SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
the Securities Exchange Act of 1934 (Amendment No. )
![[MISSING IMAGE: lg_charlesriver-4c.jpg]](/files/DEF 14A/0001104659-23-038821/lg_charlesriver-4c.jpg)
March 29, 2018
Dear Shareholder,
| | | | | Sincerely, | |
| | | | ![[MISSING IMAGE: sg_jamescfoster-bw.jpg]](/files/DEF 14A/0001104659-23-038821/sg_jamescfoster-bw.jpg) | | |
| |  | |||
| | James C. Foster Chairman, President and Chief Executive Officer | |
PLEASE RETURNVOTE YOUR PROXYSHARES PROMPTLY.
9, 2023.
to Be Held on May
9, 2023
Charles River Laboratories International, Inc.:
| | | ||||
| | | By Order of the Board of Directors | | ||
| |  | | ![[MISSING IMAGE: sg_matthewldaniel-bw.jpg]](/files/DEF 14A/0001104659-23-038821/sg_matthewldaniel-bw.jpg) | |
| | | | | Matthew L. Daniel Corporate Secretary | |
30, 2023
Alternatively, you may vote via internet by following the instructions on your proxy card or voting instruction card.
| | |||||
| Time and | | | 8:00 a.m. on Tuesday, May | | |
| Place: | | | Cooley LLP, 500 Boylston Street, Boston, | | |
| | Record | | | March | |
Name James C. Foster Robert Bertolini Stephen D. Chubb Deborah T. Kochevar Martin W. Mackay Jean-Paul Mangeolle George E. Massaro George M. Milne, Jr. C. Richard Reese Craig B. Thompson Richard F. Wallman Key: fourfive items of business which we currently expect to be considered at our 20182023 Annual Meeting. The following table lists those items of business and our Board'sBoard’s vote recommendation. PROPOSALBOARD VOTE RECOMMENDATION Management Proposals Election of Directors Management ProposalsElection of DirectorsForFOR each director nominee Advisory Vote to Approve Executive Officer Compensation ForFOR 2018 Incentive PlanAdvisory Vote on Frequency of Future Votes on Executive Compensation ForANNUAL Ratification of Independent Registered Public Accounting Firm ForFOR Shareholder Proposal Shareholder Proposal described in this Proxy Statement AGAINST Director
Since Current Committee Memberships Name Age Occupation Independent AC CC CGNC SPCAC STC FC James C. Foster 72 1989 Chair, President and CEO of Charles River Laboratories International, Inc. ![[MISSING IMAGE: ic_member-bw.jpg]](/files/DEF 14A/0001104659-23-038821/ic_member-bw.jpg)
Nancy C. Andrews 64 2020 Executive Vice President and Chief Scientific Officer at Boston Children’s Hospital. Former Professor of Pharmacology & Cancer Biology, Duke University School of Medicine. Former Dean of Duke University School of Medicine and Vice Chancellor of Academic Affairs of Duke University. ![[MISSING IMAGE: ic_tick-bw.jpg]](/files/DEF 14A/0001104659-23-038821/ic_tick-bw.jpg)
![[MISSING IMAGE: ic_committe-bw.jpg]](/files/DEF 14A/0001104659-23-038821/ic_committe-bw.jpg)
Robert Bertolini 61 2011 Former President and CFO of Bausch and Lomb Incorporated and former Executive Vice President and Chief Financial Officer of Schering-Plough Corp. Deborah T. Kochevar 66 2008 George Llado, Sr. 57 2020 Former Senior Vice President and Chief Information Officer of Alexion Pharmaceuticals, Inc. Martin W. Mackay 67 2017 Co-Founder and CEO of Rallybio Corporation. Former Chief of R&D, AstraZeneca and Former Chief of R&D, Alexion Pharmaceuticals, Inc. George E. Massaro 75 2003 Former Vice Chair, Huron Consulting Group, Inc. C. Richard Reese 77 2007 Former CEO and Chair of Iron Mountain Incorporated Craig B. Thompson 70 2022 President Emeritus, Memorial Sloan Kettering Cancer Center. Member of the Sloan Kettering Institute and the Department of Medicine, Memorial Sloan Kettering Cancer Center. Richard F. Wallman 71 2011 Former Senior Vice President and CFO, Honeywell International, Inc. Virginia M. Wilson 68 2019 Retired Senior Executive Vice President and Chief Financial Officer, TIAA Director 2017 Committee Memberships Age Since Occupation Independent AC CC CGNC SPCAC STC EC FC 67 1989 Chairman and CEO and former President of Charles River Laboratories International, Inc. No M C 56 2011 Former President and CFO of Bausch and Lomb Incorporated and former Executive Vice President and Chief Financial Officer of Schering-Plough Corp. Yes M C M 74 1994 Special Limited Partner of Catalyst Healthcare Ventures and Former President and CEO of Allegro Diagnostics, Inc. Yes M M 61 2008 Dean, Cummings School of Veterinary Medicine, Tufts University Yes M M M 62 2017 Co-Founder and CEO of Rallybio, and Former Chief of R&D, AstraZeneca and Former Chief of R&D, Alexion Yes M M 56 2018 * Former President, Sciex and Former Executive Vice President, Merck KGaA Yes M M 70 2003 Former Vice Chairman, Huron Consulting Group, Inc. Yes C M 74 2002 Venture Partner, Radius Ventures and former EVP, Pfizer Global Research and Development Yes C M M M 72 2007 Former CEO and Chairman of Iron Mountain Incorporated Yes C M M 65 2013 President and CEO, Memorial Sloan-Kettering Cancer Center Yes M C 66 2011 Former Senior Vice President and CFO, Honeywell International, Inc. Yes M M C AC—AC — Audit Committee; CC—CC — Compensation Committee; CGNC—CGNC — Corporate Governance and Nominating Committee; SPCAC—SPCAC — Strategic Planning and Capital Allocation Committee; STC—STC — Science and Technology Committee; EC—Executive Committee; FC—FC — Finance Committee; C— — Chairperson; M— — Member.*For Mr. Mangeolle, reflects committee membership from date of joining Board of Directors in January 2018.
•We shifted our Executive Long-Term Equity Incentive Compensation Program for our officers (including each of our named executives) to be more directly performance-based by restructuring awards made to those officers so that they were comprised of approximately 60% Performance Share Units (PSUs) incorporating relative Total Shareholder Return (TSR) and non-GAAP Earnings Per Share (EPS) metrics, 20% stock options, and 20% restricted stock/units.•We have obtained advice and recommendations on executive compensation best practices from our independent external compensation consultant, Pay Governance LLC.•For the limited number of our executives with whomwehad change-in-control agreements (which included each of our executive officers), we amended these agreements to eliminate any "gross-up" payment by the Company of any "golden parachute" excise taxes.•We eliminated our Corporate Officer Discretionary Allowance program.•In the 2016 Incentive Plan approved by shareholders at the 2016 Annual Meeting, we added a "double-trigger requirement" for accelerated equity vesting.•We added a Clawback Policy to our Corporate Governance Guidelines.•We have engaged in substantial outreach efforts with our major shareholders to gather feedback, who together hold more than a majority of our outstanding shares.
The Compensation Committee believes that these changes were responsive to feedback from investors and enhancedbelieve enhance the performance orientation of our executive compensation program. the program:
| | | What We Do | | | |||
| | | ✓ Align our executive pay with performance, with a substantial proportion of executive compensation tied to “at risk” elements | | | ✓ Include a “clawback” provision in our Corporate Governance Guidelines that applies to our cash and equity incentive awards | | |
| | | ✓ Set challenging performance objectives | | | ✓ Prohibit hedging and pledging of company shares | | |
| | | ✓ Appropriately balance short- and long-term incentives | | | ✓ Retain an independent compensation consultant to advise the Compensation Committee | | |
| | | ✓ Align executive compensation with shareholder returns through performance-based equity incentive awards | | | ✓ Include caps on individual payouts in short- and long-term incentive plans | | |
| | | ✓ Use appropriate peer groups methodology and revenue regression when evaluating the competitiveness of compensation | | | ✓ Hold an annual “say-on-pay” advisory vote | | |
| | | ✓ Maintain meaningful equity ownership guidelines | | | ✓ Maintain a Compensation Committee composed entirely of independent directors | | |
| | | ✓ Engage in substantial outreach efforts with our major shareholders to gather feedback, including with respect to executive compensation | | | ✓ Conduct an annual risk assessment of our pay practices | | |
| | | What We Don’t Do | | | |||
| | | ✘ No contracts with multi-year guaranteed salary increases or non-performance bonus arrangements | | | ✘ No excessive perquisites | | |
| | | ✘ No “single trigger” equity vesting provisions in our current equity award plans | | | ✘ No change-in-control tax gross-ups | | |
2022.
2018 Incentive Plan
We are asking
| | | ✓ Majority voting standard | | | ✓ Expectation of director attendance at 75%+ meetings | | |
| | | ✓ Mandatory director retirement age | | | ✓ Proxy access by-law | | |
| | | ✓ Annual director and committee assessments | | | ✓ Commitment to ESG principles | | |
| | | ✓ Lead Independent Director | | | ✓ Code of Business Conduct and Ethics | | |
| | | ✓ Independent Board Committee chairs | | | ✓ Information security risk oversight by Audit Committee | | |
| | | ✓ Stock ownership requirements | | | ✓ Corporate strategy and risk oversight by Board | | |
| | | ✓ Political Contribution Policy | | | | | |
In addition, there are several other reasons why we believe approving this 2018 Incentive Plan is important:
•The Plan will allow us to continue to grant equity awards, an important incentive tool for creating shareholder value.
•Equity awards are critical as a recruiting and retention tool.•Equity awards are critical as a motivational tool.•We have demonstrated prudent equity compensation practices.•The Plan includes features designed to protect shareholder interests.•If the Plan is not approved, we would experience a serious disruption of our compensation programs and we would be compelled to increase the cash component of employee and director compensation.
Ratification of Auditors
| | | | 2022 | | | 2021 | | ||||||
| Audit fees | | | | $ | 6,151,413 | | | | | $ | 6,479,044 | | |
| Audit related fees | | | | | 2,959,018 | | | | | | 3,258,316 | | |
| Tax fees | | | | | 980,353 | | | | | | 1,013,393 | | |
| All other fees | | | | | 646,394 | | | | | | 1,646,751 | | |
| Total | | | | $ | 10,737,178 | | | | | $ | 12,397,504 | | |
| | 2017 | 2016 | |||||
|---|---|---|---|---|---|---|---|
Audit fees | $ | 5,375,940 | $ | 5,574,758 | |||
Audit-related fees | 1,454,962 | 767,631 | |||||
Tax fees | 1,200,707 | 1,649,245 | |||||
All other fees | 11,015 | 8,700 | |||||
| | | | | | | | |
Total | $ | 8,042,624 | $ | 8,000,334 | |||
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
DetailDetails regarding these fees can be found on page 8485 of this Proxy Statement.
Shareholder Proposal
251 Ballardvale Street
Wilmington, Massachusetts 01887
(781) 222-6000
annual2023.
2023; “
ONE YEAR” for the frequency of future votes on executive compensation; and “AGAINST” the shareholder proposal. Proxies submitted via internet voting will be voted in accordance with the directions submitted thereby.shareholder proposal (Proposal 5) as described in the proxy statement. With respect to Proposal 3, if no frequency option receives the affirmative vote of a majority of the votes cast, the Company will treat the option that receives the most affirmative votes as shareholders’ preferred frequency.
ONE —
ELECTION OF DIRECTORS
| | ||||||||||
| Name and Age as of the Annual Meeting | | | | | | Position, Principal Occupation, Business Experience and Directorships | ||||
|---|---|---|---|---|---|---|---|---|---|---|
| | ||||||||||
| James C. Foster  ![[MISSING IMAGE: ph_jamescfoster-bw.jpg]](/files/DEF 14A/0001104659-23-038821/ph_jamescfoster-bw.jpg) | | 72 | | | Mr. Foster joined us in 1976 as General Counsel and over his tenure has held various staff and managerial positions. Mr. Foster was named President in 1991, Chief Executive Officer in 1992, and Mr. Foster was selected to serve as a director on our Board due to his role as our Chief Executive Officer, his depth of knowledge of us and our operations, his acute business judgment, extensive familiarity with the businesses in which we compete, and his lengthy experience with us. | | |||
| | Name and Age as of the 2023 Annual Meeting | | | | | | Position, Principal Occupation, Business Experience and Directorships | |
| Nancy C. Andrews, M.D., Ph.D (she/her/hers) ![[MISSING IMAGE: ph_nancyandrews-bwlr.jpg]](/files/DEF 14A/0001104659-23-038821/ph_nancyandrews-bwlr.jpg) | | | 64 | | | Executive Vice President and Chief Scientific Officer at Boston Children’s Hospital since December 2021. Served as Professor of Pediatrics and Professor of Pharmacology & Cancer Biology at Duke University from 2007 to December 2021 (and the Nanaline H. Duke endowed chair from 2013 to 2020). From 2007 to 2017, Dr. Andrews served as Dean of the Duke University School of Medicine and Vice Chancellor for Academic Affairs at Duke University. From 2003 to 2007, she served as dean for Basic Sciences and Graduate Studies and Professor of Pediatrics at Harvard University Medical School. From 1999 to 2003, she served as director of the Harvard-Massachusetts Institute of Technology M.D./Ph.D. Program, and the principal investigator of its MSTP grant. From 1993 to 2006, she was a biomedical research investigator of the Howard Hughes Medical Institute. Dr. Andrews served on the Executive Committee of the MIT Corporation, and is currently Chair of the Board of Directors of the American Academy of Arts and Sciences, and a member of the Scientific Advisory Board of Dyne Therapeutics. She is an elected member of both the National Academy of Medicine and the National Academy of Sciences and currently serves on the Council of the National Academy of Sciences. She is a former Chair of the Board of Directors of the Burroughs Wellcome Fund and a former member of the Scientific Management Review Board at the National Institutes of Health. Dr. Andrews also serves on the boards of directors of Novartis International AG and Maze Therapeutics. Dr. Andrews has been a director since February 2020. Dr. Andrews was selected for the Board in recognition of her distinct perspective as an accomplished physician, scientific researcher, professor, and senior administrator at leading academic institutions and hospitals. She brings to the Board extensive scientific leadership and expertise in oncology, genetics, and pediatric research. Dr. Andrews’ training and experience are particularly suited to understanding and providing insights into the research and development process, which further enhances our position as the partner of choice for our clients’ early-stage drug development programs. | |
| | Name and Age as of the 2023 Annual Meeting | | | | | | Position, Principal Occupation, Business Experience and Directorships | |
| | Robert Bertolini  ![[MISSING IMAGE: ph_robertbertolini-bw.jpg]](/files/DEF 14A/0001104659-23-038821/ph_robertbertolini-bw.jpg) | | 61 | | | President and Chief Financial Officer of Bausch & Lomb Incorporated from February 2013 to August 2013 (until its acquisition by Valeant Pharmaceuticals International, Inc. (n/k/a Bausch Health Companies Inc.)). Mr. Bertolini served as Executive Vice President and Chief Financial Officer at Schering-Plough Corp. from November 2003 until November 2009 (until its merger with Merck & Co) with responsibility for tax, accounting, and financial asset management. Prior to joining Schering-Plough, Mr. Bertolini spent 20 years at PricewaterhouseCoopers LLP, ultimately leading its global pharmaceutical industry practice. Mr. Bertolini Mr. | ||
| |
| | ||||||||||
| Name and Age as of the Annual Meeting | | | | | | Position, Principal Occupation, Business Experience and Directorships | ||||
|---|---|---|---|---|---|---|---|---|---|---|
 | ||||||||||
| | Deborah T. Kochevar, D.V.M., Ph.D. (she/her/hers) ![[MISSING IMAGE: ph_deborahtkochevar-bwlr.jpg]](/files/DEF 14A/0001104659-23-038821/ph_deborahtkochevar-bwlr.jpg) | | | |||||||
 | 66 | | Senior Fellow, The Fletcher School of Law and Diplomacy, with a focus on Global One Health and health diplomacy, and Dean Emerita of Dr. Kochevar was selected to the Board in recognition of her distinct perspective as a highly distinguished academic and educator in the life sciences. As a boarded diplomate of the American College of Veterinary Clinical Pharmacology, with a Ph.D. in cell and molecular biology combined with a D.V.M. degree, and with a deep knowledge base of comparative and translational medicine and complex animal models, Dr. | |||||||
| | ||||||||||
| | ||||||||||
| Name and Age as of the Annual Meeting | | | | | | Position, Principal Occupation, Business Experience and Directorships | ||||
|---|---|---|---|---|---|---|---|---|---|---|
| | ||||||||||
| | George Llado, Sr. (he/him/his) ![[MISSING IMAGE: ph_georgellado-bwlr.jpg]](/files/DEF 14A/0001104659-23-038821/ph_georgellado-bwlr.jpg) | | | 57 | | | Former Senior Vice President and Chief Information Officer (CIO) of Alexion Pharmaceuticals, Inc. As an industry veteran with over 30 years of pharmaceutical business and technology and cyber-security experience, Mr. Llado, through his time at Alexion, contributed to the development and implementation of innovative technology, enabling data-driven insights across Alexion’s R&D, Commercial, Manufacturing Operations and Supply Chain functions. Prior to joining Alexion, Mr. Llado served as Vice President and business line CIO for Merck and Co., where he led the planning and development of IT solutions for the company’s Manufacturing Division. Before that, he was Merck’s Vice President, IT and business line CIO for the Global Commercial Organization and various corporate G&A functions. He led the large-scale merger integration of Merck and Schering-Plough across the IT and Shared Business Services organizations. He also held several other positions of increasing responsibility at Merck, and previously worked at Citibank, N.A. Mr. Llado serves on the National Center for Women & Information Technology (NCWIT) Board, where he participates on the board’s Development Committee and has sponsored key programs such as “Counselors for Computing” that have advanced the organization’s membership. He also serves on the Temple Fox Business School IT Advisory Board. Mr. Llado has been a director since October 2020. Mr. Llado was selected to the Board in recognition of his extensive experience as a senior executive at global companies in the pharmaceutical industry, as well as his technology and cyber-security expertise. | | ||
| | Martin W. Mackay, Ph.D.  ![[MISSING IMAGE: ph_martinmackay-bw.jpg]](/files/DEF 14A/0001104659-23-038821/ph_martinmackay-bw.jpg) | | 67 | | | Dr. Mackay is co-founder, Dr. Dr. Mackay’s extensive experience leading research and development organizations at both global pharmaceutical and biotechnology companies provides us with a unique combination of expertise. | | |||
| | Name and Age as of the 2023 Annual Meeting | | | | | |
 | | |||||
| | George E. Massaro (he/him/his) ![[MISSING IMAGE: ph_georgemassaro-bwlr.jpg]](/files/DEF 14A/0001104659-23-038821/ph_georgemassaro-bwlr.jpg) | | | 75 | | |
 | Former Director and Vice Mr. Massaro has more than 35 years of accounting and auditing experience with expertise in a broad range of areas. As a former managing partner of a major accounting firm, Mr. Massaro brings a deep knowledge of financial reporting, and auditing and tax matters applicable to a variety of industries. Mr. Massaro also provides business acumen from his numerous senior positions at Huron Consulting, as well as his service on boards of other companies. As a result of his extensive background in public accounting and prior experience at Arthur Andersen, Mr. Massaro qualifies as an | | ||||
| | C. Richard Reese (he/him/ |
 | ||||
![[MISSING IMAGE: ph_crichardreese-bw.jpg]](/files/DEF 14A/0001104659-23-038821/ph_crichardreese-bw.jpg) | | | ||
 | | Former Mr. Reese is a proven global business leader who, from the time he joined Iron Mountain as its president in 1981 with only $3 million in annual revenue, developed it into a global company with over $3 billion in revenue and more than 100,000 corporate customers. As a member of our Board, Mr. Reese provides us with invaluable guidance and advice, particularly in the areas of strategic execution, customer service, and innovation, drawing upon his extensive experience, entrepreneurial spirit, and proven track record. | ||
| | ||||
| | ||||||||||
| Name and Age as of the Annual Meeting | | | | | | Position, Principal Occupation, Business Experience and Directorships | ||||
|---|---|---|---|---|---|---|---|---|---|---|
| | ||||||||||
| | Craig B. Thompson, M.D.  ![[MISSING IMAGE: ph_craigthompson-bwlr.jpg]](/files/DEF 14A/0001104659-23-038821/ph_craigthompson-bwlr.jpg) | | 70 | | | Former President and Chief Executive Officer of Memorial Sloan-Kettering Cancer Center December 2022. Dr. Thompson was selected to the Board in recognition of his distinct perspective as a highly distinguished academic and educator in medicine as well as his extensive scientific and medical expertise relevant to life science industries, including the research and development activities of our clients. Dr. | | |||
| | Richard F. Wallman (he/him/his) ![[MISSING IMAGE: ph_richardwallman-bwlr.jpg]](/files/DEF 14A/0001104659-23-038821/ph_richardwallman-bwlr.jpg) | | | |||||||
 | 71 | | From 1995 through 2003, Mr. Wallman served as the Senior Vice President and Chief Financial Officer of Honeywell International, Inc., a diversified technology company, and AlliedSignal, Inc. (prior to its merger with Honeywell). He is also a member of the boards of directors of Roper Mr. | | ||||||
| | Name and Age as of the 2023 Annual Meeting | | | | | | Position, Principal Occupation, Business Experience and Directorships | |
| | Virginia M. Wilson (she/her/hers) ![[MISSING IMAGE: ph_virginiawilson-bwlr.jpg]](/files/DEF 14A/0001104659-23-038821/ph_virginiawilson-bwlr.jpg) | | | 68 | | | Retired Senior Executive Vice President and Chief Financial Officer of TIAA, where she was responsible for leading finance and actuarial functions. Prior to joining TIAA in 2010, Ms. Wilson served as Executive Vice President and Chief Financial Officer of Wyndham Worldwide Corporation, leading Wyndham’s finance and technology organizations following its spin-off from Cendant Corporation in 2006. Previously, she served as Cendant’s Executive Vice President and Chief Accounting Officer and also served as Senior Vice President and Corporate Controller of both MetLife, Inc. and Transamerica’s life insurance division. Ms. Wilson began her career at Deloitte and is a Certified Public Accountant. She is a former member of the board of directors of Conduent Incorporated. Ms. Wilson has been a director since October 2019. Ms. Wilson brings to the Board more than 30 years of financial management experience overseeing the accounting, actuarial, tax, and financial planning and reporting functions at large, multinational organizations. In addition, as a result of her background as a Certified Public Accountant and prior service as a public company Chief Financial Officer, Ms. Wilson qualifies as an “audit committee financial expert” under SEC guidelines. | |
| | | |||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | James C. Foster | | | Nancy C. Andrews | | | Robert Bertolini | | | Deborah T. Kochevar | | | George Llado, Sr. | | | Martin W. Mackay | | | George E. Massaro | | | C. Richard Reese | | | Craig B. Thompson | | | Richard F. Wallman | | | Virginia M. Wilson | |
| Public Company CEO or CFO | | | ● | | | | | | ● | | | | | | | | | ● | | | | | | ● | | | | | | ● | | | ● | |
| Industry* | | | ● | | | | | | ● | | | | | | ● | | | ● | | | | | | | | | | | | | | | | |
| Senior Business Management | | | ● | | | ● | | | | | | ● | | | ● | | | ● | | | ● | | | ● | | | ● | | | | | | ● | |
Business Development / Corporate Strategy | | | ● | | | | | | ● | | | ● | | | | | | ● | | | ● | | | ● | | | | | | ● | | | ● | |
| Finance / Accounting | | | | | | | | | ● | | | | | | | | | | | | ● | | | | | | | | | ● | | | ● | |
| International Business Management | | | ● | | | | | | | | | ● | | | ● | | | ● | | | ● | | | ● | | | | | | | | | ● | |
| R&D / Scientific | | | | | | ● | | | | | | ● | | | | | | ● | | | | | | | | | ● | | | | | | | |
| Information Technology / Digital / Cyber | | | | | | | | | | | | | | | ● | | | | | | | | | | | | | | | | | | ● | |
| ESG | | | | | | | | | | | | ● | | | ● | | | | | | | | | | | | ● | | | | | | | |
| Human Capital Management | | | ● | | | ● | | | | | | ● | | | ● | | | ● | | | | | | | | | | | | | | | | |
| Risk Management | | | ● | | | ● | | | ● | | | ● | | | ● | | | ● | | | ● | | | | | | ● | | | ● | | | ● | |
| Diversity** | | | | | | ● | | | | | | ● | | | ● | | | | | | | | | | | | | | | | | | ● | |
| Military Veteran | | | | | | | | | | | | | | | | | | | | | | | | ● | | | ● | | | | | | | |
and Nominating Committee of the Board, have consistently reflected his strong performance and contributions to the Company, including his exceptional and inclusive leadership skills. Furthermore, Dr. Mackay currently does not chair any committee of the Board, and if re-elected has not been designated as a chair of any Board committee.
| | Tenure | | | Age | | ||||||
| | Newer Tenured (<5 years) | | | 4 | | | <60 years | | | 1 | |
| | Medium Tenured (6-10 years) | | | 1 | | | 60-70 years | | | 6 | |
| | Longer Tenured (>10 years) | | | 6 | | | >70 years | | | 4 | |
![[MISSING IMAGE: pc_diverse-bw.jpg]](/files/DEF 14A/0001104659-23-038821/pc_diverse-bw.jpg)
| Name | | | Fees Earned or Paid in Cash ($)(1) | | | Stock Awards ($)(2) | | | Option Awards ($)(3) | | | All Other Compensation ($)(4) | | | Total ($) | | |||||||||||||||
George E. Massaro . . . . . . . . . . . . . | | | | $ | 113,750 | | | | | $ | 127,828 | | | | | $ | 127,098 | | | | | $ | — | | | | | $ | 368,676 | | |
Robert Bertolini . . . . . . . . . . . . . . . . | | | | | 88,750 | | | | | | 127,828 | | | | | | 127,098 | | | | | | — | | | | | | 343,676 | | |
Virginia M. Wilson . . . . . . . . . . . . . | | | | | 88,750 | | | | | | 127,828 | | | | | | 127,098 | | | | | | — | | | | | | 343,676 | | |
C. Richard Reese . . . . . . . . . . . . . . . | | | | | 83,750 | | | | | | 127,828 | | | | | | 127,098 | | | | | | — | | | | | | 338,676 | | |
Nancy C. Andrews . . . . . . . . . . . . . . | | | | | 82,500 | | | | | | 127,828 | | | | | | 127,098 | | | | | | — | | | | | | 337,426 | | |
Deborah T. Kochevar . . . . . . . . . . . | | | | | 78,750 | | | | | | 127,828 | | | | | | 127,098 | | | | | | — | | | | | | 333,676 | | |
Richard F. Wallman . . . . . . . . . . . . | | | | | 78,750 | | | | | | 127,828 | | | | | | 127,098 | | | | | | — | | | | | | 333,676 | | |
Martin Mackay(5). . . . . . . . . . . . . . . . | | | | | 86,250 | | | | | | 122,048 | | | | | | 121,474 | | | | | | — | | | | | | 329,772 | | |
George Llado, Sr. . . . . . . . . . . . . . . | | | | | 63,750 | | | | | | 127,828 | | | | | | 127,098 | | | | | | — | | | | | | 318,676 | | |
George M. Milne, Jr.(6). . . . . . . . . . | | | | | 15,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 15,000 | | |
Craig B. Thompson(7). . . . . . . . . . . | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | ||||||||||
| | | | | | | | | | ✓ Majority voting standard in uncontested director elections with a mandatory resignation policy that requires incumbent director nominees to submit a resignation that becomes effective upon the failure to receive a majority vote and the Board’s acceptance of the resignation | | | | ✓ Expectation of director attendance with all directors attending over 75% of Board and respective Committee meetings in 2022 | | | | | | | ||||||||||
| | | | | | | | | | ✓ Mandatory director retirement age of 75 with grandfather provision permitting any director who was a member of the Board as of December 17, 2019, such as Mr. Reese, to retire at age 78 | | | | ✓ Proxy Access provision in our by-laws by which eligible stockholders may nominate director candidates for inclusion in our proxy statement and proxy card | | | | | | | ||||||||||
| | | | | | | | | | ✓ Annual director and committee assessments to ensure that the Board and its Committees are performing effectively and in the best interests of the Company and its stockholders | | | | ✓ Commitment to ESG principles through which we strive to promote and support business practices that are environmentally sustainable, socially conscious and aligned with strong corporate governance practices, including Board oversight of ESG risk | | | | | | | ||||||||||
| | | | | | | | | | ✓ Lead Independent Director to provide independent oversight and is responsible for ensuring that the Board is acting in conformity with good corporate governance practices and in our long-term best interests | | | | ✓ Code of Business Conduct and Ethics that outlines the key laws and policies that apply to our business, as well as an individual’s responsibilities for maintaining a positive and ethical work environment and our resources for issues involving legal compliance or ethical business conduct | | | | | | | ||||||||||
| | | | | | | | | | ✓ Independent Board Committee Chairs to provide independent oversight of each Committee | | | | ✓ Information security risk oversight by Board (Audit Committee) | | | | | | | ||||||||||
| | | | | | | | | | ✓ Corporate strategy and risk oversight by Board, which oversees the process and performs this oversight role using several different levels of review | | | | ✓ Political Contribution Policy that, among other things, prohibits the use of Company resources: to fund or support political parties, officials or candidates without prior approval from CEO, CFO and General Counsel; and for employees’ personal political activities | | | | | | | ||||||||||
| | | | | | | | | | | | | | ✓ Stock Ownership Requirements require our officers and directors to hold shares as follows: | | | | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| | | | | | | | | | | | | | Position | | | | Stock Ownership Requirement | | | | | | | | | | | ||
| | | | | | | | | | | | | | Director | | | | 5x cash retainer | | | | |||||||||
| | | | | | | | | | | | | | CEO | | | | 6x base salary | | | | |||||||||
| | | | | | | | | | | | | | Direct Reports to CEO | | | | 3x base salary | | | | |||||||||
| | | | | | | | | | | | | | Senior Vice President (not reporting to CEO) | | | | 2x base salary | | | | |||||||||
| | | | | | | | | | | | | | Vice President | | | | 1x base salary | | | | | | |||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |||
Contacting the Board of Directors
In order to provide shareholders and other interested parties with a direct and open line of communication to the Board, we adopted the following procedures for communications to directors. Shareholders and other interested parties may contact the lead director, any other directors, or the independent members of the Board as a group through our Lead Director, Dr. Milne, by writing to the
Lead Director, c/o Corporate Secretary, Charles River Laboratories International, Inc., 251 Ballardvale Street, Wilmington, Massachusetts 01887, or by email atCRLLeadDirector@crl.com. All communications received in this manner will be kept confidential and relevant information will be forwarded by the Corporate Secretary to the Lead Director or to other directors if the communication is so directed. Items that are unrelated to a director's duties and responsibilities as a board member may be excluded by the Corporate Secretary, including, without limitation, solicitations and advertisements, junk mail, product-related communications, job referral materials such as resumes, surveys, and material that is determined to be illegal or otherwise inappropriate. Any communication so excluded will be made available to any independent director upon request.
Director Qualification Standards; Director Independence
Company client.
Company made to Tufts University pursuant to a longstanding royalty arrangement established in 1996 that predates Dr. Kochevar’s relationship with either Tufts or the Company, and approximately $833,000 in arms-length sales from the Company to Tufts University in the following general categories: Research Models
non-employee directors serve or have served as either (1) an executive officer or (2) an officer, director or trustee of a charitable institution (other than any such charitable institution with which the Company has no transactions, relationships, or arrangements), you are directed to their biographies adjacent to their pictures above in this Proxy Statement.
The Board of Directors and Its Committees
Board Leadership Structure and the Role of the Board of Directors in Risk Oversight
We are led by Mr. James C. Foster, who has served as Chief Executive Officer (CEO) since 1992 and Chairman of the Board since 2000. Our Board of Directors is currently composed of Mr. Foster and ten independent directors. One of these directors, currently Dr. George M. Milne, serves as our Lead Director. It is our current practice that the positions of Chairman of the Board and CEO be held by the same person. We believe that this leadership structure has been effective for us because it promotes clear accountability, effective decision-making and alignment on corporate strategy. Our Corporate Governance Guidelines require the election, by the independent directors, of a Lead Director. The Lead Director helps to provide independent oversight and is responsible for ensuring that the Board is acting in conformity with good corporate governance practices and in our long-term best interests. Our Lead Director has broad responsibility and authority, including to:
•establish, with the Chairman of the Board, logistics of scheduling and setting agendas for Board and committee meetings, including approving meeting agendas and assuring there is sufficient time for discussion of all agenda items;•develop agendas for, and preside over,executive sessions of theBoard's independent directors;•assist the Board and the Corporate Governance and Nominating Committee in monitoring and implementing our Corporate Governance Guidelines;•serve as the principal liaison between the Chairman and the independent directors;•interview all director candidates and make recommendations to the Corporate Governance and Nominating Committee;•be available, when appropriate, for consultation and direct communication with shareholders;•retain outside advisors and consultants who report directly to the Board of Directors on Board-level issues; and•on an annual basis, in consultation with the independent directors, review his responsibility and authority and recommend for approval any modifications or changes to theBoard.
We believe that having a combined Chairman/CEO, independent chairs for each of our Board committees and an independent Lead Director provides the right form of leadership for us. The benefit of a combined Chairman/CEO role is complemented by the benefit of oversight of our operations by experienced independent directors who have appointed a Lead Director and independent committee chairs. This combination has served us well for many years and we have found it to be an efficient and effective leadership model for us. The Board selects our CEO and Chairman in the manner that it determines to be in the best interests of our shareholders. From time to time, and at least annually, the Corporate Governance and Nominating Committee conducts an assessment of this leadership structure.
The Board oversees our risk oversight process and performs this oversight role using several different levels of review. In connection with its reviews of the operations of our business units and corporate functions, particularly during the annual strategic planning sessions, the Board is informed of
the primary risks associated with those units and functions. Principally, the Board satisfies its responsibility through receiving regular reports from each committee chair regarding such committee's consideration and actions, as well as through receiving regular reports directly from officers responsible for oversight of our particular risks, including operational, financial, legal, regulatory, strategic, and reputational risks. Such reporting enables the Board to understand our risk identification, management, and mitigation strategies. The Company reviewed and evaluated its enterprise risk management (ERM) program in 2017, taking subsequent steps to further formalize and enhance the ERM program, the effect of which is anticipated to enhance the Board's ability to oversee their risk oversight responsibilities.
Areas of risk oversight which generally remain at the Board level and are not delegated to any Committee include risks related to our operational regulatory matters (such as quality control and humane care), cybersecurity, data privacy, and significant business decisions. The Board satisfies this oversight responsibility through regular reports from our officers responsible for each of these risk areas, reports from Board committees and related discussions, as well as through periodic progress reports from officers on our critical on-going initiatives. The Board also consults periodically with outside financial and other advisors it determines necessary.
Each of the Board's committees oversees the management of our risks that fall within the committee's areas of responsibility. A description of each committee's risk oversight focus is below. In performing this function, each committee has full access to management, as well as the ability to engage advisors. When a committee receives a report or update regarding an area of potential risk to us, the chairman of the relevant committee determines whether it is materially significant enough to report on the discussion to the full Board at the next Board meeting. This enables the Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.
Audit Committee and Financial Experts
The Audit Committee met seven times in 2017. During 2017, the members of the Audit Committee included Messrs. Bertolini, Chubb and Massaro (Chair). Mr. Mangeolle joined the Audit Committee when he joined the Board of Directors in January 2018. The Board of Directors has unanimously determined that Messrs. Bertolini, Chubb and Massaro qualify as "audit committee financial experts" under Item 401(h) of Regulation S-K promulgated under the Securities Exchange Act of 1934 and the NYSE regulations. In addition, the Board has determined that each of the members of the Audit Committee is "independent" under the rules of the NYSE and the SEC. The Audit Committee is responsible for the engagement of our independent registered public accounting firm; selecting the lead engagement partner at our independent registered public accounting firm; reviewing the plans and results of the audit engagement with our independent registered public accounting firm; approving services performed by, and the independence of, our independent registered public accounting firm; considering the range of audit and non-audit fees; discussing with our independent registered public accounting firm the adequacy of our internal control over financial reporting; and reviewing annual and quarterly financial statements and earnings releases. The Audit Committee is also responsible for administering our Related Persons Transaction Policy. A copy of the Audit Committee Charter is available on our website atwww.criver.com under the "Investor Relations—Corporate Governance" caption.
As part of its charter and as required by the NYSE, the Audit Committee discusses our policies with respect to risk assessment and risk management, including our major financial risk exposures and the steps that have been taken to monitor and control these exposures. The Audit Committee assumes primary oversight responsibility for our risk management framework as it applies to our financial reporting and disclosures, system of internal controls, and operations, including the identification of the primary risks to our business and interim updates of those risks, and periodically monitors and evaluates the primary risks associated with particular business units and functions through participation
and monitoring of the development of the annual external and internal audit plans. The Audit Committee is primarily responsible for oversight of our risks relating to accounting matters, financial reporting (including tax, legal, and related regulatory compliance), financial policies, and cash management. The head of our Internal Audit department, who functionally reports to the Audit Committee, assists us in identifying and evaluating risk management controls and methodologies to address identified risks. At each of its regularly scheduled meetings, the Audit Committee meets in executive session with representatives from our independent registered public accounting firm. The Audit Committee also has direct interaction with our Chief Financial Officer, Chief Accounting Officer, our General Counsel, and other members of management. In addition to the items mentioned above, the Audit Committee also receives regular reports, including quarterly reports from the Company's management Disclosure Committee, regarding issues such as the status of material litigation, allegations of accounting and auditing concerns or fraud, and related party transactions.
Compensation Committee
The Compensation Committee met five times during 2017 and was composed of the following members: Dr. Kochevar and Messrs. Reese (Chair) and Wallman. Mr. Mangeolle joined the Compensation Committee when he joined the Board of Directors in January 2018. Our Board of Directors has determined that each of the members of the Compensation Committee is "independent" under the rules of the NYSE and the SEC. The primary objective of the Compensation Committee is to develop and implement compensation policies and plans that are appropriate for us in light of all relevant circumstances and which provide incentives that further our long-term strategic plan and are consistent with our culture and the overall goal of enhancing shareholder value. The Compensation Committee reviews compensation structure, policies, and programs to ensure (1) that legal and fiduciary responsibilities of the Board of Directors are carried out, and (2) that such structure, policies, and programs contribute to our success. In addition, the Compensation Committee reviews, approves, and makes recommendations on our compensation and benefit plans to ensure that they meet corporate objectives. The Compensation Committee determines and approves the compensation of the CEO, reviews the CEO's recommendations on compensation for all of our executive officers, and approves such compensation when determined. As discussed below under "Compensation Discussion and Analysis—Compensation Elements—Compensation Setting Process," other than Mr. Foster and Mr. David P. Johst, our Corporate Executive Vice President, General Counsel and Chief Administrative Officer, none of our executive officers plays a significant, ongoing role in assisting the Compensation Committee in setting executive compensation. The Compensation Committee also administers our equity incentive plans other than with respect to grants to our non-employee directors. A copy of the Compensation Committee Charter is available on our website atwww.criver.com under the "Investor Relations—Corporate Governance" caption.
The Compensation Committee is responsible for oversight of risks relating to employment compensation policies and our general compensation and benefits programs. The Compensation Committee considers the impact of our executive compensation program, and the incentives created by the compensation awards that it administers, on our risk profile. To assist it in satisfying these oversight responsibilities, from time to time the Compensation Committee has retained its own outside compensation consultant, and meets both regularly and periodically as needed with management to understand the financial, human resources, and shareholder implications of compensation decisions being made. Between formal Compensation Committee meetings, the Compensation Committee Chairman also interacts regularly with management and the Committee's outside consultants. In addition, at the direction of the Compensation Committee, Mr. Johst and his staff annually conduct a review of our overall compensation programs.
The Compensation Committee engaged Pay Governance LLC (Pay Governance) as the sole independent compensation consultant to advise the Compensation Committee on matters related to
2017 executive compensation. Pay Governance is engaged by, and reports directly to, the Compensation Committee, which has the sole authority to hire or dismiss Pay Governance and to approve fee arrangements for work performed. Pay Governance generally assists the Compensation Committee in fulfilling its responsibilities under its charter, including advising on proposed compensation packages for our top executives, compensation program design, and market practices generally. With respect to 2017 compensation matters, the Compensation Committee authorized Pay Governance (1) to interact with management on behalf of the Compensation Committee, as needed, in connection with advising the Compensation Committee; (2) to assist with the calculations of compensation information to be included in our proxy statements, including the calculations and analysis related to the valuation of our PSUs; (3) to provide advice with respect to our Charles River Laboratories International, Inc. Incentive Plan that was approved by our shareholders at the 2017 Annual Meeting; and (4) to provide advice with respect to the Committee's analysis of director compensation, including competitive market data. For more information on the input Pay Governance provided to our fiscal year 2017 compensation determinations, please see "Compensation Discussion and Analysis—Compensation Elements—Compensation Setting Process" on pages 51-52 of this Proxy Statement.
Except as described above, in 2017 we did not receive any other services from Pay Governance, nor have we utilized the services of any other compensation consultant in matters affecting senior executive or director compensation. Any significant Pay Governance fees outside of the normal scope of work are approved for payment by the Chairman of the Compensation Committee, with authority delegated to Mr. Johst to approve the processing of payment of routine invoices.
Pay Governance provided the Compensation Committee with a letter addressing the independence factors under NYSE listing rules, and in compliance with SEC and the NYSE disclosure requirements regarding the independence of compensation consultants, the Committee took that information into account in concluding that there was no conflict of interest within the meaning of Section 10C-1 of the Securities Exchange Act of 1934. Based upon this and other relevant factors, the Compensation Committee has assessed the independence of Pay Governance and concluded that Pay Governance's work for the Compensation Committee does not raise any conflict of interest.
Corporate Governance and Nominating Committee
The Corporate Governance and Nominating Committee met two times during 2017. The members of the committee included Drs. Kochevar, Mackay, and Milne (Chair), and Thompson. Dr. Mackay joined the Corporate Governance and Nominating Committee when he joined the Board of Directors in July 2017. The Board of Directors has determined that each of the members of the Corporate Governance and Nominating Committee is "independent" under the rules of the NYSE. The Corporate Governance and Nominating Committee makes recommendations to the Board on all matters relating to the Board, including development and implementation of policies on composition, committee participation and size of the Board, changes in the organization and procedures of the Board, the processes used by the Board in its self-assessment, and compensation (including equity compensation) of non-employee directors. The Corporate Governance and Nominating Committee oversees matters of corporate governance, including Board performance and director education, and considers and selects director nominees, including those submitted by shareholders in accordance with the Bylaws. The Corporate Governance and Nominating Committee also recommends directors for appointment to committees of the Board. Typically, committee rotations are determined in February, made effective immediately following the annual meeting of shareholders, and are reevaluated on a yearly basis. The Corporate Governance and Nominating Committee oversees our Corporate Governance Guidelines and Code. A copy of the Corporate Governance and Nominating Committee Charter is available on our website atwww.criver.com under the "Investor Relations—Corporate Governance" caption.
The Corporate Governance and Nominating Committee is responsible for conducting an annual evaluation of the performance of the full Board and its committees to determine whether it and the committees are functioning effectively. This process includes annual self-assessments by each Board committee with performance criteria for each committee established on the basis of its charter, as well as interviews conducted by the chair of the committee. As part of this process, the Corporate Governance and Nominating Committee also assesses the performance of each individual director and the Chair of the committee/Lead Director conducts a personal discussion with each individual member of the Board. This performance assessment addresses factors such as each director's meeting attendance, core competencies, independence, and level of commitment. Upon completion of the individual director evaluation process, the Committee reports its conclusions to the full Board.
The Corporate Governance and Nominating Committee is responsible for oversight of risks relating to Board succession planning, ethics practices, matters addressed in our Corporate Governance Guidelines, and other corporate governance issues, particularly to the extent that any of these could affect our operations and strategic decisions. To satisfy these oversight responsibilities, the Committee receives assistance and reports from our senior management from time to time.
The Corporate Governance and Nominating Committee uses a variety of methods to identify and evaluate nominees for directors. The Corporate Governance and Nominating Committee regularly assesses the appropriate size of the Board and whether any vacancies on the Board are expected. For the purposes of succession planning, the Corporate Governance and Nominating Committee considers various potential candidates for director. Candidates may come to the attention of the Corporate Governance and Nominating Committee through current Board members, executive officers, professional search firms, shareholders, or other persons. All candidates complete a nominee questionnaire that solicits information regarding the nominee's background, board experience, industry experience, independence, financial expertise, and other relevant information, and are interviewed by at least one member of the Corporate Governance and Nominating Committee. These candidates are discussed at regular or special meetings of the Committee and may be considered at any point during the year. As described below, the Corporate Governance and Nominating Committee considers any director candidates recommended by shareholders as well as properly submitted shareholder nominations for candidates for the Board. If any materials are provided by a shareholder in connection with the nomination of a director candidate, such materials are forwarded to the Corporate Governance and Nominating Committee. Such nominations must be in accordance with our Bylaws. The Corporate Governance and Nominating Committee also reviews materials provided by professional search firms or other parties. The Corporate Governance and Nominating Committee evaluates all candidates based on the minimum qualifications described below as well as the criteria set forth in our Corporate Governance Guidelines. In evaluating nominations, the Corporate Governance and Nominating Committee seeks to recommend to shareholders a group that can best oversee our success and represent shareholder interests through the exercise of sound judgment using its diversity of experience in various areas. Whether the nominee is recommended by a shareholder or the Board, there is no difference in the manner in which the Committee evaluates nominees.
Science and Technology Committee
The Science and Technology Committee met three times during 2017 and was composed of the following members: Drs. Kochevar, Milne, and Thompson (Chair), and Mr. Chubb. Dr. Mackay joined the Science and Technology Committee when he joined the Board of Directors in July 2017. The Science and Technology Committee is responsible for identifying and discussing significant emerging trends and issues in science and technology. The Science and Technology Committee is responsible for periodically reviewing and advising the Board on our strategic direction, and on investment in research and development and in technology. To satisfy these oversight responsibilities, the Committee may obtain advice and assistance from consultants and has access to members of management.
Strategic Planning and Capital Allocation Committee
The Strategic Planning and Capital Allocation Committee met five times during 2017 and was composed of the following members: Messrs. Bertolini (Chair), Foster, Reese, and Wallman. The Strategic Planning and Capital Allocation Committee is responsible for reviewing our capital structure, financial strategies, major acquisitions and investment policies to support prudent and effective capital allocation. The Strategic Planning and Capital Allocation Committee is responsible for oversight of risks relating to material financial decisions, credit policies and ratings, investment strategies, and our debt and equity structure. To satisfy these oversight responsibilities, the Committee may obtain advice and assistance from outside consultants and advisors, and receives assistance and reports from our senior management from time to time.
Finance Committee
The Finance Committee met once during 2017. It is comprised of the following members: Dr. Milne, and Mr. Wallman (Chair). The Finance Committee is responsible for providing ongoing, broad-based guidance and input to management regarding opportunities to enhance finance systems and practices and to promote heightened levels of financial performance and efficiency. To satisfy these oversight responsibilities, the Committee may obtain advice and assistance from consultants and has access to members of management.
Executive Committee
While it is our general policy that all major decisions be considered by the Board as a whole, the Board has delegated authority to an Executive Committee to act on its behalf only in circumstances in which it is not feasible to convene the full Board or when authority has been specifically delegated to the Executive Committee by the full Board. In 2017, the Executive Committee consisting of Messrs. Bertolini, Foster (Chair), Massaro, and Reese, and Dr. Milne, was not required to meet.
Board Nomination Process
The Corporate Governance and Nominating Committee adopted criteria regarding the qualifications required for Board nominees, which can be found in our Corporate Governance Guidelines. These criteria are designed to assure that the Board of Directors is composed of successful individuals who demonstrate integrity, reliability, knowledge of corporate affairs, and an ability to work well together. The primary consideration in the selection and retention of directors is their respective ability to fairly represent the interests of our stakeholders. Diversity in business background, area of expertise, skills, educational background, gender, nationality, industry, geography, age, and ethnicity are also considered, as well as other factors that can provide the Board with a range of informative viewpoints and perspectives. The criteria for director nominees include: the candidate's professional experience and personal accomplishments; the candidate's independence from us and management; the ability of the candidate to attend Board and committee meetings regularly and devote an appropriate amount of effort in preparation for those meetings; the candidate's ability to function as a member of a collaborative group; and the candidate's understanding of the Board's governance role. In addition, the Board evaluates each individual in the context of the Board as a whole, with the objective of recommending to shareholders a group that can best oversee the success of the business and represent shareholder interests through the exercise of sound judgment using its diversity of backgrounds and experiences in various areas. In determining whether to recommend a director for reelection, the director's past attendance at meetings and participation in and contributions to the activities of the Board is also taken into consideration. Since the 2017 annual meeting of shareholders, two new directors (Dr. Mackay and Mr. Mangeolle) have been added to our Board, who together have added valuable industry expertise not previously represented and international backgrounds, and have contributed to our intergenerational balance.
The Corporate Governance and Nominating Committee will consider director candidates recommended by shareholders. Shareholders may submit director recommendations to the Corporate Secretary, Charles River Laboratories International, Inc., 251 Ballardvale Street, Wilmington, MA 01887. Pursuant to our Bylaws, nominations for directors at the Annual Meeting of Shareholders must be received not less than 90 days nor more than 120 days prior to the first anniversary of the previous year's meeting. For information about submitting shareholder proposals, including director nomination proposals, please see the section of this Proxy Statement entitled "Shareholder Proposals for 2019 Annual Meeting."
Meeting Attendance
All Board members are expected to attend our Annual Meetings of Shareholders, unless an emergency prevents them from doing so. All members of the Board serving at that time attended the 2017 Annual Meeting of Shareholders. During 2017 there were five meetings of the Board of Directors. Each director attended 75% or more of the aggregate number of Board meetings and the committee meetings of the Board on which he or she served during 2017.
Other Board Service
Our Corporate Governance Guidelines provide that directors generally may not serve on more than five boards of directors of other publicly traded companies (in addition to our Board or the board of directors of a director's employer). Members of the Audit Committee generally may not serve on more than three publicly traded company audit committees simultaneously (including that of our company). In addition, service on boards and/or committees of other organizations must be consistent with our conflict of interest policies.
We use a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on our Board. Linking a portion of their compensation to stock aligns the interests of directors with the interests of shareholders. In setting director compensation, we consider the significant amount of time that directors expend in fulfilling their duties to us as well as the skill levels required by us of members of the Board.
for his role as director, and the entirety of his compensation is reported in the Summary Compensation Table located on pages 64-65 of this Proxy Statement.
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | All Other Compensation ($)(4) | Total ($) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
George M. Milne, Jr. | 90,000 | 215,050 | — | 305,050 | |||||||||
George E. Massaro | 85,000 | 215,050 | — | 300,050 | |||||||||
Robert Bertolini | 80,000 | 215,050 | — | 295,050 | |||||||||
C. Richard Reese | 75,000 | 215,050 | — | 290,050 | |||||||||
Craig B. Thompson | 70,000 | 215,050 | — | 285,050 | |||||||||
Richard F. Wallman | 70,000 | 215,050 | — | 285,050 | |||||||||
Stephen D. Chubb | 65,000 | 215,050 | — | 280,050 | |||||||||
Deborah T. Kochevar | 60,000 | 215,050 | — | 275,050 | |||||||||
Martin Mackay | 30,000 | 215,042 | — | 245,042 | |||||||||
(1)Reflects the aggregate dollar amount of all fees earned for services as a director, including annual retainer fees, committee, and/or committee chair fees. A description of the applicable fees can be found below. For the following directors, totals include the following amounts in 2017 that the director elected to receive in the form of an equivalent value of restricted stock units (RSUs) instead of cash: Dr. Milne—$90,000, Dr. Mackay—$30,000, Mr. Reese—$75,000, Dr. Thompson—$70,000, and Mr. Wallman—$70,000.(2)Amounts reflect the full grant date fair value of the RSUs granted to directors in fiscal year 2017 as part of their annual equity grant in May 2017, with the exception of Dr. Mackay, (who joined the Board in July 2017 and received his equity grant in August 2017), computed in accordance with Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) Topic 718. See Item 8 "Financial Statements and Supplementary Data—Note 11 to our Consolidated Financial Statements" and Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Stock-Based Compensation," included in our Annual Report on Form 10-K for the fiscal year ended December 30, 2017 for a discussion of the assumptions used by us in the Black-Scholes valuation model. As of December 30, 2017, each then-current director held the aggregate number of unvested RSUs as follows: Mr. Bertolini—2,436, Mr. Chubb—2,436, Dr. Kochevar—2,436, Dr. Mackay—2,782, Mr. Massaro—2,436, Dr. Milne—3,470, Mr. Reese—3,300, Dr. Thompson—3,229, and Mr. Wallman—3,258.(3)None of our directors received a stock option award in fiscal year 2017. As of December 30, 2017, each then-current director held the aggregate number of option awards as follows: Mr. Bertolini—22,980, Mr. Chubb—22,980, Dr. Kochevar—0, Dr. Mackay—0, Mr. Massaro—6,670, Dr. Milne—22,980, Mr. Reese—0, Dr. Thompson—11,790, and Mr. Wallman—10,700.(4)None of our directors received perquisites or other personal benefits equal to or exceeding $10,000 in the aggregate.
During 2017, we paid each non-employee director an annual fee of $60,000 for service as our director, except for members of the Audit Committee, who are paid an annual fee of $65,000. Additional fees are paid to the Lead Independent Director ($20,000), Chair of the Audit Committee ($20,000), Chair of the Compensation Committee ($15,000), Chair of the Corporate Governance and Nominating Committee ($10,000), Chair of the Science and Technology Committee ($10,000), Chair of the Strategic Planning and Capital Allocation Committee ($15,000), Chair of the Finance Committee ($10,000) and Chair of the Science and Technology Committee ($10,000) for their added responsibilities. No additional fees are paid for attending meetings of the Board or any Committee of
the Board. We reimburse expenses incurred by directors in attending Board of Directors meetings and committee meetings.
In 2016, the Board, upon the recommendation of the Corporate Governance and Nominating Committee, determined there would be a greater opportunity for alignment of the Board's compensation structure with the interests of the Company's shareholders in creating sustained, long-term value by affording the Company's independent directors the opportunity to receive all or a significant percentage of their compensation in the form of restricted stock units (RSUs), with the ability to defer receipt of those RSUs for an extended period of time. Accordingly, the Board (1) determined that all equity awards granted to non-employee directors would be in the form of RSUs, (2) established a process pursuant to which directors could elect in advance to receive their annual cash fees in the form of equivalent value RSUs, and (3) adopted the Charles River Laboratories International, Inc. Non-Employee Directors Deferral Plan (Board DC Plan) which allows directors, if they so choose, to defer receipt of all or a portion of their RSUs for up to a period of five years.
In October 2016, following a detailed review and analysis of market data prepared by Pay Governance regarding the board compensation practices of comparable companies, the Corporate Governance and Nominating Committee established the current non-employee director compensation policy of awarding each unaffiliated non-employee director (1) restricted stock or RSUs having an intended value of approximately $215,000 (utilizing Black-Scholes pricing models) on the first day of the month following his or her initial election or appointment to the Board; provided, however, that such award will only be granted if a director is initially appointed to the Board of Directors after therecord date of the annual meeting of shareholders and prior to or on September 30th of the same calendar year, and (2) restricted stock or RSUs having an intended value of approximately $215,000 on an annual basis following our annual meeting of shareholders.
Director Stock Ownership Requirement
In order to further align the interests of directors and shareholders, the Board of Directors has mandated that, to the extent permissible, directors have a significant financial stake in the Company. Accordingly, as set forth in the Corporate Governance Guidelines: each director who has served on the Board for at least three years is required to own a minimum number of shares of Company stock (excluding stock options, stock subject to future vesting requirement, or other similar unvested and inchoate equity holdings) equivalent to four times the amount of the base cash annual fee that directors are eligible to receive for such services. Board members who are subject to third-party restrictions on their stock holdings (e.g., certain academic institutions) shall be permitted to own stock in an amount that is appropriate for them in light of such other restrictions. As of the date of this Proxy Statement, all of our directors who have served at least three years are in compliance with this holding requirement.
BENEFICIAL OWNERSHIP OF SECURITIES
The following table sets forth certain information as of March 12, 2018, with respect to the beneficial ownership of shares of our common stock by (1) 16, 2023 by:
| Name of Beneficial Owner | | | Number of Shares Beneficially Owned as of March 16, 2023 | | | Percentage of Shares Outstanding | | ||||||
| 5% Shareholders | | | | | | | | | | | | | |
| The Vanguard Group, Inc. | | | | | 5,956,960(1) | | | | | | 11.6% | | |
| BlackRock, Inc. | | | | | 4,981,145(2) | | | | | | 9.7% | | |
| Named Executives | | | | | | | | | | | | | |
| James C. Foster | | | | | 283,077(3) | | | | | | * | | |
| Flavia H. Pease | | | | | 0(4) | | | | | | * | | |
| William D. Barbo | | | | | 32,157(5) | | | | | | | | |
| Birgit Girshick | | | | | 46,018(6) | | | | | | * | | |
| Joseph W. LaPlume | | | | | 28,396(7) | | | | | | * | | |
| David R. Smith | | | | | 31,485(8) | | | | | | | | |
| Non-Employee Directors | | | | | | | | | | | | | |
| Nancy C. Andrews | | | | | 7,640(9) | | | | | | | | |
| Robert Bertolini | | | | | 35,989(10) | | | | | | * | | |
| Deborah T. Kochevar | | | | | 9,404(11) | | | | | | * | | |
| George Llado, Sr. | | | | | 5,544(12) | | | | | | | | |
| Martin W. Mackay | | | | | 15,705(13) | | | | | | * | | |
| George E. Massaro | | | | | 7,985(14) | | | | | | * | | |
| C. Richard Reese | | | | | 69,707(15) | | | | | | * | | |
| Craig B. Thompson | | | | | 0(16) | | | | | | | | |
| Richard F. Wallman | | | | | 27,136(17) | | | | | | * | | |
| Virginia M. Wilson | | | | | 8,014(18) | | | | | | * | | |
| All current executive officers and directors as a group (18 persons) | | | | | 668,885(19) | | | | | | 1.3% | | |
Name of Beneficial Owner | Number of Shares Beneficially Owned as of March 12, 2018 | Percentage of Shares Outstanding | |||||
|---|---|---|---|---|---|---|---|
5% Shareholders | |||||||
The Vanguard Group, Inc. | 5,055,870 | (1) | 10.5 | % | |||
BlackRock, Inc. | 4,034,318 | (2) | 8.4 | % | |||
FMR LLC | 3,000,499 | (3) | 6.3 | % | |||
Named Executive Officers | |||||||
James C. Foster | 329,245 | (4) | * | % | |||
David R. Smith | 4,213 | (5) | * | ||||
William D. Barbo | 24,737 | (6) | * | ||||
David P. Johst | 245,240 | (7) | * | ||||
Davide A. Molho | 90,977 | (8) | * | ||||
Outside Directors | |||||||
Robert Bertolini | 37,826 | (9) | * | ||||
Stephen D. Chubb | 48,829 | (10) | * | ||||
Deborah T. Kochevar | 8,486 | (11) | * | ||||
Martin W. Mackay | 2,782 | (12) | * | ||||
Jean-Paul Mangeolle | 0 | (13) | * | ||||
George E. Massaro | 19,721 | (14) | * | ||||
George M. Milne, Jr. | 45,260 | (15) | * | ||||
C. Richard Reese | 56,457 | (16) | * | ||||
Craig B. Thompson | 26,719 | (17) | * | ||||
Richard F. Wallman | 34,948 | (18) | * | ||||
All executive officers and directors as a group (16 persons) | 992,438 | (19) | 2.1 | % | |||
*
*- Less than 1%.
power with respect to 3,000,4994,981,145 shares reported in the table. The address of FMRBlackRock is 245 Summer55 East 52nd Street, Boston, Massachusetts 02210.
(4)- New York, New York 10055.
| Plan Category | | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | Weighted average exercise price of outstanding options, warrants and rights | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | | |||||||||
| | | | (a) | | | (b) | | | (c) | | |||||||||
| Equity compensation plan approved by security holders: | | | | | | | | | | | | | | | | | | | |
| 2016 Incentive Plan | | | | | 88,989 | | | | | $ | 109.34 | | | | | | 0 | | |
| 2018 Incentive Plan | | | | | 793,241 | | | | | $ | 215.06 | | | | | | 5,118,803 | | |
| Equity compensation plans not approved by security holders | | | | | — | | | | | | — | | | | | | — | | |
| Total | | | | | 882,230(1) | | | | | | | | | | | | 5,118,803(2) | | |
| Category | | | Number of securities outstanding | | | Weighted average exercise price | | | Weighted average term | | |||||||||
| | | | (a) | | | (b) | | | (c) | | |||||||||
| Total number of restricted stock/units outstanding(1) | | | | | 639,951 | | | | | $ | — | | | | | | — | | |
| Total number of options outstanding(2) | | | | | 882,230 | | | | | $ | 204.41 | | | | | | 5.7 | | |
| Total number of performance share units outstanding(3) | | | | | 222,285 | | | | | $ | — | | | | | | — | | |
REPORTS
PROPOSAL TWO—ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
Following the vote on this proposal, and subject to the outcome of Proposal Three, the next say-on-pay vote will occur in connection with the Company’s 2024 annual meeting.
As our clients continue to pursue their goal of more efficient and effective drug research, they are evaluating outsourcing new areas of their research programs, such as discovery services. We have enhanced our Discovery Services capabilities over the past four years to enable us to work with clients at the earliest stages of the discovery process. In fiscal year 2017, demand in our Discovery Services business was stable. The completion of a few large, integrated early discovery projects from biopharmaceutical clients in fiscal year 2016 was largely offset with increasing demand from biotechnology clients as many of these clients either initiated or continued to work with us on integrated programs and other projects. Large biopharmaceutical companies continue to have significant internal discovery capabilities, on which they can choose to rely. In order for large biopharmaceutical clients to increasingly outsource more work to us, we must continue to demonstrate that our services can augment and accelerate our clients' drug discovery processes. The business changes that we implemented in fiscal year 2016, including a small site consolidation and realignment of sales strategies in our Early Discovery business have been successful resulting in the stabilization of the business in fiscal year 2017 and in attracting new clients, including a growing base of biotechnology clients. Demand for ourin vivo discovery services continued to increase in fiscal year 2017, and we acquired Brains On-Line in August 2017 to enhance our position as the premier single-source provider for a broad portfolio of discovery CNS services. In addition, we acquired KWS BioTest in January 2018 to enhance our discovery expertise, with complementary offerings that provide our customers with additional tools in the active therapeutic research areas of oncology and immunology.
Demand for our products and services that support our clients' manufacturing activities was also robust in fiscal year 2017. Demand for our Microbial Solutions business remained strong as manufacturers continued to increase their use of our rapid microbial testing solutions. Our Biologics business continued to benefit from increased demand for services associated with the growing
proportion of biologic drugs in the pipeline and on the market. To support this increased demand, we continue to expand the capacity of our Biologics business.
Demand for our Research Models and Services was stable in fiscal year 2017. Demand for research models in mature markets outside of China declined modestly, partially offset by improved pricing. The continued effect of the consolidation of internal infrastructure within our large biopharmaceutical clients and a longer-term trend towards more efficient use of research models has led to reduced demand for research models. Demand for research models in China continued to be robust in fiscal year 2017,opportunities as clients in this growing market continue to value our high-qualityadopt more flexible and efficient research models. To accommodate increased demand, we opened a new research models facility in China in late 2017. Demand for research models services also improved in fiscal year 2017, particularly for our GEMS and IS businesses. We are confident that research models and services will remain essential tools for our clients' drug discovery and early-stage development efforts, and the RMS business will continue to be an important source of cash flow generation for us. Furthermore, our DSA segment is the largest client of the research models business. Our high-quality research models are integral to our Discovery and Safety Assessment business' ability to perform studies for our clients.
We believe the strong results in 2017 were, in part, derived from our focus on our key initiatives of:
•enhancing our ability to support our clients in today's complex drug research environment, through a focus on portfolio expansion, scientific expertise, and flexible working arrangements;•improving productivity and efficiency, and generally strengthening our business model;•maintaining disciplined investment in growth businesses; and•returning value to shareholders.
Our continued actions toward the achievement of these initiatives in 2017 included the following:
•We continued our focus on operating efficiencies through further optimizing our infrastructure, utilizing automation to reduce manual processes, and generating greater savings from our procurement activities.•We expanded our Project Management Office (PMO) in order to strengthen our ability to identify and manage initiatives that contribute to our organization's productivity, efficiency, and risk management. This group participates globally with all businesses to support maximizing revenues, minimizing costs, and reducing risks. The PMO provides regular updates to our management Executive Committee, at which projects are prioritized.•We created an Alliance Management group within the Company as part of our overarching effort to improve the client experience. This group assists clients in navigating our diverse and global organization in order to take maximum advantage of our unique portfolio of products and services.•We made a key acquisition of Brains On-Line in August 2017, a leading contract research organization providing critical data that advances novel therapeutics for the treatment of central nervous (CNS) diseases, with operations in San Francisco, the Netherlands, and Germany.
We believe these actions, together with others we made in 2016 and from which we benefited more fully in 2017, significantly contributed to the 43.7% increase in total shareholder return in 2017 and to the 15.6% increase in non-GAAP earnings per share from continuing operations in 2017. For a detailed discussion of our 2017 financial performance, the factors that we believe are influencing demand from our clients, and the actions we have taken during the past several years, please see the sections entitled "Our Strategy" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K filed with the SEC on February 13, 2018.
Pursuant to Section 14A of the Securities Exchange Act, we are asking our shareholders to approve an advisory resolution on our executive compensation as described in this Proxy Statement. This proposal, commonly known as a "say-on-pay"“say-on-pay” proposal and required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), provides our shareholders with the opportunity to express their views, on an advisory (non-binding) basis, on our executive compensation for our named executives for fiscal year 20172022 as described in the "Compensation Discussion and Analysis" (CD&A) sectionCD&A beginning on page 4442 of this Proxy Statement, as well as the Summary Compensation Table and other related compensation tables and narratives found on pages 64 through 7961-76 of this Proxy Statement. The advisory vote is not a vote on our general compensation policies, the compensation of our Board of Directors, or our compensation policies as they relate to risk management.
- its Corporate Vice President and Chief Financial Officer on March 28, 2022, Ms. Pease was granted a one-time signing bonus in the gross amount of $800,000. The initial $200,000 was paid within 30 days of her start date, with the remaining $600,000 to be paid after 12 months of employment with the Company.
The Compensation Committee believes that these changes were responsive to feedback from investors and enhanced the performance orientationall of our executive officers. Under this Clawback Policy, in the event of a restatement of all or a significant portion of Charles River’s financial statements that has been determined by the Board to be due to gross negligence, intentional misconduct, or fraud by an executive officer, the Board has the discretion to require repayment of a portion or all of any incentive-based compensation program. As those elementspaid to such executive officer or former executive officer and/or effect the cancellation of any unvested incentive compensation, subject to specified criteria.
interests of our shareholders.
We urge shareholders to read the CD&A beginning on pages 44-63page 42 of this Proxy Statement, which describes in more detail how our executive compensation policies and procedures operate and how they are designed to achieve our compensation objectives. The CD&A includes informative data that demonstrates our pay-for-performance alignment, as well as the Summary Compensation Table and other related compensation tables and narratives. Furthermore, for a detailed discussion of our 20172022 financial performance and the actions we have taken during the past fiverecent years, please also see the sections entitled "Our Strategy"“Our Strategy” and "Management's“Management’s Discussion and Analysis of Financial Condition and Results of Operations"Operations” in our Annual Report on Form 10-K filed with the SEC on February 13, 2018.
22, 2023.
Accordingly, we ask our shareholders to vote on the following resolution at the Annual Meeting:
"
”
PROPOSAL THREE—APPROVALADVISORY VOTE ON FREQUENCY OF THE 2018 INCENTIVE PLAN
FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
On March 20, 2018,2029.
The Plan, similar to the 2016 Incentive Plan, will utilize a fungible pool concept (described in more detail below) where each share issued inlong-term connection with awards that do not have option-like features (full-value awards) such as restricted stockbetween pay and unrestricted stock (including shares issued for above-target payouts earned through performance, awards) is counted as 2.3 units, and each share issued that is subject to options, stock appreciation rights, and other awards that have option-like features and that expire no more than seven years from the date of grant is counted as 1 unit against the overall reserved and available shares. The aggregate number of shares of common stock being requested for authorization under the Plan is 7,198,598 shares, which includes (1) an initial reserve of 439,798 shares remaining available for issuance under the 2016 Incentive Plan and (2) an increase of 6,758,800 shares, as approved by the Board of Directors subject to approval byrecognizes that executive compensation disclosures are made annually. Holding an annual advisory vote on executive compensation provides the Board of Directors with more direct and immediate feedback on our compensation program. However, shareholders should note that because the advisory vote on executive compensation occurs well after the beginning of the Company. As such,compensation year, and because the requested aggregate share reserve under the Plan represents only an additional 5,015,940 shares in excess of the remaining share capacity under the 2016 Incentive Plan (which is 2,182,658 shares as of March 12, 2018). If the Plan is approved by our shareholders, the Plan will replace the 2016 Incentive Plan and no additional grants will be made from the remaining share reserve under the 2016 Incentive Plan. However, shares forfeited or otherwise not delivered in accordance with the 2016 Incentive Plan (such as shares currently reserved for settlement of outstanding Performance Share Unit (PSU) awards at a maximum payout level) will become available for issuance under the Plan.
Depending on the forms of awards granted under the Plan, a maximum of 7,198,598 stock options or stock appreciation rights or 3,129,825 full-value awards could be granted under the Plan. The maximum number of shares available for issuance with respect to incentive stock options under the Plan will be 3,500,000. Except as described above, no further awards are permitted to be granted under anydifferent elements of our preexisting stock option and incentive plans. The number of shares authorized under the Plan is anticipated to enable us to grant stock-based awards through 2021.
The closing price of Charles River common stock on the NYSE on March 19, 2018 was $110.86.
The Compensation Committee worked with Pay Governance LLC, its outside compensation consultant, to develop the Plan, while taking into account the many institutional investor dilution guidelines, as well as the guidelines of investor advisory firms. We will continue to monitor the comparative advantages and accounting treatment of equity compensation awards going forward, in order to ensure that the Plan promotes retention and creates incentives in a manner which benefits our shareholders.
The affirmative vote of a majority of the votes present or represented and entitled to vote at the Meeting is required to approve the proposed Plan. This means that, assuming a quorum is present, the number of votes cast in favor of the proposal must exceed the number of votes cast against it. In
addition, under New York Stock Exchange rules, an "abstention" is counted as a vote "against" the proposal. If the Plan is not approved by shareholders, we will not be able to make the proposed additional 6,758,800 shares available for issuance under the Plan.
•The Plan will allow us to continue to grant equity awards, an important incentive tool for creating shareholder value.The use of equity compensation as a component of our compensation program is critical to our future success. Equity awards create an employee ownership culture that aligns the interests of employees with shareholders. Equity compensation also focuses employees' attention on creating long-term value, since the awards are subject to vesting and/or performance conditions. For example:•We have established stock ownership requirements for all corporate officers, which are further described on pages 61-62 of this Proxy Statement; and•A substantial portion of the equity compensation granted toexecutiveofficers is awarded in the form of performance share units (PSUs), which are earned only if the Company attains specified performance levels, as described in more detail on pages 57-60 of this Proxy Statement.
•Equity awards are critical as a recruiting and retention tool.Our success is dependent on having talented employees to drive our growth and performance, and a competitive compensation program that includes equity awards is essential for attracting and retaining such employees. Equity compensation is utilized routinely by other companies with whom we compete for talent, and if we were not able to continue to include stock-based awards in our compensation mix, we would be at a significant competitive disadvantage for critical talent. Without equity compensation, our recruiting efforts could be more challenging, and executives and other leadership staff would no longer have stock awards at risk of forfeiture, which could impact our ability to retain them. Additionally, without equity compensation, it may also be more difficult to attract the employees of companies whom we seek to acquire.•Equity awards are critical as a motivational tool.We have placed a significant portion of eligible employees' compensation at risk through the use of our annual bonus and equity grant programs, both of which only provide value to the employee if the Company's performance remains strong. This encourages employees to pair a short-term view of performance (for purposes of the annual bonus) with a long-term view of performance (for purposes of stock grants), which provides sustained motivation for ongoing innovation.•We have demonstrated prudent equity compensation practices.We recognize that equity compensation programs dilute shareholder equity and we take seriously our responsibility to use these programs responsibly. Ourcompensation programs are designed to operate in an integrated manner and to complement one another, in many cases it may not beconsistent with competitive market practice, and we believe thatappropriate or feasible to change ourhistorical share utilization has been prudent and mindfulexecutive compensation program in consideration ofshareholder interests. For example:•Our 3-year average burn rate for 2015-2017 was 3.49%, which is well withinany one year’s advisory vote on executive compensation by themarket standard for our industry and company size. The "burn rate" is the ratiotime of thenumberfollowing year’s annual meeting ofshares underlying awards, including PSUs valued at 100%shareholders.
There are a number of reasons why we believe approving this Plan is important:
•Through our stock repurchase program, we have aimed to offset equity issuances related to stock compensation by repurchasing a sufficient number of shares to avoid a dilutive increase in shares outstanding.•We generally employ a 4-year vesting schedule for annual, time-based awards which encourages sustained performance and a return of value to shareholders as well as employees; and•We emphasize the use of full-value shares over options, which helps to minimize dilution by using fewer shares than a program which emphasizes options. The Company aims to deliver a dollar value through its awards, and because it takes fewer full-value shares than options to deliver a particular dollar value to recipients, an emphasis on full-value shares results in our utilization of fewer shares.•The Plan includes features designed to protect shareholder interests:•Awards under the Plan for participants other than non-employee directors are administered by the Compensation Committee, which consists entirely of independent directors, and awards for non-employee directors are administered by the Corporate Governance and Nominating Committee, which also consists entirely of independent directors;•The Plan limits the number of shares granted to a participant annually to 2,000,000 shares and limits the amount of cash performance awards paid to a participant to $3,000,000;•The Plan provides that, in any calendar year, no participant who is a non-employee director may receive (under the Plan or otherwise) awards that are denominated in shares with a grant date fair value (determined as of the date of grant) that, when combined with the aggregate amount of any cash performance awards and any other compensation granted to such participant in the same calendar year, exceeds an aggregate of $800,000 (excluding the aggregate grant date fair value (determined as of the date of grant) of any award granted under the Plan to an individual upon becoming a non-employee director, which will not exceed $600,000);•The Plan includes strict recycling provisions. Shares held back in satisfaction of the exercise price or tax withholding requirements will not be available for new grants;•The Plan prohibits granting stock options and stock appreciation rights (SARs) with an exercise price below the fair market value of a share of stockproposal on thedate of grant;•The Plan prohibits the repricing of stock options or SARs or the exchange of stock options or SARs for cash or other awards without shareholder approval.•The Plan provides that (1) all awards that are not performance awards made under the Plan will vest (i.e., become free of forfeiture restrictions) over a period of time at leastproxy card: one year, two years, three years, ormore from the date of grant and no award will vest in partabstain. (Shareholders are not voting to approve orin whole before 12 months from the date of grant and (2) full-value awards that are performance awards will be subject to the attainment of performance criteria which require at least 12 months to achieve and no award will vest in part or in whole before 12 months from the date of grant, provided that awards that aggregate not more than 5% of the number of shares reserved for issuance under the Plan may be awarded without the vesting requirements set forth in (1) and (2) above; and
could be granted under the 2007 Incentive Plan, our Board of Directors projected that the share reserve would enable the Company to grant stock-based awards through 2016, and we effectively managed our share reserve to meet this projection. For the 2018 Plan, we are projecting the initial share reserve will allow us to grant stock-based awards through 2021.
•Material amendments to the Plan require shareholder approval.•If the Plan is not approved, we would experience a serious disruption of our compensation programs and we would be compelled to increase the cash component of employee and director compensation.If the Plan is not approved and we fail to replace the value of equity compensation, it would create an environment where engagement of our directors and our most critical employees (including employees being added as a result of our pending acquisition of MPI Research) could be severely eroded. Therefore, in order to provide competitive compensation opportunities to attract, motivate and retain directors and employees without equity compensation, we would likely need to employ cash or other non-equity rewards to replace the compensation previously delivered in equity awards. We believe these alternative forms of compensation do not align employee interests with those of shareholders as efficiently as stock-based awards, and we feel it is important to continue to provide compensation which continues to effectively align employees with shareholders.
The Board of Directors believes that the Plan, authorizing the issuance of7,198,598 shares of common stock, is in the best interest of the Companyand its shareholders and recommends a vote "FOR" the approval of the Plan.
Summary of the Plan
The following is a brief summary of the material terms of the Plan, as proposed. This summary is qualified in its entirety by reference to the Plan, a copy of which is attached as Appendix B to the electronic version of this Proxy Statement as filed with the SEC and may be accessed from the SEC's website (www.sec.gov). In addition, a hard copy may be obtained by making a written request to our Corporate Secretary.
The Board of Directors approved the Plan, which authorizes a total of 7,198,598 shares of common stock, on March 20, 2018. The total of 7,198,598 shares of common stock includes (i) an initial reserve of 439,798 shares remaining available for issuance under the 2016 Incentive Plan as of March 12, 2018, and (ii) an increase of 6,758,800 shares, as approved bydisapprove the Board of Directors, subjectDirectors’ recommendation.) We understand that our shareholders may have different views as to approval bywhat is an appropriate frequency for advisory votes on executive compensation, and we will carefully review the shareholdersvoting results on this proposal.
Eligibility to Receive Awards
All employees, non-employee directors, and individuals or entities providing services to the Company or its affiliates (approximately 12,000 employees and 10 non-employee directors as of the date of this Proxy Statement) are potentially eligible to participate in the Plan. Eligibility for incentive stock options is limited to those individuals whose employment status would qualify them for the tax treatment of Sections 421 and 422 of the Code. Participants are not required to provide consideration to the Company or its affiliates for the grant or extension of awards under the Plan, other than to provide services to the Company or its affiliates. The basis for participation in the Plan is the administrator's view, in its sole discretion, that an eligible participant is in a position to make a significant contribution to the success of the Company and its affiliates. In recent years, nine eligible
non-employee directors and approximately 6% of employees received awards under the 2016 Incentive Plan.
Non-Employee Director Limit
The aggregate grant date fair value (determined as of the date of grant) of any award granted under the Plan to an individual upon becoming a non-employee director (an Initial Non-Employee Director Grant) shall not exceed $600,000. An individual non-employee director may not receive under the Plan (or otherwise) in any calendar year awards denominated in shares with a grant date fair value (determined as of the date of grant) that, when combined with the aggregate amount of any cash performance awards and any other compensation granted to such individual in the same calendar year, exceeds an aggregate of $800,000 (excluding an Initial Non-Employee Director Grant).
New Plan Benefits
The granting of awards under the Plan is discretionary, and we cannot now determine the number or type of awards to be granted in the future to any particular group or person. Accordingly, a new plan benefits table for the Plan and the benefits or amounts that would have been received by or allocated to participants for the last completed fiscal year under the Plan if the Plan was then in effect, as described in the proxy rules, are not provided because all awards made under the Plan will be subject to the terms of the Plan and made at the discretion of the Compensation Committee (with respect to all participants other than non-employee directors) or the Corporate Governance and Nominating Committee (with respect to non-employee directors). As of the date of this Proxy Statement, no awards have been granted under the Plan. Therefore, the benefits and amounts that will be received or allocated under the Plan are not determinable at this time. Nevertheless, the Company anticipates that awards will be made under the Plan (if approved by shareholders at the Annual Meeting) to our non-employee directors in May 2018. If each non-employee director were awarded stock options and restricted stock units in 2018 with the same grant date fair value as the award the director received in 2017, and assuming that no director elected to receive their annual cash fees in the form of equivalent value RSUs, then as of March 19, 2018, each director would receive 0 stock options and 2,436 RSUs pursuant to the Plan (on a group basis, the non-employee directors would receive a total of 0 stock options and 24,360 RSUs). For additional information on our annual equity awards to non-employee directors in the last fiscal year, please see the 2017 Director Compensation Table on pages 20-21 of this Proxy Statement. Please also refer to the Summary Compensation Table on page 63 in this Proxy Statement, which sets forth certain information regarding awards granted to our named executives during fiscal year 2017.
Administration of the Plan
The Board or one or more committees of the Board that is appointed or authorized by the Board may administer the Plan. The Compensation Committee administers the Plan with respect to awards for all participants, other than for non-employee directors. The Corporate Governance and Nominating Committee administers the Plan with respect to awards for non-employee directors. Subject to the provisions of the Plan, the Compensation Committee or the Corporate Governance and Nominating Committee, as the case may be, determines the persons to whom awards will be granted, the number of shares to be covered by each stock award, and the terms and conditions upon which each of the awards may be granted, including vesting periods.
Available Shares
Subject to adjustment upon certain corporate transactions or events, as proposed, up to a maximum of 7,198,598 shares of common stock (the Fungible Pool Limit), which includes (1) an initial reserve of 439,798 shares remaining available for issuance under the 2016 Incentive Plan as of
March 12, 2018, and (2) an increase of 6,758,800 shares, as approved by the Board of Directors, subject to approval by the shareholders of the Company, may be subject to stock options, stock appreciation rights, restricted stock, unrestricted stock, deferred stock, and other equity-based awards under the Plan. Each share issued or to be issued in connection with awards such as restricted stock and unrestricted stock that do not have option-like features (full-value awards) shall be counted against the Fungible Pool Limit as 2.3 units. Each share issued or to be issued that is subject to options, stock appreciation rights and other awards that have option-like features and that expire no more than seven years from the date of grant shall be counted against the Fungible Pool Limit as 1 unit. Awards not denominated in shares shall not count against the Fungible Pool Limit.
Shares that are forfeited or cancelled shall not be considered to have been delivered under the Plan (and thus will be available for future grant under the Plan), but shares retained by the Company in satisfaction of the exercise price or tax withholding requirements of an award will be considered to have been delivered under the Plan (and thus will not be available for future grant under the Plan). In addition, shares repurchased by the Company with proceeds collected in connection with the exercise of outstanding options will not be added to the number of shares available for future grant under the Plan. The Compensation Committee will administer the appropriate methodology for calculating the number of shares of common stock issued pursuant to the Plan in accordance with the foregoing.
Subject to adjustment upon certain corporate transactions or events, the maximum number of shares available for issuance with respect to incentive stock options under the Plan shall be 3,500,000.
Description of Awards
The Plan provides for a range of awards including stock options, stock appreciation rights, restricted stock, unrestricted stock, deferred stock, cash performance awards, and grants of cash made in connection with other awards in order to help defray in whole or in part the economic cost (including tax cost) of the award to the participant. In addition, the Plan provides that certain awards may be designated as performance awards if they are related to a performance period determined at the time of grant.
Stock Options
Stock options under the Plan may be either (1) options intended to qualify as "incentive stock options" under Section 422 of the Code or (2) non-qualified stock options. Incentive stock options may be granted under the Plan to employees of the Company and its affiliates. Non-qualified stock options may be granted to employees of the Company and its affiliates, consultants, and directors.
In accordance with federal tax laws, the aggregate fair market value (determined at the time of grant) of shares issuable pursuant to incentive stock options which first become exercisable in any calendar year under any incentive stock option of the Company may not exceed $100,000 calculated individually for each option holder. Options granted under the Plan may not be granted at a price less than the fair market value of the common stock on the date of grant, or 110% of fair market value in the case of incentive stock options granted to an employee holding 10% or more of the voting stock of the Company. The Compensation Committee determines the exercise price of each stock option, provided that each option must have an exercise price that is not less than the fair market value of the common stock on the date of grant.
Stock Appreciation Rights (SARs)
SARs are rights entitling the holder upon exercise to receive cash or stock, as the Compensation Committee determines, equal to a function (determined by such factors as the Compensation Committee deems appropriate) of the amount by which the stock has appreciated in value since the date of the award. The Compensation Committee determines the exercise price of each SAR, provided
that each SAR must have an exercise price that is not less than the fair market value of the common stock on the date of grant.
Restricted Stock
Restricted stock is an award of stock subject to restrictions requiring that such stock be redelivered to the Company if specified conditions are not satisfied.
Unrestricted Stock
Unrestricted stock is an award of stock not subject to any restrictions under the Plan.
Deferred Stock
Deferred stock is a promise to deliver stock, other securities, or other property in the future on specified terms described in each deferred stock agreement to a participant (including, for the avoidance of doubt, a director of the Company). Our restricted stock units (RSUs) are a form of Deferred Stock.
Cash Performance Awards
A cash performance award is a performance award payable in cash.
Performance Awards
A performance award refers to an award granted to employees where receipt of an underlying final award is dependent upon satisfaction of specified performance criteria. At the beginning of each performance period, targeted performance levels will be established at which a target performance award may be earned, with a threshold or minimum performance level below which no award will be paid, and a maximum beyond which no additional amounts will be paid. The percentage of each performance award that will become a final award will be determined by the Compensation Committee on the basis of the performance goals established and the performance achieved. A final award may be less than or greater than the target performance award. Final awards may relate to, and upon vesting be paid in the form of, restricted stock, unrestricted stock, deferred stock, cash performance awards or cash (or any combination of the foregoing). Except in the case of a participant's full career retirement, which is subject to age, service, and advance notice requirements, payment of final awards will be contingent upon the participant continuing to render services to the Company at such time (unless this condition is waived by the Compensation Committee). For more information about full career retirement provisions in our equity awards, please see page 58 of this Proxy Statement.
Term of Awards
Awards of stock options and stock appreciation rights will have a term not to exceed seven years from the date of grant. The administrator of the Plan will determine the terms of all other awards.
Vesting and Exercisability
The Compensation Committee determines the time or times at which awards under the Plan will vest or become exercisable and the terms on which an award will remain exercisable. However, as discussed below, there are certain minimum vesting periods for issuances of awards that are not performance awards.
Repricings
Options and SARs may not be repriced, or replaced with any other award (including full-value awards) or repurchased for cash, without shareholder approval.
Transferability of Awards
No award granted under the Plan is transferable by the holder except by will or by the laws of descent and distribution.
Certain Share Limits on Awards under the Plan
Vesting Limitations
Awards will vest as follows: (1) awards that are not performance awards to participants shall vest (i.e, become free of forfeiture restrictions) over a period of time at least three years or more from the date of grant, and no award will vest in part or in whole before 12 months from the date of grant; and (2) full-value awards that are performance awards will be subject to the attainment of performance objectives which require at least 12 months to achieve, and no award will vest in part or in whole before 12 months from the date of grant. However, awards aggregating not more than 5% of the number of shares reserved for issuance under the Plan may be awarded without regard to such vesting requirements set forth in clauses (1) and (2) above.
Individual Award Limitations
Subject to adjustment upon certain corporate transactions or events, the maximum number of shares of stock for which any awards may be granted to any participant annually from and after adoption of the Plan and prior to March 20, 2028 shall be 2,000,000. No awards may be granted under the Plan after March 20, 2028, but previously granted awards may extend beyond that date.
In addition, no more than $3,000,000 may be paid to any individual with respect to any cash performance award (other than an award expressed in terms of shares of stock or units representing stock). In applying the dollar limitation of the preceding sentence, multiple cash performance awards to the same individual that are determined by reference to performance periods of one year ending with or within the same fiscal year of the Company shall be subject in the aggregate to the $3,000,000 limit. Multiple cash performance awards to the same individual that are determined by reference to one or more multi-year performance periods ending in the same fiscal year of the Company are not included in the limit described above; instead, they are subject in the aggregate to a separate $3,000,000 limit.
Dividends and Dividend Equivalents
An award may not provide for any dividend or dividend equivalents to be payable to the participant in respect of such award prior to the time at which such award (or applicable portion thereof) vests (and, in the case of a performance award, the applicable performance condition is achieved).
Reclassification of Stock
Under the Plan, if the shares of common stock shall be subdivided or combined into a greater or smaller number of shares, or if the Company shall issue any shares of common stock as a stock dividend on its outstanding common stock, the Compensation Committee will make appropriate adjustments to the maximum number of shares that may be delivered under the Plan and to the maximum share limits described above, and will also make appropriate adjustments to the number and kind of shares of stock or securities subject to awards then outstanding or subsequently granted,
including any exercise prices relating to the awards and any other provision of awards affected by such change.
Certain Transactions
Other than in connection with awards that are denominated and subject to settlement in cash, awards will not vest in connection with a Covered Transaction unless such Covered Transaction is accompanied by a "double trigger event". For this purpose, a "double trigger event" occurs in connection with a Covered Transaction if (1) the award is not appropriately assumed nor an equivalent award substituted by the surviving, continuing, successor or purchasing company or other business entity or parent thereof, as the case may be, (2) cash or cash equivalents are the sole or primary form of consideration to be received by the shareholder of the Company; and (3) at the time of, or within 12 months following the Covered Transaction, the participant incurs a termination of employment without Cause or for Good Reason (each as defined in the Plan, which is attached as Appendix B to the electronic version of this Proxy Statement as filed with the SEC and may be accessed from the SEC's website (www.sec.gov)).
Upon a Covered Transaction "double trigger event": (1) in the case of a stock option or SAR, the stock option or SAR shall become fully vested and exercisable immediately upon the occurrence of the double trigger event; (2) in the case of restricted stock, deferred stock or RSUs (in each case other than an award of restricted stock, award of deferred stock or award of RSUs that is a performance award), the restriction period shall lapse and the restricted stock, deferred stock or restricted stock unit (as applicable) shall fully vest immediately upon the occurrence of the double trigger event; and (3) in the case of a performance award, payment under the award shall be subject to the terms set forth in the applicable award agreement.
A Covered Transaction is deemed to occur where the Company undergoes any of: (1) a consolidation, merger or other transaction which results in any individual, entity or "group" acquiring the beneficial ownership, directly or indirectly, of more than 50% of either the then-outstanding shares of common stock of the Company or the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors; (2) at any time during a period of 12 consecutive months, individuals who at the beginning of such period constituted the Board of Directors and any new memberthe outcome of the shareholder vote, the Board of Directors whose election or nomination for election was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was so approved, cease for any reason to constitute a majority of members of the Board of Directors; (3) a sale or transfer of all or substantially all the Company's assets; or (4) a dissolution or liquidation of the Company.
Forfeiture or Clawback of Awards
The Compensation Committee may determine that any award under the Plan shall be subject to provisions for the forfeiture and/or reimbursement of all amounts received in connection with an award in the eventfuture decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with shareholders and the adoption of breach of noncompetition, nonsolicitation, or confidentiality agreements. All awards granted under the Plan are subjectmaterial changes to recoupment, to the extent applicable, under the Company's Corporate Governance Guidelines and/or any other recoupment, clawback or similar policy that may be approved by thecompensation programs.
French Schedule
The Plan also includes a schedule pursuant to which awards of deferred stock may be granted to participants situated and/or employed in France (French Schedule). The purpose of the French Schedule is to enable the Company to make deferred stock awards which may qualify for favorable tax treatment in France by making certain variations to the terms of the Plan in order to satisfy certain French securities laws, exchange control, corporate law and tax requirements. The French Schedule provides that, in addition to the 12-month minimum vesting requirement described above applicable to all awards, to the extent that the award vests less than two years after the date of grant, the stock acquiredannual advisory vote on vesting will be subject to a holding period, such that there is a minimum two-year period between the date of grant and the date that the shares may be freely disposed of by the participant.
Federal Income Tax Considerations
The following is a description of certain U.S. federal income tax consequences of the issuance and exercise of awards under the Plan under U.S. federal income tax laws as currently in effect. This general tax discussion is intended for the information of shareholders considering how to vote with respect to this proposal and not as tax guidance to participants in the Plan. Different tax rules may apply to specific participants and transactions under the Plan, particularly in jurisdictions outside the United States. Accordingly, the Company urges each participant to consult his or her own tax advisor as to the specific tax consequences of participation in the Plan under federal, state, local and other applicable laws.
Incentive Stock Options
An optionee is generally not taxed on the grant or exercise of an incentive stock option. The difference between the exercise price and the fair market value of the shares on the exercise date will, however, be considered an adjustment for purposes of the alternative minimum tax. If an optionee holds the shares acquired upon the exercise of an incentive stock option for at least two years following grant and at least one year following exercise, the optionee's gain (or loss), if any, upon a subsequent disposition of such shares is a long-term capital gain (or loss). The measure of the gain is the difference between the proceeds received on disposition and the optionee's basis in the shares (which generally equals the exercise price). If an optionee disposes of stock acquired pursuant to exercise of an incentive stock option before satisfying the one and two-year holding periods described above, the optionee will recognize both ordinary income and capital gain (or loss) in the year of disposition. The amount of the ordinary income will be the lesser of (1) the amount realized on disposition less the optionee's adjusted basis in the stock (usually the exercise price) or (2) the difference between the fair market value of the stock on the exercise date and the exercise price. The balance of the consideration received on such a disposition will be short-term capital gain or long-term capital gain depending on the holding period of the share. The Company is not entitled to an income tax deduction on the grant or exercise of an incentive stock option or on the optionee's disposition of the shares after satisfying the required holding periods described above. If the holding periods are not satisfied, the Company will be entitled to a deduction in the year the optionee disposes of the shares, in an amount equal to the ordinary income recognized by the optionee, subject to the reasonableness of compensation limitation and Section 162(m) of the Code.
Non-Qualified Stock Options
The grant of a non-qualified option will not result in taxable income to the optionee or deduction to the Company at the time of grant. The optionee will recognize taxable compensation, and the Company will have a corresponding deduction (subject to the reasonableness of compensation limitation and Section 162(m) of the Code), at the time of exercise in the amount of the excess of the then fair market value of the shares acquired over the exercise price, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income. Upon disposition of the shares, the optionee will generally realize capital gain or loss (short- or long-term, depending on the length of the period the shares were held), and the optionee's basis for determining gain or loss will be the sum of the exercise price paid for the shares plus the amount of compensation income recognized on exercise of the option.
Stock Appreciation Rights
The amount of any cash or the fair market value of any stock received by a participant upon the exercise of SARs under the Plan will be subject to ordinary income tax in the year of receipt, and the Company will be entitled to a deduction for such amount, subject to the reasonableness of compensation limitation and Section 162(m) of the Code.
Restricted Stock
A participant who receives restricted stock will recognize no income on the grant of the restricted stock and the Company will not qualify for any deduction, unless the election described below is made by the participant. At the time the restricted stock is no longer subject to a substantial risk of forfeiture, a participant will recognize ordinary compensation income in an amount equal to the excess, if any, of the fair market value of the restricted stock at the time the restriction lapses over the consideration paid for the restricted stock, if any. The holding period that determines whether the participant has short- or long-term capital gain or loss begins when the restriction period expires, and the tax basis for the shares will generally be the fair market value of the shares on such date.
A participant may elect, under Section 83(b) of the Code, within 30 days of his or her receipt of the restricted stock, to recognize ordinary compensation income on the date of transfer in an amount equal to the excess, if any, of the fair market value on the date of such transfer of the shares of restricted stock, determined without regard to certain restrictions, over the consideration paid for the restricted stock, if any. Additional special tax rules apply if the participant forfeits the shares. On a disposition of the shares, a participant will recognize gain or loss equal to the difference between the amount realized and the tax basis for the shares.
Whether or not the participant makes an election under Section 83(b), the Company generally will qualify for a deduction, subject to the reasonableness of compensation limitation and Section 162(m) of the Code, at the time and equal to the amount that is taxable as ordinary income to the participant.
Unrestricted Stock
Upon receiving an award of unrestricted stock under the Plan, the participant will realize ordinary income to the extent of the fair market value (determined at the time of transfer to the employee) of such shares, over the amount, if any, paid by the employee for the shares. Such taxable amounts will generally be deductible as compensation by the Company, subject to the reasonableness of compensation limitation and Section 162(m) of the Code.
Restricted Stock Units (RSUs)
A participant generally does not recognize income, and the Company generally will not be allowed a tax deduction, at the time an RSU is granted. When the RSUs vest and are settled for cash or shares, the participant generally will be required to recognize as income an amount equal to the fair market value of the shares or the amount of cash on the date of settlement, and the Company generally will be allowed a corresponding tax deduction at that time, subject to the reasonableness of compensation limitation and Section 162(m) of the Code. Any gain or loss recognized upon a subsequent sale or exchange of the shares (if settled in shares) is generally treated as capital gain or
loss for which the Company is not entitled to a deduction. For purposes of clarity, for federal income tax considerations, the PSUs are considered a variant of RSUs.
Deferred Stock
A participant who receives an award of deferred stock will recognize no income on the grant of such award. However, he or she will recognize ordinary compensation income on the later transfer of the actual stock. If at the time of transfer the stock received is subject to a substantial risk of forfeiture, the tax treatment will be the same as discussed above under the caption "Restricted Stock." The Company generally will qualify for a deduction, subject to the reasonableness of compensation limitation and Section 162(m) of the Code, at the time and equal to the amount that is taxable as ordinary income to the participant.
Cash Performance Awards
Generally, a participant will recognize ordinary income and the Company will generally be entitled to a deduction (and will be required to withhold federal income taxes), subject to the reasonableness of compensation limitation and Section 162(m) of the Code, with respect to such cash awards at the earliest time at which the participant has an unrestricted right to receive the amount of such cash payment.
Section 162(m)
Section 162(m) of the Code provides that the deduction by a publicly held corporation for compensation paid in a taxable year to certain executive officers of the corporation is limited to $1 million per each individual officer. There can be no assurance that such compensation under the Plan will be fully deductible under all circumstances.
Section 409A
To the extent applicable, awards granted under the Plan are intended to comply with or be exempt from Section 409A of the Code, and the Plan will be interpreted and administered in accordance therewith. The Administrator of the Plan will have the authority unilaterally to accelerate or delay a payment to which the holder of any award may be entitled to the extent necessary or desirable to comply with, or avoid adverse consequences under, Section 409A of the Code (including with regard to an individual deemed to be a "specified employee" under Section 409A of the Code who has received an amount under the Plan deemed to be "deferred compensation" subject to Section 409A of the Code).
Notwithstanding the foregoing, the Company does not guarantee that the Plan, any awards or any payments with respect thereto are in compliance with Section 409A of the Code. Unless certain requirements set forth in Section 409A of the Internal Revenue Code are satisfied, holders of such awards may be taxed earlier than would otherwise be the case (e.g., at the time of vesting instead of the time of payment) and may be subject to an additional 20% penalty tax (and, potentially, certain interest penalties and additional state taxes).
Registration with the SEC
If our shareholders approve the Plan, we will file a Registration Statement on Form S-8 with the Securities and Exchange Commission as soon as reasonably practical after the approval, to register the shares available for issuance under the Plan.
Equity Compensation Plan Information
The following table summarizes, as of December 30, 2017, the number of options issued under the Company's stock option plans and the number of options available for future issuance under these plans.
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| | (a) | (b) | (c) | |||||||
Equity compensation plan approved by security holders: | ||||||||||
2007 Incentive Plan | 1,164,089 | $ | 65.41 | 0 | (2) | |||||
2016 Incentive Plan | 608,430 | $ | 88.09 | 4,121,381 | (2) | |||||
Equity compensation plans not approved by security holders | — | — | — | |||||||
| | | | | | | | | | | |
Total | 1,772,519 | (1) | 4,121,381 | (3) | ||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
(1)None of the options outstanding under any of our equity compensation plans include rights to any dividend equivalents (i.e., a right to receive from us a payment equal to dividend payments received by holders of our common stock or our other equity instruments).(2)Additionally, we note that as of December 30, 2017, the zero shares remaining in the 2007 Incentive Plan Fungible Pool and the 4,121,381 shares remaining in the 2016 Incentive Plan Fungible Pool reflect the balance available after earmarking the full number of shares which may be necessary to settle outstanding 2016 and 2017 PSUs at their potential maximum payouts, taking into account the impact of non-GAAP EPS performance on both grants (in total, 621,017 shares).(3)On March 28, 2016, the Board of Directors determined that, upon approval of the 2016 Incentive Plan, no future awards would be granted under the preexisting equity compensation plans, including the 2007 Incentive Plan. Shareholder approval was obtained on May 11, 2016. Previously, on March 22, 2007, the Board of Directors determined that, upon approval of the 2007 Incentive Plan, no future awards would be granted under the preexisting equity compensation plans, including the Charles River 1999 Management Incentive Plan and the Charles River 2000 Incentive Plan. Shareholder approval was obtained on May 8, 2007. Previously, on February 28, 2005, the Board of Directors terminated the Inveresk 2002 Stock Option Plan to the extent that no further awards would be granted thereunder. The 2016 Incentive Plan utilizes a fungible pool concept where each share issued in connection with awards that do not have option-like features (full-value awards) is counted as 2.3 units and each share issued that is subject to options, stock appreciation rights, and other awards that expire no more than seven years from the date of grant is counted as 1 unit against the overall reserved and available shares.
The following table provides additional information regarding the aggregate issuances under our existing equity compensation plans as of December 30, 2017:
Category | Number of securities outstanding | Weighted average exercise price | Weighted average term | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| | (a) | (b) | (c) | |||||||
Total number of restricted stock/units outstanding(1) | 512,852 | $ | — | — | ||||||
Total number of options outstanding(2) | 1,772,519 | $ | 73.19 | 3.16 | ||||||
Total number of performance share units outstanding(3) | 621,017 | $ | — | — | ||||||
(1)For purposes of this table, only unvested restricted stock and unvested restricted stock units as of December 30, 2017 are included. This number does not incorporate the 2.3 fungible ratio.(2)For purposes of this table, only options outstanding as of December 30, 2017 are included.(3)For purposes of this table, reflects currently projected potential maximum payouts of outstanding 2016 and 2017 PSUs, taking into account the impact of non-GAAP EPS performance on both grants. This number does not incorporate the 2.3 fungible ratio.
In February 2018, the Company issued its annual equity compensation awards to its employees and on March 12, 2018 issued awards to new hires. Accordingly, the following table summarizes, as of March 12, 2018, the updated number of options issued under the Company's stock option plans and the updated number of options available for future issuance under these plans.
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| | (a) | (b) | (c) | |||||||
Equity compensation plan approved by security holders: | ||||||||||
2007 Incentive Plan | 905,761 | $ | 66.71 | 0 | (2) | |||||
2016 Incentive Plan | 1,058,063 | $ | 98.25 | 2,182,658 | (2) | |||||
Equity compensation plans not approved by security holders | — | — | — | |||||||
| | | | | | | | | | | |
Total | 1,963,824 | (1) | 2,182,658 | (3) | ||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
(1)None of the options outstanding under any equity compensation plan of the Company include rights to any dividend equivalents (i.e., a right to receive from the Company a payment equal to dividend payments received by holders of common stock or other equity instruments of the Company).(2)In addition, we note that as of March 12, 2018, the 0 shares remaining in the 2007 Incentive Plan and the 2,182,658 shares remaining in the 2016 Incentive Plan Fungible Pool reflect the balance available after earmarking the full number of shares (at the 2.3 fungible ratio) which may be necessary to settle outstanding 2016, 2017 and 2018 PSUs at their potential maximum payouts 2,415,016 shares).(3)On March 28, 2016, the Board of Directors determined that, upon approval of the 2016 Incentive Plan, no future awards would be granted under the preexisting equity compensation plans, including the 2007 Incentive Plan. Shareholder approval was obtained on May 11, 2016. Previously, on March 22, 2007, the Board of Directors determined that, upon approval of the 2007 Incentive
Plan, no future awards would be granted under the preexisting equity compensation plans, including the Charles River 1999 Management Incentive Plan and the Charles River 2000 Incentive Plan. Shareholder approval was obtained on May 8, 2007. Previously, on February 28, 2005, the Board of Directors terminated the Inveresk 2002 Stock Option Plan to the extent that no further awards would be granted thereunder. The 2016 Incentive Plan utilizes a fungible pool concept where each share issued in connection with awards that do not have option-like features (full-value awards) is counted as 2.3 units and each share issued that is subject to options, stock appreciation rights, and other awards that expire no more than seven years from the date of grant is counted as 1 unit against the overall reserved and available shares.
The following table provides additional information regarding the aggregate issuances under the Company's existing equity compensation plans as of March 12, 2018.
Category | Number of securities outstanding | Weighted average exercise price | Weighted average term | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| | (a) | (b) | (c) | |||||||
Total number of restricted stock/units outstanding(1) | 532,452 | $ | — | — | ||||||
Total number of options outstanding(2) | 1,963,824 | $ | 83.70 | 3.56 | ||||||
Total number of performance shares outstanding(3) | 1,050,007 | $ | — | — | ||||||
(1)For purposes of this table, only unvested restricted stock and unvested restricted stock units as of March 12, 2018 are included. This number does not incorporate the 2.3 fungible ratio.(2)For purposes of this table, only options outstanding as of March 12, 2018 are included.(3)For purposes of this table, reflects currently projected potential maximum payouts of outstanding 2016, 2017, and 2018 PSUs, taking into account the impact of non-GAAP EPS on the 2016 and 2017 grants. This number does not incorporate the 2.3 fungible ratio.
Share Utilization Disclosure
The following table summarizes our share utilization with respect to the 2016 Incentive Plan and our 2007 Incentive Plan over the past three fiscal years. We include this table in recognition that many shareholders find this information useful in evaluating equity compensation proposals, such as this Proposal 3.
Year | Stock Options Granted | Restricted Stock/Restricted Stock Units Granted | Performance Shares Earned(1) | Total | Basic Weighted Average Common Shares Outstanding | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Fiscal Year 2015 | 473,506 | 197,810 | 168,223 | (2) | 839,539 | 46,496,000 | ||||||||||
Fiscal Year 2016 | 587,517 | 236,457 | 326,550 | (3) | 1,150,524 | 47,014,000 | ||||||||||
Fiscal Year 2017 | 603,111 | 252,616 | 196,527 | (4) | 1,052,254 | 47,481,000 | ||||||||||
(1)In fiscal years 2015, 2016, and 2017, the following PSUs were granted (at target levels), respectively: 164,263; 208,375; 212,135.(2)Reflects shares earned for 2013 PSU grants, taking into account all performance factors as of fiscal year end 2015 (the Final Award)(3)Reflects shares earned for 2014 PSU grants, taking into account all performance factors as of fiscal year end 2016 (the Final Award).(4)Reflects shares earned for 2015 PSU grants, taking into account all performance factors as of fiscal year end 2017 (the Final Award).
COMPENSATION DISCUSSION AND ANALYSIS
Financial Officer).
Over the past five or six years, however, the demandbiotechnical clients for our outsourced services has steadily improved as has demand for products and services to support our clients'their manufacturing activities. We took severalhave continued to take many important steps in the past fourrecent years to position the Company to meet this increased demand and to maintain responsiveness to clients'clients’ needs:
market.
share.
We believe that, when viewed
![[MISSING IMAGE: lc_peergroup-bw.jpg]](/files/DEF 14A/0001104659-23-038821/lc_peergroup-bw.jpg)
| | | | Fiscal Year | | |||||||||||||||||||||||||||||||||
| | | | 2017 | | | 2018 | | | 2019 | | | 2020 | | | 2021 | | | 2022 | | ||||||||||||||||||
| Charles River Laboratories International, Inc. | | | | $ | 100.00 | | | | | $ | 102.07 | | | | | $ | 138.81 | | | | | $ | 229.98 | | | | | $ | 337.32 | | | | | $ | 199.09 | | |
| FY2022 rTSR Peer Group Median | | | | | 100.00 | | | | | | 102.84 | | | | | | 133.61 | | | | | | 156.45 | | | | | | 180.65 | | | | | | 177.33 | | |
| S&P 500 Health Care | | | | | 100.00 | | | | | | 105.01 | | | | | | 129.09 | | | | | | 143.22 | | | | | | 181.99 | | | | | | 180.47 | | |
2017Compensation Committee approved the following updates to the design of our PSUs:
executive compensation program during that period, which followed a periodwe believe enhance the performance orientation of substantial outreachthe program:
- its Corporate
- awards, and where appropriate and applicable, special equity awards (such as with respect to executive transitions):
The Compensation Committee believes that these changes have been responsive to feedback from investors and enhance
Historical Elements of Our Compensation Practices
Certain elements of our compensation practices reflect legacy decisions and changes that were made in prior years which were designed to ensure alignment between executive compensation and Company performance, and which continue to carry forward and have influence in our Compensation Program:
•Base Salaries:We have keptCEO is 6 times base salary,increases modest. While year-to-year there are adjustments (ranging from 0% to 7%) that may be below or above the average, in general annualized merit increases (excluding promotional increases) are consistent with the average annualized merit increase allotted to our North American workforce.•Annual Cash Incentive Awards:From 2009 through 2012, with business plans having been scaled to levels below earlier high-growth years, we reduced targeted bonus payoutsand foreach goal under our Executive Incentive Compensation Plan (EICP). We resumed non-reduced targeted payouts in 2013 following a second consecutive year of solid financial performance, and have maintained that level since.•Perquisites:From 2010 to 2013, we took steps to eliminate perquisites for our officers. All perquisites and cash equivalents were eliminated effective in fiscal 2014.•Severance:We reduced the severance plan benefits for involuntary terminations of corporateexecutive officersunder our Officer Separation Plan.
is 3 times base salary.
Furthermore, as seen in the graph below, the alignment between executive pay and our performance is demonstrated by the close correlation from 2008 to 20172022 between (1) the total compensation paid (consistent with the Summary Compensation Table) to our CEO in those years and (2) our non-GAAP earnings per share from continuing operations during that period. As illustrated, compensation generally increased with strong performance and decreased when performance declined.
A very similar alignment can be seen between our performance and the average pay (based on Summary Compensation Table disclosure) for the two other named executives (Mr. Johst and Dr. Molho) who have consistently been included in the Summary Compensation Table during the period from 2010 to 2017.
![[MISSING IMAGE: bc_ceocomp-bwlr.jpg]](/files/DEF 14A/0001104659-23-038821/bc_ceocomp-bwlr.jpg)
2008-2022.
The changes
In addition to changes to the Program, in light of periodic discussions with shareholders and observation of general governance trends, we have recently made and may in the future make modifications to our corporate governance structure. For instance,
which Charles River’s executive compensation programs could be improved.
•- promote the achievement of desired levels of Company performance through
the utilization of bothshort-term bonus and long-term equity elementswhich areby closelyalignedaligning them with our business performance; and
| | | ||||||||||
| Core Elements | |||||||||||
| | | | Supplemental Elements | | | ||||||
| | |
| | | |
| | |
| | | 2022 Targeted Compensation Mix for Named Executives(1) | | | ||||||||||||||||||||||||||||||||
| | | | | | | Core Compensation Element | | | | Foster | | | | Pease(2) | | | | Smith(3) | | | | Barbo | | | | Girshick | | | | LaPlume | | | | Average | | |
| | | “Fixed” Compensation | | | | Base Salary | | | | 10.3% | | | | 19.9% | | | | 23.4% | | | | 19.9% | | | | 15.6% | | | | 17.9% | | | | 17.8% | | |
| | | “At-Risk” Compensation Elements | | | | Annual Cash Incentive Awards | | | | 10.3% | | | | 13.9% | | | | 16.3% | | | | 14.0% | | | | 12.5% | | | | 12.5% | | | | 13.3% | | |
| | Long-Term Equity Incentive Awards | | | | 79.4% | | | | 66.2% | | | | 60.3% | | | | 66.1% | | | | 71.9% | | | | 69.6% | | | | 68.9% | | | |||||
| 2017 Targeted Compensation Mix for Named Executive Officers(1) | |||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Core Compensation Element | | | Foster | | | Smith | | | Barbo | | | Johst | | | Molho | | | Average | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| "Fixed" Compensation | Base Salary(2) | 11.2% | 21.8% | 22.9% | 16.6% | 15.3% | 17.6% | ||||||||||||||||||||||||||||||
| "At-Risk" | Annual Cash Incentive Awards | 11.2% | 15.3% | 16.0% | 11.6% | 10.7% | 13.0% | ||||||||||||||||||||||||||||||
| Compensation Elements | Long-Term Equity Incentive Awards | 77.5% | 62.9% | 61.1% | 71.8% | 74.0% | 69.5% | ||||||||||||||||||||||||||||||
(1)- Due to rounding, the columns may add to more or less than 100%.
-
Committee deems appropriate. The16-1720-21 of this Proxy Statement, the Compensation Committee engaged Pay Governance as its independent compensation consultant to advise the Compensation Committee on matters related to 20172022 executive compensation. Pay Governance generally assists the Compensation Committee in fulfilling its responsibilities under its charter, including advising on proposed compensation packages for our senior executives, compensation program design and market practices generally, guidance on how to appropriately compensate officers, regularly attending Committee meetings and other topics as the Compensation Compensation Committee has authorized Pay Governance to interact with management on behalf of the Compensation Committee, as needed, in connection with advising the Compensation Committee and Pay Governance is included in discussions with management.Committee. With respect to fiscal year 20172022 compensation determinations, Pay Governance specifically assisted in the following:
peers;
Committee.
each executive'sexecutive’s experience, performance ratings, internal equity, and strategic value of the executive'sexecutive’s position to the Company.
year over year.
| | | |||||||||||
| Abbott Laboratories | | | |
| ||||||||
| ||||||||||||
| ||||||||||||
| ||||||||||||
Gilead Sciences, Inc. | | | | Pfizer Inc. | | | ||||||
| | | Agilent Technologies, Inc.* | | | | Hologic Inc. | | | | PPD, Inc.* | | |
| | | Amgen Inc. | | | | Icon plc | | | | Quest Diagnostics Incorporated | | |
| | |
| ||||||||||
| Baxter International Inc.* | | | | IDEXX Laboratories Inc. * | | | | Regeneron Pharmaceuticals, Inc.* | | | ||
| | | Becton, Dickinson and | | | | Illumina, Inc.* | | | | | | |
| | | Bio-Rad Laboratories, Inc.* | | | |
| | | | | | |
| | | Biogen Inc.* | | | | Laboratory Corporation of America Holdings* | | | | Teleflex Incorporated* | | |
| | | Boston Scientific Corporation* | | | | Medpace Holdings, Inc. | | | | Thermo Fisher Scientific Inc. | | |
| | | | | |
| | | | Vertex Pharmaceuticals Incorporated* | | | |
| | | | | |
| |||||||
Merck & Co., Inc. | | | | Waters Corporation* | | | ||||||
| | | Catalent, Inc.* | | | | Mettler Toledo International Inc. | | | | West Pharmaceutical Services | | |
| | | Eli Lilly and Company | | | | Myriad Genetics, Inc.* | | | | | | |
| | | Endo International plc | | | | PerkinElmer, Inc.* | | | | | | |
For evaluating 20182023 compensation levels, the proxy peer group will change to remove PPD, Inc. (acquired in 2022 by Thermo Fisher Scientific Inc.) and Endo International plc (low market capitalization), and add CatalentAvantor, Inc. and West Pharmaceutical Services, in anticipation of the expected loss, for 2019 compensation evaluation, of four peers due to mergers and acquisition activity (Alere acquired by Abbott Laboratories in October 2017; CR Bard acquired by Becton Dickinson in December 2017; and Albany Molecular and PAREXEL being taken private in 2017).
Jazz Pharmaceuticals Public Company Limited.
| Name | | | 2022 Salary | | |||
| James C. Foster | | | | $ | 1,412,291 | | |
| Flavia H. Pease | | | | $ | 600,000 | | |
| William D. Barbo | | | | $ | 550,050 | | |
| Birgit Girshick | | | | $ | 650,000 | | |
| Joseph W. LaPlume | | | | $ | 520,000 | | |
| David R. Smith(1) | | | | $ | 580,681 | | |
Name | 2017 Salary | |||
|---|---|---|---|---|
James C. Foster | $ | 1,194,912 | ||
David R. Smith | $ | 520,502 | ||
William D. Barbo | $ | 450,000 | ||
David P. Johst | $ | 634,285 | ||
Davide A. Molho | $ | 618,632 | ||
Annual Cash Incentive Awards
the Company based on predetermined corporate/business unit, functional, and/or individual objectives. The Committee annually establishes performance objectives and corresponding performance ranges for the named executives. These performance objectives and ranges are generally developed through our annual financial planning process, whereby we assess the future operating environment and build projections of anticipated results to align the performance expectations of this plan with the overall business objectives of the Company.
On December 6, 2016,Company.
target.
cash bonus, performance goals, goal attainment levels, and cash bonuses actually paid (in February 2018)2023) for each of our named executives:
Named Executive | | Target % (of base salary) | | Target EICP Award Amount | | Actual EICP Award Amount | Performance Goal | Weighting | Target | Actual | |||||||||
| | | | | | | | | | | | | | | | | | | | |
James C. Foster | 100 | % | $ | 1,194,912 | $ | 1,227,700 | 1. | EPS(1) | 30% | $5.10 | $5.27 | ||||||||
| 2. | Revenue(1)(2) | 30% | $1,838 million | $1,853 million | |||||||||||||||
| 3. | FCF(1)(3) | 20% | $275.0 million | $242.1 million | |||||||||||||||
| 4. | ROIC(4) | 20% | 11.8% | 11.7% | |||||||||||||||
David R. Smith | 70 | % | $ | 364,351 | $ | 361,939 | 1. | EPS(1) | 35% | $5.10 | $5.27 | ||||||||
| 2. | Revenue(1)(2) | 20% | $1,838 million | $1,853 million | |||||||||||||||
| 3. | FCF(1)(3) | 25% | $275.0 million | $242.1 million | |||||||||||||||
| 4. | ROIC(4) | 20% | 11.8% | 11.7% | |||||||||||||||
William D. Barbo | 70 | % | $ | 315,000 | $ | 382,334 | 1. | EPS(1) | 20% | $5.10 | $5.27 | ||||||||
| 2. | Revenue(1)(2) | 60% | $1,838 million | $1,853 million | |||||||||||||||
| 3. | WIL Integration(6) | 20% | 100%(6) | 100%(6) | |||||||||||||||
David P. Johst | 70 | % | $ | 444,000 | $ | 456,183 | 1. | EPS(1) | 30% | $5.10 | $5.27 | ||||||||
| 2. | Revenue(1)(2) | 30% | $1,838 million | $1,853 million | |||||||||||||||
| 3. | FCF(1)(3) | 20% | $275.0 million | $242.1 million | |||||||||||||||
| 4. | ROIC(4) | 20% | 11.8% | 11.7% | |||||||||||||||
Davide A. Molho | 70 | % | $ | 433,043 | $ | 411,434 | 1. | EPS(1) | 25% | $5.10 | $5.27 | ||||||||
| 2. | Revenue(1)(5) | 35% | $1,473 million | $1,470 million | |||||||||||||||
| 3. | FCF(1)(3) | 20% | $275.0 million | $242.1 million | |||||||||||||||
| 4. | ROIC(4) | 20% | 11.8% | 11.7% | |||||||||||||||
| | | Named Executive | | | | Target % (of base salary) | | | | Target EICP Award Amount | | | | Actual EICP Award Amount | | | | Performance Goal | | | | Weighting | | | | Target | | | | Actual | | | ||||||||||||
| | | James C. Foster | | | | | | 100% | | | | | | $ | 1,412,291 | | | | | | $ | 1,030,973 | | | | | 1. CRL Revenue(1) 2. CRL OI(2) | | | | 50% 50% | | | | $4,105 million $870.6 million | | | | $3,976 million $834.0 million | | | |||
| | | Flavia H. Pease(3) | | | | | | 70% | | | | | | $ | 288,822 | | | | | | $ | 159,430 | | | | | 1. CRL Revenue(1) 2. CRL OI(2) 3. CRL FCF(6) | | | | 25% 50% 25% | | | | $4,105 million $870.6 million $442.1 million | | | | $3,976 million $834.0 million $330.0 million | | | |||
| | | William D. Barbo | | | | | | 70% | | | | | | $ | 385,035 | | | | | | $ | 278,303 | | | | | 1. CRL Revenue(1) 2. CRL OI(2) | | | | 70% 30% | | | | $4,105 million $870.6 million | | | | $3,976 million $834.0 million | | | |||
| | | Birgit Girshick | | | | | | 80% | | | | | | $ | 520,000 | | | | | | $ | 379,600 | | | | | 1. CRL Revenue(1) 2. CRL OI(2) | | | | | | 50% 50% | | | | | $4,105 million $870.6 million | | | | $3,976 million $834.0 million | | |
| | | Joseph W. LaPlume | | | | | | 70% | | | | | | $ | 364,000 | | | | | | $ | 265,720 | | | | | 1. CRL Revenue(1) 2. CRL OI(2) | | | | | | 50% 50% | | | | | $4,105million $870.6 million | | | | $3,976 million $834.0 million | | |
| | | David R. Smith(4)(5) | | | | | | 70% | | | | | | $ | 304,022 | | | | | | $ | 167,820 | | | | | 1. CRL Revenue(1) 2. CRL OI(2) 3. CRL FCF(6) | | | | | | 25% 50% 25% | | | | | $4,105 million $870.6 million $442.1 million | | | | $3,976 million $834.0 million $330.0 million | | |
- (1)
| Name | | | Actual % of Cash Incentive Award vs. Target 2015 | | | Actual % of Cash Incentive Award vs. Target - 2016 | | | Actual % of Cash Incentive Award vs. Target - 2017 | | | Actual % of Cash Incentive Award vs. Target - 2018 | | | Actual % of Cash Incentive Award vs. Target - 2019 | | | Actual % of Cash Incentive Award vs. Target - 2020 | | | 2021 Cash Incentive Award | | | Actual % of Cash Incentive Award vs. Target - 2021 | | | 2022 Cash Incentive Award | | | Actual % of Cash Incentive Award vs. Target - 2022 | | ||||||||||||||||||||||||||||||
| James C. Foster | | | | | 156.6% | | | | | | 152.5% | | | | | | 102.7% | | | | | | 188.7% | | | | | | 141.5% | | | | | | 108.0% | | | | | $ | 1,871,457 | | | | | | 137.2% | | | | | $ | 1,030,973 | | | | | | 73.0% | | |
| Flavia H. Pease | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 159,430 | | | | | | 55.2% | | |
| William D. Barbo | | | | | — | | | | | | 130.3% | | | | | | 121.4% | | | | | | 141.0% | | | | | | 104.2% | | | | | | 108.0% | | | | | | 503,947 | | | | | | 134.8% | | | | | | 278,303 | | | | | | 72.3% | | |
| Birgit Girshick | | | | | — | | | | | | — | | | | | | — | | | | | | 168.8% | | | | | | 129.7% | | | | | | 108.0% | | | | | | 579,716 | | | | | | 127.4% | | | | | | 379,600 | | | | | | 73.0% | | |
| Joseph W. LaPlume | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 120.6% | | | | | | 108.0% | | | | | | 480,025 | | | | | | 137.2% | | | | | | 265,720 | | | | | | 73.0% | | |
| David R. Smith(1) | | | | | 81.4% | | | | | | 156.7% | | | | | | 99.3% | | | | | | 192.5% | | | | | | 149.9% | | | | | | 108.0% | | | | | | 674,799 | | | | | | 154.3% | | | | | | 167,820 | | | | | | 55.2% | | |
Name | Actual % of Cash Incentive Award vs. Target - 2011 | Actual % of Cash Incentive Award vs. Target - 2012 | Actual % of Cash Incentive Award vs. Target - 2013 | Actual % of Cash Incentive Award vs. Target - 2014 | 2015 Cash Incentive Award | Actual % of Cash Incentive Award vs. Target - 2015 | 2016 Cash Incentive Award | Actual % of Cash Incentive Award vs. Target - 2016 | 2017 Cash Incentive Award | Actual % of Cash Incentive Award vs. Target - 2017 | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
James C. Foster | 83.0% | 59.0% | 81.6% | 154.0% | $1,747,138 | 156.6% | $1,760,780 | 152.5% | $1,227,700 | 102.7% | |||||||||||||||||||||
David R. Smith | — | — | — | — | $267,719 | 81.4% | $533,550 | 156.7% | $361,939 | 99.3% | |||||||||||||||||||||
William B. Barbo | — | — | — | — | — | — | $305,945 | 130.3% | $382,334 | 121.4% | |||||||||||||||||||||
David P. Johst | 83.0% | 59.0% | 81.6% | 154.0% | $649,194 | 156.6% | $654,263 | 152.5% | $456,183 | 102.7% | |||||||||||||||||||||
Davide A. Molho | 80.1% | 41.9% | 106.9% | 140.1% | $797,646 | 197.3% | $677,158 | 161.8% | $411,434 | 95.0% | |||||||||||||||||||||
While the Compensation Committee's Charter permits delegation of the Committee's authority to grant equity in certain circumstances, all
In determining award levels for annual equity awards to named executives, the Committee takes into account the values of awards made to similarly situated individuals in the peer group, the individual market benchmark for each executive'sexecutive’s position, our overall performance, the individual performance of the named executive in the immediately preceding year, and other similar factors. An absolute target value of long-term equity awards (determined in dollars) is approved by the Committee. This value is then allocated between the types of LTI awards the Company is awarding during that particular year. These determinations are typically evaluated during the first month of the fiscal year and approved at the Committee'sCommittee’s meeting in February. Once the intended value of the awards is determined, the numbers of long-term equity awards (in 2017, stock options, RSUs, and PSUs) are generally fixed utilizing an estimated stock price (the 30-trading-day average closing price as of the date of the grant). We use the estimated stock price methodology to guard against dramatic, short-term stock price movements that might artificially reduce or increase the number of shares granted. We believe this methodology represents the performance of stock in the market and is a better way to deliver the intended value of this form of compensation.
the form of time-vested stock options, thereby further reinforcing the linkage between compensation and performance.
The
- •rTSR: the
Company'sCompany’s TSR falling exactly at the50th55th percentile as compared to the TSR ofselected companies withintheS&P 1500 Healthcare Index (Index) (and who are in the Index for all 3 years of the performance period)TSR comparator group) over the full three-year performance period. For this purpose, TSR refers
- the companies that make up the S&P500 Healthcare group.
| | | 2022 PSU Grant Base Award Calculation | | | | Future Final Award Levels (as % of Target Award) | | | ||||||||||||||||||||||||||||||||||||||
| | rTSR ≤30th percentile | | | | rTSR = 55th percentile | | | | rTSR ≥75th percentile | | | |||||||||||||||||||||||||||||||||||
| | | Target Non-GAAP EPS* | | | | Actual Non-GAAP EPS | | | | Actual Non-GAAP EPS as % of Target | | | | Base Award (as % of Target Award) | | | | Minimum (Base Award × 65%) | | | | Target (Base Award × 100%) | | | | Maximum (Base Award × 135%) | | | ||||||||||||||||||
| | | $11.76 | | | | | $ | 11.12 | | | | | | | 94.6% | | | | | | | 72.5% | | | | | | | 47.1% | | | | | | | 72.5% | | | | | | | 97.9% | | | |
| | | | Future Final Award Levels (as % of Target Award) | |||||||||||||
| | | | | | | | | | | | | | | | | | |
2017 PSU Grant | | rTSR £10th percentile | | rTSR = 50th percentile | | rTSR ³90th percentile | |||||||||||
| | | | | | | | | | | | | | | | | | |
Target | Actual Non-GAAP EPS | Actual Non-GAAP EPS as % of Target | Base Award (as % of Target Award) | Minimum (Base Award × 65%) | Target (Base Award × 100%) | Maximum (Base Award × 135%) | |||||||||||
| | | | | | | | | | | | | | | | | | |
$5.10 | $5.27 | 103.3% | 116.5% | 75.7% | 116.5% | 157.3% | |||||||||||
Final Award Percentage amounts that resulted based on rTSR at the end of the three-year performance period.
| | | 2020 PSU Grant Base Award Calculation | | | | Final Award Levels | | | |||||||||||||||||||||||||||||||
| | rTSR = 64th percentile | | | ||||||||||||||||||||||||||||||||||||
| | | Target Non-GAAP EPS | | | | Actual Non-GAAP EPS | | | | Actual Non-GAAP EPS as % of Target | | | | Base Award (as % of Target Award) * | | | | rTSR Adjustment | | | | Final Award (as % of Target Award) | | | |||||||||||||||
| | | $7.86 | | | | | $ | 8.13 | | | | | | | 103.4% | | | | | | | 150% | | | | | | | 114% | | | | | | | 171% | | | |
| | | | Final Award Levels | |||||||||||
| | | | | | | | | | | | | | | |
2015 PSU Grant Base | | rTSR = 61st percentile | ||||||||||||
| | | | | | | | | | | | | | | |
Target | Actual Non-GAAP EPS | Actual Non-GAAP EPS as % of Target | Base Award (as % of Target Award) | rTSR Adjustment | Final Award Percentage (of Target Award) | |||||||||
| | | | | | | | | | | | | | | |
$3.65 | 3.76 | 103.0% | 115.0% | 111.0% | 127.7% | |||||||||
Benefits and Perquisites
members and/or non-business travel.
- •these elements avoid personal distractions and encourage employees to remain focused on our business in the event of a rumored or actual takeover.The Committee periodically conducts formal and informal market checks and believes that both the levels of payment to be made under these programs and the applicable triggers are appropriate and consistent with current general market practices.Deferred Compensation Plan ContributionsAs described in more detail in this Proxy Statement under
"Executive“Executive Compensation and Related Information—2017 Nonqualified2022 Non-qualified DeferredCompensation,"Compensation”, the named executives in the United States receive a compensatory element in connection with our Deferred Compensation Plan. ForMessrs.Mr. Foster,and Johst,whowere participantswas a participant in theCompany's now-discontinuedCompany’s now discontinued Executive Supplemental Life Insurance Retirement Plan (ESLIRP), the Company credits totheirhis accounts the present value of the annual Company accrual as it would have been calculated under the ESLIRP. These credits can vary significantly year-to-year as the ESLIRP formula is dependent on the average of the highest five consecutive years of compensation. Whenthese executives incurhe incurs several consecutive years of relatively flat or decreasing executive compensation,(such as occurred between 2008-2012),thehighest-five-consecutive-yearhighest five consecutive year compensation average remains relatively static and the credit is small or zero. Conversely, when there are several consecutive years of increasing compensation, the cumulative effect of those years may result in asingle-yearsingle year credit spike. Such variations can be seen, for instance, in the amounts credited to Mr. Foster over the pastseveral years:decade: $7,310 (2011), $0 (2012), $0 (2013), $0 (2014),and$360,047 (2015), $2,607,660 (2016), and $1,223,422 (2017), with increasesto $2,607,660of $907,510, $2,238,068, $224,652, and$1,223,422$0 in20162018, 2019,
In 2022, there was no additional credit provided to Mr. Foster.
Beginning in 2023, Ms. Pease will be eligible to receive a similar contribution to her Deferred Compensation Plan amount.
Retirement Plans
As described in more detail in this Proxy Statement under "Executive Compensation and Related Information—2017 Pension Benefits," the Company historically provided a retirement benefit for certain U.S. employees, including certain of the named executives, until 2002, when the Company amended the existing U.S. defined benefit pension plan to exclude new participants. Effective April 30, 2008, we froze the U.S. pension plan, and no additional benefits will accrue to participants (and all participants' rights to benefits under the pension plan have fully vested)package
Board has adopted stock ownership guidelines for senior management which are designed to satisfy an individual executive'sexecutive’s need for portfolio diversification, while maintaining management stock ownership at levels high enough to assure our shareholders of management'smanagement’s commitment to creating corporate value.
| | CEO | ||||
| | | |||
| Direct reports to the CEO |
| | 3 times base salary | |
| Senior Vice President (not reporting to the CEO) | |
| 2 times base salary | |
| Vice President | |
| 1 time base salary | |
Officers
REPORT OF COMPENSATION COMMITTEE
Mr. C. Richard Reese (Chair)
Mr. George Llado, Sr.
Mr. George E. Massaro
Mr. Richard F. Wallman
20172022 Summary Compensation Table
| Name and Principal Position(1) | | | Year | | | Salary ($) | | | Stock Awards ($)(2) | | | Option Awards ($)(3) | | | Bonus ($) | | | Non-Equity Incentive Plan Compensation ($)(4) | | | Change in Pension Value and Non-qualified Deferred Compensation ($)(5) Earnings ($)(5) | | | All Other Compensation ($)(6) | | | Total ($) | | |||||||||||||||||||||||||||
James C. Foster Chairman, President, Chief Executive Officer and Director | | | | | 2022 | | | | | | 1,399,442 | | | | | | 8,759,995 | | | | | | 2,179,888 | | | | | | 0 | | | | | | 1,030,973 | | | | | | 0 | | | | | | 77,574 | | | | | | 13,447,872 | | |
| | | | 2021 | | | | | | 1,353,841 | | | | | | 8,359,896 | | | | | | 2,062,193 | | | | | | 0 | | | | | | 1,871,457 | | | | | | 0 | | | | | | 58,194 | | | | | | 13,705,581 | | | ||
| | | | 2020 | | | | | | 1,354,971 | | | | | | 8,160,030 | | | | | | 2,058,396 | | | | | | 0 | | | | | | 1,430,772 | | | | | | 194,061 | | | | | | 285,181 | | | | | | 13,483,411 | | | ||
Flavia H. Pease(7) Corporate Executive Vice President and Chief Financial Officer | | | | | 2022 | | | | | | 403,844 | | | | | | 2,883,429 | | | | | | 828,323 | | | | | | 200,000(7) | | | | | | 159,430 | | | | | | 0 | | | | | | 9,124 | | | | | | 4,484,150 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
William D. Barbo Corporate Executive Vice President, Chief Commercial Officer | | | | | 2022 | | | | | | 545,738 | | | | | | 1,467,715 | | | | | | 365,944 | | | | | | 0 | | | | | | 278,303 | | | | | | 0 | | | | | | 104,508 | | | | | | 2,762,209 | | |
| | | | 2021 | | | | | | 527,176 | | | | | | 1,373,282 | | | | | | 339,892 | | | | | | 0 | | | | | | 503,947 | | | | | | 0 | | | | | | 101,922 | | | | | | 2,846,219 | | | ||
| | | | 2020 | | | | | | 515,126 | | | | | | 1,289,517 | | | | | | 325,281 | | | | | | 0 | | | | | | 384,501 | | | | | | 0 | | | | | | 95,050 | | | | | | 2,609,475 | | | ||
Birgit Girshick Corporate Executive Vice President, Chief Operating Officer | | | | | 2022 | | | | | | 650,000 | | | | | | 2,412,795 | | | | | | 601,505 | | | | | | 0 | | | | | | 379,600 | | | | | | 0 | | | | | | 121,630 | | | | | | 4,165,529 | | |
| | | | 2021 | | | | | | 502,351 | | | | | | 1,615,375 | | | | | | 399,892 | | | | | | 0 | | | | | | 579,716 | | | | | | 0 | | | | | | 99,340 | | | | | | 3,196,674 | | | ||
| | | | 2020 | | | | | | 475,329 | | | | | | 1,384,280 | | | | | | 349,245 | | | | | | 0 | | | | | | 352,218 | | | | | | 0 | | | | | | 85,372 | | | | | | 2,646,443 | | | ||
Joseph LaPlume Corporate Executive Vice President Corporate Development and Strategy | | | | | 2022 | | | | | | 514,613 | | | | | | 1,628,579 | | | | | | 406,020 | | | | | | 0 | | | | | | 265,720 | | | | | | 0 | | | | | | 91,013 | | | | | | 2,905,945 | | |
| | | | 2021 | | | | | | 494,323 | | | | | | 6,467,972 | | | | | | 379,892 | | | | | | 0 | | | | | | 480,025 | | | | | | 0 | | | | | | 95,488 | | | | | | 7,917,700 | | | ||
| | | | 2020 | | | | | | 489,858 | | | | | | 1,423,904 | | | | | | 359,185 | | | | | | 0 | | | | | | 362,086 | | | | | | 0 | | | | | | 89,833 | | | | | | 2,724,866 | | | ||
David R. Smith(8) Former Corporate Executive Vice President and Chief Financial Officer | | | | | 2022 | | | | | | 441,496 | | | | | | 1,500,056 | | | | | | 0 | | | | | | 0 | | | | | | 167,820 | | | | | | 0 | | | | | | 63,042 | | | | | | 2,172,415 | | |
| | | | 2021 | | | | | | 618,163 | | | | | | 1,792,243 | | | | | | 443,499 | | | | | | 0 | | | | | | 674,799 | | | | | | 0 | | | | | | 82,324 | | | | | | 3,611,028 | | | ||
| | | | 2020 | | | | | | 599,152 | | | | | | 1,546,432 | | | | | | 390,134 | | | | | | 0 | | | | | | 463,595 | | | | | | 0 | | | | | | 114,250 | | | | | | 3,113,563 | | | ||
Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | Change in Pension Value and Non-qualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5)(6) | Total ($) | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
James C. Foster | 2017 | 1,184,033 | 6,949,917 | 1,754,523 | 1,227,700 | 223,247 | 1,236,176 | 12,575,597 | |||||||||||||||||
Chairman, President, Chief | 2016 | 1,143,993 | 5,998,210 | 1,511,430 | 1,760,780 | 135,777 | 2,624,723 | 13,174,913 | |||||||||||||||||
Executive Officer | 2015 | 1,115,462 | 6,020,131 | 1,502,622 | 1,747,138 | 0 | 371,827 | 10,757,180 | |||||||||||||||||
and Director | |||||||||||||||||||||||||
David R. Smith | 2017 | 511,334 | 1,263,627 | 319,012 | 361,939 | — | 146,651 | (7) | 2,602,563 | ||||||||||||||||
Corporate Executive | 2016 | 482,021 | 999,635 | 251,905 | 533,550 | — | 276,977 | 2,544,088 | |||||||||||||||||
Vice President and | 2015 | 414,459 | 832,356 | 227,039 | 267,719 | — | 382,547 | 2,124,120 | |||||||||||||||||
Chief Financial Officer | |||||||||||||||||||||||||
William D. Barbo | 2017 | 447,746 | 1,010,955 | 255,214 | 382,334 | 60,068 | 94,111 | 2,250,428 | |||||||||||||||||
Corporate Executive | 2016 | 384,512 | 719,781 | 181,382 | 305,945 | 37,750 | 69,654 | 1,699,024 | |||||||||||||||||
Vice President and Chief | |||||||||||||||||||||||||
Commercial Officer | |||||||||||||||||||||||||
David P. Johst | 2017 | 628,511 | 2,338,717 | 563,575 | 456,183 | 138,409 | 484,315 | 4,609,709 | |||||||||||||||||
Corporate Executive | 2016 | 607,257 | 2,020,101 | 483,656 | 654,263 | 84,853 | 798,988 | 4,649,118 | |||||||||||||||||
Vice President, General | 2015 | 592,112 | 1,827,176 | 429,331 | 649,194 | 0 | 620,752 | 4,118,564 | |||||||||||||||||
Counsel and Chief | |||||||||||||||||||||||||
Administrative Officer | |||||||||||||||||||||||||
Davide A. Molho | 2017 | 613,000 | 2,527,254 | 638,025 | 411,434 | — | 111,821 | 4,301,534 | |||||||||||||||||
Corporate Executive | 2016 | 592,271 | 1,999,350 | 503,810 | 677,158 | — | 111,573 | 3,884,161 | |||||||||||||||||
Vice President and | 2015 | 570,096 | 1,720,068 | 429,331 | 797,646 | — | 108,152 | 3,625,293 | |||||||||||||||||
President, Global RMS | |||||||||||||||||||||||||
Safety Assessment & | |||||||||||||||||||||||||
Biologics | |||||||||||||||||||||||||
- (1)
values was somewhat offset by a decrease in present values due to the change in the mortality improvement projection scale from the MP-2016 scale published by the Society of Actuaries in October 2016 to the MP-2017 scale, published by the Society of Actuaries in October 2017.administer all future payments. Above-market or preferential earnings are not available under our Deferred Compensation Plan, which is our only plan or arrangement pursuant to which compensation may be deferred on a basis that is not tax-qualified,tax qualified, or any of our other benefit plans.
(5)
| | | Name | | | | Type of Award(*) | | | | Grant Date | | | | Date of Board or Compensation Committee Action to Approve Grant(1) | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(2) | | | | Estimated Possible Payouts Under Equity Incentive Plan Awards(3) | | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(4) | | | | All Other Option Awards: Number of Securities Underlying Options (#)(5) | | | | Exercise or Base Price of Option Awards ($/Sh) | | | | Grant Date Fair Value of Stock and Option Awards ($)(6) | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | Threshold ($) | | | | Target ($) | | | | Maximum ($) | | | | Threshold (#) | | | | Target (#) | | | | Maximum (#) | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | James C. Foster | | | | | | EICP | | | | | | | 1/27/2022 | | | | | | | 1/27/2022 | | | | | | $ | 141,229 | | | | | | $ | 1,412,291 | | | | | | $ | 2,824,583 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | SO | | | | | | | 5/27/2022 | | | | | | | 1/27/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 24,042 | | | | | | | 244.41 | | | | | | $ | 2,179,888 | | | | |||||
| | | | PSU | | | | | | | 5/27/2022 | | | | | | | 1/27/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 13,530 | | | | | | | 41,631 | | | | | | | 83,262 | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 8,759,995 | | | | |||||
| | | Flavia H. Pease (7) | | | | | | EICP | | | | | | | 3/4/2022 | | | | | | | 3/4/2022 | | | | | | $ | 28,882 | | | | | | $ | 288,822 | | | | | | $ | 577,644 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | SO | | | | | | | 5/02/2022 | | | | | | | 3/4/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,649 | | | | | | | 245.88 | | | | | | $ | 427,290 | | | | |||||
| | | | RSU | | | | | | | 5/02/2022 | | | | | | | 3/4/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,185 | | | | | | | | | | | | | | | | | | | | $ | 1,274,888 | | | | |||||
| | | | SO | | | | | | | 5/27/2022 | | | | | | | 3/4/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,423 | | | | | | | 244.41 | | | | | | $ | 401,033 | | | | |||||
| | | | RSU | | | | | | | 5/27/2022 | | | | | | | 3/4/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,637 | | | | | | | | | | | | | | | | | | | | $ | 400,099 | | | | |||||
| | | | PSU | | | | | | | 5/27/2022 | | | | | | | 3/4/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,866 | | | | | | | 5,743 | | | | | | | 11,486 | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 1,208,442 | | | | |||||
| | | William D. Barbo . . | | | | | | EICP | | | | | | | 1/27/22 | | | | | | | 1/27/2022 | | | | | | $ | 38,504 | | | | | | $ | 385,035 | | | | | | $ | 770,070 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | SO | | | | | | | 5/27/2022 | | | | | | | 1/27/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,036 | | | | | | | 244.41 | | | | | | $ | 365,944 | | | | |||||
| | | | RSU | | | | | | | 5/27/2022 | | | | | | | 1/27/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,493 | | | | | | | | | | | | | | | | | | | | $ | 364,904 | | | | |||||
| | | | PSU | | | | | | | 5/27/2022 | | | | | | | 1/27/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,703 | | | | | | | 5,241 | | | | | | | 10,482 | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 1,102,811 | | | | |||||
| | | Birgit Girshick . . . . | | | | | | EICP | | | | | | | 1/27/22 | | | | | | | 1/27/2022 | | | | | | $ | 52,000 | | | | | | $ | 520,000 | | | | | | $ | 1,040,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | SO | | | | | | | 5/27/2022 | | | | | | | 1/27/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6,634 | | | | | | | 244.41 | | | | | | $ | 601,505 | | | | |||||
| | | | RSU | | | | | | | 5/27/2022 | | | | | | | 1/27/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,455 | | | | | | | | | | | | | | | | | | | | $ | 600,027 | | | | |||||
| | | | PSU | | | | | | | 5/27/2022 | | | | | | | 1/27/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,800 | | | | | | | 8,615 | | | | | | | 17,230 | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 1,812,768 | | | | |||||
| | | Joseph LaPlume . . . | | | | | | EICP | | | | | | | 1/27/22 | | | | | | | 1/27/2022 | | | | | | $ | 36,400 | | | | | | $ | 364,000 | | | | | | $ | 728,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | SO | | | | | | | 5/27/2022 | | | | | | | 1/27/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,478 | | | | | | | 244.41 | | | | | | $ | 406,020 | | | | |||||
| | | | RSU | | | | | | | 5/27/2022 | | | | | | | 1/27/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,657 | | | | | | | | | | | | | | | | | | | | $ | 404,987 | | | | |||||
| | | | PSU | | | | | | | 5/27/2022 | | | | | | | 1/27/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,890 | | | | | | | 5,815 | | | | | | | 11,630 | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 1,223,592 | | | | |||||
| | | David R. Smith(8) . | | | | | | EICP | | | | | | | 1/27/22 | | | | | | | 1/27/2022 | | | | | | $ | 30,402 | | | | | | $ | 304,022 | | | | | | $ | 608,044 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | RSU | | | | | | | 2/28/2022 | | | | | | | 1/27/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,152 | | | | | | | | | | | | | | | | | | | | $ | 1,500,056 | | | | |||||
| | | | | | | | Date of Board or Compensation Committee Action to Approve | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(2) | | Estimated Possible Payouts Under Equity Incentive Plan Awards(3) | | All Other Stock Awards: Number of Shares of Stock | | All Other Option Awards: Number of Securities Underlying | | Exercise or Base Price of Option | | Grant Date Fair Value of Stock and Option | | |||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Name | | Type of Award(*) | | Grant Date | | Grant (1) | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | or Units (#)(4) | | Options (#)(5) | | Awards ($/Sh) | | Awards ($)(6) | | |||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
James C. Foster | EICP | 12/06/2016 | 12/06/2016 | 11,949 | 1,194,912 | 2,987,279 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SO | 02/24/2017 | 01/31/2017 | 96,033 | 88.05 | 1,754,523 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSU | 02/24/2017 | 01/31/2017 | 19,925 | 1,754,396 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PSU | 02/24/2017 | 01/31/2017 | 5,197 | 51,976 | 103,952 | 5,195,521 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David R. Smith | EICP | 12/06/2016 | 12/06/2016 | 3,644 | 364,351 | 910,878 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SO | 02/24/2017 | 01/31/2017 | 17,461 | 88.05 | 319,012 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSU | 02/24/2017 | 01/31/2017 | 3,623 | 319,005 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PSU | 02/24/2017 | 01/31/2017 | 945 | 9,450 | 18,900 | 944,622 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
William D. Barbo | EICP | 12/06/2016 | 12/06/2016 | 3,150 | 315,000 | 787,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SO | 02/24/2017 | 01/31/2017 | 13,969 | 88.05 | 255,214 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSU | 02/24/2017 | 01/31/2017 | 2,899 | 255,257 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PSU | 02/24/2017 | 01/31/2017 | 756 | 7,560 | 15,120 | 755,698 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David P. Johst | EICP | 12/06/2016 | 12/06/2016 | 4,440 | 444,000 | 1,109,999 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SO | 02/24/2017 | 01/31/2017 | 30,847 | 88.05 | 563,575 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSU | 02/24/2017 | 01/31/2017 | 7,608 | 669,884 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PSU | 02/24/2017 | 01/31/2017 | 1,669 | 16,695 | 33,390 | 1,668,832 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Davide A. Molho | EICP | 12/06/2016 | 12/06/2016 | 4,330 | 433,043 | 1,082,607 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SO | 02/24/2017 | 01/31/2017 | 34,922 | 88.05 | 638,025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RSU | 02/24/2017 | 01/31/2017 | 7,246 | 638,010 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PSU | 02/24/2017 | 01/31/2017 | 1,890 | 18,900 | 37,800 | 1,889,244 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(*)- Types of Award:
SO—Stock Option
RSU—Restricted Stock Unit
PSU—Performance Share Unit
(1)
(1)- See the section of the Proxy Statement entitled
"Compensation“Compensation Discussion andAnalysis"Analysis—Compensation Elements—Long-Term Equity Incentive Awards” for a discussion regarding our equity award grant date practices.
•Annual base salary of $425,000 beginning March 1, 2015, which increased to $470,000 as of the date of his appointment to Chief Financial Officer.•Participation by Mr. Smith in the Charles River Executive Incentive Bonus Program, and other benefit and compensation plans, at levels consistent with his position.•Promises of grants of two equity awards: (1) an award in February 2015 with an approximate value of $700,000 provided to Mr. Smith in anticipation of his pending promotion; and (2) an award granted concurrently with his appointment to Chief Financial Officer with an approximate value of $300,000.•Provision for payment of certain costs involved in the relocation of Mr. Smith and his family to the U.S., including (1) reimbursement for temporary living expenses between June 1, 2015 through June 30, 2016, and other moving and related travel costs; (2) home start-up expenses; (3) international tax planning and preparation related to the relocation; (4) reasonable costs involved in obtaining visas and other documentation required in connection with the relocation of Mr. Smith and his family; and (5) school and education tuition for one of Mr. Smith's children for up to two academic years (up to a maximum of $50,000 per year).•The agreement provides that if Mr. Smith leaves the Company or is terminated for cause within two years of relocating, he will be required to repay the Company the total amounts of the reimbursed relocation costs.
2022 On February 12, 2018, we entered into an employment agreement with James C. Foster, our 2017 restricted stock, RSUs and PSUs to our named executives were granted pursuant to our 2016Amended and Restated 2018 Incentive Plan, as amended.Plan. The vesting provisions of our PSUs are set forth above on pages 57-6055-58 of this Proxy Statement. Options vest and become exercisable in equal installments on or about the anniversary date in each of the four years following the date of grant, subject to continued employment. Restricted shares (whether in the form of restricted stock or RSUs)RSUs generally vest in installments on or about the anniversary date in each of the four years following the date of grant, subject to continued employment. The installments are generally equivalent in amount. Furthermore, 1,208 RSUs were granted to Mr. Johst on February 24, 2017, which vest in equal installments on or about the anniversary date in each of the two years following the date of grant, subject to continued employment. The exercise price of stock options is equal to the closing price of our common stock on the date of grant.20172022 also include full career retirement vesting provisions, as described further on pages 58-59page 56 of this Proxy Statement. All grants of non-equity incentive plan awards have been made pursuant to our EICP plan.Employment-Relatedhavehad not entered into employment agreements with any of our U.S.-based corporate executive officers. The named executives, however, are beneficiaries of certain separation and change-in-control agreements, as well as defined benefit and deferred compensation arrangements, as further described below in this Proxy Statement. We entered into a letter agreement dated March 3, 2015 in connection with Mr. Smith's 2015 promotion to Corporate Executive Vice President and Chief Financial Officer and his commitment to relocate from Europe to our corporate headquarters in Massachusetts. This agreement provides for the following material compensation terms:ChairmanChair, President and Chief Executive Officer.Officer, which was subsequently amended and restated on May 18, 2021. The purpose of the agreement is to benefit from Mr. Foster'sFoster’s decades of experience and unique skill set by promoting the retention of Mr. Foster. This agreement provides for the following material compensation terms:
- •Mr. Foster will be subject to post-termination non-competition and non-solicitation covenants for a period of at least one year and a perpetual confidentiality covenant.The Company agreed to reimburse Mr. Foster for the cost of his
attorneys'attorneys’ fees incurred in the negotiation of the employment agreement.On October 26, 2020, we entered into a letter agreement with David Smith, our then Corporate Executive Vice President and Chief Financial Officer, detailing the terms of his transfer of employment from the United States to the United Kingdom. This was memorialized with a standard U.K. Service Agreement effective December 1, 2020. On February 15, 2022, we entered into a letter agreement with Mr. Smith that amends our Service Agreement with him and that establishes parameters regarding a gradual and well-planned transition of his responsibilities upon his retirement from his role as Chief Financial Officer in May 2022. The 2020 letter agreement, the Service Agreement, and the 2022 letter agreement, together, provide for the following material compensation terms through February 2023, the remainder of his tenure:•Mr. Smith retained his title and continued to report to Mr. Foster, our Chief Executive Officer. Upon the appointment of his successor to Mr. Smith’s role prior to September 30, 2022, Mr. Smith’s job title changed to Senior Financial Advisor though February 28, 2023, as he transitioned his responsibilities to his successor. Throughout this transition period, Mr. Smith remained available to answer questions related to his role and to consult with his successor or our CEO about matters where Mr. Smith’s skill, expertise or insight is considered necessary.•Mr. Smith’s remuneration and benefits remained substantially unchanged, except as described below.•Annual Salary: Mr. Smith’s base compensation effective as of April 1, 2022 and through September 30, 2022 was £479,981.•Bonus: Mr. Smith’s targeted bonus (EICP) continued as 70% of gross annual base salary, subject to annual approval and/or modification by the Compensation Committee. Mr. Smith was eligible to receive a bonus of up to 70% of his base annual salary for the 2022 fiscal year, such bonus to be reduced on a pro-rata basis to reflect time worked within the fiscal year up to and including September 30, 2022.
2022 Year End
| | | | | | | Option Awards | | | | Stock Awards | | | ||||||||||||||||||||||||||||||||||||||||||||||||
| | | Name | | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | | Option Exercise Price ($) | | | | Option Expiration Date | | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(2) | | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | | | ||||||||||||||||||||||||
| | | James C. Foster | | | | | | 0 | | | | | | | 17,436(3) | | | | | | | 144.67 | | | | | | | 2/22/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 9,578 | | | | | | | 19,155(4) | | | | | | | 179.66 | | | | | | | 5/29/2030 | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||
| | | | 4,717 | | | | | | | 14,152(5) | | | | | | | 337.99 | | | | | | | 5/28/2031 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | 0 | | | | | | | 24,042(7) | | | | | | | 244.41 | | | | | | | 5/27/2032 | | | | | | | 9,832(8) | | | | | | | 2,142,393 | | | | | | | 82,635 | | | | | | | 18,006,167 | | | | |||||
| | | Flavia H. Pease | | | | | | 0 | | | | | | | 4,649(6) | | | | | | | 245.88 | | | | | | | 05/02/2032 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0 | | | | | | | 4,423(7) | | | | | | | 244.41 | | | | | | | 05/27/2032 | | | | | | | 6,822(13) | | | | | | | 1,486,514 | | | | | | | 5,743 | | | | | | | 1,251,400 | | | | |||||
| | | William D. Barbo | | | | | | 2,755 | | | | | | | 2,756(3) | | | | | | | 144.67 | | | | | | | 2/22/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 1,514 | | | | | | | 3,027(4) | | | | | | | 179.66 | | | | | | | 5/29/2030 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | 777 | | | | | | | 2,333(5) | | | | | | | 337.99 | | | | | | | 5/28/2031 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | 0 | | | | | | | 4,036(7) | | | | | | | 244.41 | | | | | | | 5/27/2032 | | | | | | | 3,803(10) | | | | | | | 828,674 | | | | | | | 10,309 | | | | | | | 2,246,331 | | | | |||||
| | | Birgit Girshick | | | | | | 3,205 | | | | | | | 0 | | | | | | | 109.34 | | | | | | | 2/23/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 2,958 | | | | | | | 2.958(3) | | | | | | | 144.67 | | | | | | | 2/22/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | 3,250 | | | | | | | 3,250(4) | | | | | | | 179.66 | | | | | | | 5/29/2030 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | 914 | | | | | | | 2,745(5) | | | | | | | 337.99 | | | | | | | 5/28/2031 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | 0 | | | | | | | 6,634(7) | | | | | | | 244.41 | | | | | | | 5/27/2032 | | | | | | | 5,011(11) | | | | | | | 1,091,897 | | | | | | | 14,577 | | | | | | | 3,176,328 | | | | |||||
| | | Joseph LaPlume | | | | | | 6,085 | | | | | | | 3,043(3) | | | | | | | 144.67 | | | | | | | 2/22/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 3,342 | | | | | | | 3,343(4) | | | | | | | 179.66 | | | | | | | 5/29/2030 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | 869 | | | | | | | 2,607(5) | | | | | | | 337.99 | | | | | | | 5/28/2031 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | 0 | | | | | | | 4,478(7) | | | | | | | 244.41 | | | | | | | 5/27/2032 | | | | | | | 4,216(12) | | | | | | | 918,666 | | | | | | | 21,671 | | | | | | | 4,722,111 | | | | |||||
| | | David R. Smith | | | | | | 0 | | | | | | | 3,305(3) | | | | | | | 144.67 | | | | | | | 2/22/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 1,815 | | | | | | | 3,631(4) | | | | | | | 179.66 | | | | | | | 5/29/2030 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
| | | | 1,014 | | | | | | | 3,044(5) | | | | | | | 337.99 | | | | | | | 5/28/2031 | | | | | | | 8,000(9) | | | | | | | 1,743,200 | | | | | | | 6,614 | | | | | | | 1,441,191 | | | | |||||
| Option Awards | Stock Awards | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(2) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
James C. Foster | 0 | 20,072 | (3) | 59.41 | 02/28/2021 | ||||||||||||||||||||
| 0 | 43,154 | (4) | 76.67 | 02/27/2020 | |||||||||||||||||||||
| 25,123 | 75,371 | (5) | 73.70 | 02/26/2021 | |||||||||||||||||||||
| 0 | 96,033 | (6) | 88.05 | 02/24/2022 | 50,155 | (9) | 5,489,465 | 168,069 | 18,395,152 | ||||||||||||||||
David R. Smith | 0 | 17,762 | (7) | 51.45 | 05/01/2021 | ||||||||||||||||||||
| 0 | 4,316 | (4) | 76.67 | 02/27/2020 | |||||||||||||||||||||
| 0 | 2,498 | (8) | 76.12 | 08/12/2020 | |||||||||||||||||||||
| 0 | 12,562 | (5) | 73.70 | 02/26/2021 | |||||||||||||||||||||
| 0 | 17,461 | (6) | 88.05 | 02/24/2022 | 9,404 | (10) | 1,029,268 | 29,247 | 3,201,084 | ||||||||||||||||
William D. Barbo | 0 | 1,825 | (3) | 59.41 | 02/28/2021 | ||||||||||||||||||||
| 0 | 4,316 | (4) | 76.67 | 02/27/2020 | |||||||||||||||||||||
| 0 | 9,045 | (5) | 73.70 | 02/26/2021 | |||||||||||||||||||||
| 0 | 13,969 | (6) | 88.05 | 02/24/2022 | 6,184 | (11) | 676,839 | 22,246 | 2,434,825 | ||||||||||||||||
David P. Johst | 17,517 | 5,839 | (3) | 59.41 | 02/28/2021 | ||||||||||||||||||||
| 12,330 | 12,330 | (4) | 76.67 | 02/27/2020 | |||||||||||||||||||||
| 8,039 | 24,119 | (5) | 73.70 | 02/26/2021 | |||||||||||||||||||||
| 0 | 30,847 | (6) | 88.05 | 02/24/2022 | 17,482 | (12) | 1,913,405 | 53,879 | 5,897,057 | ||||||||||||||||
Davide A. Molho | 0 | 5,474 | (3) | 59.41 | 02/28/2021 | ||||||||||||||||||||
| 0 | 12,330 | (4) | 76.67 | 02/27/2020 | |||||||||||||||||||||
| 0 | 25,124 | (5) | 73.70 | 02/26/2021 | |||||||||||||||||||||
| 0 | 34,922 | (6) | 88.05 | 02/24/2022 | 16,549 | (13) | 1,811,288 | 58,497 | 6,402,497 | ||||||||||||||||
(1)- Calculated based on the closing price ($
109.45)217.90) of our stock on December29, 2017,31, 2022, the last trading day of the fiscal year2017,2022, rounded to the nearest whole cent.
(9)- (8)
| | | | Option Awards | | | Stock Awards | | ||||||||||||||||||
| Name | | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($)(1) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($)(2) | | ||||||||||||
| James C. Foster | | | | | 37,732 | | | | | | 6,133,567 | | | | | | 61,181 | | | | | | 14,039,302 | | |
| Flavia H. Pease | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| William D. Barbo | | | | | 3,205 | | | | | | 354,379 | | | | | | 9,918 | | | | | | 2,279,623 | | |
| Birgit Girshick | | | | | — | | | | | | — | | | | | | 10,621 | | | | | | 2,438,482 | | |
| Joseph LaPlume | | | | | 7,152 | | | | | | 887,843 | | | | | | 10,881 | | | | | | 2,496,575 | | |
| David R. Smith | | | | | 8,965 | | | | | | 1,308,327 | | | | | | 11,922 | | | | | | 2,740,667 | | |
| | Option Awards | Stock Awards | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | |||||||||
James C. Foster | 85,004 | 2,604,056 | 86,308 | 9,002,663 | |||||||||
David R. Smith | 13,834 | 260,665 | 9,340 | 970,436 | |||||||||
William D. Barbo | 11,448 | 250,949 | 9,999 | 1,021,109 | |||||||||
David P. Johst | 80,609 | 4,482,609 | 26,233 | 2,710,754 | |||||||||
Davide A. Molho | 48,130 | 1,873,471 | 24,635 | 2,569,846 | |||||||||
(1)
(1)- The value realized on the exercise of stock options and the immediate sale of shares acquired upon exercise is based on the difference between the exercise price and the intraday price of our common stock at the time of exercise. In other circumstances, such as when the underlying shares are held following the exercise of the stock option, the value realized is based on the difference between the exercise price and the closing price of our common stock on the date of exercise.
One of our sponsored defined benefit plans, the Charles River Laboratories, Inc. Pension Plan (Pension Plan), is a qualified, non-contributory plan that covers certain U.S. employees hired prior to January 1, 2002. Employees hired after December 31, 2001 are not eligible to participate in this Pension Plan. Each of the named executives, with the exception of Dr. Molho and Mr. Smith, are participants in the Pension Plan and has an accrued pension benefit thereunder. The Pension Plan was frozen effective April 30, 2008. No additional benefits will accrue to participants after such date. All participants' rights to benefits under this plan have vested.
Benefits under the Pension Plan are based on the participants' highest five consecutive years of compensation and years of service as of April 30, 2008. The amount of pension payable annually at normal retirement (age 65) is equal to the greatest of: (1) 11/8% of participants' highest average five consecutive years of compensation (excluding compensation earned after April 30, 2008) multiplied by years of service earned through April 30, 2008 (up to 40 years), less the maximum offset allowance determined as of April 30, 2008 in accordance with the Code Section 401(l); (2) $180 multiplied by years of service as of April 30, 2008; and (3) $1,500. In addition, certain officers and key employees are entitled to a frozen supplemental benefit ranging in amount from $51,000-$97,000. The applicable amounts for the named executives are as follows: Mr. Foster, $73,000; and Mr. Johst, $79,000. Mr. Barbo is not entitled to a frozen supplemental benefit.
Compensation under the Pension Plan generally would include amounts shown as salary and non-equity incentive plan compensation for the named executives (as shown on the Summary Compensation Table above) and would exclude any wages derived from stock options or severance pay. Early retirement benefits are provided to any retiring participant who has attained age 55 and completed five years of vesting service. The early retirement benefit is equal to the participant's normal retirement benefit reduced by5/9% per month for the first 60 months and5/18% for each month over 60 by which the participant's benefit commencement date precedes his or her normal retirement date. As of the end of fiscal 2017, Mr. Foster was eligible for normal retirement and Messrs. Barbo and Johst were eligible for early retirement.
Participants' rights to benefits under this plan vest upon completion of five years of service.
The table below sets forth information regarding the accumulated benefits of the participating named executives under our Pension Plan.
Name | Plan Name | Number of Years Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(2) | Payments During Last Fiscal Year ($) | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
James C. Foster | Charles River Laboratories, Inc. Pension Plan | 32.6 | 2,164,495 | 0 | ||||||||
William D. Barbo | Charles River Laboratories, Inc. Pension Plan | 26.3 | 517,192 | 0 | ||||||||
David P. Johst | Charles River Laboratories, Inc. Pension Plan | 17.0 | 1,121,206 | 0 | ||||||||
(1)The maximum years of credited service under our Pension Plan is 40 years. Credited service disclosed for participants in the Pension Plan is shown as of April 30, 2008, when benefits were frozen.(2)The present value of accumulated benefits disclosed is based on the assumptions used in our financial statement disclosures. For the Pension Plan these assumptions include a discount rate of 3.72% and the RP-2014 mortality table with mortality improvements projected generationally from 2006 using Scale MP-2017 (which reflects the mortality table published in October 2014 and the improvement scale published in October 2017 by the Society of Actuaries). The amounts reflected in this column include the frozen supplemental benefit amounts referred to in the description of the Pension Plan above. The normal form of payment under the Pension Plan is a straight-life annuity.
2017 Nonqualified2022 Non-Qualified Deferred Compensation
The plan is not qualified under Section 401(a) of the Code and is not subject to the Employee Retirement Income Security Act of 1974.
Beginning in 2023, we will provide the same annual contribution to the Deferred Compensation Plan of Ms. Pease.
The following table sets forth, for each of our named executives, information regarding their participation in our Deferred Compensation Plan during fiscal 2017.
| Name | | | Executive Contributions in Last FY ($) | | | Registrant Contributions in Last FY ($)(1)(2) | | | Aggregate Earnings in Last FY ($) | | | Aggregate Withdrawals/ Distributions ($) | | | Aggregate Balance at Last FYE ($)(1) | | |||||||||||||||
| James C. Foster | | | | | — | | | | | | — | | | | | | (7,841,125) | | | | | | — | | | | | | 30,149,684 | | |
| Flavia H. Pease | | | | | 184,614 | | | | | | — | | | | | | 584 | | | | | | — | | | | | | 185,199 | | |
| William D. Barbo | | | | | — | | | | | | 89,078 | | | | | | (170,093) | | | | | | — | | | | | | 889,687 | | |
| Birgit Girshick | | | | | — | | | | | | 83,046 | | | | | | (211,640) | | | | | | — | | | | | | 1,113,694 | | |
| Joseph LaPlume | | | | | — | | | | | | 82,932 | | | | | | (140,880) | | | | | | — | | | | | | 555,017 | | |
| David R. Smith(3) | | | | | — | | | | | | — | | | | | | (84,065) | | | | | | — | | | | | | 435,135 | | |
Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($)(1)(2) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(1) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
James C. Foster | 0 | 2,607,669 | 2,631,959 | 0 | 18,502,661 | |||||||||||
David R. Smith | 0 | 82,936 | 7,770 | 0 | 90,706 | |||||||||||
William D. Barbo | 0 | 61,615 | 39,800 | 0 | 383,780 | |||||||||||
David P. Johst | 0 | 786,137 | 780,185 | 0 | 6,382,427 | |||||||||||
Davide A. Molho | 91,950 | 99,683 | 154,335 | 0 | 1,058,790 | |||||||||||
(1)
(1)- For purposes of consistency, the amounts shown in this table include only those contributions, earnings, withdrawals, and distributions that occurred during calendar year
2017.2022. Accordingly, amounts credited by us with respect to compensation earned in the last fiscal year, but which are credited in2018,2023, have not been included in this table. However, these amounts (Mr. Foster,$1,223,422;$0; Ms. Pease, $0; Mr. Barbo, $81,238; Ms. Girshick, $101,811; Mr. LaPlume, $77,314; and Mr. Smith,$88,030; Mr. Barbo, $75,269; Mr. Johst, $473,323; and Dr. Molho, $100,661)$0) have been included in the total compensation set forth in the Summary Compensation Table under the column entitled"All“All OtherCompensation."Compensation”. As further discussed in the narrative above, the amounts set forth in the column entitled"Registrant“Registrant Contributions in LastFY"FY” represent the present value of the accrued benefits, after adjustments for outstanding Medicare taxes, which were credited to the namedexecutives'executives’ Deferred Compensation Plan account balances.
pursuant to our Deferred Compensation Plan). The total termination compensation described below does not include these amounts. executive'sexecutive’s employment had terminated on December 30, 2017,31, 2022, given the named executive'sexecutive’s compensation and service levels as of such date and, if applicable, based on our closing stock price on that date. (Since our last trading day in fiscal 2017year 2022 was December 29, 2017,30, 2022, where applicable we have assumed a stock price of $109.45,$217.90, the closing price on that date.)date). Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be different. Factors that could affect these amounts include the timing during the year of any such event, our stock price, and the named executive'sexecutive’s age. With respect to Mr. Foster, the information below does not factor the effects of his employment agreement, which was not in place as of December 29, 2017.2613 weeks (short-term disability) and up to 60%50% of basic monthly earnings up to $25,000 per month (long-term disability)(core long-term disability—maximum benefit of $12,500/month). In the event of termination of the named executives as a result of death, additional life insurance payments could provide a maximum additional amount to the named executives'executives’ beneficiaries as follows: Mr. Foster, $9,559,294;$11,299,000; Ms. Pease, $4,000,000; Mr. Smith, $3,539,412;$1,600,000; Mr. Barbo, $3,060,000;$3,741,000; Ms. Girshick, $4,680,000; and Mr. Johst, $4,313,141; and Dr. Molho $4,206,701LaPlume $3,536,000 (inclusive of amounts payable as a result of the pre-retirement death benefit Years of Completed Company Service at Separation Date Less than 2 years2 years to 5 years5 years or more Level:Amount of Base Salary Pay Continuations: Less than 2 years 2 years to 5 years 5 years or more Level: Amount of Base Salary Pay Continuations: Executive Vice President and above One year
One year; additional 12 months mitigated severance Two years Senior Vice PresidentSix monthsOne yearOne year; additional 12 months mitigated Two years Senior Vice President Six months One year One year; additional 12 months mitigated Vice President Six months
Six months; additional six months mitigated severance One year One year
agreements provide such officer with severance and other benefits in the event his or her employment terminates under certain conditions during the term of the agreement and within one year following a "change“change in control" (ascontrol” (as defined in the agreements). Each agreement has a term of three years, with automatic one-year extensions thereafter. Payments made to the corporate officer under the agreement will generally offset or reduce payments and benefits to which the officer may be entitled under any other severance plan or agreement with us (including the Officer Separation Plan described above).
convertible securities, options, warrants, exchange rights, and other rights to acquire common stock) is transferred to a single person or entity, or a "group"“group” (within the meaning of Rule 13d-5(b)13d5(b)(l) of the Securities Exchange Act of 1934) of persons or entities, in a single transaction or a series of related transactions.
Under the agreement, the term "cause"“cause” is defined as: (1) the willful and continued failure of the corporate officer to perform his or her duties with us, (2) a substantial violation of our Code (and any successor policy), (3) conviction of a felony, or (4) engaging in conduct that violates the confidentiality provisions of the agreement. "Good Reason"“Good Reason” is generally defined to include: (1) situations such as the assignment to the corporate officer of duties inconsistent with his or her position or responsibility prior to the change in control, (2) a reduction in annual base salary (excluding across-the-board salary reductions affecting all senior executives), (3) failure to pay any portion of current compensation or deferred compensation when due after the expiration of a grace period (excluding across-the-board reductions or failures affecting all senior executives), (4) failure to maintain any compensation plan that is material to the corporate officer'sofficer’s total compensation, (5) failure to maintain material benefits that are substantially the same as those in effect when the change in control occurs, and (6) job relocations requiring the corporate officer to relocate more than 50 miles from the office where he or she is based.
Change in Control
12 months following the date of grant of a PSU, a pro rata portion of the PSU is deemed to immediately vest. Accordingly, for purposes of this table:
Ms. Pease became eligible to participate in the Deferred Compensation Plan on January 1, 2023.
| | | | | | | | | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Cash Severance | | Benefits and Supplemental Perquisites Continuation | | Equity Value(1) | | Retirement Plan Benefits | | Other(2) | | Accrued Vacation | | Total | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
James C. Foster | | | | | | | | |||||||||||||||
Disability, Voluntary Termination and For Cause Termination | $ | 0 | $ | 0 | $ | 0 | $ | 20,667,156 | $ | 0 | $ | 45,958 | $ | 20,713,114 | ||||||||
Retirement | $ | 0 | $ | 0 | $ | 23,923,679 | $ | 20,667,156 | $ | 0 | $ | 45,958 | $ | 44,636,793 | ||||||||
Death | $ | 0 | $ | 0 | $ | 4,759,157 | $ | 20,667,156 | $ | 0 | $ | 45,958 | $ | 25,472,271 | ||||||||
Involuntary Termination—Not for Cause or Good Reason Termination | $ | 2,389,824 | $ | 47,888 | $ | 0 | $ | 20,667,156 | $ | 75,000 | $ | 45,958 | $ | 23,225,826 | ||||||||
David R. Smith | | | | | | | | |||||||||||||||
Retirement, Voluntary Termination and For Cause Termination | $ | 0 | $ | 0 | $ | 0 | $ | 22,677 | $ | 0 | $ | 20,019 | $ | 42,696 | ||||||||
Disability | $ | 0 | $ | 0 | $ | 0 | $ | 90,706 | $ | 0 | $ | 20,019 | $ | 110,725 | ||||||||
Death | $ | 0 | $ | 0 | $ | 793,122 | $ | 90,706 | $ | 0 | $ | 20,019 | $ | 903,847 | ||||||||
Involuntary Termination—Not for Cause or Good Reason Termination | $ | 520,502 | $ | 1,743 | $ | 0 | $ | 22,677 | $ | 75,000 | $ | 20,019 | $ | 639,941 | ||||||||
William D. Barbo | | | | | | | | |||||||||||||||
Voluntary Termination and For Cause Termination | $ | 0 | $ | 0 | $ | 0 | $ | 800,382 | $ | 0 | $ | 17,308 | $ | 817,690 | ||||||||
Retirement | $ | 0 | $ | 0 | $ | 3,073,875 | $ | 800,382 | $ | 0 | $ | 17,308 | $ | 3,891,565 | ||||||||
Disability | $ | 0 | $ | 0 | $ | 0 | $ | 900,981 | $ | 0 | $ | 17,308 | $ | 918,289 | ||||||||
Death | $ | 0 | $ | 0 | $ | 571,044 | $ | 900,981 | $ | 0 | $ | 17,308 | $ | 1,489,333 | ||||||||
Involuntary Termination—Not for Cause or Good Reason Termination | $ | 900,000 | $ | 47,888 | $ | 0 | $ | 800,382 | $ | 75,000 | $ | 17,308 | $ | 1,840,578 | ||||||||
David P. Johst | | | | | | | | |||||||||||||||
Disability, Retirement, Voluntary Termination and For Cause Termination | $ | 0 | $ | 0 | $ | 0 | $ | 7,503,664 | $ | 0 | $ | 24,396 | $ | 7,528,060 | ||||||||
Retirement | $ | 0 | $ | 0 | $ | 7,789,370 | $ | 7,503,664 | $ | 0 | $ | 24,396 | $ | 15,317,430 | ||||||||
Death | $ | 0 | $ | 0 | $ | 1,522,927 | $ | 7,503,664 | $ | 0 | $ | 24,396 | $ | 9,050,987 | ||||||||
Involuntary Termination—Not for Cause or Good Reason Termination | $ | 1,268,571 | $ | 62,678 | $ | 0 | $ | 7,503,664 | $ | 75,000 | $ | 24,396 | $ | 8,934,309 | ||||||||
Davide A. Molho | | | | | | | | |||||||||||||||
Retirement, Voluntary Termination and For Cause Termination | $ | 0 | $ | 0 | $ | 0 | $ | 885,639 | $ | 0 | $ | 23,794 | $ | 909,433 | ||||||||
Disability | $ | 0 | $ | 0 | $ | 0 | $ | 1,058,797 | $ | 0 | $ | 23,794 | $ | 1,082,591 | ||||||||
Death | $ | 0 | $ | 0 | $ | 1,586,329 | $ | 1,058,797 | $ | 0 | $ | 23,794 | $ | 2,668,920 | ||||||||
Involuntary Termination—Not for Cause or Good Reason Termination | $ | 1,237,265 | $ | 59,192 | $ | 0 | $ | 885,639 | $ | 75,000 | $ | 23,794 | $ | 2,280,890 | ||||||||
| | | Name | | | | Cash Severance | | | | Benefits and Supplemental Perquisites Continuation | | | | Equity Value(1) | | | | Retirement Plan Benefits | | | | Other(2) | | | | Accrued Vacation | | | | Total | | | |||||||||||||||||||||
| | | James C. Foster(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Voluntary Termination or For Cause Termination | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 30,149,684 | | | | | | $ | 0 | | | | | | $ | 54,319 | | | | | | $ | 30,204,003 | | | |
| | | Retirement | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 18,397,686 | | | | | | $ | 30,149,684 | | | | | | $ | 0 | | | | | | $ | 54,319 | | | | | | $ | 48,601,689 | | | |
| | | Death | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 5,433,384 | | | | | | $ | 30,149,684 | | | | | | $ | 0 | | | | | | $ | 54,319 | | | | | | $ | 35,637,387 | | | |
| | | Disability | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 3,449,715 | | | | | | $ | 30,149,684 | | | | | | $ | 0 | | | | | | $ | 54,319 | | | | | | $ | 33,653,718 | | | |
| | | Involuntary Termination—Not For Cause or Good Reason Termination | | | | | $ | 2,824,583 | | | | | | $ | 42,140 | | | | | | $ | 0 | | | | | | $ | 30,149,684 | | | | | | $ | 75,000 | | | | | | $ | 54,319 | | | | | | $ | 33,145,726 | | | |
| | | Flavia H. Pease | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Voluntary Termination, Retirement, or For Cause Termination | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 185,199 | | | | | | $ | 0 | | | | | | $ | 23,077 | | | | | | $ | 208,275 | | | |
| | | Death | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 1,486,514 | | | | | | $ | 185,199 | | | | | | $ | 0 | | | | | | $ | 23,077 | | | | | | $ | 1,694,789 | | | |
| | | Disability | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 185,199 | | | | | | $ | 0 | | | | | | $ | 23,077 | | | | | | $ | 208,275 | | | |
| | | Involuntary Termination—Not For Cause or Good Reason Termination | | | | | $ | 600,000 | | | | | | $ | 3,713 | | | | | | $ | 0 | | | | | | $ | 185,199 | | | | | | $ | 75,000 | | | | | | $ | 23,077 | | | | | | $ | 886,988 | | | |
| | | William D. Barbo | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Voluntary Termination or For Cause Termination | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 889,687 | | | | | | $ | 0 | | | | | | $ | 21,156 | | | | | | $ | 910,842 | | | |
| | | Retirement | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 2,927,827 | | | | | | $ | 889,687 | | | | | | $ | 0 | | | | | | $ | 21,156 | | | | | | $ | 3,838,670 | | | |
| | | Death | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 1,229,822 | | | | | | $ | 889,687 | | | | | | $ | 0 | | | | | | $ | 21,156 | | | | | | $ | 2,140,664 | | | |
| | | Disability | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 426,377 | | | | | | $ | 889,687 | | | | | | $ | 0 | | | | | | $ | 21,156 | | | | | | $ | 1,337,219 | | | |
| | | Involuntary Termination—Not for Cause or Good Reason Termination | | | | | $ | 1,100,100 | | | | | | $ | 24,482 | | | | | | $ | 0 | | | | | | $ | 889,687 | | | | | | $ | 75,000 | | | | | | $ | 21,156 | | | | | | $ | 2,110,424 | | | |
| | | Birgit Girshick | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Voluntary Termination, Retirement, or For Cause Termination | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 1,001,551 | | | | | | $ | 0 | | | | | | $ | 25,000 | | | | | | $ | 1,026,551 | | | |
| | | Death | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 1,566,544 | | | | | | $ | 1,113,694 | | | | | | $ | 0 | | | | | | $ | 25,000 | | | | | | $ | 2,705,238 | | | |
| | | Disability | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 501,590 | | | | | | $ | 1,113,694 | | | | | | $ | 0 | | | | | | $ | 25,000 | | | | | | $ | 1,640,284 | | | |
| | | Involuntary Termination—Not for Cause or Good Reason Termination | | | | | $ | 1,300,000 | | | | | | $ | 7,584 | | | | | | $ | 0 | | | | | | $ | 1,001,551 | | | | | | $ | 75,000 | | | | | | $ | 25,000 | | | | | | $ | 2,409,135 | | | |
| | | Joseph LaPlume | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Voluntary Termination, Retirement, or For Cause Termination | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 447,169 | | | | | | $ | 0 | | | | | | $ | 20,000 | | | | | | $ | 467,169 | | | |
| | | Death | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 2,842,842 | | | | | | $ | 555,017 | | | | | | $ | 0 | | | | | | $ | 20,000 | | | | | | $ | 3,417,859 | | | |
| | | Disability | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 476,519 | | | | | | $ | 555,017 | | | | | | $ | 0 | | | | | | $ | 20,000 | | | | | | $ | 1,051,536 | | | |
| | | Involuntary Termination—Not for Cause or Good Reason Termination | | | | | $ | 1,040,000 | | | | | | $ | 58,038 | | | | | | $ | 0 | | | | | | $ | 447,169 | | | | | | $ | 75,000 | | | | | | $ | 20,000 | | | | | | $ | 1,640,207 | | | |
| | | David R. Smith(4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Voluntary Termination, Retirement, or For Cause Termination | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 408,820 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 408,820 | | | |
| | | Death | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 2,269,621 | | | | | | $ | 435,135 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 2,704,756 | | | |
| | | Disability | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 556,444 | | | | | | $ | 435,135 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 991,579 | | | |
| | | Involuntary Termination—Not for Cause or Good Reason Termination | | | | | $ | 1,161,362 | | | | | | $ | 2,007 | | | | | | $ | 1,533,518 | | | | | | $ | 408,820 | | | | | | $ | 75,000 | | | | | | $ | 0 | | | | | | $ | 3,180,707 | | | |
- (1)
unvested equity grants for employees who retire after meeting the specified criteria, including a specified notice period. Each of Mr. Foster and Mr. Barbo and Mr. Johst each areis retirement eligible and received awards in 20162017, 2018, 2019, 2020, 2021, and 20172022 that would qualify for continued post-retirement vesting.
- Severance —
Awards”.
- Continuation —
Equity—
- Benefits —
- 2022.
•- Benefits under
these plansthis plan are vested and will automatically be paid upon any termination (disregarding any possible delay of payment as a result of compliance with Section 409A of the Code).
- Vacation —
| | | | | | | | | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | | Cash Severance | | Benefits and Supplemental Perquisites Continuation | | Equity Value(1) | | Retirement Plan Benefits | | Other(2) | | Accrued Vacation | | Total | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | |
James C. Foster | | | | | | | | |||||||||||||||
Death, Disability, Retirement, Voluntary Termination, and For Cause Termination | $ | 0 | $ | 0 | $ | 25,345,456 | $ | 20,667,156 | $ | 0 | $ | 45,958 | $ | 46,058,570 | ||||||||
Involuntary Termination Not for Cause or Good Reason Termination | $ | 7,169,471 | $ | 278,650 | $ | 25,345,456 | $ | 20,667,156 | $ | 50,000 | $ | 45,958 | $ | 53,556,691 | ||||||||
David R. Smith | | | | | | | | |||||||||||||||
Death, Disability, Retirement, Voluntary Termination, and For Cause Termination | $ | 0 | $ | 0 | $ | 5,307,546 | $ | 90,706 | $ | 0 | $ | 20,019 | $ | 5,418,271 | ||||||||
Involuntary Termination Not for Cause or Good Reason Termination | $ | 1,769,706 | $ | 17,580 | $ | 5,307,546 | $ | 90,706 | $ | 50,000 | $ | 20,019 | $ | 7,255,557 | ||||||||
William D. Barbo | | | | | | | | |||||||||||||||
Death, Disability, Retirement, Voluntary Termination, and For Cause Termination | $ | 0 | $ | 0 | $ | 3,199,023 | $ | 900,981 | $ | 0 | $ | 17,308 | $ | 4,117,312 | ||||||||
Involuntary Termination Not for Cause or Good Reason Termination | $ | 1,530,000 | $ | 55,782 | $ | 3,199,023 | $ | 900,981 | $ | 25,000 | $ | 17,308 | $ | 5,728,094 | ||||||||
David P. Johst | | | | | | | | |||||||||||||||
Death, Disability, Retirement, Voluntary Termination, and For Cause Termination | $ | 0 | $ | 0 | $ | 8,198,912 | $ | 7,503,664 | $ | 0 | $ | 24,396 | $ | 15,726,972 | ||||||||
Involuntary Termination Not for Cause or Good Reason Termination | $ | 2,156,570 | $ | 89,226 | $ | 8,198,912 | $ | 7,503,664 | $ | 50,000 | $ | 24,396 | $ | 18,022,768 | ||||||||
Davide A. Molho | | | | | | | | |||||||||||||||
Death, Disability, Retirement, Voluntary Termination, and For Cause Termination | $ | 0 | $ | 0 | $ | 8,536,267 | $ | 1,058,797 | $ | 0 | $ | 23,794 | $ | 9,618,858 | ||||||||
Involuntary Termination Not for Cause or Good Reason Termination | $ | 2,103,350 | $ | 80,504 | $ | 8,536,267 | $ | 1,058,797 | $ | 50,000 | $ | 23,794 | $ | 11,852,712 | ||||||||
| | | Name | | | | Cash Severance | | | | Benefits and Supplemental Perquisites Continuation | | | | Equity Value(1) | | | | Retirement Plan Benefits | | | | Other(2) | | | | Accrued Vacation | | | | Total | | | |||||||||||||||||||||
| | | James C. Foster | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Death, Disability, Retirement, Voluntary Termination, and For Cause Termination | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 19,611,475 | | | | | | $ | 30,149,684 | | | | | | $ | 0 | | | | | | $ | 54,319 | | | | | | $ | 49,815,478 | | | |
| | | Involuntary Termination Not for Cause or Good Reason Termination | | | | | $ | 8,473,748 | | | | | | $ | 277,731 | | | | | | $ | 19,611,475 | | | | | | $ | 30,149,684 | | | | | | $ | 50,000 | | | | | | $ | 54,319 | | | | | | $ | 58,616,957 | | | |
| | | Flavia H. Pease | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Death, Disability, Retirement, Voluntary Termination, and For Cause Termination | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 2,737,914 | | | | | | $ | 185,199 | | | | | | $ | 0 | | | | | | $ | 23,077 | | | | | | $ | 2,946,189 | | | |
| | | Involuntary Termination Not for Cause or Good Reason Termination | | | | | $ | 2,040,000 | | | | | | $ | 20,466 | | | | | | $ | 2,737,914 | | | | | | $ | 185,199 | | | | | | $ | 50,000 | | | | | | $ | 23,077 | | | | | | $ | 5,056,655 | | | |
| | | William D. Barbo | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Death, Disability, Retirement, Voluntary Termination, and For Cause Termination | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 3,077,849 | | | | | | $ | 889,687 | | | | | | $ | 0 | | | | | | $ | 21,156 | | | | | | $ | 3,988,691 | | | |
| | | Involuntary Termination Not for Cause or Good Reason Termination | | | | | $ | 1,870,170 | | | | | | $ | 68,210 | | | | | | $ | 3,077,849 | | | | | | $ | 889,687 | | | | | | $ | 50,000 | | | | | | $ | 21,156 | | | | | | $ | 5,977,071 | | | |
| | | Birgit Girshick | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Death, Disability, Retirement, Voluntary Termination, and For Cause Termination | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 4,238,870 | | | | | | $ | 1,113,694 | | | | | | $ | 0 | | | | | | $ | 25,000 | | | | | | $ | 5,377,564 | | | |
| | | Involuntary Termination Not for Cause or Good Reason Termination | | | | | $ | 2,340,000 | | | | | | $ | 24,756 | | | | | | $ | 4,238,870 | | | | | | $ | 1,113,694 | | | | | | $ | 50,000 | | | | | | $ | 25,000 | | | | | | $ | 7,792,320 | | | |
| | | Joseph LaPlume | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Death, Disability, Retirement, Voluntary Termination, and For Cause Termination | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 4,894,274 | | | | | | $ | 555,017 | | | | | | $ | 0 | | | | | | $ | 20,000 | | | | | | $ | 5,469,290 | | | |
| | | Involuntary Termination Not for Cause or Good Reason Termination | | | | | $ | 1,768,000 | | | | | | $ | 68,832 | | | | | | $ | 4,894,274 | | | | | | $ | 555,017 | | | | | | $ | 50,000 | | | | | | $ | 20,000 | | | | | | $ | 7,356,122 | | | |
| | | David R. Smith(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Death, Disability, Retirement, Voluntary Termination, and For Cause Termination | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 3,154,526 | | | | | | $ | 435,135 | | | | | | $ | 0 | | | | | | $ | 0 | | | | | | $ | 3,589,661 | | | |
| | | Involuntary Termination Not for Cause or Good Reason Termination | | | | | $ | 1,974,315 | | | | | | $ | 4,150 | | | | | | $ | 3,154,526 | | | | | | $ | 435,135 | | | | | | $ | 50,000 | | | | | | $ | 0 | | | | | | $ | 5,618,126 | | | |
- (1)
2017
- 2022:
“Median Employee”
Sweden; and 7 employees from Switzerland. We also excluded approximately 70222 employees of Brains On-Line,from Explora BioLabs, which we acquired in August 2017.
April 2022.
Determining our Median Employee
The median employee is a different employee than the one identified in 2021.
$47,495 USD (converted from Canadian Dollars using the mid-market exchange rate as of December 30, 2022 (0.739 CAD per 1 USD), which was the final business day of our 2022 fiscal year).
Table found on pages 61-62 of this Proxy Statement.
| | | Year | | | | Summary Compensation Table Total for CEO ($) | | | | Compensation Actually Paid to CEO ($)(1) | | | | Average Summary Compensation Table Total for Other Named Executives ($) (2) | | | | Average Compensation Actually paid to Other Named Executives ($) (1) | | | | Value of Initial Fixed $100 Investment Based on (3) | | | | Net Income ($) | | | | Non- GAAP EPS ($) | | | ||||||||||||||||||||||||||||
| | Total Shareholder Return ($) | | | | Peer Group Total Shareholder Return ($) | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | 2022 | | | | | | 13,447,872 | | | | | | | (11,539,600) | | | | | | | 3,298,049 | | | | | | | (397,971) | | | | | | | 143 | | | | | | | 140 | | | | | | | 486,226,000 | | | | | | | 11.12 | | | |
| | | 2021 | | | | | | 13,705,580 | | | | | | | 43,168,611 | | | | | | | 4,392,906 | | | | | | | 9,206,989 | | | | | | | 243 | | | | | | | 141 | | | | | | | 390,982,000 | | | | | | | 10.32 | | | |
| | | 2020 | | | | | | 13,483,411 | | | | | | | 50,018,818 | | | | | | | 2,773,587 | | | | | | | 8,856,107 | | | | | | | 166 | | | | | | | 111 | | | | | | | 364,304,000 | | | | | | | 8.13 | | | |
| | | Year | | | | Executive(s) | | | | SCT Total | | | | Deduct Current Year Equity Grants(1) | | | | Deduct Change in Value of Pension or Non-qualified Deferred Compensation Earnings from SCT(1) | | | | Add Pension Value Attributable Current Year’s Service | | | | Add Year End Fair Value of Equity Awards Granted in Current Year(2) | | | | Add Change in Value of Prior Years’ Grants that Remained Unvested at Year End(3) | | | | Add Change in Value of Prior Years’ Grants that Vested in Current Year(4) | | | | Compensation Actually Paid | | | ||||||||||||||||||||||||
| | | 2022 | | | | CEO | | | | | | 13,447,872 | | | | | | | 10,939,883 | | | | | | | — | | | | | | | 989,746 | | | | | | | 7,459,567 | | | | | | | (10,070,482) | | | | | | | (12,426,419) | | | | | | | (11,539,600) | | | |
| | Other Named Executives | | | | | | 3,298,049 | | | | | | | 2,418,873 | | | | | | | — | | | | | | | — | | | | | | | 1,848,071 | | | | | | | (1,380,356) | | | | | | | (1,744,862) | | | | | | | (397,971) | | | | |||||
| | | 2021 | | | | CEO | | | | | | 13,705,580 | | | | | | | 10,422,089 | | | | | | | — | | | | | | | 823,145 | | | | | | | 15,460,355 | | | | | | | 13,268,849 | | | | | | | 10,332,771 | | | | | | | 43,168,611 | | | |
| | Other Named Executives | | | | | | 4,392,906 | | | | | | | 3,203,012 | | | | | | | — | | | | | | | — | | | | | | | 3,965,695 | | | | | | | 2,276,985 | | | | | | | 1,774,415 | | | | | | | 9,206,989 | | | | |||||
| | | 2020 | | | | CEO | | | | | | 13,483,411 | | | | | | | 10,218,426 | | | | | | | 194,061 | | | | | | | 719,230 | | | | | | | 19,616,106 | | | | | | | 15,605,432 | | | | | | | 11,007,126 | | | | | | | 50,018,818 | | | |
| | Other Named Executives | | | | | | 2,773,587 | | | | | | | 1,766,995 | | | | | | | — | | | | | | | — | | | | | | | 3,392,036 | | | | | | | 2,649,868 | | | | | | | 1,807,611 | | | | | | | 8,856,107 | | | | |||||
| | | Most Important Performance Measures | | |
| | | Revenue | | |
| | | Non-GAAP EPS | | |
| | | Non-GAAP Operating Income | | |
![[MISSING IMAGE: bc_tsr-bw.jpg]](/files/DEF 14A/0001104659-23-038821/bc_tsr-bw.jpg)
![[MISSING IMAGE: lc_crltsr-bw.jpg]](/files/DEF 14A/0001104659-23-038821/lc_crltsr-bw.jpg)
![[MISSING IMAGE: bc_nongappeps-bw.jpg]](/files/DEF 14A/0001104659-23-038821/bc_nongappeps-bw.jpg)
![[MISSING IMAGE: bc_netincome-bw.jpg]](/files/DEF 14A/0001104659-23-038821/bc_netincome-bw.jpg)
Transactions
As of the date of this Proxy Statement, we are not aware of the existence of any related person transaction since the beginning of fiscal year 2017.
Mr. Robert Bertolini
Mr. George E. Massaro
The foregoing report should not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, by any general statement incorporating by reference this Proxy Statement except to the extent that we specifically incorporate this information by reference and shall not otherwise be deemed filed under such Acts.
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
| | | | 2022 | | | 2021 | | ||||||
| Audit fees(1) | | | | $ | 6,151,413 | | | | | $ | 6,479,044 | | |
| Audit related fees(2) | | | | | 2,959,018 | | | | | | 3,258,316 | | |
| Tax fees(3) | | | | | 980,353 | | | | | | 1,013,393 | | |
| All other fees(4) | | | | | 646,394 | | | | | | 1,646,751 | | |
| Total(5) | | | | $ | 10,737,178 | | | | | $ | 12,397,504 | | |
| | 2017 | 2016 | |||||
|---|---|---|---|---|---|---|---|
Audit fees(1) | $ | 5,375,940 | $ | 5,574,758 | |||
Audit-related fees(2) | 1,454,962 | 767,631 | |||||
Tax fees(3) | 1,200,707 | 1,649,245 | |||||
All other fees(4) | 11,015 | 8,700 | |||||
| | | | | | | | |
Total(5) | $ | 8,042,624 | $ | 8,000,334 | |||
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
(1)- Audit fees consisted of work performed in the integrated audit of our annual consolidated financial statements filed on Form 10-K, audit activity directly related to Section 404 of the Sarbanes-Oxley Act of 2002, reviews of our quarterly condensed consolidated financial statements filed on Forms 10-Q and the audits of statutory financial statements of certain foreign subsidiaries. All such services were approved in advance by the Audit Committee.(2)
Audit-relatedAudit related fees consisted principally of fees for financial due diligence services for potential acquisitions, comfort letters issued, and work performed in the audit of our employee benefit plans. All such services were approved in advance by the Audit Committee.(3)Tax fees related to tax compliance, consulting, and tax return preparation. All such services were approved in advance by the Audit Committee.(4)All other fees consisted principally of fees for certain market assessment projects and accounting research tools. All such services were approved in advance by the Audit Committee.(5)None of the non-audit services constitute a prohibited activity for our independent auditor under the Sarbanes-Oxley Act of 2002 or related SEC regulations.
Policy and Procedures on Engagement and Retention of the Independent Auditor for Audit,Audit-Related,Audit Related, and Non-Audit ServicesConsistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation, and overseeing the work of our independent auditor. In recognition
December 1, 2023. It is suggested that any shareholder proposals be sent by a trackable method (i.e., certified mail, registered mail, overnight courier, etc.) to the Corporate Secretary, Charles River Laboratories International, Inc., 251 Ballardvale Street, Wilmington, MA 01887. In addition, we recommend that a copy of the shareholder proposal be sent to the following email address: GeneralCounsel@crl.com.
By-laws. In addition to complying with the advance notice provisions of our By-laws, to nominate directors, shareholders must give
Certain Matters Relating to Proxy Materials and Annual Reports
Wilmington, MassachusettsMarch 29, 2018
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY OR VOTE VIA INTERNET AT YOUR EARLIEST CONVENIENCE.
RECONCILIATION OF GAAP EARNINGS TO NON-GAAP EARNINGS(1)
(dollars in thousands, except for per share data)
| | | | Twelve Months Ended | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | December 31, 2022 | | | December 25, 2021 | | | December 26, 2020 | | | December 28, 2019 | | | December 29, 2018 | | | December 30, 2017 | | | December 31, 2016 | | | December 26, 2015 | | | December 27, 2014 | | | December 28, 2013 | | | December 29, 2012 | | | December 31, 2011 | | | December 25, 2010 | | | December 26, 2009 | | | December 27, 2008 | | |||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to common shareholders | | | | $ | 486,226 | | | | | $ | 390,982 | | | | | $ | 364,304 | | | | | $ | 252,019 | | | | | $ | 226,373 | | | | | $ | 123,355 | | | | | $ | 154,765 | | | | | $ | 149,313 | | | | | $ | 126,698 | | | | | $ | 102,828 | | | | | $ | 97,295 | | | | | $ | 109,566 | | | | | $ | (336,669) | | | | | $ | 114,441 | | | | | $ | (524,505) | | |
| Less: Income (loss) from discontinued operations, net of income taxes | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,506 | | | | | | (137) | | | | | | 280 | | | | | | (950) | | | | | | (1,726) | | | | | | (1,265) | | | | | | (4,252) | | | | | | (5,545) | | | | | | (8,012) | | | | | | 1,399 | | | | | | 3,283 | | |
| Net income (loss) from continuing operations attributable to common shareholders | | | | | 486,226 | | | | | | 390,982 | | | | | | 364,304 | | | | | | 252,019 | | | | | | 224,867 | | | | | | 123,492 | | | | | | 154,485 | | | | | | 150,263 | | | | | | 128,424 | | | | | | 104,093 | | | | | | 101,547 | | | | | | 115,111 | | | | | | (328,657) | | | | | | 113,042 | | | | | | (527,788) | | |
| Add back: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amortization related to acquisitions | | | | | 146,934 | | | | | | 128,148 | | | | | | 118,618 | | | | | | 90,867 | | | | | | 64,831 | | | | | | 41,370 | | | | | | 42,746 | | | | | | 29,374 | | | | | | 25,957 | | | | | | 17,806 | | | | | | 18,067 | | | | | | 21,795 | | | | | | 24,405 | | | | | | 25,717 | | | | | | 26,725 | | |
| Severance and executive transition costs | | | | | 4,088 | | | | | | 4,718 | | | | | | 7,586 | | | | | | 11,458 | | | | | | 8,680 | | | | | | 3,278 | | | | | | 8,472 | | | | | | 6,173 | | | | | | 7,792 | | | | | | 3,218 | | | | | | 2,580 | | | | | | 5,462 | | | | | | 16,504 | | | | | | 16,344 | | | | | | — | | |
| Site consolidation costs, impairments, and other items(2) | | | | | 13,405 | | | | | | 3,468 | | | | | | 6,457 | | | | | | 4,283 | | | | | | 864 | | | | | | 18,645 | | | | | | 11,849 | | | | | | 2,240 | | | | | | 7,136 | | | | | | 21,381 | | | | | | 3,963 | | | | | | 473 | | | | | | 384,896 | | | | | | 3,939 | | | | | | 706,689 | | |
| Adjustment of acquisition-related contingent consideration and related items | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (721) | | | | | | 2,865 | | | | | | — | | | | | | — | | |
| Operating losses(3) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,517 | | | | | | 2,600 | | | | | | 3,371 | | | | | | 3,738 | | | | | | 6,471 | | | | | | 13,387 | | | | | | 3,988 | | | | | | — | | |
| Acquisition-related adjustments(4) | | | | | 18,566 | | | | | | 15,867 | | | | | | 19,623 | | | | | | 39,439 | | | | | | 19,184 | | | | | | 6,687 | | | | | | 22,702 | | | | | | 14,513 | | | | | | 6,688 | | | | | | 1,752 | | | | | | 3,774 | | | | | | 215 | | | | | | 8,319 | | | | | | 3,246 | | | | | | 1,125 | | |
| Government billing adjustment and related expenses | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 150 | | | | | | 634 | | | | | | 477 | | | | | | 848 | | | | | | 2,402 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Acquisition agreement termination fee | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 30,000 | | | | | | — | | | | | | — | | |
| Gain on settlement of life insurance policy | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (7,710) | | | | | | — | | | | | | — | | | | | | — | | |
| U.S. pension curtailment | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (3,276) | | |
| Gain on sale of U.K. real estate | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (839) | | | | | | — | | |
| Reversal of an indemnification asset associated with acquisition and corresponding interest(5) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 54 | | | | | | 10,411 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Write-off of deferred financing costs and fees related to debt refinancing | | | | | — | | | | | | 26,089 | | | | | | — | | | | | | 1,605 | | | | | | 5,060 | | | | | | — | | | | | | 987 | | | | | | 721 | | | | | | — | | | | | | 645 | | | | | | — | | | | | | 1,450 | | | | | | 4,542 | | | | | | — | | | | | | — | | |
| Loss on sale of auction rate securities | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 712 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| (Gain) loss on bargain purchase(6) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (277) | | | | | | 15 | | | | | | (9,837) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Convertible debt accounting(7) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,710 | | | | | | 14,741 | | | | | | 13,978 | | | | | | 12,948 | | | | | | 11,106 | | | | | | 8,432 | | |
| Gain on divestiture of CDMO business | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (10,577) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Debt forgiveness associated with a prior acquisition(8) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,863) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Deferred tax revaluation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 763 | | |
| Tax benefit from disposition of Phase I clinical business | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (11,111) | | | | | | — | | | | | | — | | | | | | — | | |
| Massachusetts tax law change | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,897 | | |
| Reduction of tax benefits – Charles River Massachusetts | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 719 | | | | | | — | | |
| Costs and taxes associated with corporate legal entity restructuring and repatriation | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,637 | | | | | | 15,689 | | | | | | (1,084) | | | | | | (4,045) | | |
| Venture capital and strategic equity investment losses (gains) | | | | | 26,775 | | | | | | 30,419 | | | | | | (100,861) | | | | | | (20,707) | | | | | | (15,928) | | | | | | (22,657) | | | | | | (10,285) | | | | | | (3,824) | | | | | | (9,343) | | | | | | (5,864) | | | | | | 618 | | | | | | (869) | | | | | | 579 | | | | | | — | | | | | | — | | |
| Loss due to U.S. Pension termination | | | | | — | | | | | | — | | | | | | 10,283 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Twelve Months Ended | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | December 30, 2017 | December 31, 2016 | December 26, 2015 | December 27, 2014 | December 28, 2013 | December 29, 2012 | December 31, 2011 | December 25, 2010 | December 26, 2009 | December 27, 2008 | |||||||||||||||||||||
Net income (loss) attributable to common shareholders | $ | 123,355 | $ | 154,765 | $ | 149,313 | $ | 126,698 | $ | 102,828 | $ | 97,295 | $ | 109,566 | $ | (336,669 | ) | $ | 114,441 | $ | (524,505 | ) | |||||||||
Less: Income (loss) from discontinued operations, net of income taxes | (137 | ) | 280 | (950 | ) | (1,726 | ) | (1,265 | ) | (4,252 | ) | (5,545 | ) | (8,012 | ) | 1,399 | 3,283 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) from continuing operations attributable to common shareholders | 123,492 | 154,485 | 150,263 | 128,424 | 104,093 | 101,547 | 115,111 | (328,657 | ) | 113,042 | (527,788 | ) | |||||||||||||||||||
Add back: | |||||||||||||||||||||||||||||||
Amortization related to acquisitions | 41,370 | 42,746 | 29,374 | 25,957 | 17,806 | 18,067 | 21,795 | 24,405 | 25,717 | 26,725 | |||||||||||||||||||||
Severance and executive transition costs | 3,278 | 8,472 | 6,173 | 7,792 | 3,218 | 2,580 | 5,462 | 16,504 | 16,344 | — | |||||||||||||||||||||
Site consolidation costs, impairments, and other items(2) | 18,645 | 11,849 | 2,240 | 7,136 | 21,381 | 3,963 | 473 | 384,896 | 3,939 | 706,689 | |||||||||||||||||||||
Adjustment of acquisition-related contingent consideration and related items | — | — | — | — | — | — | (721 | ) | 2,865 | — | — | ||||||||||||||||||||
Operating losses(3) | — | — | 5,517 | 2,600 | 3,371 | 3,738 | 6,471 | 13,387 | 3,988 | — | |||||||||||||||||||||
Acquisition-related adjustments(4) | 6,687 | 22,702 | 14,513 | 6,688 | 1,752 | 3,774 | 215 | 8,319 | 3,246 | 1,125 | |||||||||||||||||||||
Government billing adjustment and related expenses | 150 | 634 | 477 | 848 | 2,402 | — | — | — | — | — | |||||||||||||||||||||
Acquisition agreement termination fee | — | — | — | — | — | — | — | 30,000 | — | — | |||||||||||||||||||||
Gain on settlement of life insurance policy | — | — | — | — | — | — | (7,710 | ) | — | — | — | ||||||||||||||||||||
U.S. pension curtailment | — | — | — | — | — | — | — | — | — | (3,276 | ) | ||||||||||||||||||||
Gain on sale of U.K. real estate | — | — | — | — | — | — | — | — | (839 | ) | — | ||||||||||||||||||||
Reversal of an indemnification asset associated with acquisition and corresponding interest(5) | — | 54 | 10,411 | — | — | — | — | — | — | — | |||||||||||||||||||||
Write-off of deferred financing costs and fees related to debt refinancing | — | 987 | 721 | — | 645 | — | 1,450 | 4,542 | — | — | |||||||||||||||||||||
Loss on sale of auction rate securities | — | — | — | — | — | 712 | — | — | — | — | |||||||||||||||||||||
Gain on bargain purchase(6) | (277 | ) | 15 | (9,837 | ) | — | — | — | — | — | — | — | |||||||||||||||||||
Convertible debt accounting(7) | — | — | — | — | 6,710 | 14,741 | 13,978 | 12,948 | 11,106 | 8,432 | |||||||||||||||||||||
Gain on divestiture of CDMO business | (10,577 | ) | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Debt forgiveness associated with a prior acquisition(8) | (1,863 | ) | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Deferred tax revaluation | — | — | — | — | — | — | — | — | — | 763 | |||||||||||||||||||||
Tax benefit from disposition of Phase I clinical business | — | — | — | — | — | — | (11,111 | ) | — | — | — | ||||||||||||||||||||
Massachusetts tax law change | — | — | — | — | — | — | — | — | — | 1,897 | |||||||||||||||||||||
Reduction of tax benefits—Charles River Massachusetts | — | — | — | — | — | — | — | — | 719 | — | |||||||||||||||||||||
Costs and taxes associated with corporate legal entity restructuring and repatriation | — | — | — | — | �� | — | — | 1,637 | 15,689 | (1,084 | ) | (4,045 | ) | ||||||||||||||||||
Tax effect of non-GAAP adjustments: | |||||||||||||||||||||||||||||||
Tax effect from U.S. Tax Reform(9) | 78,537 | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Tax effect from divestiture of CDMO business | 17,705 | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Reversal of uncertain tax position associated with acquisition and corresponding interest(5) | — | — | (10,411 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||
Tax effect of the remaining non-GAAP adjustments and certain other tax items | (21,184 | ) | (23,025 | ) | (20,106 | ) | (14,987 | ) | (19,126 | ) | (16,604 | ) | (15,710 | ) | (59,274 | ) | (22,228 | ) | (15,970 | ) | |||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income from continuing operations attributable to common shareholders, excluding specified charges (Non-GAAP) | $ | 255,963 | $ | 218,919 | $ | 179,335 | $ | 164,458 | $ | 142,252 | $ | 132,518 | $ | 131,340 | $ | 125,624 | $ | 153,950 | $ | 194,552 | |||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Twelve Months Ended | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | December 31, 2022 | | | December 25, 2021 | | | December 26, 2020 | | | December 28, 2019 | | | December 29, 2018 | | | December 30, 2017 | | | December 31, 2016 | | | December 26, 2015 | | | December 27, 2014 | | | December 28, 2013 | | | December 29, 2012 | | | December 31, 2011 | | | December 25, 2010 | | | December 26, 2009 | | | December 27, 2008 | | |||||||||||||||||||||||||||||||||||||||||||||
| Gain due to sale of RMS Japan operations | | | | | — | | | | | | (22,656) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Gain due to sale of Avian business | | | | | (123,524) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Other(9) | | | | | 5,285 | | | | | | (2,942) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Tax effect of non-GAAP adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Tax effect from U.S. Tax Reform(10) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (5,450) | | | | | | 78,537 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Tax effect from divestiture of CDMO business | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,000) | | | | | | 17,705 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Non-cash tax provision (benefit) related to international financing structure(11) | | | | | 4,648 | | | | | | 4,809 | | | | | | 4,444 | | | | | | (19,787) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Reversal of uncertain tax position associated with acquisition and corresponding interest(5) | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (10,411) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Enacted tax law changes | | | | | (382) | | | | | | 10,036 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Tax effect of the remaining non-GAAP adjustments and certain other tax items | | | | | (11,399) | | | | | | (58,404) | | | | | | (18,953) | | | | | | (24,811) | | | | | | (17,166) | | | | | | (12,286) | | | | | | (18,744) | | | | | | (18,672) | | | | | | (11,483) | | | | | | (16,976) | | | | | | (16,832) | | | | | | (15,388) | | | | | | (59,489) | | | | | | (22,228) | | | | | | (15,970) | | |
| Net income from continuing operations attributable to common shareholders, excluding specified charges (Non- GAAP) | | | | $ | 570,622 | | | | | $ | 530,534 | | | | | $ | 411,501 | | | | | $ | 334,366 | | | | | $ | 283,942 | | | | | $ | 242,204 | | | | | $ | 212,915 | | | | | $ | 176,945 | | | | | $ | 158,619 | | | | | $ | 138,538 | | | | | $ | 132,908 | | | | | $ | 130,793 | | | | | $ | 125,988 | | | | | $ | 153,950 | | | | | $ | 194,552 | | |
| Weighted average shares outstanding – Basic | | | | | 50,812 | | | | | | 50,293 | | | | | | 49,550 | | | | | | 48,730 | | | | | | 47,947 | | | | | | 47,481 | | | | | | 47,014 | | | | | | 46,496 | | | | | | 46,627 | | | | | | 47,740 | | | | | | 47,912 | | | | | | 50,823 | | | | | | 62,561 | | | | | | 65,366 | | | | | | 67,274 | | |
| Effect of dilutive securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2.25% senior convertible debentures | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 776 | | |
| Stock options, restricted stock units, performance stock units, and contingently issued restricted stock | | | | | 489 | | | | | | 1,132 | | | | | | 1,061 | | | | | | 963 | | | | | | 1,071 | | | | | | 1,083 | | | | | | 944 | | | | | | 1,138 | | | | | | 931 | | | | | | 749 | | | | | | 494 | | | | | | 495 | | | | | | 558 | | | | | | 268 | | | | | | 1,010 | | |
| Warrants | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2 | | | | | | 87 | | |
| Weighted average shares outstanding − Diluted | | | | | 51,301 | | | | | | 51,425 | | | | | | 50,611 | | | | | | 49,693 | | | | | | 49,018 | | | | | | 48,564 | | | | | | 47,958 | | | | | | 47,634 | | | | | | 47,558 | | | | | | 48,489 | | | | | | 48,406 | | | | | | 51,318 | | | | | | 63,120 | | | | | | 65,636 | | | | | | 69,147 | | |
| Earnings per share from continuing operations attributable to common shareholders | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Basic | | | | $ | 9.57 | | | | | $ | 7.77 | | | | | $ | 7.35 | | | | | $ | 5.17 | | | | | $ | 4.69 | | | | | $ | 2.60 | | | | | $ | 3.28 | | | | | $ | 3.23 | | | | | $ | 2.76 | | | | | $ | 2.18 | | | | | $ | 2.12 | | | | | $ | 2.26 | | | | | $ | (5.25) | | | | | $ | 1.73 | | | | | $ | (7.85) | | |
| Diluted | | | | $ | 9.48 | | | | | $ | 7.60 | | | | | $ | 7.20 | | | | | $ | 5.07 | | | | | $ | 4.59 | | | | | $ | 2.54 | | | | | $ | 3.22 | | | | | $ | 3.15 | | | | | $ | 2.70 | | | | | $ | 2.15 | | | | | $ | 2.10 | | | | | $ | 2.24 | | | | | $ | (5.25) | | | | | $ | 1.72 | | | | | $ | (7.85) | | |
| Basic, excluding non-GAAP adjustments | | | | $ | 11.23 | | | | | $ | 10.55 | | | | | $ | 8.30 | | | | | $ | 6.86 | | | | | $ | 5.92 | | | | | $ | 5.10 | | | | | $ | 4.53 | | | | | $ | 3.81 | | | | | $ | 3.40 | | | | | $ | 2.90 | | | | | $ | 2.77 | | | | | $ | 2.57 | | | | | $ | 2.01 | | | | | $ | 2.36 | | | | | $ | 2.89 | | |
| Diluted, excluding non-GAAP adjustments | | | | $ | 11.12 | | | | | $ | 10.32 | | | | | $ | 8.13 | | | | | $ | 6.73 | | | | | $ | 5.80 | | | | | $ | 4.99 | | | | | $ | 4.44 | | | | | $ | 3.71 | | | | | $ | 3.34 | | | | | $ | 2.86 | | | | | $ | 2.75 | | | | | $ | 2.55 | | | | | $ | 2.00 | | | | | $ | 2.35 | | | | | $ | 2.81 | | |
| | Twelve Months Ended | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | December 30, 2017 | December 31, 2016 | December 26, 2015 | December 27, 2014 | December 28, 2013 | December 29, 2012 | December 31, 2011 | December 25, 2010 | December 26, 2009 | December 27, 2008 | |||||||||||||||||||||
| Weighted average shares outstanding—Basic | 47,481 | 47,014 | 46,496 | 46,627 | 47,740 | 47,912 | 50,823 | 62,561 | 65,366 | 67,274 | |||||||||||||||||||||
Effect of dilutive securities: | |||||||||||||||||||||||||||||||
2.25% senior convertible debentures | — | — | — | — | — | — | — | — | — | 776 | |||||||||||||||||||||
Stock options, restricted stock units, performance stock units, and contingently issued restricted stock | 1,083 | 944 | 1,138 | 931 | 749 | 494 | 495 | 558 | 268 | 1,010 | |||||||||||||||||||||
Warrants | — | — | — | — | — | — | — | — | 2 | 87 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average shares outstanding—Diluted | 48,564 | 47,958 | 47,634 | 47,558 | 48,489 | 48,406 | 51,318 | 63,120 | 65,636 | 69,147 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Earnings per share from continuing operations attributable to common shareholders | |||||||||||||||||||||||||||||||
Basic | $ | 2.60 | $ | 3.28 | $ | 3.23 | $ | 2.76 | $ | 2.18 | $ | 2.12 | $ | 2.26 | $ | (5.25 | ) | $ | 1.73 | $ | (7.85 | ) | |||||||||
Diluted | $ | 2.54 | $ | 3.22 | $ | 3.15 | $ | 2.70 | $ | 2.15 | $ | 2.10 | $ | 2.24 | $ | (5.25 | ) | $ | 1.72 | $ | (7.85 | ) | |||||||||
Basic excluding non-GAAP adjustments | $ | 5.39 | $ | 4.66 | $ | 3.86 | $ | 3.53 | $ | 2.98 | $ | 2.77 | $ | 2.58 | $ | 2.01 | $ | 2.36 | $ | 2.89 | |||||||||||
Diluted excluding non-GAAP adjustments | $ | 5.27 | $ | 4.56 | $ | 3.76 | $ | 3.46 | $ | 2.93 | $ | 2.74 | $ | 2.56 | $ | 1.99 | $ | 2.35 | $ | 2.81 | |||||||||||
(1)- Solely for purposes of demonstrating executive compensation trends, this Proxy Statement contains non-GAAP financial measures, such as non-GAAP earnings per diluted share, which exclude: non-cash goodwill and other asset impairments in the fourth quarters of 2010 and 2008; amortization of intangible assets and other charges related to our
acquisitions;acquisitions, as well as fair value adjustments associated with contingent consideration; expenses associated with evaluating acquisitions (including costs related to the termination ofacquisitions,acquisitions), charges and operating losses attributable to our businesses we plan to close or divest (or have closed or divested) and other related miscellaneous expenses; severance costs associated with our cost-saving actions; fees and taxes associated with corporate subsidiary restructurings and the repatriation of cash into the United States; write-offs of deferred financing costs related to the extinguishment ofdebt;debt and fees related to debt financing; the additional interest recorded as a result of the adoption in 2009 of an accounting standard related to our convertible debt accounting which increased interest and depreciation expense; gains from the sale of U.K. real estate; the gain on the curtailment of our U.S. defined benefit plan in 2008; a gain recognized upon the settlement of a life insurance policy of a former officer income from tax settlements related to our discontinued operations;gain (and related tax effect) on the divestiture of our CDMO business; debt forgiveness associated with an acquistiion; the tax effect of 2017 U.S. Tax Reform legislation;charges in connection with a deferred tax revaluation; deferred financing costs related to our amended credit facilities; taxes associated with the disposition of our Phase I clinical business;andthe positive impact of adjustments to contingent consideration payable for earlieracquisitions.acquisitions; third-party costs associated with the remediation of unauthorized access into our information systems detected in March 2019; the non-cash tax benefit related to our international financing structure in 2019; charges related to the planned settlement of our U.S. pension plan; charges recorded in connection with the modification of our option to purchase equity in one of our joint ventures; investment gains or losses associated with our venture capital and strategic equity investments; and losses associated with the termination of our U.S. Pension Plan. We exclude these items from the non-GAAP financial measures because they are outside our normal operations. There are limitations in using non-GAAP financial measures, as they are not prepared in accordance with generally accepted accounting principles, and may be different than non-GAAP financial measures used by other companies. In particular, we believe that the inclusion of supplementary non-GAAP financial measures helps investors to gain a meaningful understanding of our core operating results and future prospects without the effect of these often-one-time charges, and is consistent with how management measures and forecasts theCompany'sCompany’s performance, especially when comparing such results to prior periods or forecasts. We believe that the financial impact of our acquisitions (and in certain cases, the evaluation of such acquisitions, whether or not ultimately consummated) is often large relative to our overall financial performance, which can adversely affect the comparability of our results on a period-to-period basis. In addition, certain activities, such as business acquisitions, happen infrequently and the underlying costs associated with such activities do not recur on a regular basis. Non-GAAP results also allow investors to compare theCompany'sCompany’s operations against the financial results of other companies in the industry who similarly provide non-GAAP results. The non-GAAP financial measures included in this Proxy Statement are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. The Company intends to continue to assess the potential value of reporting non-GAAP results consistent with applicable rules and regulations. Reconciliations of the non-GAAP financial measures used in this Proxy Statement to the most directly comparable GAAP financial measures are set forth in this table, and can also be found on theCompany'sCompany’s website at ir.criver.com.
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
The amount for fiscal year 2018 INCENTIVE PLANOriginally adopted by the Board of DirectorsOn March 20, 2018
1. ADMINISTRATION
Subjectreflects an adjustment that is related to the express provisionsrefinement of one-time charges associated with the Plan, the Administrator has the authority to interpret the Plan; determine eligibility for and grant Awards; determine, modify or waive the terms and conditionsenactment of any Award; prescribe forms, rules and procedures (which it may modify or waive); and otherwise do all things necessary to implement the Plan. Once an Award has been communicated in writing to a Participant, the Administrator may not, without the Participant's consent, alter the terms of the Award so as to materially affect adversely the Participant's rights under the Award, unless the Administrator has expressly reserved the right to do so or pursuant to Section 9.
2. LIMITS ON AWARDS UNDER THE PLAN
a. NUMBER OF SHARES. Subject to adjustments as provided in Section 5.b, the total number of shares of Stock subject to Awards granted under the Plan, in the aggregate, may not exceed 7,198,598 (the "Fungible Pool Limit"), which includes (A) a reserve of 439,798 shares of Stock remaining available for issuance under the 2016 Plan as in effect priorU.S. Tax Reform related to the Effective Datetransition tax on unrepatriated earnings (also known as the toll tax), and (B) an increasethe revaluation of 6,758,800 sharesU.S. federal net deferred tax liabilities.
![[MISSING IMAGE: px_proxypg1-bw.jpg]](/files/DEF 14A/0001104659-23-038821/px_proxypg1-bw.jpg)
b. TYPE OF SHARES. Stock delivered by the Company under the Plan may be authorized but unissued Stock or previously issued Stock acquired by the Company and held in treasury. No fractional shares of Stock will be delivered under the Plan.
c. PARTICIPANT SHARE LIMIT. The maximum number of shares of Stock for which any Awards may be granted to any Participant annually from and after adoption of the Plan and prior to March 20, 2028 shall be 2,000,000, subject to adjustments as provided in Section 5.b. No Awards may
be granted under the Plan after March 20, 2028, but previously granted Awards may extend beyond that date.
d. OTHER AWARD LIMITS. No more than $3,000,000 may be paid to any individual with respect to any Cash Performance Award (other than an Award expressed in terms of shares of Stock or units representing Stock, which shall instead be subject to the limit set forth in Section 2.c above). In applying the dollar limitation of the preceding sentence: (A) multiple Cash Performance Awards to the same individual that are determined by reference to performance periods of one year with or within the same fiscal year of the Company shall be subject in the aggregate to one limit of such amount, and (B) multiple Cash Performance Awards to the same individual that are determined by reference to one or more multi-year performance periods ending in the same fiscal year of the Company shall be subject in the aggregate to a separate limit of such amount.
e. NON-EMPLOYEE DIRECTOR LIMIT. The aggregate grant date fair value (determined as of the date of grant) of any Award granted under the Plan to an individual upon becoming a non-employee member of the Board of Directors ("Initial Non-Employee Director Grant") shall not exceed $600,000. Subject to adjustment as provided in Section 5.b, no Participant who is a non-employee member of the Board of Directors may receive under the Plan (or otherwise) in any calendar year Stock Options, SARs, Restricted Stock, Unrestricted Stock, Deferred Stock and Performance Awards denominated in shares of Stock with a grant date fair value (determined as of the date of grant) that, when combined with the aggregate amount of any Cash Performance Awards and any other compensation granted to such Participant in such calendar year, exceeds an aggregate of $800,000 (excluding an Initial Non-Employee Director Grant).
f. ISO SHARE LIMIT. Subject to adjustments as provided in Section 5.b, the maximum number of shares of Stock available for issuance with respect to ISOs under the Plan shall be 3,500,000.
3. ELIGIBILITY AND PARTICIPATION
The Administrator will select Participants from among those key Employees, directors and other individuals or entities providing services to the Company or its Affiliates who, in the opinion of the Administrator, are in a position to make a significant contribution to the success of the Company and its Affiliates. Eligibility for ISOs is further limited to those individuals whose employment status would qualify them for the tax treatment described in Sections 421 and 422 of the Code.
4. RULES APPLICABLE TO AWARDS
a. ALL AWARDS
(1)TERMS OF AWARDS. All Awards of Stock Options and SARs granted hereunder shall have a term of not to exceed seven (7) years from the date of grant. The Administrator shall determine all other terms of all Awards subject to the limitations provided herein.
(2)PERFORMANCE CRITERIA. Where rights under an Award depend in whole or in part on satisfaction of Performance Criteria, actions by the Company that have an effect, however material, on such Performance Criteria or on the likelihood that they will be satisfied will not be deemed an amendment or alteration of the Award.
(3)ALTERNATIVE SETTLEMENT. The Company may at any time extinguish rights under an Award in exchange for payment in cash, Stock (subject to the limitations of Section 2) or other property on such terms as the Administrator determines, PROVIDED the holder of the Award consents to such exchange, PROVIDED FURTHER, no such exchange will be made where the cash,
Stock or property to be received has a fair market value greater than the Award being extinguished, or where any such exchange would violate Section 4.a(9) ofmailing this Plan.
(4)TRANSFERABILITY OF AWARDS. Awards may not be transferred other than by will or by the laws of descent and distribution and during a Participant's lifetime an Award requiring exercise may be exercised only by the Participant (or in the event of the Participant's incapacity, the person or persons legally appointed to act on the Participant's behalf).
(5)VESTING, ETC. Without limiting the generality of Section 1, the Administrator may determine the time or times at which an Award will vest (i.e., become free of forfeiture restrictions) or become exercisable and the terms on which an Award requiring exercise will remain exercisable. Notwithstanding anything contained herein to the contrary, (1) Awards that are not Performance Awards to Participants shall vest (i.e., become free of forfeiture restrictions) over a period of time at least three years or more from the date of grant and no Award shall vest in part or in whole before 12 months from the date of grant, and (2) Full-Value Awards that are Performance Awards shall be subject to the attainment of Performance Criteria which require at least 12 months to achieve and no Award shall vest in part or in whole before 12 months from the date of grant; PROVIDED, however, that Awards that aggregate not more than 5% of the number of shares reserved for issuance under the Plan may be awarded without the vesting requirements set forth in clauses (1) and (2).
Unless otherwise provided by Section 4.d with respect to Performance Awards or if the Administrator expressly provides otherwise:
(A) immediately upon the cessation of a Participant's employment or other service relationship with the Company and its Affiliates, all Awards (other than Stock Options and SARs) held by the Participant (or by a permitted transferee under Section 4.a(4)) immediately prior to such cessation of employment or other service relationship will be forfeited if not then vested and, where exercisability is relevant, will cease to be exercisable;
(B) except as provided in clauses (C) and (D) below, all Stock Options and SARs held by a Participant (or by a permitted transferee under Section 4.a(4)) immediately prior to the cessation of the Participant's employment or other service relationship for reasons other than Disability or death, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of three months or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 4.a(5), and shall thereupon terminate;
(C) all Stock Options and SARs held by a Participant (or by a permitted transferee under Section 4.a(4)) immediately prior to the Participant's Disability or death, to the extent then exercisable, will remain exercisable for the lesser of (i) the one-year period ending with the first anniversary of the Participant's Disability or death or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 4.a(5), and shall thereupon terminate; and
(D) all Stock Options and SARs held by a Participant (or by a permitted transferee of the Participant under Section 4.a(4)) whose cessation of employment or other service relationship is determined by the Administrator in its sole discretion to result from reasons which cast such discredit on the Participant as to justify immediate termination of the Award shall immediately terminate upon such cessation.
Unless the Administrator expressly provides otherwise, a Participant's "employment or other service relationship with the Company and its Affiliates" will be deemed to have ceased, in the case of an employee Participant, upon termination of the Participant's employment with the Company and its Affiliates (whether or not the Participant continues in the service of the Company or its Affiliates in some capacity other than that of an employee of the Company or its Affiliates), and in the case of any other Participant, when the service relationship in respect of which the Award was granted terminates
(whether or not the Participant continues in the service of the Company or its Affiliates in some other capacity).
(6)TAXES. The Administrator will make such provision for the withholding of taxes as it deems necessary. The Administrator may, but need not, hold back shares of Stock from an Award or permit a Participant to tender previously owned shares of Stock in satisfaction of tax withholding requirements. For the avoidance of doubt, Stock may be tendered or held back by the Company in excess of the minimum amount required to be withheld for Federal, state, and local taxes.
As provided in Section 2.a of this Plan, in the event shares of Stock are held back from an Award in satisfaction of tax withholding requirements, such shares will nonetheless be considered to have been delivered under the Plan.
(7)DIVIDEND EQUIVALENTS, ETC. The Administrator may provide for the payment of amounts in lieu of cash dividends or other cash distributions with respect to Stock subject to any Full Value Award if and in such manner as it deems appropriate. Notwithstanding anything contained herein to the contrary, and without limiting the generality of Section 4.d(10), in no event shall an Award provide for any dividend or dividend equivalents to be payable to the Participant in respect of such Award prior to the time at which such Award (or the applicable portion thereof) vests (and, in the case of a Performance Award, the applicable performance condition is achieved).
(8)RIGHTS LIMITED. Nothing in the Plan shall be construed as giving any person the right to continued employment or service with the Company or its Affiliates, or any rights as a shareholder except as to shares of Stock actually issued under the Plan. The loss of existing or potential profit in Awards will not constitute an element of damages in the event of termination of employment or service for any reason, even if the termination is in violation of an obligation of the Company or Affiliate to the Participant. No Participant or other person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Participants under the Plan. The terms and conditions of Awards need not be the same with respect to each recipient. Any Award granted under the Plan shall be a one-time Award that does not constitute a promise of future grants. Any Award granted under the Plan shall not be a part of a Participant's base salary or wages and will not be taken into account in determining any other employment-related rights such Participant may have, such as rights to pension or severance pay. The Company, in its sole discretion, maintains the right to make available future grants under the Plan. Unless stated herein, no Participant or other person shall acquire any rights, remedies, benefits or obligations. Nothing contained in the Plan shall prevent the Company from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and a Participant or any other person. To the extent that any person acquires a right to receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company.
(9)OPTION AND SAR REPRICING. Options and SARs may not be repriced, or replaced with any other award (including full-value awards), or repurchased for cash without the approval of the shareholders of the Company.
(10)FORFEITURE/CLAWBACK. The Committee may determine that any Award under this Plan shall be subject to provisions for the forfeiture and/or reimbursement of all amounts received in connection with an Award in the event of breach of noncompetition, nonsolicitation or confidentiality agreements. All Awards granted under this Plan are subject to recoupment, to the extent applicable, under the Company's Corporate Governance Guidelines, as may be revised from time to time, and/or any other recoupment, clawback or similar policy that may be approved by the Board or any committee thereof. Notwithstanding any other provision of this Plan, a Participant shall be required to reimburse the Company amounts received in connection with an Award to the extent required under Section 304
of the Sarbanes-Oxley Act of 2002 and Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
(11)STOCK OWNERSHIP GUIDELINES/HOLDING PERIODS. The Committee may require that any Stock acquired by a Participant in connection with an Award granted under this Plan shall be subject to stock ownership guidelines, a minimum holding period or similar requirement under which a Participant shall not be permitted to transfer, sell, pledge, hedge, hypothecate or otherwise dispose of any such Stock.
b. AWARDS REQUIRING EXERCISE
(1)TIME AND MANNER OF EXERCISE. Unless the Administrator expressly provides otherwise, (a) an Award requiring exercise by the holder will not be deemed to have been exercised until the Administrator receives a written notice of exercise (in a form acceptable to the Administrator) signed by the appropriate person and accompanied by any payment required under the Award or adequate provision therefore, as set forth in Section 4.b(3); and (b) if the Award is exercised by any person other than the Participant, the Administrator may require satisfactory evidence that the person exercising the Award has the right to do so.
(2)EXERCISE PRICE. The Administrator shall determine the exercise price of each Stock Option and SAR; PROVIDED, that each Stock Option and SARcard.Votes submitted electronically must have an exercise price that is not less than the fair market value of the Stock subject to the Stock Option and SAR, determined as of the date of grant. An ISO granted to an Employee described in Section 422(b)(6) of the Code must have an exercise price that is not less than 110% of such fair market value.
(3)PAYMENT OF EXERCISE PRICE, IF ANY. Where the exercise of an Award is to be accompanied by payment, the Administrator may determine the required or permitted forms of payment, subject to the following: (a) all payments will be by cash or check acceptable to the Administrator, or, if so permitted by the Administrator (with the consent of the optionee of an ISO if permitted after the grant), (i) through the delivery of shares of Stock which have been outstanding for at least six months (unless the Administrator approves a shorter period) and which have a fair market value equal to the exercise price, (ii) by delivery of a promissory note of the person exercising the Award to the Company, payable on such terms as are specified by the Administrator, (iii) if the Stock is publicly traded, by delivery of an unconditional and irrevocable undertaking by a broker to deliver promptly to the Company sufficient funds to pay the exercise price, or (iv) by any combination of the foregoing permissible forms of payment; and (b) where shares of Stock issued under an Award are part of an original issue of shares, the Award shall require an exercise price equal to at least the par value of such shares.
(4)GRANT OF STOCK OPTIONS. Each Stock Option awarded under the Plan shall be deemed to have been awarded as a non-ISO (and to have been so designated by its terms) unless the Administrator expressly provides for ISO treatment that the Stock Option is to be treated as an ISO.
c. AWARDS NOT REQUIRING EXERCISE
Awards of Restricted Stock and Unrestricted Stock may be made in return for either (1) services determined by the Administrator to have a value not less than the par value of the Awarded shares of Stock, or (2) cash or other property having a value not less than the par value of the Awarded shares of Stock plus such additional amounts (if any) as the Administrator may determine payable in such combination and type of cash, other property (of any kind) or services as the Administrator may determine.
d. PERFORMANCE AWARDS
Performance Awards may be granted to Participants as follows:
(1) Prior to the grant of any Performance Award, the Administrator shall establish for each such award (i) performance levels at which 100% of the award shall be earned and a range (which need not be the same for all awards) within which greater and lesser percentages shall be earned and (ii) a performance period (which shall not be less than 12 months) which shall be determined at time of grant.
(2) With respect to the performance levels to be established pursuant to Section 4.d(1), the specific measures for each grant shall be established by the Administrator at the time of such grant. In creating these measures, the Administrator may establish the specific goals based upon or relating to any Performance Criteria (as defined below).
(3) Except as otherwise provided in Section 4.d(5), the percentage of each Performance Award to be distributed to an employee shall be determined by the Administrator on the basis of the performance levels established for such award and on the basis of individual performance in satisfaction of the Performance Award during such period. Any Performance Award, as determined and adjusted pursuant to this Section and Sections 4.d(5-8) is herein referred to as a "Final Award". No distribution of any Final Award (or portion thereof) shall be made if the minimum performance level applicable to the related Performance Award is not achieved during the applicable performance period or, unless otherwise determined by the Administrator, if the employment of the employee to whom the related Performance Award was granted shall terminate for any reason whatsoever (including Disability and death) within 12 months after the date the Performance Award was granted.
(4) All Final Awards which have vested in accordance with the provisions of Sections 4.d.(5-10) shall be granted as soon as practicable following the end of the related vesting period. Final awards shall be granted in the form of Restricted Stock, Unrestricted Stock, Deferred Stock, Cash Performance Awards, or cash or any combination thereof, as the Administrator shall determine.
(5) Payment of any Final Award (or portion thereof) to an individual employee shall be subject to the continued rendering of services as an employee (unless this condition is waived by the Administrator). If the Administrator shall determine that such employee has failed to satisfy such conditions precedent, all Performance Awards granted to such employee which have not become Final Awards, and all Final Awards which have not been paid pursuant to Section 4.d(10) shall be immediately canceled. Upon termination of an employee's employment other than by Disability or death (whether such termination is before or after a Performance Award shall have become a Final Award), the Administrator may, but shall not in any case be required to, waive the condition precedent of continuing to render services.
(6) If, upon termination of an employee's employment prior to the end of any performance period for a reason other than Disability or death, the Administrator shall determine to waive the condition precedent of continuing to render services as provided in Section 4.d(5), the Performance Award granted to such employee with respect to such performance period shall be reduced pro rata based on the number of months remaining in the performance period after the month of such termination and such awards will be paid at the time they would have been paid absent an employment termination, unless otherwise determined by the Administrator or provided for in an award agreement. The Final Award for such employee shall be determined by the Administrator (i) on the basis of the performance levels established for such award (including the minimum performance level) and the performance level achieved through the end of the performance period and (ii) in the discretion of the Administrator, on the basis of individual
performance during the period prior to such termination. A qualifying leave of absence, determined in accordance with procedures established by the Administrator, shall not be deemed to be a termination of employment but, except as otherwise determined by the Administrator, the employee's Performance Award will be reduced pro rata based on the number of months during which such person was on such leave of absence during the performance period. A Performance Award shall not vest during a leave of absence granted an employee for local, state, provincial, or federal government service.
(7) Upon termination of an employee's employment by reason of Disability or death prior to the end of any performance period, the Performance Award granted to such employee with respect to such performance period, except as otherwise provided in Section 4.d(3), shall be reduced pro rata based on the number of months remaining in the performance period after the month of such employee's Disability or death. The percentage of the reduced Performance Award to be distributed to such employee shall be determined by the Administrator (i) on the basis of the performance levels established for such award (including the minimum performance level) and the performance level achieved through the end of the fiscal year during which such employee became Disabled or died and (ii) in the discretion of the Administrator, on the basis of individual performance during the applicable period. Such Final Awards will immediately vest and be paid as promptly as practicable.
(8) If an employee is promoted during the performance period with respect to any Performance Award, such Performance Award may, in the discretion of the Administrator, be increased to reflect such employee's new responsibilities.
(9) Performance Awards that have become Final Awards may be subject to a vesting schedule established by the Administrator. Except as otherwise provided in this Plan, no Final Award (or portion thereof) subject to a vesting schedule shall be paid prior to vesting and the unpaid portion of any Final Award shall be subject to the provisions of Section 4.d(5). The Administrator shall have the authority to modify a vesting schedule as may be necessary or appropriate in order to implement the purposes of this Plan.
(10) No holder of a Performance Award shall have any rights to dividends or interest or other rights of a stockholder with respect to a Performance Award prior to such Performance Award's becoming a Final Award.
(11) To the extent that any employee, former employee, or any other person acquires a right to receive payments or distributions under this Plan with respect to a Performance Award, such right shall be no greater than the right of a general unsecured creditor of the Company. All payments and distributions to be made hereunder shall be paid from the general assets of the Company. Nothing contained in this Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any employee, former employee, or any other person.
5. EFFECT OF CERTAIN TRANSACTIONS
a. MERGERS, ETC. Other than in connection with Awards that are denominated and subject to settlement in cash, Awards shall not vest in connection with a Covered Transaction unless such Covered Transaction is accompanied by a "double trigger event". For this purpose, a "double trigger event" occurs in connection with a Covered Transaction if (i) the Award is not appropriately assumed nor an equivalent award substituted by the surviving, continuing, successor or purchasing company or other business entity or parent thereof, as the case may be, (ii) cash or cash equivalents are the sole or primary form of consideration to be received by 11:59 p.m., Eastern Time, on May 8, 2023.OnlineGo to www.investorvote.com/CRL or scan the shareholder of the Company and (iii) at the time of, or within 12 months following the Covered Transaction, the Participant incurs a termination of employment without Cause or for Good Reason.
Upon a Covered Transaction "double trigger event": (i)QR code — login details are located in the case of a Stock Option or SAR, the Stock Option or SAR shall become fully vestedshaded bar below.Save paper, time and exercisable immediately upon the occurrence of the double trigger event; (ii) in the case of Restricted Stock, Deferred Stock or restricted stock units (in each case other than an award of Restricted Stock, award of Deferred Stock or award of restricted stock units that is a Performance Award), the restriction period shall lapse and the Restricted Stock, Deferred Stock or restricted stock unit (as applicable) shall fully vest immediately upon the occurrence of the double trigger event; and (iii) in the case of a Performance Award, payment under the Award shall be subject to the terms set forth in the applicable award agreement.
b. CHANGES IN AND DISTRIBUTIONS WITH RESPECT TO THE STOCK
(1)BASIC ADJUSTMENT PROVISIONS. In the event of a stock dividend, stock split or combination of shares, recapitalization or other change in the Company's capital structure, the Administrator will make appropriate adjustments to the maximum number of shares that may be delivered under the Plan under Section 2.a and to the maximum share limits described in Section 2.c, and will also make appropriate adjustments to the number and kind of shares of stock or securities subject to Awards then outstanding or subsequently granted, any exercise prices relating to Awards and any other provision of Awards affected by such change.
(2)CERTAIN OTHER ADJUSTMENTS. The Administrator may also make adjustments of the type described in paragraph (1) above to take into account distributions to common stockholders other than those providedmoney!Sign up for in Section 5.a and 5.b (1), or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation of the Plan and to preserve the value of Awards made hereunder; PROVIDED, that no such adjustment shall be made to the maximum share limits described in Section 2.c nor shall any change be made to ISOs except to the extent consistent with their continued qualification under Section 422 of the Code.
(3)CONTINUING APPLICATION OF PLAN TERMS. References in the Plan to shares of Stock shall be construed to include any stock or securities resulting from an adjustment pursuant to Section 5.b(1) or 5.b(2) above.
6. LEGAL CONDITIONS ON DELIVERY OF STOCK
The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove any restriction from shares of Stock previously delivered under the Plan until the Company's counsel has approved all legal matters in connection with the issuance andelectronic delivery of such shares; if the outstanding Stock is at the time of delivery listed on any stock exchange or national market system, the shares to be delivered have been listed or authorized to be listed on such exchange or system upon official notice of issuance; and all conditions of the Award have been satisfied or waived. If the sale of Stock has not been registered under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of the Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of such Act. The Company may require that certificates evidencing Stock issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such Stock.
7. AMENDMENT AND TERMINATION
The Administrator may at any time or times amend the Plan or any outstanding Award for any purpose which may at the time be permitted by law, or may at any time terminate the Plan as to any further grants of Awards; PROVIDED, that (except to the extent expressly required or permitted by the Plan) no such amendment will, without the approval of the stockholders of the Company, effectuate a change for which stockholder approval is required under the rules of the New York Stock Exchange (which includes any "material revision" as defined under the rules of the New York Stock
Exchange) or in order for the Plan to continue to qualify under Section 422 of the Code and to have an Award comply with, or avoid adverse consequences under, Section 409A of the Code.
8. NON-LIMITATION OF THE COMPANY'S RIGHTS
The existence of the Plan or the grant of any Award shall not in any way affect the Company's right to award a person bonuses or other compensation in addition to Awards under the Plan.
9. COMPLIANCE WITH APPLICABLE LAW
If any provision of the Plan or any applicable award agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction, or as to any person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the applicable award agreement, such provision shall be stricken as to such jurisdiction, person or Award, and the remainder of the Plan and any such applicable award agreement shall remain in full force and effect.
10. DATA PRIVACY
The Company, any Affiliate and Committee may collect, process, transmit and store, in any form whatsoever, any data of a professional or personal nature described in the Plan, the applicable award agreement and any other grant or plan administration materials by and among, as applicable, the Company or any Affiliate that is necessary, in the discretion of the Company or any Affiliate, for the purposes of implementing, administering and managing the Participant's participation in the Plan. The Company and any Affiliate may share such information with any third party in any country, including any trustee, registrar, administrative agent, broker, stock plan service provider or any other person assisting the Company with the implementation, administration, and management of the Awards and the Plan. The Company, any Affiliate, the Committee and any possible recipients described herein may receive, possess, use, retain and transfer the data in electronic or other form, for the sole purpose described herein. The Participant may refuse to provide consent or authorization, or may withdraw such consent or authorization, regarding the matters described in this Section 10; PROVIDED, however, that such refusal or withdrawal may affect the Participant's ability to participate in the Plan.
11. GOVERNING LAW
The Plan shall be construed in accordance with the laws of The Commonwealth of Massachusetts without reference to principles of conflicts of laws.
12. DEFINED TERMS.
The following terms, when used in the Plan, shall have the meanings and be subject to the provisions set forth below:
"2007 Plan". The Charles River Laboratories International, Inc. 2007 Incentive Plan as from time to time amended and in effect.
"2016 Plan": The Charles River Laboratories International, Inc. 2016 Incentive Plan as from time to time amended and in effect.
"ADMINISTRATOR": The Board or, if one or more has been appointed, the Committee. With respect to ministerial tasks deemed appropriate by the Board or Committee, the term "Administrator" shall also include such persons (including Employees) to whom the Board or Committee shall have delegated such tasks.
"AFFILIATE": Any corporation or other entity owning, directly or indirectly, 50% or more of the outstanding Stock of the Company, or in which the Company or any such corporation or other entity owns, directly or indirectly, 50% of the outstanding capital stock (determined by aggregate voting rights) or other voting interests.
"AWARD": Any or a combination of the following (which shall include any Final Award with respect to the following):
(i)Stock Options.(ii)SARs.(iii)Restricted Stock.(iv)Unrestricted Stock.(v)Deferred Stock.(vi)Cash Performance Awards.(vii)Other Performance Awards.
"BOARD": The Board of Directors of the Company.
"CASH PERFORMANCE AWARD": A Performance Award payable in cash. The right of the Company under Section 4.a(3) (subject to the consent of the holder of the Award as therein provided) to extinguish an Award in exchange for cash or the exercise by the Company of such right shall not make an Award otherwise not payable in cash a Cash Performance Award.
"CAUSE": Unless otherwise provided for in a Participant's written agreement with the Company, "Cause"" for termination by the Company of the Participant's employment shall mean (i) the willful and continued failure by the Participant to perform the Participant's duties with the Company, (ii) a substantial and not de minimis violation of the Company's Code of Business Conduct and Ethics (and any successor policy), as the same are in effect from time to time, (iii) the Participant's conviction of a felony or (iv) engaging in conduct that constitutes a violation of any (x) confidential agreements with the Company or (y) confidentiality policies applicable to the Participant.
"CODE": The U.S. Internal Revenue Code of 1986 as from time to time amended and in effect, or any successor statute as from time to time in effect.
"COMMITTEE": One or more committees of the Board (including any subcommittee thereof) appointed or authorized to make Awards and otherwise to administer the Plan.
"COMPANY": Charles River Laboratories International, Inc.
"COVERED TRANSACTION": Any of (i) a consolidation, merger or other transaction which results in any individual, entity or "group" (within the meaning of section 13(d) of the Securities Exchange Act of 1934) acquiring the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) directly or indirectly of more than 50% of either the then outstanding shares of common stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors, (ii) at any time during a period of 12 consecutive months, individuals who at the beginning of such period constituted the Board and any new member of the Board whose election or nomination for election was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was so approved, cease for any reason to constitute a majority of members of the Board, (iii) a sale or transfer of all or substantially all the Company's assets, or (iv) a dissolution or liquidation of the Company.
"DEFERRED STOCK": A promise to deliver Stock, other securities or other property in the future on specified terms to a Participant (including, for the avoidance of doubt, a director of the Company).
"DISABILITY": With respect to any Participant, "disability" as defined in such Participant's employment agreement, if any, or if not so defined, except as otherwise provided in such Participant's award agreement:
(i)a Participant's inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or(ii)a Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under the Company's accident and health plan.
"EMPLOYEE": Any person who is employed by the Company or an Affiliate.
"FULL-VALUE AWARD": an Award other than an Option or SAR, and which is settled by the issuance of shares of Stock or the value of the stated number of shares in cash.
"FUNGIBLE POOL UNIT": the measuring unit used for purposes of the Plan, as specified in Section 2, to determine the number of Shares which may be subject to Awards hereunder, which shall consist of Shares in the proportions (ranging from 1.0 to 2.3) as set forth in Section 2.a.
"GOOD REASON": Unless otherwise provided for in a Participant's written agreement with the Company, Good Reason for termination by the Participant of the Participant's employment shall mean the occurrence (without the Participant's express written consent) of any one of the following acts by the Company, or failures by the Company to act, unless in the case of any act or failure to act described in paragraph (i), (iii) or (iv) below, such act or failure to act is corrected prior to the date of termination:
(i)the assignment to the Participant of any duties inconsistent with the Participant's position and responsibilities as in effect immediately prior to the Covered Transaction;(ii)a reduction by the Company in the Participant's annual base salary as in effect on the date of the Covered Transaction;(iii)the failure by the Company to continue in effect any compensation plan in which the Participant participates immediately prior to the Covered Transaction which is material to the Participant's total compensation, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Participant's participation therein (or in a substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of the Participant's participation relative to other participants, as existed at the time of the Covered Transaction;(iv)the failure by the Company to continue to provide the Participant with benefits substantially similar to those enjoyed by the Participant under any of the Company's pension, life insurance, medical, health and accident, or disability plans in which the Participant was participating at the time of the Covered Transaction, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Participant of any material fringe benefit enjoyed by the Participant at the time of the Covered Transaction, or the failure by the Company to provide the Participant with the number of paid vacation days to which the Participant is entitled on the basis of years of
(v)the Company's requiring the Participant to relocate to an office or location more than fifty (50) miles distant from the office or location at which the Participant was based immediately prior to the date of termination.
service with the Company in accordance with the Company's normal vacation policy in effect at the time of the Covered Transaction; or
"ISO": A Stock Option intended to be an "incentive stock option" within the meaning of Section 422 of the Code.
"PARTICIPANT": An Employee, director or other person providing services to the Company or its Affiliates who is granted an Award under the Plan.
"PERFORMANCE AWARD": An Award subject to Performance Criteria (including any Award that is a Final Award distributed in satisfaction of the vesting of a Performance Award that was subject to Performance Criteria).
"PERFORMANCE CRITERIA": Specified criteria the satisfaction of which is a condition for the exercisability, vesting or full enjoyment of an Award. A Performance Criterion measure and targets with respect thereto determined by the Administrator need not be based upon an increase, a positive or improved result or avoidance of loss.
"PLAN": The Charles River Laboratories International, Inc. 2018 Incentive Plan as from time to time amended and in effect.
"PREEXISTING PLANS": Any plan of the Company or its predecessors in existence at or prior to the Effective Date under which equity, equity-based or performance cash awards were granted, including, without limitation, the following: (1) the 2007 Plan and (2) the 2016 Plan. For the purposes of this definition, "preexisting plans" shall not refer to the Company's Executive Incentive Compensation Plan (EICP).
"RESTRICTED STOCK": An Award of Stock subject to restrictions requiring that such Stock be redelivered to the Company if specified conditions are not satisfied.
"SARS": Rights entitling the holder upon exercise to receive cash or Stock, as the Administrator determines, equal to a function (determined by the Administrator using such factors as it deems appropriate) of the amount by which the Stock has appreciated in value since the date of the Award.
"STOCK": Common Stock of the Company.
"STOCK OPTIONS": Options entitling the recipient to acquire shares of Stock upon payment of the exercise price.
"UNRESTRICTED STOCK": An Award of Stock not subject to any restrictions under the Plan.
13. SECTION 409A OF THE CODE
To the extent applicable, Awards granted under the Plan are intended to comply with or be exempt from Section 409A of the Code, and the Administrator shall interpret and administer the Plan in accordance therewith. In addition, any provision in this Plan document that is determined to violate the requirements of Section 409A shall be void and without effect. In addition, any provision that is required to appear in this Plan document that is not expressly set forth shall be deemed to be set forth herein, and such Plan shall be administered in all respects as if such provisions were expressly set forth. The Administrator shall have the authority unilaterally to accelerate or delay a payment to which the holder of any Award may be entitled to the extent necessary or desirable to comply with, or avoid adverse consequences under, Section 409A (including, for the avoidance of doubt, with regard to an individual deemed to be a "specified employee" under Section 409A of the Code who has received an
amount hereunder deemed to be "deferred compensation" subject to Section 409A of the Code). Notwithstanding the foregoing, the Company does not guarantee that this Plan, any Awards or any payments with respect thereto are in compliance with Section 409A of the Code.
14. EFFECTIVE DATE OF THE PLAN
The Plan shall be effective as of the date of its approval by the Board, subject to its approval by the stockholders of the Company (the "Effective Date").
15. AWARDS UNDER PREEXISTING PLANS
Upon approval of the Plan by stockholders of the Company as contemplated under Section 14, no further awards shall be granted under the Preexisting Plans; PROVIDED, however, that any shares that have been forfeited, cancelled or otherwise not delivered in accordance with the terms of the applicable award under a Preexisting Plan may be subsequently again awarded in accordance with the terms of the Plan. For purposes of clarity, the number of shares that relate to an Award under the Preexisting Plans is the maximum number of shares that can be delivered with respect to such Award.
1 Application and Purpose
This French Schedule includes special terms and conditions applicable to Qualified Deferred Stock Awards granted to Participants situated and/or employed in France. These terms and conditions are in addition to, or if so indicated, in place of, the terms and conditions set forth in the Plan.
The purpose of this French Schedule is to make certain variations to the terms of the Plan, in order to satisfy French securities laws, exchange control, corporate law and tax requirements, especially the provisions of Articles L. 225-197-1 et seq. of the French Commercial Code and article 135 of the Macron Law (loi n° 2015-990 du 6 août 2015 pour la croissance, l'activité et l'égalité des chances économiques as amended by the 2017 and 2018 Finance bills respectively n° 2016-1917 dated December 29, 2016 and n° 2017-1837 dated December 30, 2017), so that Qualified Deferred Stock Awards may qualify for favorable income tax and social security treatment in France (provided by article 80quaterdecies of the French Tax Code and article L242-1 of the French Social Security Code).
The rules of the Plan shall apply, subject to the modifications contained in this French Schedule, whenever the Administrator decides to grant Qualified Deferred Stock Awards to Eligible French Employees under this French Schedule. In all other circumstances, where other forms of Awards (other than Qualified Deferred Stock Award) are granted to Eligible French Employees, the rules of the Plan, unamended by this French Schedule, shall apply.
The amendments to the Plan set out in this French Schedule shall only apply in respect of Qualified Deferred Stock Awards granted in accordance with this French Schedule.
This French Schedule has been approved by the shareholders of the Company (as the empowered foreign corporate body) on 8 May 2018, as required by the French tax authorities.
2 Terms and Meanings of Words Used
Unless provided otherwise or unless the context requires otherwise, capitalized terms used but not defined in this French Schedule shall have the meaning assigned to them in the Plan.
The terms of Qualified Deferred Stock Awards under this French Schedule shall be the same as those for Deferred Stock awards under the Plan, except to the extent that this French Schedule provides to the contrary. References to Deferred Stock awards in the Plan shall apply to, and include, Qualified Deferred Stock Awards, save where expressed not to apply, or save where modified by the terms of this French Schedule (in which case, the terms shall apply as modified).
References to eligible Employees in the Plan shall apply to Eligible French Employees and references to Participants in the Plan shall apply to French Participants, save where expressed not to apply, or save where modified by the terms of this French Schedule (in which case, the terms shall apply as modified).
The following definitions shall apply to Qualified Deferred Stock Awards granted in accordance with this French Schedule:
"CLOSED PERIOD": has the meaning given in Article L. 225-197-1 of the French Commercial Code, as:
(i)ten quotation days preceding and three quotation days following the disclosure to the public of the consolidated financial statements or the annual statements of the Company; or(ii)any period during which the corporate management of the Company possesses material information which could, if disclosed to the public, significantly impact the quotation of the Stock, until ten quotation days after the day such information is disclosed to the public.
"ELIGIBLE FRENCH EMPLOYEE": means an employee of a French Subsidiary (or a French branch of a non-French Group Member), or a corporate officer of a French Subsidiary (or a French branch of a non-French Group Member) who holds the duties of chairman of the board, general manager, deputy general manager, member of the directory board, or manager (respectivelyprésident du conseil d'administration, directeur général, directeur général délégué, membre du directoire orgérant).
"FRENCH PARTICIPANT": means individuals who have been granted Qualified Deferred Stock Awards.
"GRANT DATE": means the date on which a Qualified Deferred Stock Award is granted to an Eligible French Employee by the Administrator.
"GROUP": means the Company and its Subsidiaries from time to time, and"Group Member" shall be interpreted accordingly.
"HOLDING PERIOD": means such period (applicable under article L225-197-1 of the French commercial code) following the vesting of the Qualified Deferred Stock Award as the Administrator may determine, which shall not expire until at least 2 years after the Grant Date.
"QUALIFIED DEFERRED STOCK AWARD": means a Deferred Stock award granted to an Eligible French Employee which is intended to satisfy French securities laws, exchange control, corporate law and tax requirements (especially the provisions of Articles L. 225-197-1 et seq. of the French Commercial Code) in order to qualify for favorable income tax and social security treatment in France (articles 80quaterdecies of French Tax Code and L.242-1 of French Social Security Code) and which, for the avoidance of doubt, can be subject to Performance Criteria.
"SUBSIDIARY": has the meaning given in Article L. 225-197-2 of the French Commercial Code, as:
(i)a company in which the Company holds, directly or indirectly, at least 10 per cent of the share capital or voting rights;(ii)a company holding directly or indirectly at least 10 per cent of the share capital or voting rights of the Company; or(iii)a company for which at least 50 per cent of the share capital or voting rights are held by a company which holds at least 50 per cent of the share capital of the Company.
"VESTING PERIOD": means such period (applicable under article L225-197-1 of the French commercial code) as determined by the Administrator, which shall not be less than 12 months from the Grant Date, and at the end of which, the French Participant will become entitled to have the Stock delivered to or to the order of him/her.
The following definition shall apply to Qualified Deferred Stock Awards granted in accordance with this French Schedule and shall replace the definition as it appears at Section 12 of the Plan:
"DISABILITY": has the meaning given in the second or third category of Article L.341-4 of the French Code of Social Security.
3 Limits on awards under the Plan
The following wording is inserted immediately following the end of the Section 2.a. of the Plan, as follows:
"Notwithstanding any other provisions of the Plan rules, if, at the Grant Date, the total number of Stock granted subject to Awards made under the Plan and any other employee stock plan of the Company, where such Awards are granted subject to and in accordance with the provisions of Articles L.225-197-1 et seq. of the French Commercial Code and are, or are similar in substance to, a conditional right to acquire
stock (other than an option) for no or limited cost (up to 5 percent of the fair market value of the stock), shall exceed10 percentof the issued ordinary share capital of the issuing Company, Qualified Deferred Stock Awards may only be granted over such number of Stock as does not exceed a ratio of one to five between the smallest and largest awards of Qualified Deferred Stock Awards.
However, this relevant percentage is increased to 30 percent, if at the same time, awards are granted under the Plan, or awards are granted under any other stock plan of a Group Member, to all Eligible French Employees employed by a French Group Member or a French branch of a non-French Group Member."
The following wording is inserted immediately following the end of the Section 2.c. of the Plan, as follows:
"No Qualified Deferred Stock Award shall be granted to an Eligible French Employee who holds 10 percent or more (including any outstanding Awards) under the Plan or outstanding awards under any other employee share plan operated by the Group where such Awards or awards (as applicable) are, or are similar in substance to, a conditional right to acquire shares, other than non-exercised options) of the share capital of the Company, or who may hold, as the result of the Qualified Deferred Stock Award, 10 percent or more of the share capital of the Company."
4 Eligibility and Participation
Notwithstanding any other provision of the Plan rules, Qualified Deferred Stock Awards may only be granted to Eligible French Employees.
5 Alternative Settlement
Section 4.a.(3) of the Plan is deleted in it its entirety.
6 Vesting Period
The following wording is inserted immediately following Section 4.a.(5) of the Plan, as follows:
"The Vesting Period for Qualified Deferred Stock Award shall not be less than 12 months, so that the ownership of the Qualified Deferred Stock Award cannot be transferred to, or to the order of, the French Employees before the expiry of a minimum one year period from their Grant Date.
During the Vesting Period, the delivery of Stock must remain conditional and may also be subject to the Performance Criteria, which means that the Eligible French Employees only hold a contractual right towards the Company and are not entitled to any shareholder's right during the Vesting Period (no rights to dividend (even through an equivalent bonus whose payment would be deferred), no voting rights)."
7 Dividend Equivalents
The first sentence of Section 4.a.(7) of the Plan is deleted in its entirety.
8 Holding Period
A new Section 4.a.(12) is inserted immediately following Section 4.a.(11) of the Plan, as follows:
"HOLDING PERIOD. The Administrator may determine that a Holding Period shall apply to a Qualified Deferred Stock Award, during which period the Stock acquired by the French Participant following vesting of the Qualified Deferred Stock Award (or any interest in them) may not be sold, transferred, assigned, mortgaged, charged or otherwise disposed of by, or on behalf of, the French Participant, except for a transfer to the French Participant's legal personal representatives in the event of his death.
To the extent that a Qualified Deferred Stock Award vests less than two years after the Grant Date, the Stock acquired on vesting shall be subject to a Holding Period, so that there is a two-year period between the Grant Date and the date that the Stock may be freely disposed of by the French Participant, as required by Article L.225-197-1 of the French Commercial Code.
During the Holding Period, the Stock may be delivered to the French Participant, provided he shall agree not to sell, transfer, assign, mortgage, charge or otherwise dispose of the Stock (or any interest in them) during the Holding Period; or a nominee on behalf of the French Participant, provided that the beneficial ownership of the Stock vests in the French Participant and subject to a restriction on sale, transfer, assignment, mortgaging, charging or other disposal of such Stock (or any interest in them)."
9 Closed Period
A new Section 4.a.(13) is inserted immediately following Section 4.a.(12) of the Plan, as follows:
"CLOSED PERIOD. After the expiration of the Holding Period (if applicable), Stock transferred to a French Participant in satisfaction of a Qualified Deferred Stock Award cannot be sold or transferred by or on behalf of a French Employee during a Closed Period."
10 Cessation of employment
Sections 4.a.(5)(A), 4.d.(5) to 4.d.(7) of the Plan continue to apply to Qualified Deferred Stock Awards, where relevant, if a French Participant ceases to be employee, except that a new Section 4.d.(12) is inserted immediately following Section 4.d.(11) of the Plan, as follows:
"Notwithstanding any other provision of the Plan rules, the Plan shall, in no circumstances, have the effect of accelerating the Vesting Period or disapplying the Holding Period in circumstances where there would be a less than two year period between the Grant Date and the date that the Stock may be freely disposed of by the French Participant, except in the two following cases:
•Death of the French Participant
If a French Participant dies before his Qualified Deferred Stock Award has vested, his Qualified Deferred Stock Award shall vest immediately and any applicable Holding Period will fall away. The Qualified Deferred Stock Award may only be adjusted in such proportion as determined by the Administrator in its absolute discretion after taking into account the Performance Criteria. The Qualified Deferred Stock Award cannot be adjusted for any other criteria e.g. for time. The heirs of the deceased French Participant can require the vesting within six months from the date of death, as provided by the article L225-197-3 of the French commercial code.
Where, after a Qualified Deferred Stock Award has vested but before the expiry of any applicable Holding Period, the French Participant dies, his Stock shall cease to be subject to the Holding Period.
•Disability of the French Participant
Notwithstanding any other provision of the Plan rules, if a French Participant ceases to be in employment due to Disability before his Qualified Deferred Stock Award has vested all or a proportion of his Qualified Deferred Stock Award may vest immediately, in such proportion as determined by the Administrator in its absolute discretion, having regard to the satisfaction of the Performance Criteria and any other condition as at the time of cessation of employment, and such other factors as the Administrator may consider relevant. If a French Participant ceases to be in employment due to Disability before his Qualified Deferred Stock Award has vested, the Holding Period shall fall away.
If the French Participant ceases to be in employment due to Disability after the vesting but before the expiry of any applicable Holding Period, his Stock shall cease to be subject to the Holding Period on the date of cessation of his employment."
11 Effect of certain transactions
The following wording is inserted immediately following the end of the Sections 5.a of the Plan, as follows:
"To the extent that the Administrator intends for the Qualified Deferred Stock Awards to retain favorable tax and social security treatment under this French Schedule, Sections 5.a and 5.b shall apply to Qualified Deferred Stock Awards in accordance with the provisions of Articles L. 225-197-1-III of the French Commercial Code and 80 quaterdecies of the French Tax Code, and shall be modified or interpreted in order to comply with these provisions."
The following wording is inserted immediately following the end of the Section 5.b of the Plan, as follows:
"If the share capital of the Company is modified during the Vesting Period or Holding Period, the Qualified Deferred Stock Awards may be adjusted as appropriate to ensure that there is no impact on the French Participants' Qualified Deferred Stock Awards, provided that such adjustment has the sole purpose and effect of preserving the value of Qualified Deferred Stock Awards and that additional Stock which could be issued as a result remains subject to the same requirements (including the vesting and holding requirements) as those applying to the original Qualified Deferred Stock Award".
12 Taxes
A new rule is inserted immediately following the end of Section 4.a.(6) of the Plan, as follows:
"The preceding paragraph does not apply to Qualified Deferred Stock Awards. A French Participant is responsible for paying any relevant taxes and reporting the receipt of any income under the French Schedule, however made, to the relevant tax authority".
13 Amendment and termination
The following wording is inserted immediately following the end of the Section 7 of the Plan, as follows:
"Except as permitted in this Section 7, an amendment to the provisions of the Plan may only be applied to Qualified Deferred Stock Awards already granted to the extent that:
•the proposed change does not affect the qualifying status of the Qualified Deferred Stock Awards for French tax and social security purposes; and•if the change would adversely affect the existing rights of the French Participants, affected French Participants' prior consent is obtained."
14 Cross references
Unless specified otherwise, where a deletion, addition or amendment is made to the rules by this French Schedule, other references throughout the rules and this French Schedule to those additional, amended or deleted Rules (as appropriate) are deemed to be included, modified or deleted accordingly.
15 Conclusion
The following paragraphs are inserted immediately following Section 11 in the Plan, as follows:
"It is intended that Deferred Stock awards granted to Eligible French Employees shall qualify for the special tax and social security treatment applicable to free shares granted under articles L. 225-197-1 to L.225-197-6 of the French Commercial Code and in accordance with the relevant provisions set forth by the French tax and social security laws (article 80 quaterdecies of the French Tax Code and article L.242-1 of the French Social security Code). Accordingly, the rules, the terms of the French Schedule and the terms upon which a Deferred Stock award has been granted shall be interpreted and, where necessary, deemed to be modified, in accordance with the relevant provisions set forth by French laws, as well as the relevant administrative provisions.
If for any reason a Deferred Stock award does not satisfy the requirements of the French tax authorities for favorable income tax and social security treatment, and therefore does not qualify as a Qualified Deferred Stock Award, the Company or Administrator can take such actions, including (but not limited to) changing the Vesting Period and/or the Holding Period of the Deferred Stock award, as it considers reasonably necessary to achieve such treatment, and the rules, the terms of the French Schedule and the terms of the Qualified Deferred Stock Award shall be interpreted and, where necessary, modified accordingly. The Company and any Group Member shall not be liable for any adverse consequences, legal, tax or otherwise, if and to the extent that Deferred Stock awards do not qualify as Qualified Deferred Stock Awards."
NNNNNNNNNNNN . MMMMMMMMMMMMMMM C123456789 000004 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext ENDORSEMENT_LINE______________ SACKPACK_____________ MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Usingatwww.investorvote.com/CRLUsing a black ink pen, mark your votes with an X as shown in this example. Pleaseexample.Please do not write outside the designated areas. q PLEASE FOLD ALONG THE PERFORATION,areas.Annual Meeting Proxy Card IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q ProposalsAProposals — The Board of Directors recommends a vote FOR all the nominees listed in Proposal 1 and FOR Proposals 2 and 4, ONE YEARon Proposal 3 and 4. AGAINST Proposal 5.+1. Election of Directors: 01For AgainstAbstainFor Against AbstainFor Against Abstain01 - James C. Foster For Against Abstain For Against Abstain For Against Abstain 02Foster02 - Nancy C. Andrews03 - Robert J. Bertolini 03 - Stephen D. Chubb 04Bertolini04 - Deborah T. Kochevar 05Kochevar05 - George Llado, Sr.06 - Martin W. MacKay 06 - Jean-Paul Mangeolle 07Mackay07 - George E. Massaro 08 - George M. Milne, Jr. 09Massaro08 - C. Richard Reese 10Reese09 - Craig B. Thompson 11Thompson11 - Virginia M. Wilson10 - Richard F. Wallman ForWallman2. Advisory Approval of 2022 Executive Officer CompensationFor Against Abstain ForAgainst Abstain 2. SayAbstain3. Advisory Vote on Pay - An advisory vote to approve our executive compensation. 4.the Frequency of Future Advisory Votes on1 Year 2 Years3 YearsAbstainExecutive Compensation4. Ratification of PricewaterhouseCoopers LLC as independent5. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registeredpublish a report on non-human primates imported byForAgainstAbstainregistered public accountantsaccounting firm for the fiscal year ending December 29, 2018. For Against Abstain 3. Approval of 2018 Incentive Plan. Authorized2023Charles River Laboratories International, Inc.BAuthorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below PleaseBelowPlease sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Datetitle.Date (mm/dd/yyyy) — Please print date below. Signaturebelow.Signature 1 — Please keep signature within the box. Signaturebox.Signature 2 — Please keep signature within the box. NNNNNNNC 1234567890 J N T 0 7 4 9 1 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + 1box.1 U P X3 7 02SU6B NNNNNNNNN B A Annual Meeting Proxy Card X IMPORTANT ANNUAL MEETING INFORMATION
. q PLEASE FOLD ALONG THE PERFORATION,![[MISSING IMAGE: px_proxypg2-bw.jpg]](/files/DEF 14A/0001104659-23-038821/px_proxypg2-bw.jpg)
NNNNNNNNNNNN . Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proposals — The Board of Directors recommends a vote FOR all the nominees listed in Proposal 1 and FOR Proposals 2,0001100682 3 and 4. + 1. Election of Directors: 01 - James C. Foster For Against Abstain For Against Abstain For Against Abstain 02 - Robert J. Bertolini 03 - Stephen D. Chubb 04 - Deborah T. Kochevar 05 - Martin W. MacKay 06 - Jean-Paul Mangeolle 07 - George E. Massaro 08 - George M. Milne, Jr. 09 - C. Richard Reese 10 - Craig B. Thompson 11 - Richard F. Wallman For Against Abstain ForAgainst Abstain 2. Say on Pay - An advisory vote to approve our executive compensation. 4. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accountants for the fiscal year ending December 29, 2018. For Against Abstain 3. Approval of 2018 Incentive Plan. Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. + 1 U P X 3 7 0 7 4 9 2 02SU7B NNNNNNNNN B A Annual Meeting Proxy Card X IMPORTANT ANNUAL MEETING INFORMATION
. q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proxy — CHARLES RIVER LABORATORIES INTERNATIONAL, INC. 251 Ballardvale Street Wilmington, MA 01887 (781) 222-6000 PROXY FOR ANNUAL MEETING OF SHAREHOLDERS — MAY 8, 2018 THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF CHARLES RIVER LABORATORIES INTERNATIONAL, INC. The undersigned, revoking any previous proxies relating to these shares, hereby acknowledges receipt of the Notice and Proxy Statement in connection with the Annual Meeting of Shareholders to be held at 8:00 a.m. on Tuesday, May 8, 2018 at the offices of Cooley, LLP, 500 Boylston Street, Boston, MA 02116 and hereby appoints James C. Foster, David R. Smith and David P. Johst, and each of them (with full power to act alone), the attorneys and proxies of the undersigned, with power of substitution to each, to vote all shares of the Common Stock of Charles River Laboratories International, Inc. registered in the name provided herein which the undersigned is entitled to vote at the 2018 Annual Meeting of Shareholders, and at any adjournments thereof, with all the powers the undersigned would have if personally present. Without limiting the general authorization hereby given, said proxies are, and each of them is, instructed to vote or act as follows on the proposals set forth in said Proxy. This Proxy may be revoked by the person giving it any time before its use by delivering to us a written notice of revocation or a duly executed proxy bearing a later date. Any shareholder who has executed a Proxy but is present at the Annual Meeting, and who wishes to vote in person, may do so by revoking his or her Proxy as described in the preceding sentence. This Proxy when executed will be voted in the manner directed herein. If no direction is made this Proxy will be voted FOR all director nominees and FOR Proposals 2, 3 and 4. In their discretion, the proxies are authorized to vote upon such other matters as may properly come before the meeting or any adjournments thereof. CONTINUED AND TO BE SIGNED ON REVERSE SIDE
