The Vanguard Group P.O Box 2600Valley Forge, PA 19482 3,342,331 (6) | 5.9% | | | | | | | | | | SouthernSun Asset Management LLC 6070 Popular Ave Suite 300 Memphis, TN 38119 | 3,190,144 (7) | 5.6% | | | | * | * Less than 1% of the total shares outstanding. |
| (1) | Mr. Miller ceased to be an executive officer of Hill-Rom effective December 13, 2010. Share ownership is based on the most recently available public data, and is not included in the line item “All directors and executive officers as a group”. |
| (2) | Includes shares of common stock purchased under our employee stock purchase plan over the first quarter of fiscal year 20122015 and issued December 30, 2011.31, 2014. |
| (2) | Mr. Saccaro left Hill-Rom on July 3, 2014; shareholdings based on most recent available information. |
| (3) | Mr. Infante Saracho left Hill-Rom on December 31, 2014; shareholdings based on most recent available information |
| (4) | This information is based solely on Schedule 13F filed by Fidelity Management & Research Co. with the SEC on November 14, 2014. |
| (5) | This information is based solely on Schedule 13F filed by BlackRock, Inc. with the SEC on November 3, 2011.October 29, 2014. |
| (4)(6) | This information is based solely on Schedule 13F filed by FMR LLCThe Vanguard Group with the SEC on November 14, 2011. |
Executive Summary, Financial Highlights & Links to our Incentive Compensation
| · | Executive compensation is based on (1) base salary, (2) variable cash incentive awards and (3) long-term, equity-based incentive awards.12, 2014. |
| ·(7) | The Compensation Committee generally targets total compensation atThis information is based solely on Schedule 13F filed by SouthernSun Asset Management LLC with the 50th percentile of compensation paid by our peer group.SEC on November 13, 2014. |
COMPENSATION DISCUSSION AND ANALYSIS |
Compensation Committee Report The Compensation and Management Development Committee of the Board of Directors of Hill-Rom Holdings, Inc. has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management and, based upon this review and discussion, recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2014. The Compensation and Management Development Committee Ronald A. Malone (Chair) Rolf A. Classon Joanne C. Smith, M.D. William G. Dempsey |
Contents of the Compensation Discussion and Analysis Named Executive Officers | ·23 | Goals of Our Compensation Program | 23 | Links Between Executive Compensation and Company Performance | 23 | Compensation of John Greisch, Our variable cash incentive award was based on three metrics for fiscal 2011: revenue, adjusted earnings per share,CEO | 24 | At-Risk Pay | 24 | CEO Reported vs. Realized Pay | 25 | Key Governance Features Relating to Executive Compensation | 25 | Elements of Executive Compensation | 26 | Base Salary | 26 | Annual Cash Incentive | 27 | Long-Term Equity Awards | 28 | Retirement and cash flow return on invested capital (“cash flow ROIC”).Change-in-Control Agreements | 30 | Other Personal Benefits | 31 | Employment Agreements | 31 | Role of the Compensation Committee | 32 | Peer Group and Survey Data | 32 | Peer Group Companies | 32 | Other Factors | 33 | Compensation Consultant | 33 | Risk Assessment | 33 |
***Our Key Achievements for fiscal year 2014 can be found in our executive summary on page 1 of the proxy statement*** Named Executive Officers
This Compensation Discussion and Analysis (“CD&A”) describes our compensation programs and how they apply to our Named Executive Officers (“NEOs”), including:
John J. Greisch | President and Chief Executive Officer | James K. Saccaro* | Former Senior Vice President and Chief Financial Officer | Michael S. Macek* | Vice President, Treasurer and Interim Chief Financial Officer | Alejandro Infante Saracho* | Former Senior Vice President and President International | Susan R. Lichtenstein | Senior Vice President, Corporate Affairs, Chief Legal Officer & Corporate Secretary | Alton E. Shader | Senior Vice President and President North America |
| · | In fiscal 2011, Hill-Rom achieved total revenue of almost $1.6 billion, up over $120 million from the prior year. | * Mr. Macek held the position of interim Chief Financial Officer at the start of fiscal year 2014 and stepped down as interim CFO when Mr. Saccaro joined Hill-Rom as Chief Financial Officer on December 30, 2013. Mr. Saccaro resigned as Chief Financial Officer on July 3, 2014 and Mr. Macek assumed the position as interim Chief Financial Officer as of July 3, 2014. Steven J. Strobel assumed the position of Chief Financial Officer as of December 1, 2014. Mr. Infante Saracho resigned as Senior Vice President and President International as of December 31, 2014.
| · | In fiscal 2011, we achieved an Adjusted Earnings Per Share (as calculated for our STIC plan) of $2.24 per share, $0.14 over our target. |
Goals of Our Compensation Program
| · | In addition, cash flow ROIC, was 39.3%, compared to a target of 34.7%. |
Compensation Philosophy
Hill-Rom’s compensation program is designed to: | · | Align management’s interests with those of shareholders; |
| · | Motivate and provide incentive for employees to achieve superior results; |
| · | Ensure clear accountabilities and provide rewards for producing results; |
| · | Ensure competitive compensation in order to attract and retain superior talent; and |
| · | Ensure simplicity and transparency in compensation structure. |
Hill-Rom’s compensation program has generally targeted the 50th50th percentile of compensation paid by companies with which Hill-Rom competes for executive talent. However, the Compensation Committee believes that it is critical to retain flexibility in setting compensation when competing for the top executive talent necessary to grow Hill-Rom’s business and increase stockholdershareholder value, and has indicated that it will exceed this target when necessary. In addition, because Hill-Rom utilizes performance-based compensation, in any given year total compensation can vary when pre-established business and/or personal criteria targets are exceeded or are not achieved. Accordingly, a significant portion of our executives’ compensation is at risk and tied to the achievement of pre-established corporate financial objectives.
Links Between Executive Compensation and Company Performance ProcessThe 2014 say-on-pay resolution was approved by 98% of shareholders (excluding abstentions and non-votes). The Hill-Rom Board’s Compensation Committee took that as a sign that the Company’s incentive compensation philosophy was effective, market-appropriate, and in line with shareholder expectations. However, the Company has a policy of meeting with shareholders to listen to dissenting opinions when the opportunity arises.
· | Executive compensation is comprised of (1) base salary, (2) variable cash incentive awards (Short Term Incentive Compensation or STIC) and (3) long-term, equity-based incentive awards (Long-Term Incentives or LTI). |
· | The Compensation Committee generally targets total compensation at the 50th percentile of compensation paid by our peer group. |
· | Our variable cash incentive award was based on two metrics in fiscal 2014: revenue and adjusted earnings per share. These same metrics will be used in fiscal 2015. |
· | As shown below, the significant majority of our CEO’s compensation is tied to company performance, and the actual pay realized by our CEO is substantially less than that reported in the summary compensation table. |
· | A summary of our key achievements for fiscal year 2014 can be found in the executive summary of this proxy statement on page 1. |
Compensation of John Greisch, Our CEO
While our Compensation Committee works to align the pay of all of our executives to the interests of our shareholders, they believe that it is especially important in the case of our Chief Executive Officer, John Greisch. Accordingly, the Compensation Committee has selected a mix of pay for DeterminingMr. Greisch which is heavily weighted towards annual bonuses and long-term equity based compensation, and away from base salary, so much so that 85% of Mr. Greisch’s targeted compensation for fiscal year 2015 is at-risk. This is significantly higher than the at-risk portion of the target compensation of our other named executive officers. Moreover, the at-risk nature of his compensation is demonstrated by the PSU grants made to Mr. Greisch in 2010 and 2011, which vested in 2013 and 2014 at levels of 0% and 57%, respectively. Additionally, Mr. Greisch’s annual bonus for fiscal year 2014 was paid at a level of only 73% to target. The Compensation Committee also recognizes that in extraordinary circumstances, it is appropriate to issue longer term retention awards to executives who have made substantial contributions in enhancing shareholder value to ensure they remain with Hill-Rom to consolidate and accelerate those gains. As shown by the stockholder returns graph on page 1 of our executive summary, Hill-Rom has substantially outpaced both our peer group and the S&P 500 over the last five years, a period that coincides with Mr. Greisch’s tenure with Hill-Rom. Accordingly, to ensure the continuity of future leadership, the Compensation Committee made a non-recurring RSU grant in fiscal year 2014 to Mr. Greisch in the amount of $2 million, half of which vests in three years, and half of which vests in five years. The Compensation Committee believes that these grants will help to ensure that Mr. Greisch remains with Hill-Rom to continue to provide shareholder returns in excess of the market over time. FY 2015 Target CEO Compensation Summary | FY 2015 Target Continuing NEOs Compensation Summary | | | Total at Risk: 85% | Total at Risk: 72% |
*Continuing NEOs are Ms. Lichtenstein and Mr. Shader CEO Reported Pay vs. Realized Pay *Realized pay includes, with respect to any fiscal year, salary and cash bonus actually paid in such year, the fair value of stock awards vesting in such year, the gain from any exercised stock options, and the value of other perquisites received. |
Key Governance Features Relating to Executive Compensation
The Hill-Rom Board has instituted a number of corporate governance features related to executive compensation, which are highlighted below and described more fully later.
| What We Do | | What We Don’t Do | | Require significant stock ownership, including 6X base salary for our CEO, ensuring that executives are invested in Hill-Rom’s long-term success | | We don’t re-price stock options or buy-back equity grants | | Have an effective, 24 month clawback policy in place in the event of executive misconduct resulting in a material restatement in our financial statements | | We don’t provide any gross-ups for perquisites or excise taxes, such as 280G taxes in the event of a change of control, other than certain relocation expenses | | Engage a fully independent compensation consultant | | We don’t provide single-trigger change in control agreements | | Our executives have at-will employment agreements | | We don’t allow executives to hedge or pledge their Hill-Rom stock, unless explicitly approved by the Board |
Elements of Executive Compensation The major components of Hill-Rom’s executive officer compensation are summarized below:
Element | Purpose | Key Characteristics | Base Salary | Reflects each executive’s base level of responsibility, qualifications and contributions to the company | Fixed compensation that is reviewed and, if appropriate, adjusted annually | Variable Cash Incentive - STIC Award | Motivates our executives to achieve annual company objectives that the Board believes will drive long-term growth in shareholder value | This annual cash bonus is earned by achieving designated levels of revenue and adjusted EPS; payouts are adjusted for individual performance | Long-term, Equity Incentive - PSU Award | Motivates our executives by directly linking their compensation to the value of our stock relative to our peer group | The ultimate number of units earned is based on free-cash flow, as adjusted by our total shareholder return as compared to our custom peer group plus the S&P 400 MidCap Health Care Index (fiscal 2014) or the Morgan Stanley Health Care Index (fiscal 2015) | Long-term, Equity Incentive - RSU Award | Motivates our executives by tying compensation to long-term stock appreciation; additionally, the time-vesting nature of the awards helps enable executive retention | Long-term restricted stock units vest on a three year cliff basis (other than certain sign-on awards) | Long-term, Equity Incentive - Stock Options | Motivates our executives by linking their compensation to appreciation in our stock price | Stock options vest 25% per year over a four year period |
Base Salary
Hill-Rom provides senior management a base salary that is competitive and consistent with their positions, skill levels, experience, knowledge and length of service with Hill-Rom. Base salary is intended to aid in the attraction and retention of talent in a competitive market and is generally targeted at the market median, although actual salaries may be higher or lower as a result of various factors, including those given above as well as individual performance, internal pay equity within Hill-Rom and the degree of difficulty in replacing the individual. The base salaries of senior management are reviewed by the Compensation Committee on an annual basis, generally during the first quarter of the fiscal year, as well as at the time of promotion or significant changes in responsibility. Executives are eligible for base salary increases based on individual performance, as well as market benchmarking that helps the Compensation Committee assess the Company’s competitiveness for talent. Individual performance is determined by use of an internal performance management system, which differentiates individual achievement. Market benchmarking is done via the Compensation Committee’s independent consultant, as well as with reference to publicly reported compensation data. For fiscal year 2015, the Compensation Committee granted the following increases which reflect the Committee’s assessment of the executives’ performance during the preceding year, as well as the Compensation Committee’s consideration of market benchmarking for similarly placed executives:
Name* | | 2014 Salary | | | 2015 Salary | | | % Increase | | John J. Greisch | | $ | 965,000 | | | $ | 1,000,000 | | | | 3.6 | % | Susan R. Lichtenstein | | $ | 453,614 | | | $ | 464,000 | | | | 2.3 | % | Alton E. Shader | | $ | 420,240 | | | $ | 430,000 | | | | 2.3 | % | *Table represents continuing NEOs only. |
Annual Cash Incentives Overview. All named executive officers participate in our Incentive Plan, which is designed to comply with the requirements of Section 162(m) of the Internal Revenue Code of 1986 for performance-based compensation. The Incentive Plan provides for a maximum award equal to 2.0% of our EBITDA (as adjusted) for our CEO and 1.0% for each other named executive officer. However, in determining actual awards made under the plan, the Compensation Committee has the discretion to, and has in the past, paid actual awards which are lower than the maximum awards. The committee exercises this negative discretion by reference to the Company wide Short-Term Incentive Compensation Plan (the “STIC Plan”), which is discussed herein. The objective of the STIC Plan is to provide a total level of cash compensation that involves the achievement of internal performance objectives, which take into consideration the competitive market median of total cash compensation.
Each named executive officer receives a target award that (1) is adjusted upwards or downwards based on achieving Company-wide targets, which set the STIC Funding Percentage, and (2) may be adjusted upwards or downwards based on individual targets and measures. To the extent that compensation under the Incentive Plan exceeds the compensation that the executive would have been paid under the STIC Plan, the committee has in the past reduced the payment under the Incentive Plan to match the hypothetical payment under the STIC Plan.
STIC Payment Calculation. The final STIC Plan payment to any individual is calculated by multiplying (a) the STIC Funding Percentage by (b) the Individual STIC Performance by (c) the STIC Target Opportunity by (d) base salary.
STIC Funding Percentage. Under the terms of the STIC Plan, the Compensation Committee establishes a STIC Plan pool each year that is funded based upon the achievement of pre-established performance objectives. The STIC Plan pool is generally funded at between 30% and 150% of aggregate target opportunities. For fiscal year 2014, the targets and achievements (in millions, except per share data) were as follows:
STIC Targets and Achievement Calculation | | Threshold | Target | Maximum | Weight | Actual | Achievement | Revenue | $1,564 | $1,738 | $1,911 | 40% | $1,658 | 95.4% | Adjusted EPS* | $2.13 | $2.51 | $2.89 | 60% | $2.21 | 61.8% | Total Weighted Average Achievement** | 73% | *Adjusted for the impact of acquisitions and various one-time events (such as litigation settlements, changes in policies, and certain other unusual charges or benefits) from our as-reported financial results. These amounts may differ from our reported adjusted numbers. ** Total achievement is lower than a simple weighted average calculation due to Compensation Committee discretion. |
The objectives are set with the intention that the relative level of difficulty in achieving the targets is consistent from year to year. In addition, in order to encourage management to take actions in the best interests of Hill-Rom, the Compensation Committee has the discretion to exclude nonrecurring special charges and amounts from the calculation of these targets. At its November 2014 meeting, the Compensation Committee reviewed the adjusted financial performance of Hill-Rom against the predetermined financial targets and determined that based on our performance in fiscal year 2014, the aggregate STIC Funding Percentage was 73%, adjusted slightly downward by the Compensation Committee from the nominal achievement level, demonstrating significant pay for performance alignment in our compensation program. Individual STIC Performance. The Compensation Committee uses its discretion to assess achievement of individual targets. Such assessment yields an Individual STIC Performance percentage, which ranged from 75% to 150% in fiscal 2014 for our named executive officers. The individual targets and measures are targets specific to the officer’s area of responsibility, such as sales, operating income, cash flow, and demonstrated management and leadership, as appropriate. STIC Target Opportunity. Fiscal year 2014 and 2015 opportunities, as a percentage of base salary, were: STIC Target Opportunities | | | | Name | FY 2014 | FY 2015 | John J. Greisch | 110% | 110% | Susan R. Lichtenstein | 60% | 60% | James K. Saccaro* | 75% | N/A | Michael S. Macek | 40% | 40% | Alejandro Infante Saracho* | 70% | N/A | Alton E. Shader | 70% | 70% | * FY 2015 not applicable as participants left Hill-Rom |
Long-Term Equity Awards Overview: Hill-Rom’s Stock Incentive Plan provides for the opportunity to grant stock options and other equity-based incentive awards to officers, other key employees and non-employee directors to help align those individuals’ interests with those of shareholders, to help motivate executives to make sound strategic long-term decisions, and to better enable Hill-Rom to attract and retain capable directors and executive personnel.
Hill-Rom’s long-term incentive compensation program provides a portfolio approach to long-term incentives by providing:
· | Awards, at target, that are aligned with competitive market levels; |
· | Payouts that correlate with high performance resulting in increased payouts and low performance resulting in reduced payouts; |
· | A mix of awards representative of typical market practice; and |
· | Awards that support internal equity among Hill-Rom’s executives. |
In addition, the Compensation Committee considered the Stock Incentive Plan share usage rate, number of plan participants and potential aggregate target awards for participants in the process of determining target award levels and the mix of long-term incentive awards.
LTI Target Opportunity. Fiscal year 2014 and 2015 opportunities, as a percentage of base salary, were and are: LTI Target Opportunities | | | | Name | FY 2014 | FY 2015 | John J. Greisch | 400% | 450% | Susan R. Lichtenstein | 175% | 175% | James K. Saccaro* | 200% | N/A | Michael S. Macek | 60% | 60% | Alejandro Infante Saracho* | 175% | N/A | Alton E. Shader | 175% | 175% | * No grant provided for FY 2015 as participants left Hill-Rom |
Stock Options and RSUs. Our RSUs generally vest on a three-year cliff basis, and our stock options generally vest in four equal annual installments.
Performance Based Share Units or PSUs. These awards provide the opportunity to earn shares of Hill-Rom stock based on achievement of performance objectives and completion of a three-year vesting period. For the PSU awards granted in fiscal years 2012 and 2013, vesting was and is based on relative TSR, a stock performance metric based upon share price appreciation and dividends paid to our shareholders. Fiscal Year 2012 PSU grants vested in November 2014 at a level of 57% of target achievement, again demonstrating pay for performance alignment in our compensation program. For Fiscal Year 2014 and 2015 PSU vesting is based on the level of achievement (between 0% and 150% of target) against a one-year adjusted free cash flow metric, as further modified by TSR achievement (from 50% to 150%) over the three-year vesting period. Consequently, in both cases ultimate PSU value will vary depending on Hill-Rom’s TSR during the three year performance period as compared to a peer group of other companies. Until fiscal 2015, our PSU peer group was comprised of the companies used to evaluate our overall compensation levels plus the S&P Mid-Cap Health Care Index Companies. In fiscal year 2015, we replaced the S&P Mid-Cap Health Care Index Companies with the Morgan Stanley Health Care Index, which the Compensation Committee believed was a better overall industry fit, since it included more of Hill-Rom’s custom peer group, as well as more companies directly sharing Hill-Rom’s industry classification. Fiscal Year 2013 PSU Grants | Company’s TSR over Three Year Performance Period | % of Target Award Vested | Less than 25th percentile | 0% | 25th percentile* | 50% | 35th percentile | 64% | 45th percentile | 79% | 50th percentile | 86% | 60th percentile** | 100% | *Awards between 25th and 60th percentile are made based on a straight-line interpolation. **Performance above 60th percentile may be awarded bonus shares up to 100% of the target amount at the discretion of the Compensation Committee |
Fiscal Year 2014 and 2015 PSU Grants | Performance Level | Free Cash Flow Achievement Modifier | Relative TSR Achievement Modifier* | Total Performance Modifier | Below Threshold | 0% | 50% | 0% | Threshold | 50% | 50% | 25% | Target | 100% | 100% | 100% | Maximum | 150% | 150% | 225% |
*Modifies one-year adjusted free cash-flow achievement based on three-year TSR measurement period. Modifiers between the threshold and maximum percentile amounts are based on straight-line interpolation. |
Share Ownership Guidelines. In order to align the interests of executives to the long-term performance of the Company, executive officers are required to own a certain amount of Hill-Rom stock within five years of joining the Company. The Chief Executive Officer is required to achieve ownership of Hill-Rom common stock valued at six times annual base salary, which we recently increased from our previous requirement of four times base salary. Each of the other executive officers is generally required to achieve ownership of Hill-Rom common stock valued at two times annual base salary, in each case within five years of becoming an executive officer. Shares owned outright and RSUs count toward the required ownership level. This requirement, like the Executive Compensation Recoupment Policy discussed below, helps ensure long-term focus and appropriate levels of risk-taking by executive officers. Other than Mr. Greisch, who has achieved his required ownership level, none of our executive officers have been with the Company for more than five years, and therefore are not required to meet these guidelines. However, all are on their way to accruing the shares to meet the target by their five year anniversaries.
Hill-Rom’s Compensation Recoupment Policy. Under our Compensation Recoupment Policy, the Compensation Committee can recoup from an executive officer all performance-based compensation and any trading profits on trades in Hill-Rom securities received during the prior 24 months in the event there is a material restatement of financial results due to misconduct of the executive officer from whom recoupment is sought. The Policy gives the Compensation Committee discretion to determine whether and to what extent to seek recoupment based on specific facts and circumstances.
Timing of Equity Grants. We generally make all equity grants to our executives on an annual basis (except in the case of a new hire or promotion), and these grants have historically been made at our November Board meeting. Consequently, they are made approximately two weeks after the release of our fiscal year-end financial results. Anti-Hedging/Anti-Pledging Policy. Hill-Rom has adopted an insider trading policy which incorporates anti-hedging and anti-pledging provisions. Consequently, no employee, officer or director may enter into a hedge or pledge of Hill-Rom stock. Any exception to this policy must be made by requesting a waiver from the entire Board, and such request must (1) be submitted at least thirty (30) days in advance of the proposed transaction date, (2) contain the relevant transaction documents and a summary thereof, and (3) contain a justification for the request. The Board has never granted a waiver under this policy. Re-pricing and Buybacks. Hill-Rom does not re-price options, nor does it buy-back shares (other than with respect to taxes and the exercise price upon the vesting of equity awards). Retirement and Change in Control Agreements Overview. Hill-Rom believes that it is in the best interests of it and its shareholders to have the unbiased dedication of its executives, without the distraction of personal uncertainties such as retirement or a change in control. Hill-Rom has designed its senior management retirement and other post-employment benefit programs to reduce such distraction. We also believe that these benefits are at market levels and competitive with those of other comparable companies. In addition to our Company-wide retirement programs (including our 401(k) and our pension plan, which has stopped taking new entrants), we have several other programs in place. Normal Retirement Guidelines. Executives who are at least 55 years of age and with 5 years length of service are eligible to receive certain benefits under Hill-Rom’s Stock Incentive Plan. These guidelines are incorporated into each individual equity award agreement and have been approved by the Compensation Committee. The following is allowed upon retirement:
· | accelerated vesting of outstanding time-based RSUs and stock options, which have been held for at least one year; |
· | partial vesting of outstanding PSUs and/or performance-based stock options, which have been held for at least one year and for which performance objectives have been achieved; and |
· | an extension of up to three years of the time to exercise eligible outstanding stock options. |
Supplemental Executive Retirement Plan. The Hill-Rom Holdings, Inc. Supplemental Executive Retirement Plan (the “SERP”) provides additional retirement benefits to certain employees selected by the Compensation Committee whose retirement benefits under our Company-wide pension plan or 401(k) plan are reduced, curtailed or otherwise limited as a result of certain limitations under the Internal Revenue Code of 1986.
Change in Control Agreements. Hill-Rom has a Change in Control agreement in place with each Named Executive Officer other than Mr. Macek. These change in control agreements are of the form commonly referred to as “double-trigger” agreements, in that they are triggered only in the event that an executive is terminated in connection with a change in control, not merely if a change in control occurs. Moreover, they do not contain any 280G gross-up provisions. They are intended to encourage continued employment by Hill-Rom of its key management personnel and to allow such personnel to be in a position to provide assessment and advice to the Board of Directors regarding any proposed change in control without concern that such personnel might be unduly distracted by the uncertainties and risks created by the proposed transaction. In addition, certain long-term equity awards that our executives hold may vest upon a change of control, even if the executive is not terminated. The terms of this vesting are controlled by the applicable equity award agreements and not by the change in control agreements. For information on the potential payments to executives on a change of control, see “Potential Payments Upon Termination or Change in Control”. Other Personal Benefits
In addition to the elements of compensation discussed above, we also provide senior level management with various other benefits in order to remain competitive with the market, in attracting and retaining qualified executives. Hill-Rom believes that these benefits are in-line with the market, are reasonable in nature, are not excessive and are in the best interest of Hill-Rom and its shareholders. None of our NEOs receive any excise tax or prerequisite gross-ups, other than potentially for reasonable relocation costs as applicable.
Employment Agreements
We have entered into an employment agreement with each of our Named Executive Officers. We believe that it is appropriate for our senior executives to have employment agreements because they provide certain contractual protections to us that we might not otherwise have, including provisions relating to non-competition with us, non-solicitation of our employees and confidentiality of our proprietary information. Additionally, we believe that employment agreements are a useful tool in recruiting and retention of senior level employees. The current employment agreements set forth the basic duties of the executive officers and provide that each executive officer is entitled to receive, in addition to base salary, incentive compensation payable in our discretion and such additional compensation, benefits and perquisites as we may deem appropriate. The employment agreements are terminable by either us or the executive officer “without cause” on sixty (60) days’ written notice, or if terminated by us, pay in lieu of notice, and are terminable at any time by us for cause, as defined in each employment agreement. See “Potential Payments Upon Termination or Change in Control” for further information regarding payments due upon termination. The employment agreements also contain non-competition and non-solicitation agreements of the executive officers, which continue generally for a period of eighteen to twenty-four months after the termination of the executive officer’s employment.
Role of the Compensation Committee
The Board’s Compensation Committee is charged with ensuring that Hill-Rom’s compensation programs meet the objectives outlined above. In that role, the Compensation Committee makes all executive compensation decisions, administers Hill-Rom’s compensation plans and keeps the Board informed regarding executive compensation matters. The Compensation Committee, in consultation with Hill-Rom’s independent compensation consultant and the full Board, determines the compensation of the Chief Executive Officer. The Chief Executive Officer makes recommendations to the Compensation Committee regarding the compensation of his direct reports, including Hill-Rom’s other Named Executive Officers. From time to time, Hill-Rom management also provides recommendations to the Compensation Committee regarding modificationschanges to the elements and structure of Hill-Rom’s compensation program. The Compensation Committee considers peer group data, survey data and other factors when determining the elements and amounts of compensation. The Compensation Committee also considers the results of the annual advisory ‘say-on-pay’ proposal and incorporates such results as one of the factors considered in connection with the discharge of its responsibilities, although no factor is assigned a quantitative weighting. Because a substantial majority (98% of our stockholders excluding abstentions and non-votes) approved the compensation program described in our proxy statement in 2014, the Committee did not implement changes to our executive compensation program as a result of the stockholder advisory vote.
Peer Group and Survey Data.
As one of several factors in considering approval of elements of Hill-Rom’s compensation programs, the Compensation Committee compares Hill-Rom’s compensation programs and performance against an approved peer group of companies. The compensation peer group, which is periodically reviewed and updated by the Compensation Committee, consists of companies that are similar in size and in similar industries as Hill-Rom and with whom Hill-Rom may compete for executive talent. This peer group is a custom selected peer group and does not include the stock index companies used to calculate TSR for our PSU grants. The Compensation Committee selected the following peer group with the assistance of its independent compensation consultant Mercer (US) Inc. (“Mercer”), focusing on companies whose revenues were one-halfcomparable to two times Hill-Rom’s planned revenue. In November 2011, theHill-Rom’s. The Compensation Committee updatedreviews the peer group as indicated belowannually. Hill-Rom’s annual revenue is approximately equal to eliminate two companies that were acquired, eliminate one non-healthcare company, and to increase the numbermedian revenue of companies in the peer group. After reviewing, there were no changes to the peer group.
Peer Group Companies | Alere Inc. | Invacare Corporation | Beckman Coulter,Intuitive Surgical, Inc.(2)
| Kinetic Concepts, Inc. (2)
| C. R. Bard, Inc. | Mednax, Inc. (1) Invacare Corporation | CareFusion Corp.(1) | Mettler-Toledo InternationalMednax, Inc.(2)
| Chemed Corp.(1) | PerkinElmer, Inc. | Conmed Corporation | ResMed Inc. | Dentsply International Inc. | Sirona Dental Systems Labs, Inc.(1) | Edwards Lifesciences Corporation | Steris Corporation | Hologic, Inc. (1) Inc | Teleflex, Inc.(1) | Hospira, Inc. | The Cooper Companies, Inc. | IDEXX Laboratories, Inc.(1) | Varian Medical Systems, Inc. | Integra Lifesciences Holdings Corporation | West Pharmaceutical Services, Inc.(1) | Intuitive Surgical, Inc. (1)
| Zimmer Holdings, Inc.(1) |
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In addition to peer group data, the Compensation Committee considers survey data that include a broad sample of Fortune 1000 companies, focusing primarily on companies with revenues within a range of one-halfcomparable to two times Hill-Rom’s, or its business units’ revenue, companies in the manufacturing industry and companies with a comparable number of full time equivalent employees. The purpose of the survey data is to provide an additional source of market data to validate the findings under the proxy analysis. Hill-Rom used the Mercer Benchmark Database Survey Report on Top Management Compensation for this purpose. Other Factors.
The Compensation Committee is aware that it cannot establish total executive compensation levels solely on the basis of the median range of competitive benchmark survey data without the consideration of additional information and available analysis. Accordingly, the committee also takes into account external and internal factors when establishing the total compensation of each executive. Some of these factors include the executive’s length of service, the level of experience and responsibility, external market conditions, complexity of position, individual performance, internal pay equity within Hill-Rom and the degree of replacement difficulty. In addition, the committee periodically reviews the total compensation of Hill-Rom’s Named Executive Officers in comparison to the total compensation of its peer group companies. The purpose of this high level review is to look at all elements of compensation that are not typically captured within a total direct compensation analysis covering base salary, annual incentive, and long term incentive compensation and, if there were significant differences, to understand what elements of compensation gave rise to the differences.difference.
Compensation ConsultantRetirement and Change in Control Agreements
The Compensation Committee engages nationally recognized outside compensationOverview. Hill-Rom believes that it is in the best interests of it and benefits consulting firmsits shareholders to evaluate independentlyhave the unbiased dedication of its executives, without the distraction of personal uncertainties such as retirement or a change in control. Hill-Rom has designed its senior management retirement and objectively the effectiveness of and assist with implementation of Hill-Rom’s compensation andother post-employment benefit programs to reduce such distraction. We also believe that these benefits are at market levels and competitive with those of other comparable companies. In addition to provideour Company-wide retirement programs (including our 401(k) and our pension plan, which has stopped taking new entrants), we have several other programs in place.
Normal Retirement Guidelines. Executives who are at least 55 years of age and with 5 years length of service are eligible to receive certain benefits under Hill-Rom’s Stock Incentive Plan. These guidelines are incorporated into each individual equity award agreement and have been approved by the Compensation Committee with additional expertise in the evaluation of Hill-Rom’s compensation practices. During the fiscal year ended September 30, 2011, the Compensation Committee retained Mercer as its compensation and benefits consulting firm.
Mercer also provides other consulting services to Hill-Rom, most of which are in the areas of Health & Welfare programs.Committee. The decision to retain Mercer for these other services was made at the recommendation of Hill-Rom’s management, however the Compensation Committee regularly reviews and approves these services as part of its ongoing vigilance as to Mercer’s objectivity. In fiscal year 2011, we paid Mercer approximately $127,000 for work related to executive compensation and $717,000 for administrative services related to our health and welfare programs. We also paid approximately $375,000 to affiliates of Mercer (various Marsh Insurance related entities) for insurance brokerage work.
Risk Assessment of Compensation Policies and Practices
With Mercer’s assistance, the Compensation Committee reviewed our material compensation policies and practices applicable to our employees, including our executive officers, and concluded that these policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. The key features of the executive compensation program that support this conclusion include:following is allowed upon retirement:
· | · | appropriate pay philosophy, peer groupaccelerated vesting of outstanding time-based RSUs and market positioning;stock options, which have been held for at least one year; |
| · | effective balance in cash and equity mix, short and long term focus, corporate, business unit and individual performance focus and financial and non-financial performance measurement and discretion; |
· | · | compensation programs designed to avoid excessive risk-taking;partial vesting of outstanding PSUs and/or performance-based stock options, which have been held for at least one year and for which performance objectives have been achieved; and |
· | meaningful risk mitigants, such asan extension of up to three years of the time to exercise eligible outstanding stock ownership guidelines and executive compensation recoupment policies.options. |
Elements ofSupplemental Executive Compensation
The three major components of Hill-Rom’s executive officer compensation are: (1) base salary, (2) variable cash incentive awards and (3) long-term, equity-based incentive awards. Each component of the program, as well as the program as a whole, is designed to be competitive with our peers.
Base SalaryRetirement Plan. The Hill-Rom Holdings, Inc. Supplemental Executive Retirement Plan (the “SERP”) provides senior management a base salary that is competitive and consistent with their position, skill level, experience, knowledge and length of service with Hill-Rom. Base salary is intendedadditional retirement benefits to aid incertain employees selected by the attraction and retention of talent in a competitive market and is generally targeted at the market median although actual salaries may be higherCompensation Committee whose retirement benefits under our Company-wide pension plan or lower401(k) plan are reduced, curtailed or otherwise limited as a result of certain limitations under the Internal Revenue Code of 1986.
Change in Control Agreements. Hill-Rom has a Change in Control agreement in place with each Named Executive Officer other than Mr. Macek. These change in control agreements are of the form commonly referred to as “double-trigger” agreements, in that they are triggered only in the event that an executive is terminated in connection with a change in control, not merely if a change in control occurs. Moreover, they do not contain any 280G gross-up provisions. They are intended to encourage continued employment by Hill-Rom of its key management personnel and to allow such personnel to be in a position to provide assessment and advice to the Board of Directors regarding any proposed change in control without concern that such personnel might be unduly distracted by the uncertainties and risks created by the proposed transaction. In addition, certain long-term equity awards that our executives hold may vest upon a change of control, even if the executive is not terminated. The terms of this vesting are controlled by the applicable equity award agreements and not by the change in control agreements. For information on the potential payments to executives on a change of control, see “Potential Payments Upon Termination or Change in Control”. Other Personal Benefits
In addition to the elements of compensation discussed above, we also provide senior level management with various other benefits in order to remain competitive with the market, in attracting and retaining qualified executives. Hill-Rom believes that these benefits are in-line with the market, are reasonable in nature, are not excessive and are in the best interest of Hill-Rom and its shareholders. None of our NEOs receive any excise tax or prerequisite gross-ups, other than potentially for reasonable relocation costs as applicable.
Employment Agreements
We have entered into an employment agreement with each of our Named Executive Officers. We believe that it is appropriate for our senior executives to have employment agreements because they provide certain contractual protections to us that we might not otherwise have, including provisions relating to non-competition with us, non-solicitation of our employees and confidentiality of our proprietary information. Additionally, we believe that employment agreements are a useful tool in recruiting and retention of senior level employees. The current employment agreements set forth the basic duties of the executive officers and provide that each executive officer is entitled to receive, in addition to base salary, incentive compensation payable in our discretion and such additional compensation, benefits and perquisites as we may deem appropriate. The employment agreements are terminable by either us or the executive officer “without cause” on sixty (60) days’ written notice, or if terminated by us, pay in lieu of notice, and are terminable at any time by us for cause, as defined in each employment agreement. See “Potential Payments Upon Termination or Change in Control” for further information regarding payments due upon termination. The employment agreements also contain non-competition and non-solicitation agreements of the executive officers, which continue generally for a period of eighteen to twenty-four months after the termination of the executive officer’s employment.
Role of the Compensation Committee
The Board’s Compensation Committee is charged with ensuring that Hill-Rom’s compensation programs meet the objectives outlined above. In that role, the Compensation Committee makes executive compensation decisions, administers Hill-Rom’s compensation plans and keeps the Board informed regarding executive compensation matters. The Compensation Committee, in consultation with Hill-Rom’s independent compensation consultant and the full Board, determines the compensation of the Chief Executive Officer. The Chief Executive Officer makes recommendations to the Compensation Committee regarding the compensation of his reports, including Hill-Rom’s other Named Executive Officers. From time to time, Hill-Rom management also provides recommendations regarding changes to the elements and structure of Hill-Rom’s compensation program. The Compensation Committee considers peer group data, survey data and other factors including those given abovewhen determining the elements and amounts of compensation. The Compensation Committee also considers the results of the annual advisory ‘say-on-pay’ proposal and incorporates such results as wellone of the factors considered in connection with the discharge of its responsibilities, although no factor is assigned a quantitative weighting. Because a substantial majority (98% of our stockholders excluding abstentions and non-votes) approved the compensation program described in our proxy statement in 2014, the Committee did not implement changes to our executive compensation program as a result of the stockholder advisory vote.
Peer Group and Survey Data
As one of several factors in considering approval of elements of Hill-Rom’s compensation programs, the Compensation Committee compares Hill-Rom’s compensation programs and performance against an approved peer group of companies. The compensation peer group, which is periodically reviewed and updated by the Compensation Committee, consists of companies that are similar in size and in similar industries as Hill-Rom and with whom Hill-Rom may compete for executive talent. This peer group is a custom selected peer group and does not include the stock index companies used to calculate TSR for our PSU grants. The Compensation Committee selected the following peer group with the assistance of its independent compensation consultant focusing on companies whose revenues were comparable to Hill-Rom’s. The Compensation Committee reviews the peer group annually. Hill-Rom’s annual revenue is approximately equal to the median revenue of the peer group. After reviewing, there were no changes to the peer group.
Peer Group Companies | Alere Inc. | Intuitive Surgical, Inc. | C. R. Bard, Inc. | Invacare Corporation | CareFusion Corp. | Mednax, Inc. | Chemed Corp. | PerkinElmer, Inc. | Conmed Corporation | ResMed Inc. | Dentsply International Inc. | Sirona Dental Systems Labs, Inc. | Edwards Lifesciences Corporation | Steris Corporation | Hologic, Inc | Teleflex, Inc. | Hospira, Inc. | The Cooper Companies, Inc. | IDEXX Laboratories, Inc. | Varian Medical Systems, Inc. | Integra Lifesciences Holdings Corporation | West Pharmaceutical Services, Inc. | | Zimmer Holdings, Inc. |
In addition to peer group data, the Compensation Committee considers survey data that include a broad sample of Fortune 1000 companies, focusing primarily on companies with revenues within a range comparable to Hill-Rom’s, companies in the manufacturing industry and companies with a comparable number of full time equivalent employees. The purpose of the survey data is to provide an additional source of market data to validate the findings under the proxy analysis. Hill-Rom used the Mercer Benchmark Database Survey Report on Top Management Compensation for this purpose. Other Factors
The Compensation Committee is aware that it cannot establish total executive compensation levels solely on the basis of the median range of competitive benchmark survey data without the consideration of additional information and available analysis. Accordingly, the committee also takes into account external and internal factors when establishing the total compensation of each executive. Some of these factors include the executive’s length of service, the level of experience and responsibility, external market conditions, complexity of position, individual performance, internal pay equity within Hill-Rom and the degree of difficulty in replacing the individual. The base salaries of senior management are reviewed by the Compensation Committee on an annual basis, generally during the first quarter of the fiscal year, as well as at the time of promotion or significant changes in responsibility. Executives are eligible for base salary increases based on individual performance, as well as market benchmarking that helps the Compensation Committee assess the Company’s competitiveness for talent. Individual performance is determined by use of an internal performance management system, which differentiates individual achievement. Market benchmarking is done via the Compensation Committee’s independent consultant, as well as with reference to publicly reported compensation data. For fiscal year 2012, the Compensation Committee granted base salary merit increases in the amounts of $25,000, $13,000, $13,500, $7,500 and $12,700, for each of Mr. Greisch, Ms. Aronson, Mr. Guinan, Mr. Infante Saracho and Ms. Lichtenstein, respectively. The increases reflect the Committee’s assessment of the executives’ performance during the preceding year, as well as the Compensation Committee’s consideration of market benchmarking for similarly placed executives.
Annual Cash Incentives
Overview. All named executive officers participate in our Incentive Plan, which is designed to comply with the requirements of Section 162(m) of the Internal Revenue Code of 1986 for performance-based compensation. The Incentive Plan provides for a maximum award equal to 2.0% of our EBITDA (as adjusted) for our CEO and 1.0% for each other named executive officer. However, in determining actual awards made under the plan, the Compensation Committee has the discretion to, and has in the past, paid actual awards which are lower than the maximum awards. The committee exercises this negative discretion by reference to the Company wide Short-Term Incentive Compensation Plan (the “STIC Plan”). The objective of the STIC Plan is to provide a total level of cash compensation that involves the achievement of internal performance objectives, which takes into consideration the competitive market median of total cash compensation.
Each named executive officer receives a target award that is adjusted upwards or downwards based on (1) achieving Company-wide goals, which set the STIC Funding Percentage, and (2) individual goals and measures, which set the Individual STIC Performance. To the extent that compensation under the Incentive Plan exceeds the compensation that the executive would have been paid under the STIC Plan, the committee generally reduces the payment under the Incentive Plan to match the hypothetical payment under the STIC Plan.
STIC Funding Percentage. Under the terms of the STIC Plan, the Compensation Committee establishes a STIC Plan pool each year that will be funded based upon the achievement of pre-established performance objectives. The STIC Plan pool is generally funded at between 30% and 150% of aggregate target opportunities, although the maximum achievement is 200% for our executive officers if certain Adjusted Earnings Per Share (“Adjusted EPS”) targets are met. For fiscal year 2012, the Company determined goals and measures will be based on revenue, adjusted earnings per share, and cash flow ROIC.
For fiscal year 2011, the targets and achievements were as follows:
| Target | Weight | Actual | Achievement | Revenue | $1,546 | 25% | $1,591.7 | 149.7% | Adjusted EPS | $2.10 | 50% | $2.24 (1) | 121.9% | Cash Flow ROIC | 34.7% | 25% | 39.3% | 150% (2) |
| (1) | Adjusted EPS as calculated (for STIC purposes only) by eliminating various one-time costs (such as litigation settlements, changes in accounting policies, and certain tax and earnings benefits) from our as-reported EPS. This amount may differ from the Adjusted EPS number we report as part of our normal financial reporting. |
| (2) | Maximum achievement in this category is 150%. |
The objectives are set with the intention that the relative level of difficulty in achieving the targets is consistent from year to year. In addition, in order to encourage management to take actions in the best interests of Hill-Rom, the Compensation Committee has the discretion to exclude nonrecurring special charges and amounts from the calculation of these targets. At its November 2011 meeting, the Compensation Committee reviewed the adjusted financial performance of Hill-Rom against the predetermined financial targets and adjusted to control for certain changes in accounting and tax policy, as well as extraordinary tax structuring costs. It determined that based on our performance in fiscal year 2011, the aggregate STIC Funding Percentage was 135%.
Individual STIC Performance. The Compensation Committee uses its discretion to assess achievement of individual goals. Such assessment yields an Individual STIC Performance percentage, which ranged from 85% to 115% in fiscal 2011. The individual goals and measures are goals specific to the officer’s area of responsibility, such as sales, operating income, cash flow, and demonstrated management and leadership, as appropriate.
STIC Target Opportunity. For fiscal 2011, the CEO target opportunity was 100% of base salary and 60% or 75% of base salary for all the other Named Executive Officers.
STIC Payment Calculation. The final STIC Plan payment to any individual is calculated by multiplying (a) the STIC Funding Percentage by (b) the Individual STIC Performance by (c) the STIC Target Opportunity by (d) base salary.
Long-Term Equity Awards
Overview: Hill-Rom’s Stock Incentive Plan provides for the opportunity to grant stock options and other equity-based incentive awards to officers, other key employees and non-employee directors to help align those individuals’ interests with those of shareholders, to help motivate executives to make strategic long-term decisions, and to better enable Hill-Rom to attract and retain capable directors and executive personnel.
Hill-Rom’s long-term incentive compensation program provides a portfolio approach to long-term incentives by providing:
| · | Awards, at target, that are aligned with competitive market levels; |
| · | Payouts that correlate with high performance resulting in increased payouts and low performance resulting in reduced payouts; |
| · | A mix of awards representative of typical market practice; and |
| · | Awards that support internal equity among Hill-Rom’s executives. |
replacement difficulty. In addition, the Compensation Committee consideredcommittee periodically reviews the Stock Incentive Plan share usage rate, numbertotal compensation of plan participants and potential aggregate target awards for participants in the process of determining target award levels and the mix of long-term incentive awards. Awards made in fiscal years 2011 and 2012 were typically a combination of stock options and performance stock units (“PSUs”) for theHill-Rom’s Named Executive Officers and a combinationin comparison to the total compensation of stock options, restricted stock units (“RSUs”) and PSUs for others.
Stock Options and RSUs. Our stock option and RSU award agreements generally vest in four equal annual installments beginning on the first anniversary of the date of grant for stock options and beginning on the day after the first anniversary of the date of grant for RSUs.
Performance Based Share Units or PSUs. These awards provide the opportunity to earn shares of Hill-Rom stock based on achievement of performance objectives and completion of a three-year vesting period. For the PSU awards granted in fiscal years 2011 and 2012 vesting is based on relative total shareholder return (“TSR”), a stock performance metric based upon share price appreciation and dividends paid to our shareholders. The ultimate PSU value will range from 0% to 100% of the targeted amount, depending on Hill-Rom’s TSR during the performance period as compared to a peer group of other companies. In addition, if Hill-Rom’s TSR substantially outperforms its peer group the Compensation Committee has the discretioncompanies. The purpose of this high level review is to grant additional shares uplook at all elements of compensation that are not typically captured within a total direct compensation analysis covering base salary, annual incentive, and long term incentive compensation and, if there were significant differences, to an amount equal to 100%understand what elements of the original grant. This peer group is comprised of mid-cap medical technology companies and includes, but is not limitedcompensation gave rise to the companies used to evaluate our overall compensation levels.difference.
Share Ownership Guidelines. In order to drive the long-term performance of the Company, executive officers are required to own a certain amount of Hill-Rom stock within five years of joining the Company. The Chief Executive Officer is required to achieve ownership of Hill-Rom common stock valued at four times annual base salary. Each of the other executive officers is required to achieve ownership of Hill-Rom common stock valued at two times annual base salary, in each case within five years of becoming an executive officer. Shares owned outright (including vested deferred shares) and deferred stock shares, whether vested or unvested, count toward the required ownership level. This requirement, like the Executive Compensation Recoupment Policy discussed below, helps ensure long-term focus and appropriate levels of risk-taking by executive officers. However, as none of our executive officers have been with the Company for more than five years, none are currently required to meet these guidelines.
Hill-Rom’s Compensation Recoupment Policy. In December 2009, our Board of Directors adopted an Executive Compensation Recoupment Policy. Under the policy, the Compensation Committee can recoup from an executive officer all performance-based compensation and any trading profits on trades in Hill-Rom securities received during the prior 24 months in the event there is a material restatement of financial results due to misconduct of the executive officer from whom recoupment is sought. The Policy gives the Compensation Committee discretion to determine whether and to what extent to seek recoupment based on specific facts and circumstances.
Retirement and Change in Control Agreements Overview. Hill-Rom believes that it is in the best interests of it and its shareholders to have the unbiased dedication of its executives, without the distraction of personal uncertainties such as retirement or a change in control. Hill-Rom has designed its senior management retirement and other post-employment benefit programs to reduce such distraction. We also believe that these benefits are at market levels and competitive with those of other comparable companies. In addition to our Company-wide retirement programs (including our 401(k) and our pension plan, which has stopped taking new entrants), we have several other programs in place. Normal Retirement Guidelines. Executives who are at least 55 years of age and with 5 years length of service are eligible to receive certain benefits under Hill-Rom’s Stock Incentive Plan. These guidelines are incorporated into each individual equity award agreement and have been approved by the Compensation Committee. The following is allowed upon retirement:
| · | accelerated vesting of outstanding time-based RSUs and stock options, which have been held for at least one year; |
· | partial vesting of outstanding PSUs and/or performance-based stock options, which have been held for at least one year and for which performance objectives have been achieved; and |
· | an extension of up to three years of the time to exercise eligible outstanding stock options. |
Supplemental Executive Retirement Plan. The Hill-Rom Holdings, Inc. Supplemental Executive Retirement Plan (the “SERP”) provides additional retirement benefits to certain employees selected by the Compensation Committee whose retirement benefits under our Company-wide pension plan or 401(k) plan are reduced, curtailed or otherwise limited as a result of certain limitations under the Internal Revenue Code of 1986.
Change in Control Agreements. Hill-Rom has a Change in Control agreement in place with each Named Executive Officer who currently is an executive of Hill-Rom.other than Mr. Macek. These change in control agreements are of the form commonly referred to as “double-trigger” agreements, in that they are triggered only in the event that an executive is terminated in connection with a change in control, not merely if a change in control occurs. Moreover, they do not contain any excise tax280G gross-up provisions. They are intended to encourage continued employment by Hill-Rom of its key management personnel and to allow such personnel to be in a position to provide assessment and advice to the Board of Directors regarding any proposed change in control without concern that such personnel might be unduly distracted by the uncertainties and risks created by the proposed transaction. In addition, certain long-term equity awards that our executives hold may vest upon a change of control, even if the executive is not terminated. The terms of this vesting are controlled by the applicable equity award agreements and not by the change in control agreements. For information on the potential payments to executives on a change of control, see “-Potential“Potential Payments Upon Termination or Change in Control” below.. Other Personal Benefits
In addition to the elements of compensation discussed above, we also provide senior level management with various other benefits in order to remain competitive with the market, in attracting and retaining qualified executives. Hill-Rom believes that these benefits are in-line with the market, are reasonable in nature, are not excessive and are in the best interest of Hill-Rom and its shareholders. None of our NEOs receive any excise tax or prerequisite gross-ups, other than potentially for reasonable relocation costs as applicable.
Employment Agreements
We have entered into an employment agreement with each of our Named Executive Officers. We believe that it is appropriate for our senior executives to have employment agreements because they provide certain contractual protections to us that we might not otherwise have, including provisions relating to non-competition with us, non-solicitation of our employees and confidentiality of our proprietary information. Additionally, we believe that employment agreements are a useful tool in recruiting and retention of senior level employees. The current employment agreements set forth the basic duties of the executive officers and provide that each executive officer is entitled to receive, in addition to base salary, incentive compensation payable in our discretion and such additional compensation, benefits and perquisites as we may deem appropriate. The employment agreements are terminable by either us or the executive officer “without cause” on sixty (60) days’ written notice, or if terminated by us, pay in lieu of notice, and are terminable at any time by us for cause, as defined in each employment agreement. See “-Potential“Potential Payments Upon Termination or Change in Control” below for further information regarding payments due upon termination. The employment agreements also contain limited non-competition and non-solicitation agreements of the executive officers, which continue generally for a period of eighteen to twenty-four months after the termination of the executive officer’s employment.
Role of the Compensation Committee
The Board’s Compensation Committee is charged with ensuring that Hill-Rom’s compensation programs meet the objectives outlined above. In that role, the Compensation Committee makes executive compensation decisions, administers Hill-Rom’s compensation plans and keeps the Board informed regarding executive compensation matters. The Compensation Committee, in consultation with Hill-Rom’s independent compensation consultant and the full Board, determines the compensation of the Chief Executive Officer. The Chief Executive Officer makes recommendations to the Compensation Committee regarding the compensation of his reports, including Hill-Rom’s other Named Executive Officers. From time to time, Hill-Rom management also provides recommendations regarding changes to the elements and structure of Hill-Rom’s compensation program. Non-Binding Shareholder VoteThe Compensation Committee considers peer group data, survey data and other factors when determining the elements and amounts of compensation. The Compensation Committee also considers the results of the annual advisory ‘say-on-pay’ proposal and incorporates such results as one of the factors considered in connection with the discharge of its responsibilities, although no factor is assigned a quantitative weighting. Because a substantial majority (98% of our stockholders excluding abstentions and non-votes) approved the compensation program described in our proxy statement in 2014, the Committee did not implement changes to our executive compensation program as a result of the stockholder advisory vote.
At the 2010 annual meetingPeer Group and Survey Data
As one of shareholders, we submitted to the shareholders a proposal that Hill-Rom provide its shareholders an annual non-binding advisory vote regarding our executive compensation. The shareholders followed the Board’s recommendation and approved an annual, non-binding advisory vote. Subsequently, the Dodd-Frank Wall Street Reform and Consumer Protection Act (and subsequent SEC rules) mandated a non-binding shareholder vote on executive compensation. We held this vote last year, along with a vote to determine how often this vote should be held. The shareholders approved the resolution on executiveseveral factors in considering approval of elements of Hill-Rom’s compensation with over 87% of shares (excluding abstentions and non-votes) being cast in favor of our executive compensation, and again adopted the Board’s recommendation that this vote be held annually. Given this high percentage of votes in favor of our executive compensation,programs, the Compensation Committee determinedcompares Hill-Rom’s compensation programs and performance against an approved peer group of companies. The compensation peer group, which is periodically reviewed and updated by the Compensation Committee, consists of companies that are similar in size and in similar industries as Hill-Rom and with whom Hill-Rom may compete for executive talent. This peer group is a custom selected peer group and does not include the stock index companies used to keepcalculate TSR for our compensation practices in place for fiscal year 2012.PSU grants. The Compensation Committee selected the following peer group with the assistance of its independent compensation consultant focusing on companies whose revenues were comparable to Hill-Rom’s. The Compensation Committee reviews the peer group annually. Hill-Rom’s annual revenue is approximately equal to the median revenue of the peer group. After reviewing, there were no changes to the peer group.
Peer Group Companies | Alere Inc. | Intuitive Surgical, Inc. | C. R. Bard, Inc. | Invacare Corporation | CareFusion Corp. | Mednax, Inc. | Chemed Corp. | PerkinElmer, Inc. | Conmed Corporation | ResMed Inc. | Dentsply International Inc. | Sirona Dental Systems Labs, Inc. | Edwards Lifesciences Corporation | Steris Corporation | Hologic, Inc | Teleflex, Inc. | Hospira, Inc. | The Cooper Companies, Inc. | IDEXX Laboratories, Inc. | Varian Medical Systems, Inc. | Integra Lifesciences Holdings Corporation | West Pharmaceutical Services, Inc. | | Zimmer Holdings, Inc. |
In addition to peer group data, the Compensation Committee considers survey data that include a broad sample of Fortune 1000 companies, focusing primarily on companies with revenues within a range comparable to Hill-Rom’s, companies in the manufacturing industry and companies with a comparable number of full time equivalent employees. The purpose of the survey data is to provide an additional source of market data to validate the findings under the proxy analysis. Hill-Rom used the Mercer Benchmark Database Survey Report on Top Management Compensation for this purpose. Other Factors
The Compensation Committee is aware that it cannot establish total executive compensation levels solely on the basis of the median range of competitive benchmark survey data without the consideration of additional information and available analysis. Accordingly, the committee also takes into account external and internal factors when establishing the total compensation of each executive. Some of these factors include the executive’s length of service, the level of experience and responsibility, external market conditions, complexity of position, individual performance, internal pay equity within Hill-Rom and the degree of replacement difficulty. In addition, the committee periodically reviews the total compensation of Hill-Rom’s Named Executive Officers in comparison to the total compensation of its peer group companies. The purpose of this high level review is to look at all elements of compensation that are not typically captured within a total direct compensation analysis covering base salary, annual incentive, and long term incentive compensation and, if there were significant differences, to understand what elements of compensation gave rise to the difference.
Compensation Consultant
The Compensation Committee engages nationally recognized outside compensation and benefits consulting firms to evaluate independently and objectively the effectiveness of and assist with implementation of Hill-Rom’s compensation and benefit programs and to provide the Compensation Committee with additional expertise in the evaluation of Hill-Rom’s compensation practices. During the fiscal year ending September 30, 2014, the Compensation Committee used ExeQuity as its executive compensation consulting firm. ExeQuity has been asked by the Compensation Committee to provide guidance on compensation proposals, including changes to compensation levels, the design of incentive plans, as well as relevant information about market practices and trends. ExeQuity is an independent compensation consultant that provided no other services to Hill-Rom other than those services provided to the Compensation Committee.
After considering the six independence factors discussed in the relevant SEC rules, the Compensation Committee determined that no conflict of interest existed pursuant to S-K 407(e)(3)(iv).
Risk Assessment
Assisted by its compensation consultant, the Compensation Committee reviewed our material compensation policies and practices applicable to our employees and executive officers. It concluded that these policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. Key features of the compensation program supporting this conclusion include:
· | appropriate pay philosophy, peer group and market positioning; |
· | effective balance in cash and equity mix, short and long term focus, corporate, business unit and individual performance focus and financial and non-financial performance measurement and discretion; |
· | compensation programs designed to avoid excessive risk-taking; and |
· | meaningful risk mitigants, such as the stock ownership guidelines and executive compensation recoupment policies. |
COMPENSATION OF NAMED EXECUTIVE OFFICERS |
The following tables and notes set forth compensation information for the fiscal years ended September 30, 2011, 20102014, 2013 and 20092012 for our Named Executive Officers. Summary Compensation Table
| | | | | | | | Change in Pension Value | | | | | | | | | | Non-Equity | and Nonqualified | | | | | | | | Stock | Option | Incentive Plan | Deferred Compensation | All Other | | Name and Principal Position | Year | | Salary | Bonus (1) | Awards (2) | Awards (3) | Compensation (4) | Earnings (5) | Compensation (6) | Total | | | | | | | | | | | | | | | | | | | | | | | JOHN J. GREISCH (7) | 2011 | | $887,397 | None | $1,448,171 | $1,800,207 | $1,197,986 | - | $175,002 | $5,508,763 | President and Chief Executive Officer, | 2010 | | $583,014 | None | $800,004 | $1,609,819 | $879,692 | - | $134,995 | $4,007,524 | Member of the Board of Directors | | | | | | | | | | | | | | | | | | | | | | MARK J. GUINAN (8) | 2011 | | $360,000 | $200,000 | $1,612,059 | $778,440 | $400,950 | - | $59,471 | $3,410,920 | Senior Vice President and | | | | | | | | | | | Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | MARTHA G. ARONSON (9) | 2011 | | $432,429 | None | $305,176 | $379,365 | $402,807 | - | $53,391 | $1,573,168 | Senior Vice President and | | | | | | | | | | | President North America | | | | | | | | | | | | | | | | | | | | | | ALEJANDRO INFANTE SARACHO (10) | 2011 | | $380,589 | None | $298,151 | $370,613 | $262,036 | - | $50,680 | $1,372,195 | Senior Vice President and | | | | | | | | | | | President International | | | | | | | | | | | | | | | | | | | | | | SUSAN R. LICHTENSTEIN (11) | 2011 | | $422,254 | None | $297,995 | $370,430 | $376,228 | - | $53,978 | $1,520,885 | Senior Vice President, Corporate Affairs, | 2010 | | $163,726 | None | $250,002 | $201,156 | $134,750 | - | $6,225 | $755,859 | Chief Legal Officer and Secretary | | | | | | | | | | | | | | | | | | | | | | GREGORY N. MILLER (12) | 2011 | | $100,000 | None | - | - | - | $4,950 | $497,682 | $602,632 | Former Senior Vice President and Chief | 2010 | | $400,000 | None | $550,030 | $203,958 | $345,668 | $3,827 | $45,447 | $1,548,930 | Financial Officer and Treasurer | 2009 | | $395,178 | None | $189,053 | $643,302 | $109,524 | $9,763 | $41,431 | $1,388,251 |
| | | | | | | | | | | | | | | Non-Equity | | | | | | | | Name and | | | | | | | | | Stock | | | Option | | | Incentive Plan | | | All Other | | | | | Principal Position | Year | | Salary | | | Bonus (1) | | | Awards (2) | | | Awards (3) | | | Comp. (4) | | | Comp. (5) | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | JOHN J. GREISCH | 2014 | | $ | 961,923 | | | None | | | $ | 5,187,933 | | | $ | 963,908 | | | $ | 774,895 | | | $ | 197,226 | | | $ | 8,085,885 | | President and Chief Executive Officer, | 2013 | | $ | 942,644 | | | None | | | $ | 2,331,985 | | | $ | 952,230 | | | $ | 832,355 | | | $ | 193,597 | | | $ | 5,252,811 | | Member of the Board of Directors | 2012 | | $ | 920,970 | | | None | | | $ | 1,404,277 | | | $ | 1,850,004 | | | $ | 442,894 | | | $ | 192,185 | | | $ | 4,810,330 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | MICHAEL S. MACEK (6) | 2014 | | $ | 234,096 | | | None | | | $ | 236,894 | | | $ | 41,373 | | | $ | 102,940 | | | $ | 16,898 | | | $ | 632,201 | | Vice President, Treasurer and | 2013 | | $ | 208,875 | | | None | | | $ | 79,690 | | | $ | 32,542 | | | $ | 84,841 | | | $ | 10,627 | | | $ | 416,575 | | Interim Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | JAMES K. SACCARO (7) | 2014 | | $ | 238,846 | | | $ | 250,000 | | | $ | 2,013,847 | | | $ | 230,001 | | | $ | 0 | | | $ | 35,107 | | | $ | 2,767,801 | | Former Senior Vice President and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ALEJANDRO INFANTE SARACHO | 2014 | | $ | 410,208 | | | None | | | $ | 796,746 | | | $ | 180,417 | | | $ | 157,899 | | | $ | 50,734 | | | $ | 1,596,004 | | Former Senior Vice President and | 2013 | | $ | 399,425 | | | None | | | $ | 432,253 | | | $ | 176,496 | | | $ | 246,885 | | | $ | 52,602 | | | $ | 1,307,661 | | President International | 2012 | | $ | 391,291 | | | None | | | $ | 234,639 | | | $ | 309,097 | | | $ | 102,150 | | | $ | 49,729 | | | $ | 1,086,906 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | SUSAN R. LICHTENSTEIN | 2014 | | $ | 452,246 | | | None | | | $ | 789,227 | | | $ | 208,381 | | | $ | 208,617 | | | $ | 56,738 | | | $ | 1,715,209 | | Senior Vice President, Corporate Affairs, | 2013 | | $ | 443,693 | | | None | | | $ | 480,165 | | | $ | 196,057 | | | $ | 235,068 | | | $ | 53,649 | | | $ | 1,408,632 | | Chief Legal Officer and Secretary | 2012 | | $ | 433,953 | | | None | | | $ | 318,548 | | | $ | 419,650 | | | $ | 119,250 | | | $ | 52,704 | | | $ | 1,344,105 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ALTON E. SHADER (8) | 2014 | | $ | 418,357 | | | None | | | $ | 1,068,911 | | | $ | 202,249 | | | $ | 204,006 | | | $ | 51,247 | | | $ | 1,944,770 | | Senior Vice President and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | President North America | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 1) | In 2014 Mr. GuinanSaccaro received a one-time sign-on cash award upon commencement of his employment to compensate him for the bonus opportunity foregone at his previous employer upon joining Hill-Rom. |
| 2) | The 20112014 and 2013 amounts in this column represent the grant date fair value of time-based RSUs granted during the applicable fiscal year, excluding a reduction for risk of forfeiture. Also included is the grant date fair value of PSUs granted during fiscal 20112014, 2013 and 20102012 to certain officers based upon the target achievement of the performance conditions as of the grant date as more fully described in the footnotes to the Grants of Plan-Based Awards Table. These grant date fair values were based on the methodology set forth in Notes 1 and 87 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended September 30, 2011.2014. |
| 3) | The 2011 amounts in this column represent the grant date fair value of time-based stock options granted to our Named Executive Officers during the applicable fiscal years, excluding the reduction for risk of forfeiture. These grant date fair values were based on the methodology set forth in Notes 1 and 87 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended September 30, 2011.2014. |
| 4) | The amounts in this column represent cash awards earned for the applicable fiscal year and paid in the subsequent fiscal year, under our STIC162(m) Incentive Plan. |
| 5) | During fiscal year 2011, we did not pay above-market interest on nonqualified deferred compensation, as our monthly deferred compensation interest rate did not exceed 120% of the applicable federal long-term month rate as published by the IRS. The 2011 amounts in this column reflect changes in the actuarial present value of pension benefits from September 30, 2010. See the Pension Benefits Table and Nonqualified Deferred Compensation Table below for additional information. |
| 6)5) | Please refer to the “All Other Compensation” table below for further information: |
| All Other Compensation for Fiscal Year 2011 | | Company Contributions | | | | | Name | 401(k) (a) | Supp 401(k) (a) | Cash Payout Unused Vacation | Relocation Reimbursements | Severance Benefits | Other Benefits (b) | Total All Other Compensation | Mr. Greisch | $17,150 | $157,852 | - | - | - | - | $175,002 | Mr. Guinan | $17,150 | $28,482 | - | $13,839 | - | - | $59,471 | Ms. Aronson | $19,423 | $31,166 | - | - | - | $2,802 | $53,391 | Mr. Infante Saracho | $23,877 | $24,992 | - | - | - | $1,811 | $50,680 | Ms. Lichtenstein | $23,950 | $30,028 | - | - | - | - | $53,978 | Mr. Miller | - | $6,913 | $23,077 | - | $460,000 | $7,692 | $497,682 |
All Other Compensation for Fiscal Year 2014 | | Company Contributions | | | | | | | | | | | | | Name | 401(k) (a) | Supp 401(k) (a) | Other Benefits | Total All Other Compensation | Mr. Greisch | $18,400 | $173,888 | $4,938 | $197,226 | Mr. Macek | $16,581 | $0 | $317 | $16,898 | Mr. Saccaro | $15,481 | $19,076 | $550 | $35,107 | Mr. Infante Saracho | $18,400 | $26,859 | $5,475 | $50,734 | Ms. Lichtenstein | $18,400 | $32,443 | $5,895 | $56,738 | Mr. Shader | $18,400 | $25,694 | $7,153 | $51,247 |
| a) | Amounts represent Company matching contributions to the Named Executive Officer’s accounts in the applicable plans: 401(k) Savings Plan and 401(k) Savings Plan portion of the SERP.SERP, excluding the reduction for forfeiture of non-vested contributions. |
| b)6) | Other benefits include expenses paid on behalf of the executives’ spouses who accompanied such executives on business travelMr. Macek served as well as fees for consulting services.our Interim Chief Financial Officer from July 26, 2013 to December 29, 2013 and from July 3, 2014 to November 30, 2014. Prior to fiscal 2013, Mr. Macek was not a Named Executive Officer. |
| 7) | Effective January 8, 2010,Prior to his resignation on July 1, 2014, Mr. Greisch was elected as our President and Chief Executive Officer and a member of the Board. |
| 8) | Effective December 13, 2010, Mr. GuinanSaccaro was elected as our Senior Vice President and Chief Financial Officer.Officer on December 30, 2013. The stock and option awards amounts were forfeited upon Mr. Saccaro’s resignation. |
| 9)8) | Prior to fiscal year 2011, Ms. Aronson2014, Mr. Shader was not a Named Executive Officer. Accordingly, compensation is presented for Ms. Aronson for 2011 only. |
| 10) | Prior to fiscal year 2011, Mr. Infante Saracho was not a Named Executive Officer. Accordingly, compensation is presented for Mr. Infante Saracho for 2011 only. |
| 11) | Effective May 6, 2010, Ms. Lichtenstein was elected as our Senior Vice President, Corporate Affairs, Chief Legal Officer and Secretary. |
| 12) | Effective December 12, 2010 and in connection with Mr. Guinan’s appointment, Mr. Miller stepped down from his positions as Senior Vice President and Chief Financial Officer and Treasurer. Mr. Miller’s employment with us terminated on December 31, 2010. |
Grants of Plan-Based Awards forFor Fiscal Year Ended September 30, 20112014
The following table summarizes the grants of plan-based awards to each of the Named Executive Officers for the fiscal year ended September 30, 2011.2014. All stock-basedequity awards ingranted during fiscal year 20112014 were granted under our Stock Incentive Plan. | | | | | | | | | | | | | | | | | | | | | | | | All Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stock | | | | | | | | | | | | Estimated Future Payouts Under Non-Equity | | | Estimated Future Payouts Under Equity | | | Awards: | | | Exercise | | | Grant Date | | | | | | Incentive Plan Awards (1) | | | Incentive Plan Awards (2) | | | Number of | | | or Base | | | Fair Value | | | | | Actual | | | | | | | | | | | | | | | | | | | | | Shares or | | | Price of | | | of Stock | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of | | All Other Option Awards: Number of | Exercise or Base Price of | Grant Date Fair Value of | Grant | | Amount | | | | | | | | | | | | | | | | | | | | | Stock Units | | | Option | | | and Option | | Name | Grant Date | Min | Target | Max | Min | Target | Max | Shares of Stock or Units (3) | | Securities Underlying Options (3) | Option Awards (4) | Stock and Option Awards (5) | Date | | 2014 | | | Min. | | | Target | | | Max. | | | Min. | | | Target | | | Max. | | | (3) | | | Awards (4) | | | Awards (5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | John J. Greisch | | $- | $887,397 | $1,774,795 | | | | | | | | | | | $ | 774,895 | | | | - | | | $ | 1,061,500 | | | $ | 2,388,375 | | | | | | | | | | | | | | | | | | | | | | 11/16/2010 | | | | | | | | 147,679 | | $38.81 | | $1,800,207 | 11/18/2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 80,797 | | | $ | 41.53 | | | $ | 963,908 | | | 11/16/2010 | | | | - | 11,597 | 46,386 | | | | | | | $1,448,171 | 11/18/2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 23,210 | | | | | | | $ | 963,911 | | | | | | | | | | | | | | | 12/12/2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 50,026 | | | | | | | $ | 2,000,040 | | Mark J. Guinan | | $- | $270,000 | $540,000 | | | | | | | | | | | | | 11/18/2013 | | | | | | | | | | | | | | | | | | | - | | | | 46,420 | | | | 104,445 | | | | | | | | | | | $ | 2,223,982 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Michael S. Macek | | | | $ | 102,940 | | | | - | | | $ | 94,009 | | | $ | 211,520 | | | | | | | | | | | | | | | | | | | | | | | | | | | 12/13/2010 | | | | | | | | 34,242 | | $41.84 | | $449,940 | 11/18/2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,468 | | | $ | 41.53 | | | $ | 41,373 | | | 12/13/2010 | | | | | | | | | 25,000 | (6) | $41.84 | | $328,500 | 11/18/2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,405 | | | | | | | $ | 141,409 | | | 12/13/2010 | | | | | | | 30,221 | (6) | | | | | $1,250,012 | 11/18/2013 | | | | | | | | | | | | | | | | | | | - | | | | 1,993 | | | | 4,484 | | | | | | | | | | | $ | 95,485 | | | 12/13/2010 | | | | - | 2,689 | 10,756 | | | | | | | $362,047 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | James K. Saccaro (6) | | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 12/30/2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 19,393 | | | $ | 41.29 | | | $ | 230,001 | | Martha G. Aronson | | $- | $259,457 | $518,915 | | | | | | | | | | | | 11/16/2010 | | | | | | | | 31,121 | | $38.81 | | $379,365 | 12/30/2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 35,846 | | | | | | | $ | 1,480,082 | | | 11/16/2010 | | | | - | 2,444 | 9,775 | | | | | | | $305,176 | 12/30/2013 | | | | | | | | | | | | | | | | | | | - | | | | 11,141 | | | | 25,067 | | | | | | | | | | | $ | 533,765 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Alejandro Infante Saracho | | $- | $228,353 | $456,707 | | | | | | | | | | | | $ | 157,899 | | | | - | | | $ | 288,400 | | | $ | 648,900 | | | | | | | | | | | | | | | | | | | | | | | | | | | 11/16/2010 | | | | | | | | 30,403 | | $38.81 | | $370,613 | 11/18/2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 15,123 | | | $ | 41.53 | | | $ | 180,417 | | | 11/16/2010 | | | | - | 2,388 | 9,550 | | | | | | | $298,151 | 11/18/2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9,161 | | | | | | | $ | 380,456 | | | | | | | | | | | | | | | 11/18/2013 | | | | | | | | | | | | | | | | | | | - | | | | 8,689 | | | | 19,550 | | | | | | | | | | | $ | 416,290 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Susan R. Lichtenstein | | $- | $253,352 | $506,705 | | | | | | | | | | | | $ | 208,617 | | | | - | | | $ | 272,168 | | | $ | 612,378 | | | | | | | | | | | | | | | | | | | | | | | | | | | 11/16/2010 | | | | | | | | 30,388 | | $38.81 | | $370,430 | 11/18/2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 17,467 | | | $ | 41.53 | | | $ | 208,381 | | | 11/16/2010 | | | | - | 2,386 | 9,545 | | | | | | | $297,995 | 11/18/2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 7,426 | | | | | | | $ | 308,402 | | | | | | | | | | | | | | | 11/18/2013 | | | | | | | | | | | | | | | | | | | - | | | | 10,036 | | | | 22,581 | | | | | | | | | | | $ | 480,825 | | Gregory N. Miller | | $- | $- | $- | - | - | - | | | - | | $- | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Alton E. Shader | | | | $ | 204,006 | | | | - | | | $ | 294,168 | | | $ | 661,878 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11/18/2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 16,953 | | | $ | 41.53 | | | $ | 202,249 | | | | 11/18/2013 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 14,502 | | | | | | | $ | 602,268 | | | | 11/18/2013 | | | | | | | | | | | | | | | | | | | - | | | | 9,740 | | | | 21,915 | | | | | | | | | | | $ | 466,643 | |
| 1) | Amounts represent actual and the potential cash awards that could behave been paid under our Section 162(m) Incentive Plan, assuming that the Compensation Committee exercisesexercised its negative discretion by reference to our STIC Plan. |
| 2) | The amounts under the “Maximum” column reflect the number of PSUs granted to the Named Executive Officer on November 16, 2010.18, 2013 and December 30, 2013. They represent the amount of shares the Named Executive Officer will receive if the target performance goals are met during the three-year performance period. The “Target” amount represents the threshold performance level for each Named Executive Officer. Refer to the “Long-Term“Long-Term Equity Awards” section of the Compensation Discussion and Analysis for further details. |
| 3) | Amounts under this column represent stock options and RSU’s granted to our Named Executive Officers during fiscal year 2011.2014. The exercise price for these stock options is the fair market value of our common stock on the grant date, as described in Footnote 4 below. For RSU’s, the value to beeventually realized by the Named Executive Officer is based on the fair market value of our common stock on the vesting date.dates. The vesting schedules for these awards, and other unvested awards granted to our Named Executive Officers prior to fiscal year 2011,2014, are disclosed in the footnotes to the Outstanding Equity Awards at September 30, 20112014 table. |
| 4) | The average of the high and low selling prices of our common stock on the New York Stock Exchange on the grant date or if the grant date is a non-trading day, then the next trading day thereafter.date. |
| 5) | The grant date fair values of stock options and PSUsoption awards granted to our Named Executive Officers are based on the methodology set forth in Notes 1 and 87 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended September 30, 2011.2014. |
| 6) | Amounts represent one-time executive sign-on stock options and RSUs thatDue to Mr. Guinan received in connection with his employment with us during fiscal year 2011.Saccaro’s resignation on July 1, 2014, he forfeited the awards granted on December 30, 2013. |
Outstanding Equity Awards atAt September 30, 20102014
The following table summarizes the number and terms of stock options, deferred stock shares and PSUs outstanding for each of the Named Executive Officers as of September 30, 2011.2014. | | Option Awards | | Stock Awards | | | Option Awards | | | | Stock Awards | | | | Number of Securities Underlying Unexercised Options | | | Number of Securities Underlying Unexercised Options Unexercisable | | | | | | | | Number of Shares or Units of Stock That Have Not Vested (2) | | Market Value of Shares or Units of Stock That Have Not Vested (3) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(4) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (3) | | | Number of Securities Underlying Unexercised Options | | | Number of Securities Underlying Unexercised Options Unexcercisable | | Option Grant Date (1) | | Option Exercise Price | | Option Expiration Date | | Grant Date | | Number of Shares or Units of Stock That Have Not Vested (2) | | | Market Value of Shares or Units of Stock That Have Not Vested (3) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (4) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | John J. Greisch | | | 51,996 | | | 155,991 | | 1/8/2010 | | $ | 23.92 | | 1/8/2020 | | 34,171 | | | $ | 1,025,813 | | | | | | | | | | 207,987 | | | | 0 | | 1/8/2010 | | $ | 23.92 | | 1/8/2020 | | | | | | | | | | | | | | | | | | | | | 147,679 | | 11/16/2010 | | | 38.81 | | 11/16/2020 | | | | | | | | | 46,386 | | | $ | 1,392,508 | | | | 110,759 | | | | 36,920 | | 11/16/2010 | | $ | 38.81 | | 11/16/2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 94,581 | | | | 94,581 | | 11/29/2011 | | $ | 30.63 | | 11/29/2021 | | 11/29/2011 | | | | | | | | | 34,428 | | | $ | 1,426,352 | | Mark J. Guinan | | | | | | 34,242 | | 12/13/2010 | | | 41.84 | | 12/13/2020 | | 30,221 | | | $ | 907,234 | | | 10,756 | | | $ | 322,895 | | | | | | | | | 25,000 | | 12/13/2010 | | | 41.84 | | 12/13/2020 | | | | | | | | | | | | | | | | | 30,095 | | | | 90,288 | | 11/13/2012 | | $ | 26.94 | | 11/13/2022 | | 11/13/2012 | | | 36,163 | | | $ | 1,498,250 | | | | 70,156 | | | $ | 2,906,563 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | 80,797 | | 11/18/2013 | | $ | 41.53 | | 11/18/2023 | | 11/18/2013 | | | 23,552 | | | $ | 975,744 | | | | 46,420 | | | $ | 1,923,181 | | Martha G. Aronson | | | 2,500 | | | 7,500 | | 8/2/2010 | | | 34.28 | | 8/2/2020 | | 12,577 | | | $ | 377,562 | | | | | | | | | | | | | | | | 31,121 | | 11/16/2010 | | | 38.81 | | 11/16/2020 | | | | | | | | | 9,775 | | | $ | 293,446 | | | | | | | | | | | | | | | | | 12/12/2013 | | | 50,762 | | | $ | 2,103,083 | | �� | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Michael S. Macek | | | | 2,250 | | | | 0 | | 5/27/2008 | | $ | 31.35 | | 5/27/2018 | | | | | | | | | | | | | | | | | | | | | | | 2,154 | | | | 718 | | 11/16/2010 | | $ | 38.81 | | 11/16/2020 | | | | | | | | | | | | | | | | | | | | | | | 1,534 | | | | 3,068 | | 11/29/2011 | | $ | 30.63 | | 11/29/2021 | | 11/29/2011 | | | | | | | | | | | 1,117 | | | $ | 46,277 | | | | | | 0 | | | | 3,086 | | 11/13/2012 | | $ | 26.94 | | 11/13/2022 | | 11/13/2012 | | | 1,236 | | | $ | 51,212 | | | | 2,397 | | | $ | 99,308 | | | | | | 0 | | | | 3,468 | | 11/18/2013 | | $ | 41.53 | | 11/18/2023 | | 11/18/2013 | | | 3,455 | | | $ | 143,146 | | | | 1,993 | | | $ | 82,570 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | James K. Saccaro (5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Alejandro Infante Saracho | | | 3,434 | | | 10,303 | | 5/6/2010 | | | 31.69 | | 5/6/2020 | | 5,622 | | | $ | 168,772 | | | | | | | | | | | 13,737 | | | | 0 | | 5/6/2010 | | $ | 31.69 | | 5/6/2020 | | | | | | | | | | | | | | | | | | | | | | | 22,802 | | | | 7,601 | | 11/16/2010 | | $ | 38.81 | | 11/16/2020 | | | | | | | | | | | | | | | | | | | | | | | 15,802 | | | | 15,803 | | 11/29/2011 | | $ | 30.63 | | 11/29/2021 | | 11/29/2011 | | | | | | | | | | | 5,753 | | | $ | 238,347 | | | | | | 5,578 | | | | 16,735 | | 11/13/2012 | | $ | 26.94 | | 11/13/2022 | | 11/13/2012 | | | 6,703 | | | $ | 277,713 | | | | 13,004 | | | $ | 538,756 | | | | | | | | 30,403 | | 11/16/2010 | | | 38.81 | | 11/16/2020 | | | | | | | | | 9,550 | | | $ | 286,691 | | | | 0 | | | | 15,123 | | 11/18/2013 | | $ | 41.53 | | 11/18/2023 | | 11/18/2013 | | | 9,296 | | | $ | 385,127 | | | | 8,689 | | | $ | 359,985 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Susan R. Lichtenstein | | | 4,906 | | | 14,719 | | 5/6/2010 | | | 31.69 | | 5/6/2020 | | 8,030 | | | $ | 241,061 | | | | | | | | | | | 19,625 | | | | 0 | | 5/6/2010 | | $ | 31.69 | | 5/6/2020 | | | | | | | | | | | | | | | | | | | | | | | | | 30,388 | | 11/16/2010 | | | 38.81 | | 11/16/2020 | | | | | | | | | 9,545 | | | $ | 286,541 | | | | 22,791 | | | | 7,597 | | 11/16/2010 | | $ | 38.81 | | 11/16/2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 21,454 | | | | 21,455 | | 11/29/2011 | | $ | 30.63 | | 11/29/2021 | | 11/29/2011 | | | | | | | | | | | 7,810 | | | $ | 323,568 | | Gregory N. Miller (5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6,196 | | | | 18,590 | | 11/13/2012 | | $ | 26.94 | | 11/13/2022 | | 11/13/2012 | | | 7,447 | | | $ | 308,508 | | | | 14,445 | | | $ | 598,456 | | | | | | 0 | | | | 17,467 | | 11/18/2013 | | $ | 41.53 | | 11/18/2023 | | 11/18/2013 | | | 7,535 | | | $ | 312,188 | | | | 10,036 | | | $ | 415,791 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Alton E. Shader | | | | 2,991 | | | | 997 | | 7/11/2011 | | $ | 45.91 | | 7/11/2021 | | | | | | | | | | | | | | | | | | | | | | | 10,169 | | | | 10,169 | | 11/29/2011 | | $ | 30.63 | | 11/29/2021 | | 11/29/2011 | | | | | | | | | | | 3,702 | | | $ | 153,374 | | | | | | 5,684 | | | | 17,055 | | 11/13/2012 | | $ | 26.94 | | 11/13/2022 | | 11/13/2012 | | | 6,831 | | | $ | 283,009 | | | | 13,252 | | | $ | 549,030 | | | | | | 0 | | | | 16,953 | | 11/18/2013 | | $ | 41.53 | | 11/18/2023 | | 11/18/2013 | | | 14,715 | | | $ | 609,661 | | | | 9,740 | | | $ | 403,528 | |
| 1) | Unvested stock options based solely on continued employment will become exercisable in accordance with the following vesting schedules. |
| | Remaining Vesting Schedule (as of 9/30/2011)
| 12/13/2010 | | With respect to the grant of options for 34,342 shares, four equal annual installments beginning on 12/13/2011. | 12/13/2010 | | With respect to the grantfirst anniversary of options for 25,000 shares, 8,500 vest on 12/13/2011, 8,250 vest each on 12/13/2012 and 12/13/2013. | 11/16/2010 | | Four equal annual installments beginning on 11/16/2011. | 8/2/2010 | | Four equal annual installments beginning on 8/2/2011. | 5/6/2010 | | Four equal annual installments beginning on 5/6/2011. | 1/8/2010 | | Four equal annual installments beginning on 1/8/2011.the date of grant. |
| 2) | Unvested RSUs based solely on continued employment will vest in accordance with the following vesting schedules. The amounts include reinvested dividends. |
| | Remaining Vesting Schedules (as of 9/30/2011) 2014) | 12/13/201012/2013 | | Vests in three equal annual installments beginning25,381 shares fully vest on 12/14/2011.13/2018 | 8/2/201012/12/2013 | | 25,381 shares fully vest on 12/13/2016 | 11/18/2013 | | Fully vest on 8/3/2013.11/19/2016 | 5/6/201011/13/2012 | | Fully vest on 5/7/2013. | 1/8/2010 | | 20% on 1/9/2012, 30% on 1/9/2013 and 50% on 1/9/2014.11/14/2015 |
| 3) | Market value is determined by multiplying the number of unvested RSUs and/or PSUs by $30.02,$41.43, the closing price per share of our common stock on September 30, 2011.2014. |
| 4) | Represents PSUs granted on November 16, 2010.29, 2011, November 13, 2012, and November 18, 2013. The performance and service periods for the PSU’s granted on November 29, 2011 ended at the close of business on September 30, 2014 and the awards vested in October 2014 at a level of 57% of target. The one-year adjusted free cash flow performance period for the PSU’s granted on November 18, 2013 ended at the close of business on September 30, 2014 at 96.5 percent of target achievement, which will be further modified by TSR achievement over the three-year vesting period. |
| 5) | As a result of Mr. Miller’sSaccaro’s resignation, effective December 31, 2010,July 1, 2014, no equity awards were outstanding as of September 30, 2011.2014. |
Option Exercises and Stock Vested For Fiscal Year Ended September 30, 20112014 The following table summarizes the number of stock option awards exercised and the value realized upon exercise during the fiscal year ended September 30, 20112014 for the Named Executive Officers, as well as the number of stock awards vested and the value realized upon vesting. | Option Awards | Stock Awards | 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 | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting (1) | Value Realized on Vesting | | | | | | | John J. Greisch | - | - | - | - | 64,073 | $2,438,636 | | | | | | | | Mark J. Guinan | - | - | - | | Michael S. Macek | | 1,802 | $22,324 | 3,336 | $126,300 | | | | | | | | Martha G. Aronson | - | - | - | | James K. Saccaro | | - | - | | | | | | | | | Alejandro Infante Saracho | - | - | - | - | 9,550 | $344,469 | | | | | | | | Susan R. Lichtenstein | - | - | - | - | 9,545 | $344,288 | | | | | | | | Gregory N. Miller | 152,686 | $1,949,627 | 23,750 | $982,324 | | | | | | | Alton E. Shader | | - | 8,582 | $344,810 |
| 1) | The pre-tax amounts indicated include a portion of dividends accrued and paid on the date the stock awards vested. |
Pension Benefits at September 30, 2011
The following table quantifies the pension benefits expected to be paid from the Hill-Rom, Inc. Pension Plan (the “Pension Plan”).
Name | Plan Name (1) | Number of Years Credited Service | Present Value of Accumulated Benefit (2) | Payments During Last Fiscal Year | | | | | | John J. Greisch | - | - | - | - | | | | | | Mark J. Guinan | - | - | - | - | | | | | | Martha G. Aronson | - | - | - | - | | | | | | Alejandro Infante Saracho | - | - | - | - | | | | | | Susan R. Lichtenstein | - | - | - | - | | | | | | Gregory N. Miller | Master Pension Plan | 2 | $31,160 | - |
| 1) | The Pension Plan covers officers and other employees. Employer contributions to the Pension Plan are made on an actuarial basis, and no specific contributions are determined or set aside for any individual. Effective June 30, 2003, the Pension Plan was closed to new participants, and existing participants were given the choice of remaining in the Pension Plan or freezing their accumulated benefit as of January 1, 2004 and to participate in our 401(k) Savings Plan. Mr. Miller has two years of credited service in the Pension Plan, in which his accumulated benefit was frozen as of January 1, 2004. |
| 2) | This column represents the total discounted value of the monthly single life annuity benefit earned as of September 30, 2011 assuming the executive leaves Hill-Rom at this date and retires at age 65. The present value is not the monthly or annual lifetime benefit that would be paid to the executive. The present values are based on a 4.60% discount rate at September 30, 2011, assume no pre-retirement mortality and utilize the 2012 Static Annuitant Mortality Table. |
Nonqualified Deferred Compensation for Fiscal Year Ending September 30, 20112014
Name | Plan (2) | Executive Contributions in Last FY | Registrant Contributions in Last FY | Aggregate Earnings in Last FY (3) | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last FYE (4) | | | | | | | | John J. Greisch | SERP | - | $173,888 | $66,126 | None | $921,118 | | | | | | | | Michael S. Macek | SERP | - | - | - | None | - | | | | | | | | James K. Saccaro (1) | SERP | - | $19,076 | $117 | None | $10,967 | | | | | | | | Alejandro Infante Saracho | SERP | - | $27,706 | $9,793 | None | $127,609 | | | | | | | | Susan R. Lichtenstein | SERP | - | $32,443 | $10,281 | None | $147,433 | | | | | | | | Alton E. Shader | SERP | - | $25,694 | $6,359 | None | $82,265 |
Name | Plan (1) | Executive Contributions in Last FY | Registrant Contributions in Last FY | Aggregate Earnings in Last FY (2) | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last FYE (3) | John J. Greisch | SERP | $- | $157,852 | $(17,692) | None | $244,981 | | | | | | | | Mark J. Guinan | SERP | $- | $28,482 | $(1,992) | None | $26,490 | | | | | | | | Martha G. Aronson | SERP | $- | $31,166 | $(2,493) | None | $28,673 | | | | | | | | Alejandro Infante | SERP | $- | $30,028 | $(1,907) | None | $28,121 | | | | | | | | Susan R. Lichtenstein | SERP | $- | $24,992 | $(1,882) | None | $23,110 | | | | | | | | Gregory N. Miller | SERP | $- | $6,913 | $4,073 | $(170,969) | |
| 1) | Prior to Mr. Saccaro’s resignation, $10,967 of the Company contributions vested. | | | | | 2) | We maintain a 401(k) Savings Plan portion of the SERP to provide additional retirement benefits to certain employees whose retirement benefits under the 401(k) Savings Plan are limited under the Internal Revenue Code of 1986. The additional retirement benefits provided by the SERP are for certain participants chosen by the Compensation Committee, and they may annually receive an additional benefit of a certain percentage of their Compensation for such year. “Compensation” under the SERP means the corresponding definition of compensation under the 401(k) Savings Plan plus a percentage of a participant's eligible compensation as determined under our STIC Program. A lump sum cash payment is available to the participant beginning on the six-month anniversary of the date of the Named Executive Officer’s termination of employment (except for termination for cause, where the entire SERP is forfeited). In the alternative a participant may defer receipt by electing a stream of equal annual payments for up to 20 years. |
| 2)3) | Amounts represent interestEarnings on the deferred compensationRegistrant’s SERP balances paid throughfor the first three quarters of fiscal year 2011 offset by gains/(losses) in the investment accounts during the fourth quarter when the investment approach was amended. During the first three quarters of fiscal year 2011 interest earned was based on the monthly prime rate in effect. We did not pay above-market interest or preferential earnings during fiscal year 2011 as our monthly deferred compensation interest rate did not exceed 120% of the applicable federal long-term month rate as published by the IRS. Therefore, for fiscal year 2011, there is no above-market interest or preferential earnings reported as compensation to the Named Executive Officers in the Summary Compensation Table. During the fourth quarter theyear. The Plan’s investment approach was amended to provideprovides for investments mirroring the employee’s investment allocation in theirunder the 401(k). |
| 3)4) | Of the amounts shown in this column related to the SERP theThe following amountsamount represent Company contributions and above-market interest previously reported in the Summary Compensation Table inof this Proxy Statement and previous Proxy Statements:Statements. |
| Plan (1) | Aggregate AmountContributions Reported in the Summary Compensation Table of Previous Proxy Statements
| John J. Greisch | SERP | $601,661 | | | | John J. GreischJames K. Saccaro | SERP | $103,583 | | | | Mark J. Guinan | SERP | $- | | | | Martha G. Aronson | SERP | $-19,076 | | | | Alejandro Infante Saracho | SERP | $-79,036 | | | | Susan R. Lichtenstein | SERP | $-93,535 | | | | Gregory N. MillerAlton E. Shader | SERP | $133,55925,694 |
Potential Payments Upon Termination or Change in Control
Benefits Payable Upon Termination Under Employment Agreements
Based upon a hypothetical termination date of September 30, 2011,2014, the benefits would be as follows (except in certain situations, identified below, where a Separation Agreement has been executed between the Company and the executive):follows:
John J. Greisch | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Accelerated | | Accelerated | | Continuance of | | Limited | | | | | | | | Accelerated | | | Accelerated | | | Continuance of | | | Limited | | | | | | | Salary & Other | | Vesting of | | Vesting of | | Health & | | Outplacement | | | | | Salary & Other | | | Vesting of | | | Vesting of | | | Health & | | | Outplacement | | | | | Event | | Cash Payments | | Stock Options (2) | | Stock Awards (3) | | Welfare Benefits (4) | | Assistance | | Total | | | Cash Payments | | | Stock Options (2) | | | Stock Awards (3) | | | Welfare Benefits (4) | | | Assistance | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Permanent Disability (1) | | | $1,847,009 | | $951,545 | | $2,418,296 | | $15,579 | | | | $5,232,429 | | | $ | 1,507,979 | | | $ | 2,426,478 | | | $ | 10,833,172 | | | $ | 16,211 | | | | | | $ | 14,783,840 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Death | | | $534,615 | | $951,545 | | $2,418,296 | | $12,999 | | | | $3,917,455 | | | $ | 537,115 | | | $ | 2,426,478 | | | $ | 10,833,172 | | | $ | 13,631 | | | | | | $ | 13,810,396 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination Without Cause | | | $1,834,615 | | | | | | $15,579 | | $10,000 | | $1,860,194 | | | $ | 1,967,115 | | | | | | | | | | | $ | 16,211 | | | $ | 10,000 | | | $ | 1,993,326 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Resignation With Good Reason | | | $1,834,615 | | | | | | $15,579 | | $10,000 | | $1,860,194 | | | $ | 1,967,115 | | | | | | | | | | | $ | 16,211 | | | $ | 10,000 | | | $ | 1,993,326 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination for Cause | | | $34,615 | | | | | | | | | | $34,615 | | | $ | 37,115 | | | | | | | | | | | | | | | | | | | $ | 37,115 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Resignation Without Good Reason | | | $34,615 | | | | | | | | | | $34,615 | | | $ | 37,115 | | | | | | | | | | | | | | | | | | | $ | 37,115 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Retirement (5) | | | $34,615 | | | | | | | | | | $34,615 | | | Retirement | | | $ | 37,115 | | | | | | | | | | | | | | | | | | | $ | 37,115 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mark J. Guinan | | | | | | | | | | | | | | | Michael S. Macek | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Accelerated | | Accelerated | | Continuance of | | Limited | | | | | | | | | Accelerated | | | Accelerated | | | Continuance of | | | Limited | | | | | | | | Salary & Other | | Vesting of | | Vesting of | | Health & | | Outplacement | | | | | Salary & Other | | | Vesting of | | | Vesting of | | | Health & | | | Outplacement | | | | | | Event | | Cash Payments | | Stock Options (2) | | Stock Awards (3) | | Welfare Benefits (4) | | Assistance | | Total | | | Cash Payments | | | Stock Options (2) | | | Stock Awards (3) | | | Welfare Benefits (4) | | | Assistance | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Permanent Disability (1) | | $2,362,466 | | $0 | | $1,230,125 | | $13,899 | | | | $3,606,490 | | | $ | 2,298,735 | | | $ | 79,732 | | | $ | 422,512 | | | $ | 4,396 | | | | | | | $ | 2,805,375 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Death | | $534,615 | | $0 | | $1,230,125 | | $12,999 | | | | $1,777,739 | | | $ | 504,135 | | | $ | 79,732 | | | $ | 422,512 | | | $ | 0 | | | | | | | $ | 1,006,379 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination Without Cause | | $484,615 | | | | | | $13,899 | | $10,000 | | $508,514 | | | $ | 136,635 | | | | | | | | | | | $ | 4,396 | | | $ | 10,000 | | | $ | 151,031 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Resignation With Good Reason | | $484,615 | | | | | | $13,899 | | $10,000 | | $508,514 | | | $ | 136,635 | | | | | | | | | | | $ | 4,396 | | | $ | 10,000 | | | $ | 151,031 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination for Cause | | $34,615 | | | | | | | | | | $34,615 | | | $ | 14,135 | | | | | | | | | | | | | | | | | | | $ | 14,135 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Resignation Without Good Reason | | $34,615 | | | | | | | | | | $34,615 | | | $ | 14,135 | | | | | | | | | | | | | | | | | | | $ | 14,135 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Retirement (5) | | $34,615 | | | | | | | | | | $34,615 | | | Retirement | | | $ | 14,135 | | | | | | | | | | | | | | | | | | | $ | 14,135 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Martha G. Aronson | | | | | | | | | | | | | | | James K. Saccaro (5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Alejandro Infante Saracho | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Accelerated | | Accelerated | | Continuance of | | Limited | | | | | | | | | Accelerated | | | Accelerated | | | Continuance of | | | Limited | | | | | | | | Salary & Other | | Vesting of | | Vesting of | | Health & | | Outplacement | | | | | Salary & Other | | | Vesting of | | | Vesting of | | | Health & | | | Outplacement | | | | | | Event | | Cash Payments | | Stock Options (2) | | Stock Awards (3) | | Welfare Benefits (4) | | Assistance | | Total | | | Cash Payments | | | Stock Options (2) | | | Stock Awards (3) | | | Welfare Benefits (4) | | | Assistance | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Permanent Disability (1) | | $2,766,686 | | $0 | | $671,005 | | $13,599 | | | | $3,451,290 | | | $ | 1,969,755 | | | $ | 433,077 | | | $ | 1,799,928 | | | $ | 14,155 | | | | | | | $ | 4,216,915 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Death | | $533,346 | | $0 | | $671,005 | | $12,999 | | | | $1,217,350 | | | $ | 523,769 | | | $ | 433,077 | | | $ | 1,799,928 | | | $ | 12,775 | | | | | | | $ | 2,769,549 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination Without Cause | | $466,846 | | | | | | $13,599 | | $10,000 | | $490,445 | | | $ | 435,769 | | | | | | | | | | | $ | 14,155 | | | $ | 10,000 | | | $ | 459,924 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Resignation With Good Reason | | $466,846 | | | | | | $13,599 | | $10,000 | | $490,445 | | | $ | 435,769 | | | | | | | | | | | $ | 14,155 | | | $ | 10,000 | | | $ | 459,924 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination for Cause | | $33,346 | | | | | | | | | | $33,346 | | | $ | 23,769 | | | | | | | | | | | | | | | | | | | $ | 23,769 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Resignation Without Good Reason | | $33,346 | | | | | | | | | | $33,346 | | | $ | 23,769 | | | | | | | | | | | | | | | | | | | $ | 23,769 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Retirement (5) | | $33,346 | | | | | | | | | | $33,346 | | | Retirement | | | $ | 23,769 | | | | | | | | | | | | | | | | | | | $ | 23,769 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Alejandro Infante Saracho | | | | | | | | | | | | | | | | | | | Accelerated | | Accelerated | | Continuance | | Limited | | | | | | | Salary & Other | | Vesting of | | Vesting of | | Health & | | Outplacement | | | | | Event | | Cash Payments | | Stock Options (2) | | Stock Awards (3) | | Welfare Benefits (4) | | Assistance | | Total | | | | | | | | | | | | | | | | | | Permanent Disability (1) | | $2,225,829 | | $- | | $455,451 | | $14,379 | | | | $2,695,659 | | | | | | | | | | | | | | | | | | Death | | $522,212 | | $- | | $455,451 | | $12,999 | | | | $990,662 | | | | | | | | | | | | | | | | | | Termination Without Cause | | $407,212 | | | | | | $14,379 | | $10,000 | | $431,591 | | | | | | | | | | | | | | | | | | Resignation With Good Reason | | $407,212 | | | | | | $14,379 | | $10,000 | | $431,591 | | | | | | | | | | | | | | | | | | Termination for Cause | | | $22,212 | | | | | | | | | | $22,212 | | | | | | | | | | | | | | | | | | Resignation Without Good Reason | | | $22,212 | | | | | | | | | | $22,212 | | | | | | | | | | | | | | | | | | | Retirement (5) | | | $22,212 | | | | | | | | | | $22,212 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Susan R. Lichtenstein | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Accelerated | | Accelerated | | Continuance | | Limited | | | | | | | | | Accelerated | | | Accelerated | | | Continuance of | | | Limited | | | | | | | | Salary & Other | | Vesting of | | Vesting of | | Health & | | Outplacement | | | | | Salary & Other | | | Vesting of | | | Vesting of | | | Health & | | | Outplacement | | | | | | Event | | Cash Payments | | Stock Options (2) | | Stock Awards (3) | | Welfare Benefits (4) | | Assistance | | Total | | | Cash Payments | | | Stock Options (2) | | | Stock Awards (3) | | | Welfare Benefits (4) | | | Assistance | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Permanent Disability (1) | | $1,812,173 | | $- | | $527,595 | | $14,379 | | | | $2,354,147 | | | $ | 1,488,429 | | | $ | 520,987 | | | $ | 1,958,512 | | | $ | 15,373 | | | | | | | $ | 3,983,301 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Death | | $524,421 | | $- | | $527,595 | | $12,999 | | | | $1,065,015 | | | $ | 526,170 | | | $ | 520,987 | | | $ | 1,958,512 | | | $ | 12,793 | | | | | | | $ | 3,018,462 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination Without Cause | | | $447,721 | | | | | | $14,379 | | $10,000 | | $472,100 | | | $ | 479,784 | | | | | | | | | | | $ | 15,373 | | | $ | 10,000 | | | $ | 505,157 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Resignation With Good Reason | | | $447,721 | | | | | | $14,379 | | $10,000 | | $472,100 | | | $ | 479,784 | | | | | | | | | | | $ | 15,373 | | | $ | 10,000 | | | $ | 505,157 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination for Cause | | | $24,421 | | | | | | | | | | $24,421 | | | $ | 26,170 | | | | | | | | | | | | | | | | | | | $ | 26,170 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Resignation Without Good Reason | | | $24,421 | | | | | | | | | | $24,421 | | | $ | 26,170 | | | | | | | | | | | | | | | | | | | $ | 26,170 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Retirement (5) | | | $24,421 | | | | | | | | | | $24,421 | | | Retirement | | | $ | 26,170 | | | | | | | | | | | | | | | | | | | $ | 26,170 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Alton E. Shader | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Accelerated | | | Accelerated | | | Continuance of | | | Limited | | | | | | | | | Salary & Other | | | Vesting of | | | Vesting of | | | Health & | | | Outplacement | | | | | | Event | | | Cash Payments | | | Stock Options (2) | | | Stock Awards (3) | | | Welfare Benefits (4) | | | Assistance | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | Permanent Disability (1) | | | $ | 2,948,503 | | | $ | 356,952 | | | $ | 1,998,603 | | | $ | 13,375 | | | | | | | $ | 5,317,433 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Death | | | $ | 516,163 | | | $ | 356,952 | | | $ | 1,998,603 | | | $ | 12,775 | | | | | | | $ | 2,884,493 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination Without Cause | | | $ | 436,403 | | | | | | | | | | | $ | 13,375 | | | $ | 10,000 | | | $ | 459,778 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Resignation With Good Reason | | | $ | 436,403 | | | | | | | | | | | $ | 13,375 | | | $ | 10,000 | | | $ | 459,778 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination for Cause | | | $ | 16,163 | | | | | | | | | | | | | | | | | | | $ | 16,163 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Resignation Without Good Reason | | | $ | 16,163 | | | | | | | | | | | | | | | | | | | $ | 16,163 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Retirement | | | $ | 16,163 | | | | | | | | | | | | | | | | | | | $ | 16,163 | |
| (1)1) | Benefits provided under our disability plans are based on various circumstances including the Named Executive Officer meeting certain eligibility requirements. Our disability plans are fully insured; therefore, claim payments are reviewed and processed by our third party insurance carrier. The following assumptions were used to determine the salary and other cash payment amount for permanent disability: normal retirement age is based on the Social Security Normal Retirement Age Table, short-term disability benefits are based on salary continuation for 26 weeks; long-term disability benefits are based on the lesser of 60% of the Named Executive Officer's monthly earnings or $15,000 per month; and a 4.6%4.5% discount rate. |
| (2)2) | The amounts indicated represent the intrinsic value of all unvested non-qualified stock options that would have become immediately vested and exercisable upon permanent disability or death. Performance-based stock options were not included in the amount. The amounts were calculated based on the closing stock price of $41.43 on September 30, 2011.2014. |
| (3)3) | The amounts indicated represent the market value of all unvested RSUs and PSUs that would have vested immediately and been distributed upon permanent disability or death. The amounts were calculated based on the closing stock price of $41.43 on September 30, 2011.2014. |
| (4)4) | Amounts represent the dollar value of the incremental cost to Hill-Rom by providing continuing health and life insurance coverage based on the individual’s selected coverage in effect immediately before the hypothetical termination. |
5) | (5) | BasedMr. Saccaro resigned on length of service, employeeJuly 1, 2014 and was not eligible for retirement benefits.payments upon termination as of September 30, 2014. |
Benefits Payable Under Change in Control Agreements
Based upon a hypothetical Change in Control date of September 30, 2011,2014, the Change in Control benefitsBenefits with a termination of employment would be as follows:
| | | | | | | | | | | | | | | | | | | | | | | Acceleration of Stock Based Awards | | | | | Name | | Salary | | | Incentive Comp | | | Continuation of Health and Welfare Benefits | | | Vacation Benefits | | | Retirement Savings Plan Benefits | | | Limited Outplacement Assistance | | | Continuation of Term Life Insurance Coverage | | | Stock Options (1) | | | RSUs (2) | | | Total | | John J. Greisch | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | With termination | | $ | 2,700,000 | | | $ | 1,197,986 | | | $ | 38,997 | | | $ | 34,615 | | | $ | 244,981 | | | $ | 10,000 | | | $ | 7,740 | | | $ | 1,268,721 | | | $ | 1,025,789 | | | $ | 6,528,829 | | Without termination | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | $ | 951,545 | | | $ | 1,025,789 | | | $ | 1,977,334 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mark J. Guinan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | With termination | | $ | 900,000 | | | $ | 364,500 | | | $ | 25,998 | | | $ | 34,615 | | | $ | 26,490 | | | $ | 10,000 | | | $ | 1,800 | | | | - | | | | - | | | $ | 1,363,403 | | Without termination | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Martha G. Aronson | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | With termination | | $ | 867,000 | | | $ | 350,267 | | | $ | 25,998 | | | $ | 33,346 | | | $ | 28,673 | | | $ | 10,000 | | | $ | 1,200 | | | | - | | | $ | 377,559 | | | $ | 1,694,043 | | Without termination | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | $ | 377,559 | | | $ | 377,559 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Susan R. Lichtenstein | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | With termination | | $ | 846,600 | | | $ | 342,026 | | | $ | 25,998 | | | $ | 24,421 | | | $ | 23,110 | | | $ | 10,000 | | | $ | 2,760 | | | | - | | | $ | 241,055 | | | $ | 1,515,970 | | Without termination | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | $ | 241,055 | | | $ | 241,055 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Alejandro Infante Saracho | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | With termination | | $ | 770,000 | | | $ | 314,198 | | | $ | 25,998 | | | $ | 22,212 | | | $ | 28,121 | | | $ | 10,000 | | | $ | 2,760 | | | | - | | | $ | 168,760 | | | $ | 1,342,049 | | Without termination | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | $ | 168,760 | | | $ | 168,760 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gregory N. Miller (3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Acceleration of Stock Based Awards | | | | | Name | | Salary | | | Incentive Comp. | | | Continuation Of Health and Welfare Benefits | | | Vacation Benefits | | | Retirement Savings Plan Benefits | | | Limited Outplacement Assistance | | | Continuation of Term Life Insurance Coverage | | | Stock Options (1) | | | RSUs (2) | | | Performance Based Awards (3) | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | John J. Greisch | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | With termination | | $ | 1,451,335 | | | $ | 482,916 | | | $ | 10,381 | | | $ | 37,115 | | | $ | 1,182,641 | | | $ | 5,013 | | | $ | 3,929 | | | $ | 2,399,339 | | | $ | 4,505,577 | | | $ | 3,129,627 | | | $ | 13,207,873 | | Without termination | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,426,478 | | | $ | 4,577,076 | | | $ | 0 | | | $ | 7,003,554 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Michael S. Macek (4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | With termination | | $ | 122,500 | | | $ | 0 | | | $ | 1,904 | | | $ | 14,135 | | | $ | 0 | | | $ | 0 | | | $ | 588 | | | $ | 79,732 | | | $ | 194,357 | | | $ | 228,155 | | | $ | 641,371 | | Without termination | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 79,732 | | | $ | 194,357 | | | $ | 0 | | | $ | 274,089 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | James Saccaro (5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Alejandro Infante Saracho | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | With termination | | $ | 602,325 | | | $ | 210,814 | | | $ | 18,735 | | | $ | 23,769 | | | $ | 127,608 | | | $ | 7,310 | | | $ | 2,024 | | | $ | 423,333 | | | $ | 637,651 | | | $ | 830,527 | | | $ | 2,884,096 | | Without termination | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 433,077 | | | $ | 662,840 | | | $ | 0 | | | $ | 1,095,917 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Susan R. Lichtenstein | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | With termination | | $ | 716,779 | | | $ | 215,033 | | | $ | 20,261 | | | $ | 26,170 | | | $ | 147,434 | | | $ | 7,901 | | | $ | 4,086 | | | $ | 515,965 | | | $ | 611,214 | | | $ | 1,056,372 | | | $ | 3,321,215 | | Without termination | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 520,987 | | | $ | 620,696 | | | $ | 0 | | | $ | 1,141,683 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Alton Shader | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | With termination | | $ | 489,827 | | | $ | 171,440 | | | $ | 14,981 | | | $ | 16,163 | | | $ | 82,265 | | | $ | 5,828 | | | $ | 704 | | | $ | 339,678 | | | $ | 810,658 | | | $ | 643,539 | | | $ | 2,575,083 | | Without termination | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 356,952 | | | $ | 892,670 | | | $ | 0 | | | $ | 1,249,622 | |
(
| 1) | The amounts indicated represent the intrinsic value of all unvested non-qualified stock options that would have become immediately vested and exercisable upon a change in control. The amounts were calculated based on the closing stock price of $41.43 on September 30, 2011,2014, adjusted, as applicable, for Section 280G limitations, and assume that the options granted were cashed out on the hypothetical change in control. |
(2) | 2) | The amounts indicated represent the intrinsic value of all unvested RSUs that would have become immediately vested and exercisable upon a change in control. Performance-based awards were included in the amount only to the extent performance conditions were completely met as of September 30, 2011. The amounts were calculated based on the closing stock price of $41.43 on September 30, 2011. RSUs granted to Mr. Guinan would not accelerate on a hypothetical change in control on September 30, 2011 since he would have not held his RSUs2014 and adjusted, as applicable, for the minimum required one year at such date.Section 280G limitations |
(3) | Not serving3) | The amounts indicated represent the intrinsic value of all unvested PSUs that would become immediately vested and exercisable upon a change in control. The amounts were calculated based on the closing stock price of $41.43 on September 30, 2014 and adjusted, as a Named Executive Officer atapplicable, for Section 280G limitations. The PSU grant agreements require the endNEOs to continue employment through the day after the first anniversary date of the last fiscal year. SeePSU awards before such awards can become immediately vested under the Benefits Payable Upon Termination Under Employment Agreements table for actual separation payments.NEOs’ change in control agreements. |
| 4) | Mr. Macek does not have a change in control agreement with the Company. The benefits available to Mr. Macek following a change of control are subject to terms of his employment and stock award agreements. |
| 5) | Mr. Saccaro resigned from the Company on July 1, 2014 and was not entitled to any payments under a change in control agreement as of September 30, 2014. |
The Compensation and Management Development Committee of the Board of Directors of Hill-Rom Holdings, Inc. has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management and, based upon this review and discussion, recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2011.
Submitted by the Compensation and Management Development Committee
Ronald A. Malone (Chair)
Joanne C. Smith, M.D. (Vice Chair)
Rolf A. Classon
In setting non-employee director compensation, the Board of Directors considers the significant amount of time that directors expend in fulfilling their duties to Hill-Rom as well as the skill-levelskill level required for members of the Board. Our director pay package is designed to attract and retain highly-qualified, independent professionals to monitor the effectiveness of policy and decision-making both at the Board and management level, with a view to enhancing shareholder value over the long term. Our Nominating/Corporate Governance Committee generally reviews our non-employee director compensation program or elements thereof, on an annual basis, with the assistance of the compensation consulting firm used by the Compensation Committee. Directors who are also employees of Hill-Rom receive no additional remuneration for services as a director. OurNon-Employee Director Compensation for Fiscal 2014 and Fiscal 2015
For the first two quarters of fiscal year 2014 our non-employee directors (other than the Chair of the Board) receive an annualreceived a quarterly cash retainer of $50,000;$12,500; the Chair of the Board’s quarterly retainer was $25,000. Committee members, other than the Chair of the Board, of Directors’ annual retainer is $125,000. Committee members receivereceived a fee in the amount of $1,500 for each committee meeting attended, in person or by telephone, and thetelephone. Chairs of the Audit, Compensation and Nominating/Corporate Governance Committees receivereceived an additional $12,500, $8,000,$3,125, $2,500 and $7,000 annual$2,500 quarterly retainer, respectively. For the remainder of the fiscal year ended September 30, 2014, our non-employee directors (other than the Chair of the Board) received a quarterly cash retainer of $13,750; the Chair of the Board’s quarterly retainer was $27,500. Committee members of the Audit, Compensation and Nominating/Corporate Governance Committees received a quarterly retainer in the amount of $3,125, $1,875 and $1,250, respectively. Chairs of the Audit, Compensation and Nominating/Corporate Governance Committees received a quarterly retainer in the amount of $6,250, $5,000 and $3,750, respectively. Committee members received a fee in the amount of $1,500 for each other committee meeting attended, in person or by telephone. In addition, each non-employee director is, on the first trading day following the close of each annual meeting of the Company’s shareholders, awarded vested deferred RSUs valued at $120,000$150,000 ($200,000190,000 in the case of the Chair of the Board). A new director may receive a pro-rata portion of the annual award representing the time served during the fiscal year of joining the Board of Directors. Delivery of shares of common stock underlying these RSUs occurs on the later of one year and one day from the date of the grant or the six month anniversary of the date that the applicable director ceases to be a member of the Board of Directors. This compensation plan will remain in placeIn fiscal year 2014 the annual grant consisted of 4,980 vested deferred RSUs for the Chair of the Board and 3,931 for each other non-employee director. A new director may receive a pro-rata portion of the annual award representing time served during the fiscal year of joining the Board of Directors. Director Compensation for fiscal year 2012.2015 is unchanged from the second half of fiscal 2014.
Director Compensation Table For Fiscal Year Ending September 30, 20112014
| | | | | | | | | | | | | | Change in Pension | | | | | | | | | | | | | | | | | | | | | | Value and Nonqualified | | | | | | | | | | | | | | | | | | | Non-Equity | | | Deferred | | | | | | | | | | Fees Earned or | | | | | | | | | Incentive Plan | | | Compensation | | | All Other | | | | | Name | | Paid in Cash | | | Stock Awards | | | Option Awards | | | Compensation | | | Earnings | | | Compensation | | | Total | | | | (1) | | | (2) | | | (3) | | | | | | (4) | | | (5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Rolf A. Classon | | | $137,000 | | | | $200,039 | | | | - | | | | - | | | | - | | | | $216 | | | $ | 337,255 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | James R. Giertz | | | $63,500 | | | | $120,008 | | | | - | | | | - | | | | - | | | | $216 | | | $ | 183,724 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Charles E. Golden | | | $82,000 | | | | $120,008 | | | | - | | | | - | | | | - | | | | $216 | | | $ | 202,224 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | W August Hillenbrand | | | $50,000 | | | | $120,008 | | | | - | | | | - | | | | - | | | | $140 | | | $ | 170,148 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ronald A. Malone | | | $64,000 | | | | $120,008 | | | | - | | | | - | | | | - | | | | $216 | | | $ | 184,224 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Eduardo R. Menascé | | | $65,000 | | | | $120,008 | | | | - | | | | - | | | | - | | | | $216 | | | $ | 185,224 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Katherine S. Napier | | | $63,500 | | | | $120,008 | | | | - | | | | - | | | | - | | | | $216 | | | $ | 183,724 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Joanne C. Smith, M.D. | | | $69,000 | | | | $120,008 | | | | - | | | | - | | | | - | | | | $216 | | | $ | 189,224 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | Fees Earned or Paid in Cash (1) | Stock Awards (2) | Option Awards | All Other Compensation (3) | Total | Rolf A. Classon | $123,250 | $190,037 | - | $216 | $313,503 | | | | | | | William G. Dempsey (4) | $43,750 | $150,007 | | $126 | $193,883 | | | | | | | James R. Giertz | $64,750 | $150,007 | - | $216 | $214,973 | | | | | | | Charles E. Golden | $94,750 | $150,007 | - | $216 | $244,973 | | | | | | | W August Hillenbrand (4) | $12,500 | - | - | $59 | $12,559 | | | | | | | William H. Kucheman | $76,750 | $150,007 | | $162 | $226,919 | | | | | | | Ronald A. Malone | $92,500 | $150,007 | - | $216 | $242,723 | | | | | | | Eduardo R. Menascé | $64,750 | $150,007 | - | $216 | $214,973 | | | | | | | Joanne C. Smith, M.D. | $79,250 | $150,007 | - | $216 | $229,473 |
| 1) | The amounts in this column include theapplicable annual retainerretainers and the amounts earned by each non-employee director for attending Board and/or committee meetings in person and/or by teleconference that were not held in conjunction with a meeting of our full Board. For the Chair of each of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, the additional annual retainer is also included.as applicable. For Mr. Golden and Mr. Hillenbrand, amounts include $30,000 and $50,000,$12,500, respectively, of cash fees deferred into our common stock. |
| 2) | The amounts indicated represent the grant date fair value of RSUs granted to our non-employee directors during fiscal 2011.year 2014. The determination of this value was based on the methodology set forth in Notes 1 and 87 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended September 30, 2011.2014. As of September 30, 2011,2014, our non-employee directors owned aggregate stock awards in the following amounts (in shares): Rolf A. Classon 46,209,65,707, William Dempsey 3,976, James R. Giertz 6,523,18,790, Charles E. Golden 27,695, W August Hillenbrand 19,568,45,149, William Kucheman 8,236, Ronald A. Malone 14,469,27,111, Eduardo R. Menascé 17,946, Katherine S. Napier 7,377,Menascé 30,751, and Joanne C. Smith, M.D. 27,695. 42,960. |
| 3) | As of September 30, 2011, certain of our non-employee directors had options to purchase our common stock which were granted in prior years as follows: Rolf A. Classon, 14,800, Charles E. Golden, 7,400, and W August Hillenbrand, 8,000. |
| 4) | During fiscal 2011, we did not pay above-market interest on nonqualified deferred compensation to our non-employee directors as our monthly deferred compensation interest rate did not exceed 120% of the applicable federal long-term month rate as published by the IRS in its revenue rulings. |
| 5) | Amounts in this column represent the dollar value of the voluntary director life and accidental death and dismemberment insurance premiums paid by us during fiscal 2011year 2014 on behalf of each director. |
| 4) | Mr. Hillenbrand left the Board in January 2014, and Mr. Dempsey was elected in March 2014. |
The following table sets forth information concerning Hill-Rom's equity compensation plans as of September 30, 2011:2014: | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights (1) | Number of securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (a)) | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights (1) | Number of securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (a)) | Plan Category | | (a) | | | (b) | | | (c) | | (a) | (b) | (c) | | | | | | | | Equity compensation plans approved by security holders | 3,059,041 | $27.54 | 6,889,266 | 3,265,046 | $31.90 | 5,488,583 (4) | | | | | | | | Equity compensation plans not approved by security holders(2)(3) | 10,422 | - | - | 8,275 | $0.00 | - | | | | | Total | 3,069,463 | $27.54 | 6,889,266 (4) | 3,273,303 | $31.90 | 5,488,583 (4) |
(1) | 1) | RSUs and PSUs are excluded when determining the weighted-average exercise price of outstanding stock options. |
(2) | 2) | Under the Hill-Rom Holdings Stock Award Program, which has not been approved by security holders, shares of common stock have been granted to certain key employees. All shares granted under this program are contingent upon continued employment over specified terms. Dividends, payable in stock equivalents accrue on the grants and are subject to the same specified terms as the original grants. Under this program, a total of 6,0974,250 deferred shares will be issuable at a future date. |
(3) | 3) | Members of the Board of Directors may elect to defer fees earned and invest them in Hill-Rom common stock under the Hill-Rom Holdings Directors' Deferred Compensation Plan, which has not been approved by security holders. Under this program, a total of 4,3254,007 deferred shares will be issuable at a future date. |
(4) | 4) | Amount consists of 6,156,4735,013,166 shares available for issuance under our Stock Incentive Plan and 732,793 475,417 shares available for purchase under our Employee Stock Purchase Plan. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE |
Under Section 16(a) of the Securities Exchange Act of 1934, our directors, our executive officers and any person holding more than ten percent of our common stock are required to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock. We are required to report in this proxy statement any failure to file or late filing occurring during the fiscal year ended September 30, 2011.2014. Based solely on a review of filings furnished to us and other information from reporting persons, we believe that all of these filing requirements were satisfied by our directors, executive officers and ten percent beneficial owners, with the exception of two late Form 4 filings related to 445 shares of deferred stock granted to Mr. Golden and Mr. Hillenbrand in July 2011, in lieu of cash director’s fees.
owners. HILL-ROM HOLDINGS, INC. 1069 STATE ROUTE 46 EAST BATESVILLE, IN 47006 | VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. Electronic Delivery of FutureELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
| | For | Withhold | For All | | To withhold authority to vote for any | | | | | | | | All | All | Except | | individual nominee(s), mark “For All | | | | | | The Board of Directors recommends that you vote FOR the following: | | | | | | Except” and write the number(s) of the nominee(s) on the line below. | | | | | | | | o | o | o | | | | | | | | 1. Election of Directors | | | | | | | | | | | | Nominees:Nominees | | | | | | | | | | | | | | | | | | | | | | |
| 01 Rolf A. Classon 02 William G. Dempsey 03 James R. Giertz 0304 Charles E. Golden 04 W August Hillenbrand 05 Katherine S. NapierJohn J. Greisch | | | 06 Joanne C. Smith, M.D.William H. Kucheman 07 Ronald A. Malone 08 Eduardo R. Menascé09 Stacy Enxing Seng | | | | | | | | | | | | | | |
| The Board of Directors recommends you vote FOR proposals 2 and 3. | | For | Against | Abstain | | | | | | | | | | | 2 To approve, by non-binding advisory vote, executive compensation. | o | o | o | | | | | | | | | | | | | | | | | 3 Ratify the appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for fiscal 2012.2015. | o | o | o | | | | | | | | | | | | | | | | | NOTE: Such other business as may properly come before the meeting or any adjournment thereof. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | Date | | | | | Signature (Joint Owners) | Date | | | |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report, Notice & Proxy StatementCombined Document is/are available at www.proxyvote.com . | | |
| | | | | | | This proxy is solicited by the Board of Directors | | | | | | | | | The undersigned hereby appoints Rolf A. Classon and Joanne C. Smith, M.D.,John Greisch, and each of them, with power to act without the other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the shares of Hill-Rom Holdings, Inc. Common Stock which the undersigned is entitled to vote and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of Shareholders of Hill-Rom Holdings, Inc. to be held on March 6, 20124, 2015 or any adjournment thereof, with all powers which the undersigned would possess if present at the Meeting. | | | | | | THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO SUCH DIRECTION IS MADE BUT THE CARD IS SIGNED, THIS PROXY CARD WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES UNDER PROPOSAL 1, FOR PROPOSAL 2, AND FOR PROPOSAL 3, AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. | | | | | | Continued and to be signed on reverse side | | | | |
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