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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrantþ
Filed by a party other than the registranto
Check the appropriate box:
o Preliminary proxy statement | ||
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
þ Definitive proxy statement
o Definitive additional materials
o Soliciting material pursuant to Rule 14a-12
IMATION CORP.
Payment of filing fee (Check the appropriate box):
þ No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
o Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
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(4) Date Filed:
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1. | Elect three Class I directors to serve for a three-year term; | |
2. | Ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2006; and | |
3. | Transact such other business that may properly come before the meeting or any adjournment or adjournments thereof. |
By Order of the Board of Directors, | |
John L. Sullivan | |
Senior Vice President, General Counsel | |
and Secretary |
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• | vote for all of the nominated directors as a group; | |
• | withhold authority to vote for all nominated directors as a group; or | |
• | vote for all nominated director as a group except those you select. |
• | vote “FOR” ratification; | |
• | vote “AGAINST” ratification; or | |
• | “ABSTAIN” from voting on ratification. |
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• | sending written notice of revocation to our Corporate Secretary; | |
• | submitting a signed proxy with a later date; | |
• | voting by telephone or the Internet on a date after your prior telephone or internet vote; or | |
• | attending the meeting and withdrawing your proxy. |
Amount and Nature | ||||||||||
of Beneficial | Percent | |||||||||
Name and Address of Beneficial Owner | Ownership | of Class | ||||||||
Private Capital Management, L.P. | 3,328,621 | (1) | 9.7 | % | ||||||
Bruce S. Sherman Gregg J. Powers | ||||||||||
8889 Pelican Bay Blvd. Naples, Florida 34108 |
(1) | A Schedule 13G was filed with the Securities and Exchange Commission on February 10, 2006 by Private Capital Management, L.P. (“PCM”), its Chief Executive Officer, Bruce S. Sherman, and its President, Gregg J. Powers, reporting beneficial ownership of an aggregate of 3,328,621 shares of our common stock. Of such shares, Mr. Powers reported that he had shared voting and dispositive powers with respect to 3,287,621 shares and Mr. Sherman reported that he had shared voting and dispositive powers with respect to 3,296,121 shares. Mr. Powers and Mr. Sherman disclaimed beneficial ownership of such shares, which are held by PCM’s clients and managed by PCM. Mr. Powers and |
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Mr. Sherman each reported that he had sole voting and dispositive powers with respect to an additional 41,000 and 8,000 shares of our common stock, respectively. |
Amount and Nature of | Percentage | |||||||
Name of Beneficial Owner | Beneficial Ownership(1) | of Class | ||||||
Bruce A. Henderson | 62,160 | (2) | * | |||||
Michael S. Fields | 2,295 | * | ||||||
Linda W. Hart | 109,555 | * | ||||||
Charles A. Haggerty | 8,885 | * | ||||||
Ronald T. LeMay | 89,224 | * | ||||||
L. White Matthews, III | 24,574 | * | ||||||
Charles Reich | 9,948 | * | ||||||
Glen A. Taylor | 60,412 | * | ||||||
Daryl J. White | 94,982 | * | ||||||
Jacqueline A. Chase | 17,245 | * | ||||||
Arvind Korde(3) | 0 | 0 | ||||||
Frank P. Russomanno | 96,771 | * | ||||||
John L. Sullivan | 43,984 | * | ||||||
Paul R. Zeller | 55,832 | * | ||||||
All Directors and Executive Officers as a Group (16 persons) | 730,673 | 2.0 | % |
* | Indicates ownership of less than 1%. |
(1) | In addition to the unrestricted shares held by the named individuals, the shares shown include: (i) the following shares issuable upon exercise of stock options that are currently exercisable or will become exercisable within 60 days of January 31, 2006: Mr. Henderson, 10,000 shares; Ms. Hart, 90,000 shares; Mr. Haggerty, 5,699 shares; Mr. LeMay, 84,247 shares; Mr. Matthews, 22,548 shares; Dr. Reich, 8,346 shares; Mr. Taylor, 50,000 shares; Mr. White, 90,000 shares; Ms. Chase, 6,250 shares; Mr. Russomanno, 64,739 shares; Mr. Sullivan, 24,861 shares; Mr. Zeller, 34,217 shares; and all directors and executive officers as a group, 534,695 shares; (ii) the following unvested shares of restricted stock held as of January 31, 2006: Mr. Henderson, 44,275 shares; Mr. Fields, 1,398 shares; Ms. Hart, 1,398 shares; Mr. Haggerty, 1,398 shares; Mr. LeMay, 1,398 shares; Mr. Matthews, 1,398 shares; Dr. Reich, 1,398 shares; Mr. Taylor, 1,398 shares; Mr. White, 1,398 shares; Ms. Chase, 7,795 shares; Mr. Russomanno, 28,045 shares; Mr. Sullivan, 10,405 shares; Mr. Zeller, 16,825 shares; and all directors and executive officers as a group, 123,845 shares and (iii) the following shares allocated as of January 31, 2006 to the accounts of participants under the Imation Retirement Investment Plan: Mr. Henderson, 697 shares; Ms. Chase, 2,471 shares; Mr. Russomanno, 929 shares; Mr. Sullivan, 1,887 shares; Mr. Zeller, 3,445 shares; and all executive officers as a group, 12,112 shares. The holders of restricted stock have voting power but no investment power with respect to |
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those shares. The participants in the Imation Retirement Investment Plan have shared voting and investment power with respect to such shares. |
(2) | Includes 595 shares owned by Mr. Henderson’s spouse. |
(3) | Although Mr. Korde is a consultant to Imation, because he may have participated in Imation’s policy making activities at various times in 2005, he may be deemed to be an executive officer of Imation for purposes of applicable SEC regulations. As a result, we have included information about Mr. Korde in the Summary Compensation Table and elsewhere in this Proxy Statement as if he were a named executive officer and, therefore, we have also included Mr. Korde in this table and in the total for all directors and executive officers as a group. See “Employment, Severance and Consulting Agreements — Consulting Agreement with Arvind Korde & Associates, LLC.” |
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Corporate Governance Guidelines |
Code of Ethics |
Annual Meeting Attendance Policy |
Shareholder Communications with the Board |
• | whether there were any transactions or relationships between each director or any member of his or her immediate family and us and our subsidiaries and affiliates; and | |
• | whether there were any relationships between the directors and senior management and between directors and our independent registered public accounting firm. |
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Members: | Five non-employee directors: |
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• | Reviews Imation’s consolidated financial statements, including accounting and auditing principles and practices | |
• | Has the authority to appoint or replace Imation’s independent registered public accounting firm and approve the scope of its audit services | |
• | Reviews and approves non-audit services performed by Imation’s independent registered public accounting firm | |
• | Reviews Imation’s compliance procedures and scope of internal controls | |
• | Reports to the Board of Directors on the adequacy of financial statement disclosures and adherence to accounting principles | |
• | Reviews financial policies which may impact Imation’s financial statements | |
• | Monitors compliance with financing agreement | |
• | Monitors the functions of Imation’s Pension and Retirement Committee |
Members: | Five non-employee directors: |
• | Reviews and makes recommendations as to compensation and benefits programs for our executive officers | |
• | Sets Chief Executive Officer compensation | |
• | Oversees administration of certain stock and benefit plans |
Members: | Five non-employee directors: |
• | Advises and makes recommendations to the Board on all matters concerning directorship and corporate governance matters | |
• | Advises and makes recommendations to the Board on the selection of candidates as nominees for election as director | |
• | Reports to the Board on succession planning, including succession in the event of retirement of the Chief Executive Officer |
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• | name of the candidate and a brief biographical sketch and resume; | |
• | contact information for the candidate and a document evidencing the candidate’s willingness to serve as a director if elected; and | |
• | a signed statement as to the submitting shareholder’s current status as a shareholder and the number of shares currently held. |
• | Annual retainer: $34,000 | |
• | Chairperson fee: $5,000 per year for serving as chair of the Nominating and Governance Committee or Compensation Committee and $10,000 per year for serving as chair of the Audit and Finance Committee | |
• | Lead Director fee: $15,000 per year |
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• | Meeting Attendance: |
• | Board meetings: $1,500 per meeting for attendance in person and $1,000 per meeting for telephone or video conference | |
• | Committee meetings: $1,000 per meeting, other than in-person Audit and Finance Committee meetings for which $1,500 is paid |
• | Interview of Board candidates: $1,500 per interview | |
• | Equity Grants: Initial equity grant of restricted stock and options to purchase common stock on the date a person becomes a director and an additional annual equity grant of restricted stock and options to purchase common stock on the date of the annual meeting of shareholders each year. The annual equity grant is a dollar value of $175,000 in stock options and restricted stock, with 75% of the value granted as stock options and 25% of the value granted as restricted stock, valued under the Black-Scholes model. The restricted stock and stock options currently vest 25% per year over four years, but may accelerate under certain circumstances such as death, disability, retirement and change of control of Imation, as defined under the 2005 Director Program, as amended. The Board of Directors approved a change in the vesting schedule for equity grants made as of the 2006 Annual Meeting, as described below. The initial equity grant for a director who is first elected at a time other than the annual meeting of shareholders is prorated based on the number of options and shares of restricted stock granted to directors at the time of the preceding annual meeting of shareholders. | |
• | Matching Gift: We match gifts by each director to qualified charitable institutions in an amount up to $15,000 per year | |
• | Training Program Reimbursement: We reimburse any director who chooses to attend a training program for directors for the cost of attending the program, including travel and lodging, at the maximum rate of one program per year | |
• | Travel Reimbursement: We reimburse directors for travel costs of attending Board meetings and interviews of Board candidates |
Stock Ownership Guidelines |
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• | non-employee directors cannot be nominated for re-election as a director at the next annual meeting of shareholders following either 15 years of service as a director or reaching the age of 70; | |
• | a director who is also our chief executive officer must submit his or her resignation from the Board when he or she ceases to be the chief executive officer; and | |
• | any other director who is an employee must retire from the Board (i) at the time of a reduction in his or her duties or responsibilities as an officer unless the Board at its sole discretion determines the officer continues to be qualified to act as a director, (ii) upon termination of his or her active service as an employee or (iii) upon attaining the age of 65, whichever is earliest. |
Michael S. Fields | Michael S. Fields, age 60, has been Chairman and Chief Executive Officer of KANA Software, Inc. (a customer relationship management software and services company) since September 2005. Also, since May 1997, Mr. Fields has been the Chairman of The Fields Group (a |
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management consulting firm). In June 1992, Mr. Fields founded Open Vision (a supplier of computer systems management applications for open client/server computing environments). Mr. Fields served as Chairman and Chief Executive Officer of Open Vision from July 1992 to July 1995 and continued to serve as Chairman of the Board until April 1997. Prior to such time, Mr. Fields held a number of executive positions at Oracle Corporation (an enterprise software company), including President of Oracle USA. Mr. Fields has been a director of Imation since January 1998 and is also a director of two privately-held companies, ViaNovus, Inc., and Crucian Global Services, Inc. | ||
L. White Matthews, III | L. White Matthews, III, age 60, has been retired since September 2001. From July 1999 until September 2001, Mr. Matthews served as Executive Vice President and Chief Financial Officer of Ecolab, Inc. (a developer and marketer of cleaning and sanitizing products and services) as well as a member of its Board of Directors. Mr. Matthews was retired from May 1998 to July 1999. From February 1977 to May 1998, Mr. Matthews served in various financial positions with Union Pacific Corporation (a company involved in rail/truck transportation and oil/gas exploration and production). From November 1989 to May 1998 he was Executive Vice President and Chief Financial Officer of Union Pacific and he was a member of its Board of Directors from 1994 to 1998. Mr. Matthews has been a director of Imation since February 2003. He is a director and Audit Committee chairperson of Matrixx Initiatives, Inc., a publicly-held company, a director of Ceridian Corporation, a publicly-held company, and a director of Mercantile Funds, Inc., a privately-held company. | |
Ronald T. LeMay | Ronald T. LeMay, age 60, has been an Industrial Partner of Ripplewood Holdings, LLC (a private equity fund) since October 2003, Executive Chairman of Last Mile Connections, Inc.(a network bandwidth exchange and solutions provider) since September 2005 and is also Chairman of October Capital (a private investment company). Mr. LeMay served as Representative Executive Officer of Japan Telecom (a telecommunications company) from November 2003 until the sale of the company in July 2004. Mr. LeMay served as President and Chief Operating Officer of Sprint Corporation (a telecommunications company) from October 1997 until April 2003. From July 1997 to October 1997, he served as Chairman and Chief Executive Officer of Waste Management, Inc. (a provider of waste management services). From February 1996 to July 1997, he served as President and Chief Operating Officer of Sprint. From March 1995 to September 1996, Mr. LeMay served as the Chief Executive Officer of Sprint Spectrum, a partnership among Sprint Tele-Communications, Inc., Comcast Corporation and Cox Communications. From 1989 to 1995, Mr. LeMay served as President and Chief Operating Officer of Sprint Long Distance. Mr. LeMay has been a director of Imation since July 1996 (except for the period from August 5, 1997 to December 31, 1997) and is also a director of two publicly-held companies, Allstate Corporation and Ceridian Corporation. |
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Board Members Continuing in Office — Class II (Term Ending 2007) |
Glen A. Taylor | Glen A. Taylor, age 64, is Chairman of Taylor Corporation (a holding company in the specialty printing and marketing areas). In August 1994, he acquired the National Basketball Association Minnesota Timberwolves team, and in 1999 launched the WNBA women’s basketball team, the Minnesota Lynx. Mr. Taylor has been a director of Imation since May 2000. | |
Daryl J. White | Daryl J. White, age 58, has been retired since May 2001. From August 2000 until May 2001, Mr. White served as President and Chief Financial Officer of Legerity, Inc. (a supplier of data and voice communications integrated circuitry). Prior to such time, Mr. White served as the Senior Vice President of Finance and Chief Financial Officer of Compaq Computer Corporation (a computer equipment manufacturer) from 1988 until his retirement in May 1996. Mr. White has been a director of Imation since July 1996. | |
Charles A. Haggerty | Charles A. Haggerty, age 64, has been Chief Executive Officer of LeConte Associates, LLC (a consulting and investment company) since January 2000. Mr. Haggerty retired from Western Digital Corp. (a provider of products and services for collection, management and use of digital information) in June 2000. From January 2000 until June 2000 he served as its Chairman of the Board. From July 1993 until December 1999 he served as its Chairman, President and Chief Executive Officer. From June 1992 until July 1993 he served as its President and Chief Operating Officer. Prior to that time, Mr. Haggerty had a29-year career with IBM Corporation (an information technology company), rising to the post of Vice President and General Manager of the worldwide OEM storage marketing business. Mr. Haggerty has been director of Imation since October 2004. Mr. Haggerty is also a director of three publicly-held companies, Pentair Corporation, Beckman Coulter, Inc. and Deluxe Corporation. |
Linda W. Hart | Linda W. Hart, age 65, is Vice Chairman and Chief Executive Officer of Hart Group, Inc. (a diversified group of companies primarily involved in residential and commercial building materials). Prior to joining Hart Group, Inc. in 1990, Ms. Hart was engaged in the private practice of law in Dallas, Texas. Ms. Hart has been a director of Imation since July 1996. Ms. Hart is also a director of each of the Hart Group companies: Hart Group, Inc., Rmax, Inc. and L&M Acquisitions, Inc. Ms. Hart also serves on the Board of Trustees for the Center for Strategic & International Studies, Washington, D.C. | |
Bruce A. Henderson | Bruce A. Henderson, age 56, is our Chairman of the Board and Chief Executive Officer. He was appointed to the position in May 2004. Prior to joining Imation, Mr. Henderson was Chief Executive of Edgecombe Holdings LLC (a private investment company), from November 2001 to May 2004. From July 1995 to October 2001, Mr. Henderson served in senior executive management positions for large operating units of Invensys, PLC., (a UK engineering company in the high value-added controls and automation systems industry). He was Chief Executive Officer of the $3.5 billion Invensys Controls, and was Chief Executive |
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Officer of the $2 billion Invensys Software Systems. From November 1982 to June 1995, Mr. Henderson served in various management positions at TRW, Inc., (a company that provides advanced products and services for space, defense and automotive markets). He served as a Vice President and General Manager of TRW Electronic Convenience Systems and as Managing Director of Quality Safety Systems, a joint venture between TRW and Tokai Rika Company, Ltd of Japan. Before TRW, Mr. Henderson was with McKinsey & Company (a management consulting group) where he specialized in corporate strategy and operations for U.S. and European high technology companies. Mr. Henderson is currently a director and chair of the Audit Committee of Universal Electronics, Inc., a publicly-held company. Mr. Henderson is co-author of Lean Transformation: How to Transform Your Business Into a Lean Enterprise and A Workbook for Assessing Your Lean Transformation. He also serves as a director of the Lean Enterprise Institute. | ||
Charles Reich | Dr. Charles Reich, age 63, has been retired since October 1, 2004. From October 1, 2002 to October 1, 2004, Dr. Reich served as Executive Vice President of 3M Health Care, a major business segment of 3M Company (a diversified technology company and our former parent). Dr. Reich joined 3M Co. in 1968 as a research chemist and assumed a variety of management positions in the Research & Development organization before moving to business management in 1989. He held a variety of management and executive positions, including international postings, within 3M since that time. He also served as a member of the Executive Advisory Board, Juran Center for Leadership in Quality at the University of Minnesota. Dr. Reich has been a director of Imation since July 2004. Dr. Reich is also a director of the Patterson Companies, a publicly-held company. |
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• | The Committee has reviewed and discussed the audited financial statements with Imation management. | |
• | The Committee has discussed with PwC, Imation’s independent registered public accounting firm, the matters required to be discussed by Statement on Auditing Standards No. 61. | |
• | The Committee has received the written disclosures and the letter from PwC required by Independence Standards Board Standard No. 1, and has discussed with PwC its independence from Imation. In connection with its review of PwC’s independence, the Committee also considered whether PwC’s provision of non-audit services during the 2005 fiscal year was compatible with the maintenance of its independence and determined that it was. | |
• | Based on the review and discussions described above, the Committee has recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2005, for filing with the U.S. Securities and Exchange Commission. |
AUDIT AND FINANCE COMMITTEE | |
Ronald T. LeMay, Chair | |
Charles Haggerty | |
L. White Matthews, III | |
Glen A. Taylor | |
Daryl J. White |
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Fiscal Year | Fiscal Year | |||||||||
2005 | 2004 | |||||||||
Audit Fees: | ||||||||||
GAAP or statutory audits | $ | 1,205,158 | $ | 1,171,201 | ||||||
Sarbanes-Oxley 404 audits | $ | 527,236 | $ | 684,357 | ||||||
Total Audit Fees(1) | $ | 1,732,394 | $ | 1,855,558 | ||||||
Audit-Related Fees: | ||||||||||
Services related to business transactions | $ | 0 | $ | 33,739 | ||||||
Employee benefit plan audits | $ | 74,139 | $ | 41,203 | ||||||
Attest services and other | $ | 18,110 | $ | 25,481 | ||||||
Total Audit-Related Fees | $ | 92,249 | $ | 100,423 | ||||||
Tax Fees (basic tax preparation and tax advice and compliance) | $ | 107,150 | $ | 146,956 | ||||||
All Other Fees : | ||||||||||
Financial training materials | $ | 1,500 | $ | 1,500 |
(1) | Fees billed or expected to be billed for the audit of our consolidated financial statements for the fiscal year ended December 31, 2005, for the reviews of our consolidated financial statements included in our quarterly reports on Form 10-Q, for the audit of management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2005 and for the audit of the effectiveness of internal control over financial reporting are $1,732,394 of which an aggregate amount of $801,559 has been billed through December 31, 2005. |
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• | motivate executives to achieve our strategic objectives; | |
• | align the interests of executives with the interests of shareholders; | |
• | provide competitive total compensation; | |
• | attract and retain highly qualified key executives; and | |
• | reward individual and corporate performance. |
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• | base salary; | |
• | annual incentive compensation; and | |
• | stock-based long-term incentive compensation. |
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COMPENSATION COMMITTEE | |
Daryl J. White, Chair | |
Michael S. Fields | |
Chuck A. Haggerty | |
Linda W. Hart | |
Chuck Reich |
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Summary Compensation Table | |||||||||||||||||||||||||||||||||
Long-Term Compensation | |||||||||||||||||||||||||||||||||
Awards | Payouts | ||||||||||||||||||||||||||||||||
Annual Compensation | |||||||||||||||||||||||||||||||||
Restricted | Securities | ||||||||||||||||||||||||||||||||
Other Annual | Stock | Underlying | LTIP | All Other | |||||||||||||||||||||||||||||
Name and Principal Position | Year | Salary | Bonus(1) | Compensation(2) | Awards(3) | Options | Payouts | Compensation(4) | |||||||||||||||||||||||||
Bruce A. Henderson, | 2005 | $ | 733,091 | $ | 891,352 | $ | 23,933 | $ | 1,346,298 | 88,200 | 0 | $ | 7,875 | ||||||||||||||||||||
Chairman and Chief | 2004 | $ | 417,508 | $ | 0 | $ | 92,697 | $ | 261,690 | 215,000 | 0 | $ | 0 | ||||||||||||||||||||
Executive Officer(5) | |||||||||||||||||||||||||||||||||
Jacqueline A. Chase | 2005 | $ | 270,821 | $ | 198,963 | $ | 4,921 | $ | 167,433 | 11,100 | 0 | $ | 7,875 | ||||||||||||||||||||
Vice President, | 2004 | $ | 268,378 | $ | 54,936 | $ | 4,787 | $ | 153,898 | 5,816 | 0 | $ | 7,688 | ||||||||||||||||||||
Human Resources | 2003 | $ | 249,909 | $ | 94,092 | $ | 1,940 | $ | 0 | 12,500 | 0 | $ | 7,500 | ||||||||||||||||||||
Arvind Korde(6) | 2005 | $ | 390,000 | $ | 282,144 | $ | 0 | $ | 0 | 0 | 0 | $ | 0 | ||||||||||||||||||||
Consultant | 2004 | $ | 25,000 | $ | 0 | $ | 0 | $ | 0 | 0 | 0 | $ | 0 | ||||||||||||||||||||
Frank P. Russomanno | 2005 | $ | 487,702 | $ | 506,450 | $ | 1,487 | $ | 720,987 | 38,300 | 0 | $ | 7,875 | ||||||||||||||||||||
Executive Vice | 2004 | $ | 461,894 | $ | 80,500 | $ | 437 | $ | 369,196 | 63,958 | 0 | $ | 7,688 | ||||||||||||||||||||
President and Chief | 2003 | $ | 302,237 | $ | 157,405 | $ | 0 | $ | 0 | 30,000 | 0 | $ | 7,500 | ||||||||||||||||||||
Operating Officer | |||||||||||||||||||||||||||||||||
John L. Sullivan | 2005 | $ | 314,021 | $ | 230,797 | $ | 8,145 | $ | 228,939 | 15,100 | 0 | $ | 7,875 | ||||||||||||||||||||
Senior Vice | 2004 | $ | 310,887 | $ | 70,560 | $ | 7,574 | $ | 196,958 | 7,444 | 0 | $ | 7,688 | ||||||||||||||||||||
President, General | 2003 | $ | 289,563 | $ | 116,478 | $ | 4,692 | $ | 0 | 16,000 | 0 | $ | 7,500 | ||||||||||||||||||||
Counsel and Secretary | |||||||||||||||||||||||||||||||||
Paul R. Zeller | 2005 | $ | 310,391 | $ | 273,483 | $ | 3,522 | $ | 372,453 | 24,500 | 0 | $ | 7,875 | ||||||||||||||||||||
Vice President and | 2004 | $ | 266,980 | $ | 61,905 | $ | 2,530 | $ | 282,059 | 11,871 | 0 | $ | 7,688 | ||||||||||||||||||||
Chief Financial | 2003 | $ | 221,368 | $ | 70,881 | $ | 1,114 | $ | 0 | 10,000 | 0 | $ | 7,500 | ||||||||||||||||||||
Officer |
(1) | The amounts shown for 2005 are cash payments payable to the named individuals under our 2005 bonus plan, except for Mr. Korde whose bonus was paid pursuant to his consulting agreement. The terms of Mr. Korde’s consulting agreement are described under the heading “Employment, Severance and Consulting Agreements — Consulting Agreement with Arvind Korde & Associates, LLC.” The amounts shown for 2004 include a discretionary bonus of $5,793 for Ms. Chase (including $793 related to Ms. Chase’s participation as a Top Performer in certain corporate sponsored events) and $10,000 for each of Messrs. Sullivan and Zeller. The remaining amounts shown for 2004 are cash payments payable to the named individuals under our 2004 bonus plan. The amounts shown for 2003 includeyears-of-service awards of $74 for Mr. Sullivan and $446 for Mr. Russomanno. The remaining amounts shown for 2003 are cash payments payable to the named individuals under our 2003 bonus plan. |
(2) | The amounts shown for 2004 for Mr. Henderson include payment of $85,678 in relocation benefits ($75,000 to cover relocation expenses plus $10,678 to cover the income taxes payable on this additional taxable income, as provided in Mr. Henderson’s Employment Agreement). See “Employment, Severance and Consulting Agreements — Employment Agreement with Mr. Henderson.” |
(3) | For purposes of this table, restricted stock is valued based on the closing price of our common stock on the date of grant. All shares of restricted stock vest 25% each year beginning on the first anniversary of the date of grant. Dividends paid on shares of restricted stock are held by Imation until the shares vest. As of December 31, 2005, the number and fair market value of all unvested shares of restricted stock held by each named individual were as follows: Mr. Henderson, 44,275 shares, $2,039,749; Ms. Chase, 7,795 shares, |
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$359,116; Mr. Russomanno, 28,045 shares, $1,292,033; Mr. Sullivan, 10,405 shares, $479,358; and Mr. Zeller, 16,825 shares, $775,128. | |
(4) | The amounts shown for 2005 are the value of our contributions of common stock to the accounts of the named individuals under the Retirement Investment Plan, which is $7,875 for each named individual. |
(5) | Mr. Henderson joined Imation in May 2004. |
(6) | Although Mr. Korde is a consultant to Imation, because he may have participated in Imation’s policy making activities at various times in 2005, he may be deemed to be an executive officer of Imation for purposes of applicable SEC regulations. As a result, we have included information about amounts paid to Mr. Korde in this table (and elsewhere) in addition to information on the Chief Executive Officer and the other four most highly compensated executive officers of Imation. The terms of Mr. Korde’s consulting agreement are described under the heading “Employment, Severance and Consulting Agreements — Consulting Agreement with Arvind Korde & Associates, LLC.” |
Option Grants in Last Fiscal Year | ||||||||||||||||||||
Individual Grants | ||||||||||||||||||||
% of Total Options | ||||||||||||||||||||
Number of Securities | Granted to | Exercise | ||||||||||||||||||
Underlying Options | Employees in | Price | Grant Date | |||||||||||||||||
Name | Granted(1) | Fiscal Year 2005 | ($/Share) | Expiration Date | Present Value(2) | |||||||||||||||
Bruce A. Henderson | 88,200 | 11.69 | % | $ | 34.17 | 05/03/2015 | $ | 13.08 | ||||||||||||
Jacqueline A. Chase | 11,100 | 1.47 | % | $ | 34.17 | 05/03/2015 | $ | 13.08 | ||||||||||||
Arvind Korde | 0 | — | — | — | — | |||||||||||||||
Frank P. Russomanno | 38,300 | 5.08 | % | $ | 34.17 | 05/03/2015 | $ | 13.08 | ||||||||||||
John L. Sullivan | 15,100 | 2.00 | % | $ | 34.17 | 05/03/2015 | $ | 13.08 | ||||||||||||
Paul R. Zeller | 24,500 | 3.25 | % | $ | 34.17 | 05/03/2015 | $ | 13.08 |
(1) | These options were granted at the fair market value of a share of common stock on the grant date, become exercisable at the rate of 25% each year beginning on the first anniversary of the date of grant, and expire ten years from the grant date. These options become immediately exercisable in full in the event of involuntary termination of employment within two years of a change of control (other than for death, disability or cause). |
(2) | In accordance with rules of the Securities and Exchange Commission, we chose the Black-Scholes option pricing model to estimate the grant date present value of the options set forth in this table. Our use of this model should not be construed as an endorsement of its accuracy at valuing options. All stock option valuation models, including the Black-Scholes model, require a prediction about the future movement of the stock price. The following weighted average assumptions were made for purposes of calculating the grant date present value for the options: expected life of the option of five years, volatility at 42.48%, dividend yield at 1.24% and risk free rate of return of 3.87%. |
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Aggregated Option Exercises in Last Fiscal Year | ||||||||||||||||||||||||
and Fiscal Year End Option Values | ||||||||||||||||||||||||
Number of Securities | Value of Unexercised | |||||||||||||||||||||||
Number of | Underlying Unexercised | In-the-Money Options at | ||||||||||||||||||||||
Shares | Options at 12/31/05 | 12/31/05 | ||||||||||||||||||||||
Acquired on | Value | |||||||||||||||||||||||
Name | Exercise | Realized | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Bruce A. Henderson | 0 | $ | 0 | 10,000 | 293,200 | $ | 58,100 | $ | 2,240,630 | |||||||||||||||
Jacqueline A. Chase | 0 | $ | 0 | 68,954 | 30,462 | $ | 1,355,140 | $ | 422,234 | |||||||||||||||
Arvind Korde | 0 | $ | 0 | 0 | 0 | $ | 0 | $ | 0 | |||||||||||||||
Frank P. Russomanno | 0 | $ | 0 | 104,119 | 127,519 | $ | 2,092,443 | $ | 1,292,603 | |||||||||||||||
John L. Sullivan | 0 | $ | 0 | 124,861 | 38,683 | $ | 2,852,223 | $ | 528,690 | |||||||||||||||
Paul R. Zeller | 0 | $ | 0 | 72,747 | 44,654 | $ | 1,566,664 | $ | 573,274 |
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• | base salary and prorated cash incentive compensation, if any (based on full year performance for the year of termination) earned but unpaid; | |
• | an amount equal to one year’s base salary; and | |
• | an amount equal to the cash incentive target amount for the year of termination. |
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• | if the termination is within one year after the Change of Control, then the lump sum is equal to two times his total annual base salary in effect immediately prior to a Change of Control plus two times the average of his cash incentive compensation payment (if any) for the two years prior to a Change of Control, or, if he has been employed by us for less than two years, two times the amount of the last cash incentive compensation payment (if any); and | |
• | if the termination is more than one year but within two years after the Change of Control, then the lump sum is equal to one times his total annual base salary in effect immediately prior to a Change of Control plus one times the average of his cash incentive compensation payment (if any) for the two years prior to a Change of Control. |
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• | the full base salary earned by the executive and unpaid through the date of termination, | |
• | any amount earned by the executive as a bonus with respect to the fiscal year preceding the date of termination if such bonus has not been paid and | |
• | an amount representing credit for any vacation earned or accrued by the executive but not taken during the current vacation year. |
• | an amount equal to the target bonus under the applicable bonus plan for the fiscal year in which the date of termination occurs plus | |
• | an amount equal to one year’s salary for the fiscal year in which the date of termination occurs. |
• | if the termination is within one year after the Change of Control, then the lump sum is equal to two times the executive’s total annual base salary in effect for the fiscal year of termination plus two times the average of the annual bonuses for the two fiscal years prior to termination; and | |
• | if the termination is more than one year but within two years after the Change of Control, then the lump sum is equal to one times his or her total annual base salary in effect for the fiscal year of termination plus one times the average of the annual bonuses for the two fiscal years prior to termination. |
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• | provide advice and counsel to Imation’s Chairman and Chief Executive Officer on matters of corporate strategy; | |
• | lead specific corporate strategy development projects as determined by Imation (e.g. optical archiving, expansion outside of data storage media, product portfolio evaluation); | |
• | assist the Chief Executive Officer in managing our strategy development process; | |
• | act as mentor and thought leader to the Global Product Strategy organization; | |
• | lead Imation’s merger and acquisition programs; and | |
• | attend our management board meetings in order to provide updates to management on assigned projects and programs. |
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(Total Return Index) | 12/31/00 | 12/31/01 | 12/31/02 | 12/31/03 | 12/31/04 | 12/31/05 | ||||||||||||||||||
Imation Corp. | $ | 100.00 | 139.23 | 226.33 | 228.35 | 208.94 | 305.86 | |||||||||||||||||
S&P MidCap 400 Index | 100.00 | 99.40 | 84.98 | 115.22 | 134.20 | 151.04 | ||||||||||||||||||
ArcaEx Tech 100 Index | 100.00 | 84.57 | 56.52 | 86.26 | 96.69 | 104.23 |
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INVESTOR RELATIONS | |
IMATION CORP. | |
1 IMATION PLACE | |
OAKDALE, MN 55128 |
BY ORDER OF THE BOARD OF DIRECTORS, | |
John L. Sullivan | |
Senior Vice President, General Counsel and Secretary |
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Financial Statement and Disclosure Matters | |
1. Review and discuss with management and the independent auditor the annual audited financial statements, including disclosures made in management’s discussion and analysis, and recommend to the Board whether the audited financial statements should be included in the Company’s Form 10-K. | |
2. Review and discuss with management and the independent auditor the Company’s quarterly financial statements prior to the filing of its Form 10-Q, including the results of the independent auditor’s review of the quarterly financial statements. | |
3. Discuss with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including any significant changes in the Company’s selection or application of accounting principles, any major issues as to the adequacy of the Company’s internal controls and any special steps adopted in light of material control deficiencies. | |
4. Review and discuss quarterly reports from the independent auditors on: |
(a) All critical accounting policies and practices to be used. | |
(b) All alternative treatments within generally accepted accounting principles for policies and procedures related to material items that have been discussed with management, including the ramification of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor. | |
(c) Other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences. |
5. Discuss with management the Company’s earnings press releases, including the use of “pro forma” or “adjusted” non-GAAP information, as well as financial information and earnings guidance provided to analysts and rating agencies. Such discussion may be done generally (consisting of discussing the types of information to be disclosed and the types of presentations to be made). | |
6. Discuss with management and the independent auditor the effect of regulatory and accounting initiatives as well as off-balance sheet structures on the Company’s financial statements. | |
7. Discuss with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies. | |
8. Discuss with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61 relating to the conduct of the audit, including any difficulties encountered in the course of the audit work, any restrictions on the scope of activities or access to requested information, and any significant disagreements with management. |
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9. Review disclosures made to the Audit Committee by the Company’s CEO and CFO during their certification process for the Form 10-K and Form 10-Q about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have a significant role in the Company’s internal controls. | |
Oversight of the Company’s Relationship with the Independent Auditor | |
10. Review and evaluate the lead partner of the independent auditor team. | |
11. Obtain and review a report from the independent auditor at least annually regarding (a) the independent auditor’s internal quality-control procedures, (b) any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm, (c) any steps taken to deal with any such issues, and (d) all relationships between the independent auditor and the Company. Evaluate the qualifications, performance and independence of the independent auditor, including considering whether the auditor’s quality controls are adequate and the provision of permitted non-audit services is compatible with maintaining the auditor’s independence, and taking into account the opinions of management and internal auditors. The Audit Committee shall present its conclusions with respect to the independent auditor to the Board. | |
12. Ensure the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law. Consider whether, in order to assure continuing auditor independence, it is appropriate to adopt a policy of rotating the independent auditing firm on a regular basis. | |
13. Recommend to the Board policies for the Company’s hiring of employees or former employees of the independent auditor who participated in any capacity in the audit of the Company. | |
14. Meet with the independent auditor prior to the audit to discuss the planning and staffing of the audit. | |
Oversight of the Company’s Internal Audit Function | |
15. Review the appointment and replacement of the senior internal auditing executive. | |
16. Review the significant reports to management prepared by the internal auditing department and management’s responses. | |
17. Discuss with the independent auditor and management the internal audit department responsibilities, budget and staffing and any recommended changes in the planned scope of the internal audit. | |
Compliance Oversight Responsibilities | |
18. Review with the independent auditor any issues having potential implications under Section 10A(b) of the Exchange Act . | |
19. Obtain reports from management, the Company’s senior internal auditing executive and the independent auditor that the Company and its subsidiary/foreign affiliated entities are in conformity with applicable legal requirements and the Company’s Code of Business Conduct and Ethics. Review reports and disclosures of insider and affiliated party transactions. Advise the Board with respect to the Company’s policies and procedures regarding compliance with applicable laws and regulations and with the Company’s Code of Business Conduct and Ethics. |
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20. Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. | |
21. Discuss with management and the independent auditor any correspondence with regulators or governmental agencies and any published reports which raise material issues regarding the Company’s financial statements or accounting policies. | |
22. Discuss with the Company’s General Counsel legal matters that may have a material impact on the financial statements or the Company’s compliance policies. |
1. Review policies regarding taxation, insurance, cash management, currency hedging, or other financial policies of the Company that could have a significant impact on the Company’s financial statements. | |
2. Review and approve the Company’s subsidiary capital structure and review and make recommendations to the Board of Directors concerning other elements of the Company’s capital structure, including the issuance of securities, structuring of financing agreements, dividend policy, and stock repurchase. | |
3. Monitor the Company’s compliance with financing agreements. | |
4. Monitor and oversee the functions of the Pension and Retirement Committee and review employee benefit plan investment policies including funding requirements. | |
5. Perform such other duties and responsibilities as may be assigned to the Committee from time to time by the Board of Directors. |
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HAHN AUDITORIUM
1401 N. SHORELINE BLVD.
MOUNTAIN VIEW,CA 94043
9:00 A.M. LOCAL TIME
below. I understand that this card must be received by The Bank of New York, acting as tabulation agent for the RIP Trustee, by April 28, 2006. If it is not received by that date, or if the voting instructions are invalid because this form is not properly signed and dated, the shares held in my account will be voted by Fidelity Management Trust Company in the same proportion that the other participants in the plan direct the RIP Trustee to vote shares allocated to their accounts. All voting instructions given by participants shall be held in strict confidence by the RIP Trustee.
P.O. BOX 11023
NEW YORK, N.Y. 10203-0023
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VOTE BY INTERNET / TELEPHONE
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INTERNET | TELEPHONE | |||||||||||||
https://www.proxyvotenow.com/imn | 1-866-205-9073 | |||||||||||||
• | Go to the website address listed | • | Use any touch-tone telephone. | • | Mark, sign and date your proxy card. | |||||||||
above. | OR | • | Have your proxy card ready. | OR | • | Detach your proxy card. | ||||||||
• | Have your proxy card ready. | • | Follow the simple recorded | • | Return your proxy card in the | |||||||||
• | Follow the simple instructions that | instructions. | postage-paid envelope provided. | |||||||||||
appear on your computer screen. |
o | 6 DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET 6 |
Please Sign, Date and Return the Proxy Card Promptly | x | |||||||
Using the Enclosed Envelope. | Votes must be indicated | |||||||
(x) in Black or Blue ink. |
FOR ALL | o | WITHHOLD FOR ALL | o | EXCEPTIONS | o | |||||||||
Nominees: 01 - Michael S. Fields, 02 - L. White Mathews, III, 03 - Ronald T. LeMay |
FOR | AGAINST | ABSTAIN | ||||||
2. | Ratification of appointment of PricewaterhouseCoopers LLP | o | o | o | ||||
as independent registered public accounting firm. |
Address Change? Mark box. | o | |
Indicate change on reverse. | ||
Check this box if you plan to attend the Annual Meeting. If you choose to vote your proxy by telephone, please do not hang up until you have been prompted and have replied regarding your attendance at the Annual Meeting. | o |
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