amount of the compensation and benefits potentially payable upon the events described below, any amounts actually paid or distributed may be different than those shown in the table. Factors that could affect these amounts include the nature of or basis for such termination, the timing during the year of any such event, whether and when a named executive officer decides to exercise stock options and our stock price on that date and the exercise of discretion by the Board or Compensation Committee regarding the payment of compensation and benefits.
Severance Benefits. The cash severance benefits contained in the employment agreements for Messrs. Wagner and Srega, and the amounts each of those named executive officers would be paid in connection with (a) a termination of the executive officer's employment within six months of a change in voting control of the Company or (b) in the case of Mr. Wagner only, termination without cause, if such termination had occurred on December 31, 2014 are described in the Compensation and Discussion & Analysis section of this proxy statement under the heading "Employment Agreements,
Termination of Employment and Change in Control Arrangements." Other than as contained in those agreements, we do not have arrangements with any of our other executive officers, including Dr. Laukien, Dr. Munch and Mr. Bachmann, which provide cash severance benefits in the event of termination of employment or a change in control of the Company.
Equity Awards. The unvested equity awards held by each of the named executive officers as of December 31, 2014 are described above in the 2014 Outstanding Equity Awards table. We made each of those stock option and restricted awards pursuant to our 2010 Incentive Compensation Plan. In accordance with that plan and our related award agreements, except as noted below, no accelerated vesting of stock options or restricted stock awards would have occurred as of December 31, 2014 in the event of a voluntary termination by a named executive officer or an involuntary termination by us, whether with or without cause. Generally, upon termination of employment, (a) any unvested restricted stock is forfeited and (b) the participant has a period of 90 days from termination to exercise any vested option awards (or, if earlier, until the option expiration date). However, in the event of termination for cause, including as a result of dishonesty with respect to the Company or any of its affiliates, breach of fiduciary duty, insubordination, substantial malfeasance or non-feasance of duty, unauthorized disclosure of confidential information, material failure or refusal to comply with Company's published policies generally applicable to all employees or conduct materially harmful to the business of the Company or any of its affiliates, all vested and unexercised options are forfeited immediately upon termination. Additionally, in the event of death or disability of a plan participant, including any named executive officer, (a) any unvested restricted stock will become vested and (b) all vested stock options will remain exercisable for a period of 90 days following such event (or, if earlier, until the stock option expiration date).
The Compensation Committee has discretion to revise or amend outstanding equity awards and may, at its discretion, accelerate vesting of any unvested option or restricted stock awards, including in connection with a "Change in Control" of the Company, as defined in our 2010 Incentive Compensation Plan. Under that plan, a "Change in Control" occurs if: (a) within one year of any merger, consolidation, sale of a substantial part of the Company's assets, or contested election, the persons who were directors of the Company immediately before such transaction cease to constitute a majority of the board of directors of the Company or its successor to the Company; (b) if, as a result of any such transaction, the Company does not survive as an entity, or its shares are changed into the shares of another corporation unless the stockholders of the Company immediately prior to the transaction own a majority of the outstanding shares of such other corporation immediately following the transaction; (c) any person or group who owned less than twenty percent of the outstanding common stock of the Company at the time of adoption of the 2010 Incentive Compensation Plan acquires ownership of fifty percent or more of the Company's outstanding common stock; (d) the dissolution or liquidation of the Company is approved by its stockholders; or (e) the members of the board of directors as of the date the 2010 Incentive Compensation Plan was adopted cease to represent at least two-thirds of the Board, subject to certain exceptions.
The values of (i) unvested in-the-money stock options and that would have been received by each of the named executive officers in the event the Compensation Committee chose to accelerate the vesting date.of outstanding option awards upon a Change in Control, assuming the Change in Control was effective December 31, 2014 and (ii) unvested restricted stock that would have been received by each of the named executive officers in the event (a) the Compensation Committee chose to accelerate the vesting of outstanding restricted stock awards upon a Change in Control, assuming the Change in Control was effective December 31, 2014 or (b) of the death or disability of the respective named
executive officer are set forth in the following table. All calculations are based on a price per share equal to the NASDAQ Global Select Market closing price of $19.62 per share on December 31, 2014.
Name | Unvested In-the-Money Stock Options ($) | Unvested Restricted Stock ($) | |||||
---|---|---|---|---|---|---|---|
Frank H. Laukien | 21,806 | 2,512,145 | |||||
Charles F. Wagner, Jr. | 26,826 | 1,750,163 | |||||
Juergen Srega | 75,600 | 598,999 | |||||
Mark R. Munch | 72,300 | 645,989 | |||||
Thomas W. Bachmann | 513 | 488,538 |
Retirement Plans. The retirement plans provided for Mr. Srega and Mr. Bachmann are described under the heading "Pension Benefits" above. In the event of termination of employment as of December 31, 2014 by reason of death, Mr. Srega's beneficiary would be entitled to receive an estimated lump-sum payment of $283,236, which amount is payable in euros and converted to U.S. dollars based on the average midpoint conversion rate of €1.0 =$1.2155 as of December 31, 2014.
In the event of termination of employment as of December 31, 2014, other than for reason of death or disability, Mr. Bachmann would be entitled to receive a lump-sum payment of vested benefits in the amount of $38,207. In the event of disability as of December 31, 2014, Mr. Bachmann would be entitled to receive an annual disability pension in the amount of $65,689. In the event of death, Mr. Bachmann's beneficiary would be entitled to estimated annual survivor benefits of $39,413. Amounts reported for Mr. Bachmann, which are payable in Swiss Francs, are converted to U.S. dollars based on the average midpoint conversion rate of CHF 1.0 =$1.0106 as of December 31, 2014.
Procedures forReview and Approval of Transactions with Related Persons
AllWe have adopted a written Related Person Transactions Policy that prohibits transactions involving the Company and any related person, except in accordance with the policy. For purposes of this policy, related persons include (a) our executive officers, directors, director nominees or greater than 5% shareholders, or any of their immediate family members and (b) any firm, academic entity or other entity in which any of the foregoing persons is employed or is a partner or principal or in a similar position or in which such person has more than a 10% beneficial ownership interest. The Related Person Transactions Policy applies to any transaction or series of transactions, other than product or service sales or purchases entered into in the ordinary course of business involving aggregate amounts of less than $50,000 annually, in which the Company is a participant and in which any related person has a direct or indirect interest.
Our Related Person Transactions Policy provides for standing pre-approval of certain categories of transactions with related partiespersons, including:
Under our Related Person Transactions Policy, any related person transaction not in one of the preceding categories must be submitted to our Chief Financial Officer for review and approval. Related person transactions involving amounts of $500,000 or less, as well as all product or service sales and purchases in the ordinary course of business, are subject solely to review and approval, ratification, amendment, termination or rescission by our Chief Financial Officer. Any transaction in excess of $50,000 are reviewed and pre-approved. Our$500,000, other than a transaction involving product or service sales or purchases in the ordinary course of business, must be forwarded to the Audit Committee which is ultimately responsible for approving related party transactions, pre-approvesreview and approval, ratification, amendment, termination or rescission, at the discretion of the Audit Committee. In reviewing such transactions, involving amounts exceeding $500,000. The Audit Committee has delegated authority to theour Chief Financial Officer or Audit Committee, as applicable, evaluates all material facts relating to the transaction and Corporate Controllertakes into account, among other factors deemed appropriate, the related person's relationship to reviewthe Company and pre-approve all related party transactions, such as leasing, distribution, sales and purchasing activities, involving amounts from $50,000 to $500,000. A related partyinterest in the transaction, will be approved only if it is determined upon review thatthe terms of the transaction, including its aggregate value, whether the transaction is in the best interests of the Company. IfCompany, the transaction involvesimpact on a director's independence in the event the related person is a director, thata family member of a director, will be recused from all discussions and decisions about the transaction. In considering the transaction, theor an entity in which a director is a partner, shareholder or executive officer and, if applicable, the availability of other sources of comparable products or the committee, as appropriate, will consider all relevant factors, including as applicable:
Typically every quarter, management reviews with the Audit Committee all related party transactions entered intomay participate in the preceding quarter, including thosereview of any transaction involving such person or any of his or her immediate family members.
Our Chief Financial Officer must report to the committee did not pre-approve. This review consists of a memorandum summarizing the information described aboveAudit Committee any approval or other action taken with respect to a related party transaction at or prior to the transactions, and is followed by a telephonicnext audit committee meeting following such approval or in-person meeting betweenother action. Additionally, Company management must provide to the Audit Committee an annual report of any amounts paid or payable to, or received or receivable from, any related person. The Audit Committee is responsible for reviewing such reports and management.may make inquiries or take such actions as it deems appropriate upon consideration of all of the relevant facts and circumstances.
Transactions with Related Persons
Under two lease agreements, Bruker BioSpin Corporation rents laboratory, manufacturing and office space from trusts controlled by certain Laukien family members, including Dr. Frank Laukien. During 2011,2014, Dr. Frank Laukien was paid $308,305$368,800 as a beneficiary of the trusts. The lease terms were equal to the estimated fair market value of the rentals.
Dr. Dirk Laukien, a director of the Company, also serves as Senior Scientific Fellow on a part-time basis. In 2011, Dr. Dirk Laukien was paid aggregate cash compensation of $131,718 for his services as Senior Scientific Fellow. Our Bruker Optics subsidiary rents various office space from Dr. Dirk Laukien, a director and employee of the Company until July 10, 2012 and half-brother of Dr. Frank Laukien, under lease agreements underpursuant to which Dr. Dirk Laukien was paid $1,175,340$490,000 in 2011.2014. Under two lease agreements, Bruker BioSpin Corporation rents laboratory, manufacturing and office space from trusts controlled by certain Laukien family members, including Dr. Dirk Laukien. During 2011,2014, Dr. Dirk Laukien was paid $308,305$368,800 as a beneficiary of the trusts. Dr. Dirk Laukien Isolde Laukien-Kleiner and Joerg Laukienis also are partiesa party to a lease agreement with Bruker BioSpin AG under which Bruker BioSpin AG rents certain office space. During 2011,2014, Dr. Dirk Laukien was paid $128,643$121,894 under that agreement. Payments under the terms of each of the leases referenced above were equal to the estimated fair market value of the respective rental.
Joerg C. Laukien, a director of the Company, serves in a management role at various German subsidiaries of Bruker BioSpin Corporation and is Executive Chairman of Bruker BioSpin Corporation. Joerg Laukien also serves as a Managing Director of Bruker BioSpin MRI GmbH and a director of BEST. During 2011,2014, Joerg Laukien earned aggregate cash compensation of 220,639 Euros225,000 euros in salary, and 207,623 Swiss Francs in bonus (approximately $541,563) and from various European Bruker BioSpin companiesor $297,000 based on a conversion rate of €1.00 = $1.329, which represents the 2014 average midpoint rate as published on www.oanda.com and was also provided the use of an automobile valued at $14,226. With Dr. Dirk Laukien and Isolde Laukien-Kleiner, Joerg Laukien also is a party to a lease agreement with Bruker BioSpin AG, under which Bruker BioSpin AG rents certain office space. During 2011, Joerg Laukien was paid $128,643 under that agreement. Payments under the lease terms were equal to the estimated fair market value of the rentals.$12,447.
Isolde Laukien-Kleiner is the stepmother of Dr. Frank Laukien and Mr. Joerg Laukien and the mother of Dr. Dirk Laukien. With Dr. Dirk Laukien, and Joerg Laukien, Ms. Laukien-Kleiner is a party to a lease agreement with Bruker BioSpin AG under which Bruker BioSpin AG rents certain office space. During 2011,
2014, Ms. Laukien-Kleiner was paid $257,286$365,682 under that agreement. Mrs.Ms. Laukien-Kleiner is party to an additional lease agreement with Bruker BioSpin AG under which Bruker BioSpin AG rents certain office space. During 2011,2014, Ms. Laukien-Kleiner was paid $246,127$250,446 under that agreement. Payments under the terms of each of the leases referenced above were equal to the estimated fair market value of the respective rental.
Dr. Tony W. Keller,Gilles Martin, a retiringdirector of the Company, is the Chairman, Chief Executive Officer and controlling shareholder of the Eurofins Scientific Group, a provider of analytical testing services, and a director of various of its affiliates. During 2014, the Company received approximately $1.9 million from, and paid approximately $0.1 million to, entities affiliated with the Eurofins Scientific Group in connection with purchases and sales of goods and services entered into in the normal course of business. We believe that the terms of such transactions are comparable to those that would have been reached by unrelated parties in arm's-length transactions. We expect to engage in similar commercial transactions with affiliates of the Eurofins Scientific Group during fiscal 2015.
Dr. William Linton, a director of the Company, is the Chairman, President and Chief Executive Officer of Promega Corporation, a life science supply company. Mr. Chris van Ingen, a director of the Company, is also vice-chairman of the board of Bruker BioSpin AG, president of the board of Bruker BioSpin Invest AG, and a director of BEST.Promega Corporation. During 2014, the Company received approximately $0.9 million from Promega Corporation from sales of goods entered into in the normal course of business. We believe that the terms of such transactions are comparable to those that would have been reached by unrelated parties in arm's-length transactions. We expect to engage in similar commercial transactions with Promega Corporation during fiscal 2015.
Dr. Keller also servesMieke Hamester, the wife of Bruker CALID Group President Juergen Srega, is employed by our Bruker Daltonik GmbH subsidiary as honorary chairmanthe Director of Small Molecule Pharma & CRO. During 2014, in her role as the Director of the Bruker BioSpin Group. During 2011,ICP-MS business, Dr. KellerHamester earned total cash compensation of $101,627$390,608, consisting of base salary in the amount of $122,979, an annual cash incentive bonus of $21,660 (paid in March 2015) and a special bonus of $245,969 for his serviceher contributions towards the closing of the divesture of the ICP-MS product line of the CAM division (base salary and special bonus amounts are based on payments in euros converted to U.S. dollars at a conversion rate of €1.00 = $1.3295, which represents the 2014 average midpoint rate as published on www.oanda.com; annual cash incentive bonus amount is based on payment in euros converted to U.S. dollars at a conversion rate of €1.00 = $1.0830, which is the average midpoint rate for March 2015 as published on www.oanda.com). She also received a bonus payment in the amount of $19,800, which was earned in 2013 but paid in 2014. Her ongoing compensation is consistent with the total compensation provided to other employees of the same level with similar responsibilities. Dr. Hamester continues to be an employee of Bruker Daltonik GmbH and, other than with respect to the Bruker BioSpin Group. Dr. Keller electedspecial incentive bonus payment awarded in 2014, she may receive compensation and other benefits in 2015 in amounts similar to defer payment of $28,230 of this cash compensation until 2012. Dr. Keller was also provided the use of an automobile valued at $8,118.those she received during 2014.
Richard M. Stein, a director of the Company until May 2014, is a partner of Nixon Peabody LLP, a law firm which has been retained by the Company and certain of its affiliates for over five years. Amounts paid to Nixon Peabody LLP for services provided to the Company and its affiliates in 20112014 totaled $3.2$2.4 million. Mr. Stein has also servedserves as the secretary forof each of the Company, Bruker BioSpin Corporation, Bruker AXS, Bruker Daltonics, Bruker Optics, BEST and Bruker Nano, Inc.
Bernhard Wangler, a director of the Company until May 2014, is a principal of Kanzlei Wangler, a German audit and tax advisory firm which has been retained by the Company and certain of its affiliates for over five years. Amounts paid to Kanzlei Wangler for services provided to the Company and its affiliates in 20112014 totaled $510,035.$130,547.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and the rules promulgated thereunder require our officers and directors and persons owning more than 10% of the outstanding common stock of the Company to file reports of ownership and changes in ownership with the Securities and Exchange Commission and to furnish us with copies of all these filings. We believe, based solely upon a review of those reports and amendments thereto furnished to us during and with respect to our fiscal year ended December 31, 2011,2014, that all of our directors and executive officers complied with the reporting requirements of Section 16(a) of the Exchange Act during fiscal 2011.2014, with the exception of one transaction reported in a late Form 4 filing by Mr. Wagner due to an administrative error.
The Audit Committee, which operates pursuant to a written charter, assists the board of directors in fulfilling its oversight responsibilities by reviewing Bruker Corporation's financial reporting process on behalf of the board. Management is responsible for Bruker Corporation's internal controls, the financial reporting process and compliance with laws and regulations and ethical business standards. Ernst & Young LLP ("Ernst & Young"), Bruker Corporation's independent registered public accounting firm, is responsible for expressing opinions on the conformity of Bruker Corporation's consolidated financial statements with generally accepted accounting principles and on the effectiveness of Bruker Corporation's internal control over financial reporting. The Audit Committee is responsible for overseeing and monitoring these practices. It is not the duty or responsibility of the Audit Committee to conduct auditing or accounting reviews or procedures.
In this context, the Audit Committee reviewed and discussed with management and Ernst & Young, among other things, the scope of the audit to be performed, the results of the audit performed, Ernst & Young's evaluation of Bruker Corporation's internal control over financial reporting and the independent registered public accounting firm's fees for the services performed. Management represented to the Audit Committee that Bruker Corporation's consolidated financial statements were prepared in accordance with generally accepted accounting principles. Discussions about Bruker Corporation's audited financial statements included the auditors' judgments about the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in its financial statements.
The Audit Committee also discussed with Ernst & Young other matters required by Statement on Auditing Standards ("SAS")Standard No. 61, "Communication16,Communications with Audit Committees" as amended by SAS No. 90, "Audit Committee Communications," as amended and, as adopted by the Public Company Accounting and Oversight Board (PCAOB) in Rule 3200T,, including the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of the disclosures in the financial statements. Ernst & Young also provided to the Audit Committee written disclosures and the letter required by applicable requirements of the PCAOB regarding communications with the Audit Committee concerning independence. The Audit Committee discussed with Ernst & Young the registered public accounting firm's independence from Bruker Corporation and considered the compatibility of non-audit services with Ernst & Young's independence.
Based on the Audit Committee's discussion with management and Ernst & Young, and the Audit Committee's review of the representations of management and the report of Ernst & Young to the Audit Committee, the Audit Committee recommended to the board that that the audited financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 20112014 filed with the Securities and Exchange Commission and selected Ernst & Young LLP as the independent registered public accounting firm for Bruker Corporation, subject to shareholder ratification, for 2012.2015.
Submitted by the Audit Committee of Bruker Corporation's Board of Directors.
Brenda J. Furlong, Chair Richard A. Packer |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Fees billed to the Company by its independent registered public accounting firm for fiscal years 20102013 and 2011,2014, all of which were approved by the Audit Committee, were comprised of the following:
Audit Fees. Ernst & Young's fees for its audit of the Company's annual consolidated financial statements, including the integrated audit of internal control over financial reporting, its review of the consolidated financial statements included in our quarterly reports on Form 10-Q, audits of statutory filings, comfort letter procedures and review of other regulatory filings for 20102013 and 20112014 were $4,442,000$5,214,252 and $5,511,500,$5,431,280, respectively. The 2010 and 2011 fees include $820,000 and $497,000, respectively, related to work performed in connection with a contemplated initial public offering for one of our subsidiaries.
Audit-Related Fees. Ernst & Young billed us a total of $23,000$2,000 in 2010. In 2011, no fees2013 and $3,000 in 2014 for audit-related services were billed to us by Ernst & Young.services.
Tax Fees. Ernst & Young fees for tax services provided to us, including tax compliance, tax advice and planning, totaled $27,000$1,029,472 in 20102013 and $14,275$176,611 in 2011.2014.
All Other Fees. In 20102013 and 2011,2014, no fees for services other than as indicated above were billed to us by Ernst & Young.
Audit Committee Pre-Approval Policies and Procedures
In order to ensure that audit and non-audit services proposed to be performed by the Company's independent registered public accounting firm do not impair the auditor's independence from the Company, the Audit Committee has adopted, and the board of directors has ratified, the following pre-approval policies and procedures.
Policies
Before engaging the independent registered public accounting firm to render the proposed service, the Audit Committee must either (i) approve the specific engagement ("specific pre-approval") or (ii) enter into the engagement pursuant to pre-approval policies and procedures established by the Audit Committee ("general pre-approval"), provided the policies and procedures are detailed for the particular service, the Audit Committee is informed of each service, and such policies and procedures do not include delegation of the Audit Committee's responsibilities to management. The Audit Committee annually reviews and pre-approves the services that may be provided by the independent registered public accounting firm without obtaining specific pre-approval. The Audit Committee will add to or subtract from this list of general pre-approved services from time to time, based on subsequent determinations.
Unless a type of service has received general pre-approval, it requires specific pre-approval by the Audit Committee if it is to be provided by the independent registered public accounting firm. Any proposed services exceeding pre-approved cost levels or budgeted amounts also require specific pre-approval by the Audit Committee.
For both types of pre-approval, the Audit Committee considers whether such services are consistent with the SEC's and the PCAOB's rules on auditor independence. The Audit Committee also considers whether the independent registered public accounting firm is best positioned to provide the most effective and efficient service, for reasons such as its familiarity with the Company's business, people, culture, accounting systems, risk profile and other factors, and whether the service might enhance the Company's ability to manage or control risk or improve audit quality. All such factors are considered as a whole, and no one factor will necessarily be determinative.
The Audit Committee also considers the relationship between fees for audit and non-audit services in deciding whether to pre-approve any such services and may determine, for each fiscal year, the
appropriate ratio between the total amount of fees for Audit, Audit-related and Tax services and the total amount of fees for certain permissible non-audit services classified as All Other services.
The Audit Committee may delegate either type of pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.
Procedures
Pre-approval fee levels or budgeted amounts for all services to be provided by the independent registered public accounting firm are established annually by the Audit Committee. Any proposed services exceeding these levels or amounts require specific pre-approval by the Audit Committee, even if previously generally pre-approved.
All requests or applications for services to be provided by the independent registered public accounting firm that do not require specific approval by the Audit Committee are submitted to the Chief Financial Officer and must include a detailed description of the services to be rendered.
Requests or applications to provide services that require specific approval by the Audit Committee must be submitted to the Audit Committee by both the independent registered public accounting firm and the Chief Financial Officer, and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC's rules on auditor independence.
The Audit Committee monitors the performance of all services provided by the independent auditor and assesses whether such services are in compliance with this policy.
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP has been our independent registered public accounting firm since 1998, and has been selected by the Audit Committee of the board of directors as our independent registered public accounting firm for the fiscal year ending December 31, 2012.2015. Although the Company is not required to seek stockholder approval of this appointment, the board of directors believes it to be sound corporate governance to do so. In the event that the stockholders fail to ratify the appointment, the Audit Committee will investigate the reasons for stockholder rejection and will reconsider the appointment. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent public accounting firm during the year if the Audit Committee believes that such a change would be in the best interests of the Company and its stockholders.
A representative of Ernst & Young is expected to be present at the 20122015 Annual Meeting and will have the opportunity to make a statement if he or she so desires to do so and will be available to respond to appropriate stockholder questions.
The Board of Directors recommends a vote FOR the ratification of the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for fiscal 2012.2015.
The board will give appropriate attention to written communications that are submitted by stockholders, and will respond if and as appropriate. Absent unusual circumstances or as contemplated by committee charters and subject to any required assistance or advice from legal counsel, Mr. Stein, the Secretary of the Company, is primarily responsible for monitoring communications from stockholders and for providing copies or summaries of such communications to the other directors as he considers appropriate.
Communications are forwarded to all directors if they relate to important substantive matters and include suggestions or comments that Mr. Stein considers to be important for the directors to know. In general, communications relating to corporate governance and long-term corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances and matters as to which we may receive repetitive or duplicative communications.
Stockholders who wish to send communications on any topic to the board should address such communications to Richard M. Stein, Secretary, at Nixon Peabody LLP, 100 Summer Street, Boston, MA 02110.
TIME FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present proper proposals for inclusion in a company's proxy statement and for consideration at the next annual meeting of its stockholders by submitting their proposals to Bruker Corporation in a timely manner.
Stockholders interested in submitting a proposal for inclusion in the proxy materials for the annual meeting of stockholders in 20132016 may do so by following the procedures set forth in Rule 14a-8 of the Securities Exchange Act of 1934, as amended. To be eligible for inclusion, stockholder proposals must be received by us no later than December 14, 2012.16, 2015.
Additionally, under our bylaws, no business may be brought before an annual meeting unless it is specified in the notice of meeting by or at the direction of the Boardboard of directors or by a stockholder entitled to vote who has delivered notice to Bruker Corporation (containing certain information specified in the bylaws) not less than 90 or more than 120 days prior to the first anniversary of the preceding year's annual meeting.
Management knows of no matters which may properly be and are likely to be brought before the meeting other than the matters discussed herein. However, if any other matters properly come before the meeting, the persons named in the enclosed proxy will vote in accordance with their best judgment.
The board of directors recommends an affirmative vote on all proposals specified. Proxies will be voted as specified. If signed proxies are returned without specifying an affirmative or negative vote on any proposal, the shares represented by such proxies will be voted in favor of the board of directors' recommendations.
By order of the board of directors | ||
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Frank H. Laukien, Ph.D. Chairman, President and Chief Executive Officer |
April 13, 201214, 2015
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