UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Check the appropriate box:
¨ Preliminary Proxy Statement
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þ Definitive Proxy Statement
¨ Definitive Additional Materials
¨ Soliciting Material Pursuant to§240.14a-12
Acuity Brands, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No fee required. | |
5) Total fee paid:
¨ Fee paid previously with preliminary materials.
¨ Check box if any part of the fee is offset as provided by Exchange Act Rule0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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1170 Peachtree Street, NE
Suite 2400
2300
Atlanta, Georgia 30309
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held January 7, 2011
Time: | ||
11:00 a.m. Eastern Time | ||
Date: | January 7, 2014 | |
Place: | ||
Four Seasons Hotel - Ballroom, 75 Fourteenth Street, NE Atlanta, Georgia | ||
Record Date: | ||
Stockholders of record at the close of business on November | ||
Purpose: | ||
(1) Elect three directors nominated by the Board of Directors for terms that expire at the annual meeting for the | ||
(2) Ratify the appointment of Ernst & Young LLP as our independent registered public accounting | ||
firm for fiscal year 2014; (3) Hold an advisory vote to approve named executive officer compensation; (4) Consider and act upon such other business as may properly come before the annual meeting or any adjournments or postponements thereof. | ||
Stockholders Register: | ||
A list of the stockholders entitled to vote at the annual meeting may be examined during regular business hours at our executive offices, 1170 Peachtree Street, NE, Suite |
By order of the Board of Directors,
C. DAN SMITH
Senior Vice President, Treasurer and Secretary
November 22, 2010
YOUR VOTE IS IMPORTANT
IF YOU ARE A STOCKHOLDER OF RECORD, YOU CAN VOTE YOUR SHARES BY THE INTERNET, BY TELEPHONE OR BY MAIL (IF YOU REQUESTED AND RECEIVED A PAPER COPY OF THE PROXY CARD). IF YOU WISH TO VOTE BY THE INTERNET OR BY TELEPHONE, PLEASE FOLLOW THE INSTRUCTIONS PROVIDED ON THE NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS OR PROXY CARD. IF YOU WISH TO VOTE BY MAIL, PLEASE FOLLOW THE INSTRUCTIONS PROVIDED ON THE NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS REGARDING HOW TO REQUEST A PROXY CARD.
WE ENCOURAGE YOU TO VOTE BY ONE OF THESE METHODS, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting
to be Held on January 7, 2011
The proxy statement and annual report are available at
http://bnymellon.mobular.net/bnymellon/ayi.www.edocumentview.com/AYI
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Item 3—Advisory Vote to Approve Named Executive Officer Compensation | 59 | |||
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ACUITY BRANDS, INC.
1170 Peachtree Street, NE
Suite 2300
Atlanta, Georgia 30309
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.
Annual Meeting Information
January 7, 2014, at 11:00 a.m. Eastern Time
Four Seasons Hotel—Ballroom, 75 Fourteenth Street, NE, Atlanta, Georgia
The record date is November 12, 2013
Items of Business
Proposal | Board Vote Recommendation | Page Reference (for more information) | ||||
1. Elect three directors named in this proxy statement for terms that expire at the annual meeting for the 2016 fiscal year | FOR ALL | 21 | ||||
2. Ratify the appointment of our independent registered public accounting firm for fiscal year 2014 | FOR | |||||
3. Hold an advisory vote to approve named executive officer compensation | FOR | |||||
Name | Age | Occupation | Experience/ Qualifications | Status as Independent | Board Committees | End of Term | ||||||||||
Gordon D. Harnett | 70 | Former Chairman, President and Chief Executive Officer, Brush Engineered Materials, Inc. (now known as Materion Corporation) | Leadership, Operational, | Independent | Compensation, Governance | FY 2016 | ||||||||||
Robert F. McCullough | 71 | Former Chief Financial Officer, AMVESCAP PLC (now known as Invesco Ltd.) | Leadership, Financial, | Independent | Audit (Chair), Governance, Executive | FY 2016 | ||||||||||
Dominic J. Pileggi | 62 | Former Chairman and Chief Executive Officer, Thomas & Betts Corporation | Leadership, Industry, Operational, International | Independent | Audit, Governance | FY 2016 |
Continuing Directors
The following table provides summary information about the six continuing directors whose terms expire at the annual meetings for fiscal years 2014 and 2015. For more information about the continuing directors, see page 23.
Name | Age | Occupation | Experience/ Qualifications | Status as Independent | Board Committees | End of Term | ||||||||||||
Peter C. Browning | 72 | Managing Director, Peter Browning Partners Board Advisory Services; Former Dean, McColl Graduate School of Business at Queens University of Charlotte | Leadership, Operational, Industry | Independent | Compensation, Governance (Chair), Executive | FY 2014 | ||||||||||||
George C. Guynn | 70 | Retired President and Chief Executive Officer, Federal Reserve Bank of Atlanta | Leadership, Financial, Accounting | Independent | Audit, Governance | FY 2015 | ||||||||||||
Vernon J. Nagel | 56 | Chairman, President and Chief Executive Officer, Acuity Brands, Inc. | Leadership, Operational, | — | Executive (Chair) | FY 2015 | ||||||||||||
Julia B. North | 66 | Former President and Chief Executive Officer, VSI Enterprises, Inc.; Former President of Consumer Services, BellSouth Corporation | Leadership, Operational, Labor | Independent | Compensation, Governance | FY 2015 | ||||||||||||
Ray M. Robinson | 65 | Non-Executive Chairman, Citizens Trust Bank, President Emeritus, East Lake Golf Club | Leadership, Operational | Independent | Compensation (Chair), Governance, Executive | FY 2014 | ||||||||||||
Norman H. Wesley | 63 | Former Chairman and Chief Executive Officer, Fortune Brands, Inc. | Leadership, Operational, International | Independent | Audit, Governance | FY 2014 |
Ratification of the Appointment of the Independent Registered Public Accounting Firm
The Board is asking you to ratify the selection of Ernst & Young LLP (“E&Y) as our independent registered public accounting firm for the fiscal year ending August 31, 2014. Set forth below is summary information with respect to the fees for services provided to us during the fiscal years ended August 31, 2013 and August 31, 2012. For more information see page 27.
2013 | 2012 | |||||||
Fees Billed: | ||||||||
Audit Fees | $ | 2,120,000 | $ | 2,125,000 | ||||
Audit-Related Fees | 13,000 | 104,000 | ||||||
Tax Fees | 375,000 | 177,000 | ||||||
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Total | $ | 2,508,000 | $ | 2,406,000 | ||||
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Advisory Vote to Approve Named Executive Officer Compensation
The Board is asking you to approve, on an advisory basis, the compensation of our named executive officers. The Board believes that our compensation policies and practices are effective in achieving our goals of paying for financial and operating performance and aligning the interests of our named executive officers with the interests of our stockholders. For more information see page 59.
Executive Compensation Elements
Our named executive officers are compensated in a manner consistent with our strategy, competitive practice, sound compensation governance principles and stockholder interests and concerns. The core of our executive compensation philosophy continues to be to “pay for performance” for upper-quartile performance.
Our compensation philosophy is consistent with and supportive of our long-term goals. We aspire to be the premier lighting solutions company capable of consistently delivering long-term upper-quartile financial performance. We define upper-quartile performance using specific metrics, including:
Annual growth in earnings per share of 15% or greater;
Operating profit margin in the mid-teens or higher;
Return on stockholders’ equity of 20% or better; and
Generation of cash flow from operations less capital expenditures in excess of net income.
Element of Compensation | Objective | |
Base Salary | • Provide a competitive level of secure cash compensation; and | |
• Reward individual performance, level of experience and responsibility. | ||
Performance-Based Annual Cash Incentive Award | • Provide variable cash compensation opportunity based on achievement of annual performance goals; and | |
• Reward individual performance and overall Company performance. | ||
Performance-Based Annual Equity Incentive Award | • Provide variable equity compensation opportunity based on achievement of annual performance goals; |
Element of Compensation | Objective | |
• Reward individual performance and overall Company performance; • Encourage and reward long-term appreciation of stockholder value; | ||
• Encourage long-term retention through three-year and four-year vesting periods for awards; and | ||
• Align interests of executives with those of stockholders. | ||
Post-Termination Compensation | • Encourage long-term retention through pension benefits; and | |
• Provide a measure of security against possible employment loss, through a change in control or severance agreement, in order to encourage the executive to act in the best interests of the Company and stockholders. |
2013 Key Compensation Decisions
In fiscal 2013, we continued to successfully execute our strategy to extend our leadership position in the North American lighting solutions market by providing our customers with differentiated value from our industry-leading portfolio of innovative products and solutions along with superior service. We believe our channel and product diversification, as well as our strategies to better serve customers with new, more innovative lighting solutions and the strength of our many sales forces, have allowed us to outperform the markets we serve. In fiscal 2013, we achieved the following:
Record net sales of $2.1 billion, an increase of 8.0% compared with fiscal 2012;
We continued our investments to both expand our industry-leading product and solutions portfolio and enhance our production, distribution, and customer service and support capabilities. In an effort to help fund these important investments, we completed streamlining activities to improve our efficiency that included the consolidation of our manufacturing footprint and the reduction in headcount through the realignment of responsibilities within various selling, distribution, and administrative departments;
• | Consolidated operating profit margin of 10.6%, down approximately 20 basis points from the year-ago period. Adjusted consolidated operating profit margin, which excludes the impact of $8.5 million of special charges for streamlining activities, $8.4 million of temporary manufacturing inefficiencies related to production moves, and $8.1 million of expense as a result of fraud perpetrated at a freight payment and audit service firm formerly retained by the Company, increased 10 basis points to 11.8% compared with the year-ago period1; |
• | Net income of $127.4 million, an increase of 9.5% compared with fiscal 2012. Adjusted net income, which excludes the special charges for streamlining activities, temporary manufacturing inefficiencies, and expenses associated with the fraud at the freight payment and audit service firm formerly retained by the Company, of $143.1 million increased 11.9% compared with fiscal 20121; |
• | Diluted earnings per share of $2.95 increased 8.5% compared with fiscal 2012. Adjusted diluted earnings per share, which excludes the special charges for streamlining activities, temporary manufacturing inefficiencies, and expenses associated with the fraud at the freight payment and audit service firm formerly retained by the Company, of $3.31 increased 10.3% compared with fiscal 20121; |
Net cash provided by operating activities of $132.3 million; and
We ended fiscal 2013 with a cash balance of over $359.1 million, while investing $40.6 million in capital expenditures and $25.5 million for acquisitions, and paying $22.4 million of dividends to stockholders.
1 | See page 22 of our Form 10-K for fiscal 2013 for a reconciliation of adjusted consolidated operating profit margin, adjusted net income, and adjusted diluted earnings per share. |
At August 31, 2013, the 1, 3, and 5-year annualized total returns on the Company’s common stock exceeded that of each of its respective benchmark indexes as noted in the following table:
Annualized Total Returns | ||||||||||||
1-Year | 3-Years | 5-Years | ||||||||||
Acuity Brands, Inc. | 34.3 | % | 31.4 | % | 15.8 | % | ||||||
Dow Jones U.S. Electrical Components & Equipment Index | 25.1 | % | 24.4 | % | 9.5 | % | ||||||
Dow Jones U.S. Building Materials & Fixtures Index | 27.2 | % | 28.7 | % | 9.9 | % | ||||||
Standard & Poor’s Midcap 400 Index | 23.7 | % | 19.7 | % | 9.4 | % |
Based on the comprehensive performance assessment, combined with a review of our financial results, the economic environment, and the competitive landscape, the Compensation Committee made the following key compensation decisions for our named executive officers:
Mr. Reece received a base salary increase in fiscal 2013 to $425,000 from $412,000 and Mr. Black received a base salary increase to $400,000 from $380,000. The increases were based on market data and in recognition of strong company performance in fiscal 2012.
Annual cash incentive awards to named executive officers were paid at approximately 50% of target based on the fiscal 2013 performance goals previously approved by the Compensation Committee, adjusted for individual performance factors.
Equity incentive awards (granted in October 2013 based upon fiscal 2013 performance) were approved at approximately 107% of target and were granted in the form of two-thirds in restricted stock and one-third in stock options, which the Compensation Committee believed offered a total equity incentive opportunity aligned with stockholder interests with the appropriate balance of risk, long-term company stock price performance, and retention.
The Acuity Brands, Inc. 2002 Supplemental Executive Retirement Plan (“2002 SERP”) was amended in October 2012 following a competitive assessment of executive retirement benefits which effectively increased participant benefits. Each of our named executive officers participates in the 2002 SERP. The amendments included (a) increasing the monthly benefit multiplier to 2.8% and (b) revising the determination period for average cash compensation to be the average for the three highest consecutive year period during the participant’s service with the Company.
For more information about compensation decisions, see the Compensation Discussion and Analysis on page 30.
2013 Compensation Summary
The following table summarizes the compensation of our chief executive officer, chief financial officer, and our other executive officer, to whom we refer collectively as the named executive officers, for fiscal 2013.
Name | Salary | Stock Awards(1) | Option Awards(1) | Non-Equity Incentive Plan Compen- sation | Change in Pension Value and Nonquali- fied Deferred Compen- sation Earnings | All Other Compen- sation | Total | |||||||||||||||||||||
Vernon J. Nagel | $ | 600,000 | $ | 2,000,029 | $ | 999,936 | $ | 1,000,000 | $ | 2,306,138 | $ | 52,900 | $ | 6,959,003 | ||||||||||||||
Richard K. Reece | 421,750 | 666,676 | 333,238 | 325,000 | 952,412 | 9,180 | 2,708,256 | |||||||||||||||||||||
Mark A. Black | 395,000 | 666,676 | 333,238 | 350,000 | 714,826 | 9,180 | 2,468,920 |
(1) | Represents the grant date fair value of the restricted stock and option awards that were granted on October 23, 2012 under our equity incentive plan for fiscal year 2012 performance. |
For more information about the compensation paid, see Executive Compensation on page 47.
2014 Annual Meeting of Stockholders
Stockholder proposals submitted for inclusion in the proxy statement for our annual meeting of stockholders expected to be held in January 2015 pursuant to Securities and Exchange Commission (“SEC”) Rule 14a-8 must be received by July 25, 2014. For more information see page 61.
The Board is furnishing this information in connection with the solicitation of proxies for the annual meeting of stockholders to be held on January 7, 2011.2014. We anticipate that a Notice of Internet Availability of Proxy Materials containing instructions on how to access our Proxy Statement and 20102013 Annual Report to Stockholders and how to vote over the Internet or how to request and return a proxy card by mail will first be mailed to our stockholders on or about November 22, 2010. We anticipate that, for2013. For stockholders who previously made a request to receive a paper copy of the proxy materials, we anticipate that a paper copy of the Proxy Statement, 20102013 Annual Report to Stockholders and proxy card and forwill first be mailed on or about November 22, 2013. For stockholders who previously made a request to receive email delivery of the proxy materials, we anticipate that a proxy materials email with instructions on how to access our Proxy Statement and 20102013 Annual Report to Stockholders and how to vote over the Internet will first be mailed or emailed on or about November 22, 2010.
All properly executed written proxies, and all properly completed proxies submitted by telephone or the Internet, that are delivered pursuant to this solicitation will be voted at the meeting in accordance with directions given in the proxy, unless the proxy is revoked prior to completion of voting at the meeting.
Only owners of record of shares of common stock of the Company at the close of business on November 10, 2010,12, 2013, the record date, are entitled to vote at the meeting, or at any adjournments or postponements of the meeting. Each owner of record on the record date is entitled to one vote for each share of common stock held. There were 43,056,16143,035,402 shares of common stock issued and outstanding on the record date.
What is a proxy? It is your legal designation of another person to vote the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. We have designated What is a proxy statement? It is a document that Securities and Exchange Commission (“SEC”) regulations require us to give you when we ask you to vote over the Internet, by telephone, or (if you received a proxy card by mail) by signing and returning a proxy card designating Vernon J. Nagel and Richard K. Reece Why did I receive a Notice of Internet Availability of Proxy Materials in the mail instead of a printed set of proxy materials? Pursuant to rules adopted by the SEC, we are permitted to furnish our proxy materials over the Internet to our stockholders by delivering a Notice of Internet Availability of Proxy Materials in the mail. Unless requested, you will not receive a printed copy of the proxy materials in the mail. Instead, the Notice of Internet Availability of Proxy Materials instructs you on how to access and review the Proxy Statement and threetwo of our officers as proxies for the 20102013 Annual Meeting of Stockholders. These officers are Vernon J. Nagel and Richard K. Reece and C. Dan Smith. and C. Dan Smith as proxies to vote on your behalf.20102013 Annual Report to Stockholders over the Internet athttp://bnymellon.mobular.net/bnymellon/ayi.www.edocumentview.com/AYI.The Notice of Internet Availability of Proxy Materials also instructs you on how you may submit your proxy over the Internet, or how you can request a full set of proxy materials, including a proxy card to return by mail. If you received a Notice of Internet Availability of Proxy Materials in the mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting these materials provided in the Notice of Internet Availability of Proxy Materials.1
If your shares are registered in your name with our transfer agent, The Bank of New York Mellon,Computershare, you are a stockholder of record. If your shares are held in the name of your broker or bank, your shares are held in street name.
What is the record date and what does it mean?
November 10, 201012, 2013 is the record date for the annual meeting to be held on January 7, 2011.2014. The record date is established by the Board as required by the Delaware General Corporation Law (“Delaware Law”). Owners of record of our common stock at the close of business on the record date are entitled to receive notice of the meeting and vote at the meeting and any adjournments or postponements of the meeting.
How do I vote as a stockholder of record?
As a stockholder of record, you may vote by one of the four methods described below:
By the Internet. You may give your voting instructions by the Internet as described in the Notice of Internet Availability of Proxy Materials, proxy materials email, or any proxy card you receive. This method is also available to stockholders who hold shares in the BuyDirectDirect Stock Purchase Plan, in the Employee Stock Purchase Plan, or in a 401(k) plan sponsored by us. The Internet voting procedure is designed to verify the voting authority of stockholders. You will be able to vote your shares by the Internet and confirm that your vote has been properly recorded. Please see the Notice of Internet Availability of Proxy Materials, proxy materials email, or any proxy card you receive for specific instructions.
By Telephone. You may give your voting instructions using the toll-free number listed on your proxy card (if you received a proxy card). This method is also available to stockholders who hold shares in the BuyDirectDirect Stock Purchase Plan, in the Employee Stock Purchase Plan, or in a 401(k) plan sponsored by us. The telephone voting procedure is designed to verify the voting authority of stockholders. The procedure allows you to vote your shares and to confirm that your vote has been properly recorded. Please see your proxy card (if you received a proxy card) for specific instructions.
By Mail. You may sign and date your proxy card (if you received a proxy card) and mail it in the prepaid and addressed envelope enclosed therewith.
In Person. You may vote in person at the annual meeting.
How do I vote as a street name stockholder?
If your shares are held through a bank or broker, you should receive information from the bank or broker about your specific voting options. If you have questions about voting your shares, you should contact your bank or broker.
If you wish to vote in person at the annual meeting, you will need to bring a legal proxy to the meeting. You must request a legal proxy through your bank or broker. Please note that if you request a legal proxy, any previously executed proxy will be revoked and your vote will not be counted unless you appear at the meeting and vote in person, or legally appoint another proxy to vote on your behalf.
What if I sign and return a proxy card, but do not provide voting instructions?
Proxies that are properly executed and delivered, and not revoked, will be voted as specified on the proxy card. If no direction is specified on the proxy card, the proxy will be voted as follows:
for the election of the nominees for director described in this proxy statement and statement;
for ratification of the appointment of our independent registered public accounting firm for fiscal year 2011.2014; and
for the approval, on an advisory basis, of named executive officer compensation;
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You may revoke your proxy and change your vote at any time before the polls close at the annual meeting. You may do this by:
voting again by the Internet or by telephone prior to 11:59 p.m. Eastern Time, on January 6, 2014;
giving written notice to our Corporate Secretary that you wish to revoke your proxy and change your vote; or
voting in person at the annual meeting.
What is a quorum?
The presence of the holders of a majority of the outstanding shares of common stock entitled to vote at the annual meeting, present in person or represented by proxy, is necessary to constitute a quorum. The election inspector appointed for the meeting will tabulate votes cast by proxy and in person at the meeting and determine the presence of a quorum.
Will my shares be voted if I do not vote by the Internet, vote by telephone, sign and return a proxy card, or attend the annual meeting and vote in person?
If you are a stockholder of record and you do not vote by the Internet, vote by telephone, sign and return a proxy card or attend the annual meeting and vote in person, your shares will not be voted and will not count in deciding the matters presented for stockholder consideration in this proxy statement.
If your shares are held in “street name” through a bank or broker and you do not provide voting instructions before the annual meeting, your bank or broker may vote your shares on your behalf under certain circumstances. Brokerage firms have the authority under certain rules to vote shares for which their customers do not provide voting instructions on “routine” matters.
The ratification of the appointment of theour independent registered public accounting firm is considered a “routine” matter under these rules. Therefore, brokerage firms are allowed to vote their customers’ shares on this matterthese matters if the customers do not provide voting instructions. If your brokerage firm votes your shares on this matterthese matters because you do not provide voting instructions, your shares will be counted for purposes of establishing a quorum to conduct business at the meeting and in determining the number of shares voted for or against theeach routine matter.
When a proposalmatter is not a routine matter and the brokerage firm has not received voting instructions from the beneficial owner of the shares with respect to that proposal,matter, the brokerage firm cannot vote the shares on that proposal.matter. This is called a “broker non-vote.” Only the ratification of the appointment of our independent registered public accounting firm is considered a “routine” matter. The election of directors isother matters are not considered a routine matter.
We encourage you to provide instructions to your brokerage firm by voting your proxy. This action ensures your shares will be voted at the meeting in accordance with your wishes.
How are abstentions and broker non-votes counted?
Broker non-votes will be considered as present for purposes of establishing a quorum but not entitled to vote with respect to a matter that is not “routine”.“routine.” Because none of the electionmatters contained in this proxy statement other than the ratification of directorsthe appointment of the independent registered public accounting firm is not considered a “routine”
“routine” matter for stockholder consideration, the brokers will not have discretionary authority to vote the shares with respect to such matters and if you do not instruct your bank or broker how to vote your shares, in the election of directors, no votes will be cast on your behalf in the election of directors.
The ratification of the appointment of our independent registered public accountants and the advisory vote on named executive officer compensation must each receive the affirmative vote of a majority of the votes that could be cast at the annual meeting by the holders who are present in person or by proxy to pass. IfAccordingly, if you abstain from voting on the proposalany of such proposals or your broker is unable to vote your shares, it will have the same effect as a vote against such proposal. Abstentions will have no effect on the proposal.
How are votes tabulated?
According to our By-Laws, each of the proposed items will be determined as follows:
Election of Directors: The election of directors will be determined by a plurality of votes cast.
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Advisory Vote to Approve Named Executive Officer Compensation: The advisory vote to approve named executive officer compensation will be determined by a majority of votes cast affirmatively or negatively.
How are proxies solicited and what is the cost?
We will bear all expenses incurred in connection with the solicitation of proxies. We will reimburse brokers, fiduciaries and custodians for their costs in forwarding proxy materials to beneficial owners of common stock. Our directors, officers and employees may solicit proxies by mail, telephone, and personal contact. They will not receive any additional compensation for these activities.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting
to be Held on January 7, 2011
The proxy statement and annual report are available at
http://bnymellon.mobular.net/bnymellon/ayi.www.edocumentview.com/AYI
GOVERNANCE, AND COMPANY DOCUMENTS The Board takes seriously its responsibility to represent the interests of stockholders and is committed to good corporate governance. To that end, the Board has adopted a number of policies and processes to ensure effective governance of the Board and the Company. How do I contact the Board of Directors? Pursuant to a policy adopted by the Board, stockholders and other interested parties may communicate directly with the Board as a group or Where can I see the Company’s corporate documents and SEC filings? The following governance documents are available on our website atwww.acuitybrands.comunder “Corporate Governance.” Certificate of Incorporation By-Laws Corporate Governance Guidelines Statement of Responsibilities of Committees of the Board (Charters of the Committees) Statement of Rules and Procedures of Committees of the Board Code of Ethics and Business Conduct Foreign Corrupt Practices Compliance Policy Policy Regarding Interested Party Communications with Directors Policy on Stockholder Recommendations for Board of Director Candidates Copies of any of these documents will be furnished to any interested party if requested in writing to Corporate Secretary, Acuity Brands, Inc., 1170 Peachtree Street, NE, Suite Our proxy materials and annual report are available on our website under “Annual Report/Proxy.” How are directors nominated? The Governance Committee, comprised of all of the independent directors, is responsible for recommending to the Board a slate of director nominees for the Board to consider recommending to the stockholders, and for recommending to the Board nominees for appointment to fill a new Board seat or any Board vacancy. To fulfill these responsibilities, the Committee annually assesses the requirements of the Board and makes recommendations to the Board regarding its size, composition, and structure. In determining whether to nominate an incumbent director for reelection, the Governance Committee evaluates each incumbent director’s continued service in light of the current assessment of the Board’s requirements, taking into account factors such as evaluations of the incumbent’sStockholderstheour non-management directors as a group by writing to the Chairman of the Governance Committee and with members of the Audit Committee as a group by writing to the Chairman of the Audit Committee, each in the care of the Corporate Secretary Acuity Brands, Inc.,at our principal executive offices. Our principal executive offices are located at 1170 Peachtree Street, NE, Suite 2400,2300, Atlanta, Georgia 30309. All communications will be forwarded promptly.• Certificate of Incorporation• By-Laws• Corporate Governance Guidelines• Statements of Responsibilities of Committees of the Board (Charters of the Committees)• Statement of Rules and Procedures of Committees of the Board• Code of Ethics and Business Conduct2400,2300, Atlanta, Georgia 30309.Filings” and “Section 16 Filings.”4
When the need to fill a new Board seat or vacancy arises, the Governance Committee proceeds by whatever means it deems appropriate to identify a qualified candidate or candidates, and candidates may be identified through the engagement of an outside search firm, recommendations from independent directors or management,
and shareholder recommendations. As expressed in our Corporate Governance Guidelines, we do not set specific criteria for directors, but the Committee reviews the qualifications of each candidate, including, but not limited to, the candidate’s experience, judgment, diversity, and skills in such areas as manufacturing and distribution technologies and accounting or financial management. Our Corporate Governance Guidelines provide that the Committee should consider diversity when reviewing the appropriate experience, skills, and characteristics required of directors. In evaluating director candidates, the Governance Committee considers the diversity of the experience, skills and characteristics that each candidate brings to the Board and whether the candidate’s background, qualifications and characteristics will complement the overall membership of the Board. The Governance Committee and the Board seeks to have a Board that is diverse in terms of experience across a range of industries and skill sets. In addition, the Board believes that directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively and should be committed to serve on the Board for an extended period of time. Therefore, our Corporate Governance Guidelines prohibit a director from serving on more than six public company boards (including our Board) at one time.
Final candidates are generally interviewed by one or more Committee members. The Committee makes a recommendation to the Board based on its review, the results of interviews with the candidates, and all other available information. The Board makes the final decision on whether to invite a candidate to join the Board. The Board-approved invitation is extended through the Chairman of the Governance Committee and the Chairman of the Board, President, and Chief Executive Officer.
Recommendations for Candidates for Director by Stockholders. ThePursuant to a policy adopted by the Board, the Governance Committee will consider recommendations for candidates for director from stockholders made in writing via certified mail and addressed to the attention of the Chairman of the Governance Committee,c/o Corporate Secretary, Acuity Brands, Inc., 1170 Peachtree Street, NE, Suite 2400,2300, Atlanta, Georgia, 30309. The Governance Committee will consider such recommendations on the same basis as those from other sources. Stockholders making recommendations for candidates for director should provide the same information required for director nominations by stockholders at an annual meeting, and such recommendations must be received by the Company in accordance with the advance notice provision of our by-laws, each as explained below under “Next Annual Meeting—Stockholder Proposals.” On August 25, 2010, the SEC adopted new rules relating to the ability of certain stockholders to nominate directors for election, often referred to as proxy access. These rules are not applicable to our 2010 annual meeting but may provide stockholders with additional procedures for nominating directors commencing with the 2011 annual meeting.
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The Board has delegated certain functions to the Executive Committee, the Audit Committee, the Compensation Committee, and the Governance Committee. Our Statement of Responsibilities of the Committees of the Board contains each Committee’s charter. For information about where to find the charters, see “Questions and Answers about Communications, Governance, and Company Documents.” The table below sets forth the current membership of each of the committees:
Director | Executive | Audit | Compensation | Governance | ||||
Vernon J. Nagel | Chairman | — | — | — | ||||
Peter C. Browning | X | — | X | Chairman | ||||
George C. Guynn | — | X | — | X | ||||
Gordon D. Harnett | — | — | X | X | ||||
Robert F. McCullough | X | Chairman | — | X | ||||
Julia B. North | — | — | X | X | ||||
Dominic J. Pileggi | — | X | — | X | ||||
Ray M. Robinson | X | — | Chairman | X | ||||
Norman H. Wesley | X | — |
During the fiscal year ended August 31, 2010,2013, the Board met four times. DirectorsAll of our directors attended 100% of the total meetings held by the Board and any committee on which the director served during the fiscal year. We typically expect that each continuing director will attend the annual meeting of stockholders, absent a valid reason. All of the directors serving at the time of last year’s annual meeting attended the meeting.
Board meeting,Leadership Structure
Mr. Nagel currently holds the positions of Chairman of the Board meets without management present. Non-management director sessions are led byand Chief Executive Officer, and Mr. Browning serves as our independent Lead Director. Our Corporate Governance Guidelines provide that whenever the Chairman of the Board is a member of management, there will be a Lead Director. The Lead Director is an independent director appointed each year by the independent members of the Board after the annual meeting of stockholders.
The Lead Director’s responsibilities are set forth in our Corporate Governance Committee.Guidelines. These responsibilities include:
Providing oversight to ensure the Board works in an independent, cohesive fashion;
Ensuring Board leadership in the absence or incapacitation of the Chairman of the Board;
Chairing Board meetings when the Chairman of the Board is not in attendance;
Coordinating with the Chairman of the Board to ensure the conduct of the Board meeting provides adequate time for serious discussion of appropriate issues and that appropriate information is made available to Board members on a timely basis; and
Developing the agenda for and chairing executive sessions and acting as liaison between the independent directors and the Chairman of the Board on matters raised in such sessions.
In addition, the Lead Director is entitled to request material and receive notice of and attend all meetings of Board committees. The Board believes that having an independent Lead Director whose responsibilities closely parallel those of an independent chairman ensures that the appropriate level of independent oversight is applied to all Board decisions.
Our Corporate Governance Guidelines provide that our Board will include a majority of independent directors. As described below under “Item 1—Election of Director,” 8 of our 9 directors are independent. In addition, all of the directors on each of the Audit, Compensation,and Governance Committees are independent directors. Each of these committees is led by a committee chair that sets the agenda for the committee and reports to the full Board on the committee’s work.
Our Corporate Governance Guidelines further provide that all non-management directors meet in executive session outside the presence of the Chief Executive Officer and other Company personnel during a portion of each of the Board’s in-person meetings. As noted above, the Lead Director chairs these executive sessions and develops the agenda for each executive session.
Our company has employed this leadership structure of a combined Chairman and Chief Executive Officer for many years, and we believe that this leadership structure has been effective for us. We believe that having a combined Chairman and Chief Executive Officer, an independent Lead Director, a Board comprised of approximately 90% independent directors who meet regularly in executive session, and independent chairs for the Board’s Audit, Compensation, and Governance Committees provides the best form of leadership for us and our stockholders. The Board believes that our leadership structure promotes unified leadership and direction for the Company, allowing for focus and insight on important strategic initiatives, and clear focus for management to execute our strategy and business plans.
The Board’s Role in Risk Oversight
Pursuant to our Corporate Governance Guidelines, it is the Board’s role to provide oversight of the Company’s risk management processes.
The Audit Committee is specifically charged with the responsibility of meeting periodically with management to discuss policies with respect to financial risk assessment and risk management, including the steps management has taken to monitor and control such risks. The other committees of the Board consider the risks within their areas of responsibility. For example, the Compensation Committee considers risk in designing the compensation program, with the goal of appropriately balancing annual incentives and long-term performance. A discussion of the compensation risk analysis conducted by the Compensation Committee is included in the “Compensation Discussion and Analysis” later in this Proxy Statement.
In addition to the committees’ work in overseeing risk management, our full Board regularly engages in discussions of the most significant risks that the Company is facing. At least annually, management prepares for the full Board an enterprise risk management report identifying and evaluating these key risks, and how these risks are being managed. The Board receives updates from management as to material changes to the risk profile or newly identified risks during the year. The Board also receives reports on risk management from the committee chairs.
We believe that our leadership structure, as described above, supports the risk oversight function of the Board. With his in-depth knowledge and understanding of our operations, our Chairman and Chief Executive Officer, Mr. Nagel, is well-positioned to bring key strategic and business issues and risks to the Board’s attention. We have an independent Lead Director and strong independent directors that chair the various committees involved with risk oversight and we encourage open communication between management and directors with respect to risk oversight.
The Executive Committeeis authorized to perform all of the powers of the full Board, except the power to amend the By-Laws and except as restricted by Delaware Law. The Executive Committee is called upon in very limited circumstances due to reliance on the other standing committees of the Board and the direct involvement of the entire Board in governance matters. The Committee did not meet during the 20102013 fiscal year.
The Audit Committeeis responsible for matters pertaining to our auditing, internal control, and financial reporting, as set forth in the Committee’s report (see “Report of the Audit Committee”) and in its charter. Each
member of the Committee is independent under the requirements of the SEC and the Sarbanes-Oxley Act of 2002. In addition, each member of the Committee meets the current independence and financial literacy requirements of the listing standards of the New York Stock Exchange.Exchange (the “NYSE”). Each quarter, the Audit Committee meets separately with the independent registered public accounting firm, the internal auditor, and with the chief financial officer and the general counsel of our lighting business without other management present. The Board has determined that Messrs. Clendenin, Guynn, McCullough, Pileggi, and McCulloughWesley satisfy the “audit committee financial expert” criteria adopted by the SEC and that each of them has accounting and related financial management expertise required by the listing standards of the New York Stock Exchange.NYSE. The Committee held sixfive meetings during the 20102013 fiscal year.
The Compensation Committeeis responsible for certain matters relating to the evaluation and compensation of the executive officers and non-employee directors, as set forth in its charter. At most regularly scheduled meetings, the Compensation Committee meets privately with an independent compensation consultant without management present. Annually, the Compensation Committee evaluates the performance of the independent consultant in relation to the Committee’s functions and responsibilities. Each member of the Committee is independent under the listing standards of the New York Stock ExchangeNYSE and is an outside director under Section 162(m) of the Internal Revenue Code (the “Code”) and a non-employee under Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, the Board has determined that the members of the Committee meet the additional independence requirements applicable to compensation committees under NYSE listing standards. The Committee held five meetings during the 20102013 fiscal year.
The Governance Committeeis responsible for reviewing matters pertaining to the composition, organization, and practices of the Board. The Committee’s responsibilities, as set forth in its charter, include recommending
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The directors serving on the Compensation Committee of the Board during the fiscal year ended August 31, 20102013 were Ray M. Robinson, Chairman, Peter C. Browning, Gordon D. Harnett, and Julia B. North. None of these individuals are or ever have been our officers or employees.employees of the Company. During the 20102013 fiscal year, none of our executive officers served as a director of any corporation for which any of these individuals served as an executive officer, and there were no other Compensation Committee interlocks with the companies with which these individuals or our other directors are affiliated.
Non-Employee Directors We provide each non-employee director with an annual director fee, which includes meeting fees for a specified number of Board and committee meetings. The program is designed to achieve the following goals: compensation should fairly pay directors for work required for a company of our size and scope; compensation should align directors’ interests with the long-term interests of stockholders; and the structure Directors who are employees receive no additional compensation for services as a director or as a member of a committee of our Board. Director Compensation Program for Fiscal 2013 The Approximately 45% of the annual director fee, or $80,000, is payable in cash. The cash portion of the annual director fee and any chairman or meeting fees may be deferred into the Deferred Compensation Plan described below. Approximately 55% of the annual director fee, or $100,000, is required to be deferred into deferred stock units in the Deferred Compensation Plan until the director exceeds the stock ownership requirement of five times the annual cash retainer fee (5 x $80,000, or $400,000). Once the stock ownership guideline has been met, non-employee directors may annually elect to receive this portion of the annual director fee in vested stock grants. Stock grants are issued pursuant to the Deferred Compensation Plan. In addition, when Mr. Pileggi joined the board during fiscal year 2013, he received a stock grant with a value of $20,000 that vests pro rata over three years from the date of grant. Deferred Compensation Plan We maintain the Acuity Brands, Inc. 2011 Nonemployee Director Deferred Compensation Plan (the “Deferred Compensation Plan”), which was approved by stockholders in January 2012. Director fees deferred Stock Ownership Requirement In fiscal year 2013, each non-employee director • compensation should fairly pay directors for work required for a company of our size and scope;• compensation should align directors’ interests with the long-term interests of stockholders; and• of the compensation should be simple, transparent, and easy for stockholders to understand.Annual Director FeesIn fiscal 2010, each non-employee director received an annual director fee in the amount of $130,000, which included the meeting fees for the first five Board meetings and the first five meetings attended for each committee, and an additional fee of $5,000 for serving as chairman of a committee. Non-employee directors received $2,000 for each Board meeting attended in excess of five Board meetings per year and $1,500 for each committee meeting attended in excess of five committee meetings of each committee per year. Fifty percent of the annual director fee, or $65,000, is requiredcompensation should be simple, transparent, and easy for stockholders to be deferred under the terms of the deferred compensation plan described below, and the remaining fees can be deferred at the election of the director.understand. Board has not approved any changes to non-employee director compensation program for fiscal 2011.Deferred Compensation PlanNon-employee directors are required to defer one-half of theiryear 2013 provides for an annual director fee in the amount of $180,000, which includes meeting fees for the first six Board meetings and can elect to defer the remainingfirst six meetings attended for each committee, and an additional fee of $10,000 for serving as chairman of a committee. Non-employee directors receive $2,000 for each Board meeting attended in excess of six Board meetings per year and $1,500 for each committee meeting attended in excess of six committee meetings of each committee per year.compensation plan forby non-employee directors. The deferred amounts can bedirectors are invested in deferred stock units to be paid in shares atfollowing retirement from the Board or credited to an interest-bearing account to be paid in cash atfollowing retirement from the Board. Dividend equivalents on deferred stock units are credited to the interest-bearing account.Eachhas beenwas subject to a stock ownership requirement that requiresrequired the director to attain ownership in Acuity Brandsour common stock valued at two$400,000, equal to five times the expected annual director fee.cash retainer fee of $80,000, within four years of joining our Board. For purposes7
Director Compensation Table for Fiscal 20102013
The following table sets forth information concerning the fiscal 2010year 2013 compensation of our non-employee directors:
Fees Earned | Stock | |||||||||||
or Paid in Cash | Awards | Total | ||||||||||
Name | ($)(1) | ($)(2)(3) | ($)(4) | |||||||||
Peter C. Browning | $ | 132,000 | $ | –0– | $ | 132,000 | ||||||
John L. Clendenin | 132,000 | –0– | 132,000 | |||||||||
George C. Guynn | 133,500 | –0– | 133,500 | |||||||||
Gordon D. Harnett | 132,000 | –0– | 132,000 | |||||||||
Robert F. McCullough | 140,000 | –0– | 140,000 | |||||||||
Julia B. North | 132,000 | –0– | 132,000 | |||||||||
Ray M. Robinson | 138,500 | –0– | 138,500 | |||||||||
Neil Williams | 140,000 | –0– | 140,000 |
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Total ($)(3) | |||||||||
Peter C. Browning | $ | 190,000 | $ | –0– | $ | 190,000 | ||||||
George C. Guynn | 180,000 | –0– | 180,000 | |||||||||
Gordon D. Harnett | 180,000 | –0– | 180,000 | |||||||||
Robert F. McCullough | 190,000 | –0– | 190,000 | |||||||||
Julia B. North | 180,000 | –0– | 180,000 | |||||||||
Dominic J. Pileggi | 180,000 | 20,000 | 200,000 | |||||||||
Ray M. Robinson | 190,000 | –0– | 190,000 | |||||||||
Norman H. Wesley | 180,000 | –0– | 180,000 |
(1) | The |
Paid as Compensation Deferred | ||||||||||
to Stock Units | ||||||||||
Name | $ | # | Paid in Cash | |||||||
Peter C. Browning | $ | 65,000 | 1,671 | $67,000 | ||||||
John L. Clendenin | 132,000 | 3,403 | –0– | |||||||
George C. Guynn | 65,000 | 1,671 | 68,500 | |||||||
Gordon D. Harnett | 132,000 | 3,403 | –0– | |||||||
Robert F. McCullough | 65,000 | 1,671 | 75,000 | |||||||
Julia B. North | 67,000 | 1,732 | 65,000 | |||||||
Ray M. Robinson | 65,000 | 1,671 | 73,500 | |||||||
Neil Williams | 65,000 | 1,671 | 75,000 |
Paid as Vested Stock Grants | Paid as Deferred Stock Units | |||||||||||||||||||
Name | $ | # | $ | # | Paid in Cash | |||||||||||||||
Peter C. Browning | $ | –0– | –0– | $ | 100,000 | 1,382 | $ | 90,000 | ||||||||||||
George C. Guynn | 75,000 | 991 | 25,000 | 392 | 80,000 | |||||||||||||||
Gordon D. Harnett | –0– | –0– | 100,000 | 1,382 | 80,000 | |||||||||||||||
Robert F. McCullough | –0– | –0– | 100,000 | 1,382 | 90,000 | |||||||||||||||
Julia B. North | 75,000 | 991 | 25,000 | 392 | 80,000 | |||||||||||||||
Dominic J. Pileggi | –0– | –0– | 100,000 | 1,382 | 80,000 | |||||||||||||||
Ray M. Robinson | 75,000 | 991 | 25,000 | 392 | 90,000 | |||||||||||||||
Norman H. Wesley | –0– | –0– | 100,000 | 1,382 | 80,000 |
(2) | On September 28, 2012, the date he joined our Board, Mr. Pileggi received a grant of 316 shares of restricted stock that vests pro rata over three years. The number of shares was determined by dividing the intended value of $20,000 by the closing price of our stock on the date of grant of $63.29, and rounding down to the nearest whole share. |
The aggregate number of outstanding stock awards at August 31, 2013 was 927 for each of Messrs. Browning, Guynn, Harnett, McCullough, and Robinson and Ms. North, 316 for Mr. Pileggi and 1,038 for Mr. Wesley. The aggregate number of outstanding option awards at August 31, 2013 was 3,630 for each of Messrs. Browning and McCullough and Ms. North, and 1,815 for Mr. Robinson.
Prior to January 2007, we granted the non-employee directors stock options for the purchase of 1,500 shares of common stock on the day of the annual meeting. The options vested after one year, are exercisable for ten years, and expire at the earlier of ten years from the date of grant or three years following retirement from the Board.
The only perquisite received by directors is a |
8
The following table sets forth information concerning beneficial ownership of our common stock as of November 10, 2010,12, 2013, unless otherwise indicated, by each of the directors and nominees for director, by each of the named executive officers, by all directors and executive officers as a group, and by beneficial owners of more than five percent of our common stock.
Shares of Common | Percent | Share Units Held | ||||||||||
Stock Beneficially | of Shares | in Company | ||||||||||
Name | Owned(1)(2)(3) | Outstanding(4) | Plans(5) | |||||||||
Mark A. Black | 74,696 | * | –0– | |||||||||
Peter C. Browning | 6,445 | * | 18,063 | |||||||||
John L. Clendenin | 29,247 | * | 49,194 | |||||||||
George C. Guynn | 457 | * | 4,928 | |||||||||
Gordon D. Harnett | 1,590 | * | 7,543 | |||||||||
Robert F. McCullough | 6,445 | * | 15,257 | |||||||||
Vernon J. Nagel | 936,357 | 2.1 | % | –0– | ||||||||
Julia B. North | 6,445 | * | 22,597 | |||||||||
Jeremy M. Quick | 72,126 | * | –0– | |||||||||
Richard K. Reece | 217,077 | * | –0– | |||||||||
Ray M. Robinson | 6,445 | * | 27,774 | |||||||||
C. Dan Smith | 20,106 | * | –0– | |||||||||
Neil Williams | 20,361 | * | 23,550 | |||||||||
All directors and executive officers as a group (13 persons) | 1,397,797 | 3.2 | % | 168,906 | ||||||||
Artisan Partners Holdings LP (6) | 5,452,799 | 12.7 | % | N/A | ||||||||
FMR LLC (7) | 5,001,694 | 11.6 | % | N/A | ||||||||
M&G Investment Management Ltd. (8) | 3,287,363 | 7.6 | % | N/A | ||||||||
BlackRock, Inc. (9) | 3,169,194 | 7.4 | % | N/A | ||||||||
T. Rowe Price Associates, Inc. (10) | 2,732,350 | 6.3 | % | N/A |
Name | Shares of Common Stock Beneficially Owned(1)(2)(3) | Percent of Shares Outstanding(4) | Share Units Held in Company Plans(5) | |||||||||
Mark A. Black | 22,276 | * | –0– | |||||||||
Peter C. Browning | 4,206 | * | 21,780 | |||||||||
George C. Guynn | 3,083 | * | 7,411 | |||||||||
Gordon D. Harnett | 2,981 | * | 11,260 | |||||||||
Robert F. McCullough | 4,206 | * | 18,974 | |||||||||
Vernon J. Nagel | 693,882 | 1.6 | % | –0– | ||||||||
Julia B. North | 6,256 | * | 25,116 | |||||||||
Dominic J. Pileggi | 316 | * | 1,626 | |||||||||
Richard K. Reece | 236,523 | * | –0– | |||||||||
Ray M. Robinson (6) | 3,626 | * | 30,257 | |||||||||
Norman H. Wesley | 8,225 | * | 3,717 | |||||||||
All directors and executive officers as a group (11 persons) | 985,580 | 2.3 | % | 120,141 | ||||||||
T. Rowe Price Associates, Inc. (7) | 6,284,547 | 14.6 | % | N/A | ||||||||
BlackRock, Inc. (8) | 3,071,423 | 7.1 | % | N/A | ||||||||
The Vanguard Group (9) | 2,302,123 | 5.3 | % | N/A | ||||||||
Columbia Wanger Asset Management, LLC (10) | 2,271,850 | 5.3 | % | N/A |
* | ||
Represents less than one percent of our common stock. |
(1) | Subject to applicable community property laws and, except as otherwise indicated, each beneficial owner has sole voting and investment power with respect to all shares shown. |
(2) | Includes shares that may be acquired within 60 days of November |
(3) | Includes time-vesting restricted shares granted under our Amended and Restated Acuity Brands, Inc. 2007 Long-Term Incentive Plan, portions of which vest in January |
(4) | Based on aggregate of |
(5) | Includes share units held by non-employee directors in the 2006 and 2011 Nonemployee Directors’ Deferred Compensation |
9
(6) | Mr. Robinson holds 1,000 of his shares subject to pledge. |
(7) | This information is based on a Schedule 13G/A filed with the SEC by |
(8) | ||
This information is based on a Schedule 13G/A filed with the SEC by BlackRock, Inc., 40 East |
This information is based on a Schedule 13G/A |
(10) | This information is based on a Schedule 13G filed with the SEC by Columbia Wanger Asset Management, LLC, 227 West Monroe Street, Suite 3000, Chicago, Illinois 60606 on February 14, 2013 containing information as of December 31, 2012. |
Directors, officers, and persons who beneficially own more than 10% of our common stock are required by Section 16(a) of the Exchange Act to file reports of ownership and changes in ownership of our common stock with the SEC, the New York Stock Exchange,NYSE, and us. All filings were timely induring fiscal 2010.
There is no family relationship between any of our executive officers or directors, and there are no arrangements or understandings between any of our executive officers or directors and any other person pursuant to which any of them was elected an officer or director, other than arrangements or understandings with our directors or officers acting solely in their capacities as such. Generally, our executive officers are elected annually and serve at the pleasure of our Board. We have transactions in the ordinary course of business with unaffiliated corporations and institutions, or their subsidiaries, for which certain of our non-employee directors serve as directors. None of our directors serve as executive officers of those companies. Identifying possible related party transactions involves the following procedures in addition to the completion and review of the customary directors and officers questionnaires. We annually request each director to verify and update the following information:
a list of entities where the director is an employee, director, or executive officer; |
each entity where an immediate family member of a director is an executive officer; |
each entity in which the director or an immediate family member is a partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest; and |
each charitable or non-profit organization where the director or an immediate family member is an employee, executive officer, director, or trustee. |
We compile a list of all such persons and entities and it has beenentities. The list is reviewed and updated we distribute itand then distributed within the Company to identify potential transactions through comparison to ongoing transactions along with payment and receipt information. Transactions are compiled for each person and entity and reviewed for relevancy. Relevant information, if any, is presented to the Board to obtain approval or ratification of the transactions.
In addition, under our Code of Ethics and Business Conduct, all transactions involving a conflict of interest, including related party transactions, are generally prohibited. The Code of Ethics requires directors and employees to disclose in writing any beneficial interest they may have in any firm seeking to do business with us or any relationship with any person who might benefit from such a transaction. In certain limited circumstances, our AuditGovernance Committee may grant a written waiver for certain activities, relationships, or situations that would otherwise violate
10
Pursuant to our Corporate Governance Guidelines and Statement of Responsibilities of Committees of the Board, the Governance Committee annually reviews the qualifications of directors, including any other public company boards on which each director serves. Directors must advise the Chairman of the Board prior to accepting membership on any other public company board.
Management also follows additional procedures to identify related party transactions. These procedures are not evidenced in writing, but are carried out annually at the direction of the Governance Committee in connection with evaluating directors and director nominees.
With respect to those companies having common non-employee directors with us, management believes the directors had no direct or indirect material interest in transactions in which we engaged with those companies during the fiscal year.
11
The Board is responsible for supervising the management of the Company. The Board has determined that all of its current members, except Vernon J. Nagel, the Chairman, President, and Chief Executive Officer, have no material relationship with the Company, and are therefore independent, based on the listing standards of the The members of the Board are divided into three classes serving staggered three-year terms. Directors for each class are elected at the annual meeting of stockholders for the year in which the term for their class expires. OurBy-Laws provide that the number of directors constituting the Board shall be determined from time to time by the Board. Currently, the number of directors constituting the Board is fixed at nine. The terms for three of our directors, Gordon D. Harnett, Robert F. McCullough, and In addition, The persons named in the accompanying proxy, or their substitutes, will vote for the election of the nominees listed hereafter, except to the extent authority to vote for any or all of the nominees is withheld. No proposed nominee is being elected pursuant to any arrangement or understanding between the nominee and any other person or persons. All nominees have consented to stand for election at this meeting. If any of the nominees become unable or unwilling to serve, the persons named as proxies in the accompanying proxy, or their substitutes, shall have full discretion and authority to vote or refrain from voting for any substitute nominees in accordance with their judgment. The three director nominees listed below are currently directors of the Company. New York Stock Exchange,NYSE, the categorical standards set forth in our Governance Guidelines (available on our website atwww.acuitybrands.comunder “Corporate Governance”), and a finding of no other material relationships.Neil Williams,Dominic J. Pileggi, expire at this annual meeting. Messrs. Harnett, McCullough, and WilliamsPileggi have been nominated for re-election at the annual meeting. If elected, Messrs. Harnett, McCullough, and Williamsthey will hold office for three-year terms expiring at the annual meeting for fiscal year 20132016 or until their successors are elected and qualified.although John L. Clendenin’s term does not expire until the annual meeting for fiscal year 2011, Mr. Clendenin has decided to retire from the Board as of this annual meeting. To fill the vacancy created by Mr. Clendenin’s retirement, the Board has nominated Norman H. Wesley for election as a director for the class of directors whose term expires as the annual meeting for fiscal year 2011. He was identified as a candidate by a third party search firm and was nominated and vetted in accordance with our Corporate Governance Guidelines. Mr. Wesley will stand for election at the upcoming annual meeting. If elected, he will hold office until the annual meeting for fiscal year 2011 or until his successor is elected and qualified.Our Corporate Governance Guidelines provide that directors will not be nominated for election after their 72nd birthday and are expected to offer to resign as of the annual meeting following their 72nd birthday. The term of Mr. Williams,Browning, who is 7472 years old, expires at thisthe annual meeting for 2014. Pursuant to the Guidelines, and in advance of the annual meeting, Mr. Browning offered his resignation for consideration by the Board at its October 2013 meeting. After due consideration, the Board determined that it was in the best interests of the Company and its stockholders to waive this provision of the Corporate Governance Guidelinesallow Mr. Browning to allow the Boardcontinue to nominate Mr. Williams as a director for election afterserve beyond his 72nd birthday. The Board determined, in its discretion, that the Company and the Board should continue to benefit from Mr. Williams’ leadership. The waiver was adopted in October 2010.Three of theOne of the director nominees, Mr. Wesley, is not a current director of the Company. FollowingThe following is a brief summary of each director nominee’s business experience and qualifications, other public company directorships held currently or in the last five years, and membership on the standing committees of the Board of the Company, if applicable.12Company.
GORDON D. HARNETT
70 years old |
Director since January 2009 |
Chairman, President and Chief Executive Officer of Brush Engineered Materials Inc. (now known as Materion Corporation) from 1991 until May 2006 |
Senior Vice President of The B.F. Goodrich Company (“Goodrich”) from 1988 to 1991; President and Chief Executive Officer of Tremco Inc., a wholly owned subsidiary of Goodrich, from 1982 to 1988; series of senior executive positions with Goodrich from 1977 to 1982 |
Director: EnPro Industries, Inc. |
Previous Directorships: Brush Engineered Materials, Inc. and The Lubrizol Corporation |
Member of the Compensation and Governance Committees of the Board |
Mr. Harnett’s knowledge of the manufacturing industry, leadership experience from serving as Chairman and Chief Executive Officer of a multinational corporation and broad understanding of international operations gained through senior leadership positions, qualify him to serve as a director of our Board |
If elected, three-year term expires at the Annual Meeting for Fiscal Year |
ROBERT F. McCULLOUGH
71 years old |
Director since March 2003 |
Former Chief Financial Officer of AMVESCAP PLC (now known as Invesco Ltd. |
Joined the New York audit staff of Arthur Andersen LLP in 1964, served as Partner from 1972 until 1996, and served as Managing Partner in Atlanta from 1987 until April 1996 |
Certified Public Accountant |
Member of the American Institute |
Director: Primerica, Inc. and Schweitzer-Mauduit International, Inc. |
Previous Directorships: Comverge, Inc. and Mirant Corporation |
Chairman of the Audit Committee and a member of the Executive and Governance Committees of the Board |
Mr. McCullough’s expertise in accounting, financial controls and financial reporting, experience consulting on areas related to strategic planning and service on other public company boards, including having served as the chairman of several audit committees, qualify him to serve as a director of our Board |
If elected, three-year term expires at the Annual Meeting for Fiscal Year |
NEIL WILLIAMSDOMINIC J. PILEGGI
62 years old |
Director since |
Chairman of |
¡ | Chief Executive Officer of Thomas & Betts from |
Held senior executive positions at Casco Plastic, Inc., Jordan Telecommunications and |
Former Chairman of the |
¡ | Director: Viasystems Group |
¡ | Previous Directorships: Exide Corporation and Lubrizol Corporation |
¡ | Member of the Audit and Governance Committees of the Board |
13
Mr. |
If elected, |
The Board of Directors recommends that you vote FOR the fourthree director nominees.
The directors listed below will continue in office for the remainder of their terms in accordance with our By-Laws. PETER C. BROWNING20112014 or 20122015 Annual Meetings
72 years old |
Director since December 2001 |
Managing Director of Peter Browning Partners Board Advisory Services since 2010 |
¡ | Lead Director of Nucor Corporation | ||
to 2013 and Non-executive Chairman of Nucor Corporation from September 2000 to 2006 |
Dean of the McColl Graduate School of Business at Queens University of Charlotte, North Carolina, from March 2002 to May 2005 |
Executive of Sonoco Products Company from 1993 to 2000. Last served as President and Chief Executive Officer from 1998 to July 2000 |
Chairman and CEO of National Gypsum from 1990 to 1993 |
Director: EnPro Industries, Inc., Lowe’s Companies, Inc., and Nucor Corporation |
Previous Directorships: Wachovia Corporation and The Phoenix Companies, Inc. |
Lead Director, Chairman of the Governance Committee, and a member of the Compensation and |
Mr. Browning’s operational and strategic expertise from his experience as the Chief Executive Officer of two public companies servicing individual and consumer businesses, significant corporate governance knowledge from extensive service on other public company boards, and familiarity with issues facing the manufacturing industry gained from senior leadership positions and board service qualify him to serve as a director of our Board |
Term expires at the Annual Meeting for Fiscal Year |
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70 years old |
Director since March 2008 |
President and Chief Executive Officer of the Federal Reserve Bank of Atlanta from 1995 |
Director: Genuine Parts Company and Oxford Industries, Inc. |
Trustee: Ridgeworth Investments |
Member of the Audit and Governance Committees of the Board |
Mr. Guynn’s significant financial and accounting knowledge, deep understanding of economic trends impacting the U.S. and global economy and our industry, experience with governmental relations and regulatory issues, and service on other public company boards, including extensive service on the audit committees of other public companies, qualify him to serve as a director of our Board |
Term expires at the Annual Meeting for Fiscal Year |
VERNON J. NAGEL
56 years old |
Director since January 2004 |
Chairman and Chief Executive Officer of the Company since September 2004; President since August 2005 |
Vice Chairman and Chief Financial Officer from January 2004 through August 2004 and Executive Vice President and Chief Financial Officer from December 2001 to January 2004 |
Certified Public Accountant (inactive) |
Serves on the Governance Board of the National Electrical Manufacturers Association and the Board of the Industry Data Exchange Association |
Chairman of the Executive Committee of the Board |
Mr. Nagel’s knowledge of our opportunities and challenges gained through hisday-to-day leadership as our Chief Executive Officer, |
Term expires at the Annual Meeting for Fiscal Year |
JULIA B. NORTH
66 years old |
Director since June 2002 |
President and Chief Executive Officer of VSI Enterprises, Inc. |
Held various positions at BellSouth Corporation from 1972 through October 1997, most recently as President, Consumer Services |
Director: Community Health Systems, Inc. and |
Previous Directorships: Simtrol, Inc., Winn-Dixie Stores, Inc., |
Member of the Compensation and Governance Committees of the Board |
Ms. North’s operational expertise in marketing and consumer service gained through senior executive positions, service as a director on other public company boards, and experience across a wide range of complex industries, including at companies with large labor intensive-workforces, qualify her to serve as a director of our Board |
Term expires at the Annual Meeting for Fiscal Year |
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65 years old |
Director since December 2001 |
Non-executive Chairman of Citizens Trust Bank since May 2003 |
President of Atlanta’s East Lake Golf Club from May 2003 to December 2005 and President Emeritus since December 2005 |
Chairman of Atlanta’s East Lake Community Foundation |
President of the Southern Region of AT&T Corporation from 1996 to May 2003 |
Director: Aaron’s Inc., American Airlines, Avnet, Inc. (Lead Director), and Citizens Trust Bank (trading as Citizens Bancshares) |
Previous Directorships: Choicepoint Inc., Mirant Corporation, and |
Chairman of the Compensation Committee and a member of the Executive and Governance Committees of the Board |
Mr. Robinson’s extensive service on other public company boards, sales and marketing experience gained through senior leadership positions, extensive operational skills from his tenure at AT&T, and longstanding involvement in civic and charitable leadership roles in the community qualify him to serve as a director of our Board |
Term expires at the Annual Meeting for Fiscal Year |
16NORMAN H. WESLEY
¡ | 63 years old |
¡ | Director since January 2011 |
¡ | Chairman of Fortune Brands, Inc. (“Fortune”) from December 1999 to September 2008; served as Chief Executive Officer from December 1999 to December 2007; also served in a series of senior executive positions with Fortune from 1984 to 1999 |
¡ | Director: ACCO Brands Corporation, Fortune Brands Home & Security, Inc., and Green Mountain Coffee Roasters, Inc. (Chairman) |
¡ | Previous Directorships: R.R. Donnelly & Sons Company, Pactiv Corporation, and Fortune Brands, Inc. |
¡ | Member of the Audit and Governance Committees of the Board |
¡ | Mr. Wesley’s operational and strategic expertise from more than 20 years of experience as a senior executive, including eight years of experience as Chairman and Chief Executive Officer of a multinational corporation with various brands serving multiple sales channels, as well as his service on other public company boards qualify him to serve as a director of our Board |
¡ | Term expires at the Annual Meeting for Fiscal Year 2014 |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
At the annual meeting, a proposal will be presented to ratify the appointment of Ernst & Young LLP (“E&Y”)&Y as the independent registered public accounting firm to audit our financial statements for the fiscal year ending August 31, 2011.2014. E&Y has performed this function for us since 2002. One or more representatives of E&Y are expected to be present at the annual meeting and will be afforded the opportunity to make a statement if they so desire and to respond to appropriate stockholder questions. Information regarding fees paid to E&Y during fiscal year 20102013 and fiscal year 2012 is set out below in “Fees Billed by Independent Registered Public Accounting Firm.”
The Board of Directors recommends that you vote FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm.
The Audit Committee and the Board of Directors previously adopted a written charter to set forth the Audit Committee’s responsibilities. The charter is reviewed annually and amended as necessary to comply with new regulatory requirements. A copy of the Audit Committee charter, which is included in the Statement of Responsibilities of Committees of the Board, is available on the Company’s website atwww.acuitybrands.comunder the heading, “Corporate Governance.” The Audit Committee is comprised solely of independent directors, as such term is defined by the listing standards of the New York Stock Exchange. The Company’s management has the primary responsibility for the financial statements, for maintaining effective internal control over financial reporting, and for assessing the effectiveness of internal control over financial reporting. As required by the charter, the Audit Committee reviewed the Company’s audited financial statements and met with management The Audit Committee received from the independent registered public accounting firm the required written disclosures regarding its independence and the report regarding the results of its integrated audit. The Committee reviewed with the independent registered public accounting firm, which is responsible for expressing an opinion on the conformity of those audited financial statements with U.S. generally accepted accounting principles, its judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Committee under the rules adopted by the Public Company Accounting Oversight Board (United States) (“PCAOB”), the rules of the Securities and Exchange Commission, and other applicable regulations. In addition, the Committee has discussed with the independent registered public accounting firm the firm’s independence from Company management and the Company, including the matters in the letter from the firm required by PCAOB Rule 3526, Communication with Audit Committees Concerning Independence, and considered whether the non-audit services provided by them during fiscal 2013 were compatible with the independent registered public accounting firm’s independence. The Committee also reviewed and discussed together with management and the independent registered public accounting firm the Company’s audited financial statements for the year ended August 31, 2013 and the results of management’s assessment of the effectiveness of the Company’s internal The Committee discussed with the Company’s internal auditors and independent registered public accounting firm the overall scope and plans for their Based on its discussions with management and the Company’s independent registered public accounting firm referenced above, the Audit Committee did not become aware of any material misstatements or omissions in the audited financial statements. Accordingly, the Audit Committee recommended to the Board of Directors that the audited financial statements and management’s assessment of the effectiveness of the Company’s internal control over financial reporting be included in the Company’s Annual Report onForm 10-K for the fiscal year ended August 31, AUDIT COMMITTEE Robert F. McCullough, Chairman George C. Guynnas well as with E&Y (with and without management present), to (1) discuss the audited financial statements (2) discuss their evaluationsin the Company’s Annual Report on Form 10-K, including the quality, not just the acceptability, of the accounting principles; the reasonableness of significant judgments; and the clarity of disclosures in the financial statements.controlscontrol over financial reporting, and (3) discussincluding their knowledge of any fraud, whether or not material, that involved management or other employees who had a significant role in the Company’s internal controls.The Audit Committee received from E&Y the required written disclosurescontrols and the letter from E&Y regardingindependent registered public accounting firm’s audit of internal control over financial reporting.independencerespective audits. The Committee meets with the internal auditors and the report regardingindependent registered public accounting firm, with and without management present, to discuss the results of their integrated audit. In connection with its reviewexaminations; their evaluations of the Company’s internal control, including internal control over financial statementsreporting; and the auditors’ required communications and reports, the membersoverall quality of the Audit Committee discussed with a representative of E&Y their independence, as well as the following:• the auditors’ responsibilities in accordance with generally accepted auditing standards;• the initial selection of, and whether there were any changes in, significant accounting policies or their application;• all material alternative accounting treatments under U.S. Generally Accepted Accounting Principles;• other information in documents containing audited financial statements;• management’s significant judgments and accounting estimates;• whether there were any significant audit adjustments;• whether there were any disagreements with management;• whether there was any consultation with other accountants;• whether there were any major issues discussed with management prior to the auditors’ retention;• whether the auditors encountered any difficulties in performing the audit; and• the auditors’ judgments about the quality of the Company’s accounting policies.20102013 for filing with the SEC.John L. ClendeninNeil Williams17
Norman H. Wesley
The following table sets forth the aggregate fees billed during the fiscal years ended August 31, Fees Billed: Audit Fees Audit-Related Fees Tax Fees Total Audit Fees include fees for services rendered for the audit of our annual financial statements, Audit-Related Fees for Tax Fees include amounts billed to us primarily for international tax compliance in The Audit Committee has established policies and procedures for the approval and pre-approval of audit services and permitted non-audit services. The Audit Committee has the responsibility to engage and terminate our independent registered public accounting firm, to pre-approve the performance of all audit and permitted non-audit services provided to us by our independent registered public accounting firm in accordance with Section 10A of the Exchange Act, and to review with our independent registered public accounting firm their fees and plans for all The Audit Committee considered the provision of non-audit services by the independent registered public accounting firm and determined that provision of those services was compatible with maintaining auditor independence. There were no “reportable events” as that term is described in Item 304(a)(1)(v) ofRegulation S-K.20102013 and 2009: 2010 2009 Fees Billed: Audit Fees $ 2,097,161 $ 1,897,331 Audit-Related Fees 98,000 98,609 Tax Fees 116,000 105,505 Total $ 2,311,161 $ 2,101,445 2013 2012 $ 2,120,000 $ 2,125,000 13,000 104,000 375,000 177,000 $ 2,508,000 $ 2,406,000 and the review of the interim financial statements included in quarterly reports.reports, and audit of statutory financial statements in certain foreign locations. Audit fees also include fees associated with rendering an opinion on our internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. Audit fees in 2010 also include feesservices rendered in connection with our debt offering.Audit-Related Fees2012 include amounts billed to us primarily for the annual audits of our domestic defined contribution plans.2010fiscal years 2013 and 2009.auditing services. All fees paid to E&Y were pre-approved by the Audit Committee and there were no instances of waiver of approval requirements or guidelines.18
Executive officers are elected annually by the Board and serve at the discretion of the Board. Vernon J. Nagel serves as a Director and as an executive officer. His business experience is discussed above in “Item 1—Election of Directors—Continuing Directors with Terms Expiring at the 20112014 or 20122015 Annual Meetings.”
Other executive officers as of the date of thethis Proxy Statement are:
Name and Principal Business Affiliations |
RICHARD K. REECE
57 years old |
Executive Vice President of the Company since September 2006; Senior Vice President from December 2005 to September 2006; and Chief Financial Officer since December 2005 |
Vice President, Finance and Chief Financial Officer of Belden, Inc. (“Belden”) from April 2002 to November 2005 |
President of Belden’s Communications Division from June 1999 to April 2002 |
Vice-President Finance, Treasurer and Chief Financial Officer of Belden from August 1993 to June 1999 |
Certified Public Accountant |
Member of the American Institute and the Texas Society of Certified Public Accountants |
Serves on the Board of the National Association of Manufacturers |
MARK A. BLACK
52 years old |
Executive Vice President of the Company since January 2013; Executive Vice President of Acuity Brands Lighting, Inc. since December 2007 |
Senior Vice President, Acuity Business Systems for Acuity Brands, Inc. from September 2006 |
Independent consultant for ‘Lean’ principles and implementation from September 2003 |
President of CPM, Inc. from December 2000 | |||
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The Compensation Committee has reviewed and discussed with management the following Compensation Discussion and Analysis section of the Proxy Statement. Based on its review and discussions with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in thethis Proxy Statement for fiscal 20102013 for filing with the SEC.
COMPENSATION COMMITTEE
Ray M. Robinson, Chairman
Peter C. Browning
Gordon D. Harnett
Julia B. North
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This section of the proxy statement describes the material elements of the fiscal 20102013 compensation program for the named executive officers namedlisted in the Summary Compensation Table, who are called the named executive officers.Table. We first provide an executive summary.a highlight of key compensation considerations for fiscal 2013. We then give a business update for fiscal 2010, and describe in more detail our executive compensation philosophy, the overall objectives of our compensation program, and each element of compensation that we provide. We alsoFinally, we describe the key factors the Compensation Committee considered in determining fiscal 20102013 compensation for the named executive officers.
For fiscal 2010,2013, our named executive officers are:
Vernon J. Nagel, Chairman, President and Chief Executive |
Richard K. Reece, Executive Vice President and Chief Financial |
Mark A. Black, Executive Vice President | |||
Executive SummaryKey Compensation Considerations for Fiscal 2013
Our named executive officers are compensated in a manner consistent with our strategy, competitive practice, sound compensation governance principles, and shareholder interests and concerns. The core of our executive compensation philosophy continues to be tois “pay for performance.”
In making compensation decisions, the Compensation Committee took into account thesethe level of achievement of the financial performance measures (adjusted diluted earnings per share, adjusted consolidated operating profit margin and adjusted cash flow) as well as a number of other factors, including:
Return on stockholders’ equity in excess of cost of capital; |
Solid execution of our annual business plan and progress on achieving key strategic goals, such as exceeding the |
Continued focus on leadership development and performance management processes; and |
Positive |
Fiscal 2013 diluted earnings per share increased 8.5% over the prior year while adjusted diluted earnings per share, which excludes special charges for streamlining activities, temporary manufacturing inefficiencies, and expenses associated with the fraud at the freight payment and audit service firm formerly retained by the Company, increased 10.3% over the prior year.2 The adjusted financial performance measures excluded special charges for streamlining activities net of realized savings, unbudgeted costs which related primarily to expenses associated with the fraud at the freight payment and audit service firm formerly retained by the Company, impact from continuing operationsfiscal 2013 acquisitions, and impact from a change in the United Kingdom (“U.K.”) corporate tax rate.
2 | See page 22 of our form 10-K for fiscal 2013 for a reconciliation of adjusted diluted earnings per share for fiscal 2013 and 2012. |
At August 31, 2013, the 1, 3, and 5-year annualized total returns on the Company’s common stock exceeded that of 27%.
Annualized Total Returns | ||||||||||||
1-Year | 3-Years | 5-Years | ||||||||||
Acuity Brands, Inc. | 34.3 | % | 31.4 | % | 15.8 | % | ||||||
Dow Jones U.S. Electrical Components & Equipment Index | 25.1 | % | 24.4 | % | 9.5 | % | ||||||
Dow Jones U.S. Building Materials & Fixtures Index | 27.2 | % | 28.7 | % | 9.9 | % | ||||||
Standard & Poor’s Midcap 400 Index | 23.7 | % | 19.7 | % | 9.4 | % |
Based on this comprehensive performance assessment, and combined with a review of the economic environment and competitive landscape, the Compensation Committee made the following key compensation decisions for our named executive officers:
Mr. Reece received a base salary increase to $425,000 from $412,000 and Mr. Black received a base salary increase to $400,000 from $380,000. The increases were |
Annual cash incentive awards to named executive officers were paid at approximately |
Equity incentive awards (granted in October |
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aligned with shareholder interests with the appropriate balance of risk, long-term company stock price performance, and |
— | ||
The Acuity Brands, Inc. 2002 Supplemental Executive Retirement Plan (“2002 SERP”) was amended in October | ||
The Compensation Committee undertook its annual risk assessment of our compensation program for fiscal 2010.2013. The Committee concluded that the program does not encourage management to take excessive risks that may have a material impact on the Company, and that the program serves the stockholders’ best interests in our sustained long-term performance by including an appropriate balance of financial performance measures, extended vesting schedules, and significant stock ownership requirements.
The Compensation Committee considered the independence of its compensation consultant and determined that its consultant is independent and that no conflicts of interest were raised.
Our insider trading policy prohibits our employees, officers, and directors from hedging their ownership of Acuity Brands stock. None of our executive officers holds any of our stock subject to pledge.
Consideration of “Say on Pay” Voting Results
The Compensation Committee considered the results of the stockholder “say on pay” vote at our 2012 annual meeting in making compensation decisions for fiscal 2013. Because over 98% of votes cast for or against the proposal approved our compensation program as described in our 2012 proxy statement, the Compensation Committee believes that stockholders support our pay for performance policies. Therefore, the Compensation Committee continued to apply the same principles in determining the amounts and types of executive compensation for fiscal 2013.
Business Update
In fiscal 2013, we continued to successfully execute our strategy to extend our leadership position in fiscal 2010. New U.S. non-residentialthe North American lighting solutions market by providing our customers with differentiated value from our industry-leading portfolio of innovative products and solutions along with superior service. We believe our channel and product diversification, as well as our strategies to better serve customers with new, more innovative lighting solutions and the strength of our many sales forces have allowed us to outperform the markets we serve. Our solid growth is due in large part to our focused strategy to diversify our portfolio to be less reliant on new building construction a primaryand more focused on growing portions of the market, for us, declined approximately 15% compared toincluding renovation and lighting control solutions that enhance the prior year due to weak economic conditions, including high unemployment, declining property values and restrictive credit standards for commercial and industrial development. Despite these challenges, fiscal 2010visual environment while optimizing energy usage.
Fiscal 2013 net sales declinedrose 8.0% to a modest 2%record $2.1 billion. Operating profit for fiscal 2013 was $221.5 million compared with $208.0 million for the year-ago period. Net income for fiscal 2009. Factors contributing to our favorable performance as2013 was $127.4 million compared towith $116.3 million for fiscal 2012. Diluted earnings per share for fiscal 2013 and 2012 were $2.95 and $2.72, respectively. Excluding the overall market includeimpact of special charges for streamlining activities, temporary manufacturing inefficiencies, and expenses associated with the sales growth from acquisitionsfraud at the freight payment and of certain product groups such as lighting control devices and more energy-efficient luminaries, expansion in certain geographies where selling representation was enhanced, and continued penetration in certain channels such as renovation and traditional distributor stock and flow.
In fiscal 2013, we generated over $160$132.3 million in net cash provided byfrom operating activities. Cashactivities and cash equivalents at fiscal year end totaled $191 million, an increase of $172 million since the beginning of the fiscal year. For fiscal 2010, the Company generated $139$91.7 million in free cash flow (defined as net cash provided by operating activities lessminus purchases of property, plant, and equipment). Fiscal 2010 is the sixth outAdditionally, we ended fiscal 2013 with a cash balance of the last seven years where we have generated more free cash flow than our net income. Additionally, during fiscal 2010, net proceeds from debt refinancing activities provided $109over $359.1 million, partially offset by payments of $23while investing $40.6 million in capital expenditures and $25.5 million for acquisitions and strategic investments, $23paying $22.4 million forof dividends to stockholders, and $36 million for stock repurchases. During the year, we repurchased over 1 million shares, or 2%, of our outstanding common stock.
On the strategic front, we accomplished a number of items in fiscal 2010. We introduced over 100 new products, consistent with our record setting pace in 2009. Accelerating the introduction of new, more energy efficient products and services has been a key contributor to our improved margins over the last few years and is one of the cornerstones of our growth strategy going forward.2013. We continued to focus on extending our expansion intoleadership position in North America, while diversifying our product portfolio and expanding our channels to market, making us less reliant on new markets, such as renovation, and increased our penetration of important channels, such as home improvement, which helped to offset some of the market decline in certain commercial and industrial markets. We made strides in enhancing product quality, improving delivery, and driving productivity throughout the company. We also strengthened our presence in the growing lighting controls market.construction. We continued to invest in a number of areas representing significant future growth potential, including morethe continued rapid introduction of innovative and energy-efficient luminaires and lighting luminaires, controlscontrol solutions and softwareacquisitions of eldoLAB Holding B.V. and Adura Technologies, as well as the enhancement of our production, distribution, and customer service and support capabilities. In an effort to help fund these important investments, we completed streamlining activities to improve our efficiency that included the consolidation of our manufacturing footprint and the reduction in extending our market presence inheadcount through the growing renovation sector.
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The executive compensation program is designed to:
Attract and retain executives by providing a competitive reward and recognition program that is driven by our success; |
Provide rewards to executives who create value for stockholders; |
Consistently recognize and reward superior performers, measured by achievement of results and demonstration of desired behaviors; and |
Provide a framework for the fair and consistent administration of pay policies. |
We compensate management and other key associates through a combination of base salary and variable incentive compensation, typically based on Company performance. To create a “pay for performance” environment, total compensation is comprised of a base salary, generally targeted to be at median (or lower, as in
3 | See page 22 of our form 10-K for fiscal 2013 for a reconciliation of adjusted operating profit, adjusted operating profit margin, and adjusted diluted earnings per share for fiscal 2013 and 2012. |
the case of Mr. Nagel), plus significant at-risk performance-based variable annual cash and long-termequity incentive compensation. Our executive compensation program historically has been guided by the following principles, which are intended to support our “pay for performance” philosophy:
Total compensation programs should be designed to strengthen the relationship between pay and performance, with a resulting emphasis on variable, rather than fixed, forms of compensation; |
An appropriate balance should be struck between the focus on achievement of |
Compensation should generally increase with position and responsibility, and total compensation should be higher for individuals with greater responsibility and a greater ability to influence the Company’s results, with a corresponding increase in the percentage of total compensation linked to performance; and |
Management should focus on the long-term interests of all stakeholders, including stockholders. |
Going beyond our senior management, we encourage a “pay for performance” philosophy for all of our salaried associates. Each year we put in place an incentive plan for these associates with performance goals that are structured similarly to those for our Annual Cash Incentive Plan.
Our compensation philosophy is consistent with and supportive of our long-term goals. We aspire to be athe premier industriallighting solutions company capable of consistently delivering long-term upper quartileupper-quartile financial performance. We define upper quartileupper-quartile performance using specific metrics, including:
Annual growth in earnings per share of 15% or greater; |
Operating profit |
Return on stockholders’ equity of 20% or better; and |
Generation of cash flow from operations less capital expenditures in excess of net income. |
As we believe there should be a strong relationship between executive compensation and the creation of value for stockholders, we structure our incentive compensation arrangements to pay upper quartileupper-quartile compensation for upper quartileupper-quartile performance.
In implementing our compensation philosophy, we emphasize the significant amount of risk“pay for performance” factored into the total direct compensation mix (base salary and annual cash and long-termequity incentive awards) of our named executive officers with expectations for sustained long-term upper quartileupper-quartile Company performance. This places eachEach executive officer’s total direct compensation opportunity is therefore subject to considerable leverage—mediummedian or lower fixed pay in the form of base salary andcoupled with a wide range of possible outcomes with respect to annual cash and long-termequity incentive compensation driven by performance.
An example of this strategy is the compensation opportunity of our chief executive officer. Mr. Nagel’s base salary has remained at the same level since 2004, which is well down into the lowest quartile of the peer group described below. At the same time, Mr. Nagel’s annual incentive targetcash and long-termequity incentive award targettargets are structured to provide an opportunity for him to earn total shortannual cash and long-termequity-based compensation at the upper quartile of competitive compensation as compared to the peer group, if targetedupper quartile levels of performance are achieved. Because we review our business plans annually and we have significant ownership requirements for our executives, we believe that we have an appropriate balance of incentives while limiting excessive risk taking.
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Because performance-based incentives play a large role in our overall executive compensation program, including our executive compensation program, we believe that it is important to ensure that these incentives do not result in our executives taking actions that may conflict with our long-term best interests. The Compensation Committee considers risk in designing the compensation program with the goal of appropriately balancing short-termannual incentives and long-term performance. We address this in several ways.
The various financial performance measures that are set under our annual cash and equity incentive |
and that we believe are challenging and yet attainable without the need to take inappropriate risks or make material changes to our business or strategy. |
Awards under the |
The Annual Cash Incentive Plan and the |
Because the value of the equity awards are best realized through long-term appreciation of stockholder value, especially when coupled with our stock ownership guidelines (described below), we believe this encourages a long-term growth mentality among our executives and aligns their interests with those of our stockholders. |
After reviewing with management the design of our compensation programs, the Compensation Committee concluded that our compensation program does not encourage management to take excessive risks and serves the stockholders’ best interests in our sustained long-term performance by including an appropriate balance of financial performance measures, extended vesting schedules, and significant stock ownership requirements.
Role of Compensation Consultant
Under its charter, the Compensation Committee is authorized to engage outside advisors at our expense. In fiscal 2010,2013, the Compensation Committee engaged the compensation consulting firm of Towers Perrin to advise the Committee regarding compensation of our executive officers, and other compensation-related matters such as benefit plans. Towers Perrin became Towers Watson in January 2010, and Pay Governance LLC was spun-off from Towers Watson in July 2010. As of July 2010,(“Pay Governance”). Pay Governance was the consultant engaged by the Compensation Committee.
The Compensation Committee periodically approves an engagement letter that describes the duties to be performed by the consultant and the related costs. Under the terms of existing engagement letters, TowersPay Governance performed the following services for the Compensation Committee in fiscal 2010,2013, in addition to preparation for and attendance at meetings of the Compensation Committee:
Provided peer group and market pricing analysis for the chief executive |
Throughout the year, provided the Compensation Committee with assistance and support on various issues, including updates related to evolving governance |
— | Reviewed the draft proxy statement and provided drafting input and disclosure suggestions. |
The chairman of the Compensation Committee may make additional requests of the compensation consultant during the year on behalf of the Committee.
In September 2013, the Compensation Committee was regularly informedconsidered the independence of Pay Governance. The Compensation Committee requested and received a letter from Pay Governance addressing the consulting firm’s independence, including the following factors: (1) other services provided to us by the consultant; (2) fees paid by us as a percentage of the additional consulting work performedfirm’s total revenue; (3) policies or procedures maintained by Towers outside the purviewconsulting firm that are designed to prevent a conflict of interest; (4) any business or personal relationships between the individual consultants involved in the engagement and a member of the engagement letters,Compensation Committee; (5) any company stock owned by the individual consultants involved in the engagement; and is regularly updated on(6) any business or personal relationships between our executive officers and the corresponding fees paid to Towers. Fees billed by Towers during fiscal 2010 totaled $119,000, which included $39,000 for consulting services tofirm or the individual consultants involved in the engagement. The Compensation Committee for executive compensation mattersreviewed these factors and $80,000 for consulting services for investment adviceconcluded that the consultant is independent and performance reporting for our domestic qualified defined benefit and defined contribution plans.
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The Compensation Committee annually compares the various elements of our executive compensation program with respect to the chief executive officer in order to evaluate compensation levels relative to that of the market and our competitors through the use of publicly available market surveys and total compensation studies
and long-term incentive compensation analyses. InFor fiscal 2010,2013, the Committee requested that TowersPay Governance perform this comparison, and TowersPay Governance provided compensation data for purposes of the chief executive officer’s compensation review. The Compensation Committee performs similar comparisonsreview and for ourthe other named executive officers periodically, though it did not engage Towers to perform such a comparison for our other executive officers in fiscal 2010.
For purposes of analyzing the chiefnamed executive officer’sofficer compensation, at the request of the Compensation Committee, TowersPay Governance undertook a review of our peer group and presented to the Compensation Committee recommendations for certain changes to the peer group. Pay Governance compiled a list of recommended peer companies that would be a representative example of organizations of comparable size and business focus and that are representative of the companies with whom we compete for executive talent. Towerstalent, with a particular focus on ensuring industry-representative peers. Pay Governance developed a list of recommended peer companies based upon an assessment of each company’s industry, annual revenues, market capitalization, one-year and three-year levels of historical profitability, and one-year and three-year levels of historical total shareholder returns. The Compensation Committee reviewed the recommendations of the consultant and approved the list of peer companies.
The peer group is comprised of the following list of 1716 companies comprising the peer group were selected to represent a diverse, general industry composite including consumerand includes primarily industrial machinery, electrical components and equipment, and building products industrial manufacturing,and/or wholesale/retail trade companies with size and financial characteristics generally comparable to the Company:
Actuant Corporation | ||
AMETEK Inc. | ||
A. O. Smith Corp. | Lincoln Electric Holdings, Inc. | |
Armstrong World Industries, Inc. | Regal Beloit Corporation | |
Belden Inc. | ||
Roper Industries, Inc. | ||
Steelcase, Inc. | ||
The Toro Company | ||
One company that had been part of theour peer group in fiscal 2009, AK Steel Holding Corporation and Western Digital Corporation, were removed from the 2010 peer group. Towers recommended and the Compensation Committee agreed that they were no longer an appropriate comparison in terms of industry and revenue.
General Compensation Levels
The total direct compensation opportunities offered to our executive officers have been designed to ensure that they have a strong relationship with the creation of long-term value for stockholders, are competitive with market practices, support our executive recruitment and retention objectives, and are internally equitable among executives. The annual cash and long-termequity incentive portions of total direct compensation are designed to be performance-based and to provide compensation in excess of base salary only when performance goals are met. In addition, the Compensation Committee retains the discretion to make awards outside of these parameters if it determines that a discretionary award is appropriate based on various performance-related facts and circumstances for the fiscal year.
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Weighting and Selection of Elements of Compensation
The Compensation Committee annually determines the mix and weightings of each of the compensation elements by considering the market compensation data as described above. Base salary is the only portion of
compensation that is assured. The more senior the executive within the Company, the greater the weight allocated to bonusannual cash and long-termequity incentive awards. This also furthers the appropriate risk balance in encouraging executives to consider our long-term performance. While the Compensation Committee has established a framework to assure that a significant portion of aggregate target total direct compensation is at riskbased on performance for senior executives, actual amounts earned depend on annual company performance as well as individual performance.
The Compensation Committee uses plan guidelines as well as its judgment and discretion in deciding the mix and value of total long-termequity incentive compensation. Various types of equity awards, including restricted stock and stock options, are considered to motivate executives to act like stockholders and to focus on the long-term performance of the business. Restricted stock and stock options are designed to mirror stockholder interests and make executives sensitive to upside potential and stockholder gains, as well as to downside risk, because a change in the stock price affects overall compensation.
Equity incentives historically have been designed as performance-based awards with payout determined by Company performance and subject to adjustment based on individual performance. However, the Compensation Committee retains discretion to make awards for achievement outside of the targets set forth in the incentive plan.
Elements of Executive Compensation
We typically structure our executive compensation program using the following compensation elements:
Base salary; |
Performance-based annual cash |
Performance-based |
Post-termination compensation |
The compensation program also includes minimal perquisites and other personal benefits (primarily a charitable contribution match in fiscal 2010 for Messrs. Nagel, Quick, and Smith)match). In addition, named executive officers generally participate in our health and welfare plans on the same basis as other full-time employees.
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Element of Compensation | Objective | |
Base Salary | ||
• Provide a competitive level of secure cash compensation; and | ||
• Reward individual performance, level of experience, and responsibility. | ||
Performance-Based Annual Cash Incentive Award | • Provide variable | |
• Reward individual performance and overall | ||
Performance-Based Annual Equity Incentive Award | • | |
• Reward individual | ||
• Encourage and reward long-term appreciation of stockholder value; |
Element of Compensation | Objective | |
• Encourage long-term retention through three-year and four-year vesting periods for awards; and | ||
• Align interests of executives with those of stockholders. | ||
Post-Termination Compensation | • Encourage long-term retention through pension benefits; and | |
• Provide a measure of security against possible employment loss, through a change in control or severance agreement, in order to encourage the executive to act in the best interests of the Company and stockholders. |
Base Salary
The Compensation Committee sets base salary to be competitive with the general market. The base salary is designed to attract talented executives and provide a secure base of cash compensation. Salary adjustments may be made annually as merited or on promotion to a position of increased responsibility. The base salaries of executives generally are set near or below the 50th percentile.percentile, although it is set much lower in the case of Mr. Nagel, as described below. For the chiefnamed executive officer,officers, the Compensation Committee considers the peer group data described above in determining market levels. For the other executive officers, the Compensation Committee considers the market data provided by Hay Group as well as other publicly-available third-party general survey data to determine market levels.
In accordance with our “paypay for performance”performance philosophy, Mr. Nagel’s salary of $600,000 is in the bottom quartile of the peer group and has not been increased since 2004. With respect to the other named executive officers, in October 2009 the chief executive officer recommended and the Compensation Committee approvedFor fiscal 2013, Mr. Reece received a base salary increases for fiscal 2010, effective November 1, 2009, as follows: Mr. Black’s salary was increasedincrease to $380,000$425,000 from $320,000 and Mr. Smith’s salary was increased to $225,000 from $205,000. In light of the current economic environment at that time, increases were approved only to recognize the assumption of additional responsibilities. Mr. Reece’s salary remained at $412,000 and Mr. Quick’s salary remained at $320,000. In October 2010, the chief executive officer recommended and the Compensation Committee approved noBlack received a base salary increase to $400,000 from $380,000. The increases were based on market data and in recognition of strong company performance in fiscal 2012.
Incentive Compensation Programs
As part of our “pay for theperformance” philosophy, a substantial portion of our named executive officersofficers’ total compensation opportunity is provided in the form of annual incentive awards consisting of two performance-based elements: cash and equity.
— | Annual cash incentive awards are earned only if we achieve specific annual company and individual performance objectives, which we believe focuses our executives’ efforts on company results that directly impact our stock price and link individual performance to our long-term strategic plan. |
— | Annual equity incentive awards are earned only if we achieve specific annual company performance goals. The equity awards have three or four year vesting schedules designed to align executive compensation with long-term stockholder interests. The extended vesting schedule for the equity awards mitigates against unnecessary or excessive risk. |
Each of these incentive compensation programs, including the specific company performance goals for each program for fiscal 2011.
Annual Cash Incentive Awards
Performance-based annual cash incentive compensation is a key component of our executive compensation strategy. This element is designed to be a significant at-riskperformance-based component of overall compensation. Annual cash incentive awards are made under the Acuity Brands, Inc. 20072012 Management Compensation andCash Incentive Plan (the “Annual Cash Incentive Plan”), which was approved by Acuity Brands’ stockholders at the January 20082013 annual meeting. The Annual Cash Incentive Plan is designed to motivate executive officers to attain specific short-termannual performance objectives that, in turn, further our long-term objectives.
At the start of a fiscal year, an individual annual cash incentive target, stated as a percentage of base salary, is determined for each participant. Measures of Company and business unitcompany financial performance for the fiscal year
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Financial Performance—General
At the beginning of the fiscal year, the Compensation Committee selects the annual financial performance measures and sets the annual financial performance goals at the threshold, target, and maximum levels, which determine payouts. Approximately 800 salaried associates participate in the Annual Cash Incentive Plan. For most participants, achieving target financial performance would yield an award of 100% of the target amount set at the beginning of the year, excluding any individual performance factor. However, for Messrs. Nagel, Reece and Black,the named executive officers, achieving target financial performance would yield an award of 200% of the target amount, which is then subject to the application of negative discretion by the Compensation Committee. The target and maximum levels are structured this way for certain senior executives to comply with the requirements of Section 162(m) of the Code (see “Tax Deductibility Policy” below).
Actual financial performance for the fiscal year determines the total amount of dollars available for the incentive pool for annual cash incentive awards to all eligible employees, including the named executive officers. Financial performance percentages are interpolated for performance falling between stated performance measures.
When deciding what company financial measures to use at the start of a fiscal year and the threshold, target and maximum levels of achievement of those measures, the Compensation Committee carefully considers the state of our business, including the prevailing economic environment, and what financial measures are most likely to focus the participants, including the named executive officers, on making decisions that deliver annual results aligned with long-term goals. The Compensation Committee considers management’s recommendations regarding the appropriate financial measures and the annual improvement targets for such measures. The financial measures are chosen from an array of possible financial measures included in the Annual Cash Incentive Plan.
Fiscal 20102013 Financial Performance Measures and Weighting
The performance measures and weighting for fiscal 20102013 awards were established by the Compensation Committee and ratified by the Board of Directors early in fiscal 2010,2013, based on our expectationslong-term upper quartile performance measures for the fiscal year.mid-to-large cap companies. These performance measures and weightings are consistent with those selected by the Compensation Committee for fiscal 2009.
Company Performance | Weighting | Business Unit Performance | Weighting | |||||||
Adjusted diluted earnings per share | 34 | % | Adjusted operating profit | 34 | % | |||||
Adjusted consolidated operating profit margin | 33 | % | Adjusted operating profit margin | 33 | % | |||||
Adjusted cash flow | 33 | % | Adjusted cash flow | 33 | % |
Performance Measure | Weighting | |
Adjusted diluted earnings per share | 34% | |
Adjusted consolidated operating profit margin | 33% | |
Adjusted cash flow | 33% |
Performance measures are calculated as follows:
— | Adjusted diluted earnings per share is computed by dividing net income available to common shareholders by diluted weighted average number of shares and adjusted as described below. |
— | Adjusted consolidated operating profit margin is calculated as operating profit divided by net sales and adjusted as described below. |
— | Adjusted cash flow is calculated as cash flow from operations, minus capital expenditures, plus cash received on sale of property, plus or minus cash flow from foreign currency fluctuations, and adjusted as described below. |
Each of the performance measures are adjusted to exclude the impact of: (a) capital market pre-financingand/or early pay-off of the $200 million public notes due in 2010; (b) special charges associated with(i) streamlining efforts and asset impairments; (c) the adoption of ASC Topic 260, Earnings Per Share, which provided guidance on how to allocate earnings to participating securities and compute earnings per share using the two-class method; and (d) the distortive effect of acquisitions. Adjusted consolidated operating profit margin is calculated as operating profit divided by net sales and adjusted to exclude the impact of special charges associated with streamliningactivities efforts and asset impairments, and the(ii) distortive effect of acquisitions. Adjusted cash flow is calculated as cash flow from operations, less capital expenditures, plus cash received on sale of property, plus or minus cash flow fromacquisitions, (iii) significant changes in foreign currency, fluctuations,(iv) changes in tax law or rate, and excluding cash used for acquisitions. For business unit(v) any other unusual, nonrecurring cost, expense, gain or loss that is separately identified and quantified in the our financial statements or in management’s discussion and analysis of financial performance adjusted operating profit excludes the impact of special charges associated with streamlining efforts and asset impairments and the distortive effect of acquisitions. Adjusted operating profit margin is calculated as adjusted operating profit divided
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Performance of individual participants in the Annual Cash Incentive Plan, including the named executive officers, is evaluated after the end of the fiscal year by (1) comparing actual performance to daily job responsibilities and pre-established individual objectives consistent with overall company objectives and (2) considering, on a qualitative basis, whether the individual’s performance reflects our corporate values and business philosophies, such as continuous improvement.
— | Comparing actual performance to daily job responsibilities and pre-established individual objectives consistent with overall company objectives, and |
— | Considering, on a qualitative basis, whether the individual’s performance reflects our corporate values and business philosophies, such as continuous improvement. |
The individual objectives for Mr. Nagel were set with the approval of the Compensation Committee. The individual objectives for the other named executive officers were set after individual discussion with the chief executive officer. The individual objectives established for the named executive officersThey include objectives that are common across all executives, and objectives specific to each individual’s role at our company. For example, an individual objective common for all of the named executive officers included the further development and implementation of continuous improvement (or “Lean”) processes and culture within the Company. At the end of the fiscal year, each participant, including theeach named executive officers,officer, is given an individual performance management process (“PMP”) rating (a PMP Rating)“PMP Rating”), which is translated to a PMP Payout Percentage.
The maximum PMP Payout Percentage that can be earned by participants in the plan is 140%. At the end of the fiscal year, the Compensation Committee or the Board, as applicable, selects the precise payout percentage within the range based on factors such as level of responsibility and impact on our performance, with calibrations made across comparable positions to achieve consistency of the percentages selected.
The table below sets forth the PMP Ratings and the possible PMP Payout Percentages for all participants for fiscal 2010.
Range of PMP Payout | ||||||||
Percentage | ||||||||
PMP Rating | Minimum | Maximum | ||||||
Exceptional | 110 | % | 140 | % | ||||
Superior | 85 | % | 125 | % | ||||
Commendable | 70 | % | 110 | % | ||||
Fair | 0 | % | 70 | % | ||||
Unacceptable | 0 | % | 0 | % |
Range of PMP Payout Percentage | ||||||||
PMP Rating | Minimum | Maximum | ||||||
Exceptional | 110 | % | 140 | % | ||||
Superior | 85 | % | 125 | % | ||||
Commendable | 70 | % | 110 | % | ||||
Fair | 0 | % | 70 | % | ||||
Unacceptable | 0 | % | 0 | % |
Determination of Award
The level of financial performance is determined after the end of the fiscal year based on actual businesscompany results compared to the financial measures set at the beginning of the fiscal year. In addition, the chief executive officer reports to the Compensation Committee summarizing the individual performance goals and achievements of the named executive officers, including himself. The Compensation Committee considers his report in determining the awards. Under the plan,Annual Cash Incentive Plan, the amount of each actual annual cash incentive award, including the awards to the named executive officers, would be determined as follows:
Base Salary x (Annual Cash Incentive Target % x Financial Performance Payout %) x PMP Payout %
The Annual Cash Incentive Target Percentage, representing the percentage of base salary used in the determination of the award, is set by the Compensation Committee for each of the named executive officers. For fiscal 2010,2013, they were as follows: Mr. Nagel—150%200%; Mr. Reece—65%; Mr. Black—65%; Mr. Quick—55%80%; and Mr. Smith—40%Black—80%.
The Financial Performance Payout Percentage at target is 100% for most participants in the Annual Cash Incentive Plan. For Messrs. Nagel, Reece and Black,the named executive officers, the Financial Performance Payout Percentage at target is 200%. The greater percentage is designed to facilitate the Compensation Committee’s application of negative discretion as it considers appropriate in accordance with the provisions of Section 162(m) of the Code.
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$600,000 x (150%(200% x 200%) x 100% = $1,800,000
The Compensation Committee then determines the final award by applying negative discretion as it considers appropriate in accordance with the requirements of Section 162(m) of the Code.
Fiscal 20102013 Annual Cash Incentive Award
Our Compensation Committee. In accordance with our philosophy, the performance measures at the target level were set at a level approximately equal to the 75th percentile of longer-term financial performance for public companies in the S&P 500 and S&P 600 indexes.
Actual | ||||||||||||||||||||
Performance Objectives | Performance | |||||||||||||||||||
($ millions, except earnings per share) | Weighting | Threshold | Target | Maximum | Fiscal 2010 | |||||||||||||||
Company Performance (1) | ||||||||||||||||||||
Adjusted diluted earnings per share (from continuing operations) | 34 | % | $ | 1.53 | $ | 1.73 | $ | 2.38 | $ | 2.08 | ||||||||||
Adjusted consolidated operating profit margin | 33 | % | 9.1 | % | 9.7 | % | 11.3 | % | 10.2 | % | ||||||||||
Adjusted cash flow | 33 | % | $ | 74 | $ | 82 | $ | 110 | $ | 139 | ||||||||||
Business Unit Performance (2) | ||||||||||||||||||||
Adjusted operating profit | 34 | % | $ | 148 | $ | 163 | $ | 212 | $ | 187 | ||||||||||
Adjusted operating profit margin | 33 | % | 10.3 | % | 10.9 | % | 12.5 | % | 11.5 | % | ||||||||||
Adjusted cash flow | 33 | % | $ | 148 | $ | 163 | $ | 212 | $ | 210 | ||||||||||
($ millions, except earnings per share) | Weighting | Performance Objectives | Fiscal 2013 Performance(1) | |||||||||||||||||
Threshold | Target | Maximum | ||||||||||||||||||
Performance Measures (2) | ||||||||||||||||||||
Adjusted diluted earnings per share (from continuing operations) | 34 | % | $ | 2.91 | $ | 3.19 | $ | 3.94 | $ | 3.22 | ||||||||||
Adjusted consolidated operating profit margin | 33 | % | 11.5 | % | 11.8 | % | 12.6 | % | 11.5 | % | ||||||||||
Adjusted cash flow | 33 | % | $ | 132 | $ | 144 | $ | 176 | $ | 113 |
(1) | The adjusted financial information that we use to determine performance under our incentive plans differs from the adjusted financial information that we report in our financial statements, as we adjust (add or subtract) for various items that may or may not be included in the adjusted financial information that we report in our financial statements. For fiscal 2013, performance results were adjusted for the exclusion of special charges for streamlining activities net of realized savings, unbudgeted expense associated with the fraud at the freight payment and audit service firm formerly retained by the Company, distortive impact from fiscal 2013 acquired businesses, and impact from change in the U.K. corporate tax rate. We did not adjust for the temporary manufacturing inefficiencies associated with the closing of the Cochran production facility. |
(2) | As expected, the Compensation Committee exercised negative discretion in determining the final fiscal | |
In October 2010,2013, based on the Compensation Committee’s certification of performance with respect to fiscal 20102013 annual cash incentive targets using information prepared by the company’s finance department, the Board approved the Compensation Committee’s recommendations with respect to fiscal 20102013 annual cash incentives for the named executive officers. The named executive officers earned awards at approximately 50% of target. The following table outlines the threshold, target, maximum, and actual 20102013 awards earned under the Annual Cash Incentive Plan for each of the named executive officers for fiscal 20102013 as a dollar amount (in thousands).
Annual | Actual 2010 Annual | |||||||||||||||||||
($ in thousands) | Incentive | Incentive Award | ||||||||||||||||||
Named Executive Officer | Target % | Threshold ($) | Target ($) | Maximum ($) | Earned ($) | |||||||||||||||
Vernon J. Nagel | 150 | 0 | 1,800 | 4,000 | (1) | 2,200 | (2) | |||||||||||||
Richard K. Reece | 65 | 0 | 536 | 2,250 | 700 | (2) | ||||||||||||||
Mark A. Black | 65 | 0 | 494 | 2,075 | 500 | (2) | ||||||||||||||
Jeremy M. Quick | 55 | 0 | 176 | 739 | 300 | |||||||||||||||
C. Dan Smith | 40 | 0 | 90 | 378 | 200 | |||||||||||||||
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($ in thousands) Named Executive Officer | Annual Incentive Target % | Threshold ($) | Target ($) | Maximum ($) | Actual 2013 Annual Incentive Award Earned ($)(2) | |||||||||||||||
Vernon J. Nagel | 200 | 0 | 2,400 | 6,000 | (1) | 1,000 | ||||||||||||||
Richard K. Reece | 80 | 0 | 680 | 2,856 | 325 | |||||||||||||||
Mark A. Black | 80 | 0 | 640 | 2,688 | 350 |
(1) | The maximum award for Mr. Nagel | |
(2) | Reflects application of negative discretion by the Compensation Committee in determining the final awards. |
Based on the achievement of Company or business unit performance measures as appropriate, and their PMP ratings,Ratings, Messrs. Nagel, Reece, and Black were eligible to receive annual cash incentive awards of $4,000,000, $1,400,000$1,656,500, $419,100 and $1,000,000,$394,400, respectively. As expected, the Compensation Committee exercised negative discretion to reduce the amount of the awards as shown in the table above.
As part of our overall “pay for performance” philosophy, we maintain an annual discretionary incentive plan covering all salaried associates who are not eligible to participate in the Annual Cash Incentive Plan. The incentive plan is designed to reward growth and operating profit. Based on the achievement of business unitcompany performance measures, an earned payout was attained in the amount of approximately 4%2.4% of annual base compensation for all salaried associates not eligible to participate in the Annual Cash Incentive Plan.
Long-Term IncentivesAnnual Equity Incentive Awards
A substantial portion of the total direct compensation of our named executive officers is delivered in the form of long-termannual equity awards, including restricted stock and stock options. Equity incentive awards are generally granted on an annual basis and are allocated based on the achievement of Company-widean annual company financial targetstarget and individual performance ratings. Awards are
Since 2008, awards have been made under the Amended and Restated Acuity Brands, Inc. 2007 Long-Term Incentive Plan (the “LTIP”(“2007 Plan”), which was approved by stockholders at the January 2008 annual meeting.
The purpose of the LTIPEIP is to enable executive officers and other eligible associates to accumulate capital through future managerial performance, which the Compensation Committee believes contributes to the future success of our Company. The LTIPEIP creates a pool of equity available for annual grants to all eligible associates, including the named executive officers. In fiscal 2010,2013, there were approximately 200 eligible participants in the LTIP.EIP. The Compensation Committee believes that awards under the LTIPEIP promote a long-term focus on our profitability due to the multi-year vesting period under the plan.
At the beginning of each year, the Compensation Committee selects performance criteria, upon which awards under the LTIPEIP are based, from the range of performance measures contained in the LTIP.EIP. Specific performance goals for the fiscal year are set by the Compensation Committee.
Target awards are determined as a percentage of each executive officer’s salary. For most participants in the LTIP,EIP, achieving target Companycompany financial performance yields an award of 100% of the target award for the participant, excluding any individual performance factor. For Messrs. Nagel, Reece and Black,the named executive officers, achieving target Companycompany performance yields an award of 200% of the target award. The greater percentage for these named executive officers is designed to facilitate the Compensation Committee’s application of negative discretion as it considers appropriate in accordance with the provisions of Section 162(m) of the Code.
The total long-termequity incentive award payments to all eligible employees under the EIP cannot exceed 8% of adjusted consolidated operating profit before expenses associated with the LTIP.
Final awards for each participant are determined by comparing actual Companycompany performance against the established performance criteria for the year. Final awards also take into account each individual’s PMP Rating. Individual performance is evaluated in the same manner as under the Annual Cash Incentive Plan, except that the payout factor is as follows:
PMP Rating | ||
PMP Payout Percentage | ||
Exceptional | Up to 150% | |
Superior | Up to 125% | |
Commendable | Up to 100% | |
Below Standard | 0% |
The Compensation Committee selects the precise payout percentage within the range based on factors such as level of responsibility and impact on our performance with calibrations made across comparable positions to achieve consistency of the percentages selected.
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Base Salary x (LTIP(Individual EIP Target % x Financial Performance Payout %) x PMP Payout %
The Individual EIP Target Percentage, representing the percentage of base salary used in the determination of the award, is set by the Compensation Committee for each of the named executive officers. For fiscal 2013, they were as follows: Mr. Nagel—300%; Mr. Reece—150%; and Mr. Black—150%. The target percentage represented an increase from 135% for Mr. Black in fiscal 2012. The increase was based on a review of market data.
The Compensation Committee, in its discretion and taking into account the recommendations of the chief executive officer, may increase or decrease awards under the LTIP and may approve the payment of awards where performance would otherwise not meet the minimum criteria set for payment of awards.
If an award is earned under the LTIP,EIP for the year, the Compensation Committee determines the combination of restricted stock and stock options into which the final dollar denominated LTIPEIP awards are converted to achieve the appropriate blend of (a) stockholder alignment, (b) compensation risk, (c) focus on long-term stock price appreciation, (d) executive retention, (e) cost effectiveness, and (f) efficient share utilization. RestrictedUnder the 2012 Plan, restricted stock generally vests over a four-year period. Dividendsperiod; dividends accrue on the restricted stock but are not paid until the underlying restricted stock vests. For restricted stock issued under prior plans, dividends were paid on theunvested restricted stock. Stock options have an exercise price equal to the closing price on the date of grant and generally vest over a three-year period.
Fiscal 2010 LTIP2013 Equity Incentive Awards
Consistent with prior years, the Compensation Committee determined that the performance criterion for LTIPequity incentive awards for fiscal 2013 was adjusteddiluted earnings per share, from continuing operations which excludedadjusted for the impact of: (1) any capital market pre-financingand/or early pay-off of the $200 million public notes dueunusual items as described below in 2010; (2) special charges associated with streamlining efforts and asset impairments; (3) the adoption of ASC Topic 260, Earnings Per Share, which provided guidance on how to allocate earnings to participating securities and compute earnings per share using the two-class method; and (4) the distortive effect of acquisitions.further detail. The target earnings per share was $1.80,$3.15, with a threshold of $1.40$2.64 and a maximum of $2.00. The$3.70.
For most participants, the award formula payout percentage is 0% for threshold performance, 100% for target performance and 150% for maximum performance. For Messrs. Nagel, Reece and Black,the named executive officers, the award formula payout percentage is 0% for threshold performance, 200% for target performance, and 300% for maximum performance.performance, which is then subject to the application of negative discretion by the Compensation Committee. The payout percentage used in the award formula cannot exceed 150% (300% for Messrs. Nagel, Reece and Black)the named executive officers), even if actual performance exceeds the level of performance corresponding to the maximum payout percentage. The Compensation Committee was expectedtarget and maximum levels are structured this way to apply negative discretioncomply with the requirements of Section 162(m) of the Code (see “Tax Deductibility Policy” below).
Similar to the award for Messrs. Nagel, Reece and Black.
The following table outlines the awardfiscal 2013award targets and 2010 actual equity incentive award values under the LTIP for each of the named executive officers for fiscal 2010 as a dollar amount (in thousands). The target and maximum awards listed for Messrs. Nagel, Reece and Black assume a financial performance payout percentage of 200% and 300%, respectively. In setting these levels, we expected that the Compensation Committee would exercise negative discretion in determining the final awards for Messrs. Nagel, Reece and Black.
($ in thousands) | Individual | |||||||||||||||||||
Named Executive Officer | Target % | Threshold ($) | Target ($) | Maximum ($) | Actual ($) | |||||||||||||||
Vernon J. Nagel | 300 | 0 | 3,600 | 8,100 | 2,800 | (1) | ||||||||||||||
Richard K. Reece | 150 | 0 | 1,236 | 2,781 | 1,100 | (1) | ||||||||||||||
Mark A. Black | 135 | 0 | 1,026 | 2,309 | 700 | (1) | ||||||||||||||
Jeremy M. Quick | 90 | 0 | 288 | 648 | 335 | |||||||||||||||
C. Dan Smith | 60 | 0 | 135 | 270 | 200 | |||||||||||||||
($ in thousands) Named Executive Officer | Individual Target % | Threshold ($) | Target ($) | Maximum ($) | Actual ($)(1) | |||||||||||||||
Vernon J. Nagel | 300 | $ | 0 | $ | 3,600 | $ | 8,100 | $ | 3,200 | |||||||||||
Richard K. Reece | 150 | 0 | 1,275 | 2,869 | 1,000 | |||||||||||||||
Mark A. Black | 150 | 0 | 1,200 | 2,700 | 1,000 |
(1) | Reflects application of negative discretion by the Compensation Committee in determining final awards. |
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Actual adjusted diluted earnings per share for fiscal 2013 exceeded the target of $3.15 and resulted in a calculated payout of 107% of target. Individual LTIPEIP awards were made accordingly.
The following table provides details about the number of shares of restricted stock and stock options that were granted to the named executive officers by the Compensation Committee as LTIPequity incentive awards for fiscal 20102013 performance. In determining the allocation of equity awards between restricted stock and stock options, the Compensation Committee considered the items (a) through (f) described above. Two-thirds of the value of the LTIPEIP award was allocated to restricted stock, and one-third of the value was allocated to stock options. To determine the number of shares of restricted stock, the allocated value was divided by the closing price of our stock on October 24, 2013, the date of grant. To determine the number of stock options, the allocated value was divided by the Black-Scholes value of our stock on the date of grant.
Grant Date Fair | ||||||||||||||||
Number of | Number of Shares | Value of Restricted | ||||||||||||||
Shares of | Underlying | Exercise Price of | Stock and Stock | |||||||||||||
Named Executive Officer | Restricted Stock | Stock Option | Stock Option ($) | Option Award ($) | ||||||||||||
Vernon J. Nagel | 36,920 | 55,060 | $ | 50.56 | $ | 2,800,000 | ||||||||||
Richard K. Reece | 14,500 | 21,360 | 50.56 | 1,100,000 | ||||||||||||
Mark A. Black | 9,230 | 13,770 | 50.56 | 700,000 | ||||||||||||
Jeremy M. Quick | 4,420 | 6,590 | 50.56 | 335,000 | ||||||||||||
C. Dan Smith | 2,640 | 3,930 | 50.56 | 200,000 |
($ in thousands, except Exercise Price of Stock Option) Named Executive Officer | Number of Shares of Restricted Stock | Number of Shares Underlying Stock Option | Exercise Price of Stock Option ($) | Grant Date Fair Value of Restricted Stock and Stock Option Award ($) | ||||||||||||
Vernon J. Nagel | 20,568 | 31,036 | $ | 103.74 | $ | 3,200 | ||||||||||
Richard K. Reece | 6,428 | 9,700 | 103.74 | 1,000 | ||||||||||||
Mark A. Black | 6,428 | 9,700 | 103.74 | 1,000 |
Under SEC rules, because the LTIPequity incentive awards were granted on October 25, 2010,24, 2013, which was after the end of fiscal 2010,2013, the grant date fair values for these awards are not included in the Fiscal 20102013 Summary Compensation Table and the awards are not reflected in the Outstanding Equity Awards at Fiscal 20102013 Year-End table. The values will be included in the Summary Compensation Table forand reflected in the other compensation tables in fiscal 2011.
Special Equity Award Grants to Messrs. Reece and Smith
Grant Date Fair | ||||||||||||||||
Number of | Number of Shares | Value of Restricted | ||||||||||||||
Shares of | Underlying | Exercise Price of | Stock and Stock | |||||||||||||
Named Executive Officer | Restricted Stock | Stock Option | Stock Option ($) | Option Award ($) | ||||||||||||
Richard K. Reece | 7,910 | 11,800 | $ | 50.56 | $ | 600,000 | ||||||||||
C. Dan Smith | 1,980 | 2,950 | 50.56 | 150,000 |
Annual equity awards under the LTIPEIP are approved by the Compensation Committee and the Board following the end of the fiscal year. The chief executive officer may make interim equity awards to employees, other than the named executive officers, from a previously approved discretionary share pool on the first business day of each fiscal quarter based on prescribed criteria established by the Compensation Committee. We do not time the granting of equity awards to the disclosure of material information.
Executive Perquisites
Perquisites and other personal benefits comprised a minimal portion of our executive compensation program. The only perquisite or other personal benefit provided by us to executive officers in fiscal 20102013 was a Company
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Retirement Benefits
We provide retirement benefits under a number of defined benefit retirement plans. As of December 31, 2002, we froze the pension benefits under certain plans for all participants. This means that, while participants retain the pension benefits already accrued, no additional pension benefits accrue after the effective date of the freeze. However, executives formerly covered by the frozen pension plan receive a supplemental annual contribution under a deferred compensation plan, which is designed to replace benefits lost when the pension plan was frozen.
Effective January 1, 2003, we implemented the Acuity Brands, Inc. 2002 Supplemental Executive Retirement Plan (the “2002 SERP”) that. As amended in October 2012 following a competitive assessment of executive retirement benefits, the 2002 SERP provides a monthly benefit equal to 1.8%2.8% of average cash compensation (base salary and annual cash incentive payment, using the average for the three highest three consecutive years of remuneration out ofyear period during the ten years preceding an executive’s retirement)participant’s service with the Company) multiplied by years of service as an executive officer (up to a maximum of 10 years) divided by 12. Effective January 1, 2009, the monthly benefit multiplier was increased to 1.8% from 1.6% for active participants. Benefits are generally payable for a15-year period following retirement (as defined in the 2002 SERP). Messrs. Nagel, Reece and BlackThe named executive officers participated in the 2002 SERP in fiscal 2010. For Mr. Black, this was the first year in which he participated in the 2002 SERP.
We also maintain several deferred compensation plans which are described below under “Fiscal 20102013 Nonqualified Deferred Compensation.” The plans are designed to provide eligible participants an opportunity to defer compensation on a tax-efficient basis. Under certain plan provisions, we make contributions to participants’ accounts.
We maintain defined contribution plans (“401(k) plans”) for our eligible U.S. employees. The 401(k) plans provide for employee pre-tax contributions as well as employer matching contributions for most participants.
Change in Control Agreements
We have change in control agreements with our named executive officers that provide for separation payments and benefits, consistent with common market practices among our peers, upon qualifying terminations of employment in connection with a change in control of our Company. The Board of Directors intends for the change in
control agreements to provide the named executive officers some measure of security against the possibility of employment loss that may result following a change in control in order that they may devote their energies to meeting the business objectives and needs of our Company and our stockholders. For additional information on the change in control arrangements see “Potential Payments upon Termination—Change in Control Agreements” below.
Severance Agreements
To ensure that we are offering a competitive executive compensation program, we believe it is important to provide reasonable severance benefits to our named executive officers.
The severance agreements contain restrictive covenants with respect to confidentiality, non-solicitation, and non-competition and are subject to the execution of a release. The severance agreements are effective for a rolling two-year term, which will automatically extend each day for an additional day unless terminated by either party, in which case they will continue for two years after the notice of termination or for three years following a change in control.
For additional information on the severance arrangements see “Potential Payments upon Termination—Severance Agreements” below.
Equity Ownership Requirements
Our named executive officers are subject to a share ownership requirement. The requirements are intended to ensure that our executive officers maintain an equity interest in our Company at a level sufficient to assure our stockholders of their commitment to value creation, while addressing their individual needs for portfolio diversification. The
34
Multiple of Salary | ||
Vernon J. Nagel | 4X | |
Richard K. Reece | 3X | |
Mark A. Black | 3X | |
The ownership of each named executive officer that was our employee at the end of the fiscal year currently exceeds his requirement. For these purposes, ownership includes stock held directly, interests in restricted stock, restricted stock units, stock acquired through our employee stock purchase plan, and investments in our stock through our 401(k) plan. Stock options are not taken into consideration in meeting the ownership requirements.
Hedging, Pledging, and Insider Trading Policy
Our insider trading policy prohibits our employees, officers and directors from hedging their ownership of Acuity Brands stock, including the prohibition from engaging in short sales of Acuity Brands stock and from purchasing or selling any derivative securities, or entering into any derivatives contracts relating to our securities. Our insider trading policy also prohibits our employees, officers, and directors from purchasing or selling Acuity Brands securities while in possession of material non-public information. None of our named executive officers holds any of our stock subject to pledge. Of our non-employee directors, only one holds a nominal amount of our stock subject to pledge.
Tax Deductibility Policy
Section 162(m) of the Code generally limits for a public company the tax deductibility of compensation ofto the chief executive officer and ourthe three other executive officers (other than ourthe chief executive officer and our chief
financial officer) who are the highest paid and employed at year-end to $1 million per year unless the compensation qualifies as “performance-based” compensation. While we do not design compensation programs solely for tax purposes, we design plans to be tax efficient where possible. However, the Compensation Committee may exercise discretion in those instances when the mechanistic approaches under tax laws would compromise the interest of stockholders. While the Compensation Committee does not intend that an executive officer will earn such an amount, the program is designed to permit the Compensation Committee to reward outstanding performance while retaining the tax deductibility of the award. The Compensation Committee continues to have the ability to use negative discretion in calculating an appropriate award. In itsa decision to grant discretionary restricted stock and cash awards to certainthe named executive officers, the Compensation Committee consideredconsiders that such awards may not be deductible.
Role of Executive Officers
As discussed above, the chief executive officer reports to the Compensation Committee on his evaluations of the senior executives, including the other named executive officers. He makes compensation recommendations for the other named executive officers with respect to base salary, merit increases, and annual cash bonus and long-term incentives,equity incentive awards, which are the basis of discussion with the Compensation Committee. The chief financial officer evaluates the financial implications of any proposed Compensation Committee action.
Meetings of the Compensation Committee are regularly attended by the chief executive officer and the corporate secretary. Frequently, the chief financial officer also attends meetings of the Committee.
35
The following table presents compensation data for the named executive officers for fiscal 20102013 Summary Compensation Table2010, 20092013, 2012 and 2008, or for such shorter time period as the person has been a2011. Because we have only three executive officers, all are named executive officer.officers under SEC rules. Change in Pension Value and Nonquali- Non-Equity fied Incentive Deferred All Plan Compen- Other Stock Option Compen- sation Compen- Name and Principal Salary Bonus Awards Awards sation Earnings sation Total Year ($) ($)(1) ($)(2) ($)(2) ($)(3) ($)(4) ($)(5) ($) Vernon J. Nagel 2010 $ 600,000 $ -0- $ 1,332,902 $ 667,210 $ 2,200,000 $ 935,315 $ 47,154 $ 5,782,581 Chairman, President and 2009 600,000 -0- 2,000,696 999,348 -0- 919,041 40,530 4,559,615 Chief Executive Officer 2008 600,000 -0- 1,933,920 1,038,016 3,000,000 746,460 38,446 7,356,842 Richard K. Reece 2010 412,000 -0- 467,186 233,412 700,000 257,458 8,820 2,078,876 Executive Vice President 2009 409,000 -0- 838,548 452,766 -0- 211,296 8,652 1,920,262 and Chief Financial Officer 2008 400,000 -0- 664,785 358,512 850,000 131,960 8,280 2,413,537 Mark A. Black 2010 365,000 -0- 333,226 166,803 500,000 316,415 10,080 1,691,524 Executive Vice President, 2009 315,000 -0- 673,820 380,560 -0- -0- 34,900 1,404,280 Acuity Brands Lighting, Inc. 2008 300,000 -0- 334,407 179,256 570,000 -0- 30,600 1,414,263 Jeremy M. Quick 2010 320,000 -0- 113,866 56,534 300,000 -0- 41,206 831,606 Executive Vice President 2009 317,500 65,000 333,982 166,373 -0- -0- 43,748 926,603 and Chief Financial Officer, Acuity Brands Lighting, Inc. 2008 310,000 -0- 512,967 157,023 525,000 965 45,044 1,550,999 C. Dan Smith(6) 2010 220,000 -0- 80,376 39,742 200,000 1,232 35,969 577,319 Senior Vice President, Treasurer, and Secretary, Acuity Brands, Inc. 2009 203,750 45,000 188,430 -0- -0- 1,275 33,657 472,112
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compen- sation ($)(2) | Change in Pension Value and Nonquali- fied Deferred Compen- sation Earnings ($)(3) | All Other Compen- sation ($)(4) | Total ($) | |||||||||||||||||||||||||||
Vernon J. Nagel | 2013 | $ | 600,000 | $ | –0– | $ | 2,000,029 | $ | 999,936 | $ | 1,000,000 | $ | 2,306,138 | $ | 52,900 | $ | 6,959,003 | |||||||||||||||||||
Chairman, President and | 2012 | 600,000 | –0– | 2,000,191 | 999,930 | 2,200,000 | 1,020,767 | 50,654 | 6,871,542 | |||||||||||||||||||||||||||
Chief Executive Officer | 2011 | 600,000 | –0– | 1,866,675 | 933,267 | 1,500,000 | 573,071 | 48,860 | 5,521,873 | |||||||||||||||||||||||||||
Richard K. Reece | 2013 | 421,750 | –0– | 666,676 | 333,238 | 325,000 | 952,412 | 9,180 | 2,708,256 | |||||||||||||||||||||||||||
Executive Vice President | 2012 | 412,000 | –0– | 733,234 | 366,718 | 675,000 | 381,515 | 8,820 | 2,577,287 | |||||||||||||||||||||||||||
and Chief Financial Officer | 2011 | 412,000 | –0– | 1,133,050 | (5) | 566,639 | (5) | 550,000 | 208,994 | 8,820 | 2,879,503 | |||||||||||||||||||||||||
Mark A. Black | 2013 | 395,000 | –0– | 666,676 | 333,238 | 350,000 | 714,826 | 9,180 | 2,468,920 | |||||||||||||||||||||||||||
Executive Vice President | 2012 | 380,000 | –0– | 513,356 | 256,637 | 675,000 | 326,923 | 8,820 | 2,160,736 | |||||||||||||||||||||||||||
2011 | 380,000 | –0– | 466,669 | 233,402 | 425,000 | 106,180 | 8,820 | 1,620,071 |
(1) | ||
Represents the grant date fair value of restricted stock and option awards granted during the applicable fiscal year. The assumptions used to value option awards granted in and prior to fiscal |
Represents amounts earned under the Annual Cash Incentive Plan for the applicable fiscal year. For fiscal 2013, awards were earned at approximately 50% of target. For information about the |
Represents the increase in the actuarial present value of benefits under the 2002 |
(4) | For fiscal 2013, includes the following: |
Non-qualified Deferred Compensation Plan Contributions ($) | 401(k) Match ($) | Company Match on Charitable Contributions ($) | Total All Other Compensation ($) | |||||||||||||
Mr. Nagel | $ | 38,720 | $ | 9,180 | $ | 5,000 | $ | 52,900 | ||||||||
Mr. Reece | –0– | 9,180 | –0– | 9,180 | ||||||||||||
Mr. Black | –0– | 9,180 | –0– | 9,180 |
(5) | The 2011 stock and option award values for Mr. Reece include a special equity award valued at $600,000 ($400,000 stock award and $200,000 option award) to recognize his performance and contributions related to certain key strategic growth initiatives, particularly those associated with acquisition activities. |
Non-qualified Deferred | Company Match | |||||||||||||||||||
Compensation Plan | on Charitable | Total All Other | ||||||||||||||||||
Contributions | 401(k) Match | Auto Allowance | Contributions | Compensation | ||||||||||||||||
($) | ($) | ($) | ($) | ($) | ||||||||||||||||
Mr. Nagel | $ | 33,334 | $ | 8,820 | $ | -0- | $ | 5,000 | $ | 47,154 | ||||||||||
Mr. Reece | -0- | 8,820 | -0- | -0- | $ | 8,820 | ||||||||||||||
Mr. Black | -0- | 10,080 | -0- | -0- | $ | 10,080 | ||||||||||||||
Mr. Quick | 30,800 | 9,156 | -0- | 1,250 | $ | 41,206 | ||||||||||||||
Mr. Smith | 23,683 | 8,586 | 1,200 | 2,500 | $ | 35,969 |
36
The following table provides information about equity and non-equity awards for fiscal 20102013 for each of the named executive officers. Non-equity incentive plan awards arefor fiscal 2013 were made under the Acuity Brands, Inc. 20072012 Management Compensation andCash Incentive Plan, and equityPlan. Equity awards arefor fiscal 2012 (reflected in the table below) were made under the Amended and Restated Acuity Brands, Inc. 2007 Long-Term Incentive Plan.
All Other | All Other | Grant | ||||||||||||||||||||||||||||||||||||||||||
Stock | Option | Date | ||||||||||||||||||||||||||||||||||||||||||
Awards: | Awards: | Fair Value | ||||||||||||||||||||||||||||||||||||||||||
Number | Number | of Stock | ||||||||||||||||||||||||||||||||||||||||||
Estimated Possible Payouts under | Estimated Possible Payouts under | of Shares | of Securities | Exercise or Base | and | |||||||||||||||||||||||||||||||||||||||
Non-Equity Incentive Plan Awards(1) | Equity Incentive Plan Awards(2) | of Stock | Underlying | Price of Option | Option | |||||||||||||||||||||||||||||||||||||||
Grant | Threshold | Target | Maximum | Threshold | Target | Maximum | or Units | Options | Awards | Awards | ||||||||||||||||||||||||||||||||||
Name | Date | ($) | ($) | ($) | ($) | ($) | ($) | (#)(3) | (#)(3) | ($/Sh) | ($)(4) | |||||||||||||||||||||||||||||||||
Vernon J. Nagel | $ | -0- | $ | 1,800,000 | $ | 4,000,000 | ||||||||||||||||||||||||||||||||||||||
$ | -0- | $ | 3,600,000 | $ | 8,100,000 | |||||||||||||||||||||||||||||||||||||||
10/26/09 | 59,600 | $ | 33.49 | $ | 667,210 | |||||||||||||||||||||||||||||||||||||||
10/26/09 | 39,800 | 1,332,902 | ||||||||||||||||||||||||||||||||||||||||||
Richard K. Reece | -0- | 535,600 | 2,249,520 | |||||||||||||||||||||||||||||||||||||||||
-0- | 1,236,000 | 2,781,000 | ||||||||||||||||||||||||||||||||||||||||||
10/26/09 | 20,850 | 33.49 | 233,412 | |||||||||||||||||||||||||||||||||||||||||
10/26/09 | 13,950 | 467,186 | ||||||||||||||||||||||||||||||||||||||||||
Mark A. Black | -0- | 494,000 | 2,074,800 | |||||||||||||||||||||||||||||||||||||||||
-0- | 1,026,000 | 2,308,500 | ||||||||||||||||||||||||||||||||||||||||||
10/26/09 | 14,900 | 33.49 | 166,803 | |||||||||||||||||||||||||||||||||||||||||
10/26/09 | 9,950 | 333,226 | ||||||||||||||||||||||||||||||||||||||||||
Jeremy M. Quick | -0- | 176,000 | 739,200 | |||||||||||||||||||||||||||||||||||||||||
-0- | 288,000 | 648,000 | ||||||||||||||||||||||||||||||||||||||||||
10/26/09 | 5,050 | 33.49 | 56,534 | |||||||||||||||||||||||||||||||||||||||||
10/26/09 | 3,400 | 113,866 | ||||||||||||||||||||||||||||||||||||||||||
C. Dan Smith | -0- | 90,000 | 378,000 | |||||||||||||||||||||||||||||||||||||||||
-0- | 135,000 | 303,750 | ||||||||||||||||||||||||||||||||||||||||||
10/26/09 | 3,550 | 33.49 | 39,742 | |||||||||||||||||||||||||||||||||||||||||
10/26/09 | 2,400 | 80,376 |
Estimated Possible Payouts under Non-Equity Incentive Plan Awards(1) | Estimated Possible Payouts under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | All Other Option Awards: Number of Securities Underlying Options (#)(3) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(4) | |||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold ($) | Target ($) | Maximum ($) | |||||||||||||||||||||||||||||||||||||
Vernon J. Nagel | $ | –0– | $ | 2,400,000 | $ | 6,000,000 | ||||||||||||||||||||||||||||||||||||||
$ | –0– | $ | 3,600,000 | $ | 8,100,000 | |||||||||||||||||||||||||||||||||||||||
10/23/12 | 44,800 | $ | 62.54 | $ | 999,936 | |||||||||||||||||||||||||||||||||||||||
10/23/12 | 31,980 | 2,000,029 | ||||||||||||||||||||||||||||||||||||||||||
Richard K. Reece | –0– | 680,000 | 2,856,000 | |||||||||||||||||||||||||||||||||||||||||
–0– | 1,275,000 | 2,868,750 | ||||||||||||||||||||||||||||||||||||||||||
10/23/12 | 14,930 | 62.54 | 333,238 | |||||||||||||||||||||||||||||||||||||||||
10/23/12 | 10,660 | 666,676 | ||||||||||||||||||||||||||||||||||||||||||
Mark A. Black | –0– | 640,000 | 2,688,000 | |||||||||||||||||||||||||||||||||||||||||
–0– | 1,200,000 | 2,700,000 | ||||||||||||||||||||||||||||||||||||||||||
10/23/12 | 14,930 | 62.54 | 333,238 | |||||||||||||||||||||||||||||||||||||||||
10/23/12 | 10,660 | 666,676 |
(1) | These columns show the possible fiscal 2013 payout for each named executive officer under the | |
(2) | These columns show the potential value, in dollars, of the fiscal 2013 equity payout for each named executive officer | |
(3) | These columns show the number of restricted shares and stock options granted on October | |
(4) | This column shows the grant date fair value of the restricted stock and the stock options under ASC Topic 718. The grant date fair value of restricted stock awards is calculated using the closing price of our common stock on the |
37
the time of the award using the Black-Scholes Model. The following variables were used for the October |
The following table provides information on the holdings of stock options and restricted stock awards by the named executive officers at August 31, All stock options disclosed in the following table vest ratably in three equal annual installments beginning one year from the grant date. All restricted stock grants disclosed in the following table vest ratably in four equal annual installments beginning one year from the grant date. The named executive officers earned 20102013 Year-End2010.2013. The table includes unexercised option awards and unvested restricted stock awards. The vesting schedule for each grant is shown following the table, based on the option or stock award grant date. The option exercise prices shown below are the closing market price of our common stock on the New York Stock ExchangeNYSE on the grant date.LTIPequity incentive awards for fiscal 2010;2013; however, because these awards were granted after the end of the fiscal year, they do not appear in the table. See “Compensation Discussion and Analysis—Elements of Executive Compensation—Long-Term Incentives”Fiscal 2013 Equity Incentive Awards” for a description of the 2010 LTIPfiscal 2013 awards that were granted on October 25, 2010. Option Awards Number Stock Awards of Number Market Securities Number of Value Under- of Shares of lying Securities or Units Shares Unexer- Underlying of Stock or Units cised Unexercised That of Stock Options Options Option Stock Have That Option Exercis- Unexercis- Exercise Option Award Not Have Not Grant able able Price Expiration Grant Vested Vested Name Date (#) (#) ($) Date Date (#) ($)(1) Vernon J. Nagel 12/18/03 83,005 –0– 19.58 12/17/13 1/20/04 181,518 –0– 21.17 1/19/14 1/20/04 181,518 –0– 25.62 * 1/19/14 9/29/06 181,518 –0– 37.52 9/28/16 11/2/07 49,800 24,900 40.29 11/1/17 10/24/08 29,934 59,866 31.96 10/23/18 10/26/09 –0– 59,600 33.49 10/25/19 9/29/06 9,850 $ 381,589 11/2/07 24,000 929,760 10/24/08 46,950 1,818,843 10/26/09 39,800 1,541,852 — Richard K. Reece 12/1/05 60,506 -0- 26.44 11/30/15 11/2/07 17,200 8,600 40.29 11/1/17 10/24/08 9,500 19,000 31.96 10/23/18 4/6/09 6,000 12,000 22.86 4/5/19 10/26/09 -0- 20,850 33.49 10/25/19 9/29/06 3,750 145,275 11/2/07 8,250 319,605 10/24/08 14,850 575,289 4/6/09 6,750 261,495 10/26/09 13,950 540,423 — Mark A. Black 11/2/07 -0- 4,300 40.29 11/1/17 10/24/08 -0- 11,966 31.96 10/23/18 4/6/09 -0- 16,000 22.86 4/5/19 10/26/09 -0- 14,900 33.49 10/25/19 9/1/06 5,000 193,700 11/2/07 4,150 160,771 10/24/08 9,375 363,188 4/6/09 9,000 348,660 10/26/09 9,950 385,463 — 38
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name | Option Grant Date | Number of Securities Under- lying Unexer- cised Options Exercis- able (#) | Number of Securities Underlying Unexercised Options Unexercis- able (#) | Option Exercise Price ($) | Option Expiration Date | Stock Award Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | ||||||||||||||||||||||||
Vernon J. Nagel | 9/29/06 | 81,518 | –0– | 37.52 | 9/28/16 | |||||||||||||||||||||||||||
11/02/07 | 74,700 | –0– | 40.29 | 11/01/17 | ||||||||||||||||||||||||||||
10/24/08 | 89,800 | –0– | 31.96 | 10/23/18 | ||||||||||||||||||||||||||||
10/26/09 | 59,600 | –0– | 33.49 | 10/25/19 | ||||||||||||||||||||||||||||
10/25/10 | 36,707 | 18,353 | 50.56 | 10/24/20 | ||||||||||||||||||||||||||||
10/24/11 | 20,287 | 40,573 | 46.29 | 10/23/21 | ||||||||||||||||||||||||||||
10/23/12 | –0– | 44,800 | 62.54 | 10/22/22 | ||||||||||||||||||||||||||||
10/26/09 | 9,950 | 850,725 | ||||||||||||||||||||||||||||||
10/25/10 | 18,460 | 1,578,330 | ||||||||||||||||||||||||||||||
10/24/11 | 32,408 | 2,770,884 | ||||||||||||||||||||||||||||||
10/23/12 | 31,980 | 2,734,290 | ||||||||||||||||||||||||||||||
Richard K. Reece | 11/02/07 | 25,800 | –0– | 40.29 | 11/01/17 | |||||||||||||||||||||||||||
10/24/08 | 28,500 | –0– | 31.96 | 10/23/18 | ||||||||||||||||||||||||||||
10/26/09 | 20,850 | –0– | 33.49 | 10/25/19 | ||||||||||||||||||||||||||||
10/25/10 | 22,287 | 11,143 | 50.56 | 10/24/20 | ||||||||||||||||||||||||||||
10/24/11 | 7,440 | 14,880 | 46.29 | 10/23/21 | ||||||||||||||||||||||||||||
10/23/12 | –0– | 14,930 | 62.54 | 10/22/22 | ||||||||||||||||||||||||||||
10/26/09 | 3,487 | 298,139 | ||||||||||||||||||||||||||||||
10/25/10 | 11,205 | 958,028 | ||||||||||||||||||||||||||||||
10/24/11 | 11,880 | 1,015,740 | ||||||||||||||||||||||||||||||
10/23/12 | 10,660 | 911,430 | ||||||||||||||||||||||||||||||
Mark A. Black | 10/25/10 | –0– | 4,590 | 50.56 | 10/24/20 | |||||||||||||||||||||||||||
10/24/11 | –0– | 10,413 | 46.29 | 10/23/21 | ||||||||||||||||||||||||||||
10/23/12 | –0– | 14,930 | 62.54 | 10/22/22 | ||||||||||||||||||||||||||||
10/26/09 | 2,487 | 212,639 | ||||||||||||||||||||||||||||||
10/25/10 | 4,615 | 394,583 | ||||||||||||||||||||||||||||||
10/24/11 | 8,318 | 711,189 | ||||||||||||||||||||||||||||||
10/23/12 | 10,660 | 911,430 |
Option Awards | ||||||||||||||||||||||||||||||||
Number | Stock Awards | |||||||||||||||||||||||||||||||
of | Number | Market | ||||||||||||||||||||||||||||||
Securities | Number | of | Value | |||||||||||||||||||||||||||||
Under- | of | Shares | of | |||||||||||||||||||||||||||||
lying | Securities | or Units | Shares | |||||||||||||||||||||||||||||
Unexer- | Underlying | of Stock | or Units | |||||||||||||||||||||||||||||
cised | Unexercised | That | of Stock | |||||||||||||||||||||||||||||
Options | Options | Option | Stock | Have | That | |||||||||||||||||||||||||||
Option | Exercis- | Unexercis- | Exercise | Option | Award | Not | Have Not | |||||||||||||||||||||||||
Grant | able | able | Price | Expiration | Grant | Vested | Vested | |||||||||||||||||||||||||
Name | Date | (#) | (#) | ($) | Date | Date | (#) | ($)(1) | ||||||||||||||||||||||||
Jeremy M. Quick | 8/23/05 | 18,151 | –0– | 23.71 | 8/22/15 | |||||||||||||||||||||||||||
11/2/07 | 7,534 | 3,766 | 40.29 | 11/1/17 | ||||||||||||||||||||||||||||
10/24/08 | 4,984 | 9,966 | 31.96 | 10/23/18 | ||||||||||||||||||||||||||||
10/26/09 | –0– | 5,050 | 33.49 | 10/25/19 | ||||||||||||||||||||||||||||
9/29/06 | 2,775 | 107,504 | ||||||||||||||||||||||||||||||
11/2/07 | 3,650 | 141,401 | ||||||||||||||||||||||||||||||
3/27/08 | 2,500 | 96,850 | ||||||||||||||||||||||||||||||
10/24/08 | 7,837 | 303,605 | ||||||||||||||||||||||||||||||
10/26/09 | 3,400 | 131,716 | ||||||||||||||||||||||||||||||
— | ||||||||||||||||||||||||||||||||
C. Dan Smith | 10/26/09 | –0– | 3,550 | 33.49 | 10/25/19 | |||||||||||||||||||||||||||
9/29/06 | 550 | 21,307 | ||||||||||||||||||||||||||||||
11/2/07 | 1,600 | 61,984 | ||||||||||||||||||||||||||||||
10/24/08 | 2,812 | 108,937 | ||||||||||||||||||||||||||||||
4/6/09 | 2,250 | 87,165 | ||||||||||||||||||||||||||||||
10/26/09 | 2,400 | 92,976 | ||||||||||||||||||||||||||||||
— |
(1) | The market value is calculated as the product of (a) |
The following table provides information for the named executive officers on the number of shares acquired upon the exercise of stock options, the vesting of restricted stock awards and the value realized during fiscal year 2013, each before payment of any applicable withholding tax and broker commissions.20102013 Option Awards Stock Awards Number of Number Shares Value of Shares Value Acquired on Realized Acquired Realized Exercise on Exercise on Vesting on Vesting Name (#) ($)(1) (#) ($)(2) Vernon J. Nagel 48,405 $ 1,348,647 37,500 $ 1,236,056 Richard K. Reece –0– –0– 21,325 732,319 Mark A. Black 22,584 287,584 13,200 469,437 Jeremy M. Quick –0– –0– 8,913 304,587 C. Dan Smith –0– –0– 3,288 118,577
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | ||||||||||||
Vernon J. Nagel | 281,518 | $ | 12,245,459 | 45,632 | $ | 2,916,257 | ||||||||||
Richard K. Reece | 78,506 | 3,417,277 | 20,250 | 1,313,985 | ||||||||||||
Mark A. Black | 14,763 | 265,750 | 13,692 | 900,352 |
(1) | The value realized is the difference between the closing market price on the date of exercise and the exercise price, multiplied by the number of options exercised. | |
(2) | The value realized is the closing market price on the day the stock awards vest, multiplied by the total number of shares vesting. |
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The table below sets forth information on the supplemental retirement plan and pension benefits for named executive officers under the plans described below.
2002 Acuity Brands, Inc. Supplemental Executive Retirement Plan. The 2002 Acuity Brands, Inc. Supplemental Executive Retirement Plan (the “2002 SERP”)SERP is an unfunded, nonqualified retirement benefit plan that is offered to certain executive officers of the Company to provide retirement benefits above amounts available under the Company’s tax-qualified defined contribution plans. Messrs. Nagel, Reece, and Black participated in the 2002 SERP in fiscal 2010.
Benefits payable under the SERP are paid for 180 months commencing on the executive’s normal retirement date, which is defined as retirement at age 60, in a monthly amount equal to 1.8%2.8% (“monthly benefit factor”) of the executive’s average annual compensation multiplied by the executive’s years of credited service and divided by 12. Average annual compensation is defined as the average of the executive’s salary and annual cash incentive payment for the three highest consecutive calendar years during the ten years precedingparticipant’s service with the executive’s retirement, death, or other termination of service.Company. An executive is credited with one year of credited service for each plan year in which the executive serves as an executive officer of the Company on a full time basis. Total years of credited service cannot exceed ten years, although compensation earned after completing ten years of credited service may be counted for purposes of determining the executive’s average annual compensation and accrued benefit under the 2002 SERP. A reduced retirement benefit can commence between ages 55 and 60. We do not have a policy for granting extra years of credited service under the 2002 SERP, except in connection with a change in control as provided in an executive’s change in control agreement. Participants vest in their plan benefit after three years of credited service.
Pension Benefits Table for Fiscal 20102013
The amounts reported in the table below equal the present value of the accumulated benefit in the 2002 SERP at August 31, 2010,2013 for the date used by our actuaries in determining fiscal year expense.named executive officers. The assumptions used to calculate the present value of the accumulated benefit are described in the footnotes to the table. Mr. Quick is not a participant in the 2002 SERP and Pension Plan C.
Number of Years | Present Value of | Payments During | ||||||||||||||
Credited Service | Accumulated Benefit | Last Fiscal Year | ||||||||||||||
Name | Plan Name | (#) | ($) | ($) | ||||||||||||
Vernon J. Nagel (1) | 2002 SERP | 8.75 | $ | 3,506,488 | $ | –0– | ||||||||||
Richard K. Reece (1) | 2002 SERP | 4.75 | 771,089 | –0– | ||||||||||||
Mark A. Black (1)(3) | 2002 SERP | 4.00 | 316,415 | –0– | ||||||||||||
Jeremy M. Quick | N/A | N/A | N/A | N/A | ||||||||||||
C. Dan Smith (2) | Pension Plan C | 5.00 | 13,781 | –0– |
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Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($)(1) | Payments During Last Fiscal Year ($) | |||||||||
Vernon J. Nagel | 10.00 | $ | 7,406,464 | $ | –0– | |||||||
Richard K. Reece | 7.75 | 2,314,010 | –0– | |||||||||
Mark A. Black | 7.00 | 1,464,344 | –0– |
(1) | The accumulated benefit in the 2002 SERP is based on service and earnings (base salary and bonus, as described above) considered by the 2002 SERP for the period through August 31, | |
The table below provides information on 2005 Acuity Brands, Inc. Supplemental Deferred Savings Plan. The 2005 Acuity Brands, Inc. Supplemental Deferred Savings Plan (the “2005 SDSP”) is an unfunded nonqualified plan under which key employees, including the named executive officers that are Deferred cash units earn interest income on the daily outstanding balance in the account based on the prime rate. Interest is credited monthly and is compounded annually. Contributions made in or after 2005 may be paid in a lump sum or Mr. Nagel 2001 Acuity Brands, Inc. Supplemental Deferred Savings Plan. The 2001 Acuity Brands, Inc. Supplemental Deferred Savings Plan (the “2001 SDSP”) covers the same general group of eligible employees and operates in a similar manner to the 2005 SDSP, except that it encompasses executive and Company contributions that were vested as of December 31, 2004 and, therefore, are not subject to the provisions of Section 409A. Executive deferrals may20102013 Nonqualified Deferred Compensationthe nonqualified deferred compensation of the named executive officers in fiscal 20102013 under the plans described below.not eligible to participate in the 2002 SERP, are able to annually defer up to 50% of salary and annual cash incentive payment as cash units. The 2005 SDSP replaced the 2001 SDSP (described below)Acuity Brands, Inc. Supplemental Deferred Savings Plan (the “2001 SDSP”) and is designed to comply with certain new tax law requirements, including Section 409A of the Internal Revenue Code (Section 409A)(“Section 409A”).inup to 10 annual installments at the executive’s election. The executive may direct that his deferrals and related earnings be credited to accounts to be distributed during his employment (in-service accounts) andand/or to a retirement account. In-service accounts may be distributed in a lump sum or up to ten annual installments no earlier than two years following the last deferral to the account. The executive may change the form of distribution twice during the period up to one year prior to termination or retirement, with the new distribution being delayed at least an additional five years in accordance with Section 409A.Except for the period during which an executive serves as an executive officer of Acuity Brands and is eligible for the 2002 SERP, as discussed above, beginning in 2009 an executive is eligible for a Company match of 50% (increased from 25% in 2008) of his deferrals up to a maximum of 5% of compensation (salary and annual incentive payment) and is eligible for a supplemental Company contribution of 3% of compensation. Executives vest in Company contributions, made prior to January 1, 2009, 50% upon attaining age 55 and completing at least five years of service, with vesting thereafter of an additional 10% each year up to 100% with 10 years of service and Company contributions made after December 31, 2008, 30% after three years of service and increasing by 10% per year thereafter. All Company contributions are contributed to the retirement account. Vested Company contributions are only eligible to be distributed at or following termination. Messrs.and Smith receivereceives annual company contributions to the 2005 SDSP, which are immediately vested, in replacement of benefits lost when a prior SERPsenior executive retirement plan (“prior SERP”) was frozen; however, Messrs. Nagel, Reece, and Pension Plan C were frozen.41
sooner than five years following the calendar year of deferral. Company contributions are distributed at or following termination in a lump sum or installments at the employee’s election, which must be in place twenty-four months prior to termination. Prior to 2006, Messrs.Mr. Nagel and Smith received annual company contributions to the 2001 SDSP, which were immediately vested, in replacement of benefits lost when athe prior SERP and Pension Plan C werewas frozen.
Nonqualified Deferred Compensation Benefits Table for Fiscal 20102013
The table below provides information on the nonqualified deferred compensation of the named executive officers in fiscal 2010.2013. Messrs. Reece and Black diddo not participate in the plans in fiscal 2010.
Executive | Registrant | Aggregate | Aggregate | |||||||||||||||||||||
Contributions | Contributions | Earnings | Aggregate | Balance at | ||||||||||||||||||||
in | in | in | Withdrawals/ | 2010 Fiscal | ||||||||||||||||||||
Fiscal 2010 | Fiscal 2010 | Fiscal 2010 | Distributions | Year End | ||||||||||||||||||||
Name | Plan | ($)(1)(2) | ($)(2)(3) | ($)(2)(4) | ($) | ($) | ||||||||||||||||||
Vernon J. Nagel | 2005 SDSP | $ | –0– | $ | 33,334 | $ | 5,025 | $ | –0– | $ | 170,616 | |||||||||||||
2001 SDSP | –0– | –0– | 2,236 | –0– | 71,052 | |||||||||||||||||||
Richard K. Reece | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||
Mark A. Black (5) | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||
Jeremy M. Quick | 2005 SDSP | 29,167 | 30,800 | 12,319 | –0– | 411,094 | ||||||||||||||||||
C. Dan Smith | 2005 SDSP | 28,375 | 23,683 | 6,464 | (19,010 | ) | 219,654 | |||||||||||||||||
2001 SDSP | –0– | –0– | 230 | –0– | 7,282 |
Name | Plan | Executive Contributions in Fiscal 2013 ($) | Registrant Contributions in Fiscal 2013 ($)(1) | Aggregate Earnings in Fiscal 2013 ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at 2013 Fiscal Year End ($) | ||||||||||||||||||
Vernon J. Nagel | 2005 SDSP | $ | –0– | $ | 38,720 | $ | 9,179 | $ | –0– | $ | 304,403 | |||||||||||||
2001 SDSP | –0– | –0– | 2,462 | –0– | 78,212 | |||||||||||||||||||
Richard K. Reece | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||
Mark A. Black | N/A | N/A | N/A | N/A | N/A | N/A |
(1) | Amounts shown in this column reflect contributions to the deferred compensation plan for Mr. Nagel, which were immediately vested, in replacement of benefits lost when the prior SERP was frozen, and are also reported in the “All Other Compensation” column in the Fiscal | |
None of the earnings in fiscal | ||
At the time we first hire an associate, we generally provide the associate with a letter outlining the effective date of his or her employment, the basic compensation arrangements for the associate’s at-will employment, any benefits to which the associate is entitled, and whether the associate is entitled to participate in any severance or change in control benefits. Pursuant to our currentfiscal 2013 employment arrangements with Mr. Nagel, he receives an annual salary of $600,000 and is entitled to a target annual cash incentive opportunity as a percentage of base salary under the Annual Cash Incentive Plan and a target long-termequity incentive opportunity as a percentage of base salary under the LTIP.EIP. He is entitled to participate in employee benefit plans and perquisites afforded to executives at his level, continued coverage in the 2002 SERP, participationparticipate in the 2005 SDSP, and coverage under the Company’s director and officer liability insurance. Mr. Nagel is a party to a severance agreement and a change in control agreement as described under “Potential Payments Upon Termination” below.42
Pursuant to our currentfiscal 2013 employment arrangements with Mr. Black, he receives an annual salary of $380,000 effective$400,000 (effective as of November 1, 2009,2012) and is entitled to a target annual cash incentive opportunity as a percentage of base salary under the Annual Cash Incentive Plan and a target long-termequity incentive opportunity as a
percentage of base salary under the LTIP.EIP. He is entitled to participate in employee benefit plans and perquisites afforded to executives at his level, participationcontinued coverage in the 2002 SERP, participate in the 2005 SDSP, and coverage under the Company’s director and officer liability insurance. On October 26, 2009, Mr. Black became eligible to participate in the 2002 SERP, retroactive to his hire date of September 1, 2009. Mr. Black is a party to a severance agreement and a change in control agreement as described under “Potential Payments Upon Termination” below.
We have entered into severance agreements and change in control agreements with our named executive officers. The terms of these agreements are described below. Severance Agreements The severance agreements for the named executive officers provide benefits to the executive in the event the executive’s employment is involuntarily terminated by us without cause. Mr. Nagel’s agreement will also provide benefits if he terminates his employment at any time for good reason and Mr. Reece’s agreement will provide benefits if he terminates his employment for good reason after a change in control (as each such term is defined in the severance agreement). Under the severance agreements, a good reason for termination by an executive of his employment with us means the occurrence of any of the following acts by us which has not been corrected within 30 days after written notice is given to us by the executive:
an adverse change in the executive’s title or position which represents a demotion; | ||
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a reduction in base salary and target bonus opportunity (not the bonus actually earned) below the level in the employment letter for Mr. Nagel and below the level in effect immediately prior to the change in control for Mr. Reece, unless such reduction is consistent with reductions being made at the same time for other of our officers in comparable positions;
a material reduction in the aggregate benefits provided to the executive by us under employee benefits plans, except in connection with a reduction in benefits which is consistent with reductions being made at the same time for other of our officers in comparable positions;
an insolvency or bankruptcy filing by us; or
a material breach by us of the severance agreement.
Under the severance agreements, the involuntary termination of an executive by the Company for the following reasons constitutes a termination for cause:
termination is the result of an act or acts by the executive which have been found in an applicable court of law to constitute a felony (other than traffic-related offenses);
termination is the result of an act or acts by the executive which are in the good faith judgment of the Company to be in violation of law or of written policies of the Company and which result in material injury to Acuity Brands;
termination is the result of an act or acts of dishonesty by the executive resulting or intended to result directly or indirectly in gain or personal enrichment to the executive at the expense of the Company; or
the continued failure by the executive substantially to perform the duties reasonably assigned to him, after a demand in writing for substantial performance of such duties is delivered by the Company.
Severance agreements provide for the terms set forth in the table below as described below:
monthly | ||
continuation of health care and life insurance coverage for the severance period;
outplacement services not to exceed 10% of base salary;
a cash payment based on a predefined percentage of base salary, calculated on a pro rata basis; and
additional benefits, at the discretion of the Compensation Committee, including without limitation, additional retirement benefits and acceleration of equity incentive awards, if the executive is terminated prior to age 65 and suffers a diminution of projected benefits.
The severance agreements for Messrs. Nagel and Reece also provide for:
accelerated vesting of any performance-based restricted stock for which performance targets have been achieved; and
that the Company will pay reasonable legal fees and related expenses incurred by an executive who is successful to a significant extent in enforcing his rights under the severance agreements.
The severance agreement for Mr. Nagel also provides for:
continued vesting during the severance period of unvested stock options;
exercisability of vested stock options and stock options that vest during the severance period for the shorter of the remaining exercise term or the length of the severance period;
accelerated vesting during the severance period of restricted stock that is not performance-based on a monthly pro rata basis determined from the date of grant to the end of the severance period;
continued vesting during the severance period of performance-based restricted stock for which performance targets are achieved and vesting begins during the severance period; and
continued accrual during the severance period of credited service under the 2002 SERP.
The severance agreements also contain restrictive covenants with respect to confidentiality, non-solicitation, and non-competition, and are subject to the execution of a release. The severance agreements are effective for a rolling two-year term, which will automatically extend each day for an additional day unless terminated by either
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Change in Control Agreements
It is intended that change in control agreements will provide the named executive officers some measure of security against the possibility of employment loss that may result following a change in control of the Company in order that they may devote their energies to meeting the business objectives and needs of the Company and its stockholders.
The change in control agreements are effective for a rolling two-year term, which will automatically extend each day for an additional day unless terminated by either party. However, the term of the change in control agreements will not expire during a threatened change in control period (as defined in the change in control agreements) or prior to the expiration of 24 months following a change in control. The change in control agreements provide two types of potential benefits to executives:
1. | Upon a change in control, all restrictions on any outstanding incentive awards will lapse and the awards will immediately become fully vested, all outstanding stock options will become fully vested and |
immediately exercisable, and we may be required to immediately purchase for cash, on demand, at the then per-share fair market value, any shares of unrestricted stock and shares purchased upon exercise of options. | |
2. | If the employment of the named executive officer is terminated within 24 months following a change in control or in certain other instances in connection with a change in control |
a pro rata bonus for the year of termination;
a lump sum cash payment equal to a multiple of the sum of his base salary and annual cash incentive payment (in each case at least equal to his base salary and bonus prior to a change in control), subject to certain adjustments;
continuation of life insurance, disability, medical, dental, and hospitalization benefits for the specified term;
a cash payment representing additional months participation in our qualified or nonqualified deferred compensation plans (36 months for Mr. Nagel and 30 months for Mr. Reece and Mr. Black); and
a cash payment equal to the lump sum actuarial equivalent of the accrued benefit under the 2002 SERP as of the date of termination of employment, whether or not the accrued benefit has vested.
The change in control agreements for Messrs. Nagel, Reece, and Black provide that the Company will make an additional“gross-up “gross-up payment” to offset fully the effect of any excise tax imposed under Section 4999 of the Internal Revenue Code on any payment made to a named executive officer arising out of or in connection with his employment. In addition, the Company will pay all legal fees and related expenses incurred by the officer arising out of any disputes related to his termination of employment or claims under the change in control agreement if, in general, the circumstances for which he has retained legal counsel occurred on or after a change in control.
A change in control includes:
the acquisition of 20% or more of the combined voting power of our then outstanding voting securities; | ||
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a merger or consolidation through which our stockholders no longer hold more than 60% of the combined voting power of our outstanding voting securities resulting from the merger or consolidation in substantially the same proportion as prior to the merger or consolidation; or
our complete liquidation or dissolution or the sale or other disposition of all or substantially all of our assets.
Under the change in control agreements, a termination for cause is a termination evidenced by a resolution adopted by two-thirds of the Board that the executive:
intentionally and continually failed to substantially perform his duties, which failure continued for a period of at least 30 days after a written notice of demand for substantial performance has been delivered to the executive specifying the manner in which the executive has failed to substantially perform; or
intentionally engaged in conduct which is demonstrably and materially injurious to us, monetarily or otherwise.
The executive will not be terminated for cause until he has received a copy of a written notice setting forth the misconduct described above and until he has been given an opportunity to be heard by the Board.
Under the change in control agreements, disability has the meaning ascribed to such term in our long-term disability plan or policy covering the executive, or in the absence of such plan or policy, a meaning consistent with Section 22(e)(3) of the Internal Revenue Code.
Under the change in control agreements, good reason means the occurrence of any of the following events or conditions in connection with a change in control:
any change in the executive’s status, title, position or responsibilities which, in the executive’s reasonable judgment, represents an adverse change from his status, title, position or responsibilities as in effect immediately prior; the assignment to the executive of any duties or responsibilities which, in the executive’s reasonable judgment, are inconsistent with his status, title, position or responsibilities; or any removal of the executive from or failure to reappoint or reelect him to any of such offices or positions, except in connection with the termination of his employment for disability, cause, as a result of his death or by the executive other than for good reason; | ||
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a failure to increase the executive’s base salary at least annually at a percentage of base salary no less than the average percentage increases (other than increases resulting from the executive’s promotion) granted to the executive during the three full years ended prior to a change in control (or such lesser number of full years during which the executive was employed);
requiring the executive to be based more than 50 miles from the primary workplace where the executive is based immediately prior to the change in control except for reasonably required travel on business which is not greater than such travel requirements prior to the change in control;
the failure by us (1) to continue in effect any compensation or employee benefit plan in which the executive was participating immediately prior to the change in control or (2) to provide the executive with compensation and benefits, in the aggregate, at least equal to those provided for under each other compensation or employee benefit plan, program and practice as in effect immediately prior to the change in control;
the insolvency or the filing of a petition for bankruptcy by us;
the failure by us to obtain an agreement from a successor to assume and agree to perform the agreement; and
a purported termination of executive’s employment for cause that does not follow the procedures of the change in control agreement or other material breach of the agreement.
Other Possible Payouts upon Death, Disability, and Retirement
The following describes possible payouts upon a named executive officer’s death, disability or retirement in accordance with the terms of the relevant plans.
Death/Disability
Stock options vest and are exercisable to the earlier of the expiration date or one year after the event. Restricted shares vest immediately.
Company contributions in Deferred Compensation Plans including the 401(k) and SDSP vest and are payable upon death or total and permanent disability.
Retirement
Vested options are exercisable to the earlier of the expiration date or five years after retirement.
Retirement
The table below sets forth potential benefits that eachfor the named executive officerofficers would be entitled to receive upon termination of employment in each termination situation. These amounts are estimates only and do not necessarily reflect the actual amounts that would be paid to the named executive officers, which would only be known at the time they become eligible for payment. The amounts shown in the table are the amounts that could be payable under existing plans and arrangements if the named executive officer’s employment had terminated at August 31, 2010.2013. Values for the accelerated vesting of stock option and restricted stock grants are based on the closing price of our common stock of $38.74$85.50 on August 31, 2010.
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Accelerated | Accelerated | Estimated | ||||||||||||||||||||||
Severance | Vesting of | Vesting of | Benefit | Tax | ||||||||||||||||||||
Amount | Stock | Restricted | Continuation | Gross-Up | ||||||||||||||||||||
Name | ($)(1) | Options ($)(2) | Stock ($)(2) | ($) (3)(4)(5) | ($)(6) | Total ($) | ||||||||||||||||||
Vernon J. Nagel | ||||||||||||||||||||||||
Change-in-Control | $ | 8,400,000 | $ | 718,793 | $ | 4,672,044 | $ | 763,728 | $ | -0- | $ | 14,554,565 | ||||||||||||
Involuntary | 2,100,000 | 614,496 | 3,294,837 | 674,862 | NA | 6,684,195 | ||||||||||||||||||
Voluntary (Good Reason) | 2,100,000 | 614,496 | 3,294,837 | 674,862 | NA | 6,684,195 | ||||||||||||||||||
Voluntary/Retirement | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
For Cause | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
Death | NA | 718,793 | 4,672,044 | NA | NA | 5,390,837 | ||||||||||||||||||
Disability | NA | 718,793 | 4,672,044 | NA | NA | 5,390,837 | ||||||||||||||||||
Richard K. Reece | ||||||||||||||||||||||||
Change-in-Control | 2,780,000 | 428,844 | 1,842,087 | 443,568 | -0- | 5,494,499 | ||||||||||||||||||
Involuntary | 885,800 | NA | NA | 58,709 | NA | 944,509 | ||||||||||||||||||
Voluntary (Good Reason) | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
Voluntary/Retirement | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
For Cause | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
Death | NA | 428,844 | 1,842,087 | 7,983 | NA | 2,278,914 | ||||||||||||||||||
Disability | NA | 428,844 | 1,842,087 | 7,983 | NA | 2,278,914 | ||||||||||||||||||
Mark A. Black | ||||||||||||||||||||||||
Change- in-Control | 2,200,000 | 413,436 | 1,451,783 | 285,049 | 1,158,217 | 5,508,485 | ||||||||||||||||||
Involuntary | 817,000 | NA | NA | 51,918 | NA | 868,918 | ||||||||||||||||||
Voluntary (Good Reason) | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
Voluntary/Retirement | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
For Cause | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
Death | NA | 413,436 | 1,451,783 | 14,558 | NA | 1,879,777 | ||||||||||||||||||
Disability | NA | 413,436 | 1,451,783 | 14,558 | NA | 1,879,777 | ||||||||||||||||||
Jeremy M. Quick | ||||||||||||||||||||||||
Change-in-Control | 1,240,000 | 94,083 | 781,078 | 232,676 | NA | 2,347,837 | ||||||||||||||||||
Involuntary | 656,000 | NA | NA | 48,847 | NA | 704,847 | ||||||||||||||||||
Voluntary (Good Reason) | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
Voluntary/Retirement | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
For Cause | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
Death | NA | 94,083 | 781,078 | 155,374 | NA | 1,030,535 | ||||||||||||||||||
Disability | NA | 94,083 | 781,078 | 155,374 | NA | 1,030,535 | ||||||||||||||||||
C. Dan Smith | ||||||||||||||||||||||||
Change-in-Control | 637,500 | 18,638 | 372,368 | 165,052 | NA | 1,193,558 | ||||||||||||||||||
Involuntary | 315,000 | NA | NA | 27,017 | NA | 342,017 | ||||||||||||||||||
Voluntary (Good Reason) | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
Voluntary/Retirement | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
For Cause | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
Death | NA | 18,638 | 372,368 | 118,915 | NA | 509,921 | ||||||||||||||||||
Disability | NA | 18,638 | 372,368 | 118,915 | NA | 509,921 |
Name | Severance Amount ($)(1) | Accelerated Vesting of Stock Options ($)(2) | Accelerated Vesting of Restricted Stock ($)(2) | Benefit Continuation ($)(3)(4) | Estimated Tax Gross-Up ($)(5) | Total ($) | ||||||||||||||||||
Vernon J. Nagel | ||||||||||||||||||||||||
Change-in-Control | $ | 8,400,000 | $ | 3,260,730 | $ | 7,934,229 | $ | 201,824 | $ | –0– | $ | 19,796,783 | ||||||||||||
Involuntary | 2,400,000 | 2,917,868 | 7,934,229 | 90,545 | NA | 13,342,642 | ||||||||||||||||||
Voluntary (Good Reason) | 2,400,000 | 2,917,868 | 7,934,229 | 90,545 | NA | 13,342,642 | ||||||||||||||||||
Voluntary/Retirement | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
For Cause | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
Death | NA | 3,260,730 | 7,934,229 | NA | NA | 11,194,959 | ||||||||||||||||||
Disability | NA | 3,260,730 | 7,934,229 | NA | NA | 11,194,959 | ||||||||||||||||||
Richard K. Reece | ||||||||||||||||||||||||
Change-in-Control | 2,750,000 | 1,315,573 | 3,183,337 | 623,748 | –0– | 7,872,658 | ||||||||||||||||||
Involuntary | 977,500 | NA | 2,547,046 | 60,001 | NA | 3,584,547 | ||||||||||||||||||
Voluntary (Good Reason) | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
Voluntary/Retirement | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
For Cause | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
Death | NA | 1,315,573 | 3,183,337 | NA | NA | 4,498,910 | ||||||||||||||||||
Disability | NA | 1,315,573 | 3,183,337 | NA | NA | 4,498,910 | ||||||||||||||||||
Mark A. Black | ||||||||||||||||||||||||
Change- in-Control | 2,687,500 | 911,461 | 2,229,841 | 501,108 | –0– | 6,329,910 | ||||||||||||||||||
Involuntary | 920,000 | NA | NA | 57,114 | NA | 977,114 | ||||||||||||||||||
Voluntary (Good Reason) | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
Voluntary/Retirement | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
For Cause | NA | NA | NA | NA | NA | NA | ||||||||||||||||||
Death | NA | 911,461 | 2,229,841 | NA | NA | 3,141,302 | ||||||||||||||||||
Disability | NA | 911,461 | 2,229,841 | NA | NA | 3,141,302 |
(1) | For benefits related to achange-in-control, this represents a multiple of salary and the highest of current year bonus, prior year bonus, or average of bonus for last three years. For benefits related to a severance agreement, this represents salary for the severance period plus a cash payment based on a predefined percentage of base salary. |
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(2) | The value realized on unvested equity awards represents the difference between the fair market value of unvested awards at August 31, | |
(3) | Includes payments in respect of continued health, welfare, retirement benefits, and deferred compensation benefits as outlined inchange-in-control agreements including the present value of additional credited service or annual Company contributions in the referenced plans equal to the number of months associated with the multiple and unvested Company contributions in deferred compensation plans that vest upon a change in control, as follows: |
Health | Additional | Unvested | ||||||||||||||
and Welfare | Outplacement | Company | Company | |||||||||||||
Name | Benefits | Services | Contributions (CIC) | Contributions (CIC) | ||||||||||||
Vernon J. Nagel | $ | 35,432 | $ | -0- | $ | 728,296 | $ | -0- | ||||||||
Richard K. Reece | 29,182 | -0- | 414,376 | -0- | ||||||||||||
Mark A. Black | 23,197 | -0- | 261,852 | -0- | ||||||||||||
Jeremy M. Quick | 22,462 | -0- | 54,840 | 155,374 | ||||||||||||
C. Dan Smith | 6,775 | -0- | 39,362 | 118,915 |
Name | Health and Welfare Benefits | Outplacement Services | Additional Company Contributions (CIC) | Unvested Company Contributions (CIC) | ||||||||||||
Vernon J. Nagel | $ | 45,817 | $ | –0– | $ | 156,007 | $ | –0– | ||||||||
Richard K. Reece | 29,168 | –0– | 594,580 | –0– | ||||||||||||
Mark A. Black | 28,524 | –0– | 472,584 | –0– |
(4) | Includes payments in respect of continued health, welfare, retirement benefits, and deferred compensation benefits as outlined in severance agreements including the present value of additional credited service or annual Company contributions in the referenced plans equal to the number of months associated with the multiple, as follows: |
Additional | ||||||||||||
Health | Company | |||||||||||
and Welfare | Outplacement | Contributions | ||||||||||
Name | Benefits | Services | (Severance) | |||||||||
Vernon J. Nagel | $ | 23,621 | $ | 60,000 | $ | 591,241 | ||||||
Richard K. Reece | 17,509 | 41,200 | -0- | |||||||||
Mark A. Black | 13,918 | 38,000 | -0- | |||||||||
Jeremy M. Quick | 16,847 | 32,000 | -0- | |||||||||
C. Dan Smith | 4,517 | 22,500 | -0- |
Name | Health and Welfare Benefits | Outplacement Services | Additional Company Contributions (Severance) | |||||||||
Vernon J. Nagel | $ | 30,545 | $ | 60,000 | $ | –0– | ||||||
Richard K. Reece | 17,501 | 42,500 | –0– | |||||||||
Mark A. Black | 17,114 | 40,000 | –0– |
(5) | An excise tax gross-up is applicable to the | |
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ITEM 3—ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, stockholders have the opportunity to vote, on an advisory basis, to approve the compensation of our named executive officers. This vote is often referred to as “say on pay.” Stockholders are being asked to vote on the following resolution:
“Resolved, that the stockholders approve, on an advisory basis, the compensation of the named executive officers as disclosed in the compensation discussion and analysis, the accompanying compensation tables, and the related narrative disclosure in this proxy statement.”
As described in detail in this proxy statement under “Compensation Discussion and Analysis,” our compensation programs are designed to:
Attract and retain executives by providing a competitive reward and recognition program that is driven by our success;
Provide rewards to executives who create value for stockholders;
Consistently recognize and reward superior performers, measured by achievement of results and demonstration of desired behaviors; and
Provide a framework for the fair and consistent administration of pay policies.
We believe that our compensation program, with its balance of base salary, annual cash incentives and equity incentive awards, rewards sustained performance that is aligned with long-term stockholder interests. Stockholders are encouraged to read the compensation discussion and analysis, the accompanying compensation tables, and the related narrative disclosures contained in this proxy statement.
The Board of Directors recommends that you vote FOR the approval of named executive officer compensation.
The following table provides information as of August 31, 20102013 about equity awards under our equity compensation plans. The table does not include 1,068,4771,049,617 shares available for purchase under the Employee Stock Purchase Plan. Number of Securities Number of Remaining Available Securities to for Future Issuance be Issued Upon Weighted-Average Under Equity Exercise of Exercise Price Compensation Plans Outstanding of Outstanding (Excluding those Options, Options, Warrants Currently Warrants and Rights and Rights Outstanding) Equity compensation plans approved by the security holders (1) 1,500,529 (2) $ 27.78 2,931,322 (3) Equity compensation plans not approved by the security holders N/A N/A N/A Total 1,500,529 2,931,322
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding those Currently Outstanding) | |||||||||
Equity compensation plans approved by the security holders (1) | 982,817 | (2) | $ | 43.16 | (3) | 2,578,070 | (4) | |||||
Equity compensation plans not approved by the security holders | N/A | N/A | N/A | |||||||||
|
|
|
| |||||||||
Total | 982,817 | 2,578,070 | ||||||||||
|
|
|
|
(1) | Includes the Acuity Brands, Inc. 2012 Omnibus Stock Incentive Compensation Plan (the “2012 EIP”) that was approved by our stockholders in January 2013, the Amended and Restated Acuity Brands, Inc. 2007 Long-Term Incentive Plan (the “2007 EIP”) that was approved by our stockholders in January 2008, the 2006 Nonemployee Directors’ Deferred Compensation Plan (the “2006 NEDC”) that was approved by our sole stockholder in November 2001, the 2011 Nonemployee Director’s Deferred Compensation Plan (the “2011 NEDC”) that was approved by our stockholders in January 2012, and the 2001 Nonemployee Directors’ Stock Option Plan (the “2001 NESOP”) that was approved by our sole stockholder in November 2001. | |
(2) | Includes | |
(3) | Represents weighted-average exercise price of stock options outstanding under the 2007 EIP and 2001 NESOP. Calculation excludes deferred stock units issued under the 2007 EIP, 2006 NEDC, and 2011 NEDC. |
(4) | Represents the number of shares available for future issuance under stockholder approved equity compensation plans, including, 2,296,278 shares available for grant without further stockholder approval under the |
We know of no other business to be transacted, but if any other matters do come before the meeting, the persons named as proxies in the accompanying proxy, or their substitutes, will vote or act with respect to them in accordance with their best judgment.50
If you wish to have a proposal considered for inclusion in our proxy solicitation materials in connection with the annual meeting of stockholders expected to be held in January 2012,2015, the proposal must comply with the SEC’s proxy rules, be stated in writing, and be submitted on or before July 25, 2011,2014, to us at our principal executive offices at 1170 Peachtree Street, NE, Suite 2400,2300, Atlanta, Georgia 30309, Attention: Corporate Secretary.
All such proposals should be sent by certified mail, return receipt requested.
Our By-Laws establish an advance notice procedure for stockholder proposals to be brought before any annual meeting of stockholders and for nominations by stockholders of candidates for election as directors at an annual meeting. Subject to any other applicable requirements, including, without limitation,Rule 14a-8 under the Exchange Act, nominations of persons for election to the Board and the proposal of business to be transacted by the stockholders may be made at an annual meeting of stockholders by any stockholder of record who was a stockholder of record at the time of the giving of notice for the annual meeting, who is entitled to vote at the meeting and who has complied with our notice procedures.
For nominations or other business to be properly brought before an annual meeting by a stockholder:
the stockholder must have given timely notice in writing to our Corporate Secretary;
such business must be a proper matter for stockholder action under Delaware Law;
if the stockholder, or the beneficial owner on whose behalf any such proposal or nomination is made, has provided us with a stockholder notice (as described below), such stockholder or beneficial owner must, in the case of a proposal, have delivered a proxy statement and form of proxy to holders of at least the percentage our voting shares required under applicable law to carry any such proposal, or, in the case of a nomination or nominations, have delivered a proxy statement and form of proxy to holders of a percentage of our voting shares reasonably believed by such stockholder or beneficial holder to be sufficient to elect the nominee or nominees proposed to be nominated by such stockholder, and must, in either case, have included in such materials the stockholder notice; and
if no stockholder notice relating to the proposal has been timely provided, the stockholder or beneficial owner proposing such business or nomination must not have solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice.
To be timely, a stockholder’s notice must be delivered to our Corporate Secretary at our principal executive offices not less than 90 or more than 120 days prior to the first anniversary of the preceding year’s annual meeting of stockholders (the “Meeting Anniversary”). However, if the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the anniversary of the preceding year’s annual meeting, notice by the stockholder to be timely must be so delivered not later than the close of business on the later of (i) the 90th day prior to such annual meeting or (ii) the 10th day following the day on which public announcement of the date of such meeting is first made.
A stockholder’s notice must set forth:
as to each person whom the stockholder proposes to nominate for election or reelection as a director, all information relating to such person as would be required to be disclosed in solicitations of proxies for the election of such nominees as directors pursuant to Regulation 14A under the Exchange Act and such person’s written consent to serve as a director if elected, as well as any other information required by the SEC’s proxy rules in a contested election;
as to any other business that the stockholder proposes to bring before the meeting, a brief description of such business, the reasons for conducting such business at the meeting, and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; | ||
51
as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made;
the name and address of such stockholder, as they appear on our books, and of such beneficial owner;
the class and number of shares of our common stock that are owned beneficially and of record by such stockholder and such beneficial owner, including any derivative positions of the stockholder;
information with respect to persons or entities affiliated with the stockholder and any arrangements between the affiliates and the stockholder; and
whether either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of, in the case of a proposal, at least the percentage of our voting shares required under applicable law to carry the proposal or, in the case of a nomination or nominations, a sufficient number of holders of our voting shares to elect such nominee or nominees (an affirmative statement of such intent).
In the event that the number of directors to be elected to the Board is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board made by us at least 100 days prior to the Meeting Anniversary, a stockholder’s notice required by our By-Laws also will be considered timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to our Corporate Secretary at the principal executive offices not later than the close of business on the 10th day following the day on which such public announcement is first made by us.
The preceding five paragraphs are intended to summarize the applicable provisions of our By-Laws. These summaries are qualified in their entirety by reference to those By-Laws, which are available on our website atwww.acuitybrands.comunder “Corporate Governance.”
By order of the Board of Directors,
C. DAN SMITH
Senior Vice President, Treasurer and Secretary
52
PRINTED ON RECYCLED PAPER
Using ablack ink pen, mark your votes with anX as shown in this example. Please do not write outside the designated areas. | x |
Electronic Voting Instructions | ||
Available 24 hours a day, 7 days a | ||
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. | ||
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. | ||
Proxies submitted by the Internet |
| Vote by Internet | |
• Go towww.envisionreports.com/AYI | ||
• Or scan the QR code with your smartphone | ||
• Follow the steps outlined on the secure website |
Vote by telephone |
• Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone |
• Follow the instructions provided by the recorded message |
q IF YOU HAVE NOT |
A | Proposals — | THE BOARD OF DIRECTORS RECOMMENDS A VOTE | ||
PROPOSAL 1 AND |
1. | Election of Directors | + |
For | Withhold | For | Withhold | For | Withhold | |||||||||||||||||||||||||||||||||||||
01 - |
Gordon D. Harnett |
¨ |
¨ |
02 - |
Robert F. McCullough |
¨ |
¨ |
03 - |
Dominic J. Pileggi |
¨ |
¨ | |||||||||||||||||||||||||||||||
For | Against | Abstain | For | Against | Abstain | |||||||||||||||||||||||||||||||||||||
2. | Ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm | ¨ | ¨ | ¨ | 3. | Advisory vote to approve named executive officer compensation | ¨ | ¨ | ¨ |
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3.
B | Non-Voting Items |
Change of Address —Please print your new address below. | Comments— Please print your comments below. | Meeting Attendance | ||||||
Mark the box to the right if you plan to attend the Annual Meeting. | ¨ | |||||||
C | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign | |
Below |
Please sign below, exactly as name or names appear on this proxy. When signing as attorney, executor, administrator, trustee, custodian, guardian, or corporate officer, give full title. If more than one trustee, all should sign.
Date (mm/dd/yyyy) — Please print date below. | Signature 1 — Please keep signature within the box. | Signature 2 — Please keep signature within the box. | ||||||||||
/ / |
ANNUAL MEETING DIRECTIONS AND PARKING INFORMATION
BALLROOM AT THE FOUR SEASONS HOTEL
11:00 a.m., Eastern Time, January 7, 2014
Parking for stockholders attending the Annual Meeting will be available at the hotel.
DIRECTIONS TO THE FOUR SEASONS HOTEL
From the Atlanta Airport (I-85/75 North): Take I-85/75 North to the 10th Street/14th Street exit (#250) and continue straight through the first traffic light. At the second traffic light, turn right onto 14th Street. Travel through 2 traffic lights. The hotel is on the right (between West Peachtree and Peachtree Streets). | From South of Atlanta (I-85/75 North): Take I-85/75 North to the 10th Street/14th Street exit (#250) and continue straight through the first traffic light. At the second traffic light, turn right onto 14th Street. Travel through 2 traffic lights. The hotel is on the right (between West Peachtree and Peachtree Streets). | |
From Northeast of Atlanta (I-85 South):Take I-85 South to the 17th Street/14th Street/10th Street exit (#250) and continue towards 14th Street. At the first traffic light, turn left onto 14th Street. Travel through three traffic lights. The hotel is on the right (between West Peachtree and Peachtree Streets). | From East or West of Atlanta (I-20):Take I-20 to I-85/75 North to the 10th Street/14th Street exit (#250) and continue straight through the first traffic light. At the second traffic light, turn right onto 14th Street. Travel through 2 traffic lights. The hotel is on the right (between West Peachtree and Peachtree Streets). | |
From Northwest of Atlanta (I-75 South):Take I-75 South to the 17th Street/14th Street/10th Street exit (#250) and continue towards 14th Street. At the first traffic light, turn left onto 14th Street. Travel through three traffic lights. The hotel is on the right (between West Peachtree and Peachtree Streets). | Via Arts Center MARTA transit station:When you exit the MARTA station at the Arts Center (N5), follow the signs to the West Peachtree Street exit. Turn left onto West Peachtree Street and walk against the traffic for one block to 14th Street. Turn left onto 14th Street. The hotel is on the right in the middle of the block. | |
From North of Atlanta (400 South):Take GA-400 South to the17th Street/14th Street/10th Street exit (#250) and |
Important notice regarding the availability of proxy materials for the Annual Meeting of Stockholders.
The Proxy Statement and the Annual Report are available at:www.envisionreports.com/AYI
q IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Proxy — ACUITY BRANDS, INC.
ANNUAL MEETING OF STOCKHOLDERS, JANUARY 7, 2014
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned does hereby appoint VERNON J. NAGEL and RICHARD K. REECE, and each of them, proxies of the undersigned with full power of substitution in each of them to vote at the Annual Meeting of Stockholders of the Company to be held on January 7, 2014 at 11:00 a.m., and at any and all adjournments and postponements thereof, with respect to all shares which the undersigned would be entitled to vote, and with all powers which the undersigned would possess if personally present, as follows on the reverse, and in their discretion upon all other matters brought before the meeting.If you sign and return this proxy but no direction is made, this proxy will be voted FOR all nominees listed in Proposal 1 and FOR Proposals 2 and 3.
(Continued and to be marked, dated and signed, on the other side)
Using ablack ink pen, mark your votes with anX as shown in this example. Please do not write outside the designated areas. | x |
q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q |
A | Proposals — | THE BOARD OF DIRECTORS | ||
PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. |
1. | Election of | + |
For | Withhold | For | Withhold | For | Withhold | |||||||||||||||||||||||||||||||||||||
01 - |
Gordon D. Harnett |
¨ |
¨ |
02 - |
Robert F. McCullough |
¨ |
¨ |
03 - |
Dominic J. Pileggi |
¨ |
¨ | |||||||||||||||||||||||||||||||
For | Against | Abstain | For | Against | Abstain | |||||||||||||||||||||||||||||||||||||
2. | Ratification of the appointment of Ernst &Young LLP as the independent registered public accounting firm | ¨ | ¨ | ¨ | 3. | Advisory vote to approve named executive officer compensation | ¨ | ¨ | ¨ |
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. |
B | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign | |
Below |
Please sign below, exactly as name or names appear on this proxy. When signing as attorney, executor, administrator, trustee, custodian, guardian, or corporate officer, give full title. If more than one trustee, all should sign.
Date (mm/dd/yyyy) — Please print date below. | Signature 1 — Please keep signature within the box. | Signature 2 — Please keep signature within the box. | ||||||
/ / |
Important notice regarding the availability of proxy materials for the Annual Meeting of Stockholders.
The Proxy Statement and the Annual Report are available at:www.edocumentview.com/AYI
q PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Proxy — ACUITY BRANDS, INC.
ANNUAL MEETING OF STOCKHOLDERS, JANUARY 7, 2014
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned does hereby appoint VERNON J. NAGEL and RICHARD K. REECE, and each of them, proxies of the undersigned with full power of substitution in each of them to vote at the Annual Meeting of Stockholders of the Company to be held on January 7, 2014 at 11:00 a.m., and at any and all adjournments and postponements thereof, with respect to all shares which the undersigned would be entitled to vote, and with all powers which the undersigned would possess if personally present, as follows on the reverse, and in their discretion upon all other matters brought before the meeting.If you sign and return this proxy but no direction is made, this proxy will be voted FOR all nominees listed in Proposal 1 and FOR Proposals 2 and 3.
(Continued and to be marked, dated and signed, on the other side)