SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ Preliminary Proxy Statement | ☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
☒ Definitive Proxy Statement | ||
☐ Definitive Additional Materials | ||
☐ Soliciting Material Under Rule 14a-12 |
THE COOPER COMPANIES, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ No fee required.
☐ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) | Proposed maximum aggregate value of transaction: |
(5) | Total fee paid: |
��
☐ | Fee paid previously with preliminary materials: |
☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. |
(1) | Amount previously paid: |
(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
January 27, 2017February 1, 2019
Dear Stockholder:
You are cordially invited to join us at the 20172019 Annual Meeting of Stockholders (the “Annual Meeting”) of The Cooper Companies, Inc., which will be held at 8:00 a.m. (PDT) on March 13, 201718, 2019 at the offices of The Rose Hotel, 807 Main Street,Cooper Companies, Inc., 6140 Stoneridge Mall Road, Suite 590, Pleasanton, California.
At the Annual Meeting we will ask our stockholders to vote on the proposals detailed in our Proxy Statement and related materials.
We will be providing access to electour proxy materials electronically under the U.S. Securities and Exchange Commission’s “notice and access” rules. As a Boardresult, beginning on or about February 6, 2019, we are mailing a Notice of Directors, ratify the Audit Committee’s appointmentInternet Availability of Proxy Materials to many of our independent registered public accounting firm forstockholders instead of a paper copy of this Proxy Statement and our 2018 Annual Report on Form10-K (the “Annual Report”). This approach conserves natural resources and reduces our printing and distribution costs, while providing a timely and convenient method of accessing the current fiscal yearmaterials and approve an executive incentive plan governing cash incentive awards forvoting.
The Notice contains instructions on how to access our senior executives. We willmaterials through the internet and also ask our stockholderscontains instructions on how to take advisory votes on the compensationreceive a paper copy of our Named Executive Officersproxy materials, including this Proxy Statement, our 2018 Annual Report, and a form of proxy card or voting instruction card. All stockholders who do not receive a Notice, including stockholders who have previously requested to receive paper copies of proxy materials, will receive a paper copy of the frequency with which we present such advisory votes.proxy materials by mail.
Your vote is important to us and we hope that you will take this opportunity to participate in the affairsimportant. Regardless of the Company. Whether or notwhether you plan to attend the Annual Meeting, we urgehope you to readwill vote as soon as possible. You may vote by proxy by following the accompanying materials that discuss matters to be votedinstructions on and to use either the proxy card or voting instruction form provided tocard. Voting may be done over the internet, by telephone, or by mail (if you to submitreceived paper copies of the proxy materials). Voting by proxy will ensure your vote by proxy. Additional information about voting your shares is included inrepresentation at the Proxy Statement.Annual Meeting regardless of whether you attend.
We look forward to seeing you at the Annual Meeting.
Sincerely,
A. Thomas Bender
Chairman of the Board of Directors
Sincerely, |
A. Thomas Bender |
Chairman of the Board of Directors |
THE COOPER COMPANIES, INC.
6140 Stoneridge Mall Road, Suite 590
Pleasanton, CA 94588
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
|
Meeting Date: | Monday, March | |
Meeting | 8:00 a.m. (PDT) | |
Location: | The
Pleasanton, California | |
Admission: | All stockholders are cordially invited to attend the | |
Agenda: | 1. Elect the nine directors named in the Proxy Statement; 2. Ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending October 31, 2019; 3. Approve the 4. Hold an advisory vote on the compensation of our Named Executive Officers; and 5.
|
Stockholders of record at the close of business on Tuesday, January 17, 2017,22, 2019, or their legal proxy holders, will be entitled to vote at the Annual Meeting.
On or about January 31, 2017,February 6, 2019, we will mail either (1) a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access an electronic copy of our proxy materials and vote your shares or (2) a copy of this Proxy Statement and our Annual Report on Form10-Kfor the fiscal year ended October 31, 2016.2018. The Notice will also contain instructions on how to request a paper copy of our proxy materials.
You may vote by following the instructions on the Notice or by using the proxy card accompanying the paper copy of materials. If phone or internet voting is available to you, instructions will be included on your proxy card.
Your vote is important to usYOUR VOTE IS IMPORTANT TO US.. Regardless of whether you plan to attend the meeting,Annual Meeting, we encourage you to vote your shares as soon as possible to ensure that your vote is recorded. We look forward to your participation.
By Order of the Board of Directors
Carol R. Kaufman
Randal L. Golden, Esq.
Secretary
Dated: January 27, 2017February 1, 2019
Table of ContentsTABLE OF CONTENTS
1 | |||||||
1 | |||||||
1 | |||||||
1 | |||||||
3 | |||||||
5 | |||||||
6 | |||||||
| |||||||
37 | |||||||
47 | |||||||
50 | |||||||
PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 59 | ||||||
PROPOSAL 3 — APPROVAL OF THE 2019 EMPLOYEE STOCK PURCHASE PLAN | 60 | ||||||
EXHIBIT | A-1 |
PROPOSALS TO BE PRESENTED AT THE COOPER COMPANIES, INC.ANNUAL MEETING
Our 2019 Annual Meeting will be held at 8:00 a.m. (PDT) on March 18, 2019 at the offices of The Cooper Companies, Inc., 6140 Stoneridge Mall Road, Suite 590,
Pleasanton, CA 94588California.
This Proxy Statement was provided to all stockholders of record at Tuesday, January 22, 2019 and is presented on our behalf by order of the Board of Directors. It contains information about our Company and the proposals to be presented at the Annual Meeting. We will holdhave also furnished our 2018 Annual MeetingReport to all stockholders of Stockholders (the “Annual Meeting”) on Monday, March 13, 2017 inrecord. The Boardroom at The Rose Hotel, 807 Main Street, Pleasanton, California. The meeting will start at 8:00 a.m. (PDT).Annual Report contains our financial statements for the fiscal year ended October 31, 2018 and other useful information, but it is not part of the materials for the solicitation of proxies.
| ||||
|
| |||
|
|
| ||
|
| |||
|
| |||
|
|
|
Detailed information regarding each of these proposals is presented in this Proxy Statement starting on page 54. Additional information about us, our Board and its committees, equity ownership, compensation of officers and directors, and other matters can be found starting on page 6.
No. | Board Recommendation | Page | ||||||
1 | ELECTION OF NINE DIRECTORS IDENTIFIED BELOW | FOR each director | 53 | |||||
2 | RATIFICATION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | FOR | 59 | |||||
3 | APPROVAL OF THE 2019 EMPLOYEE STOCK PURCHASE PLAN | FOR | 60 | |||||
4 | ADVISORY VOTE ON EXECUTIVE COMPENSATION | FOR | 65 |
We are not aware of any other business to be brought before the meeting. If any additional business is properly brought before the meeting, the designated officers serving as proxies will vote in accordance with their best judgment.
This Proxy Statement was provided to all stockholders of record at Tuesday, January 17, 2017 and is presented on our behalf by order of the Board of Directors. It contains information about ourOther Company and the proposals to be presented at the Annual Meeting. We have also furnished our 2016 Annual Report on Form10-K to all stockholders of record. The Annual Report contains our financial statements for the fiscal year ended October 31, 2016 and other useful information, but it is not part of the materials for the solicitation of proxies.Information
Corporate Governance – page 9
Compensation Discussion & Analysis – page 20
Executive Compensation Tables – page 37
Director Compensation – page 50
You may also find useful information about the Company on our website athttp://www.coopercos.com.www.coopercos.com. Information contained on our website is not, and should not be considered, a part of this Proxy Statement or any other filing or report filed with or furnished to with the Securities and Exchange Commission (the “SEC”).
1
Voting Information
We strongly encourage you to vote.
Your vote is important to us. Regardless of whether you plan to attend the meeting, we encourage you to read this Proxy Statement and the accompanying materials and to vote your shares as soon as possible to ensure that your vote is recorded. We look forward to your participation.
1 | Page |
Who is entitled to vote at the Annual Meeting?
Our Record Date for this year’sthe Annual Meeting is January 17, 2017.22, 2019. All stockholders who owned our stock at the close of business on the Record Date are entitled to receive proxy materials and to vote at the Annual Meeting and any continuations, adjournments or postponements thereof.
As of the Record Date, there were 48,923,30449,339,170 shares of our common stock outstanding and entitled to vote at the Annual Meeting.
How many votes do I have?
Each outstanding share of our common stock is entitled to one vote at the Annual Meeting. You have one vote per share that you owned at the close of business on the Record Date.
How do I vote my shares?
You can vote your shares in person at the Annual Meeting or vote by proxy. The method of voting by proxy differs for shares held as a record holder and shares held in “street name.” If you hold your shares of common stock as a record holder you may vote your shares by following the instructions on the Notice, or by completing, dating, and signing the proxy card included with this Proxy Statement and promptly returning it in thepre-addressed, postage paid envelope provided to you. If phone or internet voting is available to you, instructions are included in the Notice or on your proxy card.
If you hold your shares of common stock in “street name,” which means your shares are held of record by a broker, bank, or other nominee, you will receive the proxy materials from your broker, bank, or other nominee with instructions on how to vote your shares. Your broker, bank, or other nominee may allow you to deliver your voting instructions by phone or through the internet. If you wish to vote your shares in person you may do so by attending the Annual Meeting and requesting a ballot.
What happens if I vote my shares by proxy?
When you return a completed proxy card, or vote your shares by telephone or internet, you authorize our officers listed on the proxy card to vote your shares on your behalf as you direct.
If you sign and return a proxy card, but do not provide instructions on how to vote your shares, the designated officers will vote on your behalf as recommended by the Board:
Shares will be voted FOR each of the individuals nominated to serve as directors;
Shares will be voted FOR ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending October 31, 2019;
Shares will be voted FOR the approval of the 2019 Employee Stock Purchase Plan; and
Shares will be voted FOR the compensation of our Named Executive Officers as described in this Proxy Statement.
2 | Page |
2
Can I change or revoke my vote after I return my proxy card or voting instructions?
If you choose to vote your shares by proxy, you may revoke or change your vote at any time prior to the casting of votes at the Annual Meeting. To revoke or change your vote, you may take any of the following actions:
1. | Execute and submit a new proxy card; |
2. | Submit new voting instructions through telephonic or internet voting, if available to you; |
3. | Notify |
4. | Vote your shares in person at the Annual Meeting. |
Attending the Annual Meeting in person will not automatically revoke your proxy.
How many votes must be present to hold the Annual Meeting?
In order to conduct business and have a valid vote at the Annual Meeting a quorum must be present in person or represented by proxies. A quorum is defined as a majority of the shares outstanding on the Record Date and entitled to vote. In accordance with Delaware law and our Bylaws, broker“non-votes” and proxies reflecting abstentions will be considered present and entitled to vote for purposes of determining whether a quorum is present.
What are broker“non-votes”?
Broker“non-votes” occur when a broker is not permitted to vote on behalf of shares it holds for a beneficial owner and the beneficial owner does not provide voting instructions. Shares held in a broker’s name may be voted by the broker, but only in accordance with the rules of the New York Stock Exchange. Under those rules, the broker must follow the instructions of the beneficial owner. If instructions are not provided, NYSE rules determine whether the broker may vote the shares based on its own judgment or if it is required to withhold its vote, and thevote. This determination depends on the proposal being voted on. For the proposals to be presented at the Annual Meeting, broker discretionary voting is only permitted for the ratification of our independent registered public accounting firm.
Why did I receive aone-page notice in the mail regarding the internet availability of proxy materials instead of a full set of proxy materials?
The SEC permits us to provide our proxy materials electronically if you have not previously requested to receive only printed materials on an ongoing basis. Accordingly, on or about January 31, 2017,February 6, 2019, we mailed a Notice of Internet Availability of Proxy Materials (“the Notice”). The Notice includes instructions on how to access the proxy materials over the internet or to request a printed copy.
3
The Notice was sent to our stockholders of record at January 17, 2017.22, 2019. All stockholders receiving the Notice have the ability to access the proxy materials electronically through the website referred to in the Notice, and they also have the option to request a printed set of the proxy materials. We encourage stockholders to take advantage of the availability of proxy materials on the internet.
3 | Page |
Can I vote my shares by filling out and returning the Notice of Internet Availability of Proxy Materials?
No. The Notice only identifies the items to be voted on at the Annual Meeting. You cannot vote by marking the Notice and returning it. The Notice provides instructions on how to cast your vote.
Who pays for the proxy solicitation and how will the Company solicit votes?
We pay all costs associated with the solicitation of proxies, including any costs incurred by brokers and other fiduciaries to forward proxy solicitation materials to beneficial owners.
We may solicit proxies in person or by mail, telephone, facsimile, ore-mail. Proxies may be solicited on our behalf by any of our directors, officers, or employees. Additionally, we have retained the firm of D.F. King & Co., Inc. to assist with the solicitation of proxies and will pay a fee of $16,500 for this service, plus reasonable costs and expenses.
How can I communicate with the Board of Directors?
Any interested party can contact our Board to provide comments, to report concerns, or to ask a question, at the following address:
Carol R. KaufmanRandal L. Golden
Executive Vice President, Secretary Chief Administrative Officer & Chief Governance OfficerGeneral Counsel
The Cooper Companies, Inc.
6140 Stoneridge Mall Road, Suite 590
Pleasanton, CA 94588
Communications are distributed to the Board, or to any individual directors as appropriate, depending on the facts and circumstances outlined in the communication. You may also communicate online with our Board of Directors as a group through our website. Please refer to our website athttp://www.coopercos.com for any changes in this process.
4 | Page |
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTORStockholder Proposals and Nominations for Director
SEC rules and our Bylaws permit stockholders to nominate directors for election and to propose other business to be considered by stockholders at the Annual Meeting under various mechanisms.
To be considered at the 20182020 Annual Meeting, director nominations or other proposals must be submitted in writing to:
Carol R. Kaufman,Randal L. Golden, Secretary
The Cooper Companies, Inc.
6140 Stoneridge Mall Road, Suite 590
Pleasanton, CA 94588
Proposals to be presented under Rule14a-8:
Proposals to be Presented Under Rule14a-8 and Director Nominations under Bylaw Article II, Section 16 (“Proxy Access”): | No later than October 9, 2019. |
Proposals under Rule14a-8 must be submitted no later than October 3, 2017 to be included in our next Proxy Statement and considered at the 2018 Annual Meeting of Stockholders.
Proposals and Director Nominations and Proposals Submitted Under Other Bylaw Provisions:Proposals under our Bylaws must be submitted no earlier than November 13, 2017 and no later than December 13, 2017.No earlier than November 18, 2019 and no later than December 18, 2019.
In the event that we set the date for the 20182020 Annual Meeting more than 30 days before or more than 70 days after March 13, 2018,18, 2020, submissions may be made no earlier than the close of business on the 120th day prior to the announced meeting date and no later than the close of business on the later of the 90th day prior to the announced meeting date and the 10th day following our first public disclosure of the date of the meeting.
Other Director Nomination Proposals:
The Corporate Governance and Nominating Committee will consider director nominees suggested by stockholders on the same terms as nominees selected by the Committee. See page 89 for information about the Committee’s criteria for director nominations.
The person recommending the nominee must be a stockholder entitled to vote at the 20182020 Annual Meeting, and recommendations must be received in writing between November 13, 2017 and December 13, 2017.
Meeting. To be considered, recommendations must include:
the nominee’s written consent to being named in the Proxy Statement and to serve as a director if elected; |
the name and address of the stockholder submitting the recommendation or the beneficial owner on whose behalf the proposed candidate is being suggested for nomination; |
a statement of the proposed nominee’s qualifications to serve as director; and |
the class and number of our shares owned by the stockholder or beneficial owner submitting the recommendation. |
If we increase the number of directors to be elected at the 20182020 Annual Meeting with less than 100 days’ notice prior to March 13, 201818, 2020, stating the size of the increase and naming all the nominees for director, then stockholder nominations for directors will be considered if the proposal is delivered to our Secretary at our principal offices no later than 10 days after we make a public announcement of the increased board size. This only applies to nominations for positions created by the increase and does not apply to nominations for current positions.
5 | Page |
Principal Securityholders
The following table contains information regarding all individuals or groups who have advised us that they own more than five percent (5%) of the outstanding shares of our common stock. Information is presented is as of January 27, 2017.22, 2019.
Name & Address of Beneficial Owner | Aggregate Number of Shares Beneficially Held | Percentage of Shares | ||
Massachusetts Financial Services Company(1) 111 Huntington Avenue Boston, MA 02199 | 5,402,120 | 11.200% | ||
FMR LLC(2) 245 Summer St. Boston, MA 02210 | 5,108,496 | 10.654% | ||
BlackRock, Inc. (4) 55 East 52nd Street New York, NY 10022 | 3,024,777 | 6.200% | ||
T. Rowe Price Associates, Inc.(3) 100 E. Pratt Street Baltimore, MD 21202 | 3,914,339 | 8.100% | ||
Vanguard Group, Inc.(5) 100 Vanguard Blvd. Malvern, PA 19355 | 3,465,672 | 7.220% |
Name & Address of Beneficial Owner
| Aggregate Number
| Percentage of Shares
| ||
T. Rowe Price Associates, Inc. (1) 100 E. Pratt Street Baltimore, MD 21202
| 5,636,279 | 11.5% | ||
Vanguard Group, Inc. (2) 100 Vanguard Blvd. Malvern, PA 19355
| 5,122,120 | 10.48% | ||
BlackRock, Inc. (3) 55 East 52nd Street New York, NY 10022
| 3,616,339 | 7.4% | ||
Massachusetts Financial Services Company (4) 111 Huntington Avenue Boston, MA 02199
| 2,662,207 | 5.4% | ||
Generation Investment Management LLP (5) 20 Air Street, 7th Floor London, United Kingdom W1B 5AN
| 2,535,141 | 5.2% | ||
State Street Corporation (6) One Lincoln Street Boston, Massachusetts 02111 | 2,507,949 | 5.12% |
(1) | Based on information disclosed in a Schedule |
(2) | Based on information disclosed in a Schedule 13G/A filed by |
(3) | Based on information disclosed in a Schedule 13G/A filed by BlackRock, Inc. on |
(4) | Based on information disclosed in a Schedule 13G/A filed by |
(5) | Based on information disclosed in a Schedule |
6 | Page |
power to dispose of or direct the disposition of |
(6) | Based on information disclosed in a Schedule 13G filed by State Street Corporation on February 14, 2018. State Street Corporation has the shared power to dispose of or direct the disposition of and to vote or direct the voting of all 2,507,949 of these shares. |
6
The following table contains information regarding ownership of our common stock by each of our directors, the executives named in the Summary Compensation Table, and all of the current directors and executive officers as a group. The figures in this table represent sole voting and investment power except where otherwise indicated.
Common Stock Beneficially Owned as of January 17, 2017 | ||||||||||||||
Name of Beneficial Owner | Number of Shares | Percentage of Shares | ||||||||||||
A. Thomas Bender | 47,894 | (1) | * | |||||||||||
Colleen E. Jay | 500 | (2) | * | |||||||||||
Michael H. Kalkstein | 35,306 | (3) | * | |||||||||||
Carol R. Kaufman | 117,783 | (4) | * | |||||||||||
William A. Kozy | 770 | (5) | * | |||||||||||
Jody S. Lindell | 63,117 | (6) | * | |||||||||||
Daniel G. McBride | 62,043 | (7) | * | |||||||||||
Gary S. Petersmeyer | 10,912 | (8) | * | |||||||||||
Allan E. Rubenstein, M.D. | 17,794 | (9) | * | |||||||||||
Robert S. Weiss | 279,511 | (10) | * | |||||||||||
Albert G. White III | 55,952 | (11) | * | |||||||||||
Stanley Zinberg, M.D. | 40,214 | (12) | * | |||||||||||
All current directors and executive officers as a group (14 persons) | 764,403 | 1.6% |
Common Stock Beneficially Owned as of January 22, 2019 | ||||||||||||
Name of Beneficial Owner | Number of Shares | Percentage of Shares | ||||||||||
Brian G. Andrews
|
| 11,686
|
|
| (1
| )
| * | |||||
Robert D. Auerbach, M.D.
|
| 9,125
|
|
| (2
| )
| * | |||||
A. Thomas Bender
|
| 33,087
|
|
| (3
| )
| * | |||||
Colleen E. Jay
|
| 4,987
|
|
| (4
| )
| * | |||||
Michael H. Kalkstein
|
| 36,062
|
|
| (5
| )
| * | |||||
Carol R. Kaufman
|
| 90,875
|
|
| (6
| )
| * | |||||
William A. Kozy
|
| 5,257
|
|
| (7
| )
| * | |||||
Jody S. Lindell
|
| 55,838
|
|
| (8
| )
| * | |||||
Daniel G. McBride
|
| 97,871
|
|
| (9
| )
| * | |||||
Gary S. Petersmeyer
|
| 8,169
|
|
| (10
| )
| * | |||||
Allan E. Rubenstein, M.D.
|
| 4,584
|
|
| *
|
| ||||||
Holly R. Sheffield
|
| -
|
| * | ||||||||
Robert S. Weiss
|
| 312,491
|
|
| (11
| )
| * | |||||
Albert G. White III
|
| 102,906
|
|
| (12
| )
| * | |||||
Stanley Zinberg, M.D.
|
| 30,619
|
|
| (13
| )
| * | |||||
All current directors and executive officers as a group (17 persons) | 833,833 | 1.7 | % |
* | Less than 1% ownership. |
(1) | Includes |
(2) | Includes 5,326 shares which Dr. Auerbach could acquire upon the exercise of currently exercisable stock options. |
(3) | Includes 14,950 shares which Mr. Bender could acquire upon the exercise of currently exercisable stock options. |
(4) | Includes |
(5) | Includes 26,591 shares which Mr. Kalkstein could acquire upon the exercise of currently exercisable stock options; all of these exercisable options are held by an estate planning trust in which Mr. Kalkstein maintains 50% or greater control. |
7 | Page |
(6) | Includes |
(7) | Includes |
(8) | Includes |
(9) | Includes |
(10) | Includes |
(11) | Includes |
(12) | Includes |
(13) | Includes |
7
8 | Page |
Board Facts: | ||||||
|
| |||||
• 7 independent directors |
| |||||
• 2 women | ||||||
• Separate Lead Director & Chairman
| ||||||
Our Board of Directors has nine members, each of whom stands for election annually. All of our directors, except Messrs. Weiss and White, have been determined by the Board to be independent. In making this determination, the Board has affirmed that each of the independent directors meets the objective requirements for independence set forth by the NYSE and the SEC, and that each has no relationship to the Company, either directly or indirectly, other than as a stockholder of the Company or through their service on the Board. The Board and its committees conduct regular self-evaluations and review director independence and committee composition to ensure continued compliance with regulations.
Directors who are not also employees, orNon-Employee Directors, are compensated for their services as described in the section headedDirector Compensation on page 50. Mr. WeissWhite serves as our Chief Executive Officer and receives no additional compensation for his service on the Board. His compensationMr. Weiss was compensated as an employee through December 2018 and is considered aNon-Employee Director as of January 1, 2019. Compensation for both Messrs. Weiss and White is discussed in more detail in ourCompensation Discussion & Analysis and executive compensation disclosures starting on page 19.37.
Under our Corporate Governance Principles, directors are not permitted to serve on the boards of more than two other public companies while they serve on our Board. We do not limit service on private company boards of directors or withnon-profit organizations.
Identification of Candidates
The Corporate Governance and Nominating Committee is responsible for identification and selection of qualified candidates for nomination to the Board. The Committee believes that nominees for election to the Board must possess certain minimum qualifications and attributes.
To be nominated for election, an individual must:
(i) | meet the objective independence requirements set forth by the SEC and NYSE (other than executive nominees); |
(ii) | exhibit strong personal integrity, character, and ethics and a commitment to ethical business and accounting practices; |
(iii) | not serve on more than two other public company boards; |
(iv) | not be involved inon-going litigation with us or be employed by an entity which is engaged in such litigation; and |
(v) | not be the subject of anyon-going criminal investigations, including investigations for fraud or financial misconduct. |
The Corporate Governance and Nominating Committee does not currently maintain a separate diversity policy regarding nominees for director. Instead the Committee relies on diversity as one of many factors in the consideration of director nominees who meet these stated criteria.
The Corporate Governance and Nominating
9 | Page |
Committee will consider suggestions from stockholders for nominees for election as directors at our Annual Stockholder Meetings on the same terms as
8
nominees selected by the Committee. Stockholder suggestions must be received on a timely basis and meet the criteria set forth in the information onStockholder Proposals and Nominations for Director on page 5.
As of the date of this Proxy Statement, no stockholder suggestions for director nominees have been received by the Corporate Governance and Nominating Committee. Except as set forth above, the Corporate Governance and Nominating Committee does not currently have a formal process for identifying and evaluating nominees for directors, including nominees recommended by stockholders.
Board Leadership Structure
We maintain separate positions for the Chairman and Chief Executive Officer (CEO). We also maintain an independent Lead Director position, which is currently held by Dr. Allan E. Rubenstein.
We feel this division provides a balance between the independence of our directors and the experience of our officers. Our current Chairman has significant business experience with the Company, but has also been affirmatively determined to be independent by our Board. We feel that maintaining an independent Chair provides for strong, knowledgeable leadership of the Board separate from the CEO position’s immediate,day-to-day involvement with the Company.
Board Committees
Board Committees
The Board currently maintains fourthree standing committees as described below. Committee membership is determined by the Board and reviewed regularly.
As required by the SEC and NYSE, all members of our Audit Committee, Corporate Governance and Nominating Committee, Audit Committee, and Organization and Compensation Committee are independent directors. At the Board’s discretion, other committees may include directors who have not been determined to be independent. Currently the Board maintains one committee, the Science and Technology Committee, which hasnon-independent director membership.
Audit | Corporate Governance & | Organization & | ||||||||||
A. Thomas Bender (Chairman) | ||||||||||||
Allan E. Rubenstein, M.D. (Lead Director) | ❖ | |||||||||||
Colleen E. Jay | ◆ | ◆ | ||||||||||
Michael H. Kalkstein | ◆ | ◆ | ❖ | |||||||||
William A. Kozy | ◆ | ◆ | ||||||||||
Jody S. Lindell | ❖ | ◆ | ||||||||||
Gary S. Petersmeyer | ◆ | ◆ | ||||||||||
Robert S. Weiss | ||||||||||||
Albert G. White III | ||||||||||||
Stanley Zinberg, M.D. | ◆ |
❖ | - Committee Chair |
Each committee maintains a written charter detailing its authority and responsibilities. These charters are updated periodically as legislative and regulatory developments and business circumstances warrant. The committee charters are available in their entirety on our website athttp://www.coopercos.com.www.coopercos.com.
| ||||||||||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
| ||||||||||||||||||||
|
❖ - Committee Chair
9
The Audit Committee provides advice with respect to our financial matters and assists the Board in fulfilling its oversight responsibilities regarding: (i) the quality and integrity of our financial statements, (ii) our compliance
10 | Page |
with legal and regulatory requirements, (iii) review of our potential risk factors, (iv) the qualifications, independence, and performance of the independent registered public accounting firm serving as auditors of the Company, (v) retention and engagement of the independent registered public accounting firm, and (vi) the performance of the Company’s Internal Audit function and internal controls. The Audit Committee advises and makes recommendations to the Board regarding our financial, investment, and accounting procedures and practices.
The Organization and Compensation Committeereviews and approves all aspects of the compensation paid to our Chief Executive Officer and all executives identified by the Organization and Compensation Committee as officers under Section 16(a) of the Exchange Act. The Organization and Compensation Committee also approves all compensation for employees whose total combined annual base salary plus targetnon-equity incentive bonus is $500,000$750,000 or greater, regardless of whether they have been designated as officers under Section 16(a). Members of the Organization and Compensation Committee are not eligible to participate in any of our executive compensation programs.
The Organization and Compensation Committee also approves the composition of our designated comparative peer group for comparative compensation review, approves all awards under our equity andnon-equity incentive bonus plans, and has approval authority for all agreements providing for the payment of benefits following a change in control of the Company, severance following a termination of employment, or any other special arrangement with the executive officers or employees which would affect their compensation. The Organization and Compensation Committee also oversees succession planning, diversity & inclusion, and management development programs designed to strengthen our internal pool of candidates for executive level positions and promote mentoring of senior level employees.
The Corporate Governance and Nominating Committee develops, implements, and maintains the corporate governance standards by which we conduct business, and advises and makes recommendations to the Board concerning our primary governance policies. The Corporate Governance and Nominating Committee meets with the Chief Executive Officer and senior corporate staff as it deems appropriate to fulfill its obligations with regard to our corporate governance standards. The Corporate Governance and Nominating Committee also performs the functions described underIdentification of Candidates on page 8.9.
The Science and Technology Committee evaluates new and existing technologies. The Science and Technology Committee’s primary functions are to: (i) discuss technology that falls outside the usual scope of current business, (ii) periodically review our research and development projects and portfolio, (iii) annually review our key technologies and assess the position of these technologies versus third party products and processes, and (iv) provide information and guidance to the Board on matters relating to science and technology. The Science and Technology Committee functions on an ad hoc basis.
10
Meetings
The Board and its committees met as follows during our most recent fiscal year:
Number of Meetings | |||||
Board of Directors | |||||
Audit Committee | 8 | ||||
Organization | |||||
Corporate Governance | |||||
| 3 |
TheNon-Employee Directors hold executive sessions in connection with regular meetings of the Board and more often as they deem appropriate. Either Mr. Bender, as Chair, or Dr. Rubenstein, as Lead Director, presides over executive sessions.
During the 20162018 fiscal year, each director attended at least 90% of the board meetings and meetings of committees on which the director served. Currently we do not maintain a formal policy regarding director attendance at the Annual Meeting.
11 | Page |
Corporate Governance Policies
We have an ongoing commitment to good governance and business practices. In furtherance of this commitment, we regularly monitor developments in the area of corporate governance and review our policies and procedures in light of such developments. We seek to comply with the rules and regulations promulgated by the SEC and the NYSE and implement other corporate governance practices we believe are in the best interest of the Company and its stockholders. In keeping with this commitment, our corporate Bylaws include a majority voting standard for the election of our directors and we maintain various corporate policies that reflect our dedication to good governance. Additionally, we allowed our stockholder rights plan to expire by its terms at the end of the 2017 fiscal year and we have recently adopted amendments to our Bylaws to include proxy access provisions. We believe that the policies currently in place enhance our stockholders’ interests.
Corporate Governance Principles
The Board has approved a set of Corporate Governance Principles for the Company. The Principles are available in their entirety on our website athttp://www.coopercos.com. The Principles set out our standards for director qualifications, director responsibilities, Board committees, director access to officers and employees, director orientation and continuing education, and performance evaluations of the Chief Executive Officer and of the Board and its committees.
The Principles also address compensation and stock ownership requirements for ourNon-Employee Directors. These topics are discussed in more detail in the section onDirector Compensationstarting on page 50.
Ethics and Business Conduct Policy
We have adopted an Ethics and Business Conduct Policy, or Ethics Policy, which is available in its entirety on our website athttp://www.coopercos.com. All our employees, officers, and directors, including the Chief Executive Officer and Chief Financial Officer, are required to adhere to the Ethics Policy in discharging their work-related responsibilities. Employees are encouraged to report any conduct that they believe in good faith to be an actual or apparent violation of the Ethics Policy.
The Ethics Policy includes provisions relating to: (i) conflicts of interest;interest, (ii) the protection and proper use of Company assets;assets, (iii) relationships with customers, suppliers, competitors and associates;
11
associates, (iv) government relations and anti-corruption regulations;regulations, and (v) and compliance with laws and regulations, including laws and regulations relating to insider trading, equal employment opportunity, harassment, health and safety. We most recently updated the Ethics Policy in July 2014 with revisions to enhance readability and to provide additional detail regarding the Company’s expectations regarding the conduct of our employees, officers and directors and reporting of violations.
The Ethics Policy is translated into multiple languages to facilitate readability for our employees and all employees receive a copy of the Ethics Policy both at their date of hire and annually. The Ethics Policy is also posted on our internal web pages for ease of access.
Amendments to the Ethics Policy and any waivers from the Ethics Policy granted to directors or executive officers will be made available through our website. As of the date of this proxy statement, no waivers or requests have been requested or granted.
Stock Trading Policy: Hedging & Pledging
We have implemented a Stock Trading Policy that applies to our senior executives, including our Named Executive Officers, and all members of the Board of Directors. Under this Policy, trading in Company securities is prohibited except during specifically designated windows. Additionally, executives and members of the Board are prohibited from engaging in various trading practices which would suggest speculation in our securities, including short sales, puts, calls, forward sales, equity swaps, or other hedging transactions. Our policy does permit executives and members of the Board to pledge securities as collateral, but only upon prior notice to, and approval from, the Company.
12 | Page |
Procedures for Handling Accounting Complaints
The Audit Committee has established procedures for receipt and handling of potential complaints we may receive regarding accounting, internal accounting controls, or auditing matters, and to allow for the confidential, anonymous submission by our employees of concerns regarding accounting or auditing matters. In furtherance of this goal, we have established a confidential reporting system managed by an independent third-party vendor through which employees may report concerns about our business practices. The reporting system provides both a telephone hotline and online reporting options in multiple languages.
Board of Directors’ Role in Risk Oversight
Our Board of Directors recognizes the importance of appropriate oversight of potential business risks in running a successful operation and meeting its fiduciary obligations to our business and our stockholders. While our management team has responsibility for theday-to-day assessment and management of potential business risks, the Board maintains responsibility for creating an appropriate culture of risk management and setting the proper “tone at the top.”
In this function, the Board, directly and through its committees, takes an active role in overseeing our aggregate risk potential and in assisting management with addressing specific risks, including competitive, legal, regulatory, operational, and financial risks. Each committee of the Board regularly reviews risks related to its area of focus as follows:
The Audit Committee reviews potential risks within our financial operations, information technology systems, and internal controls;
12
planning.
Each committee reports regularly to the Board on these topics and contributes to the overall Board review of potential business risks.
The Board believes that its current leadership structure and majority independent membership facilitate risk oversight by combining experienced leadership with independent direction from the Board and committees. Both our Chairman and our CEO havein-depth understanding of our history and specific challenges we face as a business. Our CEO’s experienceday to day involvement with operations allows him to promptly identify and raise key business risks to the Board and our Chairman’s history with the Company provides the Board with an independent voice who can also provide insight into management decisions and market dynamics based on our specific business operations. The Board believes that the balance between our Chairman, CEO, Lead Director, and the independent committees of the Board enhances our risk oversight process and appropriately limits levels of risk within our enterprise.
Additionally, we maintain both an internal Risk Committee, and a Chief Governance Officer position. Our Risk Committee is composed of members of senior management, andwhich is responsible for the review of our potential and identified business risks. Regular reports from theThe Risk Committee are presentedprovides reports to the Board of Directors. The Chief Governance Officer holds responsibility for ensuring compliance trainingDirectors, and communication of key policies to our employees. Thethe Board feels that the appointment of executive officers that aremaking senior management directly responsible for monitoring risk and compliance issues ensures active positions dedicatedmanagement dedication to the identification of potential business risks andrisks. It also enhances the “tone at the top” message of the importance of risk oversight, governance, and compliance.compliance within the Company.
Risk and Executive Compensation
Our Organization and Compensation Committee reviews and assesses the possible risks related to our executive compensation programs. Based on this assessment, the Organization and Compensation Committee has
13 | Page |
concluded that the structure of our compensation program structure does not create unreasonable risk or the likelihood of a material adverse impact on the Company. In making this determination, the Organization and Compensation Committee considered possible compensation-based risks and means by which potential risks may be mitigated, including through the operation of our internal control structure and the Committee’s oversight. The Organization and Compensation Committee also considered the structure of our compensation plans, including the use of a combination of short- and long-term compensation programs, equity ownership guidelines for our senior executives, capped bonus targets under short-term incentive plans, and clawback provisions for short-term bonus awards.
Management Succession Planning
At least annually, and more often as deemed appropriate, the Organization and Compensation Committee meets with management to discuss plans for CEO succession as well as possible succession plans for senior management.our executive management, including our CEO. Succession plans are designed to allow for an orderly transition of the top executive posts either in the ordinary course of business or in response to emergency situations. Management develops and presents plans for identification, mentoring, and continuing development of appropriate leadership skills forpotential internal candidates for CEO and other
13
executive leadership positions. The Committee provides oversight, input, and recommendations with regard to the criteria to be used for identification of potential candidates for succession to leadership positions. The Committee also meets with individual members of management occasionally throughout the year to assess leadership development within the executive team.
Related Party Transactions
We review all relationships and transactions in which the Company and our directors and executive officers or their immediate family members are participants. The Company’s legal and governance staff is primarily responsible for monitoring and obtaining information from the directors and executive officers with respect to related personparty transactions and for then determining, based on the facts and circumstances, whether the Company or a related personparty has a direct or indirect material interest in the transaction.
KPMG LLP, as our independent registered public accounting firm, reviews our controls around the identification and reporting of related party transactions as required by current accounting standards.
The Corporate Governance and Nominating Committee of our Board reviews and approves or ratifies all transactions between the Company and related personsparties that are required to be disclosed under SEC rules, and we disclose such transactions in our Proxy Statement.
We have determined that there were no material related party transactions during the 20162018 fiscal year.
Compensation Committee Interlocks and Insider Participation
During the 20162018 fiscal year, all of the members of the Organization and Compensation Committee were independent directors, no member was an employee or former employee of the Company, and no Committee member had any relationship requiring disclosure as a related party transaction. Also, none of our executive officers served on the compensation committee (or its equivalent) or board of directors of another entity whose executive officer served on the Organization and Compensation Committee.
14 | Page |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers, directors, and anyone owning more than ten percent of a registered class of our equity securities to file reports with the SEC detailing their ownership and any changes in ownership. SEC regulations also require these persons to provide us with a copy of all reports filed.
Based solely on our review of the copies of reports and related amendments we have received, we believe that during and with respect to the 20162018 fiscal year, all Section 16(a) filing requirements applicable to our officers, directors andgreater-than-ten-percent owners were met.
14
15 | Page |
Our Audit Committee currently has four members: Jody S. Lindell (Chair), Michael H. Kalkstein, William A. Kozy, and Gary S. Petersmeyer. Our Board has determined that all members of the Audit Committee are independent directors and are financially literate as required by the NYSE. Our Board has also determined that Ms. Lindell meets the qualifications of an audit committee financial expert as defined by the SEC.
The Audit Committee operates under a written charter adopted by the Board in December 2003 and most recently amended in March 2016.2017. The Audit Committee’s charter is available in its entirety on our website athttp://www.coopercos.com.www.coopercos.com.
The Audit Committee’s primary duties and responsibilities relate to:
The reliability and integrity of our accounting policies and financial reporting and financial disclosure practices;
The Audit Committee provides advice with respect to our financial matters and assists the Board in fulfilling its oversight responsibilities regarding: (i) the quality and integrity of our financial statements, (ii) our compliance with legal and regulatory requirements, (iii) review of our potential risk factors, (iv) the qualifications, independence and performance of KPMG LLP (“KPMG”), in its role as our independent registered public accounting firm, (v) retention and engagement of KPMG, and (vi) the performance of our internal audit function and review of our internal controls.
Management is responsible for the Company’s internal controls and the financial reporting process. The Committee has engaged Ernst & Young LLP (“EY”), to assist in the assessment of the Company’s internal controls over financial reporting and to provide internal audit services. Such services provided by EY are jointly directed by management and the Audit Committee.
KPMG, as the Company’s independent registered public accounting firm, is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and to issue a report on the audit process. The Audit Committee’s responsibility is to monitor and oversee these processes. In this context, the Audit Committee has met and held discussions with management and KPMG regarding the fair and complete presentation of the Company’s financial results.
The Audit Committee held 8 meetings during the 20162018 fiscal year, including regular meetings in conjunction with the close of each fiscal quarter, during which the Audit Committee reviewed and discussed the Company’s financial statements with management and KPMG. These Audit Committee meetings routinely include executive sessions of the committee, as well as private sessions with each of KPMG, Internal Audit, EY, and management.
The Audit Committee reviewed and discussed the audited consolidated financial statements of the Company for the fiscal year ended October 31, 20162018 with management and KPMG, and management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with United States generally accepted accounting principles (GAAP). The Audit Committee discussed with KPMG the matters required to be discussed by the Public Company Accounting Oversight Board Auditing Standard No. 16 “Communication with Audit Committees.”
15
16 | Page |
The Audit Committee also reviewed and discussed with KPMG, Internal Audit, EY, and management the processes and procedures associated with our assessment of internal controls over financial reporting, including management’s assessment of such controls.
The Audit Committee maintains policies and procedures for thepre-approval of work performed by KPMG. Under its charter, the Audit Committee must approve all engagements in advance. All engagements with estimated fees above $150,000 require consideration and approval by the full Audit Committee. The Chair of the Audit Committee has the authority to approve on behalf of the full Audit Committee all engagements with fees estimated to be below $150,000. Management recommendations are considered in connection with such engagements, but management has no authority to approve engagements.
In the 20162018 fiscal year, the Audit Committee received both the written disclosures and the letter from KPMG that are mandated by applicable requirements regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and the Audit Committee discussed KPMG’s independence from the Company with the lead engagement partner. The Audit Committee or its Chair approved all audit services provided by KPMG for the fiscal year ended October 31, 2016.2018. The total fees paid or payable to KPMG for the last two fiscal years are as follows:
Fiscal Year Ended | Fiscal Year Ended | |||||||
October 31, 2016 | October 31, 2015 | October 31, 2018 | October 31, 2017 | |||||
Audit Fees | $4,140,000 | $4,105,000 | $5,304,315 | $4,539,800 | ||||
Audit Related Fees | $-0- | $-0- | $-0- | $-0- | ||||
Tax Fees | $-0- | $-0- | $-0- | $-0- | ||||
All Other Fees | $-0- | $-0- | $-0- | $-0- |
Based on the Audit Committee’s discussions with KPMG, Internal Audit, EY, and management, the Audit Committee’s review of the representations of management, the certifications of the Chief Executive Officer and Chief Financial Officer, and the written disclosures and the letter from KPMG to the Audit Committee, the Audit Committee recommended to the Board that our audited consolidated financial statements be included in our Annual Report on Form10-K for the fiscal year ended October 31, 20162018 for filing with the SEC.
THE AUDIT COMMITTEE
Jody S. Lindell (Chair)
Michael H. Kalkstein
William A. Kozy
Gary S. Petersmeyer
16
17 | Page |
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is information regarding our current executive officers and other senior employees named in this Proxy Statement who are not also directors. The individuals listed below served in the positions set forth as of the date the Notice was mailed.
DANIEL G. MCBRIDE | Age: 54 | |||
|
Mr. McBride has served as Executive Vice President and Chief Operating Officer since November 2013 and as the President of CooperVision, our contact lens subsidiary since February 2014. He previously served as our Chief Risk Officer from July 2011 through October 2013, as our General Counsel from November 2007 through January 2014, and as Vice President from July 2006 through October 2013. He also served as Senior Counsel from February 2005 through November 2007. Prior to joining Cooper, Mr. McBride was an attorney with Latham & Watkins LLP from October 1998 to February 2005, concentrating on mergers and acquisitions and corporate finance matters. He holds a B.S. in Finance from Santa Clara University and a J.D. from Stanford Law School.
| Age: 40 | |||
|
Mr. WhiteAndrews has served as Senior Vice President, Chief Financial Officer & Treasurer since May 2018. He has served as our Treasurer since January 2013 and Vice President since November 2016.2014. He also serves as Executive Vice President and Chief Strategy Officer, positions he has held since December 2015 and July 2011, respectively. Since August 2015, Mr. White also oversees and directs our women’s healthcare business and is currently Chief Executive Officer of Cooper Medical, Inc., the parent company to CooperSurgical, Inc. Previously, he served as Vice President, Investor RelationsGlobal Logistics and Service for CooperSurgical, a position he held from November 2007 through March 2013 andJune 2017 to May 2018. Mr. Andrews previously served as Vice President andAssistant Treasurer for the Company from April 2006 throughto December 2012. Prior to joining the Company, Mr. White was a Director withCooper, he served held various corporate and investment banking positions at KeyBanc Capital Markets for three yearsfrom 2002 to 2006 and heldat ING Barings from 2000 to 2001. He holds a number of leadership positions within KeyBank National Association over the prior eight years.B.A. in Economics from Columbia University.
| Age: 48 | |||
Ms. Kaufman has servedSheffield joined Cooper as Executive Vice President since July 2012& Chief Strategy Officer in June 2018. Prior to joining Cooper, Ms. Sheffield had over 20 years of experience in investment banking. She joined Cooper from UBS Securities LLC, where she was a Managing Director, Global Head of Medical Technology from 2009 to May 2018. From 2000 to 2009, Ms. Sheffield was at Credit Suisse and Chief Governance Officer since March 2013. She previously served as Senior Vice President of Legal Affairs from December 2004 to July 2012. She has also served as Vice President1997-2000, Ms. Sheffield was at Donaldson, Lufkin & Jenrette until it was acquired by Credit Suisse. Ms. Sheffield received a B.S. from Cornell University and Chief Administrative Officer since October 1995 and as Vice President of Legal Affairs and Secretary since March 1996. From January 1989 through September 1995, she served as Vice President, Secretary and Chief Administrative Officer of Cooper Development Company, a healthcare and consumer products company. She previously held a variety of financial positions with Cooper Laboratories, Inc. (our former parent) since joining that company in 1971. Ms. Kaufman currently serves as a director for Insperity, Inc. (NYSE: NSP), a publicly traded provider of human resources outsourcing options, and is a member of its finance, risk management and audit committee. She formerly served as a director of Chindex International, Inc. (NASDAQ: CHDX) and as a member of its audit and compensation committees and chaired the nominating and corporate governance committees. She also served as a member of the Special Transaction Committee in connection with sale of Chindex to TPG in 2014.
17
RANDAL L. GOLDEN, ESQ. | Age: 57 | |||||
Mr. Golden has served as Corporate Secretary since May 2018 and has also served as Vice President since November 2014 and as our General Counsel from February 2014. He previously served as our Assistant General Counsel from May 2013 through January 2014. He also served as senior counselSenior Counsel from March 2010, when he joined the Company, until May 2013. Prior to joining Cooper, he served as Senior Director & Legal Counsel at Align Technology, Inc. from 2005 through 2010 and as Director of Legal Affairs & Senior Counsel with Nokia, Inc. from 2000 to 2005. Mr. Golden also held various associate and senior legal positions prior to 2000, focusing on litigation and commercial and business law. He holds a B.S. in Finance from the University of Illinois and a J.D. from the U.C.L.A. School of Law.
18 | Page |
AGOSTINO RICUPATI | Age: 52 | |||
Senior Vice President, Finance & Tax And Chief Accounting Officer |
Mr. Ricupati has served as our Chief Accounting Officer since October 2017 and as Senior Vice President, Finance & Tax since July 2017. Mr. Ricupati previously served as Vice President, Tax for the Company from July 2013 to July 2017. Prior to joining Cooper, he served as International Tax Director for Intel Corp. (NASDAQ: INTC) from 2010 to 2013 and in various other senior finance and tax positions over the past 20 years. He holds a masters degree from DePaul University and is a Certified Public Accountant.
ROBERT D. AUERBACH, M.D. | Age: 58 | |||||||
Mr. Remmell has been Chief Executive Officer of CooperSurgical, our women’s healthcare business, since January 2012, andDr. Auerbach has served as President of CooperSurgical, Inc., the Company’s women’s healthcare division, since December 2004. He previouslyApril 2018. Previously, he served as Executive Vice President, Chief OperatingMedical Officer & Chief Strategy Officer of CooperSurgical from October 2000since May 2005. Prior to January 2012joining CooperSurgical, Dr. Auerbach served as Associate Clinical Professor in the Department of Obstetrics, Gynecology & Reproductive Services at the Yale School of Medicine, New Haven, CT. In 2005 he was the recipient of Yale’s Francis Gilman Blake Award as the most outstanding teacher of the medical sciences and was elected to the Society of Distinguished Teachers. He remains an adjunct faculty member of the School of Medicine and as Vice Presidentan Executive Board member of FinanceYale University’s Center for Biomedical Innovation and Technology. Dr. Auerbach graduated Phi Beta Kappa and Alpha Omega Alpha with highest honors from 1991 to December 2004.the Lehigh-Hahnemann6-yearBA-MD program in Philadelphia (1984), and completed his internship and a residency in Obstetrics & Gynecology at the Yale School of Medicine, New Haven, CT.
19 | Page |
REPORT OF THE ORGANIZATION AND COMPENSATION COMMITTEE
18The Organization and Compensation Committee of the Board has reviewed and discussed the Compensation Discussion and Analysis with management. Based on this review and discussion, the Organization and Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in our Annual Report on Form10-K for the fiscal year ended October 31, 2018.
Michael H. Kalkstein (Chair)
Colleen E. Jay
Jody S. Lindell
Gary S. Petersmeyer
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis describes our philosophy, strategies, policies and practices for compensating our Named Executive Officers.Officers (“NEOs”).
The Organization and Compensation Committee of our Board of Directors (referred to below as the Compensation Committee)“OCC”) oversees our executive compensation program andprogram. In this capacity, the OCC regularly reviews our program to ensure that we maintain an effective and appropriate link between pay and performance. The Compensation Committee monitors for compensation-related risksperformance, and that our compensation practices do not encourage practices that could have a material adverse effect on the Company.
This oversight responsibility is described in more detail throughout this Compensation Discussion and Analysis, includingwhich also includes information regarding our compensation governance policies and practices, the outcome of our most recent stockholder advisory vote on named executive officerNEO compensation (the“Say-on-Pay” vote), the use of compensation consultants, and the selection and composition of our peer group.
Our Named Executive Officers
Our Named Executive OfficersNEOs for the 20162018 fiscal year are listed below with the titles they held duringat the end of the fiscal year. Mr. Matz announced his intention to retire from the Company in September 2016 and stepped down from his position effective November 1, 2016. He continues as an active Senior Vice President through early 2017. Mr. White has been appointed to be Chief Financial Officer in addition to his titles below.
Name
| Title | |
| ||
| ||
Albert G. White III | President & Chief Executive Officer | |
Brian G. Andrews | Senior Vice President, Chief Financial Officer & Treasurer | |
Daniel G. McBride | Executive Vice President & Chief Operating Officer / President of CooperVision, Inc. | |
Holly R. Sheffield | Executive Vice President & Chief Strategy Officer | |
| President, CooperSurgical, Inc. | |
Robert S. Weiss | Former President & Chief Executive Officer | |
Carol R. Kaufman | Former Executive Vice President, Secretary, Chief Administrative Officer & Chief Governance Officer | |
|
20 | Page |
The Year in Review
Management Transition – Succession Planning Implementation
The 2018 fiscal year included significant management transitions for Cooper. Robert S. Weiss and Carol R. Kaufman announced their retirements in the second quarter of 2018. Mr. Weiss served as our President & Chief Executive Officer and Ms. Kaufman served as our Executive Vice President, Secretary, Chief Administrative Officer & Chief Governance Officer until May 1, 2018. Both continued as employees, in anon-executive advisory capacity, through the end of December 2018 to assist with the executive transition. Additionally, Paul Remmell stepped down in May 2018 as President of CooperSurgical.
As a result of ongoing succession planning efforts, overseen by the OCC, we were able to promote internal talent to address most open positions. Mr. White was promoted to replace Mr. Weiss as President & Chief Executive Officer in May 2018. Mr. Andrews, our Vice President & Treasurer, was selected to succeed Mr. White as Chief Financial Officer, and Dr. Auerbach was promoted from Executive Vice President, Chief Strategy Officer & Chief Medical Officer of CooperSurgical to take the role of President, CooperSurgical. Additionally, Ms. Sheffield was hired as our Executive Vice President & Chief Strategy Officer, taking on responsibility for corporate strategy, business development and global human resources, and Randal Golden was appointed as our corporate Secretary in addition to his role as our Vice President & General Counsel.
Financial and Operational HighlightsPerformance Against 2018 Goals
Our annual targets are set based on both annual and long-term objectives focused on revenue growth, strategic investment, and continued market share growth. We achieved at least 97% of our financial targets for all 2018 executive compensation and exceeded our free cash flow goal. We also continued to set new records for revenue,non-GAAP earnings per share, and cash flow.
2018 Financial Highlights
| ||||||||
Budget Target
| Actual
| Change YoY*
| % of Budget Target
| |||||
Revenue:
| $2.542 billion
| $2.533 billion
| Up 7%
| 99.4%
| ||||
CooperVision:
| $1.874 billion
| $1.882 billion
| Up 8%
| 100.1%
| ||||
CooperSurgical:
| $668.2 million
| $650.8 million
| Up 2%
| 97.5%
| ||||
EPS(1):
| $2.81
| Down 63%
| ||||||
Non-GAAP EPS(1):
| $11.61
| $11.50
| Up 19%
| 99.1%
| ||||
Free Cash Flow:
| $463.0 million
| $475.3 million
| Up 2%
| 102.7%
| ||||
Stock Price (10/31):
| $258.31
| Up 8%
|
* | YoY comparison presented pro forma |
(1) | Earnings per share were impacted by charges related to the 2017 Tax Cuts & Jobs Act.Non-GAAP earnings per share includes adjustments for these impacts, as well as cost of sales, operating expenses (excluding amortization), amortization of intangibles, interest expense, and other expenses as detailed in our earnings release published on December 6, 2018. |
Based on our results for revenue, cash flow and earnings per share, annual cash bonuses under the 2018 Incentive Payment Plan were paid at99-115% of target for our NEOs. (Discussed in more detail below starting on page 29.)
Additionally, performance share awards granted in fiscal 2016 were certified at Target achievement based on growth innon-GAAP earnings per share (EPS) over a three-year period. The NEOs received 100% of target shares under these awards. (Discussed in more detail below starting on page 34.)
21 | Page |
Operational Performance
Both the CooperVision and CooperSurgical divisions continued their operational performance in fiscal 2018 with a number of accomplishments including:
CooperVision:
Strong revenue growth across all global regions, supported by prior year product launches, as well as strong operating income and free cash flow
Significant infrastructure investments including important expansion and upgrades to our distribution facilities to support premium levels of customer service
Acquisition of Paragon Vision Sciences, expanding the specialty lens care and myopia management segment of the CooperVision business
CooperSurgical:
Significant infrastructure investing throughout the company to support continued global growth
• | Acquisition of the Paragard® intrauterine device product, driving revenue growth for the CooperSurgical Office & Surgical Products business |
Acquisition of the LifeGlobal Group, expanding the invitro fertilization business globally for CooperSurgical
• | Launch of the PGTai(sm) technology platform and ERPeak(sm) endometrial receptivity test through the CooperGenomics business to provide new tools for invitro fertilization |
Executive Compensation Highlights – 2018 Fiscal Year
The OCC initially approved target executive compensation for the NEOs for the 2018 fiscal year in December 2017. Due to the executive transitions highlighted above, the OCC subsequently approved adjustments to compensation for Messrs. White, McBride and Andrews and for Dr. Auerbach, as well as an initial compensation package for Ms. Sheffield. The OCC also reviewed and approved the terms of arrangements with Mr. Weiss and Ms. Kaufman in connection with their planned retirements.
CEO Compensation
Target total direct compensation for our CEO recognizes the significant role of the CEO in driving our performance and future growth, as well as overall responsibility for our strategic direction, management, and leadership. The practices of our peer group and our industry sector are also considered.
In setting compensation for fiscal 2018, the OCC considered the following factors:
(i) | Past performance by each of Messrs. Weiss and White against approved objectives; |
(ii) | Our financial and operational results for the prior fiscal year and targets for the 2018 fiscal year; |
(iii) | Compensation of CEOs at our peer companies; and |
(iv) | Advice from the OCC’s independent compensation consultant. |
For fiscal 2018, the OCC held target compensation for Mr. Weiss to the same level as approved for fiscal 2017.
Mr. White’s compensation was initially approved in December 2017 based on his role as Executive Vice President, Chief Financial Officer & Chief Strategy Officer and Chief Executive Officer of Cooper Medical, Inc. (the parent of CooperSurgical). His compensation was adjusted in May 2018 in connection with his promotion to CEO.
22 | Page |
Mr. Weiss:
2017 Target
| 2018 Target
| |||
Base Salary
| $925,000
| $925,000
| ||
Annual Cash Incentive (Target / % of Base Salary) (1)
| $925,000 (100%)
| $925,000 (100%)
| ||
Equity Awards (Approved GDFV)
| ||||
Performance Share Awards (at Target)
| $937,132 (5,046 shares)
| $937,132 (4,081 shares)
| ||
Time-Vested Stock Options (2) | $3,492,500 (79,370 options)
| $3,492,500 (60,322 options)
| ||
TOTAL TARGET COMPENSATION
| $6,279,632
| $6,279,632
|
(1) | Represents the target annual cash incentive opportunity under our Incentive Payment Plan. For both years, target achievement was set at 100% of Mr. Weiss’ base salary. Actual achievement under the 2017 IPP was $1,138,675 (123.1% of $925,000) and achievement under the 2018 IPP was $939,800 (101.6% of $925,000). |
(2) | Equity award amounts represent the grant values approved by the OCC and may vary from recognized compensation expense (presented in theSummary Compensation Table on page 37). Options are valued using a Black-Scholes option pricing model. |
Mr. White:
2018 Target Compensation (December 2017)
| Adjusted Target (On Promotion) (1)
| 2018 Target (Total) (2)
| ||||||
Base Salary
| $577,000
|
| $800,000
|
| $688,500
| |||
Annual Cash Incentive (Target / % of Base Salary) (3)
| $461,600 (80%)
|
| $800,000 (100%)
|
| $630,800 (92%)
| |||
Equity Awards (Approved GDFV)
| ||||||||
Performance Share Awards (at Target)
| $432,907 (1,885 shares)
| $432,907 (1,885 shares)
| ||||||
Time-Vested Stock Options (4) | $2,265,000 (39,121 options)
|
| $2,000,000 (34,479 options)
|
| $4,265,000 (73,600 options)
| |||
TOTAL TARGET COMPENSATION
| $3,736,507
| $6,017,207
|
(1) | Represents increased salary and target annual cash incentive on promotion to CEO. Also represents an incremental grant of equity on promotion discussed in more detail below. |
(2) | Represents the actual salary and bonus targets for fiscal 2018 based on a blended rate of initially approved and subsequently adjusted targets. Also represents the total value of equity awards approved for Mr. White in the 2018 fiscal year. |
(3) | Represents the target annual cash incentive opportunity under our Incentive Payment Plan. For the 2018 fiscal year, Mr. White’s base salary, and target achievement as a percentage of salary, were adjusted midyear on his promotion to CEO as detailed above. Actual achievement under the 2018 IPP was determined based on a blended salary and target rate, resulting in payment of $661,709 (104.9% of $630,800). |
(4) | Equity award amounts represent the grant values approved by the OCC and may vary from recognized compensation expense (presented in theSummary Compensation Tableon page 37). Options are valued using a Black-Scholes option pricing model. |
23 | Page |
Other NEO Compensation
Compensation for our other NEOs is determined based on their current role, recent changes to their responsibilities, and overall execution of duties throughout the prior fiscal year. Company performance, internal alignment among our executive officers, peer group compensation practices, and competitive market changes and conditions are also taken into account.
|
| |||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
|
|
| ||||||
|
19
Executive Compensation Highlights
For fiscal 2016 the compensation for our Named Executive Officers, including Mr. Weiss, was awarded as follows:
20
Compensation Objectives / Pay for Performance
|
|
| Rationale
| |||
Brian G. Andrews |
| |||||
| • Increase on promotion to CFO | |||||
Daniel G. McBride |
• Increase annual cash incentive target to 80% from 70%
| • Additional 13% increase in base salary | • Recognize importance through leadership transition and ongoing critical role within Company |
To meet these objectives our program emphasizes certain principles:
• 6% increase in base salary
• Additional 11% increase in base salary
• Increase annual cash incentive target to 60%
• Increase on promotion to |
TheChanges approved at the beginning of the fiscal year were based on individual performance in prior years, comparison to peers, management recommendations and recommendations from the OCC’s compensation packagesconsultants.Mid-year adjustments to executive compensation for the 2018 fiscal year were primarily driven by promotions and other executive transitions and were based on review of peer compensation and recommendations from management and its compensation consultant.
Ms. Sheffield’s compensation was set at the time of her hire in June 2018 based on management recommendations and alignment to peers.
Amounts discussed below in thisCompensation Discussion and Analysis and the compensation tables starting on page 20 reflect prorated or blended amounts based on start of employment (for Ms. Sheffield) or mid-year adjustments.
Executive Retirements – Mr. Weiss & Ms. Kaufman
Each of Mr. Weiss and Ms. Kaufman resigned their executive titles at the beginning of May 2018. Per agreement with the Company, both Mr. Weiss and Ms. Kaufman remained employed with the Company through December 31, 2018 with no change in their respective levels of compensation.
Amounts payable to Mr. Weiss and Ms. Kaufman on retirement are discussed in more detail in the section titledPotential Payments Upon Termination or Change In Control below on page 48. Mr. Weiss continues to serve on our Named Executive Officers are designed to reward achievementBoard of both short-termDirectors and long-term goals, as reflected in specific financial measures and continued service to the Company. Encouraging long-term service and continued financial achievement has created strong results for uswill be compensated as a Company and we have maintained steady growth and returns for our stockholders (see below).
21
We consider our compensation package design to be integral to our success and believe the selected performance measures serve as significant indicators for our continued success, while use of time-based equity awards encourages stable and continuous leadership from our key talent.
Non-Executive Director starting January 1, 2019.
22
Compensation Governance
The Compensation CommitteeOCC works closely with itsmanagement, management’s consultant, the OCC’s independent compensation consultant, and managementsuch other advisors as the Committee considers appropriate to ensure that we maintain sound governance and compensation policies and practices. In designing and overseeing our executive compensation program, we strive to employ best practices.
24 | Page |
THINGS WE DO:
| ||||||||
✓ | ||||||||
Entirely independent | ||||||||
✓ | Thorough assessment of individual and Company performance and linkage to compensation
| |||||||
✓ |
| |||||||
Independent compensation consultant, retained by and reporting only to the | ||||||||
✓ | Limited use of employment andchange-in-control agreements; allchange-in-control payments and benefits subject to “double-trigger” requirements
| |||||||
✓ |
| |||||||
A majority of | ||||||||
✓ | Robust succession planning process with annual review by the | |||||||
| ||||||||
✓ | Stock ownership guidelines applicable to our
| |||||||
✓ | Perquisites are limited in scope and have specific business rationale | |||||||
✓
| Compensation recovery (“clawback”) provision incorporated in our annual incentive plan
| |||||||
✓ | Annual review of executive compensation program and individual compensation packages
|
| ||||||
THINGS WE DON’T DO:
| ||||||||
| No loans to NEOs
| |||||||
❖ | No taxgross-ups for NEOs
| |||||||
❖ | No |
| ||||||
| ||||||||
❖ | No Supplemental Executive Retirement Plan or other exceptional deferred compensation options. Also no defined benefit or other actuarial plans which are not available generally to our employees
|
| ||||||
| ❖ | No related party transactions without approval from our Corporate Governance and Nominating Committee
| ||||||
❖
| No stock option repricing, reload options, or option exchanges without stockholder approval
|
In addition to these policies and practices, the Compensation CommitteeOCC stays informed and regularly assesses the alignment between our compensation packages and our performance as follows:
Regular updates on our business results from management;
Review of our quarterly financial statements, management throughout the year;projections, and long-range plans;
23
The Compensation CommitteeOCC considers management input, the advice of compensation consultants, and publicly available peer information to be valuable tools in its evaluation of the relationship between executive compensation and Company performance.
2016Compensation Objectives / Pay for Performance
Our executive compensation program is designed to provide competitive compensation packages to attract and retaintop-tier talent and closely link potential compensation with our financial performance. To meet these objectives our program emphasizes certain principles:
Connect executive compensation to financial measures that correlate strongly with stockholder returns;
Balance short-term operational goals and long-term strategic objectives;
25 | Page |
Reward achievement of challenging corporate objectives without encouraging inappropriate risk-taking;
Recognize the significant role our executive officers play in our overall performance and the responsibilities associated with their roles; and
Maintain sufficient flexibility to allow recognition of significant individual achievements by our executive officers.
The compensation packages for our NEOs are designed to reward achievement of both short-term and long-term goals, as reflected in specific financial measures, and continued service to the Company. Encouraging long-term service and continued financial achievement has created strong results for us and we have maintained steady growth and returns for our stockholders. We | Annual Measures | Long-Term Measures | ||||
Revenue | Non-GAAP EPS over three-year period | |||||
Cash Flow | ||||||
Non-GAAP EPS |
consider our executive compensation program design to be integral to our success and believe the selected performance measures serve as significant indicators for our continued success.
Say-on-Pay Vote
The Compensation CommitteeOCC considers the outcome of our annual stockholder advisory vote on the compensation of our Named Executive Officers (the“Say-on-Pay” vote)vote in determining the design of our executive compensation program and the composition and levels of our individual compensation packages.
At our 20162017 Annual Meeting of Stockholders, 84%94% of the votes cast on ourSay-on-Pay proposal were voted in favor of the compensation program for our Named Executive Officers.NEOs. The Compensation CommitteeOCC viewed this result as a strong affirmation of our program structure and considered these results when developing the compensation packages for fiscal 20162018 as described in this Compensation Discussion and Analysis.
Stock Ownership Guidelines
We maintain guidelines for stock ownership by our senior executives. Under | Name | Target Value | Hold on Vest/Exercise | |||||||
|
| 100%
| ||||||||
| 2x base salary | |||||||||
| ||||||||||
50% |
value stock awards if their ownership level is below the established guidelines.
The OCC reviewed and updated the guidelines in fiscal 2018. As amended, the guidelines require minimum ownership equal to 2 times base salary for all Section 16 identified officers and 5 times base salary for the CEO. In addition to directly held shares, the potential value of vested stock options and unvested restricted stock units are credited in consideration of whether ownership requirements have been met.
All NEOs were in compliance with the applicable ownership guidelines during fiscal 2018.
Use of Compensation Consultants
The Compensation CommitteeOCC retains Compensia, a national compensation consulting firm, to provide advice on compensation of our executive officers and thenon-employee members of our Board of Directors. Under this engagement, Compensia reports directly to the Compensation Committee and does no other work for the Company and the Compensation CommitteeOCC also maintains sole authority to determine the terms of Compensia’s retention and services. A representative of the firm generally attends Compensation CommitteeOCC meetings. Management interaction with Compensia is generally limited to communication of information provided by management to the Compensation Committee.
Management separately retains Frederic W. Cook & Co., Inc. (“Frederic Cook”) to serve as its compensation consultant and assist in the preparation of information provided to the Compensation Committee. Mr. Weiss has final authority for the retention of Frederic Cook. A representative of the firm generally attends Compensation Committee meetings as an invited guest, but Frederic Cook does no work directly for the Compensation Committee.
24
26 | Page |
The Compensation CommitteeOCC has reviewed the nature of the relationship between itself and Compensia as an independent consulting firm, and its relationship with the members of Compensia as individuals, for potential conflicts of interest. In conducting this review, the Compensation CommitteeOCC gave consideration to the factors identified by the SEC and the NYSE as possibly contributing to conflicts, including the scope of work performed for the Compensation CommitteeOCC by Compensia, the fees paid to Compensia for services, and any personal or business relationships between our executive officers or members of the Compensation CommitteeOCC and Compensia or its individual members. Based on its review, the Compensation CommitteeOCC has determined there are no conflicts of interest or potential conflicts of interest arising in connection with the Compensation Committee’sOCC’s engagement of Compensia.
Management separately retains Frederic W. Cook & Co., Inc. (“Frederic Cook”) to serve as its compensation consultant and assist in the preparation of information provided to the OCC. Mr. White has final authority for the retention of Frederic Cook. A representative of the firm generally attends OCC meetings as an invited guest and the OCC considers recommendations from Frederic Cook on the same basis as recommendations from management.
Role of Management
On behalf of management, Frederic Cook provides the Compensation Committee with an annual report analyzing executive officer compensation. This report presents comparative compensation information based on peer group data and contains information regarding key trends in executive compensation for other comparable publicly-traded companies. The Compensation Committee uses thisThis information asis one factor in evaluating the design of our executive compensation program and the compensation elements and levels provided to our executive officers. Compensia evaluates the recommendations provided by management and reviews the work done by Frederic Cook and advises the Compensation CommitteeOCC on these findings.
In addition to the annual compensation report, Mr. Weissmanagement also provides recommendations to the Compensation CommitteeOCC regarding:
(i) | selection of companies for |
(ii) | appropriate structure for our |
(iii) | overall compensation packages for executive officers, including the NEOs; |
(iv) | annual equity award levels, plan design and |
(v) | employment terms and arrangements, stock ownership guidelines, and special compensation awards to executive officers who have demonstrated outstanding performance during the fiscal year or on special |
Mr. WeissManagement uses Frederic Cook’s analyses and guidance to develop these recommendations. The Compensation CommitteeOCC gives full consideration to histhese recommendations and reviews these recommendationsthem with Compensia before making its own decisions on the compensation of our executive officers. Mr. WeissThe CEO does not generally participate in discussions of his own compensation.
Peer Group
The Compensation Committee selects an appropriateOCC uses a peer group for understanding and assessing competitive compensation levels and practices within our industry. It reviews this peer group annually, with consideration given to the recommendations and input of management, Frederic Cook, and Compensia.
27 | Page |
Our peer group is drawn from publicly-traded companies headquartered in the United States. Recommendations for peer group companies are based on similarity of product lines or industry and similarity in company size as measured by annual revenue, market capitalization, operating margins, and other financial measures of organizational scope and complexity. For fiscal 2016,2018, companies were considered for inclusion in the peer group that: (i) had revenue and/or a market capitalization between 0.5x and 2.0x of the Company in the past fiscal year, (ii) were in the medical device industry,
25
and (iii) were identified as a peer by at least three other current peer companies, used the Company as a peer, or had been identified as a peer by one of the major proxy advisory firms.
The peer group for fiscal 20162018 was comprised of the following companies:
Bio-Rad Laboratories, Inc. | Integra Lifesciences Holding Corporation | |
Bruker Corporation | Mettler-Toledo International, Inc. | |
| PerkinElmer, Inc. | |
| Resmed, Inc. | |
| ||
Edwards Lifesciences Corporation | Steris Corporation plc | |
Haemonetics Corporation | Teleflex, Inc. | |
Hologic, Inc. | Varian Medical Systems, Inc. | |
IDEXX Laboratories | Waters Corporation | |
Illumina, Inc. | West Pharmaceutical Services, Inc. | |
|
In August 2016, the Compensation Committee reviewed our peer group as part of its consideration of compensation planning for fiscal 2017 and removed Sirona Dental Systems, Inc. due to its merger with Dentsply International, Inc. Other than that change, the peer group remains the same for fiscal 2017 compensation planning.
Compensation Elements
Compensation for our executive officers is determined based on their current role, recent changes to their responsibilities and overall execution of duties throughout the prior fiscal year. Company performance, internal alignment among our executive officers, peer group compensation practices, and competitive market changes and conditions are also taken into account.
The primary elements of our executive compensation program are as follows:are:
| ||||
| ||||
| ||||
|
Cash salary intended to provide a minimum level of competitive compensation for our executives;
Annual cash incentive designed to encourage achievement of short-term business goals as reflected in our annual operating plan; and
Equity awards granted in the form of time-vested stock options, time-vested restricted stock units, and performance based awards, intended to connect executive compensation to long-term stockholder value, support alignment between executives and stockholders, and encourage executive retention.
Each of these elements, other than base salary, require achievement of strong financial results to realize significant (or any) amounts of compensation. Because of this dependencedepend on specific financial metrics (in the case of performance based equity and annual bonus) and significant increases in our stock price (in the case of time-vestedtime-based equity), we consider these elementscreating a link between our performance and NEO compensation. Additionally, compensation is balanced between short-term and long-term factors to be “at risk” for our Named Executive Officers. encourage attention to both annual objectives and long-term strategic goals.
28 | Page |
In the 20162018 fiscal year, approximately 86%70% of Mr. Weiss’s, targetand approximately 88% of Mr. White’s, total direct compensation and approximately 83%was long-term equity awards providing value over a three- to five-year time frame. Approximately 69% of our other Named Executive OfficersNEO’s target total direct compensation was “at risk”.
26
| ||
Chief Executive Officer Compensation
Mr. Weiss’ target total direct compensation recognizes his significant role in driving our performance and future growth and his overall responsibility for our strategic direction, management, and leadership. The practices of our peer group and our industry sector are also considered.
In setting Mr. Weiss’ compensation for fiscal 2016, the Compensation Committee considered the following factors:
“Other Compensation” represents 3% of | �� |
The Compensation Committee approved an increase of approximately 7% in Mr. Weiss’ target total direct compensation for fiscal 2016 as set out below:
2015 CEO Compensation | 2016 CEO Compensation | Change Year over Year | ||||||
($) | (%) | |||||||
Base Salary (1) | $875,000 | $875,000 | $ - 0 - | 0% | ||||
Annual Cash Incentive (Target @ 100% of salary) (2) | $875,000 | $875,000 | $ - 0 - | 0% | ||||
Equity Awards (Grant Date Fair Value) | ||||||||
Performance Share Awards (at Target) | $851,938 (5,398 shares) | $937,067 (7,145 shares) | $85,154 | 10% | ||||
Stock Options (1) | $3,174,997 (65,195 options) | $3,492,255 (93,777 options) | $317,259 | 10% |
27
Incentive Payment Plan (“IPP”)
The Compensation Committee
Fiscal 2018 Performance Measurement
At the beginning of each fiscal year, the OCC approves an annual Incentive Payment Plan, or IPP, to provide annual performance-based cash incentive opportunities. Target levels for thepre-established performance measures used in the IPP are based on budgeted goals reflected in our annual operating plan. The IPP is discussed in more detail in the narrative to theGrants of Plan Based Awards Table on page 38.39.
Annual cash incentives linked to specific, measurable, annual objectives encourageEach NEO’s opportunity under the IPP is allocated into two components:
(i) | 75% of the target award is tied to quantitative,pre-established financial performance targets; and |
(ii) | 25% of the target award is at the discretion of the OCC and intended to recognize other strategic, operational, and individual accomplishments not specifically quantified elsewhere in the IPP. |
Taken together, the IPP encourages our executive officers, including our Named Executive Officers,NEOs, to focus on both immediate business objectives generating annual growth, and stockholder returns. Target annual cash incentive opportunities for each Named Executive Officer are based on a combination of quantitative,pre-establishedfinancial performance, as well as other factors that support longer-term performance.
Financial targets for financial performance and discretionary recognition of other strategic, operational, and individual accomplishments not specifically quantified elsewhere in the IPP.
The discretionary component allows the Compensation Committee the flexibility to reward individual and business achievements during the year or to recognize special circumstances. The Compensation Committee believes this flexibility is important to connect cash incentive awards with its assessment of executive achievement in individual roles.
Financial targets were based on our annual operating plan, as approved by our Board of Directors at the beginning of fiscal 2016.2018. Targets were subject to adjustment for acquisitions and/or divestitures or other items during the fiscal year as determined by the Compensation Committee.Board. The discretionary componenttable below describes the relationship between the earned award and Company performance for each of awards is based entirely on the Compensation Committee’s assessment of executive performance duringfinance measures included in the fiscal year.
2018 IPP. No award was payable with respect to any financial performance measure that did not reach its minimum achievement threshold. Minimum achievement thresholds were setFor each NEO, the incentive that can be paid for any individual financial performance measure was capped at 85% of the target level for cash flow andnon-GAAP EPS and at 90% of the target level for revenue. In addition,200%.
IPP Achievement Required to Attain Payout (1)
Performance Measure | Threshold | Target | Maximum | |||
Revenue | 90% | 100% | 110% | |||
Earnings Per Share | 85% | 100% | 120% | |||
Cash Flow | 85% | 100% | 120% |
(1) | The IPP threshold payout is equal to approximately 10% of Target achievement, as presented in theGrants of Plan Based Awards table on page 39. Target achievement provides for payout of 100% of target bonus amounts and Maximum is capped at 200% of Target. |
29 | Page |
Further, any two of the three quantitative measures were required to exceed 95% of their target levelachievement before awards for any quantitative performance measure could exceed 100% of target. For each Named Executive Officer, the maximum incentive that can be paid for any individual financial performance measure, the discretionary component of awards, or for any total cash incentive was capped at 200% of his or her target annual cash incentive opportunity.
In addition to approving the calculation of achievement based on financial results under the 20162018 IPP (discussed in more detail below), the Compensation CommitteeOCC also hadhas the separate authority to adjust award amounts if it determined that payment based on our reported financial results was not merited.reduce the quantitative portion of the bonus by up to 25%. This determination would be based on any facts and circumstances the Compensation CommitteeOCC considered to be in the Company’s best interests and would permit the quantitative portion of annual cash incentives to be reduced by up to 25%.interests. Award payments could also be reduced or cancelled by the Compensation CommitteeOCC if a review of the results for the first two months of
28
fiscal 20172019 reflected anomalous unfavorable events that were attributable to fiscal 2016.2018. The Compensation CommitteeOCC did not determine that any adjustments to awards for fiscal 20162018 were necessary under these provisions.
The discretionary component of individual IPP awards is based entirely on the OCC’s assessment of executive performance during the fiscal year. The discretionary component allows the OCC the flexibility to recognize factors such as:
The personal contributions of the NEOs to the performance of the Company during the fiscal year;
Leadership and operational achievements of each NEO, including those that may not be explicitly reflected in current year financial results (e.g. leadership development and succession planning, identification and/or execution of business development opportunities, etc);
Business achievements that may not be fully reflected in the Company’s financial performance during the fiscal year; and
Special circumstances that may have impacted the determination of the quantitative portion of the bonus.
The OCC believes this flexibility, which can account for factors that impact our results either positively or negatively, is important to connect cash incentive awards with its assessment of executive achievement in individual roles.
20162018 IPP Results
Financial Measure Achievement
In approving the actual achievement levels for fiscal 2016,2018, the Compensation CommitteeOCC reviewed management’s presentation of our financial results and gave consideration to the events during the fiscal year that impacted budget targets and determined what adjustments, if any, would be appropriate. For fiscal 2016,targets. On review, the Compensation Committee agreed thatOCC approved achievement under the 2018 IPP based on the financial results should be considered on a constant currency basis to accountas reported for the impact of foreign exchange fluctuations during the year.
Additionally, as reported ournon-GAAP EPS excluded the impact of amortization of intangible assets, costs associated to acquisitions and related business integration, facilitystart-up costs, specific litigation settlement and legal costs, and other exceptional or unusual charges and expenses. Under the 2016 IPP, our reported results provided a baseline calculation ofnon-GAAP EPS which could be adjusted at the discretion of the Compensation Committee. The Committee used this discretion to exclude certain items related to integration costs, inventory write-offs and legal costs which were called out in our reportednon-GAAP EPS for fiscal 2016. As a result, our reportednon-GAAP EPS was $8.44, but our achievement for purposes of awards paid under the 2016 IPP was $7.70.Company with no adjustments.
The target levels for each of the financial performance measures, our actual achievement as approved by the Compensation Committee,OCC, and the associated award amounts earned with respect to each of these measures under the 20162018 IPP is set out below, and a full discussion of our financial results can be found in Item 7,Management’s Discussion and Analysis ofFinancial Condition and Results of Operations of our Annual Report on Form10-K for the fiscal year ended October 31, 2016.2018.
30 | Page |
Corporate Achievement by Division
(Basis of Awards Paid to NEOs)
Corporate:
Award Factor | Budget Target ($ in Thousands; except EPS) | Achievement (% of Target) (1) | Achievement 2016 IPP | Target Achievement / Weighting | Weighted Achievement | |||||||||
Revenue | $1,938,924 | $1,947,327 (100.4%) | 102.2% | 25% | 25.5% | |||||||||
Non-GAAP EPS (1) | $7.57 | $7.70 (101.7%) | 108.6% | 25% | 27.2% | |||||||||
Cash Flow (consolidated) | $298,930 | $388,848 (130.1%) | 200% | 25% | 50% | |||||||||
Total Achievement | 75% | 102.7% |
Award Factor | Budget Target ($ in Millions; except EPS) | Achievement except EPS) (% of Target) | Achievement 2018 IPP | Target Achievement / Weighting | Weighted Achievement | |||||||||
Revenue | $2,542.3 | $2,527.9 (99.4%) | 96.2% | 25% | 24.1% | |||||||||
EPS(Non-GAAP) | $11.61 | $11.50 (99.1%) | 96.8% | 25% | 24.2% | |||||||||
Cash Flow (consolidated) | $463.0 | $475.3 (102.7%) | 113.3% | 25% | 28.3% | |||||||||
Total Achievement | 75% | 76.6% |
CooperVision:
Award Factor | Budget Target ($ in Millions; except EPS) | Achievement except EPS) (% of Target) | Achievement 2018 IPP | Target Achievement / Weighting | Weighted Achievement | |||||||||
Revenue | $1,874.1 | $1,876.1 (100.1%) | 101.1% | 25% | 25.3% | |||||||||
Operating Income | $549.7 | $542.3 (98.6%) | 95.5% | 20% | 19.1% | |||||||||
EPS(Non-GAAP) | $11.61 | $11.50 (99.1%) | 96.8% | 5% | 4.8% | |||||||||
Cash Flow | $443.0 | $434.7 (98.1%) | 93.8% | 25% | 23.4% | |||||||||
Total Achievement | 75% | 72.6% |
CooperSurgical:
Award Factor | Budget Target ($ in Millions; | Achievement except EPS) (% of Target) | Achievement 2018 IPP | Target Achievement / Weighting | Weighted Achievement | |||||||||
Revenue | $668.2 | $651.8 (97.5%) | 83.6% | 25% | 20.9% | |||||||||
Operating Income | $227.2 | $207.1 (91.2%) | 70.4% | 20% | 14.1% | |||||||||
EPS(Non-GAAP) | $11.61 | $11.50 (99.1%) | 96.8% | 5% | 4.8% | |||||||||
Cash Flow | $73.5 | $94.2 (128.2%) | 200% | 25% | 50.0% | |||||||||
Total Achievement | 75% | 89.8% |
Discretionary Award Determinations
As discussed above, the 20162018 IPP provides for 25% of each Named Executive Officer’sNEO’s target annual cash incentive opportunity to be entirely at the discretion of the Compensation CommitteeOCC and not linked to the quantitative financial measures under the 20162018 IPP. The IPP achievement of the discretionary portion may range from 0% to a percentage deemed appropriate by the OCC, subject to a cap on the total bonus earned by any NEO equal to 200% of their target award.
In determining the discretionary payout for each executive officer’s achievement,NEO, the Compensation CommitteeOCC made an independent assessment of individual performance and leadership, operational achievements not otherwise enumerated in the 20162018 IPP,
29
and such other factors as the Compensation CommitteeOCC considers indicative of executive performance, including operational achievement indicators such as market share growth, new product launches, business development, and executive leadership.
The Compensation Committee generally considers an award
31 | Page |
There is no formulaic relationship between the OCC’s assessment of each NEO and the payout of the target 25%discretionary component of the IPP. The OCC does not rely on a formal performance evaluation or consider achievement ofpre-established goals for each NEO, other than the Chief Executive Officer. The OCC does consider, among other factors, the input of our Chief Executive Officer regarding recommended award levels (other than in respect to be a reflection of satisfactory performance by an executive officer during the fiscal year. For fiscal 2016, the Compensation Committee chose to make discretionary awards at the 25% target level for all Named Executive Officers.
In making this determination the Compensation Committee reviewed management’s individual performancehis own IPP award) and our operational achievements in fiscal 2016 separate from the quantitative financial measures, including those described underThe Year in Review on page 19 above. The Compensation Committee also considered factors that negatively impacted our results. Based on this review and its own assessment of the performance of our Named Executive Officers, the Compensation Committee concluded that discretionary awards at the 25% target level were warranted.other NEOs, and each executive’s self-assessment of accomplishments within their area of responsibility.
Named Executive Officer Awards Under the 20162018 IPP
For fiscal 2018, the OCC approved the following awards for each NEO.
Executive | Quantitative Factor Achievement | Discretionary Award | Total Award Achievement | Target Award | Actual Award Paid | |||||||||||||||
($) | (% of Base Salary) | ($) | (% of Base Salary) | |||||||||||||||||
Robert S. Weiss | 102.7% | 25% | 127.7% | $ | 875,000 | 100% | $1,117,375 | 127.7% | ||||||||||||
Daniel G. McBride (1) | 100.5% | 25% | 125.5% | $ | 346,500 | 70% | $434,684 | 87.8% | ||||||||||||
Albert G. White III (1) | 108.5% | 25% | 133.5% | $ | 332,500 | 70% | $443,888 | 93.5% | ||||||||||||
Carol R. Kaufman | 102.7% | 25% | 127.7% | $ | 272,400 | 60% | $347,855 | 76.6% | ||||||||||||
Greg W. Matz | 102.7% | 25% | 127.7% | $ | 233,750 | 55% | $298,499 | 70.2% |
Executive (1)
| Quantitative
| Discretionary
| Total Award Achievement (1)
| Target Award
| Actual Award Paid
| |||||||||||
($) | (% of Base Salary) | ($) | (% of Base Salary) | |||||||||||||
Albert G. White III | 79.9% | 25% | 104.9% | $ | 630,800 | 92% | $661,709 | 96.1% | ||||||||
Brian G. Andrews | 76.6% | 25% | 101.6% | $ | 147,899 | 45% | $150,265 | 45.7% | ||||||||
Daniel G. McBride | 74.6% | 25% | 99.6% | $ | 490,800 | 80% | $488,837 | 79.7% | ||||||||
Holly R. Sheffield | 76.6% | 25% | 101.6% | $ | 124,462 | 60% | $126,453 | 61% | ||||||||
Robert D. Auerbach, M.D. | 89.8% | 25% | 114.8% | $ | 201,000 | 53% | $230,748 | 60.7% | ||||||||
Robert S. Weiss | 76.6% | 25% | 101.6% | $ | 925,000 | 100% | $939,800 | 101.6% | ||||||||
Carol R. Kaufman | 76.6% | 25% | 101.6% | $ | 289,224 | 60% | $293,852 | 61% |
(1) | Mr. McBride’s achievement reflects weighting based on CooperVision performance due to his role as President of CooperVision and Mr. White’s achievement reflects weighting based on CooperSurgical performance based on his role as Chief Executive Officer of Cooper |
Long-Term Incentive Compensation
The Compensation CommitteeOCC uses a combination of performance-based and time-vested equity awards to deliver long-term incentive compensation to our executive officers, including our Named Executive Officers.NEOs. The Compensation CommitteeOCC believes the combination of performance-based and time-vested awards maximizeslong-term equity compensation should be designed to maximize retention value, effectively link our executive officers’ long-termNEO compensation opportunities to stockholder gains, and controlscontrol cost to the Company. The Compensation CommitteeOCC discusses appropriate award design with its compensation consultant and management to set challenging performance goals and award terms that drive a long-term focus on strategic objectives.
In setting award amountsequity compensation for our executive officers, including our Named Executive Officers,NEOs, the Compensation CommitteeOCC considers recommendations from management and Frederic Cook, as well as advice from Compensia. as the Compensation CommitteeThe OCC also reviews historical grant levels based on the role and position of each executive officer. The Compensation Committee also considersofficer, as well as economic and accounting implications, when determining the type and appropriate size of individual awards. Equity awards are generally granted in the first quarter of theeach fiscal year, after financial results for the prior fiscal year are available.available, and vest over three to five years.
The Compensation CommitteeOCC may also grant equity awards periodically to new hires, upon a promotion or in other circumstances, andor to accomplish specific retention goals. When such awards
30
are approved, the grant date is set by the Compensation Committee.OCC. Grant dates are never set prior to the date of approval by the Compensation Committee.
Performance Share Awards
Our executive officers, including our Named Executive Officers, receive performance based equity awards that require achievement ofpre-established increases innon-GAAP EPS over a three-year performance period. These awards are designed to reflect the direct influence of our executive officers on our long-term financial performance. The Compensation Committee has selected compoundednon-GAAP EPS growth over a three year period as the performance measure for these awards due to its belief that this measure provides a strong link to stockholder returns. For this metric, achievement is determined based on ournon-GAAP EPS as reported (see discussion above).
Fiscal 2016 Performance Share Awards
The performance share awards granted in fiscal 2016 are subject to three possible achievement levels. No shares will be earned under these awards unless the threshold level of achievement – 10% growth over three years – is met. Assuming the threshold target level is met, 50% of the target number of shares of our common stock subject to each performance share | 2016 Performance Share Award Targets | |||||
Performance Level | Award Achievement | Required EPS Growth:
FY2016 - 19 | ||||
Outstanding | 150% | 15% | ||||
Target | 100% | 12% | ||||
Threshold | 50% | 10% | ||||
award will be earned. If the target performance level is met, 100% of the target number of shares of our common stock subject to each performance share award will be earned. Finally, if we exceed the target performance level, 150% of the target number of shares of our common stock subject to each performance share award will be earned. |
2016 Performance Share Awards | ||||||||||||||||||||||
Name | Grant Date Fair Value | Shares At Achievement | ||||||||||||||||||||
Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||||||||||||
Robert S. Weiss | $ | 468,566 | $ | 937,132 | $1,405,698 | 3,573 | 7,145 | 10,718 | ||||||||||||||
Daniel G. McBride | $ | 216,454 | $ | 432,907 | $649,361 | 1,651 | 3,301 | 4,952 | ||||||||||||||
Albert G. White III | $ | 216,454 | $ | 432,907 | $649,361 | 1,651 | 3,301 | 4,952 | ||||||||||||||
Carol R. Kaufman | $ | 189,576 | $ | 379,152 | $568,728 | 1,446 | 2,891 | 4,337 | ||||||||||||||
Greg W. Matz | $ | 151,256 | $ | 302,511 | $453,767 | 1,154 | 2,307 | 3,461 |
The Compensation Committee considers our ongoing performance and the level of achievement under prior performance share awards and sets target levels for the performance share awards to require significantly challenging, but attainable, levels of growth. It reviews these target achievement levels with its compensation consultant to ensure that they are reasonable and appropriate. The Compensation Committee also considers the objectives for long-term growth set by our Board of Directors, the Company’s historical achievements and the Compensation Committee’s goals for executive compensation. The amount of these performance share awards was determined based on their target accounting value. In setting award levels, the Compensation Committee considered competitive market practices and the analyses provided by Frederic Cook and Compensia.
31
Results for Fiscal 2014 Performance Share Awards
The performance period for the performance share awards granted in fiscal 2014 was completed at the end of fiscal 2016. Based on ournon-GAAP EPS growth over the performance period, the Compensation Committee certified achievement of the “target” level for these awards. The Named Executive Officers received 100% of the target number of shares of common stock subject to these awards. | Achievement under 2014 Performance Share Awards | |||||||||||||
(Performance Cycle: November 2013 to October 2016) | ||||||||||||||
Name | Target Shares | |||||||||||||
Threshold (10% growth) | Target (11% growth) | Maximum (12% growth) | ||||||||||||
Robert S. Weiss | 3,553 | 7,106 | 10,659 | |||||||||||
Daniel G. McBride | 1,594 | 3,187 | 4,781 | |||||||||||
Albert G. White III | 1,113 | 2,225 | 3,338 | |||||||||||
Carol R. Kaufman | 1,438 | 2,875 | 4,313 | |||||||||||
Greg W. Matz | 1,113 | 2,225 | 3,338 | |||||||||||
In reviewing achievement, the Compensation Committee considered our reportednon-GAAP EPS for fiscal 2016. The Compensation Committee considered changes to the way thatnon-GAAP EPS is calculated. At the time the awards were granted in fiscal 2014, our reportednon-GAAP EPS included amortization of intangibles and we have since begun to call this out, consistent with changes in industry practice. The Compensation Committee agreed that it would be necessary to consider a recalculated measure ofnon-GAAP EPS for fiscal 2014 in order to accurately determine growth over the performance period.OCC.
|
| |||||
Without adjustment for foreign exchange fluctuations, ournon-GAAP EPS was $8.44, which would be below “threshold” achievement with the amortizationcall-out. With foreign exchange impact fullyoff-set, ournon-GAAP EPS would be $10.51, which would be “outstanding” achievement with the amortizationcall-out. Based on these results, the Committee chose to partiallyoff-set foreign exchange impacts and to certify achievement at “target”. The Committee felt that this adjustment was appropriate in order to not penalize management but to also recognize the impact of foreign exchange rates on stockholder returns for the period.
Time-Vested Stock Options and Restricted Stock Units
The Compensation CommitteeOCC also uses equity awards with time-based vesting to encourage executive retention while maintaining a link to long-term Company performance. Time-based vesting requires continued service to benefit from these equity awards, and the potential compensation realizable by our executive officers, including our Named Executive Officers,NEOs, is dependent on increases in the market price of our common stock over time.
In fiscal 2018 our NEOs were granted either time-vested stock option awards or a combination of time-vested stock options and time-vested RSUs. The OCC believes that these award types have strong retention value while also closely linking executive compensation to stockholder gains. Stock options only have value to the recipient if we also see growth in our stock price, putting a portion of the executives’ compensation at risk of no return, and RSUs provide guaranteed value if the executive remains with the Company. Both award types provide the opportunity for long-term gain tied to stockholder returns while also encouraging longevity and stable management for the Company.
32
Our executive officers, including our Named
The amount of these stock option grants was | Grants to NEOs in 2016 fiscal year | |||||||||
Name | Stock Options | |||||||||
Grant Date Fair Value | Options Granted | |||||||||
Robert S. Weiss | $3,492,500 | 93,777 | ||||||||
Daniel G. McBride | $2,265,000 | 60,817 | ||||||||
Albert G. White III | $2,000,000 | 53,702 | ||||||||
Carol R. Kaufman | $956,641 | 25,687 | ||||||||
Greg W. Matz | $807,483 | 21,682 |
The amount of equity grants was determined based on their target accounting value.value and our stock price at the time of grant. In setting award levels, the Compensation CommitteeOCC considered competitive market practices and the analysesrecommendations provided by Compensia. In addition, the OCC considered recommendations provided by Mr. White and input from Frederic Cook and Compensia.Cook. These awards generally vest ratably over a five-year period starting on the first anniversary of the date of grant.
Equity compensation awarded to both Mr. White and Mr. McBride in December 2017 consisted of two components. The Compensation Committee also approved additionalone-time awardsfirst was a stock option to each of Messrs. McBride and Whitepurchase 21,849 shares with a target Black Scholes value of $1 million each. These awards are designed$1,265,000 and vesting in five equal annual installments. The second grant was a stock option with a target Black Scholes value on the grant date equal to strengthen long-term retention$1M and are intended to support our succession planning efforts. To emphasize that purpose, the awards are designed to vest over a total of five years, but the initial vesting is deferred untilvests 100% on the third anniversary of the dategrant date. When finalizing this equity compensation, the OCC considered the recommendations of grant. The awards will then vest ratablyMr. Weiss, who was CEO at the time, and the desire to retain Mr. White and Mr. McBride during a critical succession period in the leadership of the Company as well as to recognize their strong performance and expected contributions to the ongoing success of the Company.
Separately, in connection with Mr. White’s promotion to CEO in May 2018, the OCC approved an option grant with a target Black Scholes value of $2M. This grant vests in equalone-third installments on the third, fourth and fifth anniversaries of the date of grant.grant date. This option was awarded to recognize Mr. White’s promotion and to better align his compensation with competitive market practice as a Chief Executive Officer.
Grants to NEOs in 2018 Fiscal Year (1) | ||||||||
Name | Stock Options | RSUs | ||||||
Grant Date Fair Value | Options Granted | Grant Date Fair Value | RSUs Granted | |||||
Albert G. White III | $4,265,000 | 73,600 | -- | -0- | ||||
Brian G. Andrews | $575,000 | 9,975 | $125,000 | 544 | ||||
Daniel G. McBride | $2,265,000 | 39,121 | -- | -0- | ||||
Holly R. Sheffield | $1,000,000 | 17,528 | $1,000,000 | 4,419 | ||||
Robert D. Auerbach, M.D. | $350,000 | 6,057 | $500,000 | 2,116 | ||||
Robert S. Weiss | $3,492,500 | 60,322 | -- | -0- | ||||
Carol R. Kaufman | $956,641 | 16,523 | -- | -0- |
(1) | Amounts represent the grant values approved by the OCC and may vary from recognized compensation expense (presented in theSummary Compensation Table on page 37). |
33 | Page |
Performance Share Awards
In 2018, our NEOs received performance based equity awards that require achievement ofpre-established increases in EPS over a three-year performance period. These awards are designed to reflect the direct influence of our NEOs on our long-term financial performance. The OCC has selected compounded EPS growth over a three-year period as the performance measure for these awards due to its belief that this measure provides a strong link to stockholder returns.
Fiscal 2018 Performance Share Awards
The performance share awards granted in fiscal 2018 are based on compounded GAAP EPS growth over the designated three-year performance cycle. The awards have three possible achievement levels and no shares will be earned under these awards unless threshold achievement is reached. Once this threshold is achieved, the number of shares awarded will be prorated between achievement levels depending on actual achievement. The maximum payout under these awards is capped at 150% of Target shares.
2018 Performance Share Award Targets | ||||||
Performance Level | Award Achievement | Required EPS Growth: FY2018 - 20 | GAAP EPS Target for Achievement | |||
Outstanding | 150% | 15% | ³ $11.44 | |||
Target | 100% | 12% | $10.57 to < $11.44 | |||
Threshold | 50% | 9% | $9.74 to < $10.57 |
In setting targets for performance share awards, the OCC considers our ongoing performance and the level of achievement under prior performance share awards. Target levels are set to require significantly challenging, but attainable, levels of growth. The OCC reviews these target achievement levels with its compensation consultant to ensure that they are reasonable and appropriate. The OCC also considers the objectives for long-term growth set by our Board of Directors, the Company’s historical achievements, and the OCC’s goals for executive compensation. The amount of these performance share awards was determined based on their target accounting value. In setting award levels, the OCC considered competitive market practices and the recommendations provided by Compensia.
2018 Performance Share Awards | ||||||||||||
Name | Grant Date Fair Value | Shares at Achievement | ||||||||||
Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||
Albert G. White III | $216,454 | $432,907 | $649,361 | 943 | 1,885 | 2,828 | ||||||
Daniel G. McBride | $216,454 | $432,907 | $649,361 | 943 | 1,885 | 2,828 | ||||||
Robert S. Weiss | $468,566 | $937,132 | $1,405,698 | 2,041 | 4,081 | 6,122 | ||||||
Carol R. Kaufman | $189,576 | $379,152 | $568,728 | 826 | 1,651 | 2,477 |
Results for Fiscal 2016 Performance Share Awards
Performance share awards granted in fiscal 2016 completed their performance cycle at the end of fiscal 2018. Based on ournon-GAAP EPS growth over the three-year performance period, the OCC certified achievement of the “Target” level for these awards.
As granted, these awards provide for achievement based onnon-GAAP EPS, as modified by the Committee for extraordinary,non-recurring, and/or unusual events. Compounded EPS growth was confirmed at $10.53 and
34 | Page |
achievement was certified to be at or above the requirements for Target payout. As granted, these awards do not provide for proration between levels of achievement. Therefore, the NEOs will receive 100% of the target shares with no adjustments as follows:
Achievement under 2016 Performance Share Awards | ||||||
(Performance Cycle: November 2015 to October 2018) | ||||||
Name | Possible Shares | |||||
Threshold (10% growth) $9.90 to <$10.45 | Target (12% growth) $10.45 to <$11.32 | Maximum (15% growth) ³ $11.32 | ||||
Albert G. White III | 1,651 | 3,301 | 4,952 | |||
Brian G. Andrews | 786 | 1,571 | 2,357 | |||
Daniel G. McBride | 1,651 | 3,301 | 4,952 | |||
Robert D. Auerbach, M.D. | 943 | 1,885 | 2,828 | |||
Robert S. Weiss | 3,573 | 7,145 | 10,718 | |||
Carol R. Kaufman | 1,446 | 2,891 | 4,337 |
Employee Benefits & Perquisites
Our Named Executive OfficersNEOs are eligible to receive benefits under programs provided to our employees generally, including participation in our 401(k) plan (with matching contributions up to a specified dollar value, set annually), benefits under our Retirement Income Plan (a defined benefit plan), health, life and disability insurance, and severance payments and benefits in accordance with our standard separation policy. Matching contributions to our 401(k) plan are equal to the matching contributions provided to employees generally. Benefits under the Retirement Income Plan are discussed in more detail in the Narrative to the Pension Benefits Table on page 44.46.
Our Named Executive OfficersWith the exception of Mr. White and Dr. Auerbach, our NEOs also participate in ourChange-in-Control Severance Plan, under which they have change in control agreements that provide for severance benefits if the participating executives were to be terminated within a specified time after a change in control of the Company. Mr. White has a separate change in control agreement outside theChange-in-Control Severance Plan, and Dr. Auerbach has an employment agreement with terms controlling his separation from the Company. These agreements are discussed in more detail in the section titledPotential Payments on Termination or a Change in Controlon page 45.48.
Our Named Executive OfficersNEOs also receive limited perquisites or other personal benefits, generally in the form of automobile allowances and expenses, income attributable to life insurance policies, and some limited reimbursement for spousal travel to business functions. In 2018, Ms. Sheffield also received amounts in connection with her relocation to California from New York. In all cases, the Compensation CommitteeOCC reviews these amounts and takes them into consideration when reviewing overall executive compensation. We only provide perquisites or other personal benefits to our executive officers, including our Named Executive Officers,NEOs, in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make our executive officers more efficient and effective, and for recruitment and retention purposes.
35 | Page |
Tax Deductibility of Compensation
Section 162(m) of the Internal Revenue Code generally providesprovided that publicly held companies may not deduct compensation in excess of $1 million paid in any fiscal year to its chief executive officer
33
and the other three most highly compensated Named Executive OfficersNEOs employed at the end of the year (other than its chief financial officer). However, pursuantFor years prior to regulations issued by the U.S. Treasury Department, a limited exemption2017 there was an exception to the Section 162(m)this deduction limit applies with respect to “qualified performance-based compensation.”
The Compensation Committee considersOCC has historically considered ways to maintain the tax deductibility of the compensation for our Named Executive OfficersNEOs under this qualified performance based compensation rule without limiting its discretion to compensate our executive officers in ways that will incentivize stockholder returns.
However, as part of the 2017 Tax Cuts & Jobs Act (“2017 Tax Reform”), the ability to rely on the qualified performance-based compensation exception was eliminated and the limitation on deductibility generally was expanded to include all NEOs. As a result of the 2017 Tax Reform, for compensation awarded or materially modified after November 2, 2017 the Company will no longer be able to deduct any compensation paid to any of its NEOs in excess of $1 million. The Compensation Committee may chooseOCC continues to assess the impact of the 2017 Tax Reform to determine what adjustments to our executive compensation practices, if any, it considers appropriate and the impact on the deductibility of compensation awarded prior to the enactment of 2017 Tax Reform. The OCC has the discretion to provide compensation which may not be deductible by reason of Section 162(m).
Equity Compensation
Our equity compensation plan is designed to be performance-based andunder the performance share awards granted to executives are intended to qualify as performance-based compensation under Section 162(m). Stock options granted at or above market value are also intended to be performance-based compensation and deductible under Section 162(m). However, time-vested full value equity awards will not be qualified as performance-based and may not be deductible.
Annual Cash Incentive
The 2016 Incentive Payment Plan has not been approved by our stockholders and therefore payments under this plan do not qualify as “performance-based compensation” for purposes of Internal Revenue Code Section 162(m). Our Board of Directors has approved the 2017 Executive Incentive Plan to govern awards for fiscal 2017 and the future. The Executive Incentive Plan is intended to qualify executive cash bonuses as “performance-based compensation” for purposes of IRC Section 162(m). Additional information regarding the Executive Incentive Plan is presented below inProposal 3–Approval of the 2017 Executive Incentive Plan on page 61.Code.
Conclusion
The Compensation CommitteeOCC believes that each element of executive compensation and the total compensation provided to each of our Named Executive OfficersNEOs is reasonable, competitive, and appropriate. The amount of compensation payable to our Named Executive OfficersNEOs depends largely on our financial performance and returns to our stockholders. The Compensation CommitteeOCC believes that our executive compensation program provides an appropriate mix of elements that will allow us to continue to attract, retain, and motivate a top performing management team, without encouraging excessive or inappropriate risk-taking by our executive officers and that its compensation arrangements create incentives that drive our continuecontinued strong financial performance.
34
36 | Page |
REPORT OF THE ORGANIZATION AND COMPENSATION COMMITTEE
The Organization and Compensation Committee of the Board has reviewed and discussed the Compensation Discussion and Analysis with management. Based on this review and discussion, the Organization and Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in our Annual Report on Form10-K for the fiscal year ended October 31, 2016.
ORGANIZATION AND COMPENSATION COMMITTEE
Michael H. Kalkstein (Chair)
Colleen E. Jay
Jody S. Lindell
Gary S. Petersmeyer
35
The table below shows compensation paid to the individuals who served as our Named Executive Officers during the past fiscal year.
Name and Principal Position
| Year
| Salary
| Bonus (1)
| Option
| Stock
| Non-Equity Plan
| Change in
| All Other
| Total
| |||||||||||||||||||||||||||
Robert S. Weiss | 2016 | $875,000 | $279,344 | $3,492,255 | $937,067 | $838,031 | $35,700 | $51,205 | $6,508,603 | |||||||||||||||||||||||||||
President & Chief Executive Officer | 2015 | $875,000 | $218,750 | $3,174,997 | $851,912 | $470,750 | $81,407 | $73,613 | $5,746,429 | |||||||||||||||||||||||||||
2014 | $840,000 | $252,000 | $3,053,718 | $851,938 | $655,200 | $42,286 | $25,535 | $5,720,678 | ||||||||||||||||||||||||||||
Daniel G. McBride, Esq. | 2016 | $495,000 | $108,671 | $2,264,825 | $432,926 | $326,013 | $56,270 | $28,004 | $3,711,709 | |||||||||||||||||||||||||||
Executive Vice President & Chief Operating Officer/ President of CooperVision, Inc. | 2015 | $495,000 | $86,625 | $575,001 | $968,561 | $186,764 | $49,632 | $49,526 | $2,411,109 | |||||||||||||||||||||||||||
2014 | $450,000 | $94,500 | $499,967 | $882,031 | $245,700 | $39,426 | $17,092 | $2,228,716 | ||||||||||||||||||||||||||||
Albert G. White III (5) | 2016 | $475,000 | $110,972 | $1,999,862 | $432,926 | $332,916 | $48,059 | $19,164 | $3,418,900 | |||||||||||||||||||||||||||
Executive Vice President & Chief Strategy Officer/ Chief Executive Officer of Cooper Medical, Inc. | 2015 | $425,000 | $58,438 | $367,052 | $642,158 | $125,758 | $38,870 | $17,146 | $1,674,420 | |||||||||||||||||||||||||||
2014 | $386,131 | $113,619 | $342,019 | $608,801 | $165,650 | $31,477 | $18,837 | $1,666,535 | ||||||||||||||||||||||||||||
Carol R. Kaufman | 2016 | $454,000 | $86,964 | $956,584 | $379,155 | $260,891 | $51,681 | $42,956 | $2,232,230 | |||||||||||||||||||||||||||
Executive Vice President, Secretary, Chief Administrative Officer & Chief Governance Officer | 2015 | $454,000 | $68,100 | $434,842 | $779,589 | $146,551 | $75,245 | $59,334 | $2,017,661 | |||||||||||||||||||||||||||
2014 | $440,644 | $79,316 | $434,785 | $779,525 | $206,221 | $80,358 | $27,657 | $2,048,506 | ||||||||||||||||||||||||||||
Greg W. Matz (5) | 2016 | $425,000 | $74,625 | $807,438 | $302,563 | $223,874 | $46,109 | $17,339 | $1,896,948 | |||||||||||||||||||||||||||
Senior Vice President, Chief Financial Officer & Chief Risk Officer | 2015 | $425,000 | $58,438 | $367,052 | $642,158 | $125,758 | $39,844 | $17,012 | $1,675,260 | |||||||||||||||||||||||||||
2014 | $386,131 | $63,712 | $342,019 | $608,801 | $165,650 | $31,421 | $17,463 | $1,615,197 | ||||||||||||||||||||||||||||
Name and Principal Position
| Year
| Salary
| Bonus (1)
| Option
| Stock
| Non-Equity
| Change in
| All Other
| Total Compensation
| |||||||||||||||||||||||||
Albert G. White III | 2018 | $688,500 | $165,427 | $4,265,233 | $432,909 | $496,282 | - | $18,769 | $6,067,120 | |||||||||||||||||||||||||
President & Chief Executive Officer | 2017 | $525,000 | $98,662 | $1,264,912 | $432,890 | $295,985 | $28,074 | $15,583 | $2,661,105 | |||||||||||||||||||||||||
2016 | $475,000 | $110,972 | $1,999,862 | $432,926 | $332,916 | $48,059 | $19,164 | $3,418,900 | ||||||||||||||||||||||||||
Brian G. Andrews | 2018 | $328,664 | $37,566 | $578,027 | $124,935 | $112,699 | - | $15,588 | $1,197,479 | |||||||||||||||||||||||||
Senior Vice President, Chief Financial Officer & Treasurer | ||||||||||||||||||||||||||||||||||
Daniel G. McBride | 2018 | $613,500 | $122,209 | $2,265,106 | $432,909 | $366,628 | - | $30,856 | $3,831,208 | |||||||||||||||||||||||||
Executive Vice President & Chief Operating Officer /President, CooperVision, Inc. | 2017 | $525,000 | $112,902 | $1,264,912 | $432,890 | $338,707 | $34,564 | $32,622 | $2,741,597 | |||||||||||||||||||||||||
2016 | $495,000 | $108,671 | $2,264,825 | $432,926 | $326,013 | $56,270 | $28,004 | $3,711,709 | ||||||||||||||||||||||||||
Holly R. Sheffield | 2018 | $207,436 | $31,613 | $999,972 | $1,000,020 | $94,840 | - | $255,553 | $2,589,434 | |||||||||||||||||||||||||
Executive Vice President & Chief Strategy Officer | ||||||||||||||||||||||||||||||||||
Robert D. Auerbach, M.D. | 2018 | $380,000 | $57,687 | $350,022 | $485,961 | $173,061 | $9,033 | $11,200 | $1,466,964 | |||||||||||||||||||||||||
President, CooperSurgical, Inc. | ||||||||||||||||||||||||||||||||||
Robert S. Weiss | 2018 | $925,000 | $234,950 | $3,492,644 | $937,242 | $704,850 | $12,693 | $89,887 | $6,397,267 | |||||||||||||||||||||||||
President & Chief Executive Officer (Former) | 2017 | $925,000 | $284,669 | $3,492,280 | $937,093 | $854,006 | - | $64,066 | $6,557,113 | |||||||||||||||||||||||||
2016 | $875,000 | $279,344 | $3,492,255 | $937,067 | $838,031 | $35,700 | $51,205 | $6,508,603 | ||||||||||||||||||||||||||
Carol R. Kaufman | 2018 | $482,040 | $181,922 | $956,682 | $379,169 | $111,930 | - | $763,278 | $2,875,020 | |||||||||||||||||||||||||
Executive Vice President, Secretary, Chief Administrative Officer & Chief Governance Officer (Former) | 2017 | $468,000 | $86,398 | $956,560 | $379,220 | $259,193 | $18,072 | $65,213 | $2,232,656 | |||||||||||||||||||||||||
2016 | $454,000 | $86,964 | $956,584 | $379,155 | $260,891 | $51,681 | $42,956 | $2,232,230 | ||||||||||||||||||||||||||
(1) | Amounts shown in the “Bonus” and |
Under the terms of her Separation Agreement and Mutual Release disclosed on Form 8-K in April 2018, Ms. Kaufman was guaranteed half of her cash incentive under the 2018 IPP at actual achievement and half at the greater of target or actual achievement. Amounts shown in the “Bonus” column for Ms. Kaufman reflect amounts attributable to the portions of her cash incentive which were either guaranteed by her Separation Agreement or the portion of awards based on the discretion of the Compensation Committee. Amounts shown in the “Non-Equity Incentive Plan Compensation” column are attributable to the portion of her bonus determined by quantitative factors.
The structure of our Incentive Payment Plan is discussed in more detail below in the narrative discussion following theGrants of Plan Based Awards Table on page 39. as well as in ourCompensation Discussion and Analysis on page 20.
(2) | Amounts shown in the “Option Awards” and “Stock Awards” columns reflect the aggregate grant date fair value of stock option, restricted stock unit, and performance share awards granted to each Named Executive Officer with respect to the |
37 | Page |
(3) | Change in value of accumulated pension benefits for the |
For the period from October 31, 2017 to October 31, 2018, the accumulated value of pension benefits reduced for the following Named Executive Officers:
Name | Benefit Reduced By: | |||||||||||||||||||||||||||
White | $8,194 | |||||||||||||||||||||||||||
Andrews | $10,717 | |||||||||||||||||||||||||||
McBride | $3,333 | |||||||||||||||||||||||||||
Kaufman | $24,329 |
36
(4) | Amounts included in the All Other Compensation column include the following: |
Name | Year | Company’s 401(k) Contributions | Automobile allowance and expenses | Income associated to life insurance | Personal Travel / Other | Year | Company’s | Automobile | Income | Relocation | Severance / | Personal | ||||||||||||
Robert S. Weiss | 2016 | $3,700 | $9,053 | $18,541 | $19,912 | |||||||||||||||||||
Albert G. White III | 2018 | $4,000 | $13,280 | $1,350 | - | - | $139 | |||||||||||||||||
2015 | $3,700 | $9,754 | $11,430 | $48,729 | �� | 2017 | $4,000 | $10,123 | $1,350 | - | - | $110 | ||||||||||||
2014 | $3,700 | $10,339 | $11,430 | $66 | 2016 | $3,700 | $12,102 | $1,344 | - | - | $0 | |||||||||||||
Brian G. Andrews | 2018 | $4,000 | $10,860 | $718 | $0 | $0 | $10 | |||||||||||||||||
Daniel G. McBride | 2016 | $3,700 | $9,072 | $2,070 | $13,161 | 2018 | $4,000 | $9,106 | $2,070 | $0 | $0 | $15,680 | ||||||||||||
2015 | $3,700 | $11,283 | $2,156 | $32,387 | 2017 | $4,000 | $8,967 | $2,070 | - | - | $17,585 | |||||||||||||
2014 | $3,700 | $11,431 | $1,950 | $11 | 2016 | $3,700 | $11,283 | $2,156 | - | - | $32,387 | |||||||||||||
Albert G. White III | 2016 | $3,700 | $13,804 | $1,350 | $310 | |||||||||||||||||||
Holly R. Sheffield | 2018 | $4,000 | $5,403 | $562 | $245,549 | $0 | $39 | |||||||||||||||||
Robert D. Auerbach, M.D. | 2018 | $4,000 | $7,200 | - | - | - | - | |||||||||||||||||
Robert S. Weiss | 2018 | $4,000 | $8,884 | $18,541 | $0 | $0 | $58,462 | |||||||||||||||||
2015 | $3,700 | $12,102 | $1,344 | $0 | 2017 | $4,000 | $9,256 | $4,064 | - | - | $46,745 | |||||||||||||
2014 | $3,700 | $13,904 | $1,222 | $11 | 2016 | $3,700 | $9,754 | $11,430 | - | - | $48,729 | |||||||||||||
Carol R. Kaufman | 2016 | $3,700 | $10,567 | $11,430 | $17,259 | 2018 | $4,000 | $8,512 | $11,430 | $0 | $711,811 | $27,525 | ||||||||||||
2015 | $3,700 | $10,233 | $11,430 | $33,970 | 2017 | $4,000 | $12,990 | $11,430 | - | - | $36,793 | |||||||||||||
2014 | $3,700 | $13,442 | $10,515 | $0 | 2016 | $3,700 | $10,233 | $11,430 | - | - | $33,970 | |||||||||||||
Greg W. Matz | 2016 | $3,700 | $9,769 | $3,870 | $0 | |||||||||||||||||||
2015 | $3,700 | $9,350 | $3,852 | $110 | ||||||||||||||||||||
2014 | $3,700 | $10,326 | $3,426 | $11 |
Personal Travel / Other amounts represent airfare, food, lodging, and other expenses paid for these executives in connection with Company events and other amounts which were determined to not be reimbursable expensesinherently related to the performance of these executive’s duties. Amounts in the “Relocation and Housing” column represent non-recurring amounts paid by the Company in connection with Ms. Sheffield’s relocation from New York to California at the time of her hire in 2018. Amounts in the “Severance” column represent one-time amounts guaranteed to Ms. Kaufman under IRS regulations.her Separation Agreement and Mutual Release.
Performance Share Awards
Amounts included in the “Stock Awards” column of theSummary Compensation Table include the value of deferred share awards granted to certain executives as Performance Share Awards. These awards are designed to deliver a variable number of shares depending on the achievement of specified levels of growth in ournon-GAAP earnings per share over a three-year period. If these awards do not achieve at least the threshold level of achievement, no shares will be distributed to the executives.distributed.
The value of the awards presented in the Summary Compensation Table for fiscal 20162018 is based on the target level of achievement. The following table shows the grant date value of these awards at each level of possible achievement:achievement. Each of these awards is subject to interpolation between levels of achievement.
Name | Threshold Achievement | Target Achievement | Maximum Achievement | Threshold (50% of Target) | Target Achievement | Maximum (150% of Target) | ||||||
Albert G. White III | $216,445 | $432,890 | $649,335 | |||||||||
Daniel G. McBride | $216,445 | $432,890 | $649,335 | |||||||||
Robert S. Weiss | $468,566 | $937,067 | $1,405,698 | $468,546 | $937,093 | $1,405,639 | ||||||
Daniel G. McBride | $216,454 | $432,926 | $649,361 | |||||||||
Albert G. White III | $216,454 | $432,926 | $649,361 | |||||||||
Carol R. Kaufman | $189,576 | $379,155 | $568,728 | $189,610 | $379,220 | $568,830 | ||||||
Greg W. Matz | $151,256 | $302,563 | $453,767 |
Equity award grants to our Named Executive Officers are discussed in more detail in theCompensation Discussion and Analysis beginning on page 19.
37
Grants of Plan Based Awards Table
This table presents information regarding the possible awards payable under our 20162018 Incentive Payment Plan and the value of certain equity awards made in the 20162018 fiscal year. Our equity grant practices and calculation of awards under the 20162018 Incentive Payment Plan are discussed in more detail in the Narrative section to this table below and in theCompensation Discussion and Analysis on page 19.20.
Estimated Future Payouts Under
| Estimated Future Payouts Under Equity Incentive Plan Awards (2)
| All Other Option Awards: Number of Securities Underlying Options (3) | Grant Date Fair | Estimated Future Payouts Under (1) | Estimated Future Payouts (2) | All Other (3) | All Other (4) | Exercise or Base Price of Option Awards ($/share) | Grant Date of Stock and (5) | |||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold |
Target | Maximum | Threshold | Target | Maximum | Grant Date | Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||||||||||||||||||||||||
Robert S. Weiss | 12/9/2015 | td08,938 | $875,000 | td,750,000 | 0 | 0 | 0 | 0 | $0 | |||||||||||||||||||||||||||||||||
1/29/2016 | $0 | $0 | $0 | 3,573 | 7,145 | 10,718 | 0 | $937,067 | ||||||||||||||||||||||||||||||||||
12/9/2015 | $0 | $0 | $0 | 0 | 0 | 0 | 93,777 | $3,492,255 | ||||||||||||||||||||||||||||||||||
Albert G. White III | 12/12/2017 | $62,828 | $630,800 | $1,261,600 | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||
12/12/2017 | - | - | - | - | - | - | - | 21,849 | $229.66 | $1,265,057 | ||||||||||||||||||||||||||||||||
12/12/2017 | - | - | - | - | - | - | - | 17,272 | $229.66 | $1,000,049 | ||||||||||||||||||||||||||||||||
12/12/2017 | - | - | - | 943 | 1,885 | 2,828 | - | - | $ 432,909 | |||||||||||||||||||||||||||||||||
5/1/2018
| -
| -
| -
| -
| -
| -
| -
| 34,479
| $230.09
| $2,000,127
| ||||||||||||||||||||||||||||||||
Brian G. Andrews | 12/12/2017 | $18,413 | $147,899 | $295,798 | - | - | - | - | - | |||||||||||||||||||||||||||||||||
12/12/2017 | - | - | - | - | - | - | - | 5,665 | $229.66 | $ 328,004 | ||||||||||||||||||||||||||||||||
12/12/2017 | - | - | - | - | - | - | 544 | - | $ 124,935 | |||||||||||||||||||||||||||||||||
5/1/2018
| -
| -
| -
| -
| -
| -
| -
| 4,310
| $230.09
| $ 250,023
| ||||||||||||||||||||||||||||||||
Daniel G. McBride | 12/9/2015 | $43,139 | $346,500 | $693,000 | 0 | 0 | 0 | 0 | $0 | 12/12/2017 | $36,663 | $490,800 | $981,600 | - | - | - | - | - | - | - | ||||||||||||||||||||||
1/29/2016 | $0 | $0 | $0 | 1,651 | 3,301 | 4,952 | 0 | $432,926 | ||||||||||||||||||||||||||||||||||
12/9/2015 | $0 | $0 | $0 | 0 | 0 | 0 | 33,966 | td,264,894 | ||||||||||||||||||||||||||||||||||
12/9/2015 | $0 | $0 | $0 | 0 | 0 | 0 | 26,851 | $999,931 | ||||||||||||||||||||||||||||||||||
Albert G. White III | 12/9/2015 | $41,396 | $332,500 | $665,000 | 0 | 0 | 0 | 0 | $0 | |||||||||||||||||||||||||||||||||
1/29/2016 | $0 | $0 | $0 | 1,651 | 3,301 | 4,952 | 0 | $432,926 | ||||||||||||||||||||||||||||||||||
12/9/2015 | $0 | $0 | $0 | 0 | 0 | 0 | 26,851 | $999,931 | ||||||||||||||||||||||||||||||||||
12/9/2015 | $0 | $0 | $0 | 0 | 0 | 0 | 26,851 | $999,931 | ||||||||||||||||||||||||||||||||||
Carol R. Kaufman | 12/9/2015 | $33,914 | td72,400 | $544,800 | 0 | 0 | 0 | 0 | $0 | |||||||||||||||||||||||||||||||||
1/29/2016 | $0 | $0 | $0 | 1,446 | 2,891 | 4,337 | 0 | $379,155 | ||||||||||||||||||||||||||||||||||
12/9/2015 | $0 | $0 | $0 | 0 | 0 | 0 | 25,687 | $956,584 | ||||||||||||||||||||||||||||||||||
Greg W. Matz | 12/9/2015 | td9,102 | td33,750 | $467,500 | 0 | 0 | 0 | 0 | $0 | |||||||||||||||||||||||||||||||||
1/29/2016 | $0 | $0 | $0 | 1,154 | 2,307 | 3,461 | 0 | $302,563 | ||||||||||||||||||||||||||||||||||
12/9/2015 | $0 | $0 | $0 | 0 | 0 | 0 | 21,682 | $807,438 | ||||||||||||||||||||||||||||||||||
12/12/2017 | - | - | - | - | - | - | - | 21,849 | $229.66 | $1,265,057 | ||||||||||||||||||||||||||||||||
12/12/2017 | - | - | - | - | - | - | - | 17,272 | $229.66 | $1,000,049 | ||||||||||||||||||||||||||||||||
12/12/2017
| -
| -
| -
| 943
| 1,885
| 2,828
| -
| -
| $ 432,909
|
39 | Page |
Estimated Future Payouts Under (1) | Estimated Future Payouts (2) | All Other (3) | All Other (4) | Exercise or Base Price of Option Awards ($/share) | Grant Date of Stock and (5) | |||||||||||||||||
Name | Grant Date | Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||||||||||
Holly R. Sheffield | 6/4/2018 | $15,495 | $124,462 | $248,923 | ||||||||||||||||||
6/4/2018 | - | - | - | - | - | - | - | 17,528 | $226.30 | $ 999,972 | ||||||||||||
6/4/2018
| -
| -
| -
| 4,419
| -
| $1,000,020
| ||||||||||||||||
Robert D. Auerbach, M.D. | 12/12/2017 | $5,005 | $201,000 | $402,000 | - | - | - | - | - | |||||||||||||
12/12/2017 | - | - | - | - | - | - | - | 4,318 | $229.66 | $ 250,012 | ||||||||||||
12/12/2017 | - | - | - | - | - | - | 2,116 | - | $ 485,961 | |||||||||||||
6/1/2018
| -
| -
| -
| -
| -
| -
| -
| 1,739
| $228.11
| $ 100,010
| ||||||||||||
Robert S. Weiss | 12/12/2017 | $115,163 | $925,000 | $1,850,000 | - | - | - | - | - | - | - | |||||||||||
12/12/2017 | - | - | - | - | - | - | - | 60,322 | $229.66 | $3,492,644 | ||||||||||||
12/12/2017
| -
| -
| -
| 2,041
| 4,081
| 6,122
| -
| -
| -
| $ 937,242
| ||||||||||||
Carol R. Kaufman | 12/12/2017 | $36,008 | $289,224 | $578,448 | - | - | - | - | - | - | - | |||||||||||
12/12/2017 | - | - | - | - | - | - | - | 16,523 | $229.66 | $ 956,682 | ||||||||||||
12/12/2017
| -
| -
| -
| 826
| 1,651
| 2,477
| -
| -
| -
| $ 379,169
|
(1) | Amounts represent the threshold, target, and maximum cash bonus amounts which could have been paid to each Named Executive Officer under our |
(2) | Amounts represent the threshold, target, and maximum amounts of shares distributable under performance share awards granted on |
(3) | Awards listed in this column were granted on |
(4) | Option awards listed in this column were granted at 100% of fair market value on the date |
Messrs. White and McBride each received a grant on December 12, 2017 of approximately $1,000,000 target value which will vest in full on the 3rd anniversary of the grant date. Mr. Andrews also received a grant of approximately $100,000 target value which will vest in full on the 3rd anniversary of the grant date. All other listed awards will vest as follows:
Grant Date | Vesting | |
December | In equal portions on the | |
May 1, 2018 | In equal portions on the 3rd – 5th anniversaries of | |
June 1, 2018 | In equal portions on the 3rd – 5th anniversaries of the date of grant | |
June 4, 2018 | In equal portions on the 2nd – 5th anniversaries of the date of grant |
Due to provisions in the awards allowing the grants to continue vesting after their retirement, options granted to Mr. Weiss and Ms. Kaufman were considered vested for accounting purposes on the first anniversary of the date of grant, but exercisability of these awards is restricted to the same vesting schedule as other grants on this date. If either Mr. Weiss or Ms. Kaufman provides services to, or owns more than 5% of, a competitor after their date of retirement, they will forfeit any remaining outstanding options.
(5) | Amounts included in the “Grant Date Fair Value of Stock and Option Awards” column represent the grant date fair value recognized with respect to the |
38
40 | Page |
AnnualNon-Equity Incentives
The Compensation Committee adopts an annual Incentive Payment Plan, or IPP, to governprovide for short-term cash incentive awards tied to the achievement of our business goals, withgoals. Financial targets are derived from our approved fiscal year budget. Specific targets and actual achievement under the 2016The IPP are discussed in more detail in theCompensation Discussion and Analysis on page 19.
We are also presentingis governed by the 2017 Executive Incentive Plan (the “2017 EIP”), as approved by stockholders in this proxy statement for stockholder approval. If approved, the 2017 EIP will govern annual cash incentives and will allow for such awards to potentially qualify for tax deductibility under Internal Revenue Code Section 162(m). The 2017 EIP is discussed in more detail inProposal 3-Approval of the 2017 Executive Incentive Plan on page 61.March 2017.
Participation levels in the IPP are set by the Compensation Committee for our executives. Targets represent a designated percentage of base salary for the fiscal year and that percentage controls the potential award that can be achieved under the IPP as follows:
As presented in theGrants of Plan Based Awards Table, target amounts represent the potential bonus that would be paid on 100% achievement of both quantitative factors and the discretionary portion of awards. Threshold amounts represent the minimum achievement necessary for payment on only the lowest weighted quantitative factor and no award of discretionary amounts. All awards are capped at a maximum of 200% of the target bonus opportunity.
Specific budget targets and actual achievement under the 2018 IPP are discussed in more detail in theCompensation Discussion and Analysis on page 20.
Equity Awards
We grant equity incentive awards as a tool to promote retention and to connect compensation with our long-term performance and stockholder returns. These awards are granted under our 2007 Long-Term Incentive Plan (as most recently restated and amended)amended in March 2016) and may vest based on continued service over time and/or performance criteria.
The Compensation Committee utilizes a mixture of equity award types, including stock options and performance shares. Stock options are granted at 100% of fair market value on the date of grant and have a10-year life. Options vest over a five-year period. Performance share awards vest on the achievement of specified levels of earnings per share over a three-year performance period.
Equity award grants to our Named Executive Officers are discussed in more detail in theCompensation Discussion and Analysisbeginning on page 19.
39
41 | Page |
Outstanding Equity Awards at Fiscal Year End Table
This table provides information regarding the equity award holdings of the Named Executive Officers as of the end of the 20162018 fiscal year.
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 Not Vested | Market Not | Equity Awards: of Unearned Rights That Have Not Vested | Equity Plan Awards: Value of Units or Other Not | ||||||||||||
Robert S. Weiss | 22,500 | - | $58.07 | 12/13/2020 | (4) | |||||||||||||||
10,000 | - | $58.07 | 12/13/2020 | (5) | ||||||||||||||||
- | 36,769 | $95.74 | 12/12/2022 | (6) | ||||||||||||||||
29,272 | 43,906 | $119.89 | 12/11/2023 | (8) | ||||||||||||||||
(9) | 10,659 | $1,876,410 | ||||||||||||||||||
13,039 | 52,156 | $162.28 | 12/9/2024 | (11) | ||||||||||||||||
(13) | 8,097 | $1,425,396 | ||||||||||||||||||
- | 93,777 | $131.60 | 12/9/2025 | (14) | ||||||||||||||||
(15) | 10,718 | $1,886,797 | ||||||||||||||||||
Daniel G. McBride | 20,000 | - | $42.65 | 10/25/2017 | (1) | |||||||||||||||
6,000 | - | $13.10 | 12/11/2018 | (3) | ||||||||||||||||
6,186 | 4,124 | $95.74 | 12/12/2022 | (6) | ||||||||||||||||
(7) | 1,360 | $239,414 | ||||||||||||||||||
4,793 | 7,188 | $119.89 | 12/11/2023 | (8) | ||||||||||||||||
(9) | 4,781 | $ 841,647 | ||||||||||||||||||
(10) | 2,502 | $440,452 | ||||||||||||||||||
2,362 | 9,445 | $162.28 | 12/9/2024 | (11) | ||||||||||||||||
(12) | 2,834 | $498,897 | ||||||||||||||||||
(13) | 3,741 | $ 658,566 | ||||||||||||||||||
- | 26,851 | $131.60 | 12/9/2025 | (14) | ||||||||||||||||
- | 33,966 | $131.60 | 12/9/2025 | (14) | ||||||||||||||||
(15) | 4,952 | $ 871,750 | ||||||||||||||||||
Albert G. White III | 6,186 | 4,124 | $95.74 | 12/12/2022 | (6) | |||||||||||||||
(7) | 1,360 | $239,414 | ||||||||||||||||||
3,279 | 4,917 | $119.89 | 12/11/2023 | (8) | ||||||||||||||||
(9) | 3,338 | $ 587,622 | ||||||||||||||||||
(10) | 1,711 | $301,204 | ||||||||||||||||||
1,508 | 6,029 | $162.28 | 12/9/2024 | (11) | ||||||||||||||||
(12) | 1,809 | $318,456 | ||||||||||||||||||
(13) | 2,615 | $ 460,345 | ||||||||||||||||||
- | 26,851 | $131.60 | 12/9/2025 | (14) | ||||||||||||||||
- | 26,851 | $131.60 | 12/9/2025 | (14) | ||||||||||||||||
(15) | 4,952 | $ 871,750 |
40
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 Not Vested | Market Not | Equity Awards: of Unearned Rights That Have Not Vested | Equity Plan Awards: Value of Units or Other Not | ||||||||||||
Carol R. Kaufman | 16,500 | - | $13.21 | 12/10/2018 | (2) | |||||||||||||||
33,000 | - | $13.10 | 12/11/2018 | (3) | ||||||||||||||||
8,018 | 5,344 | $95.74 | 12/12/2022 | (6) | ||||||||||||||||
(7) | 1,764 | $310,535 | ||||||||||||||||||
4,168 | 6,251 | $119.89 | 12/11/2023 | (5) | ||||||||||||||||
(9) | 4,313 | $ 759,261 | ||||||||||||||||||
(10) | 2,176 | $383,063 | ||||||||||||||||||
1,786 | 7,143 | $162.28 | 12/9/2024 | (11) | ||||||||||||||||
(12) | 2,144 | $377,430 | ||||||||||||||||||
(13) | 3,267 | $ 576,707 | ||||||||||||||||||
- | 25,687 | $131.60 | 12/9/2025 | (14) | ||||||||||||||||
(15) | 4,337 | $ 763,485 | ||||||||||||||||||
Greg W. Matz | - | 4,124 | $95.74 | 12/12/2022 | (6) | |||||||||||||||
(7) | 1,360 | $239,414 | ||||||||||||||||||
2,279 | 4,917 | $119.89 | 12/11/2023 | (8) | ||||||||||||||||
(9) | 3,338 | $ 587,622 | ||||||||||||||||||
(10) | 1,711 | $301,204 | ||||||||||||||||||
1,508 | 6,029 | $162.28 | 12/9/2024 | (11) | ||||||||||||||||
(12) | 1,809 | $318,456 | ||||||||||||||||||
(13) | 2,615 | $ 460,345 | ||||||||||||||||||
- | 21,682 | $131.60 | 12/9/2025 | (14) | ||||||||||||||||
(15) | 3,461 | $ 609,274 |
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 | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | ||||||||||||
Albert G. White | 10,310 | - | $95.74 | 12/12/2022 | (1) | |||||||||||||||
6,557 | 1,639 | $119.89 | 12/11/2023 | (2) | ||||||||||||||||
(3) | 570 | $147,237 | ||||||||||||||||||
4,523 | 3,014 | $162.28 | 12/9/2024 | (4) | ||||||||||||||||
(5) | 904 | $233,512 | ||||||||||||||||||
10,741 | 16,110 | $131.60 | 12/9/2025 | (6) | ||||||||||||||||
- | 26,851 | $131.60 | 12/9/2025 | (7) | ||||||||||||||||
(9) | 4,952 | $1,279,151 | ||||||||||||||||||
5,750 | 22,998 | $175.31 | 12/13/2026 | (10) | ||||||||||||||||
(12) | 3,497 | $903,310 | ||||||||||||||||||
- | 21,849 | $229.66 | 12/12/2027 | (14) | ||||||||||||||||
- | 17,272 | $229.66 | 12/12/2027 | (17) | ||||||||||||||||
(15) | 2,828 | $730,501 | ||||||||||||||||||
-
| 34,479
| $230.09
| 5/1/2028
| (20)
| ||||||||||||||||
Brian G. Andrews | 1,917 | 479 | $119.89 | 12/11/2023 | (2) | |||||||||||||||
(3) | 166 | $42,879 | ||||||||||||||||||
1,541 | 1,026 | $162.28 | 12/9/2024 | (4) | ||||||||||||||||
(5) | 308 | $79,559 | ||||||||||||||||||
1,343 | 2,013 | $131.60 | 12/9/2025 | (6) | ||||||||||||||||
(8) | 570 | $147,237 | ||||||||||||||||||
(9) | 2,357 | $608,837 | ||||||||||||||||||
569 | 2,272 | $175.31 | 12/13/2026 | (10) | ||||||||||||||||
(11) | 570 | $147,237 | ||||||||||||||||||
(13) | 555 | $143,362 | ||||||||||||||||||
- | 3,886 | $229.66 | 12/12/2027 | (14) | ||||||||||||||||
- | 1,779 | $229.66 | 12/12/2027 | (18) | ||||||||||||||||
(16) | 544 | $140,521 | ||||||||||||||||||
-
| 4,310
| $230.09
| 5/1/2028
| (20)
| ||||||||||||||||
Daniel G. McBride | 9,585 | 2,396 | $119.89 | 12/11/2023 | (2) | |||||||||||||||
(3) | 834 | $215,431 | ||||||||||||||||||
7,085 | 4,722 | $162.28 | 12/9/2024 | (4) | ||||||||||||||||
(5) | 1,417 | $366,025 | ||||||||||||||||||
13,587 | 20,379 | $131.60 | 12/9/2025 | (6) | ||||||||||||||||
- | 26,851 | $131.60 | 12/9/2025 | (7) | ||||||||||||||||
(9) | 4,952 | $1,279,151 | ||||||||||||||||||
5,750 | 22,998 | $175.31 | 12/13/2026 | (10) | ||||||||||||||||
(12) | 3,497 | $903,310 | ||||||||||||||||||
- | 21,849 | $229.66 | 12/12/2027 | (14) | ||||||||||||||||
- | 17,272 | $229.66 | 12/12/2027 | (17) | ||||||||||||||||
(15) | 2,828 | $730,501 |
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 | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | ||||||||||||
Holly R. Sheffield | - | 17,528 | $226.30 | 6/4/2028 | (22) | |||||||||||||||
(23) | 4,419 | $1,141,472 | ||||||||||||||||||
Robert D. Auerbach M.D. | (3) | 750 | $193,733 | |||||||||||||||||
(5) | 1,109 | $286,466 | ||||||||||||||||||
1,208 | 3,624 | $131.60 | 12/9/2025 | (6) | ||||||||||||||||
(8) | 1,026 | $265,026 | ||||||||||||||||||
(9) | 2,828 | $730,501 | ||||||||||||||||||
1,023 | 4,090 | $175.31 | 12/13/2026 | (10) | ||||||||||||||||
(11) | 1,254 | $323,921 | ||||||||||||||||||
(13) | 666 | $172,034 | ||||||||||||||||||
- | 4,318 | $229.66 | 12/12/2027 | (14) | ||||||||||||||||
(16) | 435 | $112,365 | ||||||||||||||||||
(19) | 592 | $152,920 | ||||||||||||||||||
(16) | 1,089 | $281,300 | ||||||||||||||||||
- | 1,739 | $228.11 | 6/1/2028 | (21) | ||||||||||||||||
Robert S. Weiss | - | 14,635 | $119.89 | 12/11/2023 | (2) | |||||||||||||||
39,117 | 26,078 | $162.28 | 12/9/2024 | (4) | ||||||||||||||||
37,511 | 56,266 | $131.60 | 12/9/2025 | (6) | ||||||||||||||||
(9) | 10,718 | $2,768,567 | ||||||||||||||||||
15,874 | 63,496 | $175.31 | 12/13/2026 | (10) | ||||||||||||||||
(12) | 7,569 | $1,955,148 | ||||||||||||||||||
— | 60,322 | $229.66 | 12/12/2027 | (14) | ||||||||||||||||
(15) | 6,122 | $1,581,374 | ||||||||||||||||||
Carol R. Kaufman | 8,336 | 2,083 | $119.89 | 12/11/2023 | (2) | |||||||||||||||
(3) | 725 | $187,275 | ||||||||||||||||||
5,358 | 3,571 | $162.28 | 12/9/2024 | (4) | ||||||||||||||||
(5) | 1,072 | $276,908 | ||||||||||||||||||
10,275 | 15,412 | $131.60 | 12/9/2025 | (6) | ||||||||||||||||
(9) | 4,337 | $1,120,290 | ||||||||||||||||||
4,348 | 17,392 | $175.31 | 12/13/2026 | (10) | ||||||||||||||||
(12) | 3,063 | $791,204 | ||||||||||||||||||
- | 16,523 | $229.66 | 12/12/2027 | (14) | ||||||||||||||||
(15)
| 2,477
| $639,834
|
Options were granted on December |
|
41
Options were granted on December 11, 2013 and become vested and exercisable in equal portions on each of the first through fifth anniversaries of the date of grant. Due to provisions in these awards allowing these grants to continue vesting after termination due to retirement, the options granted to Mr. Weiss and Ms. Kaufman were considered vested for accounting purposes on the first anniversary of their date of grant, but exercisability of these awards is restricted to the same vesting schedule as other grants on this date. If either Mr. Weiss or Ms. Kaufman provides services to, or owns more than 5% of, a competitor after their date of retirement, they will forfeit any remaining outstanding options. |
43 | Page |
(3) | Award granted as RSUs on December 11, 2013 |
Options were granted on December 9, 2014 and become vested and exercisable in equal portions on each of the first through fifth anniversaries of the date of grant. Due to provisions in these awards allowing these grants to continue vesting after termination due to retirement, the options granted to Mr. Weiss and Ms. Kaufman were considered vested for accounting purposes on the first anniversary of their date of grant, but exercisability of these awards is restricted to the same vesting schedule as other grants on this date. If either Mr. Weiss or Ms. Kaufman provides services to, or owns more than 5% of, a competitor after their date of retirement, they will forfeit any remaining outstanding options. |
Award granted as RSUs on December 9, 2014 and valued at |
Options were granted on December 9, 2015 and become vested and exercisable in equal portions on each of the first through fifth anniversaries of the date of grant. Due to provisions in these awards allowing these grants to continue vesting after termination due to retirement, the options granted to Mr. Weiss and Ms. Kaufman were considered vested for accounting purposes on the first anniversary of their date of grant, but exercisability of these awards is restricted to the same vesting schedule as other grants on this date. If either Mr. Weiss or Ms. Kaufman provides services to, or owns more than 5% of, a competitor after their date of retirement, they will forfeit any remaining outstanding options. |
Options were granted on December 9, 2015 and become vested and exercisable in equal portions on each of the third, fourth and fifth anniversaries of the date of grant. |
(8) | Award granted as RSUs on December 9, 2015 and valued at $258.31 per share, the closing price of our stock on October 31, 2018. The units vest in equal portions on each of January 8, 2017, January 8, 2018, January 8, 2019, January 8, 2020, and January 8, 2021. |
(9) | Performance share awards granted on January 29, 2016 which will vest depending on the achievement of specified levels of growth in |
42
Option Exercises and Stock Vested Table
The following table details the number of shares acquired on exercise of stock options and release of shares upon vesting of performance share awards and awards of Restricted Stock Units during the 2016 fiscal year by the Named Executive Officers.
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting (1) | Value Realized on Vesting (1) | ||||||||||||
Robert S. Weiss | 151,839 | $13,095,723 | 18,750 | $2,425,838 | ||||||||||||
Daniel G. McBride | 10,000 | $1,217,838 | 10,387 | $1,341,046 | ||||||||||||
Albert G. White III | 20,000 | $3,451,601 | 9,868 | $1,274,245 | ||||||||||||
Carol R. Kaufman | 49,500 | $6,445,154 | 6,498 | $841,996 | ||||||||||||
Greg W. Matz | 20,936 | $2,006,644 | 4,918 | $637,131 |
(10) | Options were granted on December 13, |
retirement, they will forfeit any remaining outstanding options.
Name | Number of Shares Acquired on Vesting | Value Realized on Vesting | Value at Last Fiscal Year End | |||
Robert S. Weiss | 15,000 | $1,759,500 | $1,930,650 | |||
Daniel G. McBride, Esq. | 4,950 | $580,635 | $637,115 | |||
Albert G. White III | 4,950 | $580,635 | $637,115 |
Non-Qualified Deferred Compensation Table
The table below sets forth certain information as of October 31, 2016 with respect to thenon-qualified deferred compensation plans in which our Named Executive Officers participate.
Name | Plan Name | Registrant Contributions in Last Fiscal Year (1) | Aggregate Earnings in Last Fiscal Year (2) | Aggregate Withdrawals / Distributions (3) | Aggregate Balance at Last Fiscal Year End (4) | |||||
Robert S. Weiss | 2007 Long-Term Incentive Plan | $-0- | $-0- | $1,930,650 | $-0- | |||||
Daniel G. McBride | 2007 Long-Term Incentive Plan | $-0- | $90,189 | $637,115 | $871,398 | |||||
Albert G. White III | 2007 Long-Term Incentive Plan | $-0- | $-0- | $637,115 | $-0- | |||||
Carol R. Kaufman | -- | $-0- | $-0- | $-0- | $-0- | |||||
Greg W. Matz | -- | $-0- | $-0- | $-0- | $-0- |
Award granted as RSUs on December 13, 2016 and |
43
(12) | Performance share awards granted on February 1, 2017 which will vest depending on the achievement of specified levels of growth in earnings per share for the 2019 fiscal year. Share amounts represent maximum payout amounts (150% of target) and are valued at $258.31 per share, the closing price of our stock on October 31, 2018. |
(13) | Award granted as RSUs on February 1, 2017 and valued at $258.31 per share, the closing price of our stock on October 31, 2018. The units vest in full on February 1, 2020. |
44 | Page |
(14) | Options were granted on December 12, 2017 and become vested and exercisable in equal portions on each of the first through fifth anniversaries of the date of grant. Due to provisions in these awards allowing these grants to continue vesting after termination due to retirement, the options granted to Mr. Weiss and Ms. Kaufman were considered vested for accounting purposes on the first anniversary of their date of grant, but exercisability of these awards is restricted to the same vesting schedule as other grants on this date. If either Mr. Weiss or Ms. Kaufman provides services to, or owns more than 5% of, a competitor after their date of retirement, they will forfeit any remaining outstanding options. |
(15) | Performance share awards granted on December 12, 2017 which will vest depending on the achievement of specified levels of growth in earnings per share for the 2020 fiscal year. Share amounts represent maximum payout amounts (150% of target) and are valued at $258.31 per share, the closing price of our stock on October 31, 2018. |
(16) | Award granted as RSUs on December 12, 2017 and valued at $258.31 per share, the closing price of our stock on October 31, 2018. The units vest in equal portions on each of January 8, 2019, January 8, 2020, January 8, 2021, January 8, 2022, and January 8, 2023. |
(17) | Options were granted on December 12, 2017 and become vested and exercisable in full on the third anniversary of the date of grant. |
(18) | Award granted as options on December 12, 2017 and valued at $258.31 per share, the closing price of our stock on October 31, 2018. The units vest in full on February 1, 2021. |
(19) | Award granted as RSUs on December 12, 2017 and valued at $258.31 per share, the closing price of our stock on October 31, 2018. The units vest in full on February 1, 2021. |
(20) | Options were granted on May 1, 2018 and become vested and exercisable in equal portions on each of the third through fifth anniversaries of the date of grant. |
(21) | Options were granted on June 1, 2018 and become vested and exercisable in equal portions on each of the third through fifth anniversaries of the date of grant. |
(22) | Options were granted on June 4, 2018 and become vested and exercisable in equal portions on each of the second through fifth anniversaries of the date of grant. |
(23) | Award granted as RSUs on June 4, 2018 and valued at $258.31 per share, the closing price of our stock on October 31, 2018. The units vest in equal portions on the second through fifth anniversaries of the date of grant. |
Option Exercises and Stock Vested Table
The following table details the number of shares acquired by the Named Executive Officers on exercise of stock options or release of shares upon vesting of Performance Share and Restricted Stock Unit awards during the 2018 fiscal year.
Option Awards | Stock Awards | |||||||
Name | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting | ||||
Albert G. White, III | - | - | 3,447 | $819,344 | ||||
Brian G. Andrews | - | - | 2,272 | $541,917 | ||||
Daniel G. McBride | 10,310 | $1,739,327 | 4,716 | $1,122,290 | ||||
Holly R. Sheffield | - | - | - | - | ||||
Robert D. Auerbach, M.D. | - | - | 4,429 | $1,044,707 | ||||
|
|
|
|
| ||||
|
|
|
|
| ||||
Robert S. Weiss | 127,812 | $18,588,461 | 5,398 | $1,315,007 | ||||
Carol R. Kaufman | 13,362 | $1,979,476 | 4,327 | $1,028,470 |
45 | Page |
Credited service and value of the accumulated benefits payable to our Named Executive Officers as of October 31, 20162018 under our Retirement Income Plan at the normal retirement age of 65 are as follows:
Name | Number of Years of Credited Service | Present Value of Accumulated Benefit (1) | Payments During Last Fiscal Year | |||
Robert S. Weiss (2) | 38.75 | $919,459 | $-0- | |||
Daniel G. McBride | 10.67 | $258,801 | $-0- | |||
Albert G. White III | 9.5 | $195,852 | $-0- | |||
Carol R. Kaufman (2) | 21.07 | $732,033 | $-0- | |||
Greg W. Matz | 5.5 | $167,295 | $-0- |
Name | Number of Years of Credited Service | Present Value of Accumulated Benefit (1) | Payments During Last Fiscal Year | |||
Albert G. White, III | 11.50 | $215,732 | - | |||
Brian G. Andrews | 11.50 | $127,430 | - | |||
Daniel G. McBride | 12.67 | $290,032 | - | |||
Holly R. Sheffield | - | - | - | |||
Robert D. Auerbach, M.D. | 12.50 | $352,186 | - | |||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
Robert S. Weiss | 40.75 | $932,032 | - | |||
Carol R. Kaufman | 23.07 | $725,776 | - |
(1) | Present value is calculated as of the October 31, |
(2) | Mr. Weiss and Ms. Kaufman are both over |
Narrative to Pension Benefits Table
OurThe Company’s Retirement Income Plan (the “Plan”) was adopted in December 1983. The majority of the Company’s U.S. employees who work at least 1,000 hours per year are covered by the Plan. For services performed after December 31, 1988, members are entitled to an annual retirement benefit equal to 0.60% of base annual compensation up to $10,000 and 1.20% of base annual compensation which exceeds $10,000 but is not in excess of the applicable annual maximum compensation permitted to be taken into account under Internal Revenue Service guidelines for each year of service. Furthermore, current active members are entitled to an annual retirement benefit equal to 1.20% of base annual compensation up to the applicable annual maximum compensation for each year of service in excess of 35 Plan Years of service. For service prior to January 1, 1989, members are entitled to an annual retirement benefit equal to 0.75% of base annual compensation up to the Social Security Wage Base in effect that year and 1.50% of base annual compensation in excess of the Social Security Wage Base for each year of service.
Credited service and value of the accumulated benefits payable as of October 31, 2016 under the Company’s Retirement Income Plan at the normal retirement age of 65 are basedBased on the current accumulated benefits for the Named Executive Officers. TheOfficers, the estimated annual benefits payable under this Plan upon retirement (at the normal retirement age of 65) are as follows:
Officer | Estimated Annual Benefits Payable (1) | |
| $ | |
Brian G. Andrews | $110,461 | |
Daniel G. McBride | $ | |
| $ | |
Robert D. Auerbach, M.D. | $57,801 | |
Robert S. Weiss | $89,470 | |
Carol R. Kaufman | $ | |
|
(1) | Mr. Weiss and Ms. Kaufman are both over |
(2) | As of fiscal year end, Ms. Sheffield is not yet vested in the retirement income plan. |
46 | Page |
44
The ratio of our CEO’s total annual compensation to the median annual total compensation of all employees excluding the CEO (the “CEO Pay Ratio”) is a reasonable estimate calculated in a manner consistent with Item 402(u) of RegulationS-K.
To determine the CEO Pay Ratio, we identified the median employee as of November 30, 2018 using base salary for all employees globally. We believe this measure most reasonably reflects the typical annual compensation of our employee population and was consistently applied for all employees.
Salary amounts were converted from local currency to USD for comparison purposes. Conversions were based on exchange rates at November 30, 2018. Once the median employee was identified, we calculated the median employee’s total annual compensation in accordance with the requirements of the Summary Compensation Table. Additionally, we annualized Mr. White’s compensation to reflect his compensation as if he had served as CEO for the full fiscal year.
As calculated, we determined:
The total compensation of our median-paid employee was $37,289.
• | The total compensation of Mr. White was $6,356,111 (as described above in theSummary Compensation Table and annualized to reflect compensation as CEO for the full 2018 fiscal year). |
The ratio of CEO compensation to the median employee was 170 : 1.
47 | Page |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
We have agreements with our Named Executive Officers that provide for post-employment compensation in the event their employment terminates for specified reasons. The following tables provide estimated payments under theseIf their employment terminates other than as provided for in their agreements, if termination of employment occurred on October 31, 2016. Outstanding equity awards are valued at $176.04 per share, which was the fair market value of our common stock on October 31, 2016. Upon termination of employment,standard severance policies for all amounts due to the Named Executive Officersemployees will be paid in monthly installments.apply.
Messrs. WeissMr. White and WhiteDr. Auerbach each have individual agreements.agreements with the Company. All other agreements with the Named Executive Officers are subject to our Change in Control Severance Plan adopted onin May 21, 2007.
The Change in Control Severance Plan provides severance benefits to certain of our key employees if certainspecific events occur. Agreements under this plan require prior approval of the Organization & Compensation Committee before they are offered to employees and the plan is designed to be an “employee welfare benefit plan,” as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended, or ERISA. At the time of this Proxy Statement, approximately 25 employees have agreements in place under this plan.
Robert S. Weiss
Our severance agreement with Mr. Weiss originally took effect in August 1989. Under the agreement, Mr. Weiss would be entitled to certain severance payments in the event of his termination. He would also be entitled to a prorated portion of his annual cash bonus, immediate vesting in his outstanding equity awards, and continued coverage under our benefits program for up to 18 months. Mr. Weiss is also fully vested in our Retirement Income Plan and would retain his accrued benefits.
The agreement with Mr. Weiss alsofollowing table provides for certain limitedestimated payments to our Named Executive Officers if termination of employment occurred on October 31, 2018. Upon termination of employment, all amounts due to the Named Executive Officers will be paid in the event that he voluntarily resigns his position without good reason if he providesmonthly installments.
Amounts Payable on Termination or a minimum of 45 days’ notice of his resignation.Change in Control
Voluntary Resignation | Termination without Cause or Resignation for Good Reason | Termination after Change of Control or Separation After Request to Relocate | Retirement | Death | ||||||||||||||||
Severance Payment(1) | $218,750 | $1,312,500 | $875,000 | $0 | $1,312,500 | |||||||||||||||
Incentive Payment Plan (2) | $1,117,375 | $1,117,375 | $1,117,375 | $1,117,375 | $1,117,375 | |||||||||||||||
Present Value of Accumulated Pension Benefits(3) | $802,352 | $802,352 | $802,352 | $802,352 | $802,352 | |||||||||||||||
Equity Awards(4) | $0 | $19,419,063 | $20,519,666 | $15,152,198 | $7,801,760 | |||||||||||||||
Benefits (5) | $0 | $33,551 | $22,367 | $0 | $800,000 | |||||||||||||||
Total Payable on Separation | $2,138,477 | $22,684,841 | $23,336,760 | $17,071,925 | $11,833,987 | |||||||||||||||
|
| |||||||||||||||||||
Termination without Cause (1) | Change in Control (2) | Death (3) | ||||
Albert G. White | $5,957,853 | $9,202,861 | $7,076,697 | |||
Brian G. Andrews | $999,690 | $4,091,479 | $1,293,280 | |||
Daniel G. McBride | $5,231,089 | $19,334,701 | $6,327,810 | |||
Holly R. Sheffield | $149,609 | $2,828,996 | $126,453 | |||
Robert D. Auerbach, M.D. | $763,756 | $1,276,551 | $1,062,282 |
(1) | Amounts payable on termination without cause |
Mr. Weiss’ severance agreement provides that if he is entitled to payment for any of the above reasons, his estate will receive the same payments in the event of his death. For purposes of estimating payments on death for the above table, the maximum payout of 150% of base salary has been used on the assumption that severance at this
45
level was triggered immediately prior to his death and his estate is entitled to such payments under the agreement. No severance is automatically paid upon retirement or death under Mr. Weiss’ agreement or Company policy.
(2) | Amounts payable on change in control represent 100% of base salary for each of Messrs. White and Andrews and 200% of base salary for Mr. McBride and Ms. Sheffield, in accordance with underlying agreements for these executives. Amounts also represent the value of the annual cash bonus |
Amounts payable on change in control for Dr. Auerbach represent severance in accordance with standard company policy, annual cash bonus earned |
(3) | Amounts payable on the |
Upon termination without cause, voluntary resignation
Retirement of Mr. Weiss and Ms. Kaufman
Mr. Weiss and Ms. Kaufman each announced their retirement during the 2018 fiscal year. Per agreement with good reason, termination afterthe Company, both Mr. Weiss and Ms. Kaufman remained employed with the Company through December 31, 2018, in a change in control, or separation after a requestnon-executive capacity, to relocate,assist with the executive transition. Mr. Weiss’ outstanding equity awards which were not vested will immediately become fully vestedWeiss continues to serve on our Board of Directors and exercisable. All unvested awards will be entirely forfeit on voluntary resignation without good reason regardlesscompensated as aNon-Executive Director starting January 1, 2019.
As of notice provided.December 31, 2018, Mr. Weiss and Ms. Kaufman were eligible to receive the following amounts:
In the event of retirement or death, outstanding equity awards will be treated in accordance with the terms of their associated agreements. Termination for retirement or upon death will result in payment of a pro rata portion of performance shares which have not completed their performance cycle
Severance Payment | Cash Bonus | Current Value of Pension | Outstanding Equity Awards | Total | ||||||
Robert S. Weiss | $932,400 | $932,032 | $20,680,303 | $22,544,735 | ||||||
Carol R. Kaufman | $711,811 | $345,591 | $725,776 | $10,086,536 | $11,869,534 |
Equity award value is based on a stock price of $254.50, which was the portionclosing price of the performance cycle completed at termination.
For awards prior to the 2013 fiscal year, outstandingour stock options that are unvested at the date of Mr. Weiss’ retirement or death will be forfeit. Vested options will remain outstanding and exercisable for a term of three years from the date of retirement or one year from the date of death. For awards made in fiscal 2013 and after, granted stock options will continue to vest after his date of retirement on the normal vesting dates indicatedDecember 31, 2018. Provisions in the award agreementagreements for outstanding stock option and will remain exercisable until their expiration date. Ifrestricted stock unit awards granted to Mr. Weiss provides services to, or owns more than 5% of, a competitor after his retirement, he will forfeit the right to any remaining outstanding options.
Albert G. White III
Our Change in Control Agreement with Albert G. White III originally took effect in January 2007 and was amended in September 2008. Under the agreement, Mr. White would be entitled to severance in the event of his termination within 90 days of a change in control event. He would also be entitled to a prorated portion of his annual cash bonus and continued coverage under the Company’s benefits program for up to 12 months from the date of termination.
If Mr. White’s employment terminates other than as provided for in his Change in Control agreements, the standard Company severance policies for all employees will apply. Mr. White is also fully vested in our Retirement Income Plan and would retain his accrued benefits. As of the end of the last fiscal year, Mr. White is not retirement eligible.
46
Termination without Cause | Termination after Change of Control | Death | ||||||||||
Severance Payment(1) | $105,636 | $950,000 | $0 | |||||||||
Incentive Payment Plan (2) | $443,888 | $443,888 | $443,888 | |||||||||
Present Value of Accumulated Pension Benefits(3) | $108,923 | $108,923 | $108,923 | |||||||||
Equity Awards(4) | $3,681,163 | $6,266,298 | $5,310,061 | |||||||||
Benefits (5) | $3,792 | $14,065 | $1,600,000 | |||||||||
Total Payable on Separation | $4,343,402 | $7,783,173 | $7,462,872 | |||||||||
|
| |||||||||||
In the event of the executive’s termination without cause, retirement or death, outstanding equity awards will be treated in accordance with the terms of the associated award agreements. Performance share awards will be entirely forfeit on voluntary resignation or termination without cause. Termination for death, disability or retirement will result in payment of a pro rata portion of the performance shares based on the portion of the performance cycle completed at termination.
Generally, stock options that are unvested at the date of the holder’s termination will be forfeit. Vested options will remain outstanding and exercisable for a term of three months from the termination date in the case of a termination without cause, three years from the date of retirement or one year from the date of death. Outstanding unvested RSUs would be immediately forfeited under the terms of the associated award agreement upon any termination of employment.
47
Other Named Executive Officers
We have Change in Control agreements in place under our Change in Control Severance Plan with each of Messrs. Matz and McBride and with Ms. Kaufman. The agreements with Mr. McBride and Ms. Kaufman took effect in June 2007 and the agreement withallow for continued vesting after retirement, however if either Mr. Matz took effect in June 2010. Under the agreements, each of these executives would be entitled to severance in the event of their termination within one year of a change in control event.
Each executive would also be entitled to a pro rata portion of their annual cash bonus, immediate vesting in their outstanding equity awards and their currently accrued benefits under the Retirement Income Plan, continued coverage under our benefits program for up to 24 months, and payment of all salary and vacation which was accrued but unpaid at the date of termination.
If employment terminates for these executives other than as provided for in their Change in Control agreements, the standard Company severance policies for all employees will apply. Each of these executives is also fully vested in our Retirement Income Plan and would retain their accrued benefits. As of the end of the last fiscal year, Mr. McBride is not retirement eligible. Mr. Matz will retire in early 2017.
Termination without Cause | Termination or Resignation with Good Reason After a Change in Control | Retirement | Death | |||||||||||||||||
Daniel G. McBride | ||||||||||||||||||||
Severance Payment(1) | $139,894 | $990,000 | $0 | $0 | ||||||||||||||||
Incentive Payment Plan(2) | $434,684 | $434,684 | $434,684 | $434,684 | ||||||||||||||||
Present Value of Accumulated Pension Benefits(3) | $152,899 | $152,899 | $152,899 | $152,899 | ||||||||||||||||
Equity Awards(4) | $4,443,804 | $11,271,235 | $5,417,833 | $5,417,833 | ||||||||||||||||
Benefits(5) | $5,056 | $21,097 | $0 | $1,600,000 | ||||||||||||||||
Total Payable on Separation | $5,176,336 | $12,869,915 | $6,005,416 | $7,605,416 | ||||||||||||||||
Greg W. Matz | ||||||||||||||||||||
Severance Payment(1) | $106,362 | $850,000 | $0 | $0 | ||||||||||||||||
Incentive Payment Plan(2) | $298,499 | $298,499 | $298,499 | $298,499 | ||||||||||||||||
Present Value of Accumulated Pension Benefits(3) | $81,342 | $81,342 | $81,342 | $81,342 | ||||||||||||||||
Equity Awards(4) | $148,716 | $4,115,459 | $829,111 | $829,111 | ||||||||||||||||
Benefits(5) | $4,688 | $28,681 | $0 | $1,600,000 | ||||||||||||||||
Total Payable on Separation | $639,607 | $5,373,981 | $1,208,952 | $2,808,952 | ||||||||||||||||
Carol R. Kaufman | ||||||||||||||||||||
Severance Payment(1) | $550,756 | $908,000 | $0 | $0 | ||||||||||||||||
Incentive Payment Plan(2) | $347,855 | $347,855 | $347,855 | $347,855 | ||||||||||||||||
Present Value of Accumulated Pension Benefits(3) | $605,107 | $605,107 | $605,107 | $605,107 | ||||||||||||||||
Equity Awards(4) | $8,966,169 | $13,901,942 | $12,925,008 | $9,834,046 | ||||||||||||||||
Benefits(5) | $29,823 | $45,612 | $0 | $1,170,000 | ||||||||||||||||
Total Payable on Separation | $10,499,710 | $15,808,516 | $13,877,970 | $11,957,008 | ||||||||||||||||
48
Upon termination without cause or resignation with good reason after a change in control, all benefits due under our Retirement Income Plan will vest in full. If the terms of the Retirement Income Plan prevent immediate vesting the executive will receive substantially equivalent benefits.
Upon termination after a change in control or resignation with good reason after a change in control, all outstanding equity awards will immediately become fully vested. Termination on a change in control will result in immediate payment of performance shares at either target or maximum award levels depending on how much of the performance cycle has been completed.
In the event of the executive’s termination without cause, retirement or death, outstanding equity awards will be treated in accordance with the terms of the associated award agreements. Performance share awards will be entirely forfeit on voluntary resignation or termination without cause. Termination for death, disability or retirement will result in payment of a pro rata portion of the performance shares based on the portion of the performance cycle completed at termination.
Generally, stock options that are unvested at the date of the holder’s termination will be forfeit. Vested options will remain outstanding and exercisable for a term of three months from the termination date in the case of a termination without cause, three years from the date of retirement or one year from the date of death. Outstanding unvested RSUs would be immediately forfeited under the terms of the associated award agreement upon any termination of employment.
For Ms. Kaufman’s awards in fiscal 2013 and after, her stock option and RSU awards will continue to vest after her date of retirement based on the vesting schedule provided in the award agreements. In the event of termination of Ms. Kaufman’s employment without cause, or by reason of her death, the outstanding unexerciseable stock options and unreleased RSUs would be subject to forfeiture. Additionally, if Ms. Kaufman provides services to, or owns more than 5% of, a competitor after hertheir date of retirement, shethey will forfeit any remaining outstanding equity awards.
Outstanding performance share awards will be released at the end of their respective performance periods. Awards granted to Mr. Weiss will be prorated based on the amount of the performance cycle completed at December 31, 2018 as per the underlying agreements. Performance share awards granted to Ms. Kaufman will be released in full with no proration in accordance with the terms of her Separation Agreement and Mutual Release disclosed on Form8-K in April 2018.
Ms. Kaufman will also receive a severance payment equivalent to 10 months of her 2018 base salary, 50% of target annual cash incentive under the 2019 Incentive Payment Plan (based on 2018 salary and target cash incentive), and the value of 10 months of benefits coverage under COBRA.
49
Directors of a publicly traded company have substantial responsibilities and time commitments, and with ongoing changes in corporate governance standards, highly qualified and experienced directors are in high demand; therefore, we seek to provide suitable economic incentives for our directors and to compensate them appropriately for their continued performance, increased responsibilities, and dedication. This compensation applies only to ourNon-Employee Directors. Members of the Board who are also our employees receive no additional compensation for their service as directors.
The Organization & Compensation Committee reviews and recommends compensation amounts for ourNon-Employee Directors, and the full Board approves compensation based on these recommendations. The Organization & Compensation Committee considers director responsibilities, compensation practices of our peer companies, and recommendations from its independent compensation consultant in makingNon-Employee Director compensation program recommendations to the Board.
The Compensation Committee also receives an analysis from its independent compensation consultant regarding compensation of theNon-Employee Directors. The Compensation Committee reviews and analyzes this information in determining whether to recommend changes to the Board. The Board sets totalNon-Employee Director compensation at levels it considers appropriate given the competitive market for qualified directors, peer group compensation of directors, and the time commitment and responsibilities expected of ourNon-Employee Directors. Compensation levels are reviewed at least annually and modified as the Board considers necessary or appropriate.
Components of Director Compensation
Cash Compensation
OurNon-Employee Directors receive cash compensation in the form of an annual stipend for their service. Additionally,service, and directors who also serve as the Chair of a committee of the Board receive an additional annual stipend in recognition of this additional responsibility.
TheNon-Employee Directors also receive payment for each meeting attended, as well as compensation for time spent on company business, and reimbursement for one day of travel in connection with meetings. These payments are as follows:
Annual | ||||||||
Directors | $30,000 | |||||||
Non-ExecutiveLead Director | $40,000 | |||||||
Chairman of the Board | $125,000 | |||||||
| ||||||||
Audit Committee | $17,500 | |||||||
Corporate Governance and Nominating Committee | $10,000 | |||||||
Organization and Compensation Committee | $12,000 | |||||||
Science and Technology Committee | $10,000 | |||||||
Attendance at Meetings of the Board: | $ | |||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
Travel Days (one per set of scheduled meetings) | $2,000 | |||||||
Other time spent on Company business (per hour) | $250 |
50
Directors appointed to, or resigning from, the Boardmid-year are entitled to a prorated portion of the annual stipend based on the number of months of service provided for the fiscal year in which they enter or leave service.
Equity Compensation
TheNon-Employee Directors are also eligible to receive annual equity awards. The Board believes that a significant equity component toNon-Employee Director compensation serves to align director and stockholder interests.
50 | Page |
Grant terms, including grant dates, award amounts, form of awards, and vesting criteria are set by the terms of the 2006 Directors’ Plan. The 2006 Directors’ Plan, which was originally approved by stockholders on March 21, 2006 and was amended and restated in March 2009 and2011. The 2006 Directors’ Plan was most recently amended in March 2011.2018.
The 2006 Directors’ Plan, providedas most recently amended, provides for the following equity awardsa grant to eachNon-Employee Director during fiscal 2016.of Restricted Stock Units (“RSUs”) with a total grant date value of $270,000 (or $283,500 and $297,000 in the case of the Lead Director and Chairman, respectively). These awards were madegrants are awarded annually and vest in November 2015 as follows:
Target Grant Date Fair Value(1) | ||||||||||||||||||||
Award Type | Grant Date | Chairman | Lead Director | All Other Directors | ||||||||||||||||
Stock Options | November 1st | $ | 148,500 | $ | 148,500 | $ | 135,000 | |||||||||||||
Restricted Stock | November 15th | $ | 148,500 | $ | 135,000 | $ | 135,000 | |||||||||||||
Total Value: | $ | 297,000 | $ | 283,500 | $ | 270,000 |
(1) Grant Date Fair Value of equity awards represents a target compensation amount and is used to calculate the actual number of options and restricted shares received. Amounts are divided by the approximate fair value based on the closing price of our stock on the date of grant and rounded to the nearest whole number to set the number of options or restricted shares. Actual compensation may be slightly above or below the amount shown depending on rounding.
All awards vestfull on the first anniversary of the date of grant. Upon vesting, all stock options become exercisable and all restrictions prohibiting sale are removed from the grant of restricted stock. Stock options are granted with an exercise price equal to 100% of the fair market value of our common stock on the date of grant. IfNon-Employee Director ceases to serve on the Board, unless they are terminated for cause, the restrictions on any outstanding restricted stock awards will be lifted and any unvested stock options will become immediately vested. Outstanding stock options remain exercisable for three years from the date of cessation of service.
The 2006 Directors’ Plan was amended in October 2016 to change the form of annual awards. For the 2017 fiscal year and going forward, awards will be made in the form of Restricted Stock Units. These awards will have the same total value presented above and will be made on November 15th of each year. They will vest on the first anniversary of the date of grant and if a director ends their term of service prior to the vesting date, the number of shares released under the award will be prorated according to the amount of the year actually served and the prorated amount of shares will be released on the original vesting date.
OnThe 2006 Directors’ Plan also provides that, on appointment to the Board, newNon-Employee Directors will receive an equitya grant of RSUs as specified in the 2006 Directors’ Plan. This award will beabove, prorated for the number of months of service remaining inuntil the fiscal year in which they were appointed.date of the next Annual Meeting. Additional awards under the 2006 Directors’ Plan may be made at the Board’s discretion.
Stock Ownership Requirements
The Board has adopted stock ownership requirements forNon-Employee Directors. The Board adopted this requirement to strengthen the relationship between director and stockholder interests.
51
interests, and under the current requirementsNon-EmployeeDirectors must hold Cooper common stock valued at five times their annual retainer.
Shares held must be free of restrictions to meet ownership requirements. Untilrequirements, and until the required ownership values are met theNon-Employee Directors must retain 100% of shares received on vesting of stock awards or on exercise of stock options. All of theNon-Employee Directors were in compliance with the applicable ownership guidelinerequirements during fiscal 2016.2018.
The following table sets forth the total compensation paid to theNon-Employee Directors for their service on the Board and its committees during the 20162018 fiscal year. At present, theNon-Employee Directors are not eligible to participate in our pension programs and no deferred compensation ornon-equity incentive plans are available to theNon-Employee Directors.
Name | Fees Earned or Paid in Cash (1) | Stock Awards (2)(3) | Option Awards (2)(4) | Other Compensation (5) | Total | Fees Earned or Paid in Cash (1) | Stock Awards (2) | Other Compensation | Total | |||||||||||||||||||
A. Thomas Bender | $190,000 | $148,469 | $148,482 | $5,088 | $492,039 | $193,500 | $297,080 | $993 | $491,572 | |||||||||||||||||||
Allan E. Rubenstein, M.D. | $98,000 | $134,958 | $148,482 | $0 | $381,440 | $95,000 | $283,469 | - | $378,469 | |||||||||||||||||||
Colleen E. Jay | $39,500 | $78,800 | $78,764 | $0 | $197,064 | $92,000 | $270,094 | - | $362,094 | |||||||||||||||||||
Michael H. Kalkstein | $94,000 | $134,958 | $134,992 | $0 | $363,949 | $110,000 | $270,094 | - | $380,094 | |||||||||||||||||||
William A. Kozy | $39,500 | $78,800 | $78,764 | $0 | $197,064 | $87,500 | $270,094 | - | $357,594 | |||||||||||||||||||
Jody S. Lindell | $119,875 | $134,958 | $134,992 | $0 | $389,824 | $108,000 | $270,094 | - | $378,094 | |||||||||||||||||||
Gary S. Petersmeyer | $103,500 | $134,958 | $134,992 | $0 | $373,449 | $94,000 | $270,094 | - | $364,094 | |||||||||||||||||||
Steven Rosenberg (6) | $22,500 | $134,958 | $134,992 | $0 | $292,449 | |||||||||||||||||||||||
Stanley Zinberg, M.D. | $94,000 | $134,958 | $134,992 | $0 | $363,949 |
| $80,000
|
|
| $270,094
|
|
| -
|
|
| $350,094
|
|
(1) | Fees earned represent |
(2) | Represents the aggregate grant date fair value of restricted stock units granted on November 15, 2017 under the 2006 Directors’ Plan. The amounts shown |
51 | Page |
financial statements |
Each director received an award providing the right to receive 1,151 shares on the satisfaction of vesting criteria. Dr. Rubenstein, as Lead Director, received an award providing the right to receive 1,208 shares and Mr. Bender, as Chairman of the Board, received an award providing the right to receive 1,266 shares.
At October 31, 2016,2018, eachNon-Employee Director held 899 shares of our common stock subject to restrictions, inclusive of the shares in the Director Compensation Table, with the exception of Mr. Bender who held 989 shares and Mr. Kozy and Ms. Jay who each held 500 shares.
52
TheNon-Employee Directorsalso had the following stock options outstanding at October 31, 2016:from awards in prior years:
Name | Outstanding Stock Options | |
A. Thomas Bender | ||
Allan E. Rubenstein, M.D. | ||
Colleen E. Jay | 1,766 | |
Michael H. Kalkstein | ||
William A. Kozy | 1,766 | |
Jody S. Lindell | ||
Gary S. Petersmeyer | ||
| ||
Stanley Zinberg, M.D. |
53
PROPOSAL 1 — ELECTION OF DIRECTORS
Our Bylaws require that we have a minimum of six and maximum of eleven directors serving on the Board. The Board sets the size of the board annually prior to the Annual Meeting. The BoardMeeting and has fixed the number of directors to be elected at the 2019 Annual Meeting at nine.
The names of the nominees presented for election as directors at the Annual Meeting are listed below, along with information regarding when they joined the Board, their present principal occupation, recent business experience, and their service on other companies’ boards of directors.
Each nominee, if elected, will serve as a director until the next Annual Meeting andor until his or her successor is duly elected and qualified. All of the nominees listed below have given their consent to be named as nominees for election and have indicated their intention to serve if they are elected. The Board does not anticipate that any of the nominees will be unable to serve as a director, but in the event that a nominee is unable to serve, the Board may either propose an alternate nominee or elect to reduce the size of the Board. If an alternative nominee is proposed, proxies will be voted for the alternative nominee.
Dr. Stanley Zinberg has indicated his intention to retire and will not be standing forre-election at the 2019 Annual Meeting.
The Nominees
Each nominee listed below currently serves on the Board and there are no family relationships between any of the nominees, or between the nominees and any of our officers.
A. THOMAS BENDER | AGE: | JOINED THE BOARD: 1994 |
INDEPENDENT DIRECTOR,DIRECTOR; CHAIRMAN OF THE BOARD
Business Experience: Mr. Bender has served on our Board since 1994 and was elected Chairman in July 2002. He also served as our President and Chief Executive Officer from May 1995 until his retirement in October 2007. He previously served as President of CooperVision, our contact lens subsidiary, from June 1991 to December 2004. Between 1966 and June 1991, Mr. Bender held a variety of management positions at Allergan, Inc., a manufacturer of eye and skin care products, including Corporate Senior Vice President, and President and Chief Operating Officer of Herbert Laboratories, Allergan’s dermatology division.
Other Directorships and Memberships: Mr. Bender serves on the board of directors of Allegro Ophthalmics LLC, a private ophthalmic company focused on pharmaceutical treatment of eye disease. Mr. Bender currently serves on the compensation and audit committees at Allegro. He also serves on the board of Mission Hospital Foundation in Mission Viejo, CA.
Qualifications to Serve: Mr. Bender served as our CEO for 13 years, providing him with unique understanding of our operations and business, which is valuable to the Board, and his 15 year15-year tenure as Chairman of the Board has provided leadership continuity and stability to our Company. In addition to his history with the Company, Mr. Bender has over 50 years of experience in the pharmaceutical industry, providing him with a strong background and knowledge that assists the Board in analysis of our peer companies, markets, and industry. Additionally, Mr. Bender has served on the boards of other public and private medical device companies, including service served as chairman of the compensation and organization committees for several medical device companies, allowing him to gain insight and perspective regarding business and regulatory issues facing our industry. The Corporate Governance and Nominating Committee considers these factors important to their decision to recommend Mr. Bender forre-election to the Board.
54
53 | Page |
COLLEEN E. JAY | AGE: | JOINED THE BOARD: 2016 |
INDEPENDENT DIRECTOR
Business Experience: Ms. Jay currently servesserved as a Loaned SeniorGlobal Division President for Procter and Gamble as a member of the Top 30 Global Executive for Catalyst, Inc., anon-profit organization dedicated to improving workplace inclusion for women. In this role, she is considered to be “on loan” fromCommittee until her service at Procter & Gamble (NYSE: PG), an American multinational consumer goods company. Until taking the Loaned Executive role at Catalystretirement in October 2016, Ms. Jay served as2017. Her most recent operational assignment was President, of theGlobal Beauty Specialty Business at Procter & Gamble from 2015 andwhere she was responsible for the Wella Professional Salon, Cosmetics, Retail Hair Color, and Fragrance businesses.businesses, and the successful divestiture of them. Prior to taking leadership of the Beauty Specialty Business, Ms. Jay led the Global Retail Hair Care and Color division of Procter & Gamble from 2012 to 2015 and the Global Female Beauty division from 2010 to 2012. She also served as Vice President & General Manager, Greater China Feminine Care, Personal Cleansing, Oral Care & Entire China Marketing Function, based in Guangzhou, China, from 2006 to 2009, where she was responsible for businesses with a combined value of over $1 billion.Billion. She has worked in various positions with Procter & Gamble since July 1985 and has led operational units in the United States, Canada, China, and Switzerland (including leading global businesses) during the course of her career. Ms. Jay also volunteers at Catalyst, Inc., anon-profit organization dedicated to improving workplace inclusion for women.
Other Directorships and Memberships: Ms. Jay does not presently serveserves on any other publicthe board of Treasury Wine Estates (ASX:TWE), a publicly traded company Boards of Directors.making and selling wine for the global market.
Qualifications to Serve: Ms. Jay has almost 35 years of experience within the consumer goods industry, including over 15 years of experience as a senior executive. She has first-hand experience with leading international business operations, including direct responsibility for operations in China and Europe, giving her a strong background in international business, including sales and marketing, regulatory challenges, and cultural differences in various markets. She brings a global perspective to the Board that assists with understanding and analyzing our market and global expansion. The Corporate Governance and Nominating Committee considers these factors important to their decision to recommend Ms. Jay forre-election to the Board.
MICHAEL H. KALKSTEIN | AGE: | JOINED THE BOARD: 1992 |
INDEPENDENT DIRECTOR
Business Experience: Mr. Kalkstein was a partner at Dechert LLP, an international law firm, from June 2003 through June 2007, and wasCo-chair of the firm’s Intellectual Property Practice Group. He also served as the Managing Partner of Dechert’s Palo Alto office from June 2003 through December 2005. As of June 30, 2007, he hasHe retired from active practice in June 2007 and continues to be “Of Counsel” to Dechert at its Mountain View, CA office. Previously, from September 1999 through May 2003, he was a partner at Oppenheimer, Wolff & Donnelly, LLP, an international law firm, and a member of its Policy and Technologies Committees.
Other Directorships and Memberships: Mr. Kalkstein currently serves as a director on the board of the Merola Opera Program, anon-profit arts organization affiliated with the San Francisco Opera, and sits on its finance and governance committees and on San Francisco Opera’s Medallion Society committees.committee. He also serves as Bailli of the Hillsborough Bailliage of the Chalne des Rôtisseurs, a non-profit food and wine organization. Previously he served as a member of the Board of Trustees of Opera San Jose from 1984 to October 2010, serving as its President from 1992 to 1994. He was a member of the Alliance of CEOs from 2001 to June 2007 and was a member of the board of directors of the Law Foundation of Silicon Valley from 2002 to June 2007. Until January 2007, he also served as a director of the Northern California Chapter of the National Association of Corporate Directors.
55
Qualifications to Serve: As a licensed attorney with experience in intellectual property law, Mr. Kalkstein brings the Board insight and perspective on the legal and regulatory issues that face our business and industry. Mr. Kalkstein also brings
54 | Page |
management experience, having served as a managing partner for a key office of an international law firm. His continued connections with the legal community, as well as his involvement with groups such as the Alliance of CEOs and National Association of Corporate Directors, and participation in NYSE/Euronext Corporate Board Member programs, provides the Board with insight into current issues facing both business executives and independent board members. Additionally, through his long-term service on our Board, Mr. Kalkstein has gained a good working knowledge and understanding of our business which provides efficiency and continuity for our Board. The Corporate Governance and Nominating Committee considers these factors important to their decision to recommend Mr. Kalkstein forre-election to the Board.
WILLIAM A. KOZY | AGE: | JOINED THE BOARD: 2016 |
INDEPENDENT DIRECTOR
Business Experience:Mr. Kozy served as the Chief Operating Officer of Becton Dickinson (NYSE: BDX) from 2012 until his retirement in 2016, and as its Executive Vice President from 2006 until 2016. He also served as a member of the corporate Leadership Team for Becton Dickinson and in various executive roles since 1988, including senior vice presidentSenior Vice President of company operationsCompany Operations from 1998 until 2002, presidentPresident of BD Diagnostics from 2002 through 2006, presidentPresident of the BD Biosciences segment from 2006 to 2009 and head of BD Medical from 2009 through 2011. He continues as an active emeritus senior faculty member of the Center for Becton Dickinson Leadership, engaged in Leadership Development for the company.
Other Directorships and mentorships: Mr. Kozy is a member of the Hackensack Meridian Health Boardboard of Governors where he servesdirectors of LivaNova PLC (NASDAQ:LIVN), a publicly traded medical device company focused on the Strategic Planningneurological and Executive Compensation Committees.cardiovascular medicine. He also serves on the Board of the Franciscan Sisters of the Poor Foundation.nominating and corporate governance committee. He also serves as a senior advisor to McKinsey & Company, a global management firm, with a focus on mergers and acquisitions, and he is an active benefactor and volunteer for the Karen Ann Quinlan Hospice organization and the Immokalee Child Care Center (Naples, Florida).
Qualification to serve:Mr. Kozy has over 40 years of experience in the medical technology industry. Prior to serving as chief operating officerChief Operating Officer for Becton Dickinson, key business worldwide leadership assignments included responsibilities for the Biosciences, Diagnostic, and Medical segments of the company. He is the only leader in Becton Dickinson history to have led all three segments of the company in his career. He also brings corporate experience leadership from Becton Dickinson in other areas: innovation systems, company manufacturing, and Becton Dickinson’s first ERP implementation. Overall, Mr. Kozy brings depth of general management experience in business strategy, operations, and financial performance to this role. Additionally, he has significant experience in merger and acquisition activity, with integration as an area of executive focus. The Corporate Governance and Nominating Committee considers these factors important to their decision to recommend Mr. Kozy for reelectionre-election to the Board.
JODY S. LINDELL | AGE: | JOINED THE BOARD: 2006 |
INDEPENDENT DIRECTOR,DIRECTOR; AUDIT COMMITTEE FINANCIAL EXPERT
Business Experience: Ms. Lindell is President and Chief Executive Officer of S.G. Management, Inc., an asset management company she has headed since 2000. Until May 2000, Ms. Lindell was a partner
56
with KPMG LLP where she served asPartner-In-Charge of the Industrial Markets and Healthcare and Life Sciences practices for the Western Area. Ms. Lindell is also a Certified Public Accountant (inactive).
Other Directorships and Memberships: Through September 2007, she served as a director and on the audit and director’s loan committees for First Republic Bank, a publicly traded financial institution. First Republic Bank
55 | Page |
was acquired in 2007, underwent a management led buyout inmid-2010 and again became publicly traded (NYSE: FRC) in December 2010. Ms. Lindell continuescontinued to serve as a director chairs the audit committee and serves on the director’s loan committee for First Republic Bank. She also currently serves on the board of directors and the audit and nominating and corporate governance committees of PDL BioPharma (NasdaqGS: PDLI).Bank through May 2017.
Qualifications to Serve: Ms. Lindell’s experience as a partner with KPMG and her accounting background bring valuable knowledge of finance and accounting regulations to our Board and Audit Committee. She is qualified as an Audit Committee Financial Expert under the SEC rules, and has experience with the review and analysis of financial statements and operational risk, both through her accounting background and her experience with public company audit committees. Ms. Lindell has also gained a good working knowledge and understanding of our business and operations during her term of service on the Board, which provides efficiency and continuity. The Corporate Governance and Nominating Committee considers these factors important to their decision to recommend Ms. Lindell forre-election to the Board.
GARY S. PETERSMEYER | AGE: | JOINED THE BOARD: 2013 |
INDEPENDENT DIRECTOR
Business Experience: Mr. Petersmeyer currently serves as a consultant to companies in the pharmaceutical and medical device industries. Most recently heco-founded Aesthetic Sciences Corporation in 2004 and served as the Chief Executive Officer and Chairman until December 2010. Prior to that he served as President and Chief Operating Officer of Pherin Pharmaceuticals, Inc. from 2000 to 2001 and as President and Chief Operating Officer of Collagen Corporation, Inc. from 1995 to 2000.1997 and as Chief Executive Officer from 1997 to 1999. From 1976 to 2000 he served in various management positions for pharmaceutical and medical device companies.
Other Directorships and Memberships: Mr. Petersmeyer serves as a director and member of the compensation and audit committees of Omnicell, Inc. (NASDAQ: OMCL). He also served as director and chairman of the board of Cardica, Inc. (NASDAQ: CRDC) through November 2015. He has previously served on the boards of Visx Incorporated and Roxro Pharmaceuticals prior to their acquisitions. He also serves as chairman of the board for Positive Coaching Alliance, anon-profit organization dedicated to improving youth sports.
Qualifications to Serve: Mr. Petersmeyer has served as the CEO or President of four companies in the medical device and pharmaceuticals industry and has over 35 years of industry experience in leadership positions. He has extensive knowledge and experience in global markets, including the United States, Asia, and Europe. His expertise includes financial, research and regulatory strategy, and business development with an emphasis on growth, new product lines, and leadership development. He has extensive experience as a director and has experience with service on a compensation committee. The Corporate Governance and Nominating Committee considers these factors important to their decision to recommend Mr. Petersmeyer forre-election to the Board.
57
ALLAN E. RUBENSTEIN, M.D. | AGE: | JOINED THE BOARD: 1992 |
INDEPENDENT DIRECTOR,DIRECTOR; VICE CHAIRMAN AND LEAD DIRECTOR
Business Experience: Dr. Rubenstein has served as our Vice Chairman and Lead Director since July 2002, and previously served as Chairman of the Board from July 1994 through July 2002. He served as Acting Chairman of the Board from April 1993 through June 1994. He is also Clinical Professor of Neurology and Pediatrics at New York University Langone Medical Center. Formerly, he was Chief Executive Officer of NexGenix Pharmaceuticals in NYC from 2003 to 2011.
Other Directorships and Memberships: He currently serves as chairman of the scientific advisory board for Plex Pharmaceuticals (formerly CalAsia Pharmaceuticals) since September 2012.2017. He is also a trustee of the Connecticut River Museum in Essex,
56 | Page |
Connecticut. Previously, he served as a director of BioClinica (NASDAQ: BIOC), a specialty clinical trials company, from 2000 to 2003. He is also Medical Director Emeritus of the Children’s Tumor Foundation and a consultant to the National Institutes of Health, the U.S. Food and Drug Administration and the U.S. Department of Defense, where he served as Chair of the Army Neurofibromatosis Research Program Integration Panel in 2001.
Qualifications to Serve: As a leading academic scientist and clinician, Dr. Rubenstein provides valuable insight into human physiology and medical practices and techniques that aid the Board in making determinations regarding new technologies to develop or acquire. He also brings experience with clinical trials and a knowledge and understanding of the development of medical devices to his service. His experience as the head of a medical technology company provides perspective on operations of a medical device company. Additionally, through his long-term service on our Board, Dr. Rubenstein has gained a good working knowledge and understanding of our business and operations, which provides efficiency and continuity. The Corporate Governance and Nominating Committee considers these factors important to their decision to recommend Dr. Rubenstein forre-election to the Board.
ROBERT S. WEISS | AGE: | JOINED THE BOARD: 1996 |
NON-INDEPENDENT DIRECTOR,DIRECTOR; FORMER CHIEF EXECUTIVE OFFICER
Business Experience: Mr. Weiss has served as our President sincefrom March 2008 and as our Chief Executive Officer sincefrom November 2007. He also served as President of CooperVision, our contact lens subsidiary, from March 2007 to February 2008. He previously served as our Chief Operating Officer from January 2005 to October 2007 and as Executive Vice President from October 1995 to October 2007. He served as our Chief Financial Officer from September 1989 to January 2005. He served as our Treasurer from 1989 to March 2002. Since joining us in 1977, he has held a number of finance positions both with us and Cooper Laboratories, Inc. (our former parent).
Other Directorships and Memberships: Mr. Weiss is also a director of Accuray Incorporated (Nasdaq: ARAY), a company that develops, manufactures, and sells precise, innovative tumor treatment solutions that set the standard of care with the aim of helping patients live longer, better lives. He serves on its nominating and governance committee and on its audit committee. He is also a member of the Board of Trustees of the University of Scranton in Pennsylvania and serves on its finance, advancement, and audit committees.
Qualifications to Serve: As our currentformer Chief Executive Officer and with over 40 years of experience with Cooper, Mr. Weiss provides a key connection between the senior executives and our Board, enabling oversight of our operations with the benefit of management’spersonal perspective on our business. He has day to daybusiness, awareness of our businesspeers and
58
our industry, and an understanding of the strategic visiongoals for our Company that is important to the Board in making decisions regarding the direction of our business. He provides leadership, extensive knowledge of our Company, and business, operating, and policy experience to our Board. The Corporate Governance and Nominating Committee considers these factors important to their decision to recommend Mr. Weiss forre-election to the Board.
ALBERT G. WHITE III | AGE: | JOINED THE BOARD: |
INDEPENDENTPRESIDENT & CHIEF EXECUTIVE OFFICER; DIRECTOR
Business Experience: Dr. Zinberg is a retired obstetrician-gynecologist whoMr. White has served as DeputyPresident & Chief Executive Officer, and as a member of our Board of Directors, since May 2018. Previously, he served as Chief Financial Officer from November 2016 until his appointment as CEO and he also served as Executive Vice President and Vice PresidentChief Strategy Officer, positions he held from December 2015 and July 2011, respectively. From August 2015 to May 2018, Mr. White also directed our women’s
57 | Page |
healthcare business and served as Chief Executive Officer of Practice Activities forCooper Medical, Inc., the American College of Obstetricians and Gynecologists (ACOG) in Washington, D.C. from 1993 through his retirement in December 2007. From 1981 until 1993parent company to CooperSurgical, Inc. Previously, he served as Chief, ObstetricsVice President, Investor Relations from November 2007 through March 2013 and Gynecology,as Vice President and Director,OB-GYN Residency Program at NY Downtown Hospital, whereTreasurer from 1990April 2006 through 1992 he also served as President ofDecember 2012. Prior to joining the Medical Staff andCompany, Mr. White was a memberDirector with KeyBanc Capital Markets for three years and held a number of leadership positions within KeyBank National Association over the Board of Trustees until June 2013. He is certified by the American Board of Obstetrics and Gynecology and is a member of the faculty of the Departments of Obstetrics and Gynecology at New York University School of Medicine, the Cornell University College of Medicine and the Georgetown University School of Medicine. He is the author of numerous editorials, scientific papers and book chapters in the field of women’s healthcare. In addition, Dr. Zinberg obtained a Master’s Degree in Health Administration, with an emphasis onnot-for-profit finance, in 1990 from the Graduate School of Public Administration of New York University.prior eight years.
Other Directorships and Memberships: Currently, Dr. Zinberg is a director on the Peconic Bay Medical Center board and serves on its finance committee, investment committee, and compensation committee. He is also a director on the Peconic Bay Medical Center Foundation board. He is also President-Elect of the American Gynecologic Club and will assume the presidency in 2017. Additionally, he serves as a director and chairman of the board of the Westhampton Beach Performing Arts Center, as a member of the Southampton Town Board of Ethics in Southampton, NY, and as a member of the boards of overseers of Northwell Health.Mr. White does not hold any external directorships.
Qualifications to Serve: Dr. Zinberg’s extensive background in obstetrics and gynecologyAs our current Chief Executive Officer, Mr. White provides the Board with crucial insight into the practical application of our women’s healthcare productsa direct connection to senior management and the needsbenefit of medical practitioners. His experience as a leader of ACOG and continued involvement in the medical community providesmanagement’s perspective on current medical practices and procedures which aid the Board in evaluating new technologies, products and markets as our business continues to expand. Additionally, through his long-term service on our Board, Dr. Zinberg has gained a good working knowledge and understanding of our business and operations whichimmediate strategic goals. He provides efficiencyleadership, extensive knowledge of our Company, and continuity.insight on the day to day operation of the business. The Corporate Governance and Nominating Committee considers these factors important to their decision to recommend Dr. ZinbergMr. White forre-election to the Board.
The Board of Directors unanimously recommends that you vote FOR each of the nominees for director presented above.
Nominees for director will be elected by a majority of the votes cast in person or by proxy at the Annual Meeting. The number of votes cast FOR a nominee must exceed the number of votes cast AGAINST. Abstentions and brokernon-votes will not be counted as votes cast either for or against the nominee and therefore will not affect the outcome of the director elections.
59
58 | Page |
PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed the firm of KPMG LLP to act as our independent registered public accounting firm and to audit our consolidated financial statements for the fiscal year ending October 31, 2017.2019. This appointment will continue at the pleasure of the Audit Committee and is presented to the stockholders for ratification as a matter of good governance. In the event that this appointment is not ratified by our stockholders, the Audit Committee will consider that fact when it selects our independent auditor for the following fiscal year.
KPMG LLP has served as our independent registered public accounting firm since our incorporation in 1980, and one or more representatives of KPMG LLP will be present at the Annual Meeting. These representatives will be provided an opportunity to make a statement at the Annual Meeting, if they desire to do so, and will be available to respond to appropriate questions from stockholders.
The Board of Directors unanimously recommends that you vote FOR the ratification of KPMG LLP as our independent registered public accounting firm.
The proposal to ratify the selection of KPMG LLP as our independent registered public accounting firm for the 20172019 fiscal year requires an affirmative vote of the majority of the shares represented in person or by proxy at the Annual Meeting and entitled to vote on the proposal. Abstentions will have the same practical effect as votes against this proposal. Brokernon-votes will have no effect in determining the outcome of this proposal.
60
59 | Page |
PROPOSAL 3 —– APPROVAL OF THE 2017 EXECUTIVE INCENTIVE2019 EMPLOYEE STOCK PURCHASE PLAN
Overview
Our Board of Directors adopted the 2017 Executive PerformanceThe Company is seeking to have stockholders approve The Cooper Companies, Inc. 2019 Employee Stock Purchase Plan in December 2016.(the “ESPP”), described below. The 2017 Executive Performance Plan is referred to below as the “2017 EIP” andESPP was adopted by our Board on December 11, 2018 and would become effective following stockholders approval at the recommendation2019 Annual Meeting.
The ESPP would initially authorize the issuance of 1,000,000 shares of common stock, which represents approximately 2% of our Compensation Committee andoutstanding shares of common stock as of January 22, 2019. The maximum aggregate number of shares of our common stock issuable under the ESPP per three month Offering Period will be 50,000.
Purpose
The purposes of the ESPP are (i) to assist eligible employees in acquiring a stock ownership interest in the Company pursuant to a plan intended, for those eligible employees subject to stockholder approval. A copyU.S. federal income tax, to qualify as an “employee stock purchase plan” within the meaning of the full textSection 423(b) of the 2017 EIP is presented as Exhibit A to this Proxy Statement.
Purpose
Performance-based compensation is a key element of our compensation philosophy and certain of our executive officers are eligible for performance-based annual cash incentives awarded under our annual Incentive Payment Plans. Our annual Incentive Payment Plans do not currently qualify for the “performance-based compensation” exception under Internal Revenue Code, (“IRC”) Section 162(m) becauseand (ii) to help eligible employees provide for their future security and to encourage them to remain in the IPP was not previously stockholder approved. Stockholders are being askedemployment of the Company and its designated subsidiaries. The ESPP gives our employees an opportunity to approve the 2017 EIP in orderpurchase shares of our common stock at a discounted price. We believe that our future short-termstockholders will benefit from an increased interest from our designated employees in our success.
We believe that the ESPP is a powerful incentive awards (paid underand retention tool that will benefit both our employees and all of our stockholders. Specifically, we believe the 2017 EIP) may be deductibleESPP will enable us to: (i) provide eligible employees with a convenient means of acquiring an equity interest in us through payroll deductions, (ii) enhance such employees’ sense of participation in our affairs, and (iii) provide an incentive for federal income tax purposes as performance-based compensation.continued employment. The ESPP will also align the interests of employees with those of our stockholders through increased stock ownership.
IRC Section 162(m) generally provides that publicly-held companies may not take a federal income tax deduction for certain compensation in excess of $1,000,000 paid to the named executive officers (other than the chief financial officer) in any one year unless that compensation qualifies as “performance-based compensation” under IRC Section 162(m).
Compensation can qualify as “performance-based compensation” under IRC Section 162(m) only if the material termsSummary of the performance goals relating to such compensation are disclosed to and approved by stockholders at least every five years. The material terms to be disclosed and approved at least every five years include the following: (i) the employees eligible to receive compensation; (ii) the business criteria on which the performance goals may be based; and (iii) the maximum amount of compensation that can be paid during a specified period to an employee subject to IRC Section 162(m). Each of these aspects is discussed below.ESPP
BecauseThis section summarizes certain principal features of the uncertainties associated with the application and interpretation of Section 162(m) and the regulations issued thereunder, there can be no assurance that compensation intended to satisfy the requirements for deductibility under IRC Section 162(m) will in fact be deductible. Moreover, our Compensation Committee will continue to have authority to provide compensation that is not exempt from the limits on deductibility under IRC Section 162(m).
The following is a brief summary of the material terms of the proposed 2017 EIP.ESPP. The summary is qualified in its entirety by reference to the fullcomplete text of the 2017 EIP, a copy of which is attached as Appendix A to this Proxy Statement.ESPP. Stockholders are urged to read the 2017 EIPactual text of the ESPP in its entirety.entirety which is set forth in Exhibit A to this proxy statement.
Shares Available; Administration
A total of 1,000,000 shares of common stock are initially reserved for issuance under the ESPP. We intend to register such shares on a Registration Statement on FormS-8.
The 2017 EIP wouldOrganization and Compensation Committee (the “Committee”) (or its delegate) is designated as the Administrator of the ESPP (the “Administrator”) and has the authority to interpret the terms of the ESPP and determine eligibility of participants. No purchase rights granted under the ESPP, and no shares of our common stock, will be administeredissued under the ESPP until the ESPP has been approved by our Compensation Committee. The Compensation Committee will consist ofstockholders.
Eligibility
Under the ESPP, employees are eligible to participate in the ESPP if they are customarily employed by us or a designated subsidiary at least two members, eachtwenty (20) hours per week and five months or more in any calendar year. As of December 31, 2018, we had approximately 10,500 employees who would have been eligible to participate in the ESPP had the ESPP been in effect and the subsidiaries for whom is an “outside director” withinsuch employees worked been designated as designated subsidiaries under the meaning of IRC Section 162(m), and will be authorized to adopt such rules and guidelines as it may deem appropriate in order to carry out the purposeESPP. We currently anticipate designating all subsidiaries of the 2017 EIP. All questionsCompany, globally, as designated subsidiaries under the ESPP subject to phased expansion.
60 | Page |
An employee may not be granted rights to purchase shares of interpretation, administration and applicationour common stock under our ESPP if such employee, immediately after the grant, would own (directly or through attribution) stock possessing 5% or more of the 2017 EIPtotal combined voting power or value of all classes of our common or other class of stock.
Offering Periods, Payroll Deductions and Purchase Dates
The Company will offer shares of common stock under the ESPP during one or more offering periods. The length of the offering periods under the ESPP will be determined by the Administrator and may be up to 27 months long. Initially, the Company intends to have offering periods of three (3) months in length.
Employee payroll deductions will be used to purchase shares on each purchase date during an offering period. The ESPP permits participants to purchase shares of our common stock through payroll deductions of between 1% and 15% of their eligible compensation (subject to any lower limit specified by the Administrator), which includes a majorityparticipant’s gross base compensation for services to us, and/or sales commissions, but does not include incentive compensation, bonuses, expense reimbursements, fringe benefits or other special payments. The Administrator, in its sole discretion, may, on a uniform and nondiscriminatory basis for each offering period, establish a different definition of compensation. Also, the Administrator has the discretion to adopt a different definition of compensation with respect to participants onnon-U.S. payrolls.
The purchase dates will be the final trading day in each offering period. Offering periods under the ESPP will commence when determined by the Administrator. The Administrator may, in its discretion, modify the terms of future offering periods.
Limits
In connection with each offering period, the Administrator, in its sole discretion, may, on a uniform and nondiscriminatory basis, specify:
(i) a maximum number of shares of common stock that may be purchased by any individual participant on any purchase date during such offering period, which, in the absence of a contrary specification by the Administrator, will be 500 shares of common stock for offering periods of three (3) months; and
(ii) a maximum aggregate number of shares of common stock that may be purchased by all participants on any purchase date during an offering period, which, in the absence of a contrary specification by the Administrator, will be 50,000 shares of common stock for offering periods of three (3) months.
In no event will any employee be permitted to accrue the right to purchase stock under the ESPP at a rate in excess of $25,000 worth of shares during any calendar year during which such a purchase right is outstanding (based on the fair market value per share of common stock as of the membersfirst day of the Compensation Committee. The Compensation Committee could also authorize any one or more ofoffering period).
By its members, or any officerterms, the ESPP provides the Administrator some flexibility with respect to certain aspects of the Company, to execute and deliver documents on behalfoperation of the Compensation Committee.ESPP, such as (a) the limit on the number of shares of common stock that may be purchased by a single participant during the offering period and (b) the limit on the aggregate number of shares of common stock that may be purchased by all participants on single purchase date or a single offering period. This flexibility allows the Administrator to be able to adapt and adjust to our future compensation objectives.
Purchase Price; Stock Purchases
On the first trading day of each offering period, each participant will automatically be granted an option to purchase shares of our common stock. The Compensation Committeeoption will have authority to determineexpire at the terms and conditionsend of the awards granted underapplicable offering period and will be exercised at that time to the 2017 EIP.
61 | Page |
EligibilityParticipant Withdrawal or Termination
AwardsParticipants may be granted only to employees of the Company or any of its subsidiaries who are selected forvoluntarily end their participation in the 2017 EIPESPP at any time by providing the Compensation Committee (each, a “Participant”). The Compensation Committee may delegateCompany with written notice at least 30 calendar days prior to the authority to select eligible participants to senior management.
Awards
The Compensation Committee would be authorized to grant annual performance-based awards (“Award” or “Awards”) to Participants with respect to each fiscal yearend of the Company, a portion thereof,applicable offering period, or any longersuch shorter period as determined by the Committee (each such fiscal year, portion thereof,Administrator, and will be paid their accrued payroll deductions that have not yet been used to purchase shares of common stock. A participant’s withdrawal from an offering period will not affect his or her ability to participate in subsequent offering periods or other longer periodCompany plans. Participation ends automatically upon a participant’s termination of employment. A participant may not transfer rights granted under the ESPP other than by will, the laws of descent and distribution or as otherwise provided under the ESPP.
Changes in Capital Stock; Change in Control
In the event of certain changes in the capital stock of the Company or a change in control, the Administrator may, in order to constituteprevent dilution or enlargement of the benefits intended to be made available under the ESPP, make equitable adjustments by providing for (a) either the replacement of outstanding rights with other rights or property or termination of outstanding rights in exchange for cash, (b) the assumption or substitution of outstanding rights by the successor or survivor corporation or parent or subsidiary thereof, if any, (c) the adjustment in the number and type of shares of common stock subject to outstanding rights, (d) the use of participants’ accumulated payroll deductions to purchase common stock on a “Performance Period”),new purchase date prior to the next scheduled purchase date and termination of any rights under ongoing offering periods, or (e) the termination of all outstanding rights.
Non-U.S. Employees andSub-Plans
The ESPP is generally intended to provide eligible employees of the Company and its designated subsidiaries with the opportunity to participate in the ESPP in a manner that is intended to qualify under Section 423 of the Internal Revenue Code. However, the ESPP also authorizes the establishment of rules, procedures, agreements, appendices, orsub-plans to the ESPP to facilitate participation in the ESPP by eligible employees of certain subsidiaries in particular locations outside the United States in a manner that does not comply with Section 423.
The Administrator may adopt such rules, procedures, agreements, appendices, orsub-plans relating to the operation and administration of the ESPP to accommodate local laws, customs, and procedures for jurisdictions outside of the United States, the terms of which may take precedence over provisions of the ESPP, other than with respect to the number of securities subject to the terms and conditionsESPP.
Amendment of the 2017 EIP. Awards would be in the form of cash compensation, but may be settled in shares. Under the 2017 EIP, within the earlier of either the date on which 25% of the Performance Period has been completed or 90 days after the beginning of a Performance Period, the Compensation Committee would establish for each Award: (i) performance goals and objectives (“Performance Targets”) for the Company and the subsidiaries and divisions thereof for such Performance Period; (ii) target awards (“Target Awards”) for each Participant, which would be a specified dollar amount; and (iii) schedules or other objective methods for determining the applicable performance percentage (“Performance Percentage”) to be multiplied by each portion of the Target Award to which a Performance Target relates in arriving at the actual Award payout amounts. The Compensation Committee would be authorized to specify the Performance Targets applicable to each Participant for each Performance Period and to further specify the portion of the Target Award to which each Performance Target will apply. In no event will a Performance Schedule include a Performance Percentage in excess of 200% of the Target Award.ESPP
The 2017 EIP, if approved by stockholders, willAdministrator may amend, suspend or terminate the ESPP at any time. However, stockholder approval of any amendment to the ESPP must be effectiveobtained for fiscal 2017 Awards.
Performance Targets
Performance Targets established byany amendment which increases the Compensation Committee each year underaggregate number, or changes the 2017 EIP would be based on one or more variationstype, of the following business criteria:
62
For any Performance Period, Performance Targets could be measured on an absolute or relative basis, on an aggregate or per share basis, or by reference to an index or indices or other measures and may be based on or otherwise employ comparisons based on internal targets, the past performance of the Company (including the performance of one or more subsidiaries, divisions, segments, lines of business, or operating units or with respect to continuing operations or on a consolidated basis) or the past or current performance of other companies (or a combination of such past and current performances). In all cases, the Compensation Committee will retain the ability to exercise negative discretion to reduce the actual Award payout based on subjective determinations or other objective performance metricsshares that may be established atsold pursuant to rights under the ESPP, changes in the corporations or classes of corporations whose employees are eligible to participate in the ESPP, or changes in the ESPP in any manner that would cause the ESPP to no longer be an employee stock purchase plan within the meaning of Section 423(b) of the Internal Revenue Code.
U.S. Federal Income Tax Consequences
The following is a later date.
Determinationgeneral summary under current law of the material U.S. federal income tax consequences to an employee who participates in the ESPP. This summary deals with the general U.S. federal income tax principles that apply and Paymentis provided only for general information. Some kinds of Awards
Intaxes, such as state, local and foreign income taxes and federal employment taxes, are not discussed. Tax laws are complex and subject to change and may vary depending on individual circumstances and from locality to locality. This summary also assumes that the manner required by IRCESPP complies with Section 162(m),423 of the Compensation Committee would, promptly afterInternal Revenue Code and is based on the tax laws in effect as of the date of this proxy statement. Changes to these laws could alter the tax consequences described
62 | Page |
below. The summary does not discuss all aspects of federal income taxation that may be relevant in light of a participant’s personal circumstances. This summarized tax information is not tax advice and a participant should rely on which the necessary financialadvice of his or her legal and tax advisors.
The right of U.S. participants to make purchases under the ESPP are intended to qualify under the provisions of Section 423 of the Internal Revenue Code. Under the applicable Internal Revenue Code provisions, no income will be taxable to a participant until the sale or other information for a particular Performance Period becomes available, certify the extent to which Performance Targets have been achieved. Using the Performance Schedules, the Compensation Committee would determine the Performance Percentage applicable to each Performance Target and multiply the portiondisposition of the Target Award to which the Performance Target relates by such Performance Percentage in order to arrive at the actual Award payout for such portion.
At the time Target Awards are determined, the Compensation Committee may specify that the Performance Percentage attributable to any one or more portions of a Participant’s Target Award may not exceed the Performance Percentage attributable to any other portion of the Participant’s Target Award. In the event such specification is made, actual Award payouts would be determined accordingly.
Payment of Awards would be made by the Company or the applicable employer subsidiary as soon as administratively practical following the certification by the Compensation Committee of the extent to which the applicable Performance Targets have been achieved and the determination of the actual Awards. All Awardsshares purchased under the 2017 EIP wouldESPP. Upon such sale or disposition, the participant will generally be subject to withholding, where applicable,tax in an amount that depends upon the length of time such shares are held by the participant prior to disposing of them. If the shares are sold or disposed of more than two years from the first day of the offering period during which the shares were purchased and one year from the date of purchase, or if the participant dies while holding the shares, the participant (or his or her estate) will recognize ordinary income measured as the lesser of (1) the excess of the fair market value of the shares at the time such sale or disposition over the purchase price or (2) an amount equal to 15% of the fair market value of the shares as of the first day of the offering period. Any additional gain will be treated as long-term capital gain. If the shares are held for federal, statethe holding periods described above but are sold for a price that is less than the purchase price, there is no ordinary income and local taxes. Awards maythe designated employee has a long-term capital loss for the difference between the sale price and the purchase price. If the shares are sold or otherwise disposed of before the expiration of the holding periods described above, the participant will recognize ordinary income generally measured as the excess of the fair market value of the shares on the date the shares are purchased over the purchase price. Any additional gain or loss on such sale or disposition will be paidlong-term or short-term capital gain or loss, depending on a deferred basis pursuanthow long the shares were held following the date they were purchased by the participant prior to any applicable deferred compensation plan.
Award Adjustmentsdisposing of them.
The Compensation Committee may adjust the applicable Performance Targets, asCompany is necessary to prevent reduction or enlargement of Participants’ Awards for a Performance Period to reflect one or more of the following: (i) items relatednot entitled to a change in applicable accounting standards; (ii) items relatingdeduction for amounts taxed as ordinary income or capital gain to financing activities; (iii) expenses for restructuring or productivity initiatives; (iv) othernon-operating items; (v) items related to acquisitions; (vi) items attributablea participant except to the business operationsextent of any entity acquired during the Performance Period; (vii) items related to theordinary income recognized upon a sale or disposition of a business or segmentshares prior to the expiration of a business; (viii) items relatedthe holding periods described above.
Non-U.S. Income Tax Consequences
The Company may also grant options underSub-Plans of the ESPP to discontinued operations that doemployees outside the U.S. The specific terms of suchSub-Plans are not qualify as a segmentyet known; accordingly, it is not possible to discuss with certainty the relevant tax consequences of a business under applicable accounting standards; (ix) items
63
attributable to any stock dividend, stock split, combination or exchangethese plans. These plans will besub-plans of stock occurring during the Performance Period; (x) any other items of significant income or expense which are determined to be appropriate adjustments; (xi) items relating to unusual or extraordinary corporate transactions, events or developments, (xii) items related to amortization of acquired intangible assets; (xiii) itemsESPP that are outsidegenerally not intended to qualify under the scopeprovisions of our core,on-going business activities; (xiv) items relatedSections 421 and 423 of the Code. Therefore, it is likely that at the time of the exercise of an option under such a plan, a non-U.S. employee subject to acquiredin-process researchincome tax would recognize ordinary income equal to the excess of the fair market value of the stock on the date of exercise and development; (xv) items relatingthe purchase price, to changes inthe extent that the employing entity is consolidated with the Company for U.S. tax laws; (xvi) items relatingpurposes, then the Company would be able to major licensing or partnership arrangements; (xvii) items relatingclaim a tax deduction equal to asset impairment charges; (xviii) items relatingthis difference. To the extent that the employee is subject to gains or losses for litigation, arbitrationU.S. tax withholding, then the Company would be required to withhold employment taxes and contractual settlements; (xix) items attributable to expenses incurredincome tax at the time of the purchase.
Accounting Treatment
The Company will recognize compensation expense in connection with a reduction in force or early retirement initiative; (xx) items relating to foreign exchange or currency transactions and/or fluctuations; or (xxi) items relating to any other unusual or nonrecurring events or changes in applicable law, applicable accounting standards or infrequently occurring business conditions (including those described in the Financial Accounting Standards Board’s authoritative guidance, footnotes to the Company’s financial statements and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s reports on Form10-K,10-Q or8-K for the applicable year).
Limitations on Awards
No Participantoptions outstanding under the 2017 EIP may receive an Award that is greater than $3 millionESPP in accordance with accounting authority with respect to stock-based compensation. So long as the Company continues issuing shares under the ESPP with a purchase price at a discount to the fair market value of its stock, it will recognize compensation expense which will be dependent on the level of participation in the ESPP.
New Plan Benefits
Because the ESPP is a new plan no amounts have been allocated to any Performance Period of one fiscal year, or a proportionate amount for a Performance Period longer or shorter than a fiscal year. If there are two or more Performance Periods that coincide during any fiscal year,specific employee and it is not possible to predict what employees would have elected to purchase under the plan if it had been in no event shall the aggregate amount payable for all such Performance Periods exceed $10 million. Awards may be settledeffect in shares or in a combination of cash and shares. However, the number of shares may not exceed the maximumprior years. The number of shares that may be issuedpurchased under the ESPP will depend on each employee’s voluntary election to participate and on the fair market value of our common stock at various future dates, the actual
63 | Page |
number of shares that may be purchased by any individual cannot be determined in advance. However, the maximum dollar value of shares that may be purchased in any one calendar year by any individual pursuant to the terms of the Company’s Third Amended and Restated 2007 Long-Term Incentive Plan, as amended from time to time, or any successor stockholder approved plan.
To beis $25,000.Non-executive directors are not eligible to receive payment of an Award, the Participant must have remainedparticipate in the continuous employESPP. No shares of common stock have been issued under the Company or its subsidiaries through the end of the applicable Performance Period or through the applicable payment date,ESPP as provided by theit is not yet effective.
Equity Compensation Committee, provided that, in the event the Participant’s employment terminates during the Performance Period due to death, disability or retirement, the Compensation Committee may, at its sole discretion, authorize the Company or the applicable subsidiary to pay in full or on a prorated basis an Award determined in accordance with the 2017 EIP. For purposes of the 2017 EIP: (i) “disability” is defined in the employment practices or policies of the applicable subsidiary of the Company in effect at the time of termination of employment, and (ii) “retirement” means termination of employment with all subsidiaries of the Company by the Participant after attainment of age 65.
Termination and Amendment
The 2017 EIP would be effective for any Award granted on or after November 1, 2016, subject to approval by the Company’s stockholders at the annual meeting, and would remain in effect until the stockholders meeting in 2022 or as earlier terminated by the Board of Directors. The Board of Directors may at any time, and from time to time, alter, amend, suspend, or terminate the 2017 EIP in whole or in part. Amendments would be conditioned on stockholder approval only to the extent the Board of Directors determines such approval is required by law or is desirable and necessary for Awards to qualify as “performance-based compensation” under IRC Section 162(m).
64
Federal Income Tax Consequences
The following is a brief summary of certain federal income tax consequences relating to the transactions described under the 2017 EIP as set forth below. This summary does not purport to address all aspects of federal income taxation and does not describe state, local or foreign tax consequences. This discussion is based upon provisions of the IRC and the regulations issued thereunder, and judicial and administrative interpretations under the IRC and regulations, all as in effect as of the date hereof, and all of which are subject to change (possibly on a retroactive basis) or different interpretation.
Tax Consequences to Participants: Generally, the recipient of cash will be subject to tax at ordinary income rates on the amount of the award on the date of payment or delivery. Any ordinary income realized by a Participant upon receipt of cash is subject to withholding of federal, state and local income tax and to withholding of the Participant’s share of employment taxes. Withholding does not represent an increase in the Participant’s total income tax obligation, since it is fully credited toward his or her tax liability for the year.
Tax Consequences to the Company:To the extent that a Participant recognizes ordinary income in the circumstances described above, the Company or a subsidiary of the Company for which the Participant performs services will be entitled to a corresponding deduction; provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense and is not an “excess parachute payment” within the meaning of IRC Section 280G and otherwise meets the requirements of IRC Section 162(m) discussed above.
Law Affecting Deferred Compensation:IRC Section 409A would apply to any amounts under the 2017 EIP which payments are deferred beyond vesting. If the requirements of IRC Section 409A are not satisfied and applicable correction opportunities are not available, deferred compensation and earnings thereon will be subject to tax as they vest, plus an interest charge at the underpayment rate plus 1% and a 20% penalty tax.
Other Compensation
The 2017 EIP is not exclusive. The Company may pay other compensation to executive officers as authorized by the Board of Directors or Compensation Committee and applicable law.
Plan category
| No. of
| Weighted-
| No. of Securities
| |||
(A)
| (B)
| (C)
| ||||
Equity compensation plans approved by stockholders (2) | 1,692,007 | $160.31 | 1,572,390 | |||
Equity compensation plans not approved by stockholders | - | $- | - | |||
Total
| 1,692,007
| $160.31
| 1,572,390
|
65
New Plan Benefits Table
The Compensation Committee has set Performance Targets for fiscal 2017 which would result in Awards paid under the 2017 EIP, if approved. Target Awards were set by the Compensation Committee for our executives, including our Named Executive Officers, and other participating employees. Target Awards represent a designated percentage of base salary for the 2017 fiscal year and that percentage controls the potential Award that can be achieved under the 2017 EIP. Potential payments for fiscal 2017 Awards under the 2017 EIP are presented in the following table:
Name and Position | Benefits Payable (1) | |||||
Threshold | Target | Maximum | ||||
Robert S. Weiss | $76,313 | $925,000 | $1,850,000 | |||
President & Chief Executive Officer | ||||||
Daniel G. McBride | $30,319 | $367,500 | $735,000 | |||
Exec. Vice President & Chief Operating Officer / President of CooperVision, Inc. | ||||||
Albert G. White III | $30,319 | $367,500 | $735,000 | |||
Executive Vice President, Chief Financial Officer & Chief Strategy Officer / Chief Executive Officer of Cooper Medical, Inc. | ||||||
Carol R. Kaufman | $23,166 | $280,800 | $561,600 | |||
Exec. Vice President, Secretary, Chief Administrative Officer & Chief Governance Officer | ||||||
All current executive officers (6 people) | $178,549 | $2,320,899 | $4,641,799 | |||
All currentnon-employee directors | $ -0- | $ -0- | $ -0- | |||
All other employees including currentnon-executive officers | $119,149 | $1,444,229 | $2,888,459 |
(1) As presented, target amounts represent the potential Award payable on 100% achievement of Performance Targets. Threshold amounts represent the potential Award payable on minimum achievement of Performance Targets. All awards are capped at a maximum of 200% of the target Award opportunity.
(1) | The amount of total securities to be issued under Company equity plans upon exercise of outstanding options, warrants, and rights shown in Column A includes 487,314 Restricted Stock Units granted pursuant to the Company’s equity plans. These awards allow for the distribution of shares to the grant recipient upon the completion of time-based vesting periods. The total also includes 117,695 shares representing the maximum number of shares that may be issued subject to Performance Share Awards outstanding as of the end of the fiscal year. Restricted Stock Units and Performance Share Awards do not have an associated exercise price. Accordingly, these awards are not reflected in the weighted-average exercise price disclosed in Column B. |
(2) | Includes information with respect to the Third Amended and Restated 2007 Long-Term Incentive Plan for Employees of the Cooper Companies, Inc. (“2007 Plan”), which was approved by stockholders on March 17, 2016, and provides for the issuance of up to 6,930,000 shares of Common Stock, and the Second Amended and Restated 2006 Long Term Incentive Plan forNon-Employee Directors of the Cooper Companies, Inc. (the “Directors’ Plan”), which was approved by stockholders on March 16, 2011 and provides for the issuance of up to 950,000 shares of Common Stock. As of October 31, 2017, up to 1,441,896 shares of Common Stock may be issued pursuant to the 2007 Plan and 130,494 shares of Common Stock may be issued pursuant to the 2006 Directors’ Plan. |
The Board of Directors unanimously recommends that you vote FOR the approval of the 2017 Executive Incentive Plan as presented above.2019 Employee Stock Purchase Plan.
The proposal to approve the 2017 Executive Incentive2019 Employee Stock Purchase Plan requires an affirmative vote of the majority of the shares represented in person or by proxy at the Annual Meeting and entitled to vote on the proposal. Abstentions will have the same practical effect as votes against this proposal. Brokernon-votes will have no effect in determining the outcome of this proposal.
66
64 | Page |
PROPOSAL 4 — ADVISORY VOTE ON EXECUTIVE COMPENSATION
We are requesting stockholder approval, on an advisory basis, of the compensation of our Named Executive Officers as presented in theCompensation Discussion and Analysis beginning on page 1920 and the compensation tables and associated narrative disclosure included in the discussion ofExecutive Compensation executive compensation beginning on page 36.37.
Our executive compensation program has been designed to retain and incentivize a talented, motivated, and focused executive team by providing compensation that is competitive within our market. We believe that our executive compensation program provides an appropriate balance between salary and“at-risk” forms of incentive compensation, as well as a mix of incentives that encourage executive focus on both short-term and long-term goals as a company without encouraging inappropriate risks to achieve performance.
We were pleased to receive a favorable vote for our compensation practices at both our 20162017 and 2018 Annual Meeting,Meetings, with 84%over 90% of the votes cast by our stockholders on ourSay-on-Pay proposalproposals voted in favor of the compensation of the Named Executive Officers.Officers each year. We consider these voting results to affirm stockholder support for our executive compensation practices and we continue to take steps to maintain alignment between executive pay and Company performance.
Highlights of our executive compensation program include:
As an advisory vote, this proposal is not binding upon us as a Company. However, our Compensation Committee, which is responsible for the design and administration of our executive compensation practices,program, values the opinions of our stockholders as expressed through your vote on this proposal. The Compensation Committee will consider the outcome of this vote in making future compensation decisions for our Named Executive Officers.
Accordingly, we will present the following resolution for vote at the 20172019 Annual Meeting of Stockholders:
“RESOLVED, that the stockholders of The Cooper Companies, Inc. (the “Company”) approve, on an advisory basis, the compensation of the Company’s Named Executive Officers as described in the Compensation Discussion and Analysis and disclosed in the Summary Compensation Table and related compensation tables and narrative disclosure as set forth in our Proxy Statement.”
The Board of Directors unanimously recommends that you vote FOR the approval, on an advisory basis, of our executive compensation program as presented in this Proxy Statement.
67
The proposal to approve our executive compensation program, on an advisory basis, requires an affirmative vote of the majority of the shares represented in person or by proxy at the Annual Meeting and entitled to vote on the proposal. Abstentions will have the same practical effect as votes against this proposal. Brokernon-votes will have no effect in determining the outcome of this proposal.
68
65 | Page |
PROPOSAL 5 – ADVISORY VOTE ON THE FREQUENCY OF PRESENTATION OF EXECUTIVE COMPENSATION PROGRAM FOR AN ADVISORY VOTE OF STOCKHOLDERS
We are requesting that our stockholders vote, on an advisory basis, on the frequency with which we present a request for an advisory vote on our executive compensation practices in our proxy materials. You are asked to consider whether we should present an advisory vote on our executive compensation every year, every two years or every three years. You will be requested to provide an advisory vote on this topic at least every six years.
We recognize that there are advantages and disadvantages to each of the presented options for the frequency of an advisory vote on executive compensation, and we are recommending that our stockholders select an ANNUAL advisory vote on our executive compensation program. Although our executive compensation practices change very little from year to year, we feel it is valuable for our stockholders to have an opportunity to express their opinion on our practices on a regular basis and for us to receive feedback on our programs.
Although the Board of Directors recommends a vote every year, stockholders will be able to specify one of four choices for this proposal on the proxy card: one year, two years, three years or to abstain. Stockholders are not voting to approve or disapprove of the Board’s recommendation.
Because this vote is advisory and not binding on the Board of Directors or the Company in any way, the Board may decide that it is in the best interests of our stockholders and the Company to hold an advisory vote on executive compensation more or less frequently than the option approved by our stockholders. However, we value the opinions of our stockholders and we will consider the outcome of the vote in making determinations regarding the presentation of vote proposals in future proxy statements.
The Board of Directors unanimously recommends that you vote for an ANNUAL frequency for the presentation of an advisory vote on our executive compensation programs.
The frequency of presentation of an advisory vote on our executive compensation program will be selected by the affirmative vote of the plurality of the shares represented in person or by proxy at the Annual Meeting and entitled to vote on the proposal. The option of annual, biennial or triennial that receives the highest number of advisory votes cast by stockholders will be considered to be the stockholder choice for the frequency of advisory votes on executive compensation.
Abstentions and broker“non-votes” will not affect the outcome of the proposal.
69
The Board knows of no other matters to be presented at the Annual Meeting, but if any such matters properly come before the Annual Meeting, it is intended that the persons holding the accompanying proxy will vote in accordance with their best judgment.
The Board unanimously recommends that the stockholders vote:
FOR the election of each of the nominees for director named in this Proxy Statement;
Statement.
When a properly executed proxy in the form enclosed with this Proxy Statement is returned, the shares will be voted as indicated or, if no directions are indicated, the shares will be voted in accordance with the recommendations of the Board.
By Order of the Board of Directors
By Order of the Board of Directors |
A. Thomas Bender |
Chairman of the Board of Directors |
66 | Page |
EXHIBIT A – 2019 EMPLOYEE STOCK PURCHASE PLAN
1. Purposes of the Plan
The purposes of this The Cooper Companies, Inc. 2019 Employee Stock Purchase Plan (as it may be amended or restated from time to time, the “Plan”) are to assist Eligible Employees of The Cooper Companies, Inc., a Delaware corporation (the “Company”), and its Designated Subsidiaries in acquiring a stock ownership interest in the Company pursuant to a plan that is intended, for Eligible Employees subject to U.S. federal income tax, to qualify as an “employee stock purchase plan” within the meaning of Section 423(b) of the Code (a “Qualified ESPP”), and to help Eligible Employees provide for their future security and to encourage them to remain in the employment of the Company and its Designated Subsidiaries. The provisions of the Plan shall, accordingly, be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code.
2. Definitions and Construction
Wherever the following terms are used in the Plan, they will have the meanings specified below, unless the context clearly indicates otherwise.
(a) |
|
(b) | “Affiliate” means any corporation, partnership, joint venture or other entity in which the Company holds an equity, profit or voting interest of more than fifty percent (50%). |
(c) |
|
(d) | “Board” means the Board of Directors of the Company. |
(e) | “Change in Control” means the occurrence of any of the following events: |
(i) | The |
(ii) | Consummation of a reorganization, merger or consolidation, a sale or other disposition of all or substantially all of the assets of the Company, or other transaction (each, a “Business Combination”), unless, in each case, immediately following such Business Combination, (A) all or substantially all of the individuals and |
(iii) | The Company’s stockholders approve a plan of complete liquidation or dissolution of the Company. |
(f) | “Code” means the Internal Revenue Code of 1986, as amended, |
A-1 | Page |
(g) | “Common Stock” means the common stock of the Company and such other securities of the Company that may be substituted therefore pursuant to Section |
(h) | “Company” means The |
(i) | “Compensation” of an Eligible Employee means the gross base compensation and/or sales commissions received by such Eligible Employee as compensation for services to the Company or any Designated Subsidiary, but excluding overtime payments, incentive compensation, bonuses, expense reimbursements, fringe benefits and other special payments. The Administrator, in its sole discretion, may, on a uniform and nondiscriminatory basis for each Offering, establish a different definition of Compensation. Further, the Administrator shall |
(j) | “Designated Subsidiary” means any Subsidiary designated by the |
(k) | “Effective Date” means the date the Plan is adopted by the Board; provided, however, that no Employee will have any rights under the Plan before the first Offering Period, which will be determined by the Administrator in its sole discretion. |
(l) | “Eligible Employee” means an Employee (i) who does not, immediately after any rights under this Plan are granted, own (directly or through attribution) stock possessing five percent (5%) or more of the |
(m) | “Employee” means any officer or other employee (as defined in accordance with Section 3401(c) of the Code) of the Company or any Designated Subsidiary. “Employee” does not include any director of the Company or a Designated Subsidiary who does not render services to the Company or a Designated Subsidiary as an employee within the meaning of Section 3401(c) of the Code. For purposes of the Plan, the employment relationship will be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company or Designated Subsidiary and meeting the requirements of Treasury RegulationSection 1.421-1(h)(2). Where the period of leave exceeds three (3) months and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship will be deemed to have terminated on the first day immediately following such three (3) month period, unless provided otherwise under Applicable Law. For purposes of clarity, the term “Employee” will not include the following, regardless of any subsequent reclassification as an employee by |
A-2 | Page |
the Company or a Designated Subsidiary, any governmental agency, or any court: (i) any independent contractor; (ii) any consultant; (iii) any individual performing services for the Company or a Designated Subsidiary under a purchase order, a supplier agreement or any other agreement that the Company or a Designated Subsidiary enters into for services; (iv) any individual classified by the Company or a Designated Subsidiary as contract labor (such as contractors, contract employees, job shoppers), regardless of length of service; and (vi) any leased employee. The |
(n) | “Enrollment Date” means the first Trading Day of each Offering Period. |
(o) | “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time. |
(p) | “Fair Market Value” means the value of a Share on a particular date determined by such |
(q) | “Offering” has the meaning given to such term in Section 4(a). |
(r) | “Offering Document” has the meaning given to such term in Section 4(a). |
(s) | “Offering Period” has the meaning given to such term in Section 4(a). |
(t) | “Parent” means any corporation, other than the Company, in an unbroken chain of corporations ending with the Company if, at the time of the determination, each of the corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. |
(u) | “Participant” means any Eligible Employee who has executed a subscription agreement and |
(v) | “Plan” means this The Cooper Companies, Inc. 2019 Employee Stock Purchase Plan, as it may be amended from time to time. |
(w) | “Purchase Date” means the last Trading Day of each Offering Period. |
(x) | “Purchase Price” means the purchase price designated by the Administrator in the applicable Offering Document (which purchase price will not be less than eighty-five percent (85%) of the Fair Market Value of a Share on the Purchase Date); provided, however, that, in the event no purchase price is designated by the Administrator in the applicable Offering Document, the purchase price for the Offering Periods covered by such Offering Document will be eighty-five percent (85%) of the Fair Market Value of a Share on the Purchase Date; provided, further, that the Purchase Price may be adjusted by the Administrator without shareholder approval to any purchase price that complies with Section 423 of the Code, including pursuant to Section 8(a), and will not be less than the par value of a Share. |
(y) | “Qualified ESPP” has the meaning given to such term in Section 1. |
(z) | “Securities Act” means the Securities Act of 1933, as amended. |
(aa) “Share” means a share of Common Stock.
(bb) | “Subsidiary” means any corporation, other than the Company, in an unbroken chain of corporations beginning with the Company if, at the time of the determination, each of the corporations other than the last corporation in an unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain; provided, however, that a limited liability company or partnership may be treated as a Subsidiary to the extent either (i) such entity is treated as a disregarded entity under Treasury RegulationSection 301.7701-3(a) by reason |
A-3 | Page |
of the Company or any other Subsidiary that is a corporation being the sole owner of such entity, or (ii) such entity elects to be classified as a corporation under Treasury RegulationSection 301.7701-3(a) and such entity would otherwise qualify as a Subsidiary. |
(cc) | “Trading Day” means a day on which national stock exchanges in the United States are open for trading. |
3. Shares Subject to the Plan
(a) | Number of Shares. Subject to Section 8, the aggregate number of Shares that may be issued pursuant to rights granted under the Plan is One Million (1,000,000) Shares. If any right granted under the Plan terminates for any reason without having been exercised, the Common Stock not purchased under such right will again become available for issuance under the Plan. |
(b) | Stock Distributed. Any Common Stock distributed pursuant to the Plan may consist, in whole or in part, of authorized and unissued Common Stock, treasury stock, or Common Stock purchased on the open market. |
4. Offering Periods; Offering Documents
(a) | Offering Periods. The Administrator may from time to time grant or provide for the grant of rights to purchase Common Stock under the Plan to Eligible Employees (an “Offering”) during one (1) or more periods (each, an “Offering Period”) selected by the Administrator. The terms and conditions applicable to each Offering Period will be set forth in an “Offering Document” adopted by the Administrator, which Offering Document will be in such form and will contain such terms and conditions as the Administrator will deem appropriate and will be incorporated by reference into and made part of the Plan and will be attached hereto as part of the Plan. The provisions of separate Offering Periods under the Plan need not be identical. |
(b) | Offering Documents. Each Offering Document with respect to an Offering Period will specify (through incorporation of the provisions of this Plan by reference or otherwise): |
(i) | The length of the Offering Period, which period will not exceed twenty-seven (27) months; |
(ii) | The maximum number of Shares that may be purchased by any Eligible Employee during such Offering Period, to be determined by the Administrator as set forth in Section 5(e); and |
(iii) | Such other provisions as the Administrator determines are appropriate, subject to the Plan. |
5. Eligibility and Participation
(a) | Eligibility. Any Eligible Employee who is employed by the Company or a Designated Subsidiary on a given Enrollment Date for an Offering Period is eligible to participate in the Plan during such Offering Period, subject to the requirements of this Section 5 and the limitations imposed by Section 423(b) of the Code. |
(b) | Enrollment in Plan: |
(i) | Except as otherwise set forth in an Offering Document or determined by the Administrator, an Eligible Employee may become a Participant in the Plan for an Offering Period by delivering a subscription agreement to the Company by such time prior to the Enrollment Date for such Offering Period (or such other date specified in the Offering Document) designated by the Administrator and in such form as the Company provides. |
(ii) | Each subscription agreement will designate a whole percentage of such Eligible Employee’s Compensation to be withheld by the Company or the Designated Subsidiary employing such Eligible Employee on each payday during the Offering Period as payroll deductions under the Plan. The percentage of Compensation designated by an Eligible Employee as payroll deductions may not be less than one percent (1%) and may not be more than fifteen percent (15%), or such lower limit as may be set by the Administrator for the Offering Period. The payroll deductions made for each Participant will be credited to an account for such Participant under the Plan and will be deposited with the general funds of the Company, unless required otherwise under Applicable Law. |
A-4 | Page |
(iii) | A Participant may increase (but not decrease) the percentage of Compensation designated in his or her subscription agreement, subject to the limits of this Section 5(b), prior to the Enrollment Date for such Offering Period (or such other date specified in the Offering Document) designated by the Administrator and in such form as the Company provides, or may suspend his or her payroll deductions. A Participant may not decrease the percentage of Compensation designated in his or her subscription agreement; such Participant may only suspend deductions or withdraw from such Offering Period in accordance with Section 7(a). Any increase or suspension of payroll deductions will become effective as soon as reasonably practicable after the Company’s receipt of the Participant’s new subscription agreement and, to the extent possible, within the Offering Period with respect to which it is requested by the Participant. In the event a Participant suspends his or her payroll deductions, the balance of the amount credited to the account of such Participant will be applied to the purchase of Shares on the next following Purchase Date. The balance of the amount credited to the account of any Participant that has not been applied to the purchase of Shares by reason of Section 423(b)(8) of the Code, Section 5(e) or the other limitations set forth in this Plan will be paid to such Participant in one lump sum in cash as soon as reasonably practicable. |
(iv) | Except as otherwise set forth in an Offering Document or determined by the Administrator, a Participant may participate in the Plan only by means of payroll deduction and may not make contributions by lump sum payment for any Offering Period, unless required otherwise under Applicable Law. |
(c) | Payroll Deductions. Except as otherwise provided in the applicable Offering Document, payroll deductions for a Participant will commence on the first payroll following the Enrollment Date and will end on the last payroll in the Offering Period to which the Participant’s authorization is applicable, unless sooner terminated by the Participant as provided in Section 7 or suspended by the Participant or the Administrator as provided in Section 5(b) and Section 5(e), respectively. |
(d) | Effect of Enrollment. A Participant’s completion of a subscription agreement will enroll such Participant in the Plan for each subsequent Offering Period on the terms contained therein until the Participant either submits a new subscription agreement, withdraws from participation under the Plan as provided in Section 7 or otherwise becomes ineligible to participate in the Plan. |
(e) | Limitation on Purchase of Common Stock. In connection with each Offering Period, the Administrator, in its sole discretion, may, on a uniform and nondiscriminatory basis, specify: |
(i) | A maximum number of Shares that may be purchased by any Participant on any Purchase Date during such Offering Period, which, in the absence of a lower specification by the Administrator, will be five hundred (500) Shares (subject to adjustment under Section 8) for Offering Periods of three (3) months; and |
(ii) | A maximum aggregate number of Shares that may be purchased by all Participants on any Purchase Date during an Offering Period, which, in the absence of a lower specification by the Administrator, will be Fifty Thousand (50,000) Shares (subject to adjustment under Section 8) for Offering Periods of three (3) months. |
If the aggregate number of Shares issuable upon exercise of purchase rights during the Offering Period would exceed any such maximum aggregate number, then, in the absence of any Administrator action otherwise, the maximum aggregate number of Shares will be allocated on a pro rata basis according to each Participant’s accumulated payroll deduction (rounded down to the nearest whole Share). An Eligible Employee may be granted rights under the Plan only if such rights, together with any other rights granted to such Eligible Employee under “employee stock purchase plans” of the Company, any Parent or any Subsidiary, as specified by Section 423(b)(8) of the Code, do not permit such employee’s rights to purchase stock of the Company or any Parent or Subsidiary to accrue at a rate that exceeds twenty five thousand dollars (US$25,000) of the Fair Market Value of such stock (determined as of the first day of the Offering Period during which such rights are granted) for each calendar year in which such rights are outstanding at any time. This limitation will be applied in accordance with Section 423(b)(8) of the Code.
A-5 | Page |
(f) | Suspension of Payroll Deductions. Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 5(e) or the other limitations set forth in this Plan, a Participant’s payroll deductions may be suspended by the Administrator at any time during an Offering Period. The balance of the amount credited to the account of each Participant that has not been applied to the purchase of Shares by reason of Section 423(b)(8) of the Code, Section 5(e) or the other limitations set forth in this Plan will be paid to such Participant in one lump sum in cash as soon as reasonably practicable after the Purchase Date. |
(g) | Foreign Employees. Subject to Section 12, the terms of which shall control, in order to facilitate participation in the Plan, the Administrator may provide for such special terms applicable to Participants who are citizens or residents of a foreign jurisdiction, or who are employed by a Designated Subsidiary outside of the United States, as the Administrator may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. For an Offering, such special terms may not be more favorable than the terms of rights granted under the Plan to Eligible Employees who are residents of the United States. Moreover, the Administrator may approve such supplements to, or amendments, restatements or alternative versions of, this Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of this Plan as in effect for any other purpose. No such special terms, supplements, amendments or restatements will include any provisions that are inconsistent with the terms of this Plan as then in effect unless this Plan could have been amended to eliminate such inconsistency without further approval by the stockholders of the Company. |
(h) | Leave of Absence. If a Participant ceases active service by reason of a leave of absence, then the Participant shall have the election, exercisable up until no later than thirty (30) calendar days prior to the end of the Offering Period (or by such later date prior to the end of the Offering Period as the Administrator determines in its sole discretion) in which such leave of absence commences (or, if earlier, the date immediately preceding the date on which the Participant ceases to be an Eligible Employee), to (i) withdraw all the funds in the Participant’s account at the commencement of such leave or (ii) have such funds held for the purchase of Shares at the end of such Offering Period. If no such election is made, then such funds shall automatically be held for the purchase of Shares at the end of such Offering Period. In no event, however, shall any further payroll deductions be added to the Participant’s account following the commencement of such leave of absence, unless otherwise required by Applicable Law. Should the Participant return to active service (x) within three (3) months following the commencement of his or her leave of absence or (y) prior to the expiration of any longer period for which such Participant’s right to reemployment with the Company is guaranteed by statute or contract, then his or her payroll deductions under the Plan shall automatically resume upon his or her return at the rate in effect at the time the leave began, and if a new Offering Period begins during the period of the leave, then the Participant will automatically be enrolled in that purchase period at the rate of payroll deduction in effect for him or her at the time the leave commenced, but payroll deductions for that Offering Period shall not actually begin until the Participant returns to active service, unless otherwise required by Applicable Law. However, an individual who returns to active employment following a leave of absence that exceeds in duration the applicable (x) or (y) time period will be treated as a new Employee for purposes of subsequent participation in the Plan and must accordinglyre-enroll in the Plan (by making a timely filing of the prescribed enrollment forms) on or before the start date of any subsequent Offering Period in which he or she wishes to participate. |
6. Grant and Exercise of Rights
(a) | Grant of Rights. On the Enrollment Date of each Offering Period, each Eligible Employee participating in such Offering Period will be granted a right to purchase the maximum number of Shares specified under Section 4(b), subject to the limits in Section 5(e), and will have the right to buy, on each Purchase Date during such Offering Period (at the applicable Purchase Price), such number of whole and fractional Shares as is determined by dividing (A) such Participant’s payroll deductions accumulated prior to such Purchase Date and retained in the Participant’s account as of the Purchase Date, by (B) the applicable Purchase |
A-6 | Page |
Price. The right will expire on the earlier of: (x) the last Purchase Date of the Offering Period, (y) the last day of the Offering Period and (z) the date on which the Participant withdraws in accordance with Section 7(a) or Section 7(c). |
(b) | On each Purchase Date, each Participant’s accumulated payroll deductions and any other additional payments specifically provided for in the applicable Offering Document will be applied to the purchase of whole and fractional Shares, up to the maximum number of Shares permitted pursuant to the terms of the Plan and the applicable Offering Document, at the Purchase Price. Shares issued pursuant to the Plan may be evidenced in such manner as the Administrator may determine and may be issued in certificated form or issued pursuant to book-entry procedures. |
(c) | Pro Rata Allocation of Shares. If the Administrator determines that, on a given Purchase Date, the number of Shares with respect to which rights are to be exercised may exceed (i) the number of Shares that were available for issuance under the Plan on the Enrollment Date of the applicable Offering Period, or (ii) the number of Shares available for issuance under the Plan on such Purchase Date, the Administrator may in its sole discretion provide that the Company will make a pro rata allocation of the Shares available for purchase on such Enrollment Date or Purchase Date, as applicable, among all Participants for whom rights to purchase Common Stock are to be exercised pursuant to this Section 6 on such Purchase Date, and will either (i) continue all Offering Periods then in effect, or (ii) terminate any or all Offering Periods then in effect pursuant to Section 9. The Administrator may make pro rata allocation of the Shares available on the Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional Shares for issuance under the Plan by the Company’s stockholders subsequent to such Enrollment Date. The balance of the amount credited to the account of each Participant that has not been applied to the purchase of Shares will be paid to such Participant in one lump sum in cash as soon as reasonably practicable after the Purchase Date. |
(d) | Withholding. The Participant must make adequate provision for any federal, state, or other tax withholding obligations that arise in connection with the Participant’s participation in the Plan. The Company and the Designated Subsidiaries are authorized to withhold any applicable taxes from the Participant’s compensation, from the Shares purchased under the Plan, from the proceeds of the sale of Shares purchased under the Plan or by such other means as permissible under Applicable Law. |
(e) | Conditions to Issuance of Common Stock. The Company is not required to issue or deliver any certificate or certificates for, or make any book entries evidencing, Shares purchased upon the exercise of rights under the Plan prior to fulfillment of all of the following conditions: |
(i) | The admission of such Shares to listing on all stock exchanges, if any, on which the Common Stock is then listed; |
(ii) | The completion of any registration or other qualification of such Shares under any state or federal law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, that the Administrator will, in its absolute discretion, deem necessary or advisable; |
(iii) | The obtaining of any approval or other clearance from any state or federal governmental agency that the Administrator, in its absolute discretion, determines to be necessary or advisable; |
(iv) | The payment to the Company or a Designated Subsidiary of all amounts that the Company or the Designated Subsidiary is required to withhold under federal, state or local law as a result of the Participant’s participation in the Plan; and |
(v) | The lapse of such reasonable period of time following the exercise of the rights as the Administrator may from time to time establish for reasons of administrative convenience. |
(f) | ESPP Broker. If the Administrator designates or approves a stock brokerage or other financial services firm (the “ESPP Broker”) to hold shares purchased under the Plan for the accounts of Participants, the following procedures will apply. Promptly following each Purchase Date, the number of shares of Common Stock |
A-7 | Page |
purchased by each Participant will be deposited into an account established in the Participant’s name with the ESPP Broker. Each Participant will be the beneficial owner of the Common Stock purchased under the Plan and will have all rights of beneficial ownership in such Common Stock. A Participant will be free to undertake a disposition of the shares of Common Stock in his or her account at any time, but, in the absence of such a disposition, the shares of Common Stock purchased under the Plan must remain in the Participant’s account at the ESPP Broker. Dividends paid in the form of shares of Common Stock with respect to Common Stock in a Participant’s account shall be credited to such account. |
7. Withdrawal; Cessation of Eligibility
(a) | Withdrawal. A Participant may withdraw all but not less than all of the payroll deductions credited to his or her account and not yet used to exercise his or her rights under the Plan at any time by giving written notice to the Company in a form acceptable to the Company no later than thirty (30) calendar days prior to the end of the Offering Period, or by such later date prior to the end of the Offering Period as the Administrator determines in its sole discretion. All of the Participant’s payroll deductions credited to his or her account during an Offering Period will be paid to such Participant as soon as reasonably practicable after receipt of notice of withdrawal and such Participant’s rights for the Offering Period will be automatically terminated, and no further payroll deductions for the purchase of Shares will be made for such Offering Period. If a Participant withdraws from an Offering Period, payroll deductions will not resume at the beginning of the next Offering Period unless the Participant timely delivers to the Company a new subscription agreement. |
(b) | Future Participation. A Participant’s withdrawal from an Offering Period will not have any effect upon his or her eligibility to participate in any similar plan that may hereafter be adopted by the Company or a Designated Subsidiary or in subsequent Offering Periods that commence after the termination of the Offering Period from which the Participant withdraws. |
(c) | Cessation of Eligibility. Upon a Participant’s ceasing to be an Eligible Employee for any reason, he or she will be deemed to have elected to withdraw from the Plan pursuant to this Section 7 and the payroll deductions credited to such Participant’s account during the Offering Period will be paid to such Participant or, in the case of his or her death, to the person or persons entitled thereto under Section 13(d), as soon as reasonably practicable, and such Participant’s rights for the Offering Period will automatically terminate. |
8. Adjustments Upon Changes in Stock
(a) | Changes in Capitalization. Subject to Section 8(c), in the event that the Administrator determines that any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), Change in Control, reorganization, merger, amalgamation, consolidation, combination, repurchase, recapitalization, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or sale or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event, as determined by the Administrator, affects the Common Stock such that an adjustment is determined by the Administrator to be appropriate in order to |
A-8 | Page |
(b) | Subject to Section 8(c), in the event of any transaction or event described in Section 8(a) or any unusual or nonrecurring transactions or events affecting the Company, any Affiliate, or the financial statements of the |
(i) | To provide for either (A) termination of any outstanding right in exchange for an amount of cash, if any, equal to the amount that would have been obtained upon the exercise of such right had such right been currently exercisable or (B) the replacement of such outstanding right with other rights or property selected by the Administrator in its sole discretion; |
(ii) | To provide that the outstanding rights under the Plan will be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or will be substituted for by similar rights covering the stock of the |
(iii) | To make adjustments in the number and type of Shares (or other securities or property) subject to
|
(iv) |
|
(v) | To provide that all outstanding rights will terminate without being exercised. |
(c) | No Adjustment Under Certain Circumstances. No adjustment or
|
(d) | No Other Rights. Except as expressly provided in the Plan, no Participant will have any rights by reason of
|
9. Amendment, Modification and Termination
(a) | Amendment, Modification and
|
(b) | Certain Changes to Plan. Without stockholder consent and without regard to whether any Participant rights may be considered to have been adversely affected, to the extent permitted by Section 423 of the Code, the Administrator is entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld from Compensation during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in |
A-9 | Page |
excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of payroll withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion to be advisable that are consistent with the Plan. |
(c) | Actions In the Event of Unfavorable Financial Accounting Consequences. In the event the Administrator determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Administrator may, in its discretion and, to the extent necessary or desirable and permitted under Applicable Law, modify or amend the Plan to reduce or eliminate such accounting consequence including, but not limited to: |
(i) | Altering the Purchase Price for any Offering Period including an Offering Period underway at the time |
(ii) | Shortening any Offering Period so that the Offering Period ends on a new Purchase Date, including an Offering Period underway at the time of the Administrator action; and |
(iii) | Allocating Shares among Participants, provided that such allocation is consistent with Section 13(f). |
Such modifications or amendments will not require stockholder approval or the consent of any Participant.
(d) | Payments Upon Termination of Plan. Upon termination of the Plan, the balance in each Participant’s Plan account will be refunded as soon as practicable after such termination, without any interest thereon, unless required otherwise by Applicable Law. |
10. Term of Plan
The Plan is effective as of the Effective Date. The effectiveness of the Plan is subject to approval of the Plan by the stockholders of the Company within twelve months following the date the Plan is first approved by the Board. No right may be granted under the Plan prior to such stockholder approval. No rights may be granted under the Plan during any period of suspension of the Plan or after termination of the Plan.
11. Administration
(a) | Administrator. Unless otherwise determined by the Board, the Administrator of the Plan will be the Organization and Compensation Committee of the Board (or another committee or subcommittee of the Board to which the Organization and Compensation Committee of the Board delegates administration of the Plan) (such committee, the “Committee”). Additionally, the Administrator may delegate theday-to-day administration of the Plan to a committee or group of management and other Employees, provided that such committee or group shall act in accordance with the terms of the Plan and within the scope of the Administrator’s delegation. Notwithstanding the forgoing, the Board may at any time vest in the Board any authority or duties for administration of the Plan. |
(b) | Action by the Administrator. Unless otherwise established by the Board or in any charter of the Administrator, a majority of the members comprising the Administrator will constitute a quorum. The acts of a majority of the members present at any meeting at which a quorum is present and, subject to Applicable Law and the Bylaws of the Company, acts approved in writing by a majority of the Administrator in lieu of a meeting, will be deemed the acts of the Administrator. Each member of the Administrator is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other Employee, the Company’s independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan. |
A-10 | Page |
(c) | Authority of Administrator. The Administrator will have the power, subject to, and within the limitations of, the express provisions of the Plan: |
(i) | To determine when and how rights to purchase Common Stock will be granted and the provisions of each offering of such rights (which need not be identical). |
(ii) | To designate, from time to time (A) which Subsidiaries will be Designated Subsidiaries participating in the Plan, (B) which Subsidiaries will not be Designated Subsidiaries participating in the Plan, (C) which branches, representative offices or other disregarded entities of the Company or of any Designated Subsidiary may be excluded from participation in the Plan, in each case to the extent consistent with Section 423 of the Code, and (D) which Designated Subsidiaries will participate in each separate Offering (to the extent that the Company makes separate Offerings). Such designation may be made without the approval of the stockholders of the Company. To construe and interpret the Plan and rights granted under it, and to establish, amend and revoke rules and regulations for its administration. The Administrator, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan, in a manner and to the extent it will deem necessary or expedient to make the Plan fully effective. |
To amend, suspend or terminate the Plan as provided in |
(iii) | Generally, to exercise such powers and to perform such acts as the Administrator deems necessary or |
(d) |
|
12.Non-U.S. Offerings
Notwithstanding any provision to the contrary in this Plan, the Administrator may adopt such rules, procedures, agreements, appendices, orsub-plans (collectively,“Sub-Plans”) relating to the operation and administration of the Plan to accommodate local laws, customs and procedures for jurisdictions outside of the United States, the terms of whichSub-Plans may take precedence over other provisions of this Plan, with the exception of Section 3 and Section 9 hereof, but unless otherwise superseded by the terms of suchSub-Plan, the provisions of this Plan will govern the operation of suchSub-Plan. To the extent inconsistent with the requirements of Section 423 of the Code, any suchSub-Plan will be considered part of an Offering that is not intended to, and purchase rights granted thereunder will not be required by the terms of the Plan to, comply with Section 423 of the Code. Without limiting the generality of the foregoing, the Administrator is authorized to adoptSub-Plans for particularnon-U.S. jurisdictions that modify the terms of the Plan to meet applicable local requirements, customs or procedures regarding, without limitation, (i) eligibility to participate, (ii) the definition of Compensation, (iii) the dates and duration of offering periods and purchase periods, (iv) any minimum or maximum amount of payroll deductions a Participant may make in an offering period or other specified period under the applicableSub-Plan, (v) the method of contribution to the Plan, including by means of check, wire transfer, electronic fund transfer or such other contribution method other than payroll deductions, (vi) the establishment of bank, building society or trust accounts to hold payroll deductions or other contributions to the Plan, (vii) the payment of interest, (viii) conversion of local currency, (ix) obligations to pay payroll tax, (x) withholding procedures and (xi) handling of share issuances.
13. Miscellaneous
(a) |
|
A-11 | Page |
(b) | Rights as a stockholder. With respect to Shares subject to a right granted under the |
(c) | Interest. No interest will accrue on the payroll deductions or contributions of a Participant under the Plan, unless otherwise required by Applicable Law. |
(d) | Designation of Beneficiary. |
(i) | A Participant may, if permitted by the Administrator, file a written designation of a beneficiary who is to receive any Shares and/or cash, if any, from the Participant’s account under the Plan in the event of such Participant’s death subsequent to a Purchase Date on which the Participant’s rights are exercised but prior to delivery to such Participant of such Shares and cash. In addition, if permitted by the Administrator, a Participant may file a written designation of a beneficiary who is to receive any cash from the Participant’s account under the Plan in the event of such Participant’s death prior to exercise of the Participant’s rights under the Plan. If the Participant is married and resides in a community property state, a designation of a person other than the Participant’s spouse as his or her beneficiary will not be effective without the prior written consent of the Participant’s spouse. |
(ii) | Such designation of beneficiary may be changed by the Participant at any time by written notice to the Company. In the event of the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Participant’s death, the Company will deliver such Shares and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator is appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such Shares and/or cash to the spouse or to any one or more dependents or relatives of the Participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate. |
(e) | Notices. All notices or other communications by a Participant to the Company under or in connection with the Plan will be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof. |
(f) | Equal Rights and Privileges. Subject to Section 5(g), all Eligible Employees in each Offering will have equal rights and privileges under this Plan so that the Offering qualifies as an offering under a Qualified ESPP. Subject to Section 5(g), any provision of this Plan that is inconsistent with Section 423 of the Code will, without further act or amendment by the Company, the Board or the Administrator, be reformed to comply with the equal rights and privileges requirement of Section 423 of the Code. |
(g) | Use of Funds. All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company will not be obligated to segregate such payroll deductions, unless required otherwise by Applicable Law. |
(h) | Reports. Statements of account will be given to Participants at least annually, which statements will set forth the amounts of payroll deductions, the Purchase Price, the number of Shares purchased and the remaining cash balance, if any. |
(i) | No Employment Rights. Nothing in
the Company or any Parent or Subsidiary to terminate the employment of |
(j) | Notice of
|
A-12 | Page |
Plan. Such notice will specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by |
(k) |
|
(l) | Electronic Forms. To the extent permitted by Applicable Law and in the discretion of the Administrator, an Eligible Employee may submit any form or notice as set forth herein by means of an electronic form approved by the Administrator. Before the commencement of an Offering Period, the Administrator will prescribe the time limits within which any such electronic form will be submitted to the Administrator with respect to such Offering Period in order to be a valid election. |
A-13 | Page |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | ||||||
Meeting Date
|
ANNUAL MEETING OF STOCKHOLDERS OF
THE COOPER COMPANIES, INC.
March 13, 2017
ANNUAL MEETING OF STOCKHOLDERS OF THE COOPER COMPANIES, INC. March 18, 2019 GO GREEN
|