If you are a shareholder whose stock is held in street name with a bank, broker, or other nominee, you must follow the instructions found on the voting instruction card provided by the bank, broker, or other nominee, or contact your bank, broker, or other nominee in order to change or revoke your previously given proxy.
With respect to the
re-approval ofvote on the
2007 Stock Incentive Plan,shareholder proposal concerning lobbying policies and procedures, abstentions and broker non-votes will have no effect on the proposal and will not count either in favor of, or against, the
proposal, provided that the total vote cast represents over 50% of the outstanding shares of Common Stock. | |
| Q: | Where can I find the results of the Annual Meeting? |
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| A: | We expect to announce the preliminary voting results at the Annual Meeting and disclose the final results in a Current Report on Form 8-K filed within four business days after the Annual Meeting. |
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| Q: | Who pays for the solicitation of proxies? |
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| A: | We will pay all of the costs associated with this proxy solicitation. Proxies are being solicited by mail and may also be solicited in person or by telephone, facsimile, or other means of electronic transmission by our directors, officers, and employees. We will reimburse banks, brokerage firms, and other custodians, nominees, and fiduciaries for their reasonable expenses in forwarding proxy materials to the beneficial owners of shares of Common Stock. It is contemplated that additional solicitation of proxies will be made by D.F. King & Co., Inc., 77 Water Street, New York, New York 10005, at an anticipated cost to us of approximately $6,000, plus reimbursement of out-of-pocket expenses for such items as mailing, copying, phone calls, faxes, and other related matters. In addition, we will indemnify D.F. King against any losses arising out of D.F. King’sKing's proxy soliciting services on our behalf. |
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| Q: | Could other matters be decided in the Annual Meeting? |
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| A: | The Board of Directors does not know of any other business that may be brought before the Annual Meeting. However, if any other matters should properly come before the Annual Meeting or at any adjournment or postponement thereof, it is the intention of the persons named in the enclosed proxy card to vote on such matters as they, in their discretion, may determine. |
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| Q: | Where can I find Universal Corporation’sCorporation's corporate governance materials? |
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| A: | Our Corporate Governance Guidelines, including our independence standards for members of the Board of Directors, Code of Conduct, and the charters of the Audit Committee, the Executive Compensation, Nominating and Corporate Governance Committee, which we refer to as the Compensation and Governance Committee, and all other standing committees, are available under the “Corporate Governance”“Corporate Governance” section of our Internet website athttp://investor.universalcorp.com/governance.cfm, and are available in print to any shareholder upon request by contacting us at the following address or phone number: |
Attention: Investor Relations
Telephone: (804) 359-9311
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| Q: | How do I communicate with the Board of Directors? |
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| A: | Shareholders and other interested parties may at any time direct communications to the Board of Directors as a whole, to the director who presides at the executive sessions of the non-employee directors, or to any individual member of the Board of Directors, through our Internet website or by contacting our Secretary. The “Corporate“Corporate Governance –- Contact the Board”section of our Internet website athttp://investor.universalcorp.com/contactboard.cfmcontains an e-mail link established for receipt of communications with directors, and communications can also be delivered by mail by sending requests to our Secretary at the following address: |
Telephone: (804) 359-9311
Shareholders making such communications are encouraged to state that they are shareholders and provide the exact name in which their shares of Common Stock are held and the number of shares held. Each individual communicating with the Board of Directors will receive a written acknowledgement from or on behalf of our Secretary after receipt of the communication sent in the manner described above. After screening such communications for issues unrelated to shareholder interests, our Secretary will distribute communications to the intended recipient(s) as appropriate. The process for such screening has been approved by our non-employee directors.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON AUGUST 7, 2012.6, 2013
. Our Proxy Statement and fiscal year 20122013 Annual Report are both available free of charge under the “Investor –“Investor - Financial Information”Information” section of our Internet website athttp://investor.universalcorp.com/financials.cfm.
Our 20122013 Annual Report to Shareholders, which includes a copy of our fiscal year 20122013 Annual Report (excluding exhibits) as filed with the Securities and Exchange Commission, is being mailed to shareholders with this Proxy Statement.
We will provide additional copies of our fiscal year 20122013 Annual Report, including the financial statements and financial statement schedules, without charge to any person to whom this Proxy Statement has been delivered if they so request. Requests should be directed to Investor Relations at the address or phone number provided on page 5 of this Proxy Statement.
We make available free of charge through our Internet website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, which is referred to herein as the Exchange Act, as well as reports on Forms 3, 4 and 5 filed by our directors and executive officers pursuant to Section 16 of the Exchange Act, as soon as reasonably practicable after such documents are electronically filed with, or furnished to, the Securities and Exchange Commission. The information on our Internet website is not, and shall not be deemed to be, a part of this Proxy Statement or incorporated into any other filings we make with the Securities and Exchange Commission.
In accordance with our Articles of Incorporation and Bylaws, the Board of Directors is divided into three classes. The term of office of one of the three classes of directors expires each year, and each class is elected for a three-year term.
Five members of our board directors have previously been elected to terms expiring in 2014 or 2015, as indicated below. The Compensation and Governance Committee has recommended to our Board of Directors, and our Board of Directors has approved, the threefour directors set forth below to be elected at the Annual Meeting. In order to balance the number of directors in each of the three classes of directors, the Board of Directors has proposed that the three incumbent nominated directors serve three-year terms and that the fourth nominated director, Mr. Lennart R. Freeman, serve a one-year term. The Board of Directors intends to nominate Mr. L. Freeman for re-election during the 2014 Annual Meeting for termsa three-year term, which would balance each class of three years. Six other directors have previously been elected to terms expiring in 2013 or 2014, as indicated below. directors.
The following pages set forth certain information for each nominee and each incumbent director as of March 31, 2012,2013, except as otherwise noted. All of the nominees, except for Mrs. Cantor,Mr. L. Freeman, and all of the incumbent directors listed below are directors previously elected by the shareholders. Each nominee has consented to being named in this Proxy Statement and to serve if elected. Mr. E. P. Trani’sJ. J. Sheehan's current term expires at the Annual Meeting, and he will not stand for re-election as he has reached retirement age as set forth in our Corporate Governance Guidelines.
The election of each nominee for director requires the affirmative vote of the holders of a plurality of the shares of Common Stock cast in the election of directors. With a plurality vote, the nominees that receive the highest vote totals for the director positions up for election will be elected. Proxies cannot be voted for a greater number of persons than the number of nominees named in this Proxy Statement. Unless otherwise specified in the accompanying form of proxy, it is intended that votes will be cast for the election of all of the nominees as directors. If, at the time of the Annual Meeting, any nominee should be unavailable to serve as a director, it is intended that votes will be cast, pursuant to the enclosed proxy, for such substitute nominee as may be nominated by the Board of Directors. The Board of Directors has no reason to believe that any of the nominees will be unavailable. In lieu of designating a substitute nominee, however, the Board of Directors may adopt a resolution pursuant to our Articles of Incorporation to reduce the number of directors.
Set forth below is information concerning the age, principal occupation, employment and directorships during the past five years, positions with the Company of each nominee and director, the year in which he first became a director of the Company and his term of office as a director. Also set forth below is a brief discussion of the specific experience, qualifications, attributes or skills that led to the conclusion that each nominee and director should serve as a director as of the date of this Proxy Statement, in light of the
Company’sCompany's business and structure.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” PROPOSAL ONE.
TheIncumbent Directors Whose Terms Expire in 2013 (Class I Directors)
CHESTER A. CROCKER, 71, is a professor of strategic studies at Georgetown University's Walsh School of Foreign Service, a private research university. He has held this position for more than five years. He serves as Chairman of the Board of Directors recommendsfor G3 Good Governance Holdings Ltd., a business consulting company, and as a director of the Global Leadership Foundation, a not-for-profit foundation. Dr. Crocker was a director of Bell Pottinger Communications USA, LLC, a communications and public affairs consulting company, from 2007 to 2012, a director of ASA Limited from 1996 to 2008, and a member of the Board of Directors of the United States Institute of Peace from 1991 to 2011. He is a member of the Finance Committee and the Pension Investment Committee, and has been a director since 2004.
Through Dr. Crocker's service on the boards of directors within several privately-held companies, the Federal government and the not-for-profit sector, he has developed business, leadership and administrative experience, which is valuable to the Board of Directors. Dr. Crocker's extensive African experience and expertise, his service as international political risk adviser to corporations and his familiarity with non-U.S. origins of relevance to the Company provide the Board of Directors with a valuable perspective during discussions relating to international issues. In addition, through his prior service on the board of directors of another publicly-traded company, he has developed experience in risk oversight, executive compensation and corporate governance that shareholders vote “FOR” Proposal One.is valuable to the Board of Directors.
CHARLES H. FOSTER, JR., 70, retired as Chairman of LandAmerica Financial Group, Inc. (“LandAmerica”), a title insurance company in December 2006, which filed for Chapter 11 bankruptcy protection in November 2008. He had served as Chairman and Chief Executive Officer at LandAmerica from October 1991 through December 2005. He is Chairman of the Finance Committee, a member of the Executive Committee and the Compensation and Governance Committee, and has been a director since 1995.
Mr. Foster is an experienced leader, having previously served as Chairman of the Board of Directors and Chief Executive Officer of LandAmerica, and as a member of the board of directors of other publicly-traded companies. With the tenure of this past executive and board position, he has experience in risk oversight, executive compensation and corporate governance that is valuable to the Board of Directors. He also gained extensive experience complying with the various regulatory and governance requirements to which LandAmerica was subject, both within its industry and as a publicly-traded company.
THOMAS H. JOHNSON, 63, has been Managing Partner of THJ Investments, L.P., a private investment firm, from November 2005 to the present. Since 2008, he has also served as Chief Executive Officer of Taffrail Group, LLC, a business consulting firm. Mr. Johnson retired as Chairman and Chief Executive Officer of Chesapeake Corporation (“Chesapeake”), a specialty packaging company, in November 2005, after which he served as Vice Chairman until April 2006. From 2004 until his retirement, Mr. Johnson was Chairman and Chief Executive Officer of Chesapeake and, from 2000 to 2004, he was Chairman, President, and Chief Executive Officer of Chesapeake. Mr. Johnson is also a director of Coca Cola Enterprises, Inc., a marketer, producer and distributor of Coca-Cola products, and Tumi Holdings, Inc., a global distribution company offering travel and business products in multiple categories. He was also a director of Superior Essex, Inc., a manufacturer of wire and cable products, from December 7, 2005 to August 7, 2008, and Gen On Corporation, a producer of electricity, and the predecessor company, Mirant Corporation, from January 2006 until its merger with NRG Energy, Inc. in December 2012. He is a member of the Executive Committee and the Compensation and Governance Committee, and has been a director since 2001.
Mr. Johnson's more than 15 years of experience as a chief executive of several large corporations and extensive service on the boards of multinational corporations provides the Board of Directors a valuable perspective on governance best practices and executive leadership. Through these executive management experiences, Mr. Johnson brings investment, manufacturing and distribution expertise to bear on his service as a member of the Board of Directors, and also has extensive international management experience in Europe and Asia. Mr. Johnson's service on the board of directors of other public companies, including such companies' audit, nominating and governance, and compensation and governance committees, provides our Board of Directors with financial, operational and strategic expertise.
New Nominee to Join the Board of Directors
LENNART R. FREEMAN, 61, retired as Executive Vice President of Swedish Match AB (“Swedish Match”), a global tobacco products manufacturer, in February 2011. Mr. L. Freeman worked with Swedish Match for over 30 years, serving as Executive Vice President for the six years prior to his retirement. While at Swedish Match, he successfully completed significant corporate restructurings and served in numerous executive positions within the company. He currently serves as a Director of the Dometic Group AB, a privately-held global provider of comfort products for the recreational vehicle, automotive and marine markets. Mr. L. Freeman is no relation to Mr. G. Freeman.
Mr. L. Freeman's extensive experience in the tobacco industry adds depth to the Board of Director's ability to evaluate and develop industry opportunities and strategies. His years with Swedish Match also add a unique customer perspective to the Board of Directors. In addition, Mr. L. Freeman's extensive leadership experience in a multinational company adds significant value to the Board of Directors.
Incumbent Directors Whose Terms Expire in 2014 (Class II Directors)
GEORGE C. FREEMAN, III, 50, has been our Chief Executive Officer since April 1, 2008, and our President since December 12, 2006. Mr. G. Freeman served as General Counsel and Secretary from February 1, 2001 until November 2005, and was elected Vice President in November 2005. He has been a director since November 7, 2007 and Chairman of the Board of Directors since August 5, 2008. He is Chairman of the Executive Committee and a member of the Finance Committee. Mr. G. Freeman also serves as a director of Tredegar Corporation, a manufacturer of plastic films and aluminum extrusions, since May 24, 2011 and he serves on its Audit and Nominating Committees.
As Chairman of the Board, Mr. G. Freeman provides the Board of Directors with strong leadership and a considerable amount of experience. In addition, as our President and Chief Executive Officer, Mr. G. Freeman is able to communicate to and inform the Board about our day-to-day operations, customer issues, management issues and industry developments. The Board believes that Mr. G. Freeman's extensive knowledge of the industry, his financial expertise and his forward-looking thinking brings an invaluable perspective on our current operations and our ongoing relationships with customers and suppliers. Through Mr. G. Freeman's years of service with us and on the Board of Directors, he has developed extensive knowledge in the areas of leadership, risk oversight, management and corporate governance, each of which provides great value to the Board of Directors.
EDDIE N. MOORE, JR., 65, was the Chief Executive Officer and President of St. Paul's College, a private, historically black liberal arts college, from May 2012 to June 2012, and had served as Interim President from November 2011 to May 2012. Previously, Mr. E. Moore was the President of Virginia State University, a public research university, for more than five years. Upon retirement as President on July 1, 2010, he accepted a position as President Emeritus, a position which he continues to hold. Prior to assuming the position of President in 1993, Mr. E. Moore served as state treasurer for the Commonwealth of Virginia, heading the Department of the Treasury and serving on fifteen state boards and authorities. He is also a director of Owens & Minor, Inc., a distributor of national name-brand medical and surgical supplies and a healthcare supply chain management company. He is Chairman of the Audit Committee and a member of the Finance and Pension Investment Committees, and has been a director since 2000.
Mr. E. Moore's strong background in accounting and finance and his leadership experience gained through managing prominent educational institutions is valuable to the Board of Directors. Mr. E. Moore's experience in the public sector brings valuable perspectives and disciplines to the Board of Directors' deliberations and decision-making processes.
Nominees for Election Whose Terms Expire in 20122015 (Class III Directors)
JOHN B. ADAMS, JR., 67,68, is President, Chief Executive Officer and a director of Bowman Companies, a private land development company, positions he has held for more than five years. He has also been a director of Fauquier Bankshares, Inc., a community bank, since 2003 and in January 2010 became Chairman of the Board of Directors. He is a member of the Audit Committee and the Finance Committee, and has been a director since 2003.
Having been a director of Fauquier Bankshares, Inc. since 2003, Mr. Adams brings extensive financial and banking experience to the Board of Directors. In addition, his experience as President, Chief Executive Officer and a director of Bowman Companies and his other leadership roles provides the Board of Directors with valuable leadership, business and operational experience.
DIANA F. CANTOR, 54,55, is a Partner of Alternative Investment Management, LLC, an independent privately heldprivately-held investment management firm, a position she has held since January 2010. In addition, she is the co-founder and Managing Director of Hudson James Group LLC, a strategic advisory firm, a position she has held since February 2012. Prior to that, Mrs. Cantor served as a Managing Director with New York Private Bank and Trust from January 2008 through December 2009, and from 1996 to 2007 she served as a Founder and Executive Director of the Virginia College Savings Plan, an independent agency of the Commonwealth of Virginia. She alsoMrs. Cantor serves on the Board of Directors of Domino’sDomino's Pizza, Inc., a U.S. based global pizza delivery company;company, Media General, Inc., a provider of news, information and entertainment, across multiple media platforms; and Revlon, Inc., a global cosmetics company. She is also Chairman of the Virginia Retirement System. Mrs. Cantor previously served as a director of The Edelman Financial Group, Inc., a provider of investment advice. Sheadvice, from 2011 to 2012. Mrs. Cantor is currently Chairmana member of the Virginia Retirement System.The Board of Directors concluded that Mrs. Cantor should serve onAudit Committee and the Board of Directors because Pension Investment Committee and has been a director since 2012.
Mrs. Cantor possesses extensive legal, investment and financial skills and significant public company directorship and committee experience, all of which
will add important, multi-disciplinary financial perspective to our Board of Directors.
Mrs. Cantor is a nominee for Director who will joinHer service on the boards of multinational corporations offers the Board of Directors
upona valuable perspective on governance best practices and executive leadership and, with her
election atservice on such companies' audit committees, strengthens the
Annual Meeting.financial and strategic expertise of the Board of Directors.
ROBERT C. SLEDD, 59,60, is Managing Partner of Pinnacle Ventures, LLC, a venture capital firm, and Sledd Properties, LLC, an investment company. He was appointed in January 2010 as the Senior Economic Advisor to the Governor of Virginia. He served as Chairman of Performance Food Group Co. (“PFG”), a foodservice distribution company, from 1995 until June 2008. He served as Chief Executive Officer of PFG from 1987 to 2001 and from 2004 to 2006. He also serves on the Board of Directors of Owens & Minor, Inc., a distributor of national name-brand medical and surgical supplies and a healthcare supply chain management company, and Pool Corporation, a wholesale distributor of swimming pool supplies, equipment, and related leisure products. He is Chairman of the Pension Investment Committee, a member of the Audit Committee and has been a director since 2009.
Through Mr.
Sledd’sSledd's prior experience serving as a former chief executive of a foodservice distribution company, he has gained extensive knowledge and understanding of the challenges faced by public companies. In addition, his experience in founding, expanding and taking public PFG provides the Board of Directors with a breadth of perspectives and ideas on matters of management, corporate governance and strategic growth. Having served on the board of directors of other publicly traded companies, he has gained further experience related to corporate governance matters in addition to experience in risk oversight and executive compensation.
Incumbent
DirectorsDirector Whose
Terms ExpireTerm Expires in 2013
(Class I Directors)CHESTER A. CROCKER, 70, is a professor of strategic studies at Georgetown University’s Walsh School of Foreign Service, a private research university. He has held this position for more than five years. He serves as Chairman of the Board of Directors for G3 Good Governance Holdings Ltd., a business consulting company, and is a director of Bell Pottinger Communications USA, LLC, a communications and public affairs consulting company. He was a director of ASA Limited from 1996 to 2008, and a member of the Board of Directors of the United States Institute of Peace from 1991 to 2011. He is a member of the Finance Committee and the Pension Investment Committee, and has been a director since 2004.
Through Dr. Crocker’s service on the boards of directors within several privately-held companies, the Federal government and the not-for-profit sector, he has developed business, leadership and administrative experience, which is valuable to the Board of Directors. Dr. Crocker’s extensive African experience and expertise, his service as international political risk adviser to corporations and his familiarity with non-U.S. origins of relevance to the Company provide the Board of Directors with a valuable perspective during discussions relating to international issues. In addition, through his prior service on the board of directors of another publicly-traded company, he has developed experience in risk oversight, executive compensation and corporate governance that is valuable to the Board of Directors.
CHARLES H. FOSTER, JR., 69, retired as Chairman of LandAmerica Financial Group, Inc. (“LandAmerica”), a title insurance company in December 2006, which filed for Chapter 11 bankruptcy protection in November 2008. He had served as Chairman and Chief Executive Officer at LandAmerica from October 1991 through December 2005. He is Chairman of the Finance Committee, a member of the Executive Committee and the Compensation and Governance Committee, and has been a director since 1995.
Mr. Foster is an experienced leader, having previously served as Chairman of the Board of Directors and Chief Executive Officer of LandAmerica, and as a member of the board of directors of other publicly-traded companies. With the tenure of this past executive and board position, he has experience in risk oversight, executive compensation and corporate governance that is valuable to the Board of Directors. He also gained extensive experience complying with the various regulatory and governance requirements to which LandAmerica was subject, both within its industry and as a publicly-traded company.
THOMAS H. JOHNSON, 62, has been Managing Partner of THJ Investments, L.P., a private investment firm, from November 2005 to the present. Since 2008, he has also served as Chief Executive Officer of Taffrail Group, LLC, a business consulting firm. Mr. Johnson retired as Chairman and Chief Executive Officer of Chesapeake Corporation (“Chesapeake”), a specialty packaging company, in November 2005, after which he served as Vice Chairman until April 2006. From 2004 until his retirement, Mr. Johnson was Chairman and Chief Executive Officer of Chesapeake and, from 2000 to 2004, he was Chairman, President, and Chief Executive Officer of Chesapeake. Mr. Johnson is also a director of Coca Cola Enterprises, Inc., a marketer, producer and distributor of Coca-Cola products; Gen On Corporation, a producer of electricity; and Tumi Holdings, Inc., a global distribution company offering travel and business products in multiple categories. He was also a director of Superior Essex, Inc., a manufacturer of wire and cable products, from December 7, 2005 to August 7, 2008. He is a member of the Executive Committee and the Compensation and Governance Committee, and has been a director since 2001.
Mr. Johnson’s more than 15 years of experience as a chief executive of several large corporations and extensive service on the boards of multinational corporations provides the Board of Directors a valuable perspective on governance best practices and executive leadership. Through these executive management experiences, Mr. Johnson brings investment, manufacturing and distribution expertise to bear on his service as a member of the Board of Directors, and also has extensive international management experience in Europe and Asia. Mr. Johnson’s service on the board of directors of other public companies, including such companies’ audit, nominating and governance, and compensation and governance committees, provides our Board of Directors with financial, operational and strategic expertise.
Retiring
JEREMIAH J. SHEEHAN, 73,74, is the retired as Chairman of the Board and Chief Executive Officer of Reynolds Metals Company, an aluminum and aluminum foil producer, in 2000, having served in those positions since 1996.Company. Mr. Sheehan currently serves as ouris the Lead Independent Director, and is Chairman of the Compensation and Governance Committee, a member of the Audit Committee and the Executive Committee, and has been a director since 1998.Mr. Sheehan brings extensive business, leadership and administrative experience from his tenure as Chairman of the Board of Directors and Chief Executive Officer of Reynolds Metals Company, which is valuable to the Board of Directors. Having served on the Board of Directors since 1998, he provides a wealth of knowledge concerning the Company to the Board of Directors.
Incumbent Directors Whose Terms Expire in 2014 (Class II Directors)
GEORGE C. FREEMAN, III, 49, has been our Chief Executive Officer since April 1, 2008, and our President since December 12, 2006. Mr. Freeman served as General Counsel and Secretary from February 1, 2001, until November 2005, and was elected Vice President in November 2005. He has been a director since November 7, 2007 and Chairman of the Board of Directors since August 5, 2008. He is Chairman of the Executive Committee and a member of the Finance Committee. Mr. Freeman also serves as a director of Tredegar Corporation, a publically listed manufacturer of plastic films and aluminum extrusions since May 24, 2011 and he serves on its Audit and Nominating Committees.
As Chairman of the Board, Mr. Freeman provides the Board of Directors with strong leadership and a considerable amount of experience. In addition, as our President and Chief Executive Officer, Mr. Freeman is able to communicate to and inform the Board about our day-to-day operations, customer issues, management issues and industry developments. The Board believes that Mr. Freeman’s extensive knowledge of the industry, his financial expertise and his forward-looking thinking brings an invaluable perspective on our current operations and our ongoing relationships with customers and suppliers. Through Mr. Freeman’s years of service with us and on the Board of Directors, he has developed extensive knowledge in the areas of leadership, risk oversight, management and corporate governance, each of which provides great value to the Board of Directors.
EDDIE N. MOORE, JR., 64, is the Chief Executive Officer and President of St. Paul’s College, a private, historically black liberal arts college, since his appointment in May 2012. Previously, Mr. E. Moore was the President of Virginia State University, a public research university, for more than five years. Upon retirement as President on July 1, 2010, he accepted a position as President Emeritus, a position which he continues to hold. Prior to assuming the position of President in 1993, Mr. E. Moore served as state treasurer for the Commonwealth of Virginia, heading the Department of the Treasury and serving on fifteen state boards and authorities. He is also a director of Owens & Minor, Inc. He is Chairman of the Audit Committee and a member of the Finance and Pension Investment Committees, and has been a director since 2000.
Mr. E. Moore’s strong background in accounting and finance and his leadership experience gained through managing prominent educational institutions is valuable to the Board of Directors. Mr. E. Moore’s experience in the public sector brings valuable perspectives and disciplines to the Board of Directors’ deliberations and decision-making processes.
Incumbent Director Whose Term Expires in 2012 and is Retiring
EUGENE P. TRANI, 72, was the President of Virginia Commonwealth University, a public research university, for more than five years. Upon retirement as President on June 30, 2009, he accepted a position as a University Distinguished Professor at Virginia Commonwealth University, a position which he continues to hold. He also served as a director of LandAmerica from 1993 to 2009. Dr. Trani is a member of the Audit and Pension Investment Committees, and has been a director since 2000.
The following table sets forth as of June 15, 2012,14, 2013, certain information with respect to the beneficial ownership of shares of Common Stock by each person or group we know to beneficially own more than 5% of the outstanding shares of such stock.| Name and Address of Beneficial Owner | | Number of Shares | | | Percent of Class(1) | |
| | | (#) | | | (%) | |
| | | | | | | |
| BlackRock, Inc. | | | 4,532,701 | (2) | | | 19.4 | % |
| 40 East 52nd Street | | | | | | | | |
| New York, New York 10022 | | | | | | | | |
| Allianz Global Investors Capital LLC | | | 1,891,795 | (3) | | | 8.1 | % |
| 600 West Broadway, Suite 2900 | | | | | | | | |
| San Diego, California 92101 | | | | | | | | |
| NFJ Investment Group LLC | | | | | | | | |
| 2100 Ross Avenue, Suite 700 | | | | | | | | |
| Dallas, Texas 75201 | | | | | | | | |
| Dimensional Fund Advisors LP | | | 1,758,102 | (4) | | | 7.5 | % |
| Palisades West, Building One | | | | | | | | |
| 6300 Bee Cave Road | | | | | | | | |
| Austin, Texas 78746 | | | | | | | | |
| Vanguard Group, Inc. | | | 1,270,081 | (5) | | | 5.4 | % |
| 100 Vanguard Boulevard | | | | | | | | |
| Malvern, Pennsylvania 19355 | | | | | | | | |
|
| | | | | | | |
| Name and Address of Beneficial Owner | | Number of Shares | | Percent of Class(1) |
| | | (#) | | (%) |
| BlackRock, Inc. | | 4,402,831 |
| (2) | | 18.9 | % |
| 40 East 52nd Street | | | | | |
| New York, New York 10022 | | | | | |
| Dimensional Fund Advisors LP | | 1,970,148 |
| (3) | | 8.5 | % |
| Palisades West, Building One | | | | | |
| 6300 Bee Cave Road | | | | | |
| Austin, Texas 78746 | | | | | |
| Vanguard Group, Inc. | | 1,777,936 |
| (4) | | 7.6 | % |
| 100 Vanguard Boulevard | | | | | |
| Malvern, Pennsylvania 19355 | | | | | |
| Allianz Global Investors U.S. Holdings LLC | | 1,659,114 |
| (5) | | 7.1 | % |
| 680 Newport Center Drive, Suite 250 | | | | | |
| Newport Beach, California 92660 | | | | | |
| NFJ Investment Group LLC | | | | | |
| 2100 Ross Avenue, Suite 700 | | | | | |
| Dallas, Texas 75201 | | | | | |
| |
(1) | The percentages shown in the table are based on 23,353,99823,307,659 shares of Common Stock outstanding on June 15, 2012.14, 2013. |
| |
(2) | As reported on a Schedule 13G/A filed with the Securities and Exchange Commission on January 10, 2012.11, 2013. The amended Schedule 13G indicates that BlackRock, Inc., acting as a parent holding company, reported that it has sole voting and dispositive power over 4,532,7014,402,831 shares of Common Stock. |
| |
(3) | As reported on an amended Schedule 13G/A filed with the Securities and Exchange Commission on February 13, 2012 by Allianz Global Investors Capital LLC (“AGIC”), a parent holding company and its subsidiary, NFJ Investment Group LLC (“NFJ”), an investment adviser, AGIC had sole voting power over no shares of Common Stock, shared voting power over no shares of Common Stock, sole dispositive power over no shares of Common Stock and shared dispositive power over no shares of Common Stock, and NFJ had sole voting power over 1,875,195 shares of Common Stock, shared voting power over no shares of Common Stock, sole dispositive power over 1,891,795 shares of Common Stock and shared dispositive power over no shares of Common Stock. |
| (4) | As reported on a Schedule 13G filed with the Securities and Exchange Commission on February 13, 2012.11, 2013. The amended Schedule 13G indicates that Dimensional Fund Advisors L.P., in its capacity as investment adviser to certain commingled group trusts and separate accounts, has the sole voting power over 1,734,3651,955,521 shares of Common Stock, shared voting power over no shares of Common Stock, sole dispositive power over 1,758,1021,970,148 shares of Common Stock and shared dispositive power over no shares of Common Stock that are owned by such companies, trusts, and accounts. |
| |
(5)(4)
| As reported on an amended Schedule 13G/A filed with the Securities and Exchange Commission on February 9, 2012, which was filed by The Vanguard Group, Inc. (“Vanguard”) on behalf of its subsidiary, Vanguard Fiduciary Trust Company (“VFTC”), reflecting beneficial ownership of 35,788 shares by VFTC of the total of 1,270,081 shares of common stock as of December 31, 2011.11, 2013. According to this filing, Vanguard Group, Inc. possessed sole voting power over 1,234,29335,788 shares with no shared voting power and sole dispositive power over 1,234,2931,743,248 shares with shared dispositive power over 34,688 shares. |
| |
(5) | As reported on an amended Schedule 13G/A filed with VFTC over 35,788 shares. In addition, VFTC possessedthe Securities and Exchange Commission on February 14, 2013 by Allianz Global Investors Capital LLC (“AGIC”), a parent holding company, and its subsidiary, NFJ Investment Group LLC (“NFJ”), an investment adviser. AGIC had sole voting power over 35,788no shares with noof Common Stock, shared voting power and over no shares of Common Stock, sole dispositive power withover no shares of Common Stock and shared dispositive power with Vanguard over 35,788 shares.no shares of Common Stock, and NFJ had sole voting power over 1,567,233 shares of Common Stock, shared voting power over no shares of Common Stock, sole dispositive power over 1,583,833 shares of Common Stock and shared dispositive power over no shares of Common Stock. |
Directors and Executive Officers
The following table sets forth as of June 15, 2012,14, 2013, certain information with respect to the beneficial ownership of shares of Common Stock by (i) each director or nominee (each of whom is currently a director except Mrs. CantorMr. L. R. Freeman who is being nominated to serve as of the Annual Meeting), (ii) each executive officer listed in the“Summary “Summary Compensation Table”, who we refer to as the “named executive officers”, and (iii) all current directors and executive officers as a group.| Name of Beneficial Owner | | Number of Shares(1),(2) | | | Percent of Class(3) | |
| | | (#) | | | (%) | |
| | | | | | | |
| John B. Adams, Jr. | | | 19,146 | | | | * | |
| W. Keith Brewer | | | 164,767 | | | | * | |
| Diana F. Cantor | | | 0 | | | | * | |
| Chester A. Crocker | | | 11,999 | | | | * | |
| Charles H. Foster, Jr. | | | 21,353 | | | | * | |
| George C. Freeman, III | | | 250,999 | | | | 1.1 | % |
| Thomas H. Johnson | | | 18,899 | | | | * | |
| David C. Moore | | | 122,942 | | | | * | |
| Eddie N. Moore, Jr. | | | 16,545 | | | | * | |
| Ray M. Paul, Jr. | | | 76,942 | | | | * | |
| Jeremiah J. Sheehan | | | 34,729 | | | | * | |
| Robert C. Sledd | | | 5,699 | | | | * | |
| Eugene P. Trani | | | 19,093 | | | | * | |
| Preston D. Wigner | | | 56,012 | | | | * | |
| All current directors and executive officers as a group (18 persons) | | | 982,795 | | | | 4.2 | % |
|
| | | | | | |
| Name of Beneficial Owner | | Number of Shares(1),(2) | | Percent of Class(3) |
| | | (#) | | (%) |
| John B. Adams, Jr. | | 17,312 |
| | * |
|
| W. Keith Brewer | | 109,718 |
| | * |
|
| Theodore G. Broome | | 41,241 |
| | * |
|
| Diana F. Cantor | | 1,593 |
| | * |
|
| Chester A. Crocker | | 13,736 |
| | * |
|
| Charles H. Foster, Jr. | | 18,701 |
| | * |
|
| George C. Freeman, III | | 190,793 |
| | * |
|
| Lennart R. Freeman | | — |
| | * |
|
| Thomas H. Johnson | | 20,636 |
| | * |
|
| David C. Moore | | 93,455 |
| | * |
|
| Eddie N. Moore, Jr. | | 16,700 |
| | * |
|
| Jeremiah J. Sheehan | | 36,954 |
| | * |
|
| Robert C. Sledd | | 7,436 |
| | * |
|
| Preston D. Wigner | | 53,479 |
| | * |
|
| All current directors and executive officers as a group (17 persons) | | 704,048 |
| | 3.0 | % |
| |
| * | Percentage of ownership is less than 1% of the outstanding shares of Common Stock. |
| |
(1) | The number of shares of Common Stock shown in the table includes shares that certain of our directors and executive officers had the right to acquire through the exercise of stock options or SARs within 60 days following June 15, 2012,14, 2013, and are in the following amounts: 4,000no shares to Mr. Adams, 85,79924,400 shares to Mr. Brewer, 8,400 shares to Mr. Broome, no shares to Mrs. Cantor, no shares to Mr. Crocker, 4,000no shares to Mr. Foster, 127,21431,800 shares to Mr. G. Freeman, no shares to Mr. L. Freeman, 2,000 shares to Mr. Johnson, 56,13321,333 shares to Mr. D. Moore, 2,000no shares to Mr. E. Moore, 33,4012,000 shares to Mr. Paul, 6,000shares to Mr. Sheehan, no shares to Mr. Sledd, 2,000 shares to Dr. Trani, 29,13218,334 shares to Mr. Wigner and 88,73119,800 shares to other current executive officers not individually listed in the table. |
| |
(2) | No executive officers or directors have pledged shares of Common Stock as security. |
| |
(3) | The percentages shown in the table are based on 23,353,99823,307,659 shares of Common Stock outstanding on June 15, 2012.14, 2013. |
Section 16(a) Beneficial Ownership Reporting Compliance
Our directors and executive officers are required under Section 16(a) of the Exchange Act to file reports of ownership and changes in ownership of Common Stock with the Securities and Exchange Commission. Copies of those reports must also be furnished to us.
Based solely on a review of the copies of reports furnished to us and the written representations of our directors and executive officers, we believe that, during fiscal year 2012,2013, all filing requirements applicable to directors and executive officers were satisfied.
CORPORATE GOVERNANCE AND COMMITTEES
Our business and affairs are managed under the direction of the Board of Directors in accordance with the Virginia Stock Corporation Act and our Articles of Incorporation and Bylaws. Members of the Board of Directors are kept informed of our business through discussions with the Chairman, President, and Chief Executive Officer and other officers, by reviewing materials provided to them and by participating in meetings of the Board of Directors and its committees. The corporate governance practices we follow are summarized below.
Corporate Governance Guidelines
The Board of Directors has adopted written Corporate Governance Guidelines that set forth the practices of the Board of Directors with respect to the qualification and selection of directors, director orientation and continuing education, director responsibilities, Board of Directors composition and performance, director access to management and independent advisors, director compensation, management evaluation and succession, evaluation of the Board of Directors’Directors' performance and various other issues. The Corporate Governance Guidelines are available to shareholders and the public free of charge under the “Corporate Governance”“Corporate Governance” section of our Internet website athttp://investor.universalcorp.com/governance.cfm.A printed copy is available to any shareholder free of charge upon written request directed to Investor Relations at the address provided on page 5 of this Proxy Statement.
The Board of Directors has adopted a written Code of Conduct applicable to our directors, officers and employees and the directors, officers and employees of each of our subsidiaries and controlled affiliates. The Code of Conduct satisfies the NYSE requirements for a “Code of Business Conduct and Ethics” and the Securities and Exchange Commission definition of a “Code of Ethics for Senior Financial Officers.” The Code of Conduct addresses such topics as protection and proper use of company assets, compliance with applicable laws and regulations, accuracy and preservation of records, accounting and financial reporting, conflicts of interest and insider trading. The Code of Conduct is available to shareholders and the public free of charge on our Internet website athttp://www.universalcorp.com/Compliance/. A printed copy is available to any shareholder free of charge upon written request directed to Investor Relations at the address provided on page 5 of this Proxy Statement.
The Board of Directors, in its business judgment, has determined that each member of the Board of Directors, and
Mrs. CantorMr. L. Freeman who is nominated in this Proxy Statement to become a director, except Mr.
G. Freeman, our Chairman, President, and Chief Executive Officer, is independent as defined by the NYSE listing standards and our Corporate Governance Guidelines. In reaching this conclusion and as set forth in the independence standards of our Corporate Governance Guidelines, the Board of Directors evaluated each director or nominee for director in light of the specified independence tests set forth in the NYSE listing standards. In addition, the Board of Directors considered whether we and our subsidiaries conduct business and have other relationships with organizations of which certain members of the Board of Directors or members of their immediate families are or were directors or officers. There has been no such business or relationships for the past three fiscal years.
The independent directors of the Board of Directors meet in executive session at least annually without management or employee directors present. The independent directors designate the Lead Independent Director, who is responsible for presiding over the executive sessions of the independent directors. For fiscal year 2012,2013, the independent directors designated Mr. SheehanasSheehanas the Lead Independent Director. The Lead Independent Director is responsible for advising the Chairman, President, and Chief Executive Officer of the outcome of any decisions reached or suggestions made at these sessions. Executive sessions where non-employee directors meet on an informal basis may be scheduled either before or after each regularly scheduled Board of Directors meeting.
Communications with Directors
Interested parties may at any time direct communications to the Board of Directors as a whole, to the director who presides at the executive sessions of the non-employee directors, or to any individual member of the Board of Directors, through our Internet website or by contacting our Secretary. The “Corporate“Corporate Governance –- Contact the Board”Board” section of our Internet website athttp://investor.universalcorp.com/contactboard.cfmcontains an e-mail link established for receipt of communications with directors, and communications can also be delivered by mail by sending requests to our Secretary at Universal Corporation, P. O. Box 25099, Richmond, Virginia 23260, Attention: Secretary.
Shareholders making such communications are encouraged to state that they are shareholders and provide the exact name in which their shares of Common Stock are held and the number of shares held. Each individual communicating with the Board of Directors will receive a written acknowledgement from or on behalf of our Secretary after receipt of the communication sent in the manner described above. After screening such communications for issues unrelated to shareholder interests, our Secretary will distribute communications to the intended recipient(s) as appropriate. The process for such screening has been approved by our non-employee directors.
Board and Committee Meeting Attendance
During fiscal year 2012,2013, there were sixfive meetings of the Board of Directors. Each director attended 75% or moreofmoreof the total number of meetings of the Board of Directors and of the committees on which he served.
Board Leadership Structure and Role in Risk Oversight
Board Leadership Structure
The Board of Directors does not have a policy on whether or not the role of the Chief Executive Officer and Chairman should be separate or, if it is to be separate, whether the Chairman should be selected from the non-employee directors or be an employee. Currently, we operate with one individual, Mr.
G. Freeman, serving as Chairman of the Board, President, and Chief Executive Officer. Mr.
G. Freeman was elected by the Board of Directors as President on December 12, 2006, Chief Executive Officer on April 1, 2008 and Chairman of the Board on August 5, 2008. Prior to his election as our President and Chief Executive Officer, Mr.
G. Freeman served as our General Counsel and Secretary from February 1, 2001 until November 2005, when he was elected Vice President. The Board of Directors believes that because Mr.
G. Freeman has unique and extensive experience and understanding of our business, he is well situated to lead and execute strategy and business plans to maximize shareholder value by having a combined role of Chairman of the Board, President, and Chief Executive Officer.
The
Company’sCompany's Corporate Governance Guidelines permit the individual who serves as Chief Executive Officer to serve as Chairman of the Board of Directors. In order to ensure that independent directors continue to play a leading role in our governance, however, the Board of Directors established the position of a Lead Independent Director in our Corporate Governance Guidelines. Mr. Sheehan currently serves as our Lead Independent Director. The Lead Independent Director is elected by the independent directors and ensures that (i) the Board of Directors operates independently of management and (ii) directors and shareholders have an independent leadership contact. The Lead Independent Director, who must satisfy our independence standards, is responsible for presiding over the executive sessions of the independent directors and performing such other duties as may be delegated to the position by the Board of Directors. The Lead Independent Director also has the following additional roles and responsibilities:
| · |
| Ÿ | chair Board of Directors meetings when the Chairman of the Board of Directors is not present or when there is a potential conflict of interest; |
| · |
| Ÿ | call meetings and set agendas for executive sessions of the independent directors; |
| · |
| Ÿ | preside over meetings of the independent Board members and, as appropriate, provide prompt feedback to the Chief Executive Officer and Chairman; |
| · |
| Ÿ | serve as a liaison between the independent directors and the Chief Executive Officer and Chairman of the Board of Directors and senior management to report or raise matters; |
| · |
| Ÿ | serve as a “sounding board” and mentor to the Chief Executive Officer and Chairman of the Board of Directors; and |
| · |
| Ÿ | perform such other duties and responsibilities as may be delegated to the Lead Independent Director by the Board of Directors from time to time. |
The Board of Directors also has five standing committees: the Audit Committee, the Compensation and Governance Committee, the Finance Committee, the Pension Investment Committee and the Executive Committee. Each committee has a separate chairperson and each of the Audit and Compensation and Governance Committees are composed solely of independent directors.
Given our current circumstances, relative size and operating strategies, we believe having a combined Chairman of the Board of Directors and Chief Executive Officer, as well as having a Lead Independent Director
and independent standing Board committees,, is the most appropriate structure for us and our shareholders. We believe this structure demonstrates clear leadership to our employees, shareholders, and other interested parties and eliminates potential for redundancies and confusion. The Lead Independent Director protects the role of the independent directors by providing leadership to the independent directors and working closely with the Chairman of the Board of Directors and Chief Executive Officer.
As part of the Board of
Directors’Directors' annual assessment process, the Board of Directors evaluates our board leadership structure to ensure that it remains appropriate for us. The Board of Directors recognizes that there may be circumstances in the future that would lead it to separate the roles of Chief Executive Officer and Chairman of the Board of Directors, but believes that the absence of a policy requiring either the separation or combination of the roles of Chairman and Chief Executive Officer provides the Board of Directors with the flexibility to determine the best leadership structure for us.
Board of
Directors’Directors' Role in Risk Oversight
The Board of Directors is responsible for our risk oversight. Management is responsible for our risk management, including providing oversight and monitoring to ensure our policies are carried out and processes are executed in accordance with our performance goals and risk tolerances. In carrying out its risk oversight function, the Board of Directors has five standing committees: the Audit; Compensation and Governance; Finance; Pension Investment; and Executive Committees that are each responsible for risk oversight within such
committee’scommittee's area of responsibility and regularly report to the Board of Directors. In addition, management holds regular meetings in which they identify, discuss and assess financial risk from current macro-economic, industry, and company specific perspectives.
The Audit Committee charter provides that the Audit Committee is responsible for discussing with management, the independent registered public accounting firm and the internal auditors our
policies and procedures with respect to risk assessment and risk management.As part of its regular reporting process, management reports and reviews with the Audit Committee our material risks, including (i) proposed Risk Factors and other public disclosures, and (ii) mitigation strategies and our internal controls over financial reporting. The Audit Committee also engages in regular periodic discussions with the Chief Financial Officer and other members of management regarding risks as appropriate.
The Finance Committee charter provides that the Finance Committee
assists the Board of Directors in control of the Company’sCompany's financial policies and resourcesand monitors our financial strategic
direction. Asdirection. As part of its responsibilities, the Finance Committee oversees our financial policies, including financial risk management, and reviews and approves significant financial policies and transactions.
In addition to the Audit Committee and Finance Committee, each of the other committees of the Board of Directors considers risks within its area of responsibility. The Compensation and Governance Committee considers succession planning, human resources risks, corporate governance risks and risks that may be a result of our executive compensation programs. In addition, the Pension Investment Committee has oversight of the investments in the
Company’sCompany's ERISA - regulated pension and savings plans. Each of the committees regularly reports to the Board of Directors.
We believe the current leadership structure of the Board of Directors supports the risk oversight functions described above by providing independent leadership at the committee level, with ultimate oversight by the full Board of Directors as led by the Chairman of the Board of Directors and Chief Executive Officer and the Lead Independent Director.
The standing committees of the Board of Directors are the Audit Committee, the Executive Committee, the Compensation and Governance Committee, the Finance Committee, and the Pension Investment Committee.
The responsibilities of the Audit Committee include the review of the scope and the results of the work of the independent registered public accounting firm and internal auditors, the review of the adequacy of internal accounting controls, and the selection, appointment, compensation, and oversight of our independent registered public accounting firm. The Audit Committee operates under a written charter last amended by the Board of Directors on April 20, 2009. The Audit Committee’sCommittee's charter is available under the “Corporate Governance”“Corporate Governance” section of our Internet website athttp://investor.universalcorp.com/governance.cfm.
The members of the Audit Committee are Messrs. E. Moore (Chairman), Adams, Sheehan, Sledd and
Trani.Mrs. Cantor. The Board of Directors has determined that each of the Audit Committee members is independent as defined under the applicable independence standards set forth in regulations of the Securities and Exchange Commission and the NYSE listing standards. The Board of Directors has also determined that all of the Audit Committee members are financially literate as defined by the NYSE listing standards.
InFinally, in accordance with the applicable regulations of the Securities and Exchange Commission, the Board of Directors has further determined that the Audit Committee contains at least one “audit committee financial expert” as defined by such regulations. That person is Mr. E. Moore, the Chairman of the Audit Committee. The fact that the Board of Directors did not identify additional Audit Committee members as “audit committee financial experts” does not in any way imply that other members do not meet that definition.
The Audit Committee met six times during fiscal year 2012.2013. Additional information with respect to the Audit Committee is discussed below in the section entitled“Audit “Audit Information” on page 6072 of this Proxy Statement.
The Executive Committee has the authority to act for the Board of Directors on most matters during the intervals between Board of Directors meetings. The members of the Executive Committee are Messrs. G. Freeman (Chairman), Foster, Johnson and Sheehan. The Executive Committee met three times during fiscal year 2012.
2013.
Compensation and Governance Committee
The members of the Compensation and Governance Committee are Messrs. Sheehan (Chairman), Foster and Johnson.
The Compensation and Governance Committee performs the responsibilities of the Board of Directors relating to compensation of our executives. The Compensation and Governance
Committee’sCommittee's responsibilities include reviewing and setting or approving corporate goals and objectives relevant to compensation of the Chief Executive Officer and other executive officers, evaluating the performance of the Chief Executive Officer and our other executive officers in light of those goals and objectives, and determining and approving compensation levels for the Chief Executive Officer and our other executive officers based on this evaluation; making recommendations to the Board of Directors with respect to annual and long-term incentive compensation plans; evaluating the performance of, and determining the salaries, incentive compensation, and executive benefits for senior management; and administering our equity-based and other executive compensation plans.
The Chairman of the Compensation and Governance Committee works with our Chief Financial Officer to establish the agenda for Compensation and Governance Committee meetings. The Chief Financial Officer and management personnel reporting to him prepare data and materials for review by the Compensation and Governance Committee using market data from both broad-based and targeted national and regional compensation surveys. Competitive industry analysis is enhanced through review of peer company proxy data, professional research consortiums, and nationally recognized compensation databases provided by the Compensation and Governance
Committee’sCommittee's external compensation consultant.
The Compensation and Governance Committee periodically meets with the Chief Financial Officer and other members of executive management in order to assess progress toward meeting long-term objectives approved by the Board of Directors. The Compensation and Governance Committee reviews the performance and compensation of the Chief Executive Officer with input from both the full Board of Directors and the Chief Executive
Officer’sOfficer's self evaluation. The Compensation and Governance Committee approves the compensation of the other executive officers, based upon the evaluation and recommendation of the Chief Executive Officer. Where it deems appropriate, the Compensation and Governance Committee engages its independent compensation consultant or other appropriate advisors to analyze compensation trends and competitiveness of pay packages and to support the Compensation and Governance
Committee’sCommittee's duty to establish each of the executive
officers’officers' targeted overall compensation levels.
The Compensation and Governance Committee reports regularly to the Board of Directors on matters relating to the Compensation and Governance Committee’sCommittee's responsibilities. In addition, the Compensation and Governance Committee follows regulatory and legislative developments and considers corporate governance best practices in performing its duties. For additional information regarding the compensation-related activities of the Compensation and Governance Committee, see the sections entitled“Compensation “Compensation Discussion and Analysis” and“Report “Report of Executive Compensation, Nominating, and Corporate Governance Committee” beginning on pages 18and 35of19and 40of this Proxy Statement, respectively.
The Board of Directors has determined that the members of the Compensation and Governance Committee are “non-employee directors” (within the meaning of Rule 16b-3 of the Exchange Act), “outside directors” (within the meaning of Section 162(m) of the Internal Revenue Code) and “independent directors” (as defined under the applicable NYSE listing standards and our Corporate Governance Guidelines). In addition, no Compensation and Governance Committee member is a current or former employee of ours or any of our subsidiaries. While the Compensation and Governance Committee’sCommittee's charter does not specify qualifications required for members, Messrs. Sheehan, Foster and Johnson have each been members of other public company boards of directors and are each former chief executive officers of public companies. The Compensation and Governance Committee met four times during fiscal year 2012.2013.
In performing its responsibilities with respect to executive compensation decisions, the Compensation and Governance Committee receives information and support from the Company’sCompany's Human Resources Department and a nationally-recognized executive compensation consultant. For fiscal year 2012,2013, Towers Watson & Co., whom we refer to as Towers Watson, served as an independent, executive compensation consultant to the Compensation and Governance Committee and received aggregate fees for fiscal 2012year 2013 of approximately $16,000.$48,000. Management does not engage an outside compensation consultant and did not engage Towers Watson to provide any other services of significance to the Company. For more information with respect to the Compensation and Governance Committee’sCommittee's compensation consultant, see “Compensation“Compensation Discussion and Analysis”Analysis” beginning on page 1819 of this Proxy Statement.
The Compensation and Governance Committee also acts as our nominating committee. The Compensation and Governance Committee develops qualifications for director candidates, recommends to the Board of Directors persons to serve as directors, and monitors developments in, and makes recommendations to the Board of Directors concerning, corporate governance practices. The Compensation and Governance Committee operates under a written charter last amended by the Board of Directors on April 16, 2010.9, 2013. The Compensation and Governance Committee’sCommittee's charter is available under the “Corporate Governance”“Corporate Governance” section of our Internet website athttp://investor.universalcorp.com/governance.cfm.
The Compensation and Governance Committee employs several methods for identifying and evaluating director nominees. The Compensation and Governance Committee considers candidates for Board of Directors membership suggested by its members and by management, and the Compensation and Governance Committee will also consider candidates suggested informally by our shareholders. The Compensation and Governance Committee periodically assesses whether any vacancies on the Board of Directors are expected due to retirement or otherwise and in the event that vacancies are anticipated, the Compensation and Governance Committee considers possible director candidates. The Compensation and Governance Committee may also retain a third-party executive search firm to identify candidates upon request of the Compensation and Governance Committee from time to time based upon the director membership criteria described in the Corporate Governance Guidelines. Shareholders entitled to vote for the election of directors may submit candidates for formal consideration by the Compensation and Governance Committee in connection with an Annual Meeting if we receive timely written notice, in proper form, for each such recommended director nominee. If the notice is not timely and in proper form, the nominee will not be considered by the Compensation and Governance Committee. To be timely for the 20132014 Annual Meeting, the notice must be received within the time frame set forth in the section entitled“Proposals “Proposals for 20132014 Annual Meeting” on page 6877 of this Proxy Statement. To be in proper form, the notice must include each nominee’snominee's written consent to be named as a nominee and to serve if elected, and information about the shareholder making the nomination and the person nominated for election. These requirements are more fully described in our Bylaws and Corporate Governance Guidelines.
The Compensation and Governance Committee evaluates all director candidates in accordance with the director membership criteria described in the Corporate Governance Guidelines. The Compensation and Governance Committee does not differentiate between Board of Directors candidates submitted by Board of Directors members or those submitted by shareholders with respect to evaluating candidates. All Board of Directors candidates are considered based upon various criteria, such as their broad-based business skills and experience, prominence and reputation in their profession, their global business and social perspective, concern for the long-term interests of the shareholders, knowledge of our industry or related industries, diversity, and personal and professional integrity, ethics, and judgment
—- all in the context of an assessment of the perceived needs of the Board of Directors at that point in time. Because the needs of the Board of Directors change from time to time, the Compensation and Governance Committee evaluates the totality of the merits of each prospective nominee that it considers and has not established specific minimum qualifications that must be met by potential new directors. The Board of Directors, however, believes that as a matter of policy there should be a substantial majority of independent directors on the Board of Directors.
It also is important to the Compensation and Governance Committee that the members of the Board of Directors work together in a cooperative fashion. When considering a director standing for re-election as a nominee, in addition to the attributes described above, the Compensation and
GovernanceCommitteeGovernance Committee also considers that
individual’sindividual's past contribution and future commitment to us. The Compensation and Governance Committee will also seek to ensure that the Board of Directors, and consequently the Audit Committee, have at least three independent members that satisfy the NYSE financial and accounting experience requirements and at least one member who qualifies as an audit committee financial expert.
After completing potential director
nominees’nominees' evaluations, the Compensation and Governance Committee makes a recommendation to the full Board of Directors as to the persons who should be nominated by the Board of Directors, and the Board of Directors determines the nominees after considering the recommendation and report of the Compensation and Governance Committee. There is no difference in the manner by which the Governance and Nominating Committee evaluates prospective nominees for director based upon the source from which the individual was first identified.
Messrs.
AdamsCrocker, Foster, Johnson and
Sledd and Mrs. CantorL. Freeman were each recommended by the Compensation and Governance Committee for nomination for election at the Annual Meeting as directors to serve a three-year term until their respective successors are elected and qualified, or until their earlier resignation or removal.
Mrs. CantorMr. L. Freeman was first identified to the Compensation and Governance Committee as a potential candidate by
Mr. George C. Freeman, III, a member of the Board of Directors. The Compensation and Governance Committee did not receive any Board of Director recommendations from any shareholder in connection with the Annual Meeting.
The Finance Committee has the responsibility of establishing our financial policies and controlling our financial resources. The members of the Finance Committee are Messrs. Foster (Chairman), Adams, Crocker, G. Freeman and E. Moore. The Finance Committee met twice during fiscal year 2012.
2013.
Pension Investment Committee
The Pension Investment Committee establishes the investment policies, selects investment advisors and portfolio managers, and monitors the performance of investments of the retirement plans and other qualified employee benefit plans of Universal Leaf Tobacco Company, Incorporated, which we refer to as Universal Leaf, and our other U.S. subsidiaries. The members of the Pension Investment Committee are Messrs. Sledd (Chairman), Crocker, E. Moore and Trani.Mrs. Cantor. The Pension Investment Committee met sixfive times during fiscal year 2012.2013.
Annual Meeting Attendance
We expect and encourage each member of the Board of Directors to attend our Annual Meetings when it is reasonably practical for the director to do so. All of the directors attended the 20112012 Annual Meeting.
COMPENSATION DISCUSSION AND ANALYSIS
Universal Corporation is the leading global leaf tobacco supplier. The largest portion of the
Company’sCompany's business involves
the procuring and processing
of leaf tobacco
tofor manufacturers of consumer tobacco products. As such, our business is subject to risks, including changes in general economic, political, market, and weather conditions, government regulation, and fluctuations in foreign exchange rates. Our executive compensation program, therefore, reflects a strong tie of pay to performance in order to link the interests of executive officers to the interests of shareholders and promote the creation of long-term shareholder value.
Company Performance
We
delivered soundare proud of the successful results
that we achieved in fiscal year
2012 despite oversupply conditions that reduced green tobacco prices2013. Despite smaller crops, rising leaf production costs, and margin pressures in
many major markets and pressured margins.most regions, we delivered better performance than we anticipated at the beginning of the fiscal year. Net income for the fiscal year ended March 31,
20122013 was
$132.8 million, or $4.66 per diluted share, compared with last year's net income of $92.1 million, or $3.25 per diluted
share, includingshare. In fiscal year 2012, our earnings were negatively impacted by a charge related to the
effectrejection of
the charge for aour European Commission
fine. That charge totaled $49.1 million, or $46.2 million after tax. Net income forfine appeal, although we appealed that decision to a higher court and expect resolution in fiscal year
2011 was $156.6 million, or $5.42 per diluted share.2014. Segment operating income
for the year was
$223.5$232.8 million,
down $34.4up $9.2 million compared to the prior year.
The following charts show a five-year history of our diluted earnings per share and our segment operating income:
(1) We evaluate the performance of our segments based on operating income after allocated overhead expenses (excluding significant non-recurring charges or credits), plus equity in the pretax earnings of unconsolidated affiliates.
During fiscal year 2013, we generated about $234 million in net cash flows from operations, returned nearly $70 million to shareholders through a combination of dividends and repurchases of our common stock, and continued to strengthen our balance sheet.
Over the last three fiscal years, we have strengthened our balance sheet by repaying almost $103 million in debt, generated over $488 million in net cash flow from operations, and returned almost $240 million to shareholders through a combination of dividends and share repurchase.
Net debt as a percentage of total capitalization was approximately 11% at March 31, 2013, down from 19% at March 31, 2012. Over the last three fiscal years, we have reduced our net debt as a percentage of total capitalization from 29% to 11%, which is a historic low for the Company.
The following charts show a five-year history of our net cash flow from operations, our funds returned to shareholders, and our net debt as a percentage of total capitalization:
| |
| • | During fiscal year 2013, we approved our 42nd consecutive annual dividend increase on the Common Stock of the Company. We have increased our common dividend every year since 1971. |
Based on the closing price of $56.04 for our Common Stock, as quoted on the NYSE on March 29, 2013, the last trading day of fiscal year 2013, our Common Stock increased in value by 20.3% compared to the market closing price of $46.60 at March 31, 2012.
The following charts show a five-year history of our dividends declared per share of Common Stock and the market price of our Common Stock:
We continued to advance our goal of providing compliant leaf produced in a sustainable and competitive manner for our customers, and we maintained our position as the leading global leaf tobacco supplier.
We believe our compensation philosophy is appropriate and aligned with the interests of our shareholders, as demonstrated by our Common Stock performance. The following performance graph compares the cumulative total shareholder return on our Common Stock for the last three fiscal years with the cumulative total return for the same period of the Standard & Poor's MidCap 400 Stock Index and the peer group index. The peer group represents Alliance One International, Inc. The graph assumes that $100 was invested in Universal Corporation common stock at the end of the Company's 2010 fiscal year, and in each of the comparative indices, in each case with dividends reinvested.
Executive Compensation
The Compensation and Governance Committee, Board of Directors and management of Universal take pride in our performance-based compensation program and remain committed to maintaining the integrity of the program in good times and bad. We believe that the proportion of at-risk, performance-based compensation should increase as an employee’semployee's level of responsibility increases. To this end, our executive compensation program primarily consists of moderate base salary and variable at-risk annual cash and equity incentive awards that are benchmarked to the 50th percentile of the market. While the Compensation and Governance Committee utilizes market data and other statistical information on executive compensation, it is not over-reliant on such data. The Committee recognizes its responsibility to avoid the tendency to permit “benchmarking” to be a contributor to escalating executive compensation. This year, we limited base salary increases to three percent2.25% for our named executive officers. Lastofficers, except for Mr. Broome who was promoted during the year and is a named executive officer for the first time. Over the last 3 years, the base salary of our Chief Executive Officer has increased by an average of 1.75% per year.
The following charts show the relative components of total compensation for our Chief Executive Officer and our other named executive officers atin terms of Base Salary, Short-Term Performance Pay, and Long-Term Performance Pay:
| |
(1) | Base Salary is the actual amount paid in fiscal year 2013, Short-Term Performance Pay is the actual amount earned in fiscal year 2013 based on performance, and Long-Term Performance Pay is the value on the grant date of restricted stock and performance shares granted in fiscal year 2013. See Summary Compensation Table for the amounts of all elements of reportable compensation described in this section. |
Our annual cash incentive payments under the time did not receive any increases in base salary.Annual Incentive Plan (i.e., our Short-Term Performance Pay) are based upon the Company's achievement against pre-established performance goals for adjusted diluted earnings per share and economic profit. In fiscal year 2013, we performed better than expected and exceeded our performance goals. That performance corresponded to a weighted payout of 168.3% of an executive's individual target cash bonus opportunity amount based on the pre-approved percent-of-target performance tables. Although the Companywe performed well in fiscal year 2012, our reported performance included the effect of a significant charge for a fine and accumulated interest imposed by the European Commission related to tobacco buying practices in Italy between 1995 and 2002. The magnitude of that charge was such that our performance measures were reduced to levels below the thresholds at which we pay cash bonuses to named executive officers, and therefore none of our named executive officers received a fiscal year 2012 annual bonus award. We
The Compensation and Governance Committee has the challenging task of designing a compensation program that balances the interests of senior management with those of the shareholders. No one form of compensation will perfectly align those interests, but we believe our equity award program plays a significant role in striving to achieve the appropriate balance. Stock ownership, supported by our equity award program (i.e., our Long-Term Performance Pay), is the most effective way to ensure that management is properly motivated to create long-term shareholder value. To that end, we maintain robust stock ownership guidelines applicable to all named executive officers and other equity award participants. As of June 15, 2012,14, 2013, all of our named executive officers met or exceededare well in excess of their ownership targets. targets and collectively hold beneficial ownership of more than 1.6% of our Common Stock.
We do not provide our executives with many of the types of perquisites that other companies offer their executives, such as personal use of corporate aircraft, vehicle allowances or reimbursement of membership dues in social organizations. We also do not offer our executives employment, severance or retention agreements, and we do not utilize excise tax gross-ups or other tax reimbursements. We currently maintain only four Change of Control Agreements, each of which contains a “double trigger” as well as non-competition and non-solicitation clauses, but do not contain any obligations to gross-up severance payments. We have a recoupment or “clawback” provision applicable to all performance-based compensation, and we have adopted a policy prohibiting hedging and derivatives trading in our Common Stock.
At the 20112012 Annual Meeting of Shareholders, more than 97%98% of the votes cast supported our executive compensation policies and procedures offor our named executive officers. Given the high level of support from our shareholders, as demonstrated by the results of their vote, we did not make any significant changes in our policies or programs in response to their vote.
Compensation and GovernanceCommittee Activities in Fiscal Year 20122013
In fiscal year 2012,2013, the Compensation and Governance Committee reviewed the existing mix, form and calibration of the executive compensation programs and confirmed its commitment to the principles and structure it followed during fiscal year 2011.2012. In fiscal year 2009 and subsequent years, the Compensation and Governance Committee modified components of some of those programs to reflect changes in the rules and regulations applicable to such components and to ensure that the components were in line with market medians. These modifications continued in place for fiscal year 2012.2013. Some of the significant actions the Compensation and Governance Committee undertook in fiscal year 20122013 included:
| · |
| Ÿ | Reaffirming the Compensation and Governance Committee’sCommittee's objective of setting total direct compensation (including base salary, annual cash incentive awards, and long-term equity awards) for our executives at levels competitive with the market median for executives in comparable positions at companies of comparable size, complexity, and operational characteristics; |
| · |
| Ÿ | Evaluating the mix of pay to ensure that the appropriate balance among base salary, annual cash incentives, and long-term performance-based award opportunities is maintained; |
| · |
| Ÿ | Benchmarking fiscal year 20112013 executive and director compensation and using new peer group data to assist in better aligning compensation with the 50th50th percentile of the market, where appropriate, taking into consideration recent changes in senior management; |
| · |
| Ÿ | Conducting a review and assessment of potential risks arising from our compensation policies and programs; |
| · |
| Ÿ | AdoptingReaffirming a policy prohibiting our executives and directors from hedging or engaging in any derivatives trading in respect to shares of our Common Stock.Stock and generally prohibiting pledging of securities. This new policy serves to enhance our long standinglong-standing policy prohibiting insider trading by executives and directors while in the possession of material information that is not available to the public; |
| · |
| Ÿ | Electing to discontinue, beginning with fiscal year 2012, future Company contributions to executive insurance policies for all active participants thereby restoring the coverage provided to named executive officers to our standard group term life insurance program; |
| |
| Ÿ | Evaluating alternative performance metrics and reaffirming the use of adjusted earnings per share as a performance goal in both the annual incentive and long-term performance award program because adjusted earnings per share is an important driver of shareholder value; |
| |
| Ÿ | Reviewing the performance targets and calibration ranges for economic profit and adjusted earnings per share to reflect current and anticipated business conditions and to ensure adequate performance stretch in the annual incentive plan goals; |
| · |
| Ÿ | Evaluating alternative performance metrics and reaffirmedReaffirming the use of adjusted earnings per share as a performance goal in both the annual incentive and long-term performance award program because adjusted earnings per share is an important driver of shareholder value; |
| · | Electing to discontinue, beginning with fiscal year 2012, future Company contributions to executive insurance policies for all active participants thereby restoring the coverage provided to named executive officers to the Company’s standard group term life insurance program; |
| · | Amending the benefit replacement and benefit restoration plans relative to death benefits to further ensure that any benefits payable under these plans are consistent with benefits payable under the qualified defined benefit pension plan; |
| · | Suspending the usesuspension of stock-settled stock appreciation rights, which we refer to as SARs, because of the potential disconnect between the amount of pay received by executives versus the amount of expense recognized by the Company and the potential incentive for executives to pursue riskier and shorter term strategies; |
| · |
| Ÿ | Reaffirming that 5-year restricted stock units and 3-year performance-based stock units, which we refer to as Performance Shares, are appropriate forms of long-term incentive awards. The Performance Shares, if earned over a three-year period, will be paid out in shares of Common Stock; |
| · |
| Ÿ | Reviewing the performance target and calibration range for adjusted earnings per share to reflect current and anticipated business conditions and to ensure adequate performance stretch in the goals of the performance based stock units; |
| · |
| Ÿ | Reaffirming the stock ownership guidelines that were revised in fiscal year 2008 to higher levels for all of our officers and the officers of our main operating subsidiary, Universal Leaf, with a title of Senior Vice President or above, and monitoring our executive officers’officers' compliance with the guidelines; |
| · |
| Ÿ | Reaffirming stock ownership guidelines for the non-employee directors; |
| · |
| Ÿ | Reaffirming the “clawback” provision in our performance-based awards with respect to ethical misconduct or material restatements of financial results, in part to address the potential recovery or adjustment of awards in instances where the performance measures on which they were based are restated in a manner that would have decreased the amount of the award; and |
| · |
| Ÿ | Reaffirming a commitment to provide onlyvery limited perquisites to executives. |
The Compensation and Governance Committee reports regularly to the Board of Directors on matters relating to the Compensation and Governance
Committee’sCommittee's responsibilities. In addition, the Compensation and Governance Committee follows regulatory and legislative developments and considers corporate governance best practices in performing its duties.
The goal of our executive compensation and benefits program is to attract, motivate, reward and retain the management talent required to achieve our business objectives, at compensation levels that are fair, equitable and competitive with those of comparable companies. This goal is furthered by the Compensation and Governance
Committee’sCommittee's policy of linking compensation to individual and corporate performance and by encouraging significant stock ownership by senior management in order to support our business strategy and align the financial interests of management with those of the shareholders.
In addition to the stated goal of our executive compensation and benefits program, the following objectives serve as guiding principles for all compensation decisions:
| · |
| Ÿ | Compensation should be set based on the responsibilities, skills, experience and achievements of each executive officer, taking into account competitive market rates; |
| · |
| Ÿ | Compensation should be linked to individual and corporate performance by aligning our executive compensation program to company-wide performance, which we define in terms of economic performance and increases in shareholder value; |
| · |
| Ÿ | There should be an appropriate mix and weighting among base salary, cash incentives and equity awards, such that an adequate amount of each executive officer’sofficer's total compensation is performance-based or “at risk.” Further, as an executive’sexecutive's responsibilities increase, the portion of “at risk” compensation for the executive should increase as a percentage of total compensation; |
| · |
| Ÿ | Compensation should avoid any arrangements that pay for failure; |
| · |
| Ÿ | Compensation programs should be designed to provide appropriate performance incentives without encouraging executives to take excessive risks in managing the business and which emphasize the company’sour commitment to itsour core values; |
| · |
| Ÿ | Strong emphasis should be placed on equity-based compensation and equity ownership in order to align the financial interests of senior management with those of the shareholders and to ensure the proper focus on long-term business strategies; and |
| · |
| Ÿ | Compensation goals and objectives should be transparent and easy to communicate, both internally and externally. Shareholders should be supplied with clear, comprehensive compensation disclosure. |
The Compensation and Governance Committee also believes that the various elements of our compensation program effectively achieve the objective of aligning compensation with performance measures that are directly related to
the Company’sour financial goals and creation of shareholder value, without encouraging executives to take unnecessary and excessive risks.
Retaining Experts to Aid in Discharge of Duties
The Compensation and Governance Committee has sole authority to retain experts, consultants and other advisors to aid in the discharge of its duties. The Compensation and Governance Committee meets privately with its independent outside advisor from time to time without management present to discuss developments and best practices in executive compensation matters. All work completed by the outside advisor, whether for the Compensation and Governance Committee or management, is subject to the approval of the Compensation and Governance Committee. The outside
advisor’sadvisor's role with the Compensation and Governance Committee is to provide independent advice and counsel. The Compensation and Governance Committee has considered the
six independence factors specified under The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”) and believes that Towers Watson qualifies as being fully independent. The Compensation and Governance Committee does not delegate authority to its outside advisor or to other parties.
For fiscal year 2012,2013, Towers Watson continued to serve as the Compensation and Governance Committee’sCommittee's independent outside advisor.Towers Watson’sadvisor.Towers Watson's role as outside advisor is to review the analyses and recommendations prepared by the Compensation and Governance Committee and management, to provide alternative market data and guidance on policy development and administration, and to undertake special projects as the request of the Compensation and Governance Committee. To maintain the independence of the outside advisor, management is not permitted to use Towers Watson without the prior approval of the Compensation and Governance Committee. Towers Watson participated in Compensation and Governance Committee meetings during fiscal year 2012,2013, reviewed materials in advance and provided to the Compensation and Governance Committee additional data on market trends and overall compensation design.
During fiscal year 2012,2013, our independent auditor,registered public accounting firm, Ernst & Young LLP, reviewed management’smanagement's calculation of performance measures and the amount of the annual incentive awards to be paid to our executive officers as part of their audit of our consolidated financial statements.
The Compensation and Governance Committee utilizes compensation reports prepared by its independent outside advisor to aid in the determination of competitive levels of compensation for each of our executive officers. On an annual basis, the Compensation and Governance Committee determines the total compensation target for each of our executive officers. The Compensation and Governance Committee then sets the mix of the different components of compensation desired to achieve the total compensation target. From time to time, the Compensation and Governance Committee requests that its outside advisor benchmark the component totals to confirm that such amounts are within reason of our peer group. The Compensation and Governance Committee targets the 50th percentile in measuring competitiveness.
During fiscal year 2011,2013, the Compensation and Governance Committee requested that Towers Watson review and, if necessary, update our then-current peer group list. Towers Watson evaluated the peer group list to discover relevant comparator companies not currently within our peer group and proposed changes to the listpotentially identify companies currently included in order to better align our company with other companies with similar characteristics to us. Those characteristics includepeer group that may no longer be considered comparable. Characteristics considered in this evaluation included industry relevance, similarity of business operations, markets, relevant size, and market capitalization, as well as business operations conducted in similar environments. Towers Watson did not identify any changes to the peer group list that would better align that list with us in terms of the overall characteristics considered. Although the leaf tobacco industry is highly competitive, Universal and Alliance One International, Inc. are the only global, independent, publicly traded competitors. We, therefore, lack true “peers” within our own industry. The Compensation and Governance Committee reviewed the proposed list with Towers Watson and after making appropriate adjustments, approved a revisedreaffirmed the use of the current peer group list for use beginning with fiscal year 2012.2014. The peer group list for fiscal year 20122014 consisted of the following companies: |
| |
| Alliance One International, Inc. | Ralcorp Holdings, Inc. |
| | |
| Chiquita Brands International, Inc. | Seaboard Corporation |
| | |
Corn Products International,Flowers Foods, Inc. | Seneca Foods CorporationThe Andersons, Inc. |
| | |
FlowersIngredion Incorporated | Seneca Foods Inc. | The Andersons, Inc.Corporation |
| | |
| Lancaster Colony Corporation | Treehouse Foods, Inc. |
| | |
| McCormick & Company, Inc. | |
When we refer to the “market,” we are referring to the peer group used duringfor fiscal year 2012.2014.
Stock Ownership Guidelines
The Compensation and Governance Committee believes it is important to align the interests of members of senior management with those of our shareholders. While the Compensation and Governance Committee considers this principle when determining the appropriate mix of base salary, annual cash incentive awards, and long-term equity awards, the Compensation and Governance Committee also established stock ownership guidelines that encourage the accumulation and retention of Common Stock.
Our current stock ownership guidelines, which were revised in fiscal year 2008 to set new, higher target levels for our executives, are expressed as a multiple of base salary, ranging from 2.5 to 6 times base salary. The Compensation and Governance Committee believes this methodology provides for greater individualization of ownership guidelines. The guidelines work in concert with the long-term incentive plan and are intended to foster strong executive ownership of our Common Stock. The Compensation and Governance Committee believes that it is important to achieve and maintain these guideline amounts as minimum target levels of ownership. The Compensation and Governance Committee reviews compliance with our stock ownership guidelines on an annual basis.
Under our stock ownership guidelines, executives have to comply within five years from the date of the
executive’sexecutive's appointment to a qualifying position and certain executives are provided additional time when they receive promotions that result in higher ownership targets. The guidelines apply to our named executive officers in the following manner:
|
| |
| George C. Freeman, III | 66.0 times base salary |
| W. Keith Brewer | 66.0 times base salary |
| David C. Moore | 55.0 times base salary |
| Preston D. Wigner | 3.54.0 times base salary |
Ray M. Paul, Jr.Theodore G. Broome | 3.5 times base salary |
Only shares beneficially owned (as defined by the Securities and Exchange Commission’sCommission's rules and regulations) by our executive officers, excluding such executives’executives' stock options, Performance Shares, and SARs, but including the executive officers’officers' restricted stock unit awards (and corresponding dividend equivalent rights) are counted in determining compliance with the guidelines. The table below sets forth each of our named executive officers’ 2011officers' 2012 holdings and value as compared to 20122013 holdings and value.| | | Shares held
as of June 15, 2011 | | | Value of Shares held
as of June 15, 2011(1) | | | Shares held
as of June 15, 2012 | | | Value of Shares held
as of June 15, 2012(2) | |
| | | (#) | | | ($) | | | (#) | | | ($) | |
| | | | | | | | | | | | | |
| George C. Freeman, III | | | 87,625 | | | | 3,248,259 | | | | 123,785 | | | | 5,643,358 | |
| W. Keith Brewer | | | 56,605 | | | | 2,098,347 | | | | 78,968 | | | | 3,600,151 | |
| David C. Moore | | | 51,071 | | | | 1,893,202 | | | | 66,809 | | | | 3,045,822 | |
| Preston D. Wigner | | | 18,474 | | | | 684,831 | | | | 26,880 | | | | 1,225,459 | |
| Ray M. Paul, Jr. | | | 38,413 | | | | 1,423,970 | | | | 43,541 | | | | 1,985,034 | |
|
| | | | | | | | | | | | |
| | | Shares held as of June 15, 2012 | | Value of Shares held as of June 15, 2012(1) | | Shares held as of June 14, 2013 | | Value of Shares held as of June 14, 2013(2) |
| | | (#) | | ($) | | (#) | | ($) |
| George C. Freeman, III | | 123,785 |
| | 5,643,358 |
| | 158,993 |
| | 9,561,839 |
|
| W. Keith Brewer | | 78,968 |
| | 3,600,151 |
| | 85,318 |
| | 5,131,025 |
|
| David C. Moore | | 66,809 |
| | 3,045,822 |
| | 72,122 |
| | 4,337,417 |
|
| Preston D. Wigner | | 26,880 |
| | 1,225,459 |
| | 35,145 |
| | 2,113,620 |
|
| Theodore G. Broome | | 27,682 |
| | 1,262,022 |
| | 32,841 |
| | 1,975,058 |
|
| |
(1) | Based on $37.07$45.59 per share, the closing price of a share of our Common Stock as quoted on the NYSE on June 15, 2011.2012. |
| |
(2) | Based on $45.59$60.14 per share, the closing price of a share of our Common Stock as quoted on the NYSE on June 15, 2012.14, 2013. |
Management’s ownership targets are viewed as minimum targets to be achieved as soon as possible and maintained.
All of our named executive officers meetexceed their ownership targets and are in compliance with our stock ownership guidelines at the present time. Each of our named executive officers also increased the number of shares of Common Stock owned during fiscal year 2012.2013.
In addition, the Compensation and Governance Committee adopted stock ownership guidelines during fiscal year 2008 applicable to the non-employee directors. Information with respect to the non-employee directors’directors' stock ownership guidelines is set forth in“Non-Employee “Non-Employee Director Stock Ownership Guidelines” on page 5769 of this Proxy Statement.Limitations on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code
(the “Code”) generally disallows a tax deduction to public companies for compensation of more than $1 million paid in any year (not including amounts deferred) to a
company’scompany's chief executive officer and to the four other most highly compensated executive officers. The statute, however, exempts qualifying performance-based compensation from the deduction limit if certain requirements are met. In this regard, we have
takenattempted to take appropriate actions to maximize the deductibility
under Section 162(m) of the Code of annual cash incentive awards, stock option grants, SARs, Performance Shares and restricted stock unit awards. For example, the vesting of certain restricted stock unit awards to Mr.
G. Freeman in May 2010,
2012, and
20122013 were subject to Section 162(m) and therefore the Compensation and Governance Committee elected to defer part or all of the payment until Mr.
G. Freeman retires in order to preserve the Section 162(m) deduction.
The rules and regulations promulgated under Section 162(m) of the Code are complicated and subject to change from time to time, sometimes with retroactive effect. There can be no guarantee, therefore, that amounts potentially subject to the Section 162(m) limitations will be treated by the Internal Revenue Service as qualified performance-based compensation under Section 162(m) of the Code and/or deductible by us. A number of requirements must be met under Section 162(m) of the Code in order for particular compensation to so qualify for the exception such that there can be no assurance that “qualified performance-based” compensation will be fully deductible under all circumstances. While our policy is generally to preserve corporate tax deductions by qualifying compensation over $1 million paid to executive officers as performance-based, the Compensation and Governance Committee may, from time to time, conclude that compensation arrangements are in our best interests and the best interests of our shareholders despite the fact that such arrangements might not, in whole or part, qualify for tax deductibility.
Clawback in the Event of Restatements or Ethical Misconduct
The Compensation and Governance Committee adopted a recoupment, or “clawback,” provision during fiscal year 2008 that is applicable to cash incentive awards, as well as performance-based equity awards, beginning with all such awards for fiscal year 2008. The clawback provision applied to all cash incentive and equity awards made during fiscal year 2012.2013. The purpose of the clawback provision is to authorize the potential recovery or adjustment of awards when the performance measures on which such awards were based are restated in a manner that would have decreased the amount of the award had the restated performance measure been used to calculate the original award, or when the award is otherwise deemed inappropriate by the Compensation and Governance Committee due to the occurrence of certain stated events. In the event of a material restatement of our financial statements, we may seek recoupment of incentive compensation and equity awards paid under our incentive plans for all relevant performance periods. Management has also implemented additional effective controls to minimize potential unintended or willful reporting errors. In addition, the Compensation and Governance Committee also has the discretion to reduce or eliminate an executive’sexecutive's incentive compensation and equity awards or seek a recoupment of the same, in the event of ethical misconduct. The Compensation and Governance Committee will review all cash incentive payments, performance-based equity awards, and other performance-based awards that are made to all current and former officers on the basis of having met or exceeded performance goals. Appropriate action will be taken after considering all factors and circumstances.
In addition to the clawback provision, our Benefit Restoration Plan includes a forfeiture provision whereby a participant will forfeit all rights in and to any benefits payable under the Benefit Restoration Plan if we terminate the participant's employment as a result of a participant's fraud, dishonesty or embezzlement where the participant has been materially, unjustly enriched by such conduct.
2007 Stock Incentive Plan
The Compensation and Governance Committee, and subsequently our shareholders at our 2007 Annual Meeting, approved and adopted the Universal Corporation 2007 Stock Incentive Plan, which we call the 2007 Stock Incentive Plan. This plan replaced our 2002 Executive Stock Plan. The 2007 Stock Incentive Plan as amended and restated in fiscal year 2012
and reapproved in fiscal year 2013, serves as the core program for the performance-based compensation components of our named executive
officers’officers' total compensation. The 2007 Stock Incentive Plan defines the incentive arrangements for eligible participants and:
| · |
| Ÿ | authorizes the granting of annual cash incentive awards, stock options, SARs, Performance Shares, restricted stock, restricted stock units and other incentive awards, all of which may be made subject to the attainment of performance goals approved by the Compensation and Governance Committee; |
| · |
| Ÿ | provides for the enumeration of the business criteria on which an individual’sindividual's performance goals are to be based; |
| · |
| Ÿ | establishes the maximum share grants or awards (or, in the case of incentive awards, the maximum compensation) that can be paid to a participant in the 2007 Stock Incentive Plan; and |
| · |
| Ÿ | prohibits repricing or the exchange of options or stock appreciation rights without the approval of shareholders. |
Components of Executive Compensation
The Compensation and Governance Committee targets a specific mix of compensation components, with the intent to make each component of total direct compensation competitive with other companies of similar size and operational characteristics while also linking compensation to individual and corporate performance and encouraging stock ownership by senior management. The major components of our executive compensation program are the following:
Total Direct Opportunity Compensation
| · |
| Ÿ | Base salary. Base salary is intended to reflect the market value of an executive officer’sofficer's role and responsibility, with differentiation for individual capabilities and experience in their positions. |
| · |
| Ÿ | Annual cash incentive awards.awards. Annual cash incentive awards in the form of market competitive, performance-based, cash bonuses are designed to focus our executives on pre-set goals each year and to drive profitability, growth, and shareholder value. |
| · |
| Ÿ | Long-term equity participation.Long-term equity participation is designed to recognize executives for their contributions to the Company, to highlight the strategic importance of each executive’sexecutive's role, to promote retention, and to align the interests of management and shareholders in long-term growth and stock performance by rewarding executives for the creation of shareholder value. |
Total Indirect Compensation
| · |
| Ÿ | Retirement and other post-retirement compensation. |
The tables contained in this Proxy Statement set forth amounts for these components applicable to the following executives, who served in the noted capacities at the end of fiscal year 2012:2013: George C. Freeman, III, our Chairman, President, and Chief Executive Officer; W. Keith Brewer, our Executive Vice President and Chief Operating Officer; David C. Moore, our Senior Vice President and Chief Financial Officer; Preston D. Wigner, our Vice President, General Counsel, Secretary, and Chief Compliance Officer;Secretary; and Ray M. Paul, Jr.,Theodore G. Broome, Executive Vice President and Sales Director of Universal Leaf, our main operating subsidiary. We refer to these five executives as our named executive officers.
In determining executive compensation, the Compensation and Governance Committee reviews all components of the Chief Executive
Officer’sOfficer's and each other named executive
officer’sofficer's total compensation, including retirement benefits and the costs of all perquisites received to ensure such compensation meets the goals of the program. As a part of this review, the Compensation and Governance Committee considers corporate performance information, compensation survey data, the advice of its independent advisor, and the recommendations of management. The Compensation and Governance Committee also takes into consideration individual and overall company operating performance to ensure executive compensation reflects past performance as well as future potential and adequately differentiates between employees, based on the scope and complexity of the
employee’semployee's job position, market comparisons, individual performance and experience, and our ability to pay. The Chief Executive
Officer’sOfficer's performance is reviewed annually by the Compensation and Governance Committee prior to considering changes in base salary, annual cash incentive awards, long-term equity awards, and total direct compensation. The Chief Executive
Officer’sOfficer's performance is evaluated in light of company performance (as described in greater detail below) and non-financial goals and strategic objectives selected by the Compensation and Governance Committee. Based on its review, the Compensation and Governance Committee believes total compensation for each of the named executive officers is reasonable and not excessive.
In addition, the Compensation and Governance Committee evaluates the amount of compensation apportioned to base salary, annual cash incentive awards, and long-term equity participation, which we refer to as total direct opportunity compensation. The Compensation and Governance Committee sets target levels for each component of total direct opportunity compensation based on its desire to link compensation to individual and corporate performance and to ensure that a sufficient amount of compensation is performance-based or “at risk.” As an executive’sexecutive's responsibilities increase, the portion of “at risk” total direct opportunity compensation for the executive increases as a percentage of total direct opportunity compensation. The Compensation and Governance Committee set the following target percentages for the components of our named executive officers’officers' total direct opportunity compensation for fiscal year 2013:| | | Base
Salary | | | Cash Incentive
Award | | | Long-Term
Equity Award | | | Total | |
| | | | | | | | | | | | | |
| George C. Freeman, III | | | 25 | % | | | 25 | % | | | 50 | % | | | 100 | % |
| W. Keith Brewer | | | 25 | % | | | 25 | % | | | 50 | % | | | 100 | % |
| David C. Moore | | | 30 | % | | | 25 | % | | | 45 | % | | | 100 | % |
| Preston D. Wigner | | | 35 | % | | | 25 | % | | | 40 | % | | | 100 | % |
| Ray M. Paul, Jr. | | | 35 | % | | | 25 | % | | | 40 | % | | | 100 | % |
|
| | | | | | | | | | | | |
| | | Base Salary | | Cash Incentive Award | | Long-Term Equity Award | | Total |
| George C. Freeman, III | | 25.0 | % | | 25.0 | % | | 50.0 | % | | 100 | % |
| W. Keith Brewer | | 25.0 | % | | 25.0 | % | | 50.0 | % | | 100 | % |
| David C. Moore | | 30.0 | % | | 25.0 | % | | 45.0 | % | | 100 | % |
| Preston D. Wigner | | 32.5 | % | | 25.0 | % | | 42.5 | % | | 100 | % |
| Theodore G. Broome | | 35.0 | % | | 30.0 | % | | 35.0 | % | | 100 | % |
1.Base Salaries
The Compensation and Governance Committee approved the following base salaries for fiscal year 20122013 and fiscal year 20132014 for our named executive officers, which became effective April 1, 2011,2012, and April 1, 2012,2013, respectively:
| | | Fiscal Year
2011 | | | Fiscal Year
2012 | | | Percentage
Increase | | | Fiscal Year
2013 | | | Percentage
Increase | |
| | | ($) | | | ($) | | | (%) | | | ($) | | | (%) | |
| | | | | | | | | | | | | | | | | | | | | |
| George C. Freeman, III | | | 775,000 | | | | 775,000 | | | | 0.0 | | | | 798,200 | | | | 3.0 | |
| W. Keith Brewer | | | 545,000 | | | | 545,000 | | | | 0.0 | | | | 561,300 | | | | 3.0 | |
| David C. Moore | | | 405,000 | | | | 405,000 | | | | 0.0 | | | | 417,100 | | | | 3.0 | |
| Preston D. Wigner | | | 271,900 | | | | 310,000 | | | | 14.0 | | | | 319,300 | | | | 3.0 | |
| Ray M. Paul, Jr. | | | 317,500 | | | | 317,500 | | | | 0.0 | | | | 327,000 | | | | 3.0 | |
|
| | | | | | | | | | | | | |
| | | Fiscal Year 2012 | | Fiscal Year 2013 | | Percentage Increase | | Fiscal Year 2014 | | Percentage Increase |
| | | ($) | | ($) | | (%) | | ($) | | (%) |
| George C. Freeman, III | | 775,000 |
| | 798,200 |
| | 3.00 | | 816,200 |
| | 2.25 |
| W. Keith Brewer | | 545,000 |
| | 561,300 |
| | 3.00 | | 573,900 |
| | 2.25 |
| David C. Moore | | 405,000 |
| | 417,100 |
| | 3.00 | | 426,500 |
| | 2.25 |
| Preston D. Wigner | | 310,000 |
| | 319,300 |
| | 3.00 | | 326,500 |
| | 2.25 |
| Theodore G. Broome | | 290,000 |
| | 298,700 |
| | 3.00 | | 330,000 |
| | 10.48 |
For fiscal year 2012 and 2013, the Compensation and Governance Committee evaluated executive compensation based on a periodic assessment conducted by Towers Watson in fiscal year 2011 of the competitiveness of the executive’sexecutive's salary with salaries of executives in our peer group. Fiscal year 20112012 and 2013 base salaries were determined in accordance with the responsibilities, skills and experience of each executive, personal performance of the executive in light of individual levels of responsibility and the competitiveness of the executive’sexecutive's salary with the salaries of executives in our peer group. While the Compensation and Governance Committee considered each of these factors in their totality, the Compensation and Governance Committee did not assign a specific value to each factor. For purposes of assessing the competitiveness of salaries, the Compensation and Governance Committee reviewed compensation data for our peer group described above from its independent outside consultant to determine ranges of total compensation and the individual components of such compensation. While the Compensation and Governance Committee considered many factors including the advice of senior management, the Committee felt it was prudent to maintain base salaries at present levels given the global economic outlook and the industry movement to a period of oversupply. Therefore, theincrease base salaries of our named executive officers with the exception of Mr. Wigner, were not increased for fiscal year 2012. The Compensation2013 by 3.0% and Governance Committee recognized that Mr. Wigner, as the Company’s Vice President, General Counsel, Secretary and Chief Compliance Officer, had continued to assume increasing responsibilities and wanted to ensure that Mr. Wigner’s compensation was comparable to that of similarly situated executives at companies in our peer group. The Compensation and Governance Committee increased his salary and made a number of adjustments to his compensation effective April 1, 2011.2.25% for fiscal year 2014.
As part of the compensation setting process for fiscal year 2013,2014, the Compensation and Governance Committee met periodically with Mr. G. Freeman, our Chairman, President, and Chief Executive Officer during fiscal year 2012,2013, and reviewed his performance and the Company’sCompany's performance for fiscal year 2012. With Mr. Freeman’s appointment to Chief Executive Officer at the beginning of fiscal year 2009 and Chairman in August 2009, the2013. The Compensation and Governance Committee also evaluated Mr. Freeman’sG. Freeman's compensation level, considering the average base salaries of the chief executive officers at the companies included in the peer group approved for use in fiscal year 2012.2013 and 2014. The Compensation and Governance Committee believed this new base amount was appropriate and not excessive when viewed in context with chief executive officer compensation for the peer group.
For fiscal year 2013,2014, the Compensation and Governance Committee also reviewed a variety of compensation surveys and published statistical reports. The Committee also considered affordability within the Company’sCompany's business plans. After consultation with Towers Watson, as well as management, the base salaries of Mr. G. Freeman and the other named executive officers, except for Mr. Broome, were increased by 3.0%2.25% each.2.Annual Cash Incentives Awards
The Compensation and Governance Committee considered the recent promotion of Mr. Broome to Executive Vice President and Sales Director of Universal Leaf Tobacco Company, Inc. when it reviewed fiscal year 2014 salary recommendations.
| |
| 2. | Annual Cash Incentives Awards |
The fiscal year 20122013 annual incentive plan, which we refer to as the Annual Incentive Plan, provides that key managerial employees, including our named executive officers, may receive annual cash incentive awards that vary from year to year based upon corporate and individual performance. The purpose of annual cash incentive awards is to drive our key employees to maximize shareholder value and to provide a means for recognizing individual contribution to our overall results. The cash incentive awards earned for fiscal year 20122013 by our named executive officers were approved by the Compensation and Governance Committee on May 25, 2012,24, 2013, and are set forth in Column (g),“Non-Equity “Non-Equity Incentive Plan Compensation”Compensation”, in the“Summary “Summary Compensation Table” on page 3641 of this Proxy Statement.
Annual cash incentive payments under the Annual Incentive Plan are paid based on the Company’sCompany's achievements against pre-established performance metrics as set by the Compensation and Governance Committee. The annual cash incentive awards to our named executive officers in fiscal year 20122013 were based 50% on the generation of economic profit and 50% on the generation of adjusted earnings per share. We use economic profit and adjusted earnings per share, as these performance measures strongly encourage capital discipline and better investment decisions and lead to enhanced cash flow. The Compensation and Governance Committee also believes that these measures are representative of our overall performance, and they provide transparency to investors and enable period-to-period comparability of financial performance. For purposes of the Annual Incentive Plan, we define economic profit as consolidated earnings before interest and taxes after certain adjustments, minus a capital charge equal to our weighted average cost of capital times average funds employed, and we define “adjusted earnings per share” as the fully-diluted earnings per share of Common Stock, adjusted to exclude extraordinary gains and losses, restructuring and impairment, and annual cash incentive award accruals under the Annual Incentive Plan. Economic profit and adjusted earnings per share should not be considered as alternatives to net income or earnings per share determined in accordance with accounting principles generally accepted in the United States.
During fiscal year 2012,2013, the Compensation and Governance Committee considered alternative performance metrics and reaffirmed the use of adjusted earnings per share as a performance goal in both the annual incentive and long-term performance award program because adjusted earnings per share is an important driver of shareholder value. Our business is not capital intensive and we believe that adequate free cash flow is generated at acceptable levels of profitability.
The executive officers who participate in the Annual Incentive Plan are eligible to receive an annual cash incentive award equal to a percentage of their base salary in the event certain threshold levels are met for economic profit and adjusted earnings per share. The following table sets forth the threshold and target levels for the economic profit and adjusted earnings per share metrics that were applicable for fiscal year 20122013 awards: |
| | | | | | | | |
| | | Threshold Level | | | Target Level | | | Maximum Level | | | 2012
2013 Results | |
| | | | | | | | | | | | |
| Economic Profit | | $ | (28.57)(40.00) million | | | $ | 15.000.00 million | | | $ | 53.3362.50 million | | | $ | (40.20)40.70 million | |
| | | | | | | | | | | | | | | | |
| Adjusted Earnings Per Share | | $ | 3.581.98 per share | | | $ | 5.153.55 per share | | | $ | 6.7235.12 per share | | | $ | 3.514.84 per share | |
Based on the definition of adjusted earnings per share provided above, a reconciliation of the adjusted earnings per share of $3.51achieved$4.84achieved for fiscal year 20122013 to our reported diluted earnings per share of $3.25$4.66 is as follows:| Adjusted Earnings Per Share | | $ | 3.51 | |
| | | | | |
| Per share effect of annual cash incentive award accrual excluded from adjusted earnings per share | | $ | — | |
| | | | | |
| Per share effect of restructuring and impairment | | $ | 0.26 | |
| | | | | |
| Reported Diluted Earnings Per Share | | $ | 3.25 | |
The Company performed well in fiscal years 2010 and 2011 and reported record levels of profitability. As we entered fiscal 2012, we had begun to see the negative effects of leaf oversupply and we faced challenging market and industry conditions. Notwithstanding the outlook for fiscal 2012, the Compensation and Governance Committee maintained the performance targets for adjusted earnings per share and economic profit at $5.15 and $15 million, respectively; unchanged from the prior year. The threshold level for economic profit was reduced from negative $10 million to negative $28.57 million to better reflect the impact that higher leaf prices and the weakness in the U.S. dollar have had on the Company’s average funds employed in recent years. The Compensation and Governance Committee believes that this adjustment better aligns these two performance scales with each other.
|
| | | | |
| Adjusted Earnings Per Share | | $ | 4.84 |
|
| | | |
| Per share effect of annual cash incentive award accrual excluded from adjusted earnings per share | | (0.12 | ) |
| | | |
| Per share effect of restructuring and impairment | | (0.06 | ) |
| | | |
| Reported Diluted Earnings Per Share | | $ | 4.66 |
|
In fiscal year 2012, we believe our sound operating performance showed that we successfully managed our business in
this year’sthe year's oversupply situation. However, in September 2011, we announced that the General Court of the European Union issued a decision rejecting the appeal of Deltafina S.p.A., our Italian subsidiary. That appeal related to the European
Commission’sCommission's revocation of
Deltafina’sDeltafina's immunity from a fine for actions in connection with
Deltafina’sDeltafina's purchase and processing of tobacco in the Italian raw tobacco market between 1995 and 2002.
The CompanyWe recorded a charge for the full amount of the fine plus accumulated interest. That charge totaled $49.1 million, or $46.2 million after tax, as
the Companywe did not record an income tax benefit on the non-deductible fine portion of the charge. The magnitude of the charge was such that our performance measures were reduced to levels below the thresholds at which we pay annual cash incentive awards under the Annual Incentive Plan to our named executive officers. If not for the one-time charge, the annual cash incentive awards would have been 97.925% of target bonus opportunity amounts. In spite of the unusual and infrequent nature of the charge, as well as the fact that the fine was for activities that took place more than ten years ago, the Compensation and Governance Committee did not make any adjustment in the computation of performance measures under the Annual Incentive Plan. The Compensation and Governance Committee
believesbelieved that in so doing, management thus suffered the economic consequences of the decision just as our shareholders suffered
athe negative impact on the market price of our Common Stock, and
the Companywe therefore sent a strong message throughout the organization that non-compliant behavior and violations of company policy will not be tolerated.
Although we performed well in fiscal year 2012, the outlook for fiscal year 2013 was for lower performance following several years of record profitability. Performance targets had been steadily increased during this extended period of prosperity. The Compensation and Governance Committee, therefore, adjusted the performance targets to better reflect current and anticipated business conditions and to ensure adequate, yet reasonable, performance stretch in the fiscal year 2013 Annual Incentive Plan goals. The performance targets for adjusted earnings per share and economic profit were reduced to $3.55 and zero, respectively. The Compensation and Governance Committee believed that these goals better reflected for fiscal year 2013 the cyclical market supply imbalance and reinforced management's commitment to taking the appropriate long-term approach to our business.
Each executive officer participating in the Annual Incentive Plan is eligible to receive an annual cash incentive award based on a percentage of his or her base salary, which we call the target bonus opportunity percentage. The target bonus opportunity percentage for each executive officer, except the Chief Executive Officer, is initially set by our Chief Executive Officer and is based on the executive
officer’sofficer's experience in his or her present position and job responsibilities. Our Chief Executive Officer submits the recommended target bonus opportunity percentages to the Compensation and Governance Committee for its review and approval each year. For our Chief Executive Officer, the Compensation and Governance Committee determines the target bonus opportunity percentage. The Compensation and Governance Committee also reviews its outside
advisor’sadvisor's compensation data for our peer group when evaluating the recommended target bonus opportunity percentages.
Each year, the Compensation and Governance Committee approves percent-of-target performance tables for each performance measure. As Company performance deviates from targeted performance, the percentages in the tables increase or decrease at an accelerated rate. Once the economic profit and adjusted earnings per share performance measures have been calculated for the applicable fiscal year, the Compensation and Governance Committee compares the calculated performance to the preapproved tables to determine the percentage to apply to the
executives’executives' target bonus opportunity amounts. The Compensation and Governance Committee applies the resulting percentage to the target bonus opportunity amount to determine the annual cash incentive award each executive is eligible to receive. Annual cash incentive awards are capped at two times the target bonus opportunity percentage for each criterion, regardless of how much the
Company’sCompany's performance exceeded the target level for either criteria. In addition, the Compensation and Governance Committee reserves the right to exercise negative discretion in adjusting any incentive awards, but the Compensation and Governance Committee has no discretion to increase the awards. The Compensation and Governance Committee does not award any discretionary, non-performance based annual cash incentive awards if the performance goals are not achieved.
Using Mr. G. Freeman as an example, we generated negativepositve economic profit and adjusted earnings per share during fiscal year 2012,2013, with adjusted earnings per share and economic profit falling belowexceeding the threshold and target levels. The economic profit and adjusted earnings per share performance measures for the year corresponded to zero percent168.3 % on the Compensation and Governance Committee’sCommittee's preapproved tables. Mr. Freeman’sG. Freeman's cash incentive award for fiscal year 20122013 was, zero as a percenttherefore, 168.3 % of his target bonus opportunity amount. Mr. Freeman, therefore, did not receive a bonus for fiscal year 2012.amount or $1,343,400.
The following table lists the target bonus opportunity percentages, the target bonus opportunity amounts, the maximum bonus opportunity amounts, and the actual cash incentive awards for fiscal year 20122013 for our named executive officers:| | | Target Bonus
Opportunity
Percentage | | | Target Bonus
Opportunity
Amount | | | Maximum
Bonus
Opportunity | | | Actual 2012
Bonus
Paid | |
| | | (%) | | | ($) | | | ($) | | | ($) | |
| | | | | | | | | | | | | |
| George C. Freeman, III | | | 100 | | | | 775,000 | | | | 1,550,000 | | | | 0 | |
| W. Keith Brewer | | | 100 | | | | 545,000 | | | | 1,090,000 | | | | 0 | |
| David C. Moore | | | 83 | | | | 337,500 | | | | 675,000 | | | | 0 | |
| Preston D. Wigner | | | 71 | | | | 221,400 | | | | 442,800 | | | | 0 | |
| Ray M. Paul, Jr. | | | 71 | | | | 226,800 | | | | 453,600 | | | | 0 | |
|
| | | | | | | | | | | | |
| | | Target Bonus Opportunity Percentage | | Target Bonus Opportunity Amount | | Maximum Bonus Opportunity Amount | | Actual 2013 Bonus Paid |
| | | (%) | | ($) | | ($) | | ($) |
| George C. Freeman, III | | 100 | % | | 798,200 |
| | 1,596,400 |
| | 1,343,400 |
|
| W. Keith Brewer | | 100 | % | | 561,300 |
| | 1,122,600 |
| | 944,700 |
|
| David C. Moore | | 83 | % | | 347,600 |
| | 695,200 |
| | 585,000 |
|
| Preston D. Wigner | | 71 | % | | 228,100 |
| | 456,200 |
| | 383,900 |
|
| Theodore G. Broome | | 71 | % | | 213,400 |
| | 426,800 |
| | 359,200 |
|
On June 5, 2012,May 24, 2013, the Compensation and Governance Committee established the performance measures applicable for the annual cash incentive awards to be awarded for fiscal year 2013.2014. The Compensation and Governance Committee reconfirmed its use of adjusted earnings per share and economic profit as the appropriate performance measures for the fiscal year 20132014 cash incentive awards.3.Long-Term Equity Participation
| |
| 3. | Long-Term Equity Participation |
The Compensation and Governance Committee administers Universal Corporation’sCorporation's 1997 and2002and2002 Executive Stock Plans, and the 2007 Stock Incentive Plan, as amended and restated, pursuant to which the Compensation and Governance Committee grants to key executive officers SARs, restricted stock units, Performance Shares, and options to purchase shares of our Common Stock, based upon a determination of competitive aggregate compensation levels. The primary objectives of issuing such equity awards are to encourage significant ownership of Common Stock by management and to provide long-term financial incentives linked directly to market performance of our Common Stock. Long-term equity awards are aligned with the interests of our shareholders as the awards deliver value based on shareholder return and promote retention of management. The Compensation and Governance Committee believes that significant ownership of Common Stock by senior management is the optimal method to align the interests of management and the shareholders, and our stock incentive program is effectively designed to further this objective. Our compensation structure is designed to deliver a significant portion of total direct compensation in the form of long-term equity awards with 40%35% to 50% for named executive officers.
With the exception of new hires, long-term incentives are awarded annually on a day between two and twelve business days following the public release of our annual earnings. The Compensation and Governance Committee selected this timing, because it enables us to consider the prior year performance of the Company and the participants and our expectations for the next performance period, while also guaranteeing that normal awards will be made after we publicly disclose our performance for the year. The awards also are made as early as practicable in our fiscal year in order to maximize the time period for the incentives associated with the awards. The Compensation and Governance
Committee’sCommittee's schedule is determined between six and twelve months in advance, and the proximity of any awards to market events other than earnings announcements is coincidental.
Executive long-term equity participation has historically been in the form of non-qualified stock option grants. In fiscal year 2006, the Compensation and Governance Committee re-evaluated the form of its long-term incentive awards, and selected SARs and
We currently use restricted stock units
and Performance Shares as the preferred forms of long-term equity participation.
The switch to SARs was due in large part to cost efficiencies when we adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Stock Compensation (formerly, FASB Statement 123R), which we refer to as FASB ASC Topic 718. Restricted stock units
wereare used as a cost-effective addition to the compensation mix because such awards
diddo not require the issuance of Common Stock until vesting.
In fiscal year 2008, the Compensation and Governance Committee consulted with Towers Watson and approved the addition Our use of Performance Shares to the existing mix ofas a long-term equity awards for use in future awards beginning with fiscal 2009. The addition of Performance Sharesaward places greater emphasis on our long-term financial performance and subjects a higher percentage of the long-term incentive awards to risk based on such performance. The addition of Performance Shares is intended to focus greater attention and rewards on the key underlying drivers of shareholder value. Performance Shares are granted annually, with overlapping multi-year performance cycles. Performance Shares vest on the last day of the performance period selected by the Compensation and Governance Committee and are earned and paid out based on the Company’sCompany's achievement of certain performance measures selected by the Compensation and Governance Committee. Performance Shares do not carry any dividend rights. Similar to annual cash incentive awards under the Annual Incentive Plan, as the actual performance exceeds the performance measure threshold selected by the Compensation and Governance Committee,
the amount of Performance Share payout increases, with 100% payout occurring if performance reaches a target level set by the Compensation and Governance Committee. Payout can exceed 100% if the performance exceeds the target level, but it is capped at a maximum of 150%. Conversely, the payout is reduced if actual performance falls short of the selected performance measure threshold. At the time of vesting, the vested Performance Shares are payable in shares of Common Stock.
For awards granted in fiscal years
2009-2012,2009-2013, the Compensation and Governance Committee selected average adjusted earnings per share as the appropriate criterion for use with Performance Shares and set the performance period at three fiscal years, which began April 1. Adjusted earnings per share is calculated in the same manner as it is with Annual Incentive Plan awards. The threshold levels for adjusted earnings per share performance were set based on levels of performance that were believed to be achievable. The target levels for adjusted earnings per share performance were set based on levels of performance that were believed to be aggressive, but obtainable. The maximum levels for adjusted earnings per share performance were set based on levels of performance that were believed to be realizable with exceptional performance.
The Compensation and Governance Committee, after consulting with its outside advisor, reaffirmed that a portion of our executive officers’officers' total compensation should be paid in equity awards through our long-term incentive plans. For fiscal year 20122013 long-term equity awards, the Compensation and Governance Committee determined that one-third of the target value of the equity awards should consist of stock-settled SARs, one-thirdone-half should consist of Performance Shares and the remaining one-thirdone-half should consist of 5-year restricted stock units. The Compensation and Governance Committee used an equal mix of SARs, Performance Shares and restricted stock units because it believes that such mix represents the appropriate balance for our Company in rewarding stock appreciation and relative shareholder return, while also placing sufficient emphasis on our overall financial performance. In order to allocate compensation among the threetwo forms of equity participation, the Compensation and Governance Committee values restricted stock unit awards at the fair market value on the date of grant of the equivalent number of shares of Common Stock. All restricted stock units are awarded with five-year cliff vesting and earn dividend equivalent units during such period. In addition, our named executive officers have additional vesting restrictions or holding period requirements on their restricted stock unit awards in order to preserve deductibility under Section 162(m) of the Internal Revenue Code. The Compensation and Governance Committee values SARs as equal to 25% of the value of our Common Stock based on a Black-Scholes valuation method. All SARs vest during the three-year period immediately following the grant date, with one third of the amount awarded vesting on each annual anniversary of the date of grant. The Compensation and Governance Committee values Performance Shares at the fair market value on the date of grant of the equivalent number of shares of Common Stock. As described above, Performance Shares vest on the last day of the selected performance period and are earned and paid out based on the degree to which our financial performance exceeds a threshold level set by the Compensation and Governance Committee.
For fiscal year 2013 long-term equity awards, the Compensation and Governance Committee decided to suspend the use of SARs and determined that one-half of the target value of equity awards should consist of Performance Shares and the remaining one-half should consist of 5-year restricted stock units. All other attributes of the program as well as the terms and conditions of the Performance Shares and restricted stock units remain unchanged from the previous year. The decision to suspend the inclusion of SARs reflects the potential disconnect between the amount of pay received by executives versus the amount of expense recognized by the Company as well as the risk that stock options and SARs potentially incentivize executives to pursue short-term or riskier strategies.
On May 28, 2008, we awarded Performance Shares for the 3-year performance period from April 1, 2008 through March 31, 2011. Those awards vested on March 31, 2011 and the payout was approved by the Compensation Committee on May 25, 2011. The performance measure was the 3-year average adjusted earnings per share with earnings per share calculated in the same manner as it is with the Annual Incentive Plan awards. We generated average adjusted earnings per share for fiscal years 2009, 2010 and 2011 that exceeded the threshold, target and maximum levels. The following table sets forth the threshold and target levels for the adjusted earnings per share metrics applicable for the fiscal year 2009 award:
| | | Threshold
Level | | | Target
Level | | | Maximum
Level | | | Average
2009-2011
Result | |
| | | | | | | | | | | | | | | | | |
| Average Adjusted Earnings per Share | | $ | 2.95 | | | $ | 4.00 | | | $ | 4.55 | | | $ | 5.41 | |
A reconciliation of average adjusted earnings per share of $5.41 for fiscal years 2009 through 2011 is as follows:
| Adjusted Earnings Per Share | | | |
| | | | |
| Fiscal Year 2009 | | $ | 4.41 | |
| Fiscal Year 2010 | | | 5.81 | |
| Fiscal Year 2011 | | | 6.01 | |
| 3-year Average Adjusted Earnings Per Share | | $ | 5.41 | |
The average adjusted earnings per share performance measure for the performance period exceeded the maximum on the Compensation and Governance Committee’s preapproved percent-of-target performance tables. The payouts of the fiscal year 2009 Performance Share awards were, therefore, made at the maximum of 150%.
The following table lists the target Performance Share opportunities, the maximum Performance Share opportunities and the actual number of shares paid out:
| | | Actual
Payout
as a %
of Target | | | Target
Award
at Grant
(Shares) | | | Maximum
Award
at Grant
(Shares) | | | Actual
Award
Shares | | | Target
Award
Value
at Grant(1) | | | Actual
Award
Value(2) | |
| | | | | | | | | | | | | | | | | | | |
| George C. Freeman, III | | | 150 | % | | | 6,050 | | | | 9,075 | | | | 9,075 | | | $ | 465,729 | | | $ | 393,038 | |
| W. Keith Brewer | | | 150 | % | | | 4,450 | | | | 6,675 | | | | 6,675 | | | $ | 342,561 | | | $ | 289,094 | |
| David C. Moore | | | 150 | % | | | 2,650 | | | | 3,975 | | | | 3,975 | | | $ | 203,997 | | | $ | 172,157 | |
| Preston D. Wigner | | | 150 | % | | | 1,550 | | | | 2,325 | | | | 2,325 | | | $ | 119,319 | | | $ | 100,696 | |
| Ray M. Paul, Jr. | | | 150 | % | | | 1,800 | | | | 2,700 | | | | 2,700 | | | $ | 138,564 | | | $ | 116,937 | |
(1)This column represents grant date fair value based on the May 28, 2008 stock price of $51.32.
| (2) | This column represents market value based on the May 26, 2011 stock price of $43.31. |
We have historically assigned an initial value to
stock optionsSARs granted by our Compensation and Governance Committee
equal to the closing price of a share of our Common Stock as quoted on the NYSE on the first business day following the date the stock options were granted. This process was followed with the first set of SARs we issued, in June 2006. The Compensation and Governance Committee changed this process, starting with the SAR awards made on May 24, 2007 by assigning an initial value to a SAR equal to the closing price of a share of our Common Stock as quoted on the NYSE on the date the SAR is granted by the Compensation and Governance Committee. The exercise price for SARs is the closing price of a share of our Common Stock as quoted on the NYSE on the date the SAR is
exercised, except for the SAR awards made in June 2006 for which we used the closing price of a share of our Common Stock as quoted on the NYSE on the day before exercise.exercised. When SARs become exercisable, they may be exercised on a date specified by the executive in writing to our Secretary or, if no date is specified, then (a) the date of receipt of the
executive’sexecutive's notice of exercise if our Secretary receives the notice by 2:00 p.m. Eastern Time or (b) the first business day following receipt of the
executive’sexecutive's notice of exercise if the
executive’sexecutive's notice is received by our Secretary after 2:00 p.m. Eastern Time. Such written notices may only be given to our Secretary during one of our trading windows.
On June 7, 2011, the Compensation and Governance Committee granted Performance Shares, SARs, and restricted stock units to key executives pursuant to the 2007 Stock Incentive Plan. The Compensation and Governance Committee granted 42,600 Performance Shares, 170,400 SARs, and 57,100 restricted stock units to 16 executives. The number of SARs, Performance Shares, and restricted stock units granted to our named executive officers on June 7, 2011, were as follows:
| | | Performance
Shares | | | SARs | | | Restricted
Stock Units | |
| | | | | | | | | | |
| George C. Freeman, III | | | 12,050 | | | | 48,200 | | | | 12,050 | |
| W. Keith Brewer | | | 8,500 | | | | 34,000 | | | | 8,500 | |
| David C. Moore | | | 4,750 | | | | 19,000 | | | | 4,750 | |
| Preston D. Wigner | | | 2,750 | | | | 11,000 | | | | 2,750 | |
| Ray M. Paul, Jr. | | | 2,800 | | | | 11,200 | | | | 2,800 | |
Additional details regarding the fiscal year 2012 equity participation awards for each of our named executive officers is set forth in the“Grants of Plan-Based Awards” table on page 39 of this Proxy Statement.
SARs awarded during fiscal year 2006 may be exercised by retiring executives after retirement during the remainder of the period preceding the stated expiration date of the SARs. The Compensation and Governance Committee reconsidered this provision with respect to SARs awards for fiscal year 2007. Beginning with the fiscal year 2007 SARs awards, retiring Retiring executives have been given the ability to exercise their SARs during the remainder of the period preceding the stated expiration date of the SARs or 36 months, whichever is shorter.
On May 27, 2009, we awarded Performance Shares for the 3-year performance period from April 1, 2009 through March 31, 2012. Those awards vested on March 31, 2012 and the payout was approved by the Compensation Committee on May 25, 2012. The performance measure was the 3-year average adjusted earnings per share with earnings per share calculated in the same manner as it is with the Annual Incentive Plan awards. We generated average adjusted earnings per share for the performance period covering fiscal years 2010 through 2012 that exceeded the threshold, target and maximum levels. The following table sets forth the threshold, target and maximum levels for the adjusted earnings per share metrics applicable for the fiscal year 2010 award:
|
| | | | | | | | | | | | | | | | |
| | | Threshold Level | | Target Level | | Maximum Level | | Average 2010-2012 Result |
| Average Adjusted Earnings per Share | | $ | 3.25 |
| | $ | 4.30 |
| | $ | 4.85 |
| | $ | 5.11 |
|
A reconciliation of average adjusted earnings per share of $5.11 for the performance period covering fiscal years 2010 through 2012 is as follows:
|
| | | | |
| Fiscal Year 2010 | | $ | 5.81 |
|
| Fiscal Year 2011 | | 6.01 |
|
| Fiscal Year 2012 | | 3.51 |
|
| 3-year Average Adjusted Earnings Per Share | | $ | 5.11 |
|
The average adjusted earnings per share performance measure for the performance period exceeded the maximum on the Compensation and Governance Committee's pre-approved percent-of-target performance tables. The payouts of the fiscal year 2010 Performance Share awards were, therefore, made at the maximum of 150%.
The following table lists the target Performance Share opportunities, the maximum Performance Share opportunities and the actual number of shares of Common Stock paid out:
|
| | | | | | | | | | | | | | | | | | | |
| | | Actual Payout as a % of Target | | Target Award at Grant (Shares) | | Maximum Award at Grant (Shares) | | Actual Award (Shares) | | Target Award Value at Grant(1) | | Actual Award Value(2) |
| George C. Freeman, III | | 150% | | 15,000 |
| | 22,500 |
| | 22,500 |
| | $ | 529,500 |
| | $ | 1,026,675 |
|
| W. Keith Brewer | | 150% | | 10,800 |
| | 16,200 |
| | 16,200 |
| | $ | 381,240 |
| | $ | 739,206 |
|
| David C. Moore | | 150% | | 6,150 |
| | 9,225 |
| | 9,225 |
| | $ | 217,095 |
| | $ | 420,937 |
|
| Preston D. Wigner | | 150% | | 3,400 |
| | 5,100 |
| | 5,100 |
| | $ | 120,020 |
| | $ | 232,713 |
|
| Theodore G. Broome | | 150% | | 3,000 |
| | 4,500 |
| | 4,500 |
| | $ | 105,900 |
| | $ | 205,335 |
|
| |
(1) | This column represents grant date fair value based on the May 27, 2009 stock price of $35.30. |
| |
(2) | This column represents market value based on the May 25, 2012 stock price of $45.63. |
On June 5, 2012, the Compensation and Governance Committee granted Performance Shares and restricted stock units to key executives pursuant to the 2007 Stock Incentive Plan. The Compensation and Governance Committee shortenedgranted 60,850 Performance Shares and 63,550 restricted stock units to 14 executives. The number of Performance Shares and restricted stock units granted to our named executive officers on June 5, 2012, were as follows:
|
| | | | | | |
| | | Performance Shares | | Restricted Stock Units |
| George C. Freeman, III | | 17,350 |
| | 17,350 |
|
| W. Keith Brewer | | 12,200 |
| | 12,200 |
|
| David C. Moore | | 6,800 |
| | 6,800 |
|
| Preston D. Wigner | | 3,950 |
| | 3,950 |
|
| Theodore G. Broome | | 3,700 |
| | 3,700 |
|
Additional details regarding the post-retirement exercise periodfiscal year 2013 equity participation awards for each of our named executive officers is set forth in order to set a reasonable time frame for exercising awards considering the period during which retiring executives’ efforts may have resulted in an impact“Grants of Plan-Based Awards” table on stock price.4.Other Benefits
page
45 of this Proxy Statement.
The Compensation and Governance Committee believes employee benefits are an essential component of our competitive total compensation package. These benefits are designed to attract and retain our employees. The named executive officers may participate in the same benefit plans as our salaried employees, which include health, dental and life insurance, long-term disability benefits, and our 401(k) savings plan. Our 401(k) savings plan includes a defined company match component, and we have disclosed all company matches for our named executive officers in Column (i), “All“All Other Compensation”Compensation”, in the“Summary “Summary Compensation Table”, and separately disclosed each amount in Footnote 6to5to that table on page 3641 of this Proxy Statement.
In addition, we provide certain other benefits to our executives, including our named executive officers. The Compensation and Governance Committee believes these other benefits provide security for current and future needs of the executives and their families and therefore assist in attracting and retaining them. These other benefits are structured to be within the competitive range relative to our peer group. In general, we do not provide our executives with many of the types of perquisites that other companies offer their executives, such as the personal use of a corporate aircraft, car allowances, social memberships or club dues, or preventative health evaluations, and the Compensation and Governance Committee re-evaluates and has approved the very limited types of perquisites that we offer on a regular basis. We also do not utilize tax gross-ups. The additional benefits we provide or have provided to some of our executives during fiscal year 20122013 consist of the following and are included in the amounts set forth in Column (i),“All “All Other Compensation”Compensation”, in the“Summary “Summary Compensation Table”, and separately disclosed in Footnote 65 to that table on page 37of43of this Proxy Statement: financial planning and tax preparation services and matching gifts.5.Retirement and Post-Termination Compensation
| |
| 5. | Retirement and Post-Termination Compensation |
Our named executive officers are covered by a defined benefit retirement plan, a supplemental retirement plan, deferred income plans, and a 401(k) savings plan. Certain of our named executive officers also have Change of Control Agreements addressing a change of control in our company. These items are defined and summarized below. Additional details and all amounts earned by our named executive officers or contributed by us to our named executive officers through those benefits are disclosed in this Proxy Statement where noted below.
A. Defined Benefit Retirement Plan
Our salaried employees, including our named executive officers, participate in a defined benefit retirement plan, the
Employees’Employees' Retirement Plan of Universal Leaf Tobacco Company, Incorporated and Designated Affiliated Companies, which we refer to as the Pension Plan. The Pension Plan is a company-funded, qualified plan under the Internal Revenue Code, with the purpose of providing a fixed benefit for the life of the participant (and/or the spouse if the joint and survivor option is elected) beginning at the time of the
participant’sparticipant's retirement or termination. The Pension Plan also has survivor benefits for
participants’participants' spouses. The Pension Plan benefit under normal retirement circumstances is a percentage of the
participant’sparticipant's average compensation, multiplied by the
participant’sparticipant's credited years of service under the Pension Plan. Average compensation is calculated by taking the highest average of annual salary and annual cash incentive awards for any three consecutive calendar-year periods during the
participant’sparticipant's participation in the Pension Plan. The normal retirement benefit under the Pension Plan is calculated as follows:
|
| | | |
| Base Benefit: | Designated Percentage of Average Compensation | Multiplied by | All years of service |
| PLUS |
| Excess Benefit: | Designated Percentage of Average Compensation less Covered Compensation | Multiplied by | Participant’sParticipant's first 35 years of service |
Covered compensation, for purposes of the excess benefit, is defined as the average of the Social Security Taxable Wage Base for the 35 calendar-year period ending in the year preceding the
executive’sexecutive's normal retirement age under the Social Security Act.
Benefits are paid as a straight life annuity for the
participant’sparticipant's lifetime for a single participant, or a 50% joint and survivor annuity, if elected, for married participants for their joint lifetime. Benefits are normally payable when the participant reaches age 65; however, participants may begin receiving early retirement benefits when they reach age 55 and elect to retire with at least five years of service. The early retirement benefit is reduced based on the
participant’sparticipant's age and years of service.
Further detail regarding the Pension Plan and disclosure of the estimated value of pension benefits for our named executive officers is set forth in the“Pension “Pension Benefits”table and related footnotes beginning on page 4450 of this Proxy Statement.
B. Benefit Restoration Plan
To the extent benefits payable to our employees at retirement pursuant to the Pension Plan exceed amounts that may be payable under applicable provisions of the Internal Revenue Code, such benefits will be paid under our supplemental retirement plan called the Universal Leaf Tobacco Company, Incorporated 1996 Benefit Restoration Plan, which we refer to as the Benefit Restoration Plan. The Benefit Restoration Plan is a non-qualified defined benefit pension plan that provides eligible individuals the difference between the benefits they would actually accrue under the Pension Plan, but for the maximum benefit limitations and the limitation on compensation pursuant to the Internal Revenue Code that may be recognized under the Pension Plan and deferrals of their compensation under DIP II and DIP III, our two
nonqualifiednon-qualified deferred income plans, which are defined and discussed below. Benefits under the Benefit Restoration Plan are paid in one lump sum payment at retirement except where Section 409A restrictions apply, and benefits under DIP II and DIP III are paid out at or after retirement in accordance with the election option chosen by a participant prior to deferral. The purpose of the Benefit Restoration Plan is not to provide employees with additional benefits but to ensure that our employees who earn more than the amounts set forth in the Internal Revenue Code for maximum benefit limitations receive a retirement benefit that is proportionately equivalent to the benefit provided to our other salaried employees participating in the Pension Plan. We maintain the Pension Plan and Benefit Restoration Plan to ensure an overall competitive compensation and benefits offering and to attract and retain top talent. Our Compensation and Governance Committee believes it is essential that our overall compensation and benefits, including retirement benefits, be competitive in the market.
Certain participants in the Benefit Restoration Plan, including our named executive officers, entered into agreements with Universal Leaf that provided for taxable cash compensation payments to be made by Universal Leaf to the participant to partially fund their Benefit Restoration Plan payment upon retirement. Under such agreements, the participant directed Universal Leaf to deposit the payments on behalf of the participant directly into an irrevocable trust established by the participant for this purpose. During fiscal year 2010, the Compensation and Governance Committee decided to discontinue all future payments by Universal Leaf in connection with the Benefit Restoration Plan and notified participants that it would not make a payment for benefits earned after January 1, 2010. At retirement, the after-tax balance from each of the
participants’participants' agreements is used to offset the after-tax lump sum benefit payable to a participant under the Benefit Restoration Plan.
The retirement benefit under the Benefit Restoration Plan is paid in a lump sum. Like the Pension Plan, the benefit payable under the Benefit Restoration Plan normally is distributed when the participant reaches age 65. Participants may receive an early distribution of their retirement benefit when they reach age 55 and elect to retire with at least five years of service, but such early retirement benefit is reduced based on the
participant’sparticipant's age and years of service.
We offer all salaried employees, including our named executive officers, the opportunity to participate in the Employees’Employees' 401(k) Savings Plan of Universal Leaf Tobacco Company, Incorporated and Designated Affiliated Companies, which we refer to as the 401(k) Plan. Participants can contribute percentages on a monthly basis up to 100% of total compensation excluding annual cash incentive awards, subject to statutory limitations. We match the monthly contributions up to 5% on a monthly basis, subject to a calendar year contribution limit of $12,500.$12,750. The company match becomes vested after the participant completes three years of service. All of our named executive officers participated in the 401(k) Plan in fiscal year 2012.2013.
In addition, we have two nonqualifiednon-qualified deferred compensation plans available to certain of our executives: the Universal Leaf Tobacco Company, Incorporated Deferred Income Plan of 1994, which we refer to as DIP II, and the Universal Leaf Tobacco Company, Incorporated Deferred Income Plan III, which we refer to as DIP III. In order to remain in compliance with Section 409A of the Internal Revenue Code, we froze the terms of DIP II as it pertained to any compensation earned prior to January 1, 2005 and amended and restated the plan in December 2008 as DIP III. Both plans are designed to permit participants to accumulate additional income for retirement and other personal financial goals through the deferral of their annual cash incentive award and portions of their salary, as more fully described in the narrative to the table entitled“Nonqualified “Non-qualified Deferred Compensation” on page 4652 of this Proxy Statement. Deferred compensation arrangements are common executive programs, and we believe that these arrangements help us in the recruitment and retention of executive talent for which we are competing. The Company does not provide any contributions to either DIP II or DIP III.
DIP II and DIP III are non-qualified savings plans, with eligibility based on a participant’sparticipant's position in the Company and certain of its subsidiaries. Under DIP II and DIP III, each participant elects to make contributions through the deferral of up to 50% of their salary and up to 100% of their annual incentive award. DIP II and DIP III are unfunded and unsecured by us and provide the participants a variety of investment options from which to choose. These options are selected by the Pension Investment Committee of the Board of Directors. No named executive officers deferred income in DIP II in fiscal year 2012,2013, and Messrs.Mr. G. Freeman and Paul werewas the only named executive officersofficer who deferred income in DIP III in fiscal year 2012.
2013.
D. Change of Control Agreements
We do not offer severance agreements to our named executive officers, nor have we offered them agreements for employment or retention with our company. However, to ensure that we will have the continued dedicated service of certain executives (including some of our named executive officers) notwithstanding the possibility, threat, or occurrence of a change of control, we have change of control agreements, which we refer to as Change of Control Agreements. The Compensation and Governance Committee believes that the Change of Control Agreements serve the best interests of Universal Corporation and our shareholders by ensuring that if a hostile or friendly change of control is ever under consideration, our executives are able to perform their duties and responsibilities and advise the Board of Directors about the potential transaction in the best interests of shareholders, without being unduly influenced by the distracting uncertainty and risk associated with a change of control, such as fear of the economic consequences of losing their jobs as a result of a change of control. The terms and conditions in the Change of Control Agreements are identical for each executive officer who has such an agreement.
A “change of control” is defined in the Change of Control Agreements, and is generally deemed to have occurred if:
| · |
| Ÿ | any individual, entity, or group acquires 20% or more of either the outstanding shares of Common Stock or the combined voting power of our outstanding voting securities; |
| · |
| Ÿ | a majority of our directors are replaced; |
| · |
| Ÿ | we reorganize, merge, consolidate, or sell all or substantially all of our assets except for certain situations in which control of outstanding shares of Common Stock or outstanding voting securities is maintained; or |
| · |
| Ÿ | our shareholders approve a complete liquidation or dissolution of Universal Corporation. |
The Change of Control Agreements:
| · |
| Ÿ | do not contain any obligation to gross-up severance payments for potential excise taxes incurred by the executive officer; |
| · |
| Ÿ | contain a “double trigger” instead of a “single trigger,” meaning that payments are not made until there is a change of control and the executive officer is effectively terminated within three years of the change of control; |
| · |
| Ÿ | contain non-competition and non-solicitation clauses; and |
| · |
| Ÿ | contain certain administrative elements intended to address the requirements of Section 409A of the Internal Revenue Code applicable to deferred compensation. |
Our Compensation and Governance Committee believes that the current Change of Control Agreements with certain of our named executive officers are in the best interests of Universal Corporation and our shareholders, and they adequately protect the legitimate interests of our named executive officers in employment security without unduly burdening us or reducing shareholder value. We currently maintain Change of Control Agreements with only Messrs. G. Freeman, Brewer, D. Moore and Wigner. The Change of Control Agreements are described in more detail below in the section entitled“Potential “Potential Payments uponUpon Termination or Change of Control” beginning on page 4754 of this Proxy Statement.
Advisory Votes on Executive Compensation
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the subsequent rules and regulations promulgated by the SEC, we are including a non-binding advisory resolution approving the compensation of our named executive officers. The vote on this proposal will be non-binding on us and the Board and will not be construed as overruling a decision by us or the Board of Directors. This vote will not create or imply any change to our fiduciary duties or create or imply any additional fiduciary duties for us or the Board of Directors. However, the Board of Directors values the opinions that our shareholders express in their votes and will consider the outcome of the vote when making future decisions on named executive officer compensation as it deems appropriate.
At the 20112012 Annual Meeting of Shareholders, more than 9798 percent of the shares cast on the proposal were voted for the non-binding advisory resolution approving the compensation of our named executive officers. The Board of Directors believes that the voting results indicate our shareholders’shareholders' overwhelming approval of our named executive officer compensation objectives, program and rationale. As a result, the Board of Directors implemented the same objectives, program and rationale for the compensation of our named executive officers in fiscal year 2012,2013, as disclosed in the Compensation“Compensation Discussion and Analysis,Analysis”, the compensation tables and the accompanying narrative on pages 1819 through 5439 in this Proxy Statement.In addition, at
At the 2011 Annual Meeting of Shareholders a large majority of our shareholders approved, on a non-binding basis, the holding of the non-binding vote on the compensation of our named executive officers on an annual basis. As previously disclosed, the Board of Directors and management determined to implement an annual advisory vote on the compensation of our named executive officers. As a result, we are including the non-binding advisory resolution approving the compensation of our named executive officers again in this Proxy Statement. See Proposal Two“Proposal Two” on page 5971 of this Proxy Statement.
REPORT OF THE EXECUTIVE COMPENSATION,
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
We have reviewed and discussed the
Compensation“Compensation Discussion and
AnalysisAnalysis” section of this Proxy Statement with management. Based on that review and discussion, we have recommended to the Board of Directors that the
Compensation“Compensation Discussion and
AnalysisAnalysis” section be included in this Proxy Statement.
|
| |
| | THE EXECUTIVE COMPENSATION, NOMINATING AND |
| | CORPORATE GOVERNANCE COMMITTEE |
| | |
| | Jeremiah J. Sheehan,Chairman |
| | Charles H. Foster, Jr. |
| | Thomas H. Johnson |
Richmond, Virginia
June 5, 2012
May 24, 2013
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation and Governance Committee during fiscal year 20122013 or as of the date of this Proxy Statement is or has been a Universal officer or employee, and none of our executive officers served on the Compensation and Governance Committee or board of any company that employed any member of our Compensation and Governance Committee or Board of Directors.
The individuals named below include the Chairman, President, and Chief Executive Officer, the Chief Financial Officer and the other named executive officers as of March 31, 2012.2013. Information relating to total compensation is provided, where applicable, for the fiscal years ended March 31, 2010, 2011, 2012, and 2012.2013.
SUMMARY COMPENSATION TABLE
Name and
Principal Position | | Fiscal
Year | | | Salary(1) | | | Stock
Awards(2) | | | Option
Awards(2) | | | Non-Equity
Incentive Plan
Compensation(3) | | | Change in Pension Value and Nonqualified Deferred
Compensation
Earnings(4),(5) | | | All Other
Compensation(6) | | | Total | |
| | | | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
| (a) | | (b) | | | (c) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | | | (j) | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| George C. Freeman, III | | | 2012 | | | | 775,000 | | | | 841,211 | | | | 359,572 | | | | 0 | | | | 1,878,900 | | | | 17,250 | | | | 3,871,933 | |
| Chairman, President, and | | | 2011 | | | | 775,000 | | | | 699,770 | | | | 317,299 | | | | 1,122,700 | | | | 900,896 | | | | 122,354 | | | | 3,938,019 | |
| Chief Executive Officer | | | 2010 | | | | 675,000 | | | | 974,550 | | | | 471,000 | | | | 1,313,200 | | | | 461,735 | | | | 80,675 | | | | 3,976,160 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| W. Keith Brewer | | | 2012 | | | | 545,000 | | | | 593,385 | | | | 253,640 | | | | 0 | | | | 1,961,747 | | | | 15,025 | | | | 3,368,797 | |
| Executive Vice President | | | 2011 | | | | 545,000 | | | | 493,522 | | | | 223,781 | | | | 789,500 | | | | 1,242,612 | | | | 97,634 | | | | 3,392,049 | |
| and Chief Operating Officer | | | 2010 | | | | 485,000 | | | | 701,676 | | | | 339,120 | | | | 943,600 | | | | 327,055 | | | | 64,125 | | | | 2,860,576 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| David C. Moore | | | 2012 | | | | 405,000 | | | | 331,598 | | | | 141,740 | | | | 0 | | | | 1,725,852 | | | | 14,970 | | | | 2,619,160 | |
| Senior Vice President and | | | 2011 | | | | 405,000 | | | | 276,225 | | | | 125,250 | | | | 488,900 | | | | 1,308,729 | | | | 75,626 | | | | 2,679,730 | |
| Chief Financial Officer | | | 2010 | | | | 370,000 | | | | 399,566 | | | | 193,110 | | | | 599,800 | | | | 616,481 | | | | 50,818 | | | | 2,229,775 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preston D. Wigner | | | 2012 | | | | 310,000 | | | | 191,978 | | | | 82,060 | | | | 0 | | | | 267,591 | | | | 13,728 | | | | 865,357 | |
| Vice President, General Counsel, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Secretary, and
Chief Compliance Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Ray M. Paul, Jr. | | | 2012 | | | | 317,500 | | | | 195,468 | | | | 83,552 | | | | 0 | | | | 1,061,825 | | | | 17,250 | | | | 1,675,595 | |
| Executive Vice President, | | | 2011 | | | | 317,500 | | | | 165,735 | | | | 75,150 | | | | 328,500 | | | | 812,460 | | | | 49,650 | | | | 1,748,995 | |
| Universal Leaf Tobacco Company, Inc. | | | 2010 | | | | 312,800 | | | | 256,632 | | | | 124,030 | | | | 434,600 | | | | 350,391 | | | | 39,611 | | | | 1,518,064 | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Fiscal Year | | Salary(1) | | Stock Awards(2) | | Option Awards(2) | | Non-Equity Incentive Plan Compensation(3) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) | | All Other Compensation(5) | | Total |
| | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| (a) | | (b) | | (c) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
| George C. Freeman, III | | 2013 | | 798,200 |
| | 1,428,252 |
| | — |
| | 1,343,400 |
| | 973,395 |
| | 17,790 |
| | 4,561,037 |
|
| Chairman, President, and Chief Executive Officer | | 2012 | | 775,000 |
| | 841,211 |
| | 359,572 |
| | — |
| | 1,878,900 |
| | 17,250 |
| | 3,871,933 |
|
| | 2011 | | 775,000 |
| | 699,770 |
| | 317,299 |
| | 1,122,700 |
| | 900,896 |
| | 122,354 |
| | 3,938,019 |
|
| | | | | | | | | | | | | | | | | |
| W. Keith Brewer | | 2013 | | 561,300 |
| | 1,004,304 |
| | — |
| | 944,700 |
| | 988,163 |
| | 21,596 |
| | 3,520,063 |
|
| Executive Vice President and Chief Operating | | 2012 | | 545,000 |
| | 593,385 |
| | 253,640 |
| | — |
| | 1,961,747 |
| | 15,025 |
| | 3,368,797 |
|
| Officer | | 2011 | | 545,000 |
| | 493,522 |
| | 223,781 |
| | 789,500 |
| | 1,242,612 |
| | 97,634 |
| | 3,392,049 |
|
| | | | | | | | | | | | | | | | | |
| David C. Moore | | 2013 | | 417,100 |
| | 559,776 |
| | — |
| | 585,000 |
| | 870,773 |
| | 14,986 |
| | 2,447,635 |
|
| Senior Vice President and Chief Financial Officer | | 2012 | | 405,000 |
| | 331,598 |
| | 141,740 |
| | — |
| | 1,725,852 |
| | 14,970 |
| | 2,619,160 |
|
| | | 2011 | | 405,000 |
| | 276,225 |
| | 125,250 |
| | 488,900 |
| | 1,308,729 |
| | 75,626 |
| | 2,679,730 |
|
| | | | | | | | | | | | | | | | | |
| Preston D. Wigner | | 2013 | | 319,300 |
| | 325,164 |
| | — |
| | 383,900 |
| | 175,984 |
| | 12,616 |
| | 1,216,964 |
|
| Vice President, General Counsel, and Secretary | | 2012 | | 310,000 |
| | 191,978 |
| | 82,060 |
| | — |
| | 267,591 |
| | 13,728 |
| | 865,357 |
|
| | | | | | | | | | | | | | | | | |
| Theodore G. Broome | | 2013 | | 298,700 |
| | 304,584 |
| | — |
| | 359,200 |
| | 275,875 |
| | 12,609 |
| | 1,250,968 |
|
| Executive Vice President and Sales Director Universal Leaf Tobacco Co., Inc. | | | | | | | | | | | | | | | | |
| |
(1) | Salary amounts include cash compensation earned by each named executive officer during fiscal years 2010, 2011, 2012, and 2012,2013, where applicable, as well as any amounts earned in such fiscal years, but contributed into the 401(k) Plan and/or deferred at the election of the named executive officer into our deferred compensation program. Mr. Wigner became a named executive officer in fiscal year 2012 and therefore summary compensation information is presented only for fiscal yearyears 2012 and 2013 in accordance with Question and Answer 119.01 of the SEC’sSEC's Compliance and Disclosure Interpretations of Regulation S-K. Mr. Broome became a named executive officer in fiscal year 2013 and, therefore, summary compensation information is presented only for fiscal year 2013 in accordance with Question and Answer 119.01 of the SEC's Compliance and Disclosure Interpretations of Regulation S-K. For a discussion of the deferred compensation program and amounts deferred by the named executive officers in fiscal year 2012,2013, including earnings on amounts deferred, see“Nonqualified “Non-qualified Deferred Compensation” beginning on page 4652 of this Proxy Statement. |
| |
(2) | The amount represents the aggregate grant date fair value of stock or options awarded in the applicable fiscal year in accordance with FASB ASC Topic 718. This amount does not reflect our accounting expense for these award(s) during the year and does not correspond to the actual cash value that will be recognized by the named executive officer when received. Performance Share awards do not have dividend rights and therefore reflect a lower grant date fair value than the closing price of the Company’sour Common Stock on the date of grant. For fiscal years 2010, 2011, 2012, and 20122013 Performance Share awards, the grant date fair market value per share was $29.67, $33.95$33.95, $31.95 and $31.95,$38.14, respectively. Amounts for fiscal years 2010, 2011, 2012, and 20122013 include Performance Share awards calculated at target levels. If these Performance Share awards paid at maximum (150% of target) the aggregate grant fair value of all stock awards for each of the named executive officers would have been at the time of the grant: for fiscal 2010,year 2011, Mr. G. Freeman: $667,575;$861,033; Mr. Brewer: $480,654; Mr. Moore: $273,705;$607,255; and Mr. Paul: $175,795;D. Moore: $339,881; for fiscal 2011,year 2012, Mr. G. Freeman: $483,787;$1,033,709; Mr. Brewer: $341,197;$729,173; Mr. D. Moore: $190,969;$407,479; and Mr. Paul: $114,581;Wigner: $235,909; and for fiscal 2012,year 2013, Mr. G. Freeman: $577,497;$1,759,117; Mr. Brewer: $407,363;$1,236,958; Mr. D. Moore: $227,645;$689,452; Mr. Wigner $131,795;Wigner: $400,491; and Mr. Paul: $134,190.Broome: $375,143. Assumptions used in the calculation of these award amounts are included in Notes 1 and 1413 to the consolidated financial statements, included in our Annual Report on Form 10-K for the year ended March 31, 20102011 and Notes 1 and 13 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2011,2012, in Notes 1 and 13 to the consolidated financial statementstatements, included in our Annual Report on Form 10-K for the year ended March 31, 2012,2013, and incorporated by reference into this Proxy Statement. Beginning in fiscal year 2007, fair value expense for stock-based compensation was recognized ratably over the period from grant date to the earlier of (a) the vesting date of the award, or (b) the date the grantee is eligible to retire without forfeiting the award. For employees who are already eligible to retire at the date an award is granted, the total fair value of the award is recognized as expense at the date of grant. Information on individual equity awards granted to the named executive officers in fiscal year 20122013 is set forth in the section entitled“Grants “Grants of Plan-Based Awards” on page 3945 of this Proxy Statement. |
| |
(3) | The amounts represent cash awards to the named executive officers under our performance-based annual cash incentive plan for fiscal years 2010, 2011, 2012, and 2012,2013, where applicable, which is discussed in the section entitled“Annual “Annual Cash Incentives Awards” beginning on page 2631 of this Proxy Statement. While such amounts were earned for fiscal year 2010, years 2011, 2012 and 20122013 performance, they were not paid to the named executive officers until June 11, 201010, 2011 and June 10, 2011,4, 2013, respectively. No payments were due for fiscal year 2012 as performance was below the lower threshold. |
| |
(4) | The amounts represent the actuarial increases in the present values of the named executive officers’officers' benefits under our pension plans during fiscal years 2010, 2011, 2012 and 2012,2013, as applicable, determined using interest rate and mortality rate assumptions consistent with those used in our financial statements. For all named executive officers, the amounts only reflect changes in pension value because they had no above market interest earnings for fiscal years 2010, 2011, 2012 and 2012.2013. For additional information on our pension plans, see the section entitled“Retirement “Retirement and Post-Termination Compensation”on page 2936 of this Proxy Statement and the tables entitled“Pension “Pension Benefits” on page 4450 of this Proxy Statement and“Nonqualified “Non-qualified Deferred Compensation” on page 4652 of this Proxy Statement. For a full description of the pension plan assumptions used by us for financial reporting purposes for fiscal years 2010, 2011, 2012 and 2012,2013, see Note 11 to our consolidated financial statements, which is included in our Annual Report on Form 10-K for the year ended March 31, 2012,2013, and incorporated by reference into this Proxy Statement. |
| |
(5) | We previously provided funding payments, less applicable tax withholding, that were used for individual trusts for covered officers with vested accrued benefits under the Benefit Restoration Plan. These amounts are not included in the“Summary Compensation Table” because they do not represent compensation or earnings to the named executive officers. Instead, these amounts offset benefits otherwise payable by us at the named executive officers’ retirement so they are not intended to increase total promised benefits to a named executive officer. Pursuant to the Benefit Restoration Plan, participants were able to withdraw from their individual trusts current contributions deposited by us provided such withdrawal occurred within ten business days after we made the deposit. During fiscal year 2010, the following amounts were deposited in individual trusts for our named executive officers with respect to the present value of projected benefits expected to be earned through December 31, 2009, under our retirement plans as follows: Mr. Freeman, $247,079; Mr. Brewer, $228,574; Mr. D. Moore, $387,399; and Mr. Paul, $170,981. For fiscal years after 2010, there were no amounts deposited in individual trusts for our named executive officers. Additional information regarding the Benefit Restoration Plan is set forth in the section entitled“Benefit Restoration Plan” on page 32 of this Proxy Statement. |
| (6) | The table below reflects the types and dollar amounts of perquisites, additional compensation, and other personal benefits provided to the named executive officers during fiscal year 2012.2013. For purposes of computing the dollar amounts of the items listed below, we used the actual out-of-pocket costs to us of providing the perquisite or other personal benefit to the named executive officer. The named executive officers paid any taxes associated with these benefits without reimbursement from us. Each perquisite and personal benefit included in the table below is described in more detail in the narratives immediately following the table: |
| Column (i) Components | | G.C.
Freeman, III | | | W.K.
Brewer | | | D.C.
Moore | | | P.D.
Wigner | | | R.M.
Paul, Jr. | |
| | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
| | | | | | | | | | | | | | | | |
| Professional Fees(a) | | | — | | | | 1,575 | | | | 1,500 | | | | — | | | | — | |
| Executive Insurance(b) | | | — | | | | — | | | | — | | | | — | | | | — | |
| 401(k) Match(c) | | | 12,250 | | | | 12,250 | | | | 12,250 | | | | 12,726 | | | | 12,250 | |
| Matching Gifts(d) | | | 5,000 | | | | 1,200 | | | | 1,220 | | | | 1,002 | | | | 5,000 | |
| TOTALS | | | 17,250 | | | | 15,025 | | | | 14,970 | | | | 13,728 | | | | 17,250 | |
|
| | | | | | | | | | | | | | | |
| Column (i) Components | | G.C. Freeman, III | | W.K. Brewer | | D.C. Moore | | P.D. Wigner | | T.G. Broome |
| | | ($) | | ($) | | ($) | | ($) | | ($) |
Professional Fees (a) | | — |
| | 7,692 |
| | 1,410 |
| | — |
| | — |
|
Executive Insurance (b) | | — |
| | — |
| | — |
| | — |
| | — |
|
401(k) Match (c) | | 12,790 |
| | 12,704 |
| | 12,651 |
| | 12,616 |
| | 12,609 |
|
Matching Gifts (d) | | 5,000 |
| | 1,200 |
| | 925 |
| | — |
| | — |
|
| TOTALS | | 17,790 |
| | 21,596 |
| | 14,986 |
| | 12,616 |
| | 12,609 |
|
| |
(a) | Financial Planning and Tax Preparation Services. Only three of our executives are eligible to be reimbursed for financial planning and tax preparation services they incur during the year, subject to an annual cap of $15,000. All reimbursed amounts paid to our named executive officers during fiscal year 20122013 pursuant to our financial planning and tax preparation policy are individually disclosed in the perquisites table above. |
| |
(b) | Executive Insurance Program. Up until fiscal year 2012, we provided certain executives with executive life insurance policies in lieu of participation in our standard group life insurance program. The purpose of the executive life insurance program, which we called the Executive Insurance Program, was to provide our executive officers with the opportunity to participate in a policy that the executive officer owns directly and retains after retirement or termination of employment, and would provide substantially more post-retirement coverage than the group term plan provides participants. During fiscal year 2011, the Compensation and Governance Committee approved the discontinuation of future company contributions to executive insurance policies for all active participants in the plan; inclusive of our named executive officers. In lieu of this coverage, the effected participants became eligible for coverage under our standard group life program. As a result of this change, our named executive officers participated in the same benefit plan as all other salaried employees in fiscal 2012.years 2012 and 2013. The Company, therefore, did not provide a perquisite or other personal benefit during fiscal year 2012.years 2012 and 2013. |
| |
(c) | 401(k) Company Match.Each named executive officer is eligible to participate in the 401(k) Plan, which offers them an opportunity to defer income and receive matching contributions from us subject to certain limits. Company contributions made to the named executive officers during fiscal year 20122013 are set forth in the table above. Information about the 401(k) Plan is set forth in the section entitled“Deferred “Deferred Income Plans” beginning on page 3337 of this Proxy Statement. |
| |
(d) | Matching Gifts.Gifts. Each named executive officer is eligible to participate in our matching gifts program in which our charitable foundation matches employees’employees' contributions to charities. The maximum amount applicable to all participants that can be matched in any fiscal year of our foundation is $5,000 per employee. Each of the named executive officers participated in the matching gifts program in amounts equal to or below the maximum amount. |
Compensation Risk Assessment
As part of its oversight of our executive compensation program, the Compensation and Governance Committee considers the impact of our executive compensation program, and the incentives created by the compensation awards that it administers, on our risk profile. The Committee has implemented compensation program design features to mitigate the risk that our compensation programs encourage misconduct or imprudent risk-taking. In addition, we review all of our compensation policies and procedures, including the incentives that they create and factors that may reduce the likelihood of excessive risk taking, to determine whether they present a significant risk to us. At the Compensation and Governance Committee’sCommittee's direction, our Senior Vice President and Chief Financial Officer and his staff, our Vice President, General Counsel, Secretary and Chief Compliance Officer,Secretary, and a member of our internal audit team, with the advice of our outside legal counsel, conducted a risk review assessment of our compensation programs in fiscal 2012.year 2013. The Compensation and Governance Committee reviewed the findings of the assessment and concluded that our compensation programs are designed with the appropriate balance of risk and reward in relation to our overall business strategy and that the balance of compensation elements discourages excessive risk taking. The Compensation and Governance Committee, therefore determined that the risks arising from our compensation policies and practices for employees are not reasonably likely to have a material adverse effect on the Company. The Committee also concluded that the performance measures and performance targets do not encourage excessive or unnecessary risk taking. In its discussions, the Compensation and Governance Committee considered the attributes of our programs, including:
| · |
| Ÿ | the balance between annual and longer-term performance opportunities; |
| · |
| Ÿ | the balance between performance-based and non-performance based pay; |
| · |
| Ÿ | alignment of our programs with business strategies focused on long-term growth and sustained shareholder value, the performance goals established for senior management reflect the objectives set by the Compensation and Governance Committee to increase focus on the achievement of the Company’sCompany's strategic plan; |
| · |
| Ÿ | placement of an appropriate portion of our executive pay “at risk” and dependent upon the achievement of specific corporate and individual performance goals that are objectively determined with verifiable results. These corporate goals have pre-established thoughtful threshold, target and maximum award limits; |
| · |
| Ÿ | the use of multiple performance metrics that are based on the general performance of the corporation and the use of economic profit as a risk adjusted metric; |
| · |
| Ÿ | the use of rolling three year Performance Shares to lengthen the overall measurement period; |
| · |
| Ÿ | the Compensation and Governance Committee’sCommittee's ability to exercise negative discretion and to consider non-financial and other qualitative performance factors in determining actual compensation payouts; |
| · |
| Ÿ | stock ownership guidelines that are reasonable and align executives’executives' short- and long-term interests with those of our shareholders; and |
| · |
| Ÿ | the recoupment policy adopted in 2008 to authorize the potential recovery or adjustment of cash incentive awards and long-term equity awards paid to named executive officers and other recipients in the event there was a restatement of incorrect financial results and upon the occurrence of certain specified events. |
Effective with the long-term equity awards
to be granted in fiscal year 2013, the Compensation and Governance Committee suspended the inclusion of SARs in the
Company’sCompany's portfolio of equity awards. An executive holding SARs receives financial benefit when the stock price increases, but does not have the corresponding downside if the stock price declines. The Compensation and Governance Committee determined that this may incentivize executives to pursue short-term or riskier strategies and, therefore, no longer represents an effective component of our executive compensation program.
GRANTS OF PLAN-BASED AWARDS
The following table presents information regarding grants of plan-based awards to the named executive officers during the fiscal year ended March 31, 2012.| Name and | | Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards(1) | | | Estimated Future Payouts
Under Equity
Incentive Plan Awards(2) | | | All
Other
Stock
Awards:
Number
of Shares
of Stock | | | All Other
Option
Awards:
Number of
Securities
Underlying | | | Exercise
or Base
Price of
Option | | | Market
Price of
Option
Awards on | | | Grant
Date Fair
Value of
Stock
and
Option | |
| Grant Date | | Threshold | | | Target | | | Max. | | | Threshold | | | Target | | | Max. | | | or Units(3) | | | Options(4) | | | Awards | | | Grant Date | | | Awards(5) | |
| | | ($) | | | ($) | | | ($) | | | (#) | | | (#) | | | (#) | | | (#) | | | (#) | | | ($/Sh) | | | ($/Sh) | | | ($) | |
| (a & b) | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | | | (j) | | | (k) | | | (l) | | | (m) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| George C. Freeman, III | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0 | | | | 775,000 | | | | 1,550,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 6/7/2011 | | | | | | | | | | | | | | | 0 | | | | 12,050 | | | | 18,075 | | | | | | | | | | | | | | | | 37.86 | | | | 384,998 | |
| 6/7/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | 12,050 | | | | | | | | 37.86 | | | | 37.86 | | | | 456,213 | |
| 6/7/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 48,200 | | | | 37.86 | | | | 37.86 | | | | 359,572 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| W. Keith Brewer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0 | | | | 545,000 | | | | 1,090,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 6/7/2011 | | | | | | | | | | | | | | | 0 | | | | 8,500 | | | | 12,750 | | | | | | | | | | | | | | | | 37.86 | | | | 271,575 | |
| 6/7/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | 8,500 | | | | | | | | 37.86 | | | | 37.86 | | | | 321,810 | |
| 6/7/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 34,000 | | | | 37.86 | | | | 37.86 | | | | 253,640 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| David C. Moore | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0 | | | | 337,500 | | | | 675,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 6/7/2011 | | | | | | | | | | | | | | | 0 | | | | 4,750 | | | | 7,125 | | | | | | | | | | | | | | | | 37.86 | | | | 151,763 | |
| 6/7/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,750 | | | | | | | | 37.86 | | | | 37.86 | | | | 179,835 | |
| 6/7/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 19,000 | | | | 37.86 | | | | 37.86 | | | | 141,740 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preston D. Wigner | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0 | | | | 221,400 | | | | 442,800 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 6/7/2011 | | | | | | | | | | | | | | | 0 | | | | 2,750 | | | | 4,125 | | | | | | | | | | | | | | | | 37.86 | | | | 87,863 | |
| 6/7/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,750 | | | | | | | | 37.86 | | | | 37.86 | | | | 104,115 | |
| 6/7/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11,000 | | | | 37.86 | | | | 37.86 | | | | 82,060 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Ray M. Paul, Jr. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 0 | | | | 226,800 | | | | 453,600 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 6/7/2011 | | | | | | | | | | | | | | | 0 | | | | 2,800 | | | | 4,200 | | | | | | | | | | | | | | | | 37.86 | | | | 89,460 | |
| 6/7/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,800 | | | | | | | | 37.86 | | | | 37.86 | | | | 106,008 | |
| 6/7/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11,200 | | | | 37.86 | | | | 37.86 | | | | 83,552 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | All Other Stock Awards: Number of Shares of Stock or Units(3) | | All Other Option Awards: Number of Securities Underlying Options | | Exercise or Base Price of Option Awards | | Market Price of Option Awards on Grant Date | | Grant Date Fair Value of Stock and Option Awards(4) |
| | Threshold | | Target | | Max. | | Threshold | | Target | | Max. | | | | | |
| | | ($) | | ($) | | ($) | | (#) | | (#) | | (#) | | (#) | | (#) | | ($/Sh) | | ($/Sh) | | ($) |
| (a & b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | | (k) | | (l) | | (m) |
| | | | | | | | | | | | | | | | | | | | | | | |
| George C. Freeman, III | | | | | | | | | | | | | | | | | | | | |
| | | 0 |
| | 798,200 |
| | 1,596,400 |
| | | | | | | | | | | | | | | | |
| 6/5/2012 | | | | | | | | 0 |
| | 17,350 |
| | 26,025 |
| | | | | | | | 44.18 |
| | 661,729 |
|
| 6/5/2012 | | | | | | | | | | | | | | 17,350 |
| | | |
| | 44.18 |
| | 766,523 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| W. Keith Brewer | | | | | | | | | | | | | | | | | | | | |
| | | 0 |
| | 561,300 |
| | 1,122,600 |
| | | | | | | | | | | | | | | | |
| 6/5/2012 | | | | | | | | 0 |
| | 12,200 |
| | 18,300 |
| | | | | | | | 44.18 |
| | 465,308 |
|
| 6/5/2012 | | | | | | | | | | | | | | 12,200 |
| | | |
| | 44.18 |
| | 538,996 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| David C. Moore | | | | | | | | | | | | | | | | | | | | |
| | | 0 |
| | 347,600 |
| | 695,200 |
| | | | | | | | | | | | | | | | |
| 6/5/2012 | | | | | | | | 0 |
| | 6,800 |
| | 10,200 |
| | | | | | | | 44.18 |
| | 259,352 |
|
| 6/5/2012 | | | | | | | | | | | | | | 6,800 |
| | | |
| | 44.18 |
| | 300,424 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Preston D. Wigner | | | | | | | | | | | | | | | | | | | | |
| | | 0 |
| | 228,100 |
| | 456,200 |
| | | | | | | | | | | | | | | | |
| 6/5/2012 | | | | | | | | 0 |
| | 3,950 |
| | 5,925 |
| | | | | | | | 44.18 |
| | 150,653 |
|
| 6/5/2012 | | | | | | | | | | | | | | 3,950 |
| | | |
| | 44.18 |
| | 174,511 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Theodore G. Broome | | | | | | | | | | | | | | | | | | | | |
| | | 0 |
| | 213,400 |
| | 426,800 |
| | | | | | | | | | | | | | | | |
| 6/5/2012 | | | | | | | | 0 |
| | 3,700 |
| | 5,550 |
| | | | | | | | 44.18 |
| | 141,118 |
|
| 6/5/2012 | | | | | | | | | | | | | | 3,700 |
| | | |
| | 44.18 |
| | 163,466 |
|
| |
(1) | Amounts represent potential annual cash incentive awards for fiscal year 2012.2013. The actual amount of the annual cash incentive award earned by each named executive officer for fiscal year 20122013 is reported in Column (g),“Non-Equity “Non-Equity Incentive Plan Compensation,”in the“Summary “Summary Compensation Table” on page 3641 of this Proxy Statement. For additional information with respect to the annual cash incentive awards under the Incentive Plan, see the section entitled“Annual “Annual Cash Incentives Awards” beginning on page 2631 of this Proxy Statement. |
| | |
| |
(2) | Amounts represent potential vesting of Performance Shares granted during fiscal year 2012.2013. Performance Shares vest in the event the three yearthree-year performance measures corresponding to the Performance Shares are met or exceeded. For additional information with respect to Performance Shares granted pursuant to our 2007 Stock Incentive Plan, see the section entitled“Long-Term “Long-Term Equity Participation” beginning on page 2833 of this Proxy Statement and in Column (g) in the table entitled“Outstanding “Outstanding Equity Awards at Fiscal Year End” on page 4047 of this Proxy Statement. |
| | |
| |
(3) | Amounts represent the award of restricted stock units. Each restricted stock unit will convert one-for-one into shares of Common Stock upon vesting. Additional information with respect to restricted stock unit awards is set forth in the section entitled“Long-Term “Long-Term Equity Participation” beginning on page 2833 of this Proxy Statement, and in Column (i) in the table entitled“Outstanding “Outstanding Equity Awards at Fiscal Year End” on page 4047 of this Proxy Statement. |
| | |
| (4) | Each SAR represents the right to receive from us upon exercise an amount, payable in shares of Common Stock, equal to the excess, if any, of the fair market value of one share of Common Stock on the date of exercise over the base value per share. SARs granted during fiscal year 2012 were assigned an initial base value on the date of grant equal to the price of a share of our Common Stock on the date of grant. This process is dictated by the 2007 Stock Incentive Plan. For additional information with respect to the SAR awards, see the section entitled“Long-Term Equity Participation” beginning on page 28 of this Proxy Statement. |
(4) | | |
| (5) | Represents the grant date fair value of the award determined in accordance with FASB ASC Topic 718. The full grant date fair value of the Performance Shares is calculated at the target performance level and will vest, if at all, at the end of a three-year measurement period, if certain performance targets are met. Amounts for Performance Share awards are determined assuming a price per share of $31.95,$38.14, which represents a discount to the closing price of Common Stock as of the date of grant due to the lack of dividend rights and represents the grant date fair value of the award determined in accordance with FASB ASC Topic 718. Each Performance Share will convert one-for-one into a share of Common Stock upon vesting if the performance target is met. Grant date fair value for the restricted stock unit awards is based on the grant date fair value of the underlying shares of Common Stock. Grant date fair value of SARs is $7.46 per SAR based on a Black-Scholes option pricing model for use in valuing executive stock options. The actual value, if any, that a named executive officer may realize upon exercise of SARs will depend on the excess of the stock price over the base value on the date of exercise, so there is no assurance that the value realized by a named executive officer will be at or near the value estimated by the Black-Scholes model. The assumptions used in determining the grant date fair values of these awards are set forth in Note 13 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2012,2013, and incorporated by reference into this Proxy Statement. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table presents information concerning the number and value of outstanding restricted stock units, stock options, Performance Shares, and SARs held by the named executive officers as of March 31, 2012.| | | Option Awards | | | Stock Awards | |
Name and Grant
Date | | Number of
Securities
Underlying
Unexercised
Options
Exercisable | | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable(1) | | | Option
Exercise
Price | | | Option
Expiration
Date | | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested(1) | | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested(2) | | | Number of
Shares or
Units of
Stock That
Have Not
Vested(1) | | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(2),(3) | |
| | | (#) | | | (#) | | | ($) | | | | | (#) | | | ($) | | | (#) | | | ($) | |
| (a) | | (b) | | | (c) | | | (e) | | | (f) | | (g) | | | (h) | | | (i) | | | (j) | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| George C. Freeman, III | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 17, 2004 | | | 4,144 | | | | | | | | 47.28 | | | 5-Dec-12 | | | | | | | | | | | | | | | | |
| December 17, 2004 | | | 5,671 | | | | | | | | 48.21 | | | 5-Dec-12 | | | | | | | | | | | | | | | | |
| May 24, 2007 | | | 31,800 | | | | | | | | 62.66 | | | 23-May-17 | | | | | | | | | | | | | | | | |
| May 28, 2008 | | | 24,200 | | | | | | | | 51.32 | | | 27-May-18 | | | | | | | | | | | | | | | | |
| May 27, 2009 | | | | | | | 20,000 | | | | 35.30 | | | 26-May-19 | | | | | | | | | | | | | | | | |
| June 8, 2010 | | | 12,666 | | | | 25,334 | | | | 39.71 | | | 7-Jun-20 | | | | | | | | | | | | | | | | |
| June 7, 2011 | | | | | | | 48,200 | | | | 37.86 | | | 6-Jun-21 | | | | | | | | | | | | | | | | |
| May 24, 2007 | | | | | | | | | | | | | | | | | | | | | | | | | 9,730 | | | | 453,418 | |
| May 28, 2008 | | | | | | | | | | | | | | | | | | | | | | | | | 7,162 | | | | 333,749 | |
| May 27, 2009 | | | | | | | | | | | | | | | | | | | | | | | | | 16,941 | | | | 789,451 | |
| June 8, 2010 | | | | | | | | | | | | | | | | | | | | | | | | | 10,291 | | | | 479,561 | |
| June 7, 2011 | | | | | | | | | | | | | | | | | | | | | | | | | 12,469 | | | | 581,055 | |
| May 27, 2009 | | | | | | | | | | | | | | | | | 15,000 | | | | 699,000 | | | | | | | | | |
| June 8, 2010 | | | | | | | | | | | | | | | | | 9,500 | | | | 442,700 | | | | | | | | | |
| June 7, 2011 | | | | | | | | | | | | | | | | | 12,050 | | | | 561,530 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| W. Keith Brewer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| May 24, 2007 | | | 24,400 | | | | | | | | 62.66 | | | 23-May-17 | | | | | | | | | | | | | | | | |
| May 28, 2008 | | | 17,800 | | | | | | | | 51.32 | | | 27-May-18 | | | | | | | | | | | | | | | | |
| May 27, 2009 | | | | | | | 14,400 | | | | 35.30 | | | 26-May-19 | | | | | | | | | | | | | | | | |
| June 8, 2010 | | | 8,933 | | | | 17,867 | | | | 39.71 | | | 7-Jun-20 | | | | | | | | | | | | | | | | |
| June 7, 2011 | | | | | | | 34,000 | | | | 37.86 | | | 6-Jun-21 | | | | | | | | | | | | | | | | |
| May 24, 2007 | | | | | | | | | | | | | | | | | | | | | | | | | 7,464 | | | | 347,822 | |
| May 28, 2008 | | | | | | | | | | | | | | | | | | | | | | | | | 5,266 | | | | 245,396 | |
| May 27, 2009 | | | | | | | | | | | | | | | | | | | | | | | | | 12,198 | | | | 568,427 | |
| June 8, 2010 | | | | | | | | | | | | | | | | | | | | | | | | | 7,259 | | | | 338,269 | |
| June 7, 2011 | | | | | | | | | | | | | | | | | | | | | | | | | 8,795 | | | | 409,847 | |
| May 27, 2009 | | | | | | | | | | | | | | | | | 10,800 | | | | 503,280 | | | | | | | | | |
| June 8, 2010 | | | | | | | | | | | | | | | | | 6,700 | | | | 312,220 | | | | | | | | | |
| June 7, 2011 | | | | | | | | | | | | | | | | | 8,500 | | | | 396,100 | | | | | | | | | |
| | | Option Awards | | | Stock Awards | |
Name and Grant
Date | | Number of
Securities
Underlying
Unexercised
Options
Exercisable | | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable(1) | | | Option
Exercise
Price | | | Option
Expiration
Date | | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested(1) | | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested(2) | | | Number of
Shares or
Units of
Stock That
Have Not
Vested(1) | | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(2),(3) | |
| | | (#) | | | (#) | | | ($) | | | | | (#) | | | ($) | | | (#) | | | ($) | |
| (a) | | (b) | | | (c) | | | (e) | | | (f) | | (g) | | | (h) | | | (i) | | | (j) | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| David C. Moore | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| May 24, 2005 | | | 6,000 | | | | | | | | 46.34 | | | 23-May-15 | | | | | | | | | | | | | | | | |
| May 24, 2007 | | | 15,000 | | | | | | | | 62.66 | | | 23-May-17 | | | | | | | | | | | | | | | | |
| May 28, 2008 | | | 10,600 | | | | | | | | 51.32 | | | 27-May-18 | | | | | | | | | | | | | | | | |
| May 27, 2009 | | | | | | | 8,200 | | | | 35.30 | | | 26-May-19 | | | | | | | | | | | | | | | | |
| June 8, 2010 | | | 5,000 | | | | 10,000 | | | | 39.71 | | | 7-Jun-20 | | | | | | | | | | | | | | | | |
| June 7, 2011 | | | | | | | 19,000 | | | | 37.86 | | | 6-Jun-21 | | | | | | | | | | | | | | | | |
| May 24, 2007 | | | | | | | | | | | | | | | | | | | | | | | | | 4,588 | | | | 213,801 | |
| May 28, 2008 | | | | | | | | | | | | | | | | | | | | | | | | | 3,138 | | | | 146,231 | |
| May 27, 2009 | | | | | | | | | | | | | | | | | | | | | | | | | 6,947 | | | | 323,730 | |
| June 8, 2010 | | | | | | | | | | | | | | | | | | | | | | | | | 4,062 | | | | 189,289 | |
| June 7, 2011 | | | | | | | | | | | | | | | | | | | | | | | | | 4,915 | | | | 229,039 | |
| May 27, 2009 | | | | | | | | | | | | | | | | | 6,150 | | | | 286,590 | | | | | | | | | |
| June 8, 2010 | | | | | | | | | | | | | | | | | 3,750 | | | | 174,750 | | | | | | | | | |
| June 7, 2011 | | | | | | | | | | | | | | | | | 4,750 | | | | 221,350 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Preston D. Wigner | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| May 24, 2007 | | | 9,600 | | | | | | | | 62.66 | | | 23-May-17 | | | | | | | | | | | | | | | | |
| May 28, 2008 | | | 6,200 | | | | | | | | 51.32 | | | 27-May-18 | | | | | | | | | | | | | | | | |
| May 27, 2009 | | | 67 | | | | 4,533 | | | | 35.30 | | | 26-May-19 | | | | | | | | | | | | | | | | |
| June 8, 2010 | | | 2,533 | | | | 5,067 | | | | 39.71 | | | 7-Jun-20 | | | | | | | | | | | | | | | | |
| June 7, 2011 | | | | | | | 11,000 | | | | 37.86 | | | 6-Jun-21 | | | | | | | | | | | | | | | | |
| May 24, 2007 | | | | | | | | | | | | | | | | | | | | | | | | | 2,937 | | | | 136,864 | |
| May 28, 2008 | | | | | | | | | | | | | | | | | | | | | | | | | 1,836 | | | | 85,558 | |
| May 27, 2009 | | | | | | | | | | | | | | | | | | | | | | | | | 3,840 | | | | 178,944 | |
| June 8, 2010 | | | | | | | | | | | | | | | | | | | | | | | | | 2,059 | | | | 95,949 | |
| June 7, 2011 | | | | | | | | | | | | | | | | | | | | | | | | | 2,846 | | | | 132,624 | |
| May 27, 2009 | | | | | | | | | | | | | | | | | 3,400 | | | | 158,440 | | | | | | | | | |
| June 8, 2010 | | | | | | | | | | | | | | | | | 1,900 | | | | 88,540 | | | | | | | | | |
| June 7, 2011 | | | | | | | | | | | | | | | | | 2,750 | | | | 128,150 | | | | | | | | | |
| | | Option Awards | | | Stock Awards | |
Name and Grant
Date | | Number of
Securities
Underlying
Unexercised
Options
Exercisable | | | Number of
Securities
Underlying
Unexercised
Options
Unexercisable(1) | | | Option
Exercise
Price | | | Option
Expiration
Date | | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested(1) | | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested(2) | | | Number of
Shares or
Units of
Stock That
Have Not
Vested(1) | | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(2),(3) | |
| | | (#) | | | (#) | | | ($) | | | | | (#) | | | ($) | | | (#) | | | ($) | |
| (a) | | (b) | | | (c) | | | (e) | | | (f) | | (g) | | | (h) | | | (i) | | | (j) | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Ray M. Paul, Jr. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| May 24, 2007 | | | 11,200 | | | | | | | | 62.66 | | | 23-May-17 | | | | | | | | | | | | | | | | |
| May 28, 2008 | | | 7,200 | | | | | | | | 51.32 | | | 27-May-18 | | | | | | | | | | | | | | | | |
| May 27, 2009 | | | | | | | 5,268 | | | | 35.30 | | | 26-May-19 | | | | | | | | | | | | | | | | |
| June 8, 2010 | | | 3,000 | | | | 6,000 | | | | 39.71 | | | 7-Jun-20 | | | | | | | | | | | | | | | | |
| June 7, 2011 | | | | | | | 11,200 | | | | 37.86 | | | 6-Jun-21 | | | | | | | | | | | | | | | | |
| May 24, 2007 | | | | | | | | | | | | | | | | | | | | | | | | | 3,427 | | | | 159,698 | |
| May 28, 2008 | | | | | | | | | | | | | | | | | | | | | | | | | 2,130 | | | | 99,258 | |
| May 27, 2009 | | | | | | | | | | | | | | | | | | | | | | | | | 4,461 | | | | 207,883 | |
| June 8, 2010 | | | | | | | | | | | | | | | | | | | | | | | | | 2,438 | | | | 113,611 | |
| June 7, 2011 | | | | | | | | | | | | | | | | | | | | | | | | | 2,897 | | | | 135,000 | |
| May 27, 2009 | | | | | | | | | | | | | | | | | 3,950 | | | | 184,070 | | | | | | | | | |
| June 8, 2010 | | | | | | | | | | | | | | | | | 2,250 | | | | 104,850 | | | | | | | | | |
| June 7, 2011 | | | | | | | | | | | | | | | | | 2,800 | | | | 130,480 | | | | | | | | | |
2013. |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name and Grant Date | | Number of Securities Underlying Unexercised Options Exercisable | | Number of Securities Underlying Unexercised Options Unexercisable(1) | | Option Exercise Price | | Option Expiration Date | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(1) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2) | | Number of Shares or Units of Stock That Have Not Vested(1) | | Market Value of Shares or Units of Stock That Have Not Vested(2) |
| | | (#) | | (#) | | ($) | | | | (#) | | ($) | | (#) | | ($) |
| (a) | | (b) | | (c) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
| George C. Freeman, III | | | | | | | | | | | | | | | | |
| May 24, 2007 | | 31,800 |
| | | | 62.66 |
| | May 23, 2017 | | | | | | | | |
| May 28, 2008 | | 24,200 |
| | | | 51.32 |
| | May 27, 2018 | | | | | | | | |
| June 8, 2010 | |
|
| | 12,667 |
| | 39.71 |
| | June 7, 2020 | | | | | | | | |
| June 7, 2011 | | | | 32,134 |
| | 37.86 |
| | June 6, 2021 | | | | | | | | |
| May 28, 2008 | | | | | | | | | | | | | | 7,456 |
| | 417,834 |
|
| May 27, 2009 | | | | | | | | | | | | | | 17,638 |
| | 988,434 |
|
| June 8, 2010 | | | | | | | | | | | | | | 10,714 |
| | 600,413 |
|
| June 7, 2011 | | | | | | | | | | | | | | 12,982 |
| | 727,511 |
|
| June 5, 2012 | | | | | | | | | | | | | | 17,870 |
| | 1,001,435 |
|
| June 8, 2010 | | | | | | | | | | 9,500 |
| | 532,380 |
| | | | |
| June 7, 2011 | | | | | | | | | | 12,050 |
| | 675,282 |
| | | | |
| June 5, 2012 | | | | | | | | | | 17,350 |
| | 972,294 |
| | | | |
| | | | | | | | | | | | | | | | | |
| W. Keith Brewer | | | | | | | | | | | | | | | | |
| May 24, 2007 | | 24,400 |
| | | | 62.66 |
| | May 23, 2017 | | | | | | | | |
| June 8, 2010 | |
|
| | 8,934 |
| | 39.71 |
| | June 7, 2020 | | | | | | | | |
| June 7, 2011 | | | | 22,667 |
| | 37.86 |
| | June 6, 2021 | | | | | | | | |
| May 28, 2008 | | | | | | | | | | | | | | 5,482 |
| | 307,211 |
|
| May 27, 2009 | | | | | | | | | | | | | | 12,699 |
| | 711,652 |
|
| June 8, 2010 | | | | | | | | | | | | | | 7,557 |
| | 423,494 |
|
| June 7, 2011 | | | | | | | | | | | | | | 9,157 |
| | 513,158 |
|
| June 5, 2012 | | | | | | | | | | | | | | 12,565 |
| | 704,143 |
|
| June 8, 2010 | | | | | | | | | | 6,700 |
| | 375,468 |
| | | | |
| June 7, 2011 | | | | | | | | | | 8,500 |
| | 476,340 |
| | | | |
| June 5, 2012 | | | | | | | | | | 12,200 |
| | 683,688 |
| | | | |
| | | | | | | | | | | | | | | | | |
| David C. Moore | | | | | | | | | | | | | | | | |
| May 24, 2007 | | 15,000 |
| | | | 62.66 |
| | May 23, 2017 | | | | | | | | |
| June 8, 2010 | | | | 5,000 |
| | 39.71 |
| | June 7, 2020 | | | | | | | | |
| June 7, 2011 | | | | 12,667 |
| | 37.86 |
| | June 6, 2021 | | | | | | | | |
| May 28, 2008 | | | | | | | | | | | | | | 3,267 |
| | 183,083 |
|
| May 27, 2009 | | | | | | | | | | | | | | 7,232 |
| | 405,281 |
|
| June 8, 2010 | | | | | | | | | | | | | | 4,229 |
| | 236,993 |
|
| June 7, 2011 | | | | | | | | | | | | | | 5,118 |
| | 286,813 |
|
| June 5, 2012 | | | | | | | | | | | | | | 7,003 |
| | 392,448 |
|
| June 8, 2010 | | | | | | | | | | 3,750 |
| | 210,150 |
| | | | |
| June 7, 2011 | | | | | | | | | | 4,750 |
| | 266,190 |
| | | | |
| June 5, 2012 | | | | | | | | | | 6,800 |
| | 381,072 |
| | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name and Grant Date | | Number of Securities Underlying Unexercised Options Exercisable | | Number of Securities Underlying Unexercised Options Unexercisable(1) | | Option Exercise Price | | Option Expiration Date | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(1) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2) | | Number of Shares or Units of Stock That Have Not Vested(1) | | Market Value of Shares or Units of Stock That Have Not Vested(2) |
| | | (#) | | (#) | | ($) | | | | (#) | | ($) | | (#) | | ($) |
| (a) | | (b) | | (c) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
| Preston D. Wigner | | | | | | | | | | | | | | | | |
| May 24, 2007 | | 9,600 |
| | | | 62.66 |
| | May 23, 2017 | | | | | | | | |
| May 28, 2008 | | 6,200 |
| | | | 51.32 |
| | May 27, 2018 | | | | | | | | |
| June 8, 2010 | |
|
| | 2,534 |
| | 39.71 |
| | June 7, 2020 | | | | | | | | |
| June 7, 2011 | | | | 7,334 |
| | 37.86 |
| | June 6, 2021 | | | | | | | | |
| May 28, 2008 | | | | | | | | | | | | | | 1,911 |
| | 107,092 |
|
| May 27, 2009 | | | | | | | | | | | | | | 3,998 |
| | 224,048 |
|
| June 8, 2010 | | | | | | | | | | | | | | 2,144 |
| | 120,150 |
|
| June 7, 2011 | | | | | | | | | | | | | | 2,963 |
| | 166,047 |
|
| June 5, 2012 | | | | | | | | | | | | | | 4,068 |
| | 227,971 |
|
| June 8, 2010 | | | | | | | | | | 1,900 |
| | 106,476 |
| | | | |
| June 7, 2011 | | | | | | | | | | 2,750 |
| | 154,110 |
| | | | |
| June 5, 2012 | | | | | | | | | | 3,950 |
| | 221,358 |
| | | | |
| | | | | | | | | | | | | | | | | |
| Theodore G. Broome | | | | | | | | | | | | | | | | |
| May 24, 2007 | | 8,400 |
| | | | 62.66 |
| | May 23, 2017 | | | | | | | | |
| May 28, 2008 | | 5,600 |
| | | | 51.32 |
| | May 27, 2018 | | | | | | | | |
| June 8, 2010 | | | | 2,267 |
| | 39.71 |
| | June 7, 2020 | | | | | | | | |
| June 7, 2011 | | | | 6,934 |
| | 37.86 |
| | June 6, 2021 | | | | | | | | |
| May 28, 2008 | | | | | | | | | | | | | | 1,724 |
| | 96,613 |
|
| May 27, 2009 | | | | | | | | | | | | | | 3,529 |
| | 197,765 |
|
| June 8, 2010 | | | | | | | | | | | | | | 1,917 |
| | 107,429 |
|
| June 7, 2011 | | | | | | | | | | | | | | 2,800 |
| | 156,912 |
|
| June 5, 2012 | | | | | | | | | | | | | | 3,810 |
| | 213,512 |
|
| June 8, 2010 | | | | | | | | | | 1,700 |
| | 95,268 |
| | | | |
| June 7, 2011 | | | | | | | | | | 2,600 |
| | 145,704 |
| | | | |
| June 5, 2012 | | | | | | | | | | 3,700 |
| | 207,348 |
| | | | |
| |
(1) | Amounts in Column (c) represent unvested SARs. SARs vest within three years of the date of grant, with one-third of the SARs vesting on each anniversary date of the date of grant. Amounts in Column (g) represent Performance Shares. Performance Shares vest at the end of their corresponding three-year performance period if certain performance targets are met or exceeded. Amounts in Column (g) assume 100% vesting of the award, which represents the target amount payable. Each Performance Share converts one-for-one into a share of Common Stock upon vesting if the performance target is met. See“Compensation “Compensation Discussion and Analysis” beginning on page 1819 of this Proxy Statement. Amounts in Column (i) represent unvested restricted stock units and accumulated dividend equivalent rights. Restricted stock units have five-year cliff vesting, meaning all restricted stock units vest on the fifth anniversary of the date they are granted. At the time of vesting, restricted stock units are automatically converted into an equal number of shares of Common Stock without restriction, except in the case of certain executives who are named executive officers at the time of vesting, in which case some shares may remain restricted until the executives are no longer named executive officers or they retire.retire in order to attempt to preserve the Section 162(m) deduction. Restricted stock unit awards accumulate dividend equivalent rights, which track actual dividend amounts and are added to the total number of restricted stock units to be converted into shares of Common Stock at the time of vesting. |
| | |
| |
(2) | Based on the closing price of $46.60$56.04 for our Common Stock, as quoted on the NYSE on March 31, 2012,29, 2013, the last trading day of fiscal year 2012. |
| | 2013. |
| (3) | We have historically assigned an initial value to stock options granted by our Compensation and Governance Committee equal to the closing price of a share of Common Stock as quoted on the NYSE on the first trading day following the date of grant. As of May 24, 2007, the Compensation and Governance Committee changed this process for future awards by assigning an initial value to an award equal to the closing price of a share of Common Stock as quoted on the NYSE on the date of grant. |
OPTION EXERCISES AND STOCK VESTED
The following table presents information concerning the vesting of stock awards and the exercise of stock options and SARs for the named executive officers during the fiscal year ended March 31, 2012.2013. There were no other exercises of options, SARs, or similar instruments for the named executive officers during the fiscal year ended March 31, 2012.| | | Stock Awards | | | Option Awards | |
| Name | | Number of Shares
Acquired on
Vesting(1) | | | Value Realized on
Vesting | | | Number of Shares
Acquired on
Exercise(1) | | | Value Realized on
Exercise(2) | |
| | | (#) | | | ($) | | | (#) | | | ($) | |
| (a) | | (b) | | | (c) | | | (d) | | | (e) | |
| | | | | | | | | | | | | |
| George C. Freeman, III | | | 13,984 | | | | 574,377 | | | | 10,299 | | | | 472,675 | |
| W. Keith Brewer | | | 10,357 | | | | 425,107 | | | | 4,963 | | | | 211,672 | |
| David C. Moore | | | 7,657 | | | | 308,170 | | | | 4,722 | | | | 217,819 | |
| Preston D. Wigner | | | 4,780 | | | | 191,383 | | | | 1,967 | | | | 88,911 | |
| Ray M. Paul, Jr. | | | 6,382 | | | | 252,950 | | | | 2,205 | | | | 98,453 | |
2013. |
| | | | | | | | | | | | |
| | | Stock Awards | | Option Awards |
| Name | | Number of Shares Acquired on Vesting(1) | | Value Realized on Vesting | | Number of Shares Acquired on Exercise(1) | | Value Realized on Exercise(2) |
| | | (#) | | ($) | | (#) | | ($) |
| (a) | | (b) | | (c) | | (d) | | (e) |
| George C. Freeman, III | | 32,336 |
| | 1,476,770 |
| | 14,854 |
| | 738,645 |
|
| W. Keith Brewer | | 23,745 |
| | 1,084,465 |
| | 11,046 |
| | 544,450 |
|
| David C. Moore | | 13,863 |
| | 633,172 |
| | 12,904 |
| | 412,175 |
|
| Preston D. Wigner | | 8,069 |
| | 368,574 |
| | 3,774 |
| | 198,330 |
|
| Theodore G. Broome | | 7,097 |
| | 324,174 |
| | 10,053 |
| | 168,131 |
|
| |
(1) | Amounts represent the number of shares of Common Stock underlying restricted stock unitsawards vested and stock options and SARs exercised during fiscal year 2012.2013. The amounts in Column (b) represent the vesting of restricted stock awards that were granted in fiscal 2007year 2008 and the vesting of performance shares that were granted in fiscal 2009.year 2010. The amounts in Column (d) include shares of Common Stock withheld by us in connection with the cashless exercise of stock options by the named executive officers. The actual number of shares received by the named executive officers through the exercise of stock options, therefore, would be less than the number of shares underlying stock options exercised. SARs do not require the withholding of Common Stock upon exercise, so amounts in this column reflect shares of Common Stock acquired on the exercise of SARs would only include the shares of Common Stock received by the executive upon exercise. |
| | |
| |
(2) | Amounts associated with stock options were calculated by determining the difference between the market price of the underlying Common Stock at the time of exercise and the exercise or base price of the stock options. Amounts associated with SARs would be calculated by multiplying the market price of the Common Stock received by the number of shares acquired on exercise. |
The following table shows the actuarial present value of accumulated benefits as of March 31, 2012,2013, under each of our defined benefit plans, which are our only defined benefit plans that provide for payments or other benefits to the named executive officers at, following, or in connection with retirement.| Name | | Plan Name | | | Number of Years
Credited Service(1) | | | Present Value of
Accumulated
Benefit(2),(3) | | | Payments During
Last Fiscal Year | |
| | | | | | (#) | | | ($) | | | ($) | |
| (a) | | (b) | | | (c) | | | (d) | | | (e) | |
| | | | | | | | | | | | | |
| George C. Freeman, III | | | Pension Plan | | | | 14.75 | | | | 323,025 | | | | — | |
| | | Benefit Restoration Plan | | | | 14.75 | | | | 3,591,150 | | | | — | |
| W. Keith Brewer | | | Pension Plan | | | | 23.25 | | | | 641,980 | | | | — | |
| | | Benefit Restoration Plan | | | | 23.25 | | | | 4,400,636 | | | | — | |
| David C. Moore | | | Pension Plan | | | | 34.25 | | | | 1,069,456 | | | | — | |
| | | Benefit Restoration Plan | | | | 34.25 | | | | 4,244,601 | | | | — | |
| Preston D. Wigner | | | Pension Plan | | | | 9.00 | | | | 153,407 | | | | — | |
| | | Benefit Restoration Plan | | | | 9.00 | | | | 399,610 | | | | — | |
| Ray M. Paul, Jr. | | | Pension Plan | | | | 33.25 | | | | 961,808 | | | | — | |
| | | Benefit Restoration Plan | | | | 33.25 | | | | 2,613,780 | | | | — | |
|
| | | | | | | | | | | |
| Name | | Plan Name | | Number of Years Credited Service(1) | | Present Value of Accumulated Benefit(2) | | Payments During Last Fiscal Year |
| | | | | (#) | | ($) | | ($) |
| (a) | | (b) | | (c) | | (d) | | (e) |
| George C. Freeman, III | | Pension Plan | | 15.75 |
| | 397,052 |
| | — |
|
| | | Benefit Restoration Plan | | 15.75 |
| | 4,490,518 |
| | — |
|
| W. Keith Brewer | | Pension Plan | | 24.25 |
| | 760,374 |
| | — |
|
| | | Benefit Restoration Plan | | 24.25 |
| | 5,270,405 |
| | — |
|
| David C. Moore | | Pension Plan | | 35.25 |
| | 1,235,461 |
| | — |
|
| | | Benefit Restoration Plan | | 35.25 |
| | 4,949,369 |
| | — |
|
| Preston D. Wigner | | Pension Plan | | 10.00 |
| | 200,268 |
| | — |
|
| | | Benefit Restoration Plan | | 10.00 |
| | 528,733 |
| | — |
|
| Theodore G. Broome | | Pension Plan | | 17.00 |
| | 637,717 |
| | — |
|
| | | Benefit Restoration Plan | | 17.00 |
| | 1,077,159 |
| | — |
|
| |
(1) | We have not granted, and we do not have a policy with respect to granting, extra years of service to named executive officers under the Pension Plan or the Benefit Restoration Plan. Additional information with respect to the Pension Plan and the Benefit Restoration Plan is set forth in the section entitled“Retirement “Retirement and Post-Termination Compensation” beginning on page 3136 of this Proxy Statement. |
| | |
| |
(2) | Present value was determined assuming retirement at age 65 for the Pension Plan and Benefit Restoration Plan. The present value calculation used an interest rate consistent with assumptions used for our financial reporting under FASB ASC Topic 715, and post-retirement mortality assumption table RP2000 projected to 20122018 with white collar adjustment. Other assumptions made in the valuation are discussed in our Annual Report on Form 10-K for the year ended March 31, 2012,2013, in the section entitled“Pension “Pension and Other Post-Retirement Plans,” the section entitled“Critical “Critical Accounting Assumptions and Estimates,”and in Note 11 to the consolidated financial statements, and are incorporated by reference into this Proxy Statement. |
| | |
| (3) | The Compensation and Governance Committeeadopted amendments to the Benefit Restoration Plan that became effective April 1, 2009. One of the effects of the amendments was to reduce the valuation of the lump sum benefit payable to participants due to the use of a higher discount rate, the elimination of the administrative annuity interest factor, and the use of updated mortality tables. The amendments are discussed in more detail in the section entitled“Benefit Restoration Plan”beginning on page 32 of this Proxy Statement. |
Retirement Benefits
Our named executive officers are covered by the Pension Plan, the Benefit Restoration Plan, deferred income plans, and the 401(k) Plan. We also have Change of Control Agreements with some of our named executive officers addressing a change of control in our company. Additional details, and all amounts earned by our named executive officers or contributed by the company to our named executive officers through those plans, are disclosed in this Proxy Statement.
Defined Benefit Retirement Plan. Our salaried employees, including our named executive officers, participate in the Pension Plan, which is a defined benefit retirement plan. The Pension Plan is a company-funded, qualified plan under the Internal Revenue Code, with the purpose of providing a fixed benefit for the life of the participant (and/or the spouse if the joint and survivor option is elected) beginning at the time of the participant’sparticipant's retirement or termination. The Pension Plan also has survivor benefits for the participant’sparticipant's spouse. The Pension Plan benefit under normal retirement circumstances is a percentage of the participant’sparticipant's average compensation, multiplied by the participant’sparticipant's credited years of service under the Pension Plan. Average compensation is calculated by taking the highest average of annual salary and annual cash incentive awards for any three consecutive calendar-yearcalendar year periods during the participant’sparticipant's participation in the Pension Plan. The normal retirement benefit under the Pension Plan is calculated as follows: |
| | | |
| Base Benefit: | Designated Percentage of Average
Compensation | Multiplied by | All years of service |
| PLUS |
| Excess Benefit: | Designated Percentage of Average
Compensation less Covered
Compensation | Multiplied by | Participant’sParticipant's first 35 years of
service |
Covered compensation, for purposes of the excess benefit, is defined as the average of the Social Security Taxable Wage Base for the 35 calendar-year period ending in the year preceding the
executive’sexecutive's normal retirement age under the Social Security Act.
Benefits are paid as a straight life annuity for the
participant’sparticipant's lifetime for a single participant, or a 50% joint and survivor annuity, if elected, for married participants for their joint lifetime. Benefits are normally payable when the participant reaches age 65; however, participants may begin receiving early retirement benefits when they reach age 55 and elect to retire with at least five years of service. The early retirement benefit is reduced based on the
participant’sparticipant's age and years of service.
Benefit Restoration Plan. To the extent benefits payable to our employees at retirement pursuant to the Pension Plan exceed amounts that may be payable under applicable provisions of the Internal Revenue Code, such benefits will be paid under the Benefit Restoration Plan. The Benefit Restoration Plan is a non-qualified defined benefit pension plan that provides eligible individuals the difference between the benefits they would actually accrue under the Pension Plan, but for the maximum benefit limitations and the limitation on compensation pursuant to the Internal Revenue Code that may be recognized under the Pension Plan and deferrals of their compensation under DIP II or DIP III. Benefits under the Benefit Restoration Plan are paid in one lump sum payment at retirement except where Section 409A restrictions apply, and benefits under DIP II and DIP III are paid out at or after retirement in accordance with the election option chosen by a participant prior to deferral. The purpose of the Benefit Restoration Plan is not to provide employees with additional benefits, but to ensure that our employees who earn more than the amounts set forth in the Internal Revenue Code for maximum benefit limitations receive a retirement benefit that is proportionately equivalent to the benefit provided to our other salaried employees participating in the Pension Plan. We maintain the Pension Plan and Benefit Restoration Plan to ensure an overall competitive compensation and benefits offering and to attract and retain top talent. Our Compensation and Governance Committee believes it is essential that our overall compensation and benefits, including retirement benefits, be competitive in the market.
Certain participants in the Benefit Restoration Plan, including certain of our named executive officers, entered into agreements with Universal Leaf that provided for taxable cash compensation payments to be made by Universal Leaf to the participant to partially fund their Benefit Restoration Plan payment upon retirement. Under such agreements, the participant directed Universal Leaf to deposit the payments on behalf of the participant directly into an irrevocable trust established by the participant for this purpose. During fiscal year 2010, Universal Leaf elected to discontinue payments for benefits that accrue after calendar 2009. At retirement, the after-tax balance from each of the
participants’participants' agreements is used to offset the after-tax lump sum benefit payable to a participant under the Benefit Restoration Plan.
The retirement benefit under the Benefit Restoration Plan is paid in a lump sum. Like the Pension Plan, the benefit payable under the Benefit Restoration Plan normally is distributed when the participant reaches age 65. Participants may receive an early distribution of their retirement benefit when they reach age 55 and elect to retire with at least five years of service, but such early retirement benefit is reduced based on the
participant’sparticipant's age and years of service.
NONQUALIFIED
NON-QUALIFIED DEFERRED COMPENSATION
We offer all salaried employees, including our named executive officers, the opportunity to participate in our qualified deferred compensation plan, the 401(k) Plan. Participants can contribute percentages on a monthly basis up to 100% of total compensation excluding annual cash incentive awards, subject to statutory limitations. We match the monthly contributions up to 5% on a monthly basis, subject to a calendar year contribution limit of $12,500.$12,750. The company match becomes vested after the participant completes three years of service. All of our named executive officers participated in the 401(k) Plan in fiscal year 2012.2013.
In addition to our qualified deferred compensation plan, we have two
nonqualifiednon-qualified deferred compensation plans available to certain of our executives: DIP II and DIP III. The plans are designed to permit participants to accumulate additional income for retirement and other personal financial goals through the deferral of their annual cash incentive award and portions of their salary. Deferred compensation arrangements are common executive programs and we believe that these arrangements help us in the recruitment and retention of executive talent for which we are competing. The Company does not provide any contributions to either DIP II or DIP III.
DIP II and DIP III are non-qualified savings plans, with eligibility based on a participant’sparticipant's position in the Company and certain of its subsidiaries. Under DIP II and DIP III, participants elect to make contributions through the deferral of up to 50% of their salary, and up to 100% of their annual incentive award. DIP II and DIP III are unfunded and unsecured by us and provides the participants a variety of investment options from which to choose. These options are selected by the Pension Investment Committee of the Board of Directors. No named executive officers deferred income in DIP II in fiscal year 2012,2013, and Messrs.Mr. G. Freeman and Paul werewas the only named executive officersofficer who deferred income in DIP III in fiscal year 2012.2013.
The following table presents information concerning our deferred compensation plans that provide for the deferral of compensation of the named executive officers on a basis that is not tax qualified.
| Name | | Executive
Contributions
in FY 2012
(1) | | | Registrant
Contributions in FY
2012
(2) | | | Aggregate
Earnings
in FY 2012
(3) | | | Aggregate
Withdrawals/
Distributions
(4) | | | Aggregate
Balance at
FYE 2012
(5) | |
| | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
| | | | | | | | | | | | | | | | |
| George C. Freeman, III | | | 60,785 | | | | — | | | | 17,348 | | | | — | | | | 409,202 | |
| W. Keith Brewer | | | — | | | | — | | | | (3,340 | ) | | | — | | | | 73,635 | |
| David C. Moore | | | — | | | | — | | | | 12,125 | | | | — | | | | 403,349 | |
| Preston D. Wigner | | | — | | | | — | | | | 485 | | | | — | | | | 11,075 | |
| Ray M. Paul, Jr. | | | 46,050 | | | | — | | | | 23,338 | | | | — | | | | 466,232 | |
|
| | | | | | | | | | | | | | | |
| Name | | Executive Contributions in FY 2013(1) | | Registrant Contributions in FY 2013(2) | | Aggregate Earnings in FY 2013(3) | | Aggregate Withdrawals/ Distributions(4) | | Aggregate Balance at FYE 2013(5) |
| | | ($) | | ($) | | ($) | | ($) | | ($) |
| George C. Freeman, III | | 10,500 |
| | — |
| | 46,890 |
| | — |
| | 466,592 |
|
| W. Keith Brewer | | — |
| | — |
| | 6,924 |
| | — |
| | 80,559 |
|
| David C. Moore | | — |
| | — |
| | 52,424 |
| | — |
| | 455,773 |
|
| Preston D. Wigner | | — |
| | — |
| | 1,230 |
| | — |
| | 12,305 |
|
| Theodore G. Broome | | — |
| | — |
| | — |
| | — |
| | 0 |
|
| |
(1) | Amounts represent a portion of base salary and annual incentive awards deferred into DIP III. Additional information about DIP II and DIP III is set forth in the section entitled“Deferred “Deferred Income Plans” on page 3337 of this Proxy Statement. |
| | |
| |
(2) | DIP II and DIP III do not provide for company matches or contributions. |
| | |
| |
(3) | Amounts represent earnings on funds held for named executive officers in DIP II and DIP III. |
| | |
| |
(4) | DIP II and DIP III permit withdrawals under certain circumstances including hardship, and participants may elect to have annual deferrals distributed from DIP II or DIP III upon reaching age 65, or after a specified number of years after the compensation is deferred. |
| | |
| |
(5) | Amounts represent the balances at the end of fiscal year 20122013 in DIP II and DIP III for named executive officers. Executive contributions included in the aggregate balance that are reported as compensation to the named executive officers in the“Summary “Summary Compensation Table” in our 20112012 Proxy Statement and 20102011 Proxy Statement are as follows: Mr. G. Freeman: $23,300 (2011)$60,785 (2012) and $13,000 (2010)$23,300 (2011), Mr. Brewer: $0 (2011)$0 (2012) and $0 (2010)$0 (2011), Mr. D. Moore: $0 (2011)$0 (2012) and $0 (2010)$0 (2011), and Mr. Paul: $56,660 (2011) and $0 (2010)Wigner: $0 (2012). |
In addition to our qualified and non-qualified deferred compensation plans, the Company has taken the appropriate actions to maximize the deductibility of its compensation and benefit programs and avoid the limitations on deductibility under Section 162(m) of the Internal Revenue Code. Additional information about Section 162(m) is set forth in the section entitled“Limitations “Limitations on Deductibility of Compensation” on page 2327 of this Proxy Statement.
In May 2010
and 2012, the vesting of certain restricted stock units awards to Mr.
G. Freeman were subject to Section 162(m) and payment was deferred until Mr.
G. Freeman retires. The following table presents information concerning
that deferral.| Name | | Executive
Contributions
in FY 2012 | | | Registrant
Contributions in FY
2012
(1) | | | Aggregate
Earnings
in FY 2012
(2) | | | Aggregate
Withdrawals/
Distributions | | | Aggregate
Balance at
FYE 2012
(3) | |
| | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
| | | | | | | | | | | | | | | | |
| George C. Freeman, III | | | — | | | | — | | | | 16,576 | | | | — | | | | 154,293 | |
| W. Keith Brewer | | | — | | | | — | | | | — | | | | — | | | | — | |
| David C. Moore | | | — | | | | — | | | | — | | | | — | | | | — | |
| Preston D. Wigner | | | — | | | | — | | | | — | | | | — | | | | — | |
| Ray M. Paul, Jr. | | | — | | | | — | | | | — | | | | — | | | | — | |
|
| | | | | | | | | | | | | | | |
| Name | | Executive Contributions in FY 2013 | | Registrant Contributions in FY 2013(1) | | Aggregate Earnings in FY 2013(2) | | Aggregate Withdrawals/ Distributions | | Aggregate Balance at FYE 2013(3) |
| | | ($) | | ($) | | ($) | | ($) | | ($) |
| George C. Freeman, III | | — |
| | 162,903 |
| | 81,809 |
| | — |
| | 399,005 |
|
| W. Keith Brewer | | — |
| | — |
| | — |
| | — |
| | — |
|
| David C. Moore | | — |
| | — |
| | — |
| | — |
| | — |
|
| Preston D. Wigner | | — |
| | — |
| | — |
| | — |
| | — |
|
| Theodore G. Broome | | — |
| | — |
| | — |
| | — |
| | — |
|
| |
(1) | Amount represents the value of the restricted stock units on the vesting date of the awards. |
| |
(2) | Amount represents earnings and change in market value during fiscal year 2012.2013. |
| |
(3) | Amount represents market value of the restricted stock units on March 31, 2012.29, 2013. |
SUMMARY OF TERMINATION PAYMENTS AND BENEFITS
Potential Payments Upon Termination or Change of Control
We do not offer severance, employment, or retention agreements to our named executive officers. However, to ensure that we will have the continued dedicated service of certain executives, including some of our named executive officers, notwithstanding the possibility, threat, or occurrence of a change of control, we have Change of Control Agreements. We currently maintain Change of Control Agreements with only Messrs.
G. Freeman, Brewer, D. Moore, and Wigner. The Compensation and Governance Committee believes that the Change of Control Agreements serve the best interests of Universal Corporation and our shareholders by ensuring that if a hostile or friendly change of control is ever under consideration, our executives are able to perform their duties and responsibilities and advise the Board of Directors about the potential transaction in the best interests of shareholders, without being unduly influenced by the distracting uncertainty and risk associated with a change of control, such as fear of the economic consequences of losing their jobs as a result of a change of control. The terms and conditions in the Change of Control Agreements are identical for each executive
officer who has such an agreement.
A “change of control” is defined in the Change of Control Agreements, and is generally deemed to have occurred if:
| · |
| Ÿ | any individual, entity, or group acquires 20% or more of either the outstanding shares of Common Stock or the combined voting power of our outstanding voting securities; |
| · |
| Ÿ | a majority of our directors are replaced; |
| · |
| Ÿ | we reorganize, merge, consolidate, or sell all or substantially all of our assets except for certain situations in which control of outstanding shares of Common Stock or outstanding voting securities is maintained; or |
| · |
| Ÿ | our shareholders approve a complete liquidation or dissolution of Universal Corporation. |
During fiscal year 2007, we replaced all existing Change of Control Agreements with new Change of Control Agreements. The 2007 Change of Control Agreements are similar to the original Change of Control Agreements, but have a number of significant differences intended to reduce potential cost and eliminate outdated concepts.
The 2007 Change of Control Agreements:
| · |
| Ÿ | do not contain any obligation to gross-up severance payments for potential excise taxes incurred by the executive officer; |
| · |
| Ÿ | contain a “double trigger” instead of a “single trigger,” meaning that payments are not made until there is a change of control and the executive officer is effectively terminated within three years of the change of control (under our prior Change of Control Agreements, payment could be triggered at the executive’sexecutive's option); |
| · |
| Ÿ | contain non-competition and non-solicitation clauses; and |
| · |
| Ÿ | contain certain administrative elements intended to address the requirements of Section 409A of the Internal Revenue Code applicable to deferred compensation. |
The Change of Control Agreements provide that the executive officer will have generally the same authority, duties, and responsibilities during the three years after a change of control of Universal Corporation or until the executive
officer’sofficer's normal retirement at age 65 (if earlier), as such executive officer did immediately prior to the change of control. Each Change of Control Agreement also provides for the payment, during such period, of an annual base salary and annual cash incentive award at least at the same levels as prior to the change of control. Each executive officer will also participate at least at the same levels in incentive, savings and retirement plans, and welfare benefit plans as were offered prior to the change of control.
Each Change of Control Agreement provides benefits in the event of the executive’sexecutive's death or disability, or in the event the executive’sexecutive's employment is terminated for “cause” or for “good reason.” If the executive officer is terminated other than for cause, death, or disability within three years after a change of control, or if the executive officer terminates his employment for good reason within such three-year period, the executive officer is entitled to receive certain severance benefits.Severancebenefits.Severance benefits include a lump sum severance payment based on an amount equal to 2.99 times the sum of his annual base salary and the higher of such executive officer’sofficer's most recent targeted bonus opportunity under our cash incentive plan and such executive officer’sofficer's prior year’syear's annual cash incentive award. This payment will be made in full if the date of termination of employment is more than three years prior to the executive officer’sofficer's normal retirement at age 65, and it will be prorated if such period is less than three years. There will be no such payment if the executive officer has reached normal retirement. Severance benefits also include certain other payments and benefits, including continuation of benefits under retirement plans, continuation of employee welfare benefits, and outplacement services for the executive officer up to a maximum amount of $10,000.
Severance and Change of Control Benefits for the Named Executive Officers
The following tables summarize the value of the termination payments and benefits that each of our named executive officers would receive if their employment had terminated on March 31, 2012,2013, under the circumstances shown. The tables exclude amounts accrued through March 31, 2012,2013, that would be paid in the normal course of continued employment, such as accrued but unpaid salary and earned annual cash incentive award for the fiscal year ended March 31, 2012.2013
.
Under our benefit programs, an individual is eligible for retirement after reaching age 55, with at least five years of service. The amounts in the tables for “Retirement” assume that all of our named executive officers have reached age 55 by March 31, 2012,2013, even though that is not the case for Mr. G. Freeman, Mr. Brewer Mr. Wigner and Mr. Paul.
Summary of Termination Payment and Benefits: George C. Freeman, III
| Benefit | | Retirement | | | Death | | | Disability | | | Termination
by Executive
Other Than
Retirement,
Death or
Disability | | | For Cause
Termination
by Company
Other Than
Retirement,
Death or
Disability | | | Involuntary
Termination
Following a
Change in
Control | |
| | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
| | (a) | | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | |
| | | | | | | | | | | | | | | | | | | |
| Change of Control(1) | | | — | | | | — | | | | — | | | | — | | | | — | | | | 4,773,236 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Acceleration
of Equity Awards | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock Options and SARs(2) | | | 821,819 | | | | 821,819 | | | | 821,819 | | | | — | | | | — | | | | 821,819 | |
| Restricted Stock(2) | | | 2,637,234 | | | | 2,637,234 | | | | 2,637,234 | | | | — | | | | — | | | | 2,637,234 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Qualified
Retirement Benefits | | | | | | | | | | | | | | | | | | | | | | | | |
| Pension Plan(3) | | | 34,340 | | | | 17,686 | | | | 53,749 | | | | 34,340 | | | | 34,340 | | | | 34,340 | |
| 401(k) Savings Plan | | | 195,949 | | | | 195,949 | | | | 195,949 | | | | 195,949 | | | | 195,949 | | | | 195,949 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Nonqualified
Retirement Benefits | | | | | | | | | | | | | | | | | | | | | | | | |
| Benefit Restoration Plan(4) | | | 4,891,732 | | | | 1,307,296 | | | | 4,891,732 | | | | 4,891,732 | | | | 4,891,732 | | | | 4,891,732 | |
| Deferred Income Plan II and III(5) | | | 26,907 | | | | 409,202 | | | | 409,202 | | | | 409,202 | | | | 409,202 | | | | 409,202 | |
| Deferred Payment of Restricted Stock(6) | | | 154,293 | | | | 154,293 | | | | 154,293 | | | | 154,293 | | | | 154,293 | | | | 154,293 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Other Benefits | | | | | | | | | | | | | | | | | | | | | | | | |
| Health and Welfare Plans(7) | | | — | | | | 3,100,000 | | | | — | | | | — | | | | — | | | | — | |
| Long-Term Disability Plan(8) | | | — | | | | — | | | | 465,000 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | 8,762,274 | | | | 8,643,479 | | | | 9,628,978 | | | | 5,685,516 | | | | 5,685,516 | | | | 13,917,805 | |
|
| | | | | | | | | | | | | | | | | | |
| Benefit | | Retirement | | Death | | Disability | | Termination by Executive Other Than Retirement, Death or Disability | | For Cause Termination by Company Other Than Retirement, Death or Disability | | Involuntary Termination Following a Change in Control |
| | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| | | (a) | | (b) | | (c) | | (d) | | (e) | | (f) |
Change of Control(1) | | — |
| | — |
| | — |
| | — |
| | — |
| | 6,457,204 |
|
| | | | | | | | | | | | | |
| Acceleration of Equity Awards | | | | | | | | | | | | |
SARs(2) | | 791,048 |
| | 791,048 |
| | 791,048 |
| | — |
| | — |
| | 791,048 |
|
Restricted Stock(2) | | 3,735,627 |
| | 3,735,627 |
| | 3,735,627 |
| | — |
| | — |
| | 3,735,627 |
|
Performance Shares(2) | | 1,306,666 |
| | 1,306,666 |
| | 1,306,666 |
| | — |
| | — |
| | 2,179,956 |
|
| | | | | | | | | | | | | |
| Qualified Retirement Benefits | | | | | | | | | | | | |
Pension Plan(3) | | 36,809 |
| | 19,162 |
| | 57,545 |
| | 36,809 |
| | 36,809 |
| | 36,809 |
|
| 401(k) Savings Plan | | 253,502 |
| | 253,502 |
| | 253,502 |
| | 253,502 |
| | 253,502 |
| | 253,502 |
|
| | | | | | | | | | | | | |
| Non-qualified Retirement Benefits | | | | | | | | | | | | |
Benefit Restoration Plan(4) | | 5,679,596 |
| | 1,729,931 |
| | 5,679,596 |
| | 5,679,596 |
| | 5,679,596 |
| | 5,679,596 |
|
Deferred Income Plan II and III(5) | | 41,602 |
| | 466,592 |
| | 466,592 |
| | 466,592 |
| | 466,592 |
| | 466,592 |
|
Deferred Payment of Restricted Stock(6) | | 399,005 |
| | 399,005 |
| | 399,005 |
| | 399,005 |
| | 399,005 |
| | 399,005 |
|
| | | | | | | | | | | | | |
| Other Benefits | | | | | | | | | | | | |
Health and Welfare Plans(7) | | — |
| | 3,100,000 |
| | — |
| | — |
| | — |
| | — |
|
Long-Term Disability Plan(8) | | — |
| | — |
| | 478,920 |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | | |
| Total | | 10,937,189 |
| | 10,494,867 |
| | 11,861,835 |
| | 6,835,504 |
| | 6,835,504 |
| | 17,819,383 |
|
| |
(1) | Amount represents cash payment due pursuant to the change of control double trigger (change of control and involuntary termination) in the executive’sexecutive's Change of Control Agreement. The payments do not include any form of tax gross-up amount because the Change of Control Agreement does not provide for such payments. |
| | |
| |
(2) | Stock options and SARs automatically vest at the time of the events specified in the table for which amounts are shown. Amounts for stock options and SARs represent the positive difference, if any, between $46.60,$56.04, the market value of the underlying shares of Common Stock as of March 31, 2012,29, 2013, and the exercise price for all unvested options and SARs. Restricted stock units and the corresponding dividend equivalent rights automatically vest and are paid in shares of Common Stock at the time of the events specified in the table for which amounts are shown. Amounts for restricted stock units represent the value of Common Stock as of March 31, 2012. |
| | 29, 2013. Performance Shares vest on the last day of the performance period and are earned and paid out based on the degree to which our financial performance exceeds a threshold level. Participants are entitled to a prorated number of Performance Shares if they retire, die or become disabled during the performance period. Amounts for Performance Shares are based on the market value of the underlying shares of Common Stock as of March 29, 2013 and assuming a payout equating to the target level of performance. |
| |
(3) | For all columns except Column (b), amounts represent an annual payment to the executive at March 31, 2012,2013, payable for the life of the executive, assuming with respect to Columns (a), (d), (e), and (f), the executive elects the 50% joint and survivor annuity option, which is the default option under the Pension Plan. For Column (c), the annual payment assumes the executive elects the straight life annuity option. For Column (b), the amount represents an annual payment to the executive’sexecutive's survivor at March 31, 2012,2013, payable for the life of the survivor. |
| | |
| |
(4) | Amounts represent a lump sum payment at March 31, 2012.2013. The lump sum payment includes balances from the individual trust agreement maintained through the Benefit Restoration Plan. A participant will forfeit all rights in and to any benefits payable under the Benefit Restoration Plan if the Company terminates the participant’sparticipant's employment as a result of a participant’sparticipant's fraud, dishonesty or embezzlement where the participant has been materially, unjustly enriched by such conduct. |
| | |
| |
(5) | Amount in Column (a) represents a first payment of annual payments for retirement as elected in the executive’sexecutive's DIP II and DIP III agreements. Amounts in Columns (b) through (f) represent a lump-sum payment for all remaining circumstances as elected in the executive’sexecutive's DIP II and DIP III agreements. |
| | |
| |
(6) | Amounts represent the value of restricted stock units that vested, but payment was deferred until termination of employment in order to preserve the Section 162(m) deduction. More information on Section 162(m) is discussed in the section entitled“Limitations “Limitations on Deductibility of Compensation” on page 2327 of this Proxy Statement. |
| | |
| |
(7) | Amounts represent payment due under the standard Group Term Life Insurance Program, which is the death benefit amount on March 31, 2012.2013. In case of accidental death, the benefit amount would increase by $3,600,000. |
| | $5,100,000. |
| |
(8) | Amounts represent 60% of annual base salary as of March 31, 2012,2013, which is payable from three different sources: the Pension Plan, Social Security, and a company supplement. Payments under the long-term disability plan continue until the recipient reaches age 65. |
Summary of Termination Payment and Benefits: W. Keith Brewer
| Benefit | | Retirement | | | Death | | | Disability | | | Termination
by Executive
Other Than
Retirement,
Death or
Disability | | | For Cause
Termination
by Company
Other Than
Retirement,
Death or
Disability | | | Involuntary
Termination
Following a
Change in
Control | |
| | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
| | | (a) | | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | |
| | | | | | | | | | | | | | | | | | | |
| Change of Control(1) | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3,356,574 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Acceleration
of Equity Awards | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock Options and SARs(2) | | | 582,984 | | | | 582,984 | | | | 582,984 | | | | — | | | | — | | | | 582,984 | |
| Restricted Stock(2) | | | 1,909,761 | | | | 1,909,761 | | | | 1,909,761 | | | | — | | | | — | | | | 1,909,761 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Qualified
Retirement Benefits | | | | | | | | | | | | | | | | | | | | | | | | |
| Pension Plan(3) | | | 54,542 | | | | 29,702 | | | | 85,630 | | | | 54,542 | | | | 54,542 | | | | 54,542 | |
| 401(k) Savings Plan | | | 279,148 | | | | 279,148 | | | | 279,148 | | | | 279,148 | | | | 279,148 | | | | 279,148 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Nonqualified
Retirement Benefits | | | | | | | | | | | | | | | | | | | | | | | | |
| Benefit Restoration Plan(4) | | | 5,158,885 | | | | 1,746,819 | | | | 5,158,885 | | | | 5,158,885 | | | | 5,158,885 | | | | 5,158,885 | |
| Deferred Income Plan II and III(5) | | | 7,363 | | | | 73,635 | | | | 73,635 | | | | 73,635 | | | | 73,635 | | | | 73,635 | |
| Deferred Payment of Restricted Stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Other Benefits | | | | | | | | | | | | | | | | | | | | | | | | |
| Health and Welfare Plans(6) | | | — | | | | 2,180,000 | | | | — | | | | — | | | | — | | | | — | |
| Long-Term Disability Plan(7) | | | — | | | | — | | | | 327,000 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | 7,992,683 | | | | 6,802,049 | | | | 8,417,043 | | | | 5,566,210 | | | | 5,566,210 | | | | 11,415,529 | |
|
| | | | | | | | | | | | | | | | | | |
| Benefit | | Retirement | | Death | | Disability | | Termination by Executive Other Than Retirement, Death or Disability | | For Cause Termination by Company Other Than Retirement, Death or Disability | | Involuntary Termination Following a Change in Control |
| | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| | | (a) | | (b) | | (c) | | (d) | | (e) | | (f) |
Change of Control(1) | | — |
| | — |
| | — |
| | — |
| | — |
| | 4,540,614 |
|
| | | | | | | | | | | | | |
| Acceleration of Equity Awards | | | | | | | | | | | | |
SARs(2) | | 557,978 |
| | 557,978 |
| | 557,978 |
| | — |
| | — |
| | 557,978 |
|
Restricted Stock(2) | | 2,659,658 |
| | 2,659,658 |
| | 2,659,658 |
| | — |
| | — |
| | 2,659,658 |
|
Performance Shares(2) | | 920,924 |
| | 920,924 |
| | 920,924 |
| | — |
| | — |
| | 1,535,496 |
|
| | | | | | | | | | | | | |
| Qualified Retirement Benefits | | | | | | | | | | | | |
Pension Plan(3) | | 57,320 |
| | 31,713 |
| | 90,020 |
| | 57,320 |
| | 57,320 |
| | 57,320 |
|
| 401(k) Savings Plan | | 346,027 |
| | 346,027 |
| | 346,027 |
| | 346,027 |
| | 346,027 |
| | 346,027 |
|
| | | | | | | | | | | | | |
| Non-qualified Retirement Benefits | | | | | | | | | | | | |
Benefit Restoration Plan(4) | | 5,847,586 |
| | 2,189,965 |
| | 5,847,586 |
| | 5,847,586 |
| | 5,847,586 |
| | 5,847,586 |
|
Deferred Income Plan II and III(5) | | 8,056 |
| | 80,559 |
| | 80,559 |
| | 80,559 |
| | 80,559 |
| | 80,559 |
|
| Deferred Payment of Restricted Stock | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | | |
| Other Benefits | | | | | | | | | | | | |
Health and Welfare Plans(6) | | — |
| | 2,180,000 |
| | — |
| | — |
| | — |
| | — |
|
Long-Term Disability Plan(7) | | — |
| | — |
| | 336,780 |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | | |
| Total | | 9,476,625 |
| | 8,045,900 |
| | 9,918,608 |
| | 6,331,492 |
| | 6,331,492 |
| | 14,089,742 |
|
| |
(1) | Amount represents cash payment due pursuant to the change of control double trigger (change of control and involuntary termination) in the executive’sexecutive's Change of Control Agreement. The payments do not include any form of tax gross-up amount because the Change of Control Agreement does not provide for such payments. |
| |
(2) | Stock options and SARs automatically vest at the time of the events specified in the table for which amounts are shown. Amounts for stock options and SARs represent the positive difference, if any, between $46.60,$56.04, the market value of the underlying shares of Common Stock as of March 31, 2012,29, 2013, and the exercise price for all unvested options and SARs. Restricted stock units and the corresponding dividend equivalent rights automatically vest and are paid in shares of Common Stock at the time of the events specified in the table for which amounts are shown. Amounts for restricted stock units represent the value of Common Stock as of March 31, 2012.29, 2013. Performance Shares vest on the last day of the performance period and are earned and paid out based on the degree to which our financial performance exceeds a threshold level. Participants are entitled to a prorated number of Performance Shares if they retire, die or become disabled during the performance period. Amounts for Performance Shares are based on the market value of the underlying shares of Common Stock as of March 29, 2013 and assuming a payout equating to the target level of performance. |
| |
(3) | For all columns except Column (b), amounts represent an annual payment to the executive at March 31, 2012,2013, payable for the life of the executive, assuming with respect to Columns (a), (d), (e), and (f), the executive elects the 50% joint and survivor annuity option, which is the default option under the Pension Plan. For Column (c), the annual payment assumes the executive elects the straight life annuity option. For Column (b), the amount represents an annual payment to the executive’sexecutive's survivor at March 31, 2012,2013, payable for the life of the survivor. |
| |
(4) | Amounts represent a lump sum payment at March 31, 2012.2013. The lump sum payment includes balances from the individual trust agreement maintained through the Benefit Restoration Plan. A participant will forfeit all rights in and to any benefits payable under the Benefit Restoration Plan if the Company terminates the participant’sparticipant's employment as a result of the participant’sa participant's fraud, dishonesty or embezzlement where the participant has been materially, unjustly enriched by such conduct. |
| |
(5) | Amount in Column (a) represents a first payment of annual payments for retirement as elected in the executive’sexecutive's DIP II and DIP III agreements. Amounts in Columns (b) through (f) represent a lump-sum payment for all remaining circumstances as elected in the executive’sexecutive's DIP II and DIP III agreements. |
| |
(6) | Amounts represent payment due under the standard Group Term Life Insurance Program, which is the death benefit amount on March 31, 2012.2013. In case of accidental death, the benefit amount would increase by $3,600,000.$4,180,000. |
| |
(7) | Amounts represent 60% of annual base salary as of March 31, 2012,2013, which is payable from three different sources: the Pension Plan, Social Security, and a company supplement. Payments under the long-term disability plan continue until the recipient reaches age 65. |
Summary of Termination Payment and Benefits: David C. Moore
| Benefit | | Retirement | | | Death | | | Disability | | | Termination
by Executive
Other Than
Retirement,
Death or
Disability | | | For Cause
Termination
by Company
Other Than
Retirement,
Death or
Disability | | | Involuntary
Termination
Following a
Change in
Control | |
| | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
| | | (a) | | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | |
| | | | | | | | | | | | | | | | | | | |
| Change of Control(1) | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,286,453 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Acceleration
of Equity Awards | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock Options and SARs(2) | | | 327,620 | | | | 327,620 | | | | 327,620 | | | | — | | | | — | | | | 327,620 | |
| Restricted Stock(2) | | | 1,102,090 | | | | 1,102,090 | | | | 1,102,090 | | | | — | | | | — | | | | 1,102,090 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Qualified
Retirement Benefits | | | | | | | | | | | | | | | | | | | | | | | | |
| Pension Plan(3) | | | 87,847 | | | | 45,780 | | | | 127,479 | | | | 87,847 | | | | 87,847 | | | | 87,847 | |
| 401(k) Savings Plan | | | 189,888 | | | | 189,888 | | | | 189,888 | | | | 189,888 | | | | 189,888 | | | | 189,888 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Nonqualified
Retirement Benefits | | | | | | | | | | | | | | | | | | | | | | | | |
| Benefit Restoration Plan(4) | | | 4,899,617 | | | | 2,290,870 | | | | 4,899,617 | | | | 4,899,617 | | | | 4,899,617 | | | | 4,899,617 | |
| Deferred Income Plan II and III(5) | | | 51,096 | | | | 403,349 | | | | 403,349 | | | | 403,349 | | | | 403,349 | | | | 403,349 | |
| Deferred Payment of Restricted Stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Other Benefits | | | | | | | | | | | | | | | | | | | | | | | | |
| Health and Welfare Plans(6) | | | — | | | | 1,530,000 | | | | — | | | | — | | | | — | | | | — | |
| Long-Term Disability Plan(7) | | | — | | | | — | | | | 243,000 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | 6,658,158 | | | | 5,889,597 | | | | 7,293,043 | | | | 5,580,701 | | | | 5,580,701 | | | | 9,296,864 | |
|
| | | | | | | | | | | | | | | | | | |
| Benefit | | Retirement | | Death | | Disability | | Termination by Executive Other Than Retirement, Death or Disability | | For Cause Termination by Company Other Than Retirement, Death or Disability | | Involuntary Termination Following a Change in Control |
| | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| | | (a) | | (b) | | (c) | | (d) | | (e) | | (f) |
Change of Control(1) | | — |
| | — |
| | — |
| | — |
| | — |
| | 3,024,385 |
|
| | | | | | | | | | | | | |
| Acceleration of Equity Awards | | | | | | | | | | | | |
SARs(2) | | 311,936 |
| | 311,936 |
| | 311,936 |
| | — |
| | — |
| | 311,936 |
|
Restricted Stock(2) | | 1,504,618 |
| | 1,504,618 |
| | 1,504,618 |
| | — |
| | — |
| | 1,504,618 |
|
Performance Shares(2) | | 514,634 |
| | 514,634 |
| | 514,634 |
| | — |
| | — |
| | 857,412 |
|
| | | | | | | | | | | | | |
| Qualified Retirement Benefits | | | | | | | | | | | | |
Pension Plan(3) | | 96,394 |
| | 48,197 |
| | 131,969 |
| | 96,394 |
| | 96,394 |
| | 96,394 |
|
| 401(k) Savings Plan | | 241,176 |
| | 241,176 |
| | 241,176 |
| | 241,176 |
| | 241,176 |
| | 241,176 |
|
| | | | | | | | | | | | | |
| Non-qualified Retirement Benefits | | | | | | | | | | | | |
Benefit Restoration Plan(4) | | 5,667,429 |
| | 2,642,224 |
| | 5,667,429 |
| | 5,667,429 |
| | 5,667,429 |
| | 5,667,429 |
|
Deferred Income Plan II and III(5) | | 57,743 |
| | 455,773 |
| | 455,773 |
| | 455,773 |
| | 455,773 |
| | 455,773 |
|
| Deferred Payment of Restricted Stock | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | | |
| Other Benefits | | | | | | | | | | | | |
Health and Welfare Plans(6) | | — |
| | 1,564,000 |
| | — |
| | — |
| | — |
| | — |
|
Long-Term Disability Plan(7) | | — |
| | — |
| | 250,260 |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | | |
| Total | | 7,879,296 |
| | 6,767,924 |
| | 8,563,161 |
| | 6,460,772 |
| | 6,460,772 |
| | 11,301,711 |
|
| |
(1) | Amount represents cash payment due pursuant to the change of control double trigger (change of control and involuntary termination) in the executive’sexecutive's Change of Control Agreement. The payments do not include any form of tax gross-up amount because the Change of Control Agreement does not provide for such payments. |
| |
(2) | Stock options and SARs automatically vest at the time of the events specified in the table for which amounts are shown. Amounts for stock options and SARs represent the positive difference, if any, between $46.60,$56.04, the market value of the underlying shares of Common Stock as of March 31, 2012,29, 2013, and the exercise price for all unvested options and SARs. Restricted stock units and the corresponding dividend equivalent rights automatically vest and are paid in shares of Common Stock at the time of the events specified in the table for which amounts are shown. Amounts for restricted stock units represent the value of Common Stock as of March 31, 2012.29, 2013. Performance Shares vest on the last day of the performance period and are earned and paid out based on the degree to which our financial performance exceeds a threshold level. Participants are entitled to a prorated number of Performance Shares if they retire, die or become disabled during the performance period. Amounts for Performance Shares are based on the market value of the underlying shares of Common Stock as of March 29, 2013 and assuming a payout equating to the target level of performance. |
| |
(3) | For all columns except Column (b), amounts represent an annual payment to the executive at March 31, 2012,2013, payable for the life of the executive, assuming with respect to Columns (a), (d), (e), and (f), the executive elects the 50% joint and survivor annuity option, which is the default option under the Pension Plan. For Column (c), the annual payment assumes the executive elects the straight life annuity option. For Column (b), the amount represents an annual payment to the executive’sexecutive's survivor at March 31, 2012,2013, payable for the life of the survivor. |
| |
(4) | Amounts represent a lump sum payment at March 31, 2012.2013. The lump sum payment includes balances from the individual trust agreement maintained through the Benefit Restoration Plan. A participant will forfeit all rights in and to any benefits payable under the Benefit Restoration Plan if the Company terminates the participant’sparticipant's employment as a result of the participant’sa participant's fraud, dishonesty or embezzlement where the participant has been materially, unjustly enriched by such conduct. |
| |
(5) | Amount in Column (a) represents a first payment of annual payments for retirement as elected in the executive’sexecutive's DIP II and DIP III agreements. Amounts in Columns (b) through (f) represent a lump-sum payment for all remaining circumstances as elected in the executive’sexecutive's DIP II and DIP III agreements. |
| |
(6) | Amounts represent payment due under the standard Group Term Life Insurance Program, which is the death benefit amount on March 31, 2012.2013. In case of accidental death, the benefit amount would increase by $3,530,000.$3,564,000. |
| |
(7) | Amounts represent 60% of annual base salary as of March 31, 2012,2013, which is payable from three different sources: the Pension Plan, Social Security, and a company supplement. Payments under the long-term disability plan continue until the recipient reaches age 65. |
Summary of Termination Payment and Benefits:
Preston D. Wigner| Benefit | | Retirement | | | Death | | | Disability | | | Termination
by Executive
Other Than
Retirement,
Death or
Disability | | | For Cause
Termination
by Company
Other Than
Retirement,
Death or
Disability | | | Involuntary
Termination
Following a
Change in
Control | |
| | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
| | | (a) | | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | |
| | | | | | | | | | | | | | | | | | | |
| Change of Control(1) | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,636,726 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Acceleration
of Equity Awards | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock Options and SARs(2) | | | 182,275 | | | | 182,275 | | | | 182,275 | | | | — | | | | — | | | | 182,275 | |
| Restricted Stock(2) | | | 629,939 | | | | 629,939 | | | | 629,939 | | | | — | | | | — | | | | 629,939 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Qualified
Retirement Benefits | | | | | | | | | | | | | | | | | | | | | | | | |
| Pension Plan(3) | | | 20,628 | | | | 10,351 | | | | 32,445 | | | | 20,628 | | | | 20,628 | | | | 20,628 | |
| 401(k) Savings Plan | | | 203,712 | | | | 203,712 | | | | 203,712 | | | | 203,712 | | | | 203,712 | | | | 203,712 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Nonqualified
Retirement Benefits | | | | | | | | | | | | | | | | | | | | | | | | |
| Benefit Restoration Plan(4) | | | 640,586 | | | | 127,789 | | | | 640,586 | | | | 640,586 | | | | 640,586 | | | | 640,586 | |
| Deferred Income Plan II and III(5) | | | 11,075 | | | | 11,075 | | | | 11,075 | | | | 11,075 | | | | 11,075 | | | | 11,075 | |
| Deferred Payment of Restricted Stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Other Benefits | | | | | | | | | | | | | | | | | | | | | | | | |
| Health and Welfare Plans(6) | | | — | | | | 1,643,000 | | | | — | | | | — | | | | — | | | | — | |
| Long-Term Disability Plan(7) | | | — | | | | — | | | | 186,000 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | 1,688,215 | | | | 2,808,141 | | | | 1,886,032 | | | | 876,001 | | | | 876,001 | | | | 3,324,941 | |
|
| | | | | | | | | | | | | | | | | | |
| Benefit | | Retirement | | Death | | Disability | | Termination by Executive Other Than Retirement, Death or Disability | | For Cause Termination by Company Other Than Retirement, Death or Disability | | Involuntary Termination Following a Change in Control |
| | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| | | (a) | | (b) | | (c) | | (d) | | (e) | | (f) |
Change of Control(1) | | — |
| | — |
| | — |
| | — |
| | — |
| | 2,124,096 |
|
| | | | | | | | | | | | | |
| Acceleration of Equity Awards | | | | | | | | | | | | |
SARs(2) | | 174,712 |
| | 174,712 |
| | 174,712 |
| | — |
| | — |
| | 174,712 |
|
Restricted Stock(2) | | 845,308 |
| | 845,308 |
| | 845,308 |
| | — |
| | — |
| | 845,308 |
|
Performance Shares(2) | | 283,002 |
| | 283,002 |
| | 283,002 |
| | — |
| | — |
| | 481,944 |
|
| | | | | | | | | | | | | |
| Qualified Retirement Benefits | | | | | | | | | | | | |
Pension Plan(3) | | 23,009 |
| | 11,636 |
| | 36,147 |
| | 23,009 |
| | 23,009 |
| | 23,009 |
|
| 401(k) Savings Plan | | 255,496 |
| | 255,496 |
| | 255,496 |
| | 255,496 |
| | 255,496 |
| | 255,496 |
|
| | | | | | | | | | | | | |
| Non-qualified Retirement Benefits | | | | | | | | | | | | |
Benefit Restoration Plan(4) | | 770,843 |
| | 176,921 |
| | 770,843 |
| | 770,843 |
| | 770,843 |
| | 770,843 |
|
Deferred Income Plan II and III(5) | | 12,305 |
| | 12,305 |
| | 12,305 |
| | 12,305 |
| | 12,305 |
| | 12,305 |
|
| Deferred Payment of Restricted Stock | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | | |
| Other Benefits | | | | | | | | | | | | |
Health and Welfare Plans(6) | | — |
| | 1,734,000 |
| | — |
| | — |
| | — |
| | — |
|
Long-Term Disability Plan(7) | | — |
| | — |
| | 191,580 |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | | |
| Total | | 2,081,673 |
| | 3,210,378 |
| | 2,286,391 |
| | 1,061,653 |
| | 1,061,653 |
| | 4,205,769 |
|
| |
(1) | Amount represents cash payment due pursuant to the change of control double trigger (change of control and involuntary termination) in the executive’sexecutive's Change of Control Agreement. The payments do not include any form of tax gross-up amount because the Change of Control Agreement does not provide for such payments. |
| |
(2) | Stock options and SARs automatically vest at the time of the events specified in the table for which amounts are shown. Amounts for stock options and SARs represent the positive difference, if any, between $46.60,$56.04, the market value of the underlying shares of Common Stock as of March 31, 2012,29, 2013, and the exercise price for all unvested options and SARs. Restricted stock units and the corresponding dividend equivalent rights automatically vest and are paid in shares of Common Stock at the time of the events specified in the table for which amounts are shown. Amounts for restricted stock units represent the value of Common Stock as of March 31, 2012.29, 2013. Performance Shares vest on the last day of the performance period and are earned and paid out based on the degree to which our financial performance exceeds a threshold level. Participants are entitled to a prorated number of Performance Shares if they retire, die or become disabled during the performance period. Amounts for Performance Shares are based on the market value of the underlying shares of Common Stock as of March 29, 2013 and assuming a payout equating to the target level of performance. |
| |
(3) | For all columns except Column (b), amounts represent an annual payment to the executive at March 31, 2012,2013, payable for the life of the executive, assuming with respect to Columns (a), (d), (e), and (f), the executive elects the 50% joint and survivor annuity option, which is the default option under the Pension Plan. For Column (c), the annual payment assumes the executive elects the straight life annuity option. For Column (b), the amount represents an annual payment to the executive’sexecutive's survivor at March 31, 2012,2013, payable for the life of the survivor. |
| |
(4) | Amounts represent a lump sum payment at March 31, 2012.2013. The lump sum payment includes balances from the individual trust agreement maintained through the Benefit Restoration Plan. A participant will forfeit all rights in and to any benefits payable under the Benefit Restoration Plan if the Company terminates the participant’sparticipant's employment as a result of the participant’sa participant's fraud, dishonesty or embezzlement where the participant has been materially, unjustly enriched by such conduct. |
| |
(5) | Amount in Column (a) represents a first payment of annual payments for retirement as elected in the executive’sexecutive's DIP II and DIP III agreements. Amounts in Columns (b) through (f) represent a lump-sum payment for all remaining circumstances as elected in the executive’sexecutive's DIP II and DIP III agreements. |
| |
(6) | Amounts represent payment due under the standard Group Term Life Insurance Program, which is the death benefit amount on March 31, 2012. The death benefit also includes an additional amount equal to one times covered compensation, which is attributable to premiums paid directly by Mr. Wigner on an after-tax basis.2013. In case of accidental death, the benefit amount would increase by $2,738,000.$2,889,000. |
| |
(7) | Amounts represent 60% of annual base salary as of March 31, 2012,2013, which is payable from three different sources: the Pension Plan, Social Security, and a company supplement. Payments under the long-term disability plan continue until the recipient reaches age 65. |
Summary of Termination Payment and Benefits:
Ray M. Paul, Jr.| Benefit | | Retirement | | | Death | | | Disability | | | Termination
by Executive
Other Than
Retirement,
Death, or
Disability | | | For Cause
Termination
by Company
Other Than
Retirement,
Death or
Disability | | | Involuntary
Termination
Following a
Change in
Control | |
| | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
| | | (a) | | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | |
| | | | | | | | | | | | | | | | | | | |
| Change of Control(1) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Acceleration
of Equity Awards | | | | | | | | | | | | | | | | | | | | | | | | |
| Stock Options and SARs(2) | | | 198,756 | | | | 198,756 | | | | 198,756 | | | | — | | | | — | | | | 198,756 | |
| Restricted Stock(2) | | | 715,450 | | | | 715,450 | | | | 715,450 | | | | — | | | | — | | | | 715,450 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Qualified
Retirement Benefits | | | | | | | | | | | | | | | | | | | | | | | | |
| Pension Plan(3) | | | 77,882 | | | | 43,204 | | | | 123,108 | | | | 77,882 | | | | 77,882 | | | | 77,882 | |
| 401(k) Savings Plan | | | 200,563 | | | | 200,563 | | | | 200,563 | | | | 200,563 | | | | 200,563 | | | | 200,563 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Nonqualified
Retirement Benefits | | | | | | | | | | | | | | | | | | | | | | | | |
| Benefit Restoration Plan(4) | | | 2,979,579 | | | | 1,040,941 | | | | 2,979,579 | | | | 2,979,579 | | | | 2,979,579 | | | | 2,979,579 | |
| Deferred Income Plan II and III(5) | | | 466,232 | | | | 466,232 | | | | 466,232 | | | | 466,232 | | | | 466,232 | | | | 466,232 | |
| Deferred Payment of Restricted Stock | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Other Benefits | | | | | | | | | | | | | | | | | | | | | | | | |
| Health and Welfare Plans(6) | | | — | | | | 1,122,000 | | | | — | | | | — | | | | — | | | | — | |
| Long-Term Disability Plan(7) | | | — | | | | — | | | | 190,500 | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | 4,638,462 | | | | 3,787,146 | | | | 4,874,188 | | | | 3,724,256 | | | | 3,724,256 | | | | 4,638,462 | |
Theodore G. Broome |
| | | | | | | | | | | | | | | | | | |
| Benefit | | Retirement | | Death | | Disability | | Termination by Executive Other Than Retirement, Death, or Disability | | For Cause Termination by Company Other Than Retirement, Death or Disability | | Involuntary Termination Following a Change in Control |
| | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| | | (a) | | (b) | | (c) | | (d) | | (e) | | (f) |
Change of Control(1) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | | |
| Acceleration of Equity Awards | | | | | | | | | | | | |
SARs(2) | | 163,080 |
| | 163,080 |
| | 163,080 |
| | — |
| | — |
| | 163,080 |
|
Restricted Stock(2) | | 772,231 |
| | 772,231 |
| | 772,231 |
| | — |
| | — |
| | 772,231 |
|
Performance Shares(2) | | 261,520 |
| | 261,520 |
| | 261,520 |
| | — |
| | — |
| | 448,320 |
|
| | | | | | | | | | | | | |
| Qualified Retirement Benefits | | | | | | | | | | | | |
Pension Plan(3) | | 45,764 |
| | 22,882 |
| | 63,387 |
| | 45,764 |
| | 45,764 |
| | 45,764 |
|
| 401(k) Savings Plan | | 193,683 |
| | 193,683 |
| | 193,683 |
| | 193,683 |
| | 193,683 |
| | 193,683 |
|
| | | | | | | | | | | | | |
| Non-qualified Retirement Benefits | | | | | | | | | | | | |
Benefit Restoration Plan(4) | | 1,156,959 |
| | 523,556 |
| | 1,156,959 |
| | 1,156,959 |
| | 1,156,959 |
| | 1,156,959 |
|
Deferred Income Plan II and III(5) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Deferred Payment of Restricted Stock | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | | |
| Other Benefits | | | | | | | | | | | | |
Health and Welfare Plans(6) | | — |
| | 1,226,000 |
| | — |
| | — |
| | — |
| | — |
|
Long-Term Disability Plan(7) | | — |
| | — |
| | 179,220 |
| | — |
| | — |
| | — |
|
| | | | | | | | | | | | | |
| Total | | 2,331,717 |
| | 2,901,432 |
| | 2,528,560 |
| | 1,396,406 |
| | 1,396,406 |
| | 2,331,717 |
|
| |
(1) | Amount represents cash payment due pursuant to the change of control double trigger (change of control and involuntary termination) in the executive’sexecutive's Change of Control Agreement. The payments do not include any form of tax gross-up amount because the Change of Control Agreement does not provide for such payments. |
| | |
| |
(2) | Stock options and SARs automatically vest at the time of the events specified in the table for which amounts are shown. Amounts for stock options and SARs represent the positive difference, if any, between $46.60,$56.04, the market value of the underlying shares of Common Stock as of March 31, 2012,29, 2013, and the exercise price for all unvested options and SARs. Restricted stock units and the corresponding dividend equivalent rights automatically vest and are paid in shares of Common Stock at the time of the events specified in the table for which amounts are shown. Amounts for restricted stock units represent the value of Common Stock as of March 31, 2012. |
| | 29, 2013. Performance Shares vest on the last day of the performance period and are earned and paid out based on the degree to which our financial performance exceeds a threshold level. Participants are entitled to a prorated number of Performance Shares if they retire, die or become disabled during the performance period. Amounts for Performance Shares are based on the market value of the underlying shares of Common Stock as of March 29, 2013 and assuming a payout equating to the target level of performance. |
| |
(3) | For all columns except Column (b), amounts represent an annual payment to the executive at March 31, 2012,2013, payable for the life of the executive, assuming with respect to Columns (a), (d), (e), and (f), the executive elects the 50% joint and survivor annuity option, which is the default option under the Pension Plan. For Column (c), the annual payment assumes the executive elects the straight life annuity option. For Column (b), the amount represents an annual payment to the executive’sexecutive's survivor at March 31, 2012,2013, payable for the life of the survivor. |
| | |
| |
(4) | Amounts represent a lump sum payment at March 31, 2012.2013. The lump sum payment includes balances from the individual trust agreement maintained through the Benefit Restoration Plan. A participant will forfeit all rights in and to any benefits payable under the Benefit Restoration Plan if the Company terminates the participant’sparticipant's employment as a result of the participant’sa participant's fraud, dishonesty or embezzlement where the participant has been materially, unjustly enriched by such conduct. |
| | |
| |
(5) | Amount in Column (a) represents a first payment of annual payments for retirement as elected in the executive’sexecutive's DIP II and DIP III agreements. Amounts in Columns (b) through (f) represent a lump-sum payment for all remaining circumstances as elected in the executive’sexecutive's DIP II and DIP III agreements. |
| | |
| |
(6) | Amounts represent payment due under the standard Group Term Life Insurance Program, which is the death benefit amount on March 31, 2012.2013. In case of accidental death, the benefit amount would increase by $2,804,000. |
| | $3,065,000. |
| |
(7) | Amounts represent 60% of annual base salary as of March 31, 2012,2013, which is payable from three different sources: the Pension Plan, Social Security, and a company supplement. Payments under the long-term disability plan continue until the recipient reaches age 65. |
EQUITY COMPENSATION INFORMATION
Shares of Common Stock are authorized for issuance with respect to our compensation plans. The following table sets forth information as of March 31, 2012,2013, with respect to compensation plans under which shares of Common Stock are authorized for issuance.| Plan Category | | Number of Securities
to Be Issued
upon Exercise of
Outstanding Options,
Warrants and Rights | | | Weighted-Average
Exercise Price of
Outstanding
Options,
Warrants and Rights | | | Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans(1) | |
| | | (#) | | | ($) | | | (#) | |
| | | | | | | | | | |
| Equity compensation plans approved by shareholders: | | | | | | | | | | | | |
| 1994 Amended and Restated Stock Option Plan for Non-Employee Directors | | | 5,000 | | | | 41.66 | | | | — | |
| 1997 Executive Stock Plan | | | 1,000 | | | | 35.81 | | | | — | |
| 2002 Executive Stock Plan | | | 364,984 | | | | 56.15 | | | | 124,240 | (2) |
| 2007 Stock Incentive Plan | | | 918,611 | | | | 39.04 | | | | 1,012,803 | (3) |
| Equity compensation plans not approved by shareholders(4) | | | — | | | | — | | | | — | |
| Total | | | 1,289,595 | | | | 43.89 | | | | 1,137,043 | |
|
| | | | | | | | | |
| 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(1) |
| | | (#) | | ($) | | (#) |
| Equity compensation plans approved by shareholders: | | | | | | |
| 1994 Amended and Restated Stock Option Plan for Non-Employee Directors | | 1,000 |
| | 43.12 |
| | — |
|
| 2002 Executive Stock Plan | | 192,667 |
| | 60.08 |
| | — |
|
2007 Stock Incentive Plans(2) | | 224,810 |
| | 41.53 |
| | 991,802 |
|
Equity compensation plans not approved by shareholders(3) | | — |
| | — |
| | — |
|
| Total | | 418,477 |
| | 50.07 |
| | 991,802 |
|
| |
(1) | Amounts exclude any securities to be issued upon exercise of outstanding options, warrants, and rights. |
| | |
| (2) | The 2002 Executive Stock Plan permits grants of stock options and stock appreciation rights, and awards of Common Stock, restricted stock, and phantom stock/restricted stock units. Of the 124,240 shares of Common Stock remaining available for future issuance under that plan, none are available for awards of Common Stock or restricted stock. |
(2) | | |
| (3) | The 2007 Stock Incentive Plan permits grants of stock options and stock appreciation rights, and awards of Common Stock, restricted stock, and phantom stock/restricted stock units. Of the 1,012,803991,802 shares of Common Stock remaining available for future issuance under that plan, 283,895709,756 shares are available for awards of Common Stock, restricted stock units, or restricted stock. |
| | |
| |
(4)(3)
| All of ourthe Company's equity compensation plans have been approved by shareholders. |
DIRECTORS’
The following table presents information relating to total compensation for our non-employee directors for fiscal year 2012:| Name | | Fees
Earned or
Paid in
Cash(2) | | | Stock
Awards(3),(4) | | | Option
Awards(5) | | | Non-Equity
Incentive Plan
Compensation | | | Change in
Pension Value
And
Nonqualified
Deferred
Compensation
Earnings(6) | | | All Other
Compensation(7) | | | Total | |
| | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
| | | | | | | | | | | | | | | | | | | | | | |
| John B. Adams, Jr. | | | 74,000 | | | | 64,954 | | | | — | | | | — | | | | — | | | | — | | | | 138,954 | |
| Chester A. Crocker | | | 71,000 | | | | 64,954 | | | | — | | | | — | | | | — | | | | — | | | | 135,954 | |
| Charles H. Foster, Jr. | | | 80,500 | | | | 64,954 | | | | — | | | | — | | | | — | | | | — | | | | 145,454 | |
| Thomas H. Johnson | | | 70,500 | | | | 64,954 | | | | — | | | | — | | | | — | | | | — | | | | 135,454 | |
| Eddie N. Moore, Jr. | | | 91,500 | | | | 64,954 | | | | — | | | | — | | | | — | | | | — | | | | 156,454 | |
| Jeremiah J. Sheehan | | | 89,000 | | | | 64,954 | | | | — | | | | — | | | | — | | | | — | | | | 153,954 | |
| Robert C. Sledd | | | 83,500 | | | | 64,954 | | | | — | | | | — | | | | — | | | | — | | | | 148,454 | |
| Hubert R. Stallard(1) | | | 10,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10,000 | |
| Eugene P. Trani | | | 78,500 | | | | 64,954 | | | | — | | | | — | | | | — | | | | — | | | | 143,454 | |
|
| | | | | | | | | | | | | | | | | | | | | |
| Name | | Fees Earned or Paid in Cash(2) | | Stock Awards(3),(4) | | Option Awards(5) | | Non-Equity Incentive Plan Compensation | | Change in Pension Value And Non-qualified Deferred Compensation Earnings(6) | | All Other Compensation(7) | | Total |
| | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) |
| | | | | | | | | | | | | | | |
| John B. Adams, Jr. | | 70,500 |
| | 70,510 |
| | — |
| | — |
| | — |
| | — |
| | 141,010 |
|
| Diana F. Cantor | | 65,000 |
| | 70,510 |
| | — |
| | — |
| | — |
| | — |
| | 135,510 |
|
| Chester A. Crocker | | 69,000 |
| | 70,510 |
| | — |
| | — |
| | — |
| | — |
| | 139,510 |
|
| Charles H. Foster, Jr. | | 77,000 |
| | 70,510 |
| | — |
| | — |
| | — |
| | — |
| | 147,510 |
|
| Thomas H. Johnson | | 68,500 |
| | 70,510 |
| | — |
| | — |
| | — |
| | — |
| | 139,010 |
|
| Eddie N. Moore, Jr. | | 88,000 |
| | 70,510 |
| | — |
| | — |
| | — |
| | — |
| | 158,510 |
|
| Jeremiah J. Sheehan | | 87,000 |
| | 70,510 |
| | — |
| | — |
| | — |
| | — |
| | 157,510 |
|
| Robert C. Sledd | | 81,500 |
| | 70,510 |
| | — |
| | — |
| | — |
| | — |
| | 152,010 |
|
Eugene P. Trani (1) | | 11,500 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 11,500 |
|
| |
(1) | Mr. StallardTrani retired from the Board of Directors as of August 4, 2011.7, 2012. |
| |
(2) | Represents fees earned before deferral of any amounts into the Outside Directors’Directors' 1994 Deferred Income Plan, as amended in 1998, 2008 and 2010, which we refer to as the Directors’Directors' DIP. Amounts deferred into the Directors’Directors' DIP during fiscal year 20122013 are set forth below in Footnote 6 to this table. Additional information concerning the Directors’Directors' DIP is set forth in the narrative on page 5669 of this Proxy Statement. |
| |
(3) | These amounts represent the aggregate grant date fair value of the annual restricted stock unit award recognized in fiscal year 20122013 in accordance with FASB ASC Topic 718. These amounts reflect our accounting expense for these awards, and do not correspond to the actual value that will be recognized by each of the non-employee directors. The assumptions used in the calculation of these award amounts are included in Notes 1 and 13 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2012,2013, and are incorporated by reference into this Proxy Statement. |
| |
(4) | On August 4, 2011,7, 2012, each non-employee director was awarded 1,8501,550 shares of restricted stock units. The methodology for determining the amount awarded is set forth on page5669 of this Proxy Statement.The grant date fair value of the award for each non-employee director was $64,954,$70,510, based on the closing price of $35.11$45.49 for our Common Stock as quoted on the NYSE on the grant date. As of March 31, 2012,2013, the aggregate amount of restricted stock, restricted stock units and dividend equivalent units held by each non-employee director was as follows: Mr. Adams held 12,65814,391 shares; Mrs. Cantor held 1,580 shares; Mr. Crocker held 11,95813,691 shares; Mr. Sledd held 5,6587,391 shares; and the remaining non-employee directors each held 13,35815,091 shares. |
| |
(5) | No options werehave been awarded duringsince fiscal year 2012.2006. The following table sets forth, as of March 31, 2012,2013, the total number of option awards held by each non-employee director and the weighted average exercise price for each director’sdirector's total options held: |
| Name | | Total Options Held | | | Weighted Average
Exercise Price of
Total Options Held | |
| | | | | | ($) | |
| | | | | | | |
| John B. Adams, Jr. | | | 4,000 | | | | 44.91 | |
| Chester A. Crocker | | | — | | | | — | |
| Charles H. Foster, Jr. | | | 4,000 | | | | 44.91 | |
| Thomas H. Johnson | | | 2,000 | | | | 46.70 | |
| Eddie N. Moore, Jr. | | | 2,000 | | | | 46.70 | |
| Jeremiah J. Sheehan | | | 6,000 | | | | 41.88 | |
| Robert C. Sledd | | | — | | | | — | |
| Eugene P. Trani | | | 2,000 | | | | 46.70 | |
|
| | | | | | |
| Name | | Total Options Held | | Weighted Average
Exercise Price of
Total Options Held |
| | | (#) | | ($) |
| | | | | |
| John B. Adams, Jr. | | — |
| | — |
|
| Diana F. Cantor | | — |
| | — |
|
| Chester A. Crocker | | — |
| | — |
|
| Charles H. Foster, Jr. | | — |
| | — |
|
| Thomas H. Johnson | | 2,000 |
| | 46.70 |
|
| Eddie N. Moore, Jr. | | — |
| | — |
|
| Jeremiah J. Sheehan | | 4,000 |
| | 44.91 |
|
| Robert C. Sledd | | — |
| | — |
|
| |
(6) | We do not maintain any defined benefit or actuarial plans for non-employee directors. The non-employee directors did not earn above-market or preference earnings on compensation they deferred into the Directors’Directors' DIP. The following table presents information concerning the Directors’Directors' DIP, which provides for the deferral of compensation on a basis that is not tax qualified: |
| | |
| Name | | Director
Contributions
in FY 2012 | | | Registrant
Contributions
FY 2012(a) | | | Aggregate
Earnings in
FY 2012 | | | Aggregate
Withdrawals/
Distributions(b) | | | Aggregate
Balance at
2012 FYE | |
| | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
| | | | | | | | | | | | | | | | |
| John B. Adams, Jr. | | | — | | | | — | | | | — | | | | — | | | | — | |
| Chester A. Crocker | | | 22,500 | | | | — | | | | 5,291 | | | | — | | | | 183,466 | |
| Charles H. Foster, Jr. | | | 80,500 | | | | — | | | | 30,994 | | | | 65,407 | | | | 834,605 | |
| Thomas H. Johnson | | | — | | | | — | | | | — | | | | — | | | | — | |
| Eddie N. Moore, Jr. | | | — | | | | — | | | | 1,784 | | | | — | | | | 43,663 | |
| Jeremiah J. Sheehan | | | — | | | | — | | | | 38,242 | | | | — | | | | 380,727 | |
| Robert C. Sledd | | | — | | | | — | | | | — | | | | — | | | | — | |
| Eugene P. Trani | | | — | | | | — | | | | 18,342 | | | | — | | | | 437,683 | |
|
| | | | | | | | | | | | | | | |
| Name | | Director Contributions in FY 2013 | | Registrant
Contributions
FY 2013(a) |
| Aggregate
Earnings in
FY 2013 | | Aggregate Withdrawals/ Distributions(b) |
| Aggregate Balance at 2013 FYE |
| | | ($) | | ($) |
| ($) | | ($) |
| ($) |
| | | | | | | | | | | |
| John B. Adams, Jr. | | — |
| | — |
| | — |
| | — |
| | — |
|
| Diana F. Cantor | | — |
| | — |
| | — |
| | — |
| | — |
|
| Chester A. Crocker | | 19,000 |
| | — |
| | 22,999 |
| | — |
| | 225,465 |
|
| Charles H. Foster, Jr. | | 77,000 |
| | — |
| | 121,770 |
| | 115,539 |
| | 917,836 |
|
| Thomas H. Johnson | | — |
| | — |
| | — |
| | — |
| | — |
|
| Eddie N. Moore, Jr. | | — |
| | — |
| | 4,900 |
| | — |
| | 48,563 |
|
| Jeremiah J. Sheehan | | — |
| | — |
| | 89,333 |
| | — |
| | 470,060 |
|
| Robert C. Sledd | | — |
| | — |
| | — |
| | — |
| | — |
|
| |
(a) | We do not match non-employee director deferrals or otherwise contribute to the Directors’Directors' DIP. |
| |
(b) | There were no withdrawals and only one distribution from the Directors’Directors' DIP. The Directors’Directors' DIP permits withdrawals under certain circumstances including hardship, and participants elect to have annual deferrals distributed after a specified number of years after the compensation is deferred. |
| |
(7) | None of the directors received perquisites, personal benefits, or other compensation in excess of $10,000 for fiscal year 2012.2013. We maintain life insurance policies which fund our Directors’Directors' Charitable Contribution Program. We did not incur any costs with respect to the insurance policies during fiscal year 2012.2013. |
Total target direct annual compensation for each non-employee director equals $150,000. Each director who is not an officer receives an annual retainer of $50,000, a fee of $2,000 for each Board of Directors meeting attended, and a fee of $1,500 for each committee meeting attended. In addition, the Chairmen of the Audit Committee, the Compensation and Governance Committee, the Pension Investment Committee and the Finance Committee receive an annual retainer of $10,000, $7,500, $5,000 and $5,000, respectively.
A non-employee directorNon-employee directors may elect to receive
histheir annual retainer in cash
or shares of Common
Stock, or an option to purchase such shares. If option payment is elected, the number of shares of Common Stock covered by the option is determined by dividing the Black-Scholes value per share on the date of grant into 125% of the cash value of the annual retainer.Stock.
The
Directors’Directors' DIP permits a non-employee director to defer all or a portion of his compensation. Deferred amounts are deemed hypothetically invested as designated by the director in certain investment options we offer. The
Directors’Directors' DIP has been in existence since 1994 and was amended in 1998 to add a deferred stock unit fund to the investment options available under the plan. Each deferred stock unit represents a hypothetical share of Common Stock and fluctuates in value with the market price of the stock. The portion of a
director’sdirector's deferral account that is invested in the deferred stock unit fund is increased by the number of deferred stock units that could be purchased with Common Stock dividends paid by Universal. In February 2010, we amended the
Directors’Directors' DIP. We no longer offer the deferred stock unit fund as an investment option. Subject to certain restrictions,
the directordirectors may elect at the time of deferral to take cash distributions, in whole or in part, from
histheir deferral account either prior to or following termination of service. The
Directors’Directors' DIP was further amended in December 2008 in order to maintain compliance with Section 409A of the Internal Revenue Code. The terms of the
Directors’Directors' DIP as it pertained to any compensation earned prior to January 1, 2005, were frozen. The restated
Directors’Directors' DIP applies solely with respect to amounts deferred on or after January 1, 2005.
Pursuant to the 2002 Executive Stock Plan, in fiscal year 2007, non-employee directors received annual restricted stock grants equating in value to $70,000, with the number of shares granted, rounded to the nearest 50, determined by the closing market price of the stock on the trading day that next preceded the 2006 Annual Meeting. The number of shares so determined was intended to serve as the amount to be granted for subsequent years until re-evaluated by the Compensation and Governance Committee on a periodic basis. Due to the significant increase in our Common Stock share price during fiscal year 2007, the Compensation and Governance Committee, with the advice of its independent outside advisor, re-evaluated the number of shares of Common Stock granted on an annual basis. The Compensation and Governance Committee calculated restricted stock grants annually based on the daily, volume-weighted, average price of Common Stock for the period of June 1 to July 31, with the resulting share grant number rounded to the nearest 50. This process was followed to calculate the fiscal year 2008 annual restricted stock grants, and for all subsequent years until re-evaluated by the Compensation and Governance Committee on a periodic basis. Beginning with fiscal year 2011, the Compensation and Governance Committee decided to continue following this same process, but substituted restricted stock units for restricted stock. The change was made to improve administrative and tax efficiency. On August 4, 2011,7, 2012, each non-employee director was awarded 1,8501,550 shares of restricted stock units.
As part of our overall program of charitable giving, we
offerpreviously offered the directors the opportunity to participate in a
Directors’Directors' Charitable
ContributionAward Program, or the Charitable Program. The Charitable Program is funded by life insurance policies purchased by us on the directors. The directors derive no financial or tax benefits from the Charitable Program, because all insurance proceeds and charitable tax deductions accrue solely to us. We, however, will donate up to $1,000,000 in aggregate to one or more qualifying charitable organizations recommended by that director. We make donations in ten equal annual installments, with the first installment to be made at the later of the
director’sdirector's retirement from the Board of Directors or age 72; the remaining nine installments are paid annually beginning immediately after the
director’sdirector's death.
The Charitable Program was re-evaluated in fiscal year 2013 and the Compensation and Governance Committee decided to terminate the Charitable Program for all new directors that join the Board of Directors after January 1, 2013.
Each director is also eligible to participate in our matching gifts program in which our charitable foundation match
directors’directors' contributions to charities. The maximum amount that can be matched in any fiscal year of our foundation is $5,000 per director.
Non-Employee Director Stock Ownership Guidelines
The Compensation and Governance Committee adopted share ownership guidelines during fiscal year 2008 applicable to the non-employee directors. The guidelines became effective for fiscal year 2009, and are set at three times the annual cash retainer the directors receive. If the amount of the annual cash retainer changes in the future, the applicable share ownership requirement will automatically adjust proportionately with the change. Non-employee directors have three years to comply with the share ownership guidelines. For fiscal year 2012,2013, the directors’directors' annual cash retainer was $50,000, and therefore the revised guidelines require that each of our non-employee directors own no less than $150,000 worth of Common Stock. Only shares of Common Stock beneficially owned (as defined by the Securities and Exchange Commission’sCommission's rules and regulations) by our non-employee directors, excluding directors’directors' stock options but including the directors’directors' restricted stock and restricted stock units are counted in determining compliance with the guidelines. All of our non-employee directors meet or exceed the stock ownership guidelines.guidelines, except Mrs. Cantor who was elected to the Board of Directors in August 2012.
Our Board of Directors adopted a written related person transaction policy that governs the review, approval, or ratification of covered related person transactions. Our Audit Committee manages this policy. The policy generally provides that we may enter into a related person transaction only if the Audit Committee approves or ratifies such transaction in accordance with the guidelines set forth in the policy and if:
| · |
| Ÿ | the transaction is on terms comparable to those that could be obtained in arm’sarm's length dealings with an unrelated third party; |
| · |
| Ÿ | the transaction is approved by the disinterested members of the Board of Directors; or |
| · |
| Ÿ | the transaction involves compensation approved by our Compensation and Governance Committee. |
In the event our management determines to recommend a related person transaction to the Audit Committee, such transaction must be presented to the Audit Committee for approval. After review, the Audit Committee will approve or disapprove such transaction and at each subsequently scheduled Audit Committee meeting, our management will update the Audit Committee as to any material change to the proposed related person transaction. In those instances in which our General Counsel, in consultation with our Chief Executive Officer or our Chief Financial Officer, determines that it is not practicable or desirable for us to wait until the Audit Committee meeting, the Chairman of the Audit Committee possesses delegated authority to act on behalf of the Audit Committee. The Audit Committee (or the Chairman) approves only those related person transactions that are in, or are not inconsistent with, Universal
Corporation’sCorporation's best interests and the best interests of our shareholders, as the Audit Committee (or the Chairman) determines in good faith.
For purposes of this policy, “related person transaction” is a transaction, arrangement, or relationship (or any series of similar transactions, arrangements, or relationships) in which Universal Corporation (or any of our subsidiaries) was, is, or will be a participant and the amount involved exceeds $120,000 and in which any related person had, has, or will have a direct or indirect interest.
For purposes of determining whether a transaction is a related person transaction, the Audit Committee relies upon Item 404 of Regulation S-K, promulgated under the Exchange Act.
A “related person” is defined as:
| · |
| Ÿ | any person who is, or at any time since the beginning of our last fiscal year was, one of our directors or executive officers or a nominee to become one of our directors; |
| · |
| Ÿ | any person who is known to be the beneficial owner of more than 5% of any class of our voting securities; |
| · |
| Ÿ | any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee or more than 5% beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee, or more than 5% beneficial owner; and |
| · |
| Ÿ | any firm, corporation, or other entity in which any of the foregoing persons is employed or is a general partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest. |
There have been no transactions since the beginning of fiscal year 20122013 between our directors or officers, either directly or indirectly, and us, nor are there any proposed transactions. Additionally, there are no legal proceedings to which any director, officer, or principal shareholder, or any affiliate thereof, is a party that would be material and adverse to us.
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
Our executive compensation program is designed to incent and reward executives to contribute to the achievement of our business objectives and to attract, retain and motivate talented executives to perform at the highest level and contribute significantly to our success. The program is intended to align the interests of the named executive officers with those of shareholders, provide an appropriate and balanced mix of short-term and long-term compensation elements, and reward the achievement of performance measures that are directly related to our financial goals and the creation of shareholder value, without encouraging unnecessary and excessive risks.
The Compensation and Governance Committee believes that the amounts of fiscal year 20122013 actual total compensation for the named executive officers are consistent with these objectives and the competitive market. Based on its review, the Compensation and Governance Committee believes total compensation for each of the named executive officers is reasonable and not excessive. The compensation of the named executive officers is described in the Compensation Discussion and Analysis, the compensation tables and the accompanying narrative on pages 1819 to 5439 of this Proxy Statement. The Compensation Discussion and Analysis and the accompanying tables and narrative provide a comprehensive review of our executive compensation program and its elements, objectives and rationale. Shareholders are urged to read this disclosure before voting on this proposal.
For the reasons stated above, the Board of Directors is requesting approval of the following non-binding resolution:
“RESOLVED, that our shareholders approve, on a non-binding advisory basis, the compensation of the named executive officers, as disclosed in the Proxy Statement for the 20122013 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the fiscal year 20122013 Summary Compensation Table, the other related tables and the accompanying narrative.”
The shareholder vote on this proposal will be non-binding on us and the Board of Directors and will not be construed as overruling a decision by us or the Board of Directors. However, the Board of Directors and the Compensation and Governance Committee value the opinions that shareholders express in their votes and will consider the outcome of the vote when making future executive compensation decisions as they deem appropriate.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE TO APPROVE THE NON-BINDING ADVISORY RESOLUTION APPROVING THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
The five members of the Audit Committee are independent as that term is currently defined in the listing standards of the NYSE.
Fees of Independent Auditors
Ernst & Young LLP served as our independent registered public accounting firm for the fiscal years ended March 31, 20122013 and 2011.2012. The aggregate amounts of fees billed to us by Ernst & Young LLP for those years were as follows:| | | Fiscal Year
2012 | | | Fiscal Year
2011 | |
| | | ($) | | | ($) | |
| | | | | | | |
| Audit Fees | | | | | | | | |
| Includes fees associated with the integrated audit of our financial statements and internal controls over financial reporting, review of our Annual Report on Form 10-K, reviews of our interim financial statements and Quarterly Reports on Form 10-Q, statutory audits, and other attestation services related to regulatory filings. Also includes comfort letters related to the filing of a shelf registration statement (2012) and to a debt offering under a prior registration statement (2011). | | | 2,924,574 | | | | 2,657,474 | |
| Audit-Related Fees | | | | | | | | |
| Includes fees for services that are reasonably related to the review of our financial statements that are not reported under the category “Audit Fees." These services include various technical accounting consultations (2011) and employee benefit plan audits (2012 and 2011). | | | 19,115 | | | | 81,526 | |
| Tax Fees | | | | | | | | |
| Includes fees for corporate tax compliance, tax advice, and tax planning. | | | 315,445 | | | | 160,908 | |
| All Other Fees | | | | | | | | |
| Includes fees for assistance in completing certain governmental filings in countries outside the United States (2012 and 2011). The Audit Committee has concluded that the services covered under this category are compatible with maintaining Ernst & Young LLP's independence with respect to Universal Corporation. | | | 14,690 | | | | 1,689 | |
|
| | | | | | |
| | | Fiscal Year
2013 | | Fiscal Year
2012 |
| | | ($) | | ($) |
| | | | | |
| Audit Fees | | | | |
| Includes fees associated with the integrated audit of our financial statements and internal controls over financial reporting, review of our Annual Report on Form 10-K, reviews of our interim financial statements and Quarterly Reports on Form 10-Q, statutory audits, and other attestation services related to regulatory filings. Also includes comfort letters related to the filing of a shelf registration statement (2012). | | 2,671,503 |
| | 2,924,574 |
|
| Audit-Related Fees | | | | |
| Includes fees for services that are reasonably related to the review of our financial statements that are not reported under the category “Audit Fees.” These services include employee benefit plan audits (2013 and 2012), procedures performed to certify financial information in certain governmental filings outside the United States (2013), and agreed-upon testing and validation procedures related to product costing information developed for one of the Company's operating regions (2013). | | 56,425 |
| | 19,115 |
|
| Tax Fees | | | | |
| Includes fees for corporate tax compliance, tax advice, and tax planning (2013 and 2012), and expatriate employee tax compliance (2013). | | 188,921 |
| | 315,445 |
|
| All Other Fees | | | | |
| Includes fees for assistance in completing certain governmental filings in countries outside the United States (2013 and 2012). The Audit Committee has concluded that the services covered under this category are compatible with maintaining Ernst & Young LLP's independence with respect to Universal Corporation. | | 6,119 |
| | 14,690 |
|
Pre-approval Policies and Procedures
We have written guidelines regarding the engagement of our independent auditors to perform services for us. All audit and non-audit services provided by an independent auditing firm (including its member accounting and law firms outside the United States) to us or any of our
wholly ownedwholly-owned or majority-owned affiliates must be pre-approved by the Audit Committee. All audit and non-audit services listed above were pre-approved by the Audit Committee pursuant to the terms of our pre-approval policies and procedures.
A detailed report of all audit and non-audit services planned for the fiscal year is presented to the Audit Committee for its consideration, discussion, and approval. In addition, the Audit Committee pre-approves a spending account to pay the fees for unplanned audit and non-audit services that do not exceed specified dollar thresholds and are consistent in nature and scope with the planned services. The Chairman of the Audit Committee has pre-approval authority with respect to further additional services that exceed the dollar thresholds or are not consistent in nature or scope with the planned services. All services paid through the spending account or pre-approved by the Chairman must be presented to the full Audit Committee at its next scheduled meeting.
Management is responsible for Universal
Corporation’sCorporation's internal controls, financial reporting process, and compliance with laws and regulations and ethical business standards. The independent auditor is responsible for performing an independent audit of Universal
Corporation’sCorporation's consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and issuing a report thereon. The Audit
Committee’sCommittee's responsibility is to monitor and oversee these processes on behalf of the Board of Directors.
In this context, the Audit Committee has reviewed and discussed the audited financial statements with management and the independent auditor. The Audit Committee has discussed with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. In addition, the Audit Committee has received from the independent auditor the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent
accountant’saccountant's communication with the audit committee concerning independence and discussed with the independent auditor its independence from Universal Corporation and management. Moreover, the Audit Committee has considered whether the independent
auditor’sauditor's provision of non-audit services to Universal Corporation is compatible with maintaining the
auditor’sauditor's independence.
In reliance on the reviews and discussions referred to above, the representation of management that the audited financial statements were prepared in accordance with generally accepted accounting principles and the report of the independent auditor to the Audit Committee, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in Universal Corporation’sCorporation's Annual Report on Form 10-K for the fiscal year ended March 31, 2012,2013, for filing with the Securities and Exchange Commission. By recommending to the Board of Directors that the audited financial statements be so included, the Audit Committee is not opining on the accuracy, completeness, or presentation of the information contained in the audited financial statements.
Eddie N. Moore, Jr.,Chairman Diana F. Cantor
Robert C. Sledd
Eugene P. Trani
The Audit Committee Report does not constitute solicitation material and shall not be deemed filed or incorporated by reference into any of our other filings under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate this report by reference therein.
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Ernst & Young LLP, an independent registered public accounting firm, as our independent registered public accounting firm for the fiscal year ending March 31, 2013.2014. A representative of Ernst & Young LLP is expected to be present at the Annual Meeting with an opportunity to make a statement and to be available to respond to appropriate questions.
Ernst & Young
LLP’sLLP's principal function is to audit the consolidated financial statements of the Company and its subsidiaries and, in connection with that audit, to review certain related filings with the SEC and to conduct limited reviews of the financial statements included in our quarterly reports.
Appointment of our independent registered public accounting firm is not required to be submitted to a vote of the shareholders of the Company for ratification by our by-laws or otherwise. However, the Board of Directors is submitting the appointment of Ernst & Young LLP to the shareholders for ratification as a matter of good corporate practice. If the shareholders do not ratify the appointment, the Audit Committee will consider whether to retain the firm. In such event, the Audit Committee may retain Ernst & Young LLP, notwithstanding the fact that the shareholders did not ratify the appointment or may select another nationally recognized accounting firm without resubmitting the matter to shareholders. Even if the appointment is ratified, the Audit Committee reserves the right, in its discretion, to select a different nationally recognized accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders. Under the Sarbanes-Oxley Act of 2002 and the rules of the SEC promulgated thereunder, the Audit Committee is solely responsible for the appointment, compensation and oversight of the work of our independent registered public accounting firm.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS AND AUDIT COMMITTEE RECOMMEND THAT SHAREHOLDERS VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING MARCH 31,
2013.
SHAREHOLDER PROPOSAL
PROPOSAL - DISCLOSURE OF
THEUNIVERSAL CORPORATON 2007 STOCK INCENTIVE PLAN
LOBBYING POLICIES AND PRACTICES
The Province of St. Joseph of the Capuchin Order, 1015 North Ninth Street, Milwaukee, Wisconsin 53233, claiming beneficial ownership of 95 shares of Universal Common Stock has submitted the proposal set forth below. The names, addresses, and shareholdings of the proponent will be furnished upon request made to the Secretary of the Company. The Company is not responsible for the content of the shareholder proposal, which is printed below exactly as it was submitted.
Whereas, corporate lobbying exposes our company to risks that could affect the company's stated goals, objectives, and ultimately shareholder value, and
Whereas, we rely on the information provided by our company to evaluate goals and objectives, and we, therefore, have a strong interest in full disclosure of our company's lobbying to assess whether our company's lobbying is consistent with its expressed goals and in the best interests of shareholders and long-term value.
Resolved, the shareholders of Universal Corporation 2007 Stock Incentive Plan (the “Plan”(“Universal”) was approvedrequest the Board authorize the preparation of a report, updated annually, disclosing:
| |
| 1. | Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications. |
| |
| 2. | Payments by Universal used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient. |
| |
| 3. | Universal's membership in and payments to any tax-exempt organization that writes and endorses model legislation. |
| |
| 4. | Description of the decision making process and oversight by management and the Board for making payments described in sections 2 and 3 above. |
For purposes of this proposal, a “grassroots lobbying communication” is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. “Indirect lobbying” is lobbying engaged in by a trade association or other organization of which Universal is a member.
Both “direct and indirect lobbying” and “grassroots lobbying communications” include efforts at the local, state and federal levels.
The report shall be presented to the Audit Committee or other relevant oversight committees of the Board and posted on the company's website.
Supporting Statement
As shareholders, we encourage transparency and accountability in the use of staff time and corporate funds to influence legislation and regulation both directly and indirectly. We believe such disclosure is in shareholders' best interests. Absent a system of accountability, company assets could be used for objectives contrary to Universal's long-term interests. We note that in 2010, our company paid a criminal fine of $4.4 million to settle charges of violating the Foreign Corrupt Practices Act by paying approximately $800,000 to officials in Thailand.
Universal spent approximately $180,000 in 2010 and 2011 on August 7, 2007. On May 22, 2012,direct federal lobbying activities (Senate reports). These figures do not include lobbying expenditures to influence legislation in states, nor do they include expenditures to influence legislation in other countries. Universal is listed as a member of the International Tobacco Growers' association. Universal does not disclose its trade association memberships, nor payments and the portions used for lobbying on its website.
We encourage our Board to require comprehensive disclosure related to direct, indirect and grassroots lobbying.
RECOMMENDATION OF BOARD OF DIRECTORS
The Board of Directors
approved the following amendments to the Plan: | · | Amendment to the Plan to increase the number of shares of Common Stock that may be issued under the Plan pursuant to stock awards, stock units and incentive awards from 750,000 to 1,350,000. |
| · | Amendment to the Plan which affords the Compensation and Governance Committee the discretion to cause any award to be forfeited or seek a recoupment of payments made under the Plan in the event of (i) a participant’s willful engagement in any activity that the Compensation and Governance Committee determines is or was harmful to us, (ii) a material restatement of financial statements, or (iii) a participant’s ethical misconduct. |
| · | Amendment to the Plan to add total shareholder return as a performance measure under the Plan. |
In addition, the Compensation and Governance Committee made other immaterial changes to the Plan.
Reasons to Re-approve the Plan
The purposes of the Plan are to promote our financial success; to provide designated executive officers with an opportunity to receive incentive compensation dependent uponrecommends that success; to attract, retain, and motivate such individuals; and to provide awards that are “qualified performance-based compensation” under Section 162(m) of the Internal Revenue Code (“Section 162(m)”).
Under the Plan, we are authorized to issue up to 2,000,000 shares of Common Stock, plus any remaining shares under the 2002 Executive Stock Plan (the “2002 Plan”). In addition, the Plan currently provides that not more than 750,000 shares of Common Stock are available for grants of stock awards, stock units, and/or incentive awards. As of June 15, 2012, we had approximately 124,739 shares available for future stock awards, stock units and incentive awards. We believe that increasing the number of shares of Common Stock that may be issued under the Plan pursuant to stock awards, stock units and incentive awards from 750,000 to 1,350,000 will enable us to have adequate shares to fund expected awards over the next several years without increasing the maximum total number of shares of Common Stock that we may issue under the Plan.
If our shareholders approve the amendment to the Plan, effective August 7, 2012, the number of shares of our Common Stock that may be issued under the Plan pursuant to stock awards, stock units and incentive awards will increase to 1,350,000.
Shareholders also are being asked to approve the material terms of the performance goals under the Plan, as amended. This approval is necessary to preserve the Company’s federal income tax deduction for performance-based compensation paid to certain executive officers under Section 162(m).
Section 162(m) imposes an annual deduction limit of $1 million on the amount of compensation paid to each of the chief executive officer and the four other highest compensated officers. The deduction limit does not apply to performance-based compensation that satisfies the requirements of Section 162(m). The requirements of Section 162(m) for performance-based compensation include shareholder approval of the material terms of the performance goals under which the compensation is paid and the re-approval of such performance goals every five years. vote “against” this proposal.
The Board recommendsbelieves that our shareholders re-approve the qualifying performance criteria for purposes of Section 162(m).If our shareholders do not re-approve these qualifying performance criteria, any compensation expenses associated with performance-based compensation under the Plan (together with all other non-performance based compensation) in excess of $1 million for our Chief Executive Officer or our other four most highly compensated executive officers may not be deductible for U.S. federal income tax purposes. If our shareholders do not re-approve this proposal, the Compensation and Governance Committee would consider the possible loss of the deduction, but may approve restricted stock, incentive awards, stock units and other performance awards for which some of the deductionit is lost.
The following is a general description of the principal features of the Plan, the full text of which, as proposed to be amended by this Proposal Four, is attached as Exhibit A to this Proxy Statement. This summary is qualified in its entirety by reference to Exhibit A.
Material Terms of the Plan
The Plan authorizes the Compensation and Governance Committee to make one or more of the following awards and grants to officers, directors, and employees who are designated by the Compensation and Governance Committee:
| · | stock units, which are stock-denominated awards that will entitle the participant to receive a payment for each unit, in cash, Common Stock, or a combination of cash and Common Stock equal to the fair market value of a share of Common Stock; |
| · | incentive awards, which are cash-denominated awards that will entitle the participant to receive a payment in cash, Common Stock, or stock units, or a combination of cash, Common Stock, or stock units; |
| · | options qualifying as either incentive stock options or non-qualified stock options; and |
| · | stock appreciation rights. |
The Compensation and Governance Committee administers the Plan, and we bear all expenses of administering it.
We are authorized under the Plan to issue up to 2,000,000 shares of Common Stock plus any remaining shares under the 2002 Plan. Shares will be considered to be issued under the Plan only when the shares are actually issued to a participant. Additionally, any shares that are forfeited under the 2002 Plan or the Plan and not issued because of the cancellation, termination, or expiration of a grant or award will become available for issuance under the Plan. If shareholders approve the amendment to the Plan, not more than 1,350,000 shares of Common Stock will be available for grants of stock awards, stock units, and/or incentive awards.
The Plan provides that, if there is a stock split, stock dividend, or other event that affects our capitalization, appropriate adjustments will be made in the number of shares that may be issued and the number of shares and price of all outstanding grants and awards made before such event. The Plan also provides that no award may be granted before August 7, 2007, or after August 6, 2017.
On June 15, 2012, the closing price for a share of our Common Stock on the New York Stock Exchange was $45.59. Through that date, approximately 853,647 shares of Common Stock remained available for issuance under the Plan.
Grants and Awards under the Plan
The principal features of awards under the Plan are summarized below.
Stock Options. The Plan permits the grant of incentive stock options, which qualify for special tax treatment, and non-qualified stock options. The exercise price for options will not be less than the fair market value of a share of Common Stock on the date of grant. The period in which an option may be exercised will be determined by the Compensation and Governance Committee on the date of grant, but will not exceed 10 years in the case of an incentive stock option. Payment of the option exercise price may be in cash or, if the award agreement provides, by surrendering previously owned shares of Common Stock or by our withholding of shares of Common Stock upon exercise. The Plan also permits us to “cash out” any outstanding option by paying the optionee the fair market value of the shares of Common Stock underlying the option less the applicable option exercise price.
Stock Appreciation Rights. Stock appreciation rights may be granted either independently or in combination with underlying stock options. Each stock appreciation right will entitle the holder upon exercise to receive the excess of the fair market value of a share of Common Stock at the time of exercise over the stock appreciation right’s initial value.
Stock Awards. The Compensation and Governance Committee may also grant stock awards that entitle the participant to receive shares of Common Stock. A participant’s rights in the stock award may be forfeitable or otherwise restricted for a period of time or subject to the satisfaction of performance objectives, including those described below, or such other conditions set forth in the grant agreement. The Compensation and Governance Committee may, in its discretion, make a stock award that is not forfeitable and is free of any restrictions on transferability.
Stock Units. The Compensation and Governance Committee may also award stock units, which are awards stated with reference to a number of shares of Common Stock. The award may entitle the recipient to receive, upon satisfaction of performance objectives or other conditions prescribed by the Compensation and Governance Committee and set forth in the award agreement, cash, shares of Common Stock, or a combination of cash and Common Stock. The performance objectives that apply to a stock unit award may be based on the performance criteria described below.
Incentive Awards. Incentive awards entitle the participant to receive a payment if certain performance objectives or other conditions prescribed by the Compensation and Governance Committee and set forth in the award agreement are satisfied. The performance objectives that apply to an incentive award may be based on the performance criteria described below. To the extent that incentive awards are earned, our obligation will be settled in cash, shares of Common Stock, the grant of stock units, or a combination of the three. The Plan provides that no person may receive incentive award payments in any calendar year of more than $2,500,000 for awards with performance periods of one year, or more than the product of $200,000 and the number of months in the performance period for awards with performance periods of more than one year.
Performance Criteria
The performance objectives stated with regard to an award may be based on one or more of the following performance criteria:
| · | basic or diluted earnings per share; |
| · | income before income taxes; |
| · | earnings beforebest interest and taxes; |
| · | earnings before interest, taxes, depreciation, and amortization; |
| · | return on funds employed; |
| · | the price of Common Stock; and |
| · | total shareholder return. |
Performance objectives may be established on a company-wide basis, on the basis of smaller units of the Company or relativeand its shareholders to engage in the political and legislative process, and that the Company's political activities are aligned with its long-term interests. In addition, Universal is committed to adhering to the performancehighest ethical standards in engaging in any political activities and to complying with the letter and spirit of other companies. Measurementall laws, regulations and Company policies governing lobbying activities and disclosure. The Board has carefully considered the proposal and believes that it is not in the best interests of Universal and its shareholders. Accordingly, the Board recommends you vote
AGAINST this proposal.
Participation in Political Process and Existing Disclosure. The Board believes that it is in the best interest of the performance objectives may exclude, as determined by the CompensationCompany and Governance Committee, the effects of extraordinary items, the gain or loss on the disposal of a business segment, unusual or infrequently occurring events and transactions, and cumulative effects of changes in accounting principles.Federal Income Tax Consequences
The principal federal tax consequences to participants and to us of grants and awards under the Plan are summarized below.
Nonqualified Stock Options. Nonqualified stock options granted under the Plan are not taxable to an optionee at grant but result in taxation at exercise, at which time the individual will recognize ordinary income in an amount equal to the difference between the option exercise price and the fair market value of the Common Stock on the exercise date. We will be entitled to deduct a corresponding amount as a business expense in the year the optionee recognizes this income.
Incentive Stock Options. An employee will generally not recognize income on grant or exercise of an incentive stock option; however, the amount by which the fair market value of the Common Stock at the time of exercise exceeds the option price is a required adjustment for purposes of the alternative minimum tax applicable to the employee. If the employee holds the Common Stock received upon exercise of the option for one year after exercise (and for two years from the date of grant of the option), any difference between the amount realized upon the disposition of the stock and the amount paidits shareholders for the stock will be treated as long-term capital gain (or loss, if applicable) to the employee. If the employee exercises an incentive stock option and satisfies these holding period requirements, we may not deduct any amount in connection with the incentive stock option.
Stock Appreciation Rights. There are no immediate federal income tax consequences to a participant when a stock appreciation right is granted. Instead, the participant realizes ordinary income upon exercise of a stock appreciation right in an amount equal to the cash and/or the fair market value (on the date of exercise) of the shares of Common Stock received. We will be entitled to deduct the same amount as a business expense at the time.
Stock Awards. The federal income tax consequences of stock awards depend on the restrictions imposed on the stock. Generally, the fair market value of the stock received will not be includable in the participant’s gross income until such time as the stock is no longer subject to a substantial risk of forfeiture or becomes transferable. The participant may make, however, a tax election to include the value of the stock in gross income in the year of receipt despite such restrictions. Generally, we will be entitled to deduct the fair market value of the stock transferred to the participant as a business expense in the year the participant includes the compensation in income.
Stock Units. A participant generally will not recognize taxable income upon the award of stock units. The participant, however, will recognize ordinary income when the participant receives payment of cash and/or shares of Common Stock for the stock unit. The amount included in the participant’s income will equal the amount of cash and the fair market value of the shares of Common Stock received. We generally will be entitled to a corresponding tax deduction at the time the participant recognizes ordinary income with respect to stock units.
Incentive Awards. A participant generally will not recognize taxable income upon the award of incentive awards. The participant, however, will recognize ordinary income when the participant receives payment of cash and/or shares of Common Stock for the incentive awards. The amount included in the participant’s income will equal the amount of cash and the fair market value of the shares of Common Stock received. We generally will be entitled to a corresponding tax deduction at the time the participant recognizes ordinary income with respect to incentive awards.
Common Stock/Cash Payments. The fair market value of any shares of Common Stock awarded to a participant and any cash payments a participant receives in connection with other awards under the Plan or as dividends on restricted stock are taxable as ordinary income in the year received or made available to the participant without substantial limitations or restrictions. Generally, we will be entitled to deduct the amount (other than dividends) that the participant includes as income as a business expense in the year the participant recognizes such income.
Performance-Based Compensation. Section 162(m) places a $1 million annual limit on the deductible compensation of certain executives of publicly traded corporations. The limit, however, does not apply to “qualified performance-based compensation.” We believe that grants of options and stock appreciation rights under the Plan will qualify for the performance-based compensation exception to the deductibility limit. Stock awards, incentive awards, and stock units will also qualify for this exception to the extent they are subject to the satisfaction of shareholder-approved performance objectives and certain other criteria are satisfied.
State tax consequences may in some cases differ from those described above. Grants and awards under the Plan may in some instances be made to employees who are subject to tax in jurisdictions other than the United States and may result in tax consequences differing from those described above.
Plan Benefits
No determination has been made as to which of the persons eligibleCompany to participate in the Plan will receive future awards underpolitical and legislative process by engaging in a political or legislative discourse to educate and inform agencies and public officials about the Plan, and, therefore,Company's position on issues significant to the benefits to be allocated to any individual or to various groups of eligible participants are not presently determinable. With respect to fiscal year 2012, awards were granted under the Plan to our named executive officers as set forthCompany's business. This is particularly important in the table captioned“Grants of Plan-Based Awards” table on page 39United States, where the tobacco industry is subject to new and increasing regulation. The Company is already required by applicable federal, state and local laws to report corporate lobbying activity, making the adoption of this Proxy Statement,proposal unnecessary and awards forredundant with information that is already available to the public. Specifically, the Company files all required reports pursuant to the federal Lobbying Disclosure Act with the U.S. House of Representatives and the U.S. Senate. These reports are publicly available and provide information on activities associated with affecting legislation through communication with any member or employee of a totallegislative body or with any covered executive branch official. The Company files similar reports as required by state agencies reflecting lobbying activities at the state level, which are also publicly available. The Board does not believe that posting the same information on our Company website in the form of 236,700 sharesa report, updated annually, would provide shareholders with additional meaningful information. Instead, the Board believes that it would be duplicative and impose unnecessary costs and administrative burdens on the Company.
Membership in Associations Unrelated to Lobbying Efforts. The Company and certain of Common Stock were awardedits subsidiaries and officers are members of or support various trade associations and industry groups at the national, state and local level. The Board does not believe that lobbying is the primary purpose of such associations, but associations do occasionally engage in their own lobbying efforts independent of its individual members. The Company does not direct how the associations use their funds, nor does the Company require that any portion of the dues or contributions paid to our executive officers as a group. With respectassociations be dedicated to our non-employee directors, awards were granted to non-employee directors as set forth inlobbying activities. In some cases, the“Directors’ Compensation” table on page 55 of this Proxy Statement. Awards for a total of 33,400 shares were awarded to employees other than executive officers Company may not even agree with respect to fiscal year 2012.Other Information
The Plan was effective as of August 7, 2007, and will expire on August 6, 2017, unless terminated earlierthe position being advocated by the associations to which it or its subsidiaries or employees belong. As a result, disclosure of the Company's payments to these associations may misrepresent the Company's position on certain legislative issues and would not provide shareholders with any meaningful information. In addition, it would place an unreasonable and costly burden on the Company to collect such information from associations because associations generally do not publicly disclose their lobbying efforts and expenses.
Company Adheres to Enhanced Compliance Program. In addition to the disclosure requirements noted above, the Company also complies with its own compliance policies and procedures pertaining to political or legislative interaction. These policies and procedures support the Company's efforts to conduct business with integrity. For example, the Company has a policy prohibiting any of its subsidiaries from making overseas political contributions. In addition, lobbying activity is subject to review and approval pursuant to its compliance policies. The Company posts its policies on its website, which is maintained in 16 languages (www.universalcorp.com/Compliance).
For these reasons, the Board of Directors. Grants and awards issued beforerecommends a vote AGAINST this proposal. Proxies received by the Plan expires or is terminated may extend beyond the expiration or termination date. The Board of Directors may amend the Plan at any time, provided that no such amendmentCompany will be made without shareholder approval if such approval is required under any applicable law, rule, or regulation. Except for adjustments that result from events that affect our capitalization, the Plan prohibits any repricing of options or stock appreciation rights without shareholder approval. In any calendar year, no individual may receive grants and awards under the Plan that represent more than 200,000 shares of our Common Stock.The Plan provides that grants and awards under the plan generally are nontransferable except by will or by the laws of descent and distribution. The Compensation and Governance Committee may grant non-qualified stock options that are transferable if such transfer is not made for value, specifically provided forso voted unless shareholders specify a contrary choice in an option or stock appreciation right agreement, and subject to applicable securities laws requirements.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” RE-APPROVAL OF THE UNIVERSAL CORPORATION 2007 STOCK INCENTIVE PLAN.
PROPOSALS FOR 20132014 ANNUAL MEETING
Under the regulations of the Securities and Exchange Commission, any shareholder desiring to make a proposal to be acted upon at the 20132014 Annual Meeting must cause such proposal to be delivered, in proper form, to our Secretary at the address provided on page 56 of this Proxy Statement no later than February 28, 2013,27, 2014, in order for the proposal to be considered for inclusion in our Proxy Statement for that meeting. We anticipate holding the 20132014 Annual Meeting on August 6, 2013.5, 2014
.
Our Bylaws and Corporate Governance Guidelines also prescribe the procedure a shareholder must follow to nominate directors, and our Bylaws prescribe the procedure a shareholder must follow to bring other business, before shareholders’shareholders' meetings outside of the proxy statement process. For a shareholder to nominate a candidate for director or to bring other business before a meeting, notice must be received by our Secretary not less than 60 days and not more than 90 days prior to the date of the Annual Meeting. Based upon an anticipated date of August 6, 2013,5, 2014, for the 20132014 Annual Meeting, we must receive such notice no later than June 7, 2013,6, 2014, and no earlier than May 8, 2013.7, 2014. Notice of a nomination for director must describe various matters regarding the nominee and the shareholder giving the notice. Notice of other business to be brought before the Annual Meeting must include a description of the proposed business, the reasons therefor, and other specified matters. Any shareholder may obtain a copy of our Bylaws or Corporate Governance Guidelines, without charge, upon written request to our Secretary at the address provided on page 56 of this Proxy Statement. The Corporate Governance Guidelines can also be obtained, free of charge, by visiting the “Corporate Governance”“Corporate Governance” section of our Internet website athttp://investor.universalcorp.com/governance.cfm.
CERTAIN MATTERS RELATING TO PROXY MATERIALS AND ANNUAL REPORTS
Electronic Access to Proxy Materials and Annual Reports
This Proxy Statement and our fiscal year 20122013 Annual Report are available under the “Investor –- Financial Information” section of our Internet website athttp://investor.universalcorp.com/financials.cfm.Paper copies of these documents may be requested by contacting Investor Relations at the address or phone number provided on page 5 of this Proxy Statement.
“Householding” of Proxy Materials and Annual Reports for Record Owners
The Securities and Exchange Commission rules permit us to deliver a single Proxy Statement and Annual Report to any household at which two or more shareholders of record reside at the same address. Each shareholder will continue to receive a separate proxy card. This procedure, known as “householding,” reduces the volume of duplicate information you receive and helps to reduce our expenses. We will deliver promptly upon written or oral request a separate Proxy Statement and Annual Report to a shareholder at a shared address that only received a single set of such materials for this year. If a shareholder would prefer to receive his or her own copy of the Proxy Statement and Annual Report, he or she may request the materials by contacting our Secretary at the address or phone number provided on page 56 of this Proxy Statement.
The Board of Directors is not aware of any matters to be presented for action at the Annual Meeting other than as set forth in this Proxy Statement. However, if any other matters properly come before the Annual Meeting, or any adjournment or postponement thereof, the person or persons voting the proxies will vote them in accordance with their best judgment.
OUR 20122013 ANNUAL REPORT TO SHAREHOLDERS, WHICH INCLUDES A COPY OF OUR FISCAL YEAR 20122013 ANNUAL REPORT (EXCLUDING EXHIBITS), AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, IS BEING MAILED TO SHAREHOLDERS WITH THIS PROXY STATEMENT. ADDITIONAL COPIES OF THE FISCAL YEAR 20122013 ANNUAL REPORT CAN BE OBTAINED WITHOUT CHARGE BY CONTACTING US AT THE ADDRESS OR PHONE NUMBER PROVIDED ON PAGE 5 OF THIS PROXY STATEMENT OR BY VISITING OUR INTERNET WEBSITE AThttp://investor.universalcorp.com/contactus.cfm.
By Order of the Board of Directors
Preston D. Wigner,SecretaryExhibit A
UNIVERSAL CORPORATION
2007 STOCK INCENTIVE PLAN
As Amended and Restated Effective August 7, 2012
Article I
DEFINITIONS
| 1.1. | Affiliate means any “subsidiary” or “parent corporation” (within the meaning of Section 424 of the Code) of the Company. |
| 1.2. | Agreement means a written agreement (including any amendment or supplement thereto) between the Company and a Participant specifying the terms and conditions of a Grant or an Award issued to such Participant. |
| 1.3. | Award means an award of Stock Units, a Stock Award or an Incentive Award. |
| 1.4. | Board means the Board of Directors of the Company. |
| 1.5. | Code means the Internal Revenue Code of 1986, as amended from time to time. References to the Code shall include the valid and binding governmental regulations, court decisions and other regulatory and judicial authority issued or rendered thereunder. |
| 1.6. | Commission means the Securities and Exchange Commission or any successor agency. |
| 1.7. | Committee means the Executive Compensation, Nominating and Corporate Governance Committee of the Board. |
| 1.8. | Common Stock means the Common Stock of the Company. |
| 1.9. | Company means Universal Corporation. |
| 1.10. | Disability, with respect to a Participant, means “disability” as defined from time to time under any long-term disability plan of the Company or Subsidiary with which the Participant is employed. |
| 1.11. | Exchange Act means the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto. |
| 1.12. | Fair Market Value of a share of Common Stock as of any given date means the closing sale price of a share of Common Stock on the New York Stock Exchange Composite Tape on such date, or if the Common Stock was not traded on such date, then the next succeeding date that the Common Stock was traded on such exchange, in either case as reported by such source as the Committee may select. |
| 1.13. | Grant means the grant of an Option or an SAR, or both. |
| 1.14. | Incentive Award means a cash-denominated Award which, subject to such terms and conditions as may be prescribed by the Committee, entitles the Participant to receive a payment, in (i) cash, (ii) Common Stock, (iii) Stock Units or (iv) a combination of cash, Common Stock or Stock Units. |
| 1.15. | Incentive Stock Option means an Option that is intended to qualify as an “incentive stock option” under Section 422 of the Code. |
| 1.16. | Initial Value means, with respect to an SAR, the Fair Market Value of one share of Common Stock on the date of grant, as set forth in an Agreement. |
| 1.17. | Non-Qualified Stock Option means an Option other than an Incentive Stock Option. |
| 1.18. | Option means a stock option that entitles the holder to purchase from the Company a stated number of shares of Common Stock at the price set forth in an Agreement. |
| 1.19. | Option Price means the price per share for Common Stock purchased on the exercise of an Option as provided in Article VI. |
| 1.20. | Participant means an officer, director or employee of the Company or of a Subsidiary who satisfies the requirements of Article IV and is selected by the Committee to receive a Grant or an Award. |
| 1.21. | Performance Measure means one or more of the following selected by the Committee to measure Company and/or business unit performance: net income; basic or diluted earnings per share; net revenues; gross profit; income before income taxes; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; economic profit; free cash flow; operating income; return on assets; return on funds employed; return on equity; total shareholder return and the price of Common Stock; each as determined in accordance with generally accepted accounting principles, where applicable, as consistently applied by the Company and, if so determined by the Committee prior to the expiration of the performance period, adjusted, to the extent permitted under Section 162(m) of the Code, to omit the effects of extraordinary items, the gain or loss on the disposal of a business segment, unusual or infrequently occurring events and transactions, and cumulative effects of changes in accounting principles. Performance Measure may vary from performance period to performance period and from Participant to Participant and may be established on a stand-alone basis, in tandem or in the alternative. |
| 1.22. | Plan means the Universal Corporation 2007 Stock Incentive Plan, as amended and restated, effective August 7, 2012. |
| 1.23. | Prior Planmeans the Universal Corporation 2002 Executive Stock Plan. |
| 1.24. | Rule 16b-3 means Rule 16b-3, as promulgated by the Commission under Section 16(b) of the Exchange Act, as amended from time to time. |
| 1.25. | SAR means a stock appreciation right granted pursuant to this Plan that entitles the holder to receive, with respect to each share of Common Stock encompassed by the exercise of such SAR, the excess of the Fair Market Value at the time of exercise over the Initial Value of the SAR. |
| 1.26. | Securities Broker means the registered securities broker acceptable to the Company who agrees to effect the cashless exercise of an Option pursuant to Section 8.4 hereof. |
| 1.27. | Stock Award means Common Stock awarded to a Participant pursuant to Article IX. |
| 1.28. | Stock Unit means an award stated with reference to a share of Common Stock that entitles the holder to receive a payment for each Stock Unit equal to the Fair Market Value of a share of Common Stock on the date of payment. At the Committee’s discretion, the Participant’s rights in Stock Units may be forfeitable or otherwise restricted and may be paid in cash, Common Stock or a combination of cash or Common Stock. |
| 1.29. | Subsidiary means any corporation, partnership, joint venture or other entity during any period in which at least a 50% voting or profits interest is owned, directly or indirectly, by the Company (or by any entity that is a successor to the Company), and any other business venture designated by the Committee in which the Company (or an entity that is a successor to the Company) has a significant interest, as determined in the discretion of the Committee. |
Article II
PURPOSES
The Plan is intended to assist the Company in recruiting and retaining officers, directors and employees with ability and initiative by enabling such persons who contribute significantly to the Company or an Affiliate to participate in its future success and to better align their interests with those of the Company and its shareholders. The Plan is intended to permit the award of Stock Awards, Stock Units and Incentive Awards, and the grant of Options qualifying as Incentive Stock Options or Non-Qualified Stock Options as designated by the Committee at time of grant, and SARs. No Option that is intended to be an Incentive Stock Option, however, shall be invalid for failure to qualify as an Incentive Stock Option under Section 422 of the Code but shall be treated as a Non-Qualified Stock Option.
Article III
ADMINISTRATION
The Plan shall be administered by the Committee. No person shall be appointed to or serve as a member of the Committee unless at the time of such appointment and service he shall be a “non-employee director” as defined in Rule 16b-3, an “outside director” within the meaning of Section 162(m) of the Code, and an “independent director” within the meaning of any applicable listing requirement of the New York Stock Exchange applicable to the Committee. The Committee shall have authority to issue Grants and Awards upon such terms (not inconsistent with the provisions of this Plan) as the Committee may consider appropriate. The terms of such Grants and Awards may include conditions (in addition to those contained in this Plan) on (i) the exercisability of all or any part of an Option or SAR and (ii) the transferability or forfeitability of a Stock Award, Incentive Award or award of Stock Units, including, by way of example and not of limitation, requirements that a Participant complete a specified period of employment or service with the Company or a Subsidiary, requirements that the Company achieve a specified level of financial performance or financial return. Notwithstanding any such conditions, the Committee may, in its discretion, accelerate the time at which any Option or SAR may be exercised or the time at which a Stock Award may become transferable or nonforfeitable or both; provided, however, that if an Award is subject to Code section 409A, any acceleration must satisfy the requirements of such Code section. In addition, the Committee shall have complete authority to interpret all provisions of this Plan; to prescribe the form of Agreements; to adopt, amend, and rescind rules and regulations pertaining to the administration of the Plan; and to make all other determinations necessary or advisable for the administration of this Plan. To fulfill the purposes of the Plan without amending the Plan, the Committee may also modify any Grants or Awards issued to Participants who are nonresident aliens or employed outside of the United States to recognize differences in local law, tax policy or custom provided such modifications are permitted by Code section 409A, if applicable.
The express grant in the Plan of any specific power to the Committee shall not be construed as limiting any power or authority of the Committee. Any decision made, or action taken, by the Committee or in connection with the administration of this Plan shall be final and conclusive. All expenses of administering this Plan shall be borne by the Company.
If the Committee determines, in its sole discretion, that the Participant at any time has willfully engaged in any activity that the Committee determines was or is harmful to the Company, then the Committee may cause any award to be forfeited in part or in whole or the Company may seek a recoupment of payments made under the Plan in part or in whole. In the event of a material restatement of financial statements, the Committee may cause any award to be forfeited in part or in whole or the Company may seek a recoupment of payments made pursuant to the Plan in part or in whole. In addition, the Committee may cause any award to be forfeited in part or in whole or the Company may seek a recoupment of payments made under the Plan in part or in whole in the event of the Participant’s ethical misconduct.
Article IV
ELIGIBILITY
| 4.1. | General. Any officer, director or employee of the Company or of any Subsidiary (including any corporation that becomes a Subsidiary after the adoption of this Plan) who, in the judgment of the Committee, has contributed significantly or can be expected to contribute significantly to the performance of the Company or a Subsidiary may receive one or more Awards or Grants, or any combination or type thereof. Employee and non-employee directors of the Company are eligible to participate in this Plan. |
| 4.2. | Grants and Awards. The Committee will designate individuals to whom Grants and/or Awards are to be issued and will specify the number of shares of Common Stock subject to each such Grant or Award. An Option may be granted alone or in addition to other Grants and/or Awards under the Plan. The Committee shall have the authority to grant any Participant Incentive Stock Options, Non-Qualified Stock Options or both types of Options (in each case with or without a related SAR); provided, however, that Incentive Stock Options may be granted only to employees of the Company and its subsidiaries (within the meaning of Section 424(f) of the Code). An SAR may be granted with or without a related Option. All Grants or Awards issued under this Plan shall be evidenced by Agreements, which shall be subject to applicable provisions of this Plan and to such other provisions as the Committee may determine. No Participant may be granted Options that are Incentive Stock Options or related SARs (under all Incentive Stock Option plans of the Company and Affiliates) which are first exercisable in any calendar year for stock having an aggregate Fair Market Value (determined as of the date an Option is granted) exceeding $100,000. A Participant may not receive Grants and Awards under this Plan with respect to more than 200,000 shares of Common Stock during any calendar year. |
| 4.3. | Designation of Option as an Incentive Stock Option or a Non-Qualified Stock Option. The Committee will designate at the time an Option is granted whether the Option is to be treated as an Incentive Stock Option or a Non-Qualified Stock Option. In the absence, however, of any such designation, such Option shall be treated as a Non-Qualified Stock Option. |
| 4.4. | Qualification of Incentive Stock Option under Section 422 of the Code. Anything in the Plan to the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options shall be interpreted, amended or altered nor shall any discretion or authority granted under the Plan be exercised so as to disqualify the Plan under Section 422 of the Code or, without the consent of the optionee affected, to disqualify any Incentive Stock Option under such Section 422. No Option that is intended to be an Incentive Stock Option, however, shall be invalid for failure to qualify as an Incentive Stock Option under Section 422 of the Code but shall be treated as a Non-Qualified Stock Option. |
Article V
STOCK SUBJECT TO PLAN
| 5.1. | Maximum Number of Shares to be Issued. Subject to the adjustment provisions of Article XII and the provisions of (a) and (b) of this Section 5.1, up to 2,000,000 shares of Common Stock plus any shares remaining under the Prior Plan on the effective date may be issued under the Plan. In addition to such authorization, the following shares of Common Stock may be issued under the Plan: |
| (a) | Shares of Common Stock that are forfeited under the Prior Plan and shares of Common Stock that are not issued under the Prior Plan because of the cancellation, termination or expiration of Grants and Awards, and/or other similar events under the Prior Plan shall be available for issuance under this Plan. |
| (b) | Shares of Common Stock that are forfeited under the Plan and shares of Common Stock that are not issued under the Plan because of the cancellation, termination or expiration of Grants and Awards and/or other similar events under the Plan, shall be available for issuance under the Plan. |
| | Subject to the adjustment provisions of Article XII, not more than 1,350,000 shares of Common Stock shall be issued under this Plan pursuant to Stock Awards, Stock Units or Incentive Awards. |
| | Subject to the foregoing provisions of this Section 5.1, if a Grant or an Award may be paid only in shares of Common Stock, or in either cash or shares of Common Stock, the shares of Common Stock shall be deemed to be issued hereunder only when and to the extent that payment is actually made in shares of Common Stock. |
| 5.2. | Independent SARs. Upon the exercise of an SAR granted independently of an Option, the Company may deliver to the Participant authorized but previously unissued Common Stock, cash, or a combination thereof as provided in Section 8.6. The maximum aggregate number of shares of Common Stock that may be issued pursuant to SARs that are granted independently of Options is subject to the provisions of Section 5.1. hereof. |
Article VI
OPTION PRICE
The price per share for Common Stock purchased on the exercise of an Option shall be fixed by the Committee, but shall not be less than the Fair Market Value on the date of grant.
Article VII
EXERCISE OF OPTIONS AND SARS
| 7.1. | Maximum Option Period or SAR Period. The period in which an Option or SAR may be exercised shall be determined by the Committee on the date of grant; provided, however that an Incentive Stock Option shall not be exercisable after the expiration of 10 years from the date the Incentive Stock Option was granted and any SAR related to an Incentive Stock Option may not be exercised after the expiration of the underlying Incentive Stock Option. The term of exercisability of any Option may not be extended or renewed except as may be permitted by Code section 409A. |
| 7.2. | Non-Transferability of Options and SARs.Non-Qualified Stock Options and SARs may be transferable by a Participant and exercisable by a person other than a Participant, but only to the extent such transfer is not made for value, specifically provided for in an Option or SAR Agreement and subject to applicable securities laws requirements. Incentive Stock Options and any related SARs, by their terms, shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable, during the Participant’s lifetime, only by the Participant. No right or interest of a Participant in any Option or SAR shall be liable for, or subject to, any lien, obligation or liability of such Participant. |
| 7.3. | Employee Status. For purposes of determining the applicability of Section 422 of the Code (relating to Incentive Stock Options), or in the event that the terms of any Grant provide that it may be exercised only during employment or within a specified period of time after termination of employment, the Committee may decide to what extent leaves of absence for governmental or military service, illness, temporary Disability, or other reasons shall not be deemed interruptions of continuous employment. |
Article VIII
METHOD OF EXERCISE
| 8.1. | Exercise. Subject to the provisions of Articles VII and XIII, an Option or SAR may be exercised in whole at any time or in part from time to time at such times and in compliance with such requirements as the Committee shall determine; provided, however, that an SAR that is related to an Incentive Stock Option may be exercised only to the extent that the related Option is exercisable and when the Fair Market Value exceeds the Option Price of the related Option. An Option or SAR granted under this Plan may be exercised with respect to any number of whole shares less than the full number for which the Option or SAR could be exercised. Such partial exercise of an Option or SAR shall not affect the right to exercise the Option or SAR from time to time in accordance with this Plan with respect to remaining shares subject to the Option or SAR. The exercise of an Option shall result in the termination of any related SAR to the extent of the number of shares with respect to which the Option is exercised. |
| 8.2. | Payment. Unless otherwise provided by the Agreement, payment of the Option Price shall be made in cash. If the Agreement provides, payment of all or part of the Option Price may be made by surrendering (by either actual delivery or attestation)already owned shares of Common Stock to the Company and the payment of applicable minimum statutory withholding taxes may be made by the Company withholding whole shares of Common Stock from the Participant upon exercise, provided the shares surrendered or withheld have a Fair Market Value (determined as of the day preceding the date of exercise) that is not less than such price or part thereof and any such minimum statutory withholding taxes. In addition, the Committee may establish such payment or other terms as it may deem to be appropriate and consistent with these purposes. |
| 8.3. | Shareholder Rights. No Participant shall have any rights as to shareholder of the Company with respect to shares subject to his Option or SAR until the date he exercises his Option or SAR. |
| 8.4. | Cashless Exercise. To the extent permitted under the applicable laws and regulations, at the request of the Participant and with the consent of the Committee, the Company agrees to cooperate in a “cashless exercise” of the Option. The cashless exercise shall be effected by the Participant delivering to the Securities Broker instructions to exercise all or part of the Option, including instructions to sell a sufficient number of shares of Common Stock to cover the costs and expenses associated therewith. The Committee may permit a Participant to elect to pay any applicable withholding taxes by requesting that the Company withhold the number of shares of Common Stock equivalent at current Fair Market Value to the minimum statutory withholding taxes due. |
| 8.5. | Cashing Out of Option.The Committee may elect to cash out all or part of the portion of any Option to be exercised by paying the optionee an amount, in cash or Common Stock, equal to the excess of the Fair Market Value of the Common Stock that is the subject of the portion of the Option to be exercised over the Option Price times the number of shares of Common Stock subject to the portion of the Option to be exercised on the effective date of such cash out. |
| 8.6. | Determination of Payment of Cash and/or Common Stock Upon Exercise of SAR. At the Committee’s discretion, the amount payable as a result of the exercise of an SAR may be settled in cash, Common Stock, or a combination of cash and Common Stock. No fractional shares shall be delivered upon the exercise of an SAR. |
Article IX
STOCK AWARDS
| 9.1. | Award. In accordance with the provisions of Article IV, the Committee will designate persons to whom a Stock Award is to be made and will specify the number of shares of Common Stock covered by such Award or Awards. |
| 9.2. | Vesting. The Committee, on the date of the Award, may prescribe that the Participant’s rights in a Stock Award shall be forfeitable or otherwise restricted for a period of time or subject to the satisfaction of performance objectives, including performance objectives stated with reference to Performance Measures, or such other conditions as may be set forth in an Agreement. Subject to the provisions of Article XIII hereof, the Committee may award a Stock Award to a Participant which is not forfeitable and is free of any restrictions on transferability. |
| 9.3. | Shareholder Rights. Prior to their forfeiture (in accordance with the terms of the Agreement and shares of Common Stock granted pursuant to a Stock Award may be forfeited or are nontransferable), a Participant will have all rights of a shareholder with respect to a Stock Award, including the right to receive dividends and vote the shares; provided, however, that (i) a Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of shares of Stock granted pursuant to a Stock Award, (ii) the Company shall retain custody of the certificates evidencing shares of Common Stock granted pursuant to a Stock Award, and (iii) the Participant will deliver to the Company a stock power, endorsed in blank, with respect to each Stock Award. |
Article X
STOCK UNITS
| 10.1 | Award. Pursuant to this Plan or an Agreement establishing additional terms and conditions, the Committee may designate each individual to whom an awards of Stock Units is to be made and will specify the number of Stock Units covered by the Award. |
| 10.2 | Earning the Award. The Committee, on the date of grant of the Award, may prescribe that the Stock Units or a portion thereof, will be earned only upon, and the Participant will be entitled to receive a payment pursuant to the Award of Stock Units, only upon the satisfaction of performance objectives or such other criteria as may be prescribed by the Committee and set forth in the Agreement, including performance objectives stated with reference to Performance Measures. |
| 10.3 | Shareholder Rights. No Participant shall, as a result of receiving a Stock Unit Award, have any of the rights of a shareholder with respect to such Stock Unit Award until and to the extent such Stock Units are earned and settled in shares of Common Stock. |
| 10.4 | Payment. At the Committee’s discretion, the amount payable when an award of Stock Units is earned may be settled in cash, Common Stock or a combination of cash and Common Stock. Fractional shares shall be deliverable when an Award of Stock Units is earned. |
| 10.5 | Nontransferability. A Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of a Stock Unit Award other than by will or the laws of descent and distribution and the Participant’s right or interest in a Stock Unit Award may not be liable for, or subject to, any lien, obligation or liability of such Participant. |
Article XI
INCENTIVE AWARDS
| 11.1. | Award. The Committee shall designate Participants to whom Incentive Awards are made. All Incentive Awards shall be finally determined exclusively by the Committee under the procedures established by the Committee. With respect to an Incentive Award based on a performance period of one year, no Participant may receive an Incentive Award payment in any calendar year that exceeds $2,500,000. With respect to an Incentive Award based on a performance period of more than one year, no Participant may receive an Incentive Award payment in any calendar year that exceeds the product of (i) $200,000 and (ii) the number of months in the performance period. |
| 11.2. | Terms and Conditions.The Committee, at the time an Incentive Award is made, shall specify the terms and conditions which govern the Award. The restrictions set forth in the Agreement must include the attainment of performance objectives, including performance objectives stated with reference to Performance Measures. By way of example and not of limitation, the performance objectives may provide that the Incentive Award will be earned only if the Company, a Subsidiary or the Company and its Subsidiaries or the Participant achieve stated objectives, including objectives stated with reference to Performance Measures. |
| 11.3. | Payment.In the discretion of the Committee, the Award payable when an Incentive Award is earned, may be settled in cash, by the issuance of Common Stock, grant of Stock Units, or a combination of cash, Common Stock and/or Stock Units. |
| 11.4. | Nontransferability.Incentive Awards granted under this Plan shall be nontransferable except by will or by the laws of descent and distribution. No right or interest of a Participant in an Incentive Award shall be liable for, or subject to, any lien, obligation, or liability of such Participant. |
| 11.5. | Employee Status.If the terms of an Incentive Award provide that a payment will be made thereunder only if the Participant completes a stated period of employment or service, the Committee may decide to what extent leaves of absence for governmental or military service, illness, temporary disability or other reasons shall not be deemed interruptions of continuous employment or service. |
| 11.6. | Shareholder Rights.No Participant shall, as a result of receiving an Incentive Award, have any rights as to shareholder of the Company or any Subsidiary on account of such Award until, and except to the extent that, the Incentive Award is earned and settled in shares of Common Stock. |
Article XII
ADJUSTMENT UPON CHANGE IN COMMON STOCK
Should the Company effect one or more (x) stock dividends, stock split-ups, subdivisions or consolidations of shares or other similar changes in capitalization; (y) spin-offs, spin-outs, split-ups, split-offs, or other such distribution of assets to shareholders; or (z) direct or indirect assumptions and/or conversions of outstanding Options due to an acquisition of the Company, then the maximum number of shares as to which Grants and Awards may be issued under this Plan shall be proportionately adjusted and their terms shall be adjusted as the Committee shall determine to be equitably required, provided that the number of shares subject to any Grant or Award shall always be a whole number. Any determination made under this Article XII by the Committee shall be final and conclusive.
The issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to any Grant or Award.
Article XIII
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Grant shall be exercisable, no Common Stock shall be issued, no certificates for shares of Common Stock shall be delivered, and no payment shall be made under this Plan except in compliance with all applicable federal and state laws and regulations (including, without limitation, withholding tax requirements) and the rules of all domestic stock exchanges on which the Company’s shares may be listed. The Company may rely on an opinion of its counsel as to such compliance. Any share certificate issued to evidence Common Stock for which a Grant is exercised or an Award is issued may bear such legends and statements as the Committee may deem advisable to assure compliance with federal and state laws and regulations. No Grant shall be exercisable, no Common Stock shall be issued, no certificate for shares shall be delivered, and no payment shall be made under this Plan until the Company has obtained such consent or approval as the Committee may deem advisable from regulatory bodies having jurisdiction over such matters.
Article XIV
GENERAL PROVISIONS
| 14.1 | Effect on Employment. Neither the adoption of this Plan, its operation, nor any documents describing or referring to this Plan (or any part thereof) shall confer upon any employee any right to continue in the employ of the Company or a Subsidiary or in any way affect any right and power of the Company or a Subsidiary to terminate the employment of any employee at any time with or without assigning a reason therefor. |
| 14.2 | Unfunded Plan. The Plan, insofar as it provides for a Grant or an Award, is not required to be funded, and the Company shall not be required to segregate any assets that may at any time be represented by a Grant or an Award under this Plan. |
| 14.3 | Rules of Construction. Headings are given to the articles and sections of this Plan solely for ease of reference and are not to be considered in construing the terms and conditions of the Plan. The reference to any statute, regulation, or other provision of law shall be construed to refer to any amendment to or successor of such provision of law. |
| 14.4 | Rule 16b-3 Requirements. Notwithstanding any other provisions of the Plan, the Committee may impose such conditions on any Grant or Award, and the Board may amend the Plan in any such respects, as they may determine, on the advice of counsel, are necessary or desirable to satisfy the provisions of Rule 16b-3. Any provision of the Plan to the contrary notwithstanding, and except to the extent that the Committee determines otherwise: (a) transactions by and with respect to officers and directors of the Company who are subject to Section 16(b) of the Exchange Act shall comply with any applicable conditions of Rule 16b-3; and (b) every provision of the Plan shall be administered, interpreted, and construed to carry out the foregoing provisions of this sentence. |
| 14.5 | Amendment, Modification, and Termination. At any time and from time to time, the Board may terminate, amend, or modify the Plan. Such amendment or modification may be without shareholder approval except to the extent that such approval is required by the Code, pursuant to the rules under Section 16 of the Exchange Act, by any national securities exchange or system on which the Common Stock is then listed or reported, by any regulatory body having jurisdiction with respect thereto, or under any other applicable laws, rules, or regulations. No termination, amendment, or modification of the Plan, other than pursuant to Section 14.4 herein, shall in any manner adversely affect any Grant or Award theretofore issued under the Plan, without the written consent of the Participant. The Committee may amend the terms of any Grant or Award theretofore issued under this Plan, prospectively or retrospectively, but no such amendment shall impair the rights of any Participant without the Participant’s written consent except an amendment provided for or contemplated in the terms of the Grant or Award, an amendment made to cause the Plan, or Grant or Award, to qualify for the exemption provided by Rule 16b-3, or an amendment to make an adjustment under Article XII. |
| 14.6 | Repricing of Options and SARs.An Option or SAR may not berepriced without the approval of the shareholders of the Company after the date of grant of such Option or SAR. For this purpose, a repricing means any of the following (or such other action that has the same effect as any of the following): (a) amending the terms of an Option or SAR to reduce the exercise price of such Option or the grant price of an SAR; (b) taking any action that is treated as a repricing under generally accepted accounting principles; and (c) repurchasing for cash or canceling an Option or SAR in exchange for another Award at a time when the exercise price of such Option or grant price of such SAR is greater than the Fair Market Value of Common Stock, unless the cancellation and exchange occurs in connection with an event set forth in Article XII. Such cancellation and exchange is considered a repricing regardless of whether it is treated as a repricing under generally accepted accounting principles and regardless of whether it is voluntary on the part of the Participant. |
| 14.7 | Governing Law. The validity, construction and effect of the Plan and any actions taken or related to the Plan shall be determined in accordance with the laws of the Commonwealth of Virginia and applicable federal law. |
| 14.8 | Successors and Assigns. All obligations of the Company under the Plan, with respect to Grants and Awards issued hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. The Plan shall be binding on all successors and permitted assigns of a Participant, including, but not limited to, the estate of such Participant and the executor, administrator or trustee of such estate, and the guardians or legal representative of the Participant. |
| 14.9 | Effect on Prior Plans and Other Compensation Arrangements.The adoption of this Plan shall have no effect on Grants and Awards made or to be made pursuant to the Prior Plans and the Company’s other compensation arrangements. Nothing contained in this Plan shall prevent the Company from adopting other or additional compensation plans or arrangements for its officers, directors or employees. |
| 14.10 | Limitation of Implied Rights. Neither a Participant nor any other person shall, by reason of participation in the Plan, acquire any right in or title to any assets, funds or property of the Company or any Subsidiary whatsoever, including, without limitation, any specific funds, assets, or other property which the Company or any Subsidiary, in its sole discretion, may set aside in anticipation of a liability under the Plan. Except for those rights in Stock Awards specifically set forth in subsection 9.3 hereof, a Participant shall have only a contractual right to the Stock or amounts if any, payable under the Plan, unsecured by any assets of the Company or any Subsidiary, and nothing contained in the Plan shall constitute a guarantee that the assets of the Company or any Subsidiary shall be sufficient to pay any benefits to any person. The Plan does not constitute a contract of employment, and selection as a Participant will not give any participating employee the right to be retained in the employ of the Company or any Subsidiary, nor any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan. Except as otherwise provided in the Plan, no Award or Grant under the Plan shall confer upon the holder thereof any rights as a shareholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such rights. |
| 14.11 | Duration of Plan.No Grant or Award may be issued under this Plan before August 7, 2007, or after August 6, 2017. Grants and Awards issued on or after August 7, 2007, but on or before August 6, 2017, shall remain valid in accordance with their terms. |
| 14.12 | Effective Date. This Plan was initially approved by the Board, effective as of August 7, 2007, and by the shareholders of the Company entitled to vote at the 2007 Annual Meeting of the Shareholders. This amended and restated Plan was approved by the Board on May 22, 2012, and by the shareholders entitled to vote at the 2012 Annual Meeting of the Shareholders. |
 | | Shareowner ServicesSM
P.O. Box 64945 St. Paul, MN 55164-0945
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| | Vote by Internet, Telephone or Mail |
| | 24 Hours a Day, 7 Days a Week |
| | Your phone or Internet vote authorizes the named |
| | proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. |
| | : | |
|  | INTERNET/MOBILE – - www.eproxy.com/uvv |
| | | Use the Internet to vote your proxy until 11:59 a.m. (ET) on August 6, 2012.5, 2013. |
| | | |
|  | PHONE –- 1-800-560-1965 |
| | | Use a touch-tone telephone to vote your proxy until 11:59 a.m. (ET) on August 6, 2012.5, 2013. |
| | * | |
|  | MAIL – - Mark, sign and date your proxy card and return it in the postage-paid envelope provided. |
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| | If you vote your proxy by Internet or by Telephone, you do NOT need to mail back your Proxy Card. |
TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW,
SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD.
The Board of Directors recommends a vote FOR the listed nominees:
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1. Election of directors: | | 01 John B. Adams, Jr.Chester A. Crocker (three-year term) | ¨o | Vote FOR | | ¨o | Vote WITHHELD |
| | | 02 Diana F. CantorCharles H. Foster, Jr. (three-year term) | | all nominees | | | from all nominees |
| | | 03 Robert C. SleddThomas H. Johnson (three-year term) | | (except as marked) |
| | 04 Lennart R. Freeman (one-year term) | | | | | |
(Instructions: To withhold authority to vote for any indicated nominee,
write the number(s) of the nominee(s) in the box provided to the right.)
The Board of Directors recommends a vote FOR the following proposals:
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2. Approve a non-binding advisory resolution relating to the compensation of the named executive officers | | o For | | o Against | | o Abstain | | |
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3. Ratify the appointment of Ernst & Young LLP as the Company’sCompany's independent
registered public accounting firm for the fiscal year ending March 31, 20132014 | | o For | | o Against | | o Abstain | | |
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4. Re-approve the Universal Corporation 2007 Stock Incentive Plan | | o For | | o Against | | o Abstain | | |
The Board of Directors recommends a vote AGAINST the following proposal:
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4. One shareholder proposal, if properly presented, concerning the disclosure of lobbying policies and practices. | | o For | | o Against | | o Abstain | | |
The undersigned hereby authorizes the
Company’sCompany's designated proxies to vote, in their discretion, on such other business and matters incident to the conduct of the meeting as may come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTEDFOR ALL NOMINEES,FOR PROPOSALS 2 AND 3, ANDAGAINST PROPOSAL 4, AND ACCORDING TO THE PROXY HOLDERS’HOLDERS' DISCRETION ON ALL OTHER MATTERS. |
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Address Change? Mark Boxbox, sign, and indicate changes below: ¨oIndicate changes below: | Date | |
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| Please sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy. |
ANNUAL MEETING OF SHAREHOLDERS
Tuesday, August 7, 20126, 2013
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| UNIVERSAL CORPORATION | proxy |
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints Preston D. Wigner and David C. Moore, and each or either of them, proxies for the undersigned, with full power of substitution, to vote all the shares of Common Stock of Universal Corporation held of record by the undersigned on June 15, 2012,14, 2013, at the Annual Meeting of Shareholders to be held at 2:00 p.m. on August 7, 2012,6, 2013, and at any adjournments or postponements thereof, upon the matters listed on the reverse side, as more fully set forth in the Proxy Statement, and for the transaction of such other business as may properly come before the Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON THE REVERSE SIDE BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES, FOR PROPOSALS 2
AND 3,
ANDAGAINST PROPOSAL 4 AND ACCORDING TO THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY AND ALL ADJOURNMENTS OR POSTPONEMENTS THEREOF.
PLEASE VOTE BY INTERNET OR PHONE, OR DATE AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING: THE NOTICE AND PROXY STATEMENT AND THE ANNUAL REPORT ARE AVAILABLE ON UNIVERSAL
CORPORATION’SCORPORATION'S WEBSITE AT: WWW.INVESTOR.UNIVERSALCORP.COM.
See reverse for voting instructions.
