UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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| ¨ Soliciting Material Pursuant to §240.14a -12 |
ANIXTER INTERNATIONAL INC.
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SEC 1913 (11-01) | Persons who are to respond to the collection of information contained in this form are not required torespond unless the form displays a currently valid OMB control number. |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 10, 20129, 2013
To the Stockholders of Anixter International Inc.:
The Annual Meeting of Stockholders of Anixter International Inc. will be held at Two North Riverside Plaza, 24th Floor, Chicago, Illinois on Thursday, May 10, 2012,9, 2013, at 8:30 a.m., for the following purposes:
| (1) | to elect 11 directors nominated by the Board of Directors; |
| (2) | to hold an advisory vote to approve executive compensation; |
| (3) | to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year |
| (4) | to transact such other business as may properly be brought before the meeting or any adjournment or postponement thereof. |
The Board of Directors has fixed the close of business on March 12, 201211, 2013 as the record date for the determination of stockholders entitled to notice of, and to vote at, the meeting or any adjournment(s) or postponements thereof. A complete list of the stockholders entitled to vote at the meeting will be open for examination by any stockholder for any purpose germane to the meeting during ordinary business hours for ten days prior to the meeting at the offices of Anixter International Inc., 2301 Patriot Boulevard, Glenview, Illinois 60026, and will also be available at the meeting.
A copy of Anixter International Inc.’s Annual Report to Stockholders for the fiscal year ended December 30, 201128, 2012 is being mailed to all registered holders. Additional copies of the Annual Report and Proxy Statement may be obtained without charge by writing to the Corporate Secretary or by requesting them from the Company’s website at http://www.anixter.com/IRContacts.
By Order of the Board of Directors
BJRADDUSTIN EC. CASTONHOI,
AssistantGeneral Counsel & Secretary
Glenview, Illinois
April 4, 20122013
All Stockholders are invited to attend the meeting in person. Whether or not you expect to attend, please vote your shares by following the voting procedures set forth on the proxy card.
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE MEETING OF STOCKHOLDERS TO BE HELD ON MAY 10, 2012.9, 2013.
The 20122013 Proxy Statement is available at http://www.anixter.com/Proxy.
The 20112012 Annual Report is available at http://www.anixter.com/AnnualReports.
PROXY STATEMENT
For
ANNUAL MEETING OF STOCKHOLDERS
OF ANIXTER INTERNATIONAL INC.
To Be Held May 10, 20129, 2013
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Anixter International Inc., a Delaware corporation (the “Company,” which as used herein shall mean together with or without its subsidiaries, as the context may require). The Company’s Our corporate headquarters are located at 2301 Patriot Boulevard, Glenview, Illinois 60026 (telephone 224-521-8000). The Proxy Statement and form of proxy were first mailed to our stockholders on or about April 4, 2012.2013. Proxies solicited by the Board of Directors of the Company are to be voted at theour Annual Meeting of Stockholders of the Company to be held on Thursday, May 10, 2012,9, 2013, at 8:30 a.m., at Two North Riverside Plaza, 24th Floor, Chicago, Illinois, or any adjournment(s) or postponement(s) thereof.
This solicitation is being made by mail, although directors,At the Annual Meeting you will be asked to vote on the following three proposals:
| 1. | Election to our Board of Directors of the 11 nominees named in this Proxy Statement (Proposal 1) |
| 2. | Approval, on an advisory basis, of the compensation of our named executive officers, which we refer to as “Say on Pay” (Proposal 2) |
| 3. | Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2013 (Proposal 3) |
Our Board of Directors recommends a vote “FOR” the election of each nominee for director named in this Proxy Statement, “FOR” the approval of executive compensation and regular employees“FOR” the ratification of the Company may solicit proxies from stockholders personally or by telephone, facsimile, internet or other meansappointment of communication. The costs of this solicitation will be borne by the Company. The Company may request brokerage houses, nominees or fiduciariesErnst & Young LLP.
If you sign and other custodians to solicit their principals or customers for their proxies, and may reimburse them for their reasonable expenses in so doing. In addition, the Company has retained Morrow & Co., LLC., 470 West Ave., Stamford, CT 06902 to assist in the solicitation for a fee of $7,000 plus expenses.
VOTING
Stockholders may vote their shares of common stock, $1.00 par value, of the Company (“Common Stock”) in person at the meeting. Stockholders may also vote byreturn your proxy by signing and dating the enclosed proxy card and returning it by mail. Shares will be voted at the meeting in accordance with the stockholder’s voting instructions marked on the proxy card. If a stockholder marks no voting instructions on a properly executed proxy card, thewithout making any selections, your shares will be voted as recommended by“FOR” each of the Board of Directors. Stockholders may also vote by proxy by telephone or Internet usingdirector nominees and “FOR” proposals 2 and 3.
If other matters properly come before the instructions contained onmeeting, the proxy card. Each stockholder hasholders will have the powerauthority to revoke his or her proxyvote on those matters for you at their discretion. As of the date of this Proxy Statement, we are not aware of any timematters that will come before it is voted by (i) delivering to the Company prior to ormeeting other than those disclosed in this Proxy Statement.
Who can vote at the meeting writtenAnnual Meeting?
Each share of our common stock issued and outstanding is entitled to one vote on each matter. Only stockholders of record as of the close of business on March 11, 2013, the record date, are entitled to receive notice of, revocation, (ii) submittingand to vote at, the Annual Meeting. As of March 11, 2013, there were 32,479,486 shares of our common stock issued and outstanding.
What is the difference between a later dated proxy by mail, telephone or the Internet or (iii) attending the meetingstockholder of record and voting his or hera beneficial owner of shares held in person.street name?
A stockholder whoseYou are a “stockholder of record” if your shares are registered directly in your name with our transfer agent, Wells Fargo Bank, N.A.
You are a “beneficial owner” of shares held in “street name” if your shares are held in “street name”an account at a brokerage firm, bank, broker-dealer or other similar organization. The organization holding your account is considered the stockholder of record. However, you, as the beneficial owner, have the right to instruct that organization on how to vote the shares held in your account.
How do I vote?
If you are a stockholder of record, there are four ways to vote:
| • | In person. You may vote your shares of common stock in person at the meeting. |
| • | By Mail. You may vote by proxy by signing and dating the enclosed proxy card and returning it by mail. |
| • | By Telephone. You may vote by proxy by calling the toll free number found on the proxy card. |
| • | Via the Internet. You may vote by proxy via the Internet by following the instructions on the proxy card. |
If you are a beneficial owner of shares held in street name (for example, in the name of a bank, broker or other record holder), you must vote his or heryour shares in accordance with the voting instruction form provided by his or heryour bank, broker or other holder of record. A stockholder holdingIf you hold your shares in street name, you must obtain a proxy from his or heryour bank, broker or other holder of record in order to vote in person at the meeting.
The Board of Directors has fixed the close of business on March 12, 2012 as the record date for the determination of stockholders entitled to notice of, and to voteCan I change my vote?
You may revoke your proxy at any time before it is voted at the meeting by:
delivering to us a written notice of revocation prior to or any adjournment(s)at the meeting,
submitting a later dated proxy by mail, telephone or postponement(s) thereof.the Internet, or
attending the meeting and voting your shares in person.
If you are a beneficial stockholder, you may change your vote by following your nominee’s procedures for revoking or changing your proxy.
AsWhat is the quorum requirement for the Annual Meeting?
A quorum is the minimum number of March 12, 2012, 33,219,581 shares of Common Stock were outstanding. Each stockholder is entitledthat must be present in order to one vote per share.
transact business at the Annual Meeting. A majority of the outstanding shares of Common Stockour common stock present in person or represented by proxy at the Annual Meeting will constitute a quorum. If a quorum for purposes ofis not present, the meeting. meeting will be adjourned until a quorum is obtained.
How are broker non-votes and abstentions treated?
Abstentions and broker non-votes are counted as present for establishingpurposes of determining whether a quorum for the transaction of businessis present at the Annual Meeting. A broker “non-vote” occurs when a broker votes on some matter on the proxy card but not on others because the broker does not have discretionary voting authority to do so and has not received instructions as to how to vote on a particular proposal.
What is the voting requirement to approve each of the proposals?
The election of directors (Proposal 1) will be determined by a majority of the votes cast. A “majority of the votes cast” means that the number of votes cast “for” a nominee’s election exceeds the number of votes cast “against” thatnominee’sthat nominee’s election. An abstention or broker non-vote will have no effect on the election of directors.Your broker will not be able to vote your shares with respect to the election of directors if you have not provided
instructions to your broker. We encourage you to exercise your right to vote by voting your shares utilizing one of the procedures set forth on the proxy card.
The non-binding advisory vote to approve executive compensation (Proposal 2) will be determined by a majority of the shares represented in person or by proxy at the Annual Meeting and entitled to vote. An abstention will have the effect of a vote against the proposal. A broker non-vote will have no effect on this proposal.Your broker will not be able to vote your shares with respect to this proposal if you do not provide instructions to your broker.
Ratification of the appointment of Ernst & Young LLP as the Company’sour independent registered public accounting firm (Proposal 3) requires the affirmative vote of a majority of the shares represented in person or by proxy at the Annual Meeting and entitled to vote. An abstention will have the effect of a vote against the ratification. Brokers have discretionary authority to vote on the ratification of the appointment of Ernst & Young LLP.
TheSince Proposal 2 is a non-binding advisory vote, what is the effect if it is approved?
Although the advisory vote on Proposal 2 is non-binding, our Board of Directors recommends a vote “for”and the election of each nominee for director namedrelevant committees will review the results and take them into account in this Proxy Statement, “for” the approval ofmaking future decisions regarding executive compensation and “for” the ratification of the appointment of Ernst & Young LLP.compensation.
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Will the voting results of the Annual Meeting be made available?
The preliminary voting results will be announced at the Annual Meeting. The final voting results will be tallied by the inspector of election and published in a Current Report on Form 8-K, which we are required to file with the SEC within four business days following the Annual Meeting.
Who is paying for the cost of this proxy solicitation?
We are paying the costs of this solicitation of proxies. We may request brokerage houses, nominees or fiduciaries and other custodians to solicit their principals or customers for their proxies, and may reimburse them for their reasonable expenses in doing so. In addition, we have retained Morrow & Co., LLC, 470 West Ave., Stamford, CT 06902 to assist in the solicitation for a fee of $7,000 plus expenses.
In addition to soliciting proxies by mail, our directors, officers and regular employees may, without additional compensation, solicit proxies on our behalf from stockholders personally or by telephone, facsimile, internet or other means of communication.
How can I attend the Annual Meeting?
Only stockholders as of the record date and our invited guests may attend the Annual Meeting. Admission will be on a first-come, first-served basis. To be admitted to the meeting, you must present an appropriate form of personal identification verifying your name is on our stockholder list. If your shares are held in street name, you should also bring a brokerage statement indicating your ownership of the shares as of the record date and a letter from your bank, broker or other holder of record confirming your beneficial ownership of such shares. If you wish to vote your shares held in street name at the meeting, you must obtain a proxy from your bank, broker or other holder of record and bring the proxy to the meeting.
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PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors has nominated the 11 directors named below for re-election as directors. In order to be elected as a director, a nominee must receive a majority of the votes cast with respect to that nominee’s election. A “majority of the votes cast” means that the number of votes cast “for” a nominee’s election exceeds the number of votes cast “against” that nominee’s election. All directors are elected to hold office until the next annual meeting of stockholders or until their successors are elected and qualified. Although the Board of Directors does not contemplate that any nominee will be unable to serve as a director, in such event the proxies will be voted for another person selected by the Board of Directors upon recommendation of the Nominating and Governance Committee, unless the Nominating and Governance Committee acts to reduce the size of the Board in accordance with the provisions of the Company’sour by-laws. The number of directors has been set by the Nominating and Governance Committee at 11.
The Board of Directors, acting through the Nominating and Governance Committee, is responsible for assembling for stockholder consideration a group of nominees that, taken together, have the experience, qualifications, attributes, and skills appropriate for functioning effectively as a Board. The Nominating and Governance Committee regularly reviews the composition of the Board in light of the Company’s changing requirements, itsour assessment of the Board’s performance, and the inputs of stockholders and other key constituencies.
The Nominating and Governance Committee looks for certain characteristics common to all Board members, including integrity, judgment, independence, experience, effectiveness, maturity, absence of conflict and the ability and commitment to devote sufficient time and energy to Board service.
Although the Nominating and Governance Committee does not have a written policy regarding diversity, it seeks to include on the Board a complementary mix of individuals with the diverse backgrounds, experiences, viewpoints and skills necessary to meet the challenges that the Board confronts. These individual qualities can include, among others, particular subject matter expertise, experience in a related industry, leadership experience, relevant geographical experience, governmental experience and experience in managing large or complex organizations.
The following table sets forth the name and age as of March 12, 201211, 2013 of each nominee for director of the Companycompany (each of whom has consented to being named in the Proxy Statement and to serving if elected), the year each director was first elected, his or her position with the Company,company, his or her principal occupation(s) for the last five years, any directorships currently held, or held during the past five years, by such person in companies which have a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or subject to the requirements of Section 15(d) of the Exchange Act or which are registered as investment companies under the Investment Company Act of 1940, and family relationships between directors and other directors or executive officers. It also describes the qualifications, experience and selected other biographical information for each director.
Name and Age | Qualifications, Experience and Biographical Information | |
Lord James Blyth, | Director
Lord Blyth brings to the Board important perspectives in the areas of international business, compensation and governance through his leadership of large multinational companies. He was the former Chief Executive and then Chairman of The Boots Company, a UK-based company involved in retailing, manufacturing and property. His experience on multiple boards provides an important global perspective on management and governance issues, and his experience and stature in the U.K. business community contributes to the Board’s diversity of experience and viewpoints. | |
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Frederic F. Brace, | Director | |
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Name and Age | Qualifications, Experience and Biographical Information | |
Code; it emerged from bankruptcy in March 2012); Executive Vice President and Chief Financial Officer from 2002 to 2008, Senior Vice President from 1999 to 2001 and various other management positions since 1988 of UAL Corporation, an air transportation company (in December 2002, UAL Corporation filed for protection under Chapter 11 of the Bankruptcy Code)
Mr. Brace’s experience as the Chief Financial Officer and head of strategy for several large public companies augments the Board’s insight into | ||
Linda Walker Bynoe, | Director
Ms. Bynoe’s experience as a director of other large public companies and in management consulting, accounting, strategic planning and corporate governance assists the Board in setting the strategic direction of the | |
Robert J. Eck, | Director
Mr. Eck has | |
Robert W. Grubbs, | Director
Mr. Grubbs’ long experience with the | |
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F. Philip Handy, | Director | |
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Name and Age | Qualifications, Experience and Biographical Information | |
Mr. Handy’s role as the Chief Executive Officer of a global manufacturer adds to the Board’s international perspective. His membership on the compensation committee of another large public company provides additional perspective to | ||
Melvyn N. Klein, | Director
Mr. Klein has served on the Board during the entire evolution of | |
George Muñoz, | Director
Mr. Muñoz maintains legal and investment banking practices. As a former President of the Overseas Private Investment Corporation and a former Chief Financial Officer of the U.S. Treasury, he also brings foreign investment and governmental experience to the Board. He is a Certified Public Accountant, chairs the audit committees of two large public companies and | |
Stuart M. Sloan, | Director
Mr. Sloan was formerly the Chairman and Chief Executive Officer of a public company and has been a successful investor for over 25 years. His investment activities give him a broad perspective on macroeconomic trends and developments which could affect | |
Matthew Zell, 46 | Director since 2001; Senior Managing Director since 2012, Managing Director from 2001 to 2012 of Equity Group Investments division of Chai Trust Company, LLC, a private investment company; President from 1990 to 2001 of Prometheus Technologies, Inc., an information technology consulting firm; director of Penford Corporation; and former director of Desarrolladora Homex S.A. de C.V. Mr. Zell is the son of Samuel Zell. | |
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Name and Age | Qualifications, Experience and Biographical Information | |
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Matthew Zell’s experience in the field of information technology consulting provides | |
Samuel Zell, | Director | |
Samuel Zell is an active investor in public and private companies around the world to which he provides strategic direction. He is a well known figure in the finance, corporate and real estate sectors and he provides companies in which he invests with a network of resources across a broad range of industries. Mr. Zell is | ||
WE RECOMMEND THAT YOU VOTEFOR THE ELECTION OF EACH OF THESE
NOMINEES TO THE BOARD OF DIRECTORS
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PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION
Pursuant to Section 14A of the Exchange Act, the Company iswe are required to submit to our stockholders a resolution subject to an advisory vote to approve the compensation of the Company’sour named executive officers. The current frequency of the advisory vote on executive compensation is annually, and the next such vote will occur at our 20132014 Annual Meeting of Stockholders.
The Board of Directors encourages our stockholders to carefully review the Compensation Discussion and Analysis (“CD&A”) and Executive Compensation sections of this Proxy Statement for a complete discussion of the Company’sour compensation program for our named executive officers. Our executive compensation program is designed to closely align executive rewards with the overall return to stockholders and Companyour performance with the following objectives:
be market competitive to attract and retain talented executives
recognize sustained above-market performance with comparably superior compensation
motivate continuing improvement and future performance at above-market levels relative to competitive peer group companies
drive the achievement of specific strategic objectives designed to enhance long term stockholder value creation
encourage prudent levels of business risk to meet our short and long term performance goals of the Company
promote ownership in the Companycompany at a reasonable cost to the Company’sour stockholders
be transparent and understandable to the participants and our stockholders
be consistent with the Company’sour corporate governance principles
We believe that the Company’sour executive compensation program has been effective in achieving these goals. For example, the Company’sour compensation program:
is overseen by an independent Compensation Committee
employs all executive officers “at will” without change of control or termination agreements
requires compensation recoupment (“clawback”) in the event of financial restatements
has stock ownership guidelines for all executives
incorporates a four year vesting period for nearly all equity awards to emphasize long term performance
does not allow guaranteed increases in salary, incentive awards or long term equity incentives
provides annual incentive awards based on performance only
provides pension paymentsbenefits based only on actual years worked
does not provide tax reimbursement on perquisites for our named executive officers, with the exception of relocation expenses
does not allow re-pricing or replacing of options or stock appreciation rights
does not provide guaranteed annual incentives to senior executives
| • | benchmarks all three primary components of compensation, targeting the 50th to 75th percentiles of compensation paid to executives at a comparison group of companies |
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We are asking our stockholders to indicate their support for our named executive officer compensation as described in this Proxy Statement. This vote is not intended to address any specific item of compensation, but
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rather the overall compensation of our named executive officers and the policies and procedures described in this Proxy Statement. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby approved.”
As an advisory vote, the result is not binding on the Company,company, the Board of Directors or the Compensation Committee. However, the Compensation Committee and the Board of Directors value the opinions expressed by our stockholders and will carefully consider the outcome when evaluating the Company’sour executive compensation program.
WE RECOMMEND THAT YOU VOTEFORTHE APPROVAL OF THE
COMPENSATION OF THE NAMED EXECUTIVE OFFICERS
PROPOSAL 3: RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP
The Audit Committee has re-appointed Ernst & Young LLP to serve as the Company’sour independent registered public accounting firm for 2012,fiscal 2013, subject to ratification by the Company’sour stockholders. For further information regarding Ernst & Young LLP, please reference the Report of the Audit Committee and the Independent Registered Public Accounting Firm and Their Fees sections of this Proxy Statement. Representatives of Ernst & Young LLP, who are expected to be present at the meeting, will be given an opportunity to make a statement if they so desire and to respond to appropriate questions asked by stockholders. If the stockholders should fail to ratify the appointment of Ernst & Young LLP, the Audit Committee would reconsider the appointment.
WE RECOMMEND THAT YOU VOTEFOR THE RATIFICATION OF ERNST & YOUNG LLP
AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR FISCAL 20122013
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CORPORATE GOVERNANCE
Governance Guidelines and Charters
The operation of the Board of Directors is governed by the Company’sour corporate by-laws and Corporate Governance Guidelines. The operations of the Executive Committee, the Audit Committee, the Compensation Committee and the Nominating and Governance Committee are governed by charters adopted by each committee and ratified by the Board of Directors. The Corporate Governance Guidelines and each of the committee charters can be viewed on the Company’sour website at: http://www.anixter.com/CorporateGovernance.
Code of Ethics
The Company hasWe have a longstanding Business Ethics and Conduct Policy which is applicable to all employees, directors and officers, including the principal executive officer, the principal financial officer and the principal accounting officer. The Company’sOur Global Business Ethics and Conduct Policy can be viewed on the Company’sour website at: http://www.anixter.com/Ethics.
Director Independence
The Board determines the independence of its directors and nominees by requiring each of them to complete and return a questionnaire which solicits information relevant to a determination of independence under applicable New York Stock Exchange and Securities and Exchange Commission rules, as well as any other direct or indirect relationship that the director may have with the Company.company. Independence is determined by the Board after presentation and discussion of questionnaire responses. Based on this procedure, all directors,members of the Board, except for Mr. Eck, were found to be independent.
Board of Directors
The Board of Directors held six meetings in 2011.2012. Each of the directors attended 75 percent or more of the total of all meetings held by the Board and the committees on which the director served. The Company encourages itsWe encourage our directors to attend the Annual Meeting of Stockholders. All directors attended the 20112012 Annual Meeting of Stockholders.
Board Committees
The Board has a standing Executive Committee, Audit Committee, Compensation Committee, and Nominating and Governance Committee. The Board has determined that the Chairs and all committee members are independent under applicable NYSE and SEC rules for committee memberships. The Chairs and members of each committee are shown in the table below.
Director | Executive Committee | Audit Committee | Compensation Committee | Nominating and Governance Committee | ||||
Lord James Blyth | — | — | Member | Member | ||||
Frederic Brace | — | Member | Member | Member | ||||
Linda Walker Bynoe | Member | Member | Member | Chair | ||||
Robert J. Eck | — | — | — | — | ||||
Robert W. Grubbs | — | — | — | — | ||||
F. Philip Handy | Member | — | Chair | Member | ||||
Melvyn Klein | Member | Chair | Member | Member | ||||
George Muñoz | — | Member | Member | Member | ||||
Stuart Sloan | — | — | Member | Member | ||||
Matthew Zell | — | — | — | — | ||||
Samuel Zell | Chair | — | — | — |
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Executive Committee
The Executive Committee currently consisting of Samuel Zell (Chair), Ms. Bynoe and Messrs. Handy and Klein, exercises the full powers of the Board of Directors to the extent permitted by law in the intervals between Board meetings.
The Executive Committee held one meetingno meetings in 2011.2012.
Audit Committee
The Audit Committee currently consistsis primarily responsible for overseeing:
the integrity of Messrs. Klein (Chair), Brace, Muñozour financial statements,
our compliance with legal and Ms. Bynoe, eachregulatory requirements,
the qualifications and independence of whom is “independent” as defined in our independent registered public accountants, and
the listing standardsperformance of the New York Stock Exchangeour independent registered public accountants and Rule 10A-3(b)(1) under the Exchange Act. Noour internal audit function.
Each member of the Audit Committee serves on more than three public company audit committees. Each member of the Committee has been designated as an “audit committee financial expert,” as defined by the Securities and Exchange Commission. TheNo member of the Audit Committee oversees the integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the independent registeredserves on more than three public accountants’ qualifications and independence, and the performance of the independent registered public accountants and the Company’s internalcompany audit function.committees.
The Audit Committee held 9 meetings in 2011.2012.
Compensation Committee
The Compensation Committee currently consisting of Mr. Handy (Chair), Lord Blyth, Ms. Bynoe and Messrs. Brace, Klein, Muñoz and Sloan, each of whom meets the independence requirements of the New York
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Stock Exchange, exercises all powers of the Board of Directors in connection with compensation matters, including incentive compensation, benefit plans and equity-based grants.
The essential functions of the Compensation Committee are to:
annually determine that the Chief Executive Officer’s compensation is appropriately linked to corporate objectives, evaluate the Chief Executive Officer’s performance in light of those objectives, and set the Chief Executive Officer’s compensation based on this evaluation
annually review and approve the compensation of the Company’sour other senior executives, including the named executive officers
retain overall responsibility for approving, evaluating, modifying, monitoring and terminating theour compensation and benefit plans, policies and programs, of the Company, including all employment, severance and change-in-control agreements (of which there are none), supplemental benefits and perquisites in which executives subject to the Compensation Committee’s review participate
recommend to the Board new or modified cash or equity-based incentive plans
recommend to the Board the form and amount of compensation for non-employee directors
review and discuss with management the Compensation Discussion and Analysis prepared by management and, based on its review and discussions, recommend to the Board that the Compensation Discussion and Analysis be included in the Company’sour Annual Report on Form 10-K and Proxy Statement
review and discuss with management its risk review of compensation programs for senior executives and the broader employee group
select the companies included in the comparison group for senior executive compensation
The Compensation Committee has the sole authority to retain and terminate outside advisors in executing its duties, including sole authority to approve their fees and other retention terms. Since 2005, the Compensation Committee has retained PricewaterhouseCoopers (PwC) as its outside compensation consultant (the “Consultant”).consultant. The Compensation Committee may delegate certain of its activities with regard to the Consultantcompensation consultant to the Committee Chairman and/or representatives from the Company’sour management, as appropriate.
The Compensation Committee has directly engaged the ConsultantPwC to provide: (1) general advisory services in areas consistent with the Compensation Committee’s charter, including Compensation Committee processes and
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practices, incentive plan design and use, and significant regulatory and market trends related to executive compensation, and (2) benchmarking services in connection with the Compensation Committee’s determination of the amount and form of director and executive compensation.
Management also plays a significant role in determining or recommending the amount and form of executive compensation by recommending performance targets and objectives and evaluating executive performance. Each year, management also provides the Compensation Committee with recommended base salary, target annual cash incentive and equity-based award for each senior executive, which includes all executive officers, persons reporting directly to the Chief Executive Officer and other selected members of senior management. Each executive’s immediate superior is responsible for providing the recommendation for that executive, which is then reviewed by the Chief Executive Officer for recommendation to the Compensation Committee. Our Chairman of the Board (who is not an executive of the Company)company), in consultation with the Compensation Committee Chairman, is responsible for providing the recommendation to the Compensation Committee for the Chief Executive Officer’s base salary, target annual cash incentive and equity-based award and for purposes of this discussion is deemed to be the Chief Executive Officer’s immediate superior.
These recommendations are based, in part, on a review of competitive market data provided to management and the Compensation Committee by the Consultant.PwC. This data shows base salaries, total cash compensation and total compensation at the 50th and 75th percentiles of the range paid by other companies to executives holding comparable positions, which is the reference range chosen by the Compensation Committee as appropriate for benchmarking the
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compensation of the Company’sour senior executives. The Compensation Committee, working with the Consultant,PwC, selects the companies for the comparison group which it believes are representative of the types of companies with which the Company competeswe compete for executives. See Compensation Discussion and Analysis in this Proxy Statement for the companies in the comparison group.
In addition to a review of the competitive market data, management’s recommendations for individual executives are based on a variety of other factors, including experience in the position, performance, scope of duties compared to the benchmark positions used in the competitive market data, career potential, ability to impact results and retention goals. The evaluation of these factors and their impact on the recommendations is subjectively determined by the person making the recommendation.
After the Chairman of the Board and the Compensation Committee Chairman develop the recommendations for the Chief Executive Officer, the recommendations are presented to the full Compensation Committee for review, discussion, final determination and approval. Similarly, management’s recommendations for the other senior executives, including the named executive officers, are reviewed by the ConsultantPwC and the Compensation Committee Chairman and presented to the full Compensation Committee for review, discussion, final determination and approval.
The Compensation Committee held sixfive meetings in 2011.2012.
Nominating and Governance Committee
The Nominating and Governance Committee currently consisting of Ms. Bynoe (Chair), Lord Blyth and Messrs. Brace, Handy, Klein, Muñoz and Sloan, each of whom meets the independence requirements of the New York Stock Exchange, identifies and recommends director nominees, advises the Board of Directors on corporate governance issues and Board organization and assesses Board performance.
The Board of Directors is responsible for selecting candidates for Board membership and for extending invitations to join the Board of Directors through the Nominating and Governance Committee. Candidates must meet the requirements of applicable law and listing standards, and are selected for qualities such as integrity, judgment, independence, experience, effectiveness, maturity, commitment and other relevant considerations. Any director may recommend a candidate for nomination to the Board of Directors. Consistent with its charter, the Nominating and Governance Committee is responsible for identifying and screening candidates (in consultation with the Chairman of the Board and the Chief Executive Officer), for establishing criteria for nominees and for recommending to the Board a slate of nominees for election to the Board of Directors at the Annual Meeting of Stockholders. Final approval of any candidate shall be determined by the Board of Directors.
The Nominating and Governance Committee will consider candidates submitted by stockholders on the same basis as other candidates. Stockholders desiring to recommend a candidate for nomination at an annual stockholder’s meeting must notify the Company’sour Corporate Secretary no later than 120 days prior to the date the Company’sour proxy
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statement was released to stockholders in connection with the previous year’s annual meeting. Communications should be sent to: Secretary, Anixter International Inc., 2301 Patriot Boulevard, Glenview, IL 60026. Communications must set forth: the name, age, business address and residence address, e-mail address and telephone number of the proposed nominee; the principal occupation or employment of the proposed nominee; the name and record address of the stockholder who is submitting the notice; and a description of all arrangements or understandings between the stockholder who is submitting the recommendation and the proposed nominee.
The Nominating and Governance Committee held three meetings in 2011.2012.
Executive Sessions
Each regularly scheduled Board and Committee meeting includes an executive session. The Chairman of the Board of Directors as Lead Director, presides over all Board meetings and the executive sessions thereof, including meetings of the independent directors of the Board. The Chair of each Committee presides over executive sessions of that Committee. If the Chairman of the Board is not present, a Lead Directorlead director is selected by the independent directors present at the Board meeting, or if the Committee Chair is not present, the presiding director for the Committee meeting is selected by the independent directors present.
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Board Leadership Structure
The offices of Chairman of the Board and Chief Executive Officer have been at times combined and at times separated. The Board has exercised discretion in combining or separating the positions as it has deemed appropriate in light of prevailing circumstances. The Board of Directors believes that the combination or separation of these offices should continue to be considered as part of the succession planning process.
At the current time, the Board believes that separating these offices promotes Board efficiency, allows the Chief Executive Officer to focus more fully on the implementation of the Company’sour strategy and is in the best interest of our stockholders.
The Company’sOur current Chairman, Samuel Zell, is the Company’sour largest investor and, as such, is particularly well qualified to ensure that the Board’s focus remains on the creation of long-term value for stockholders.
The Board’s Role in Risk Oversight
Overseeing the Company’sour risk management processes and practices is a key function and competence of the Board and its committees.
Each year, management reports to the Board or one of its committees (as appropriate for the subject matter) on the nature of risks inherent in the Company’sour business and its risk management practices with respect thereto including: customer strategies and credit; vendor relationships and their sustainability; product liability; business continuity and information security, recovery and development; economic trends; foreign exchange; taxation; regulatory, ethical and other compliance topics; insurance; succession planning and the attraction, retention and development of employees; compensation plans; budgeting and forecasting; public reporting; liquidity and funding; working capital; capital transactions; acquisitions and divestitures; and significant geographic or product line expansions.
These risks are considered by management and the Board in developing and approving strategic plans, annual operating plans and incentive arrangements.
Communicating with the Board of Directors and Non-Management Directors
Stockholders and other parties interested in communicating directly with the Board of Directors, individual directors, the presiding director or the non-management directors may do so by directing such communications to the Company’sour Corporate Secretary at: Secretary, Anixter International Inc., 2301 Patriot Boulevard, Glenview, IL 60026 and should prominently indicate on the outside of the envelope that it is intended for the Board of Directors, individual directors, the presiding director, or for non-management directors. Each communication intended for members of the Board of Directors and received by the Secretary will be reviewed by the Secretary. Communications related to the operation of the Companycompany which are not sales solicitations or of a similar commercial nature will be forwarded to the specified party or parties.
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Other Matters
In order to be considered for nomination to the Company’s Board, a nominee may not hold more than five directorships at other public companies unless the nominee gives notice of the intent to resign fromWe limit the number of corporate boards requiredon which our directors and director nominees may serve to bring the total number of directorships (including the Company)six, including their directorship with us. If applicable, nominees to no more thanour Board must declare their intent to reduce their board commitments to six. No member of the Company’s Board can hold more than six directorships including the Company’s directorship.
REPORT OF THE AUDIT COMMITTEE
Pursuant to the Audit Committee Charter, the function of the Audit Committee is to oversee (i) the integrity of the Company’scompany’s financial statements, (ii) the Company’scompany’s compliance with legal and regulatory requirements, (iii) the independent registered public accountants’accounting firm’s qualifications and independence, and (iv) the performance of the independent registered public accountantsaccounting firm and the Company’scompany’s internal audit function. While the Audit Committee has the duties and powers set forth in its Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’scompany’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and
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regulations. Management is responsible for the preparation, presentation, and integrity of the Company’scompany’s financial statements and for the appropriateness of the accounting principles and reporting policies that are used by the Company.company. The independent registered public accountants areaccounting firm is responsible for auditing the Company’scompany’s financial statements and the effectiveness of internal controls over financial reporting and for reviewing the Company’scompany’s unaudited interim financial statements.
In fulfilling our oversight responsibilities, we have reviewed and discussed the audited financial statements in the Annual Report with management. We have reviewed and discussed with the independent registered public accountants,accounting firm, who areis responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability of the Company’scompany’s accounting principles and such other matters as are required to be discussed with the Committee under generally accepted auditing standards (including Statement on Auditing Standards No. 61,Communications with Audit Committees,as amended (AICPA —Professional Standards, Vol. 1. AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. In addition, we discussed with the independent registered public accountantsaccounting firm their independence from management and the Company,company, including the matters in the written disclosures and the letter from the independent registered public accountantsauditors required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accountants’auditor’s communications with us concerning independence. We also considered independence and the compatibility of nonaudit services provided by the independent registered public accountantsauditors to the Companycompany with their independence.
We discussed with the Company’scompany’s internal auditors and independent registered public accountantsaccounting firm the overall scope and plans for their respective audits. The Committee regularly meets with the internal auditors and the independent registered public accountants,accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of the Company’scompany’s internal controls, and the overall quality of the Company’scompany’s financial reporting. The Committee also reviews proposed interim financial statements with management and the independent registered public accountants.accounting firm. In reliance on the reviews and discussions referred to above, the Committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 30, 201128, 2012 for filing with the Securities and Exchange Commission.
Melvyn N. Klein, Chair
Frederic F. Brace
Linda Walker Bynoe
George Muñoz
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND THEIR FEES
Fees for professional services rendered by Ernst & Young LLP with respect to fiscal years 20112012 and 20102011 are set forth below.
Audit Fees
Fees for audit services totaled approximately $4,422,500 in 2012 and approximately $3,945,400 in 2011, and approximately $3,728,200 in 2010, including fees associated with the annual audit, reviews of the Company’sour quarterly reports on Form 10-Q, other SEC filings and statutory audits of foreign subsidiaries.
Audit-Related Fees
Fees for audit-related services for use of the Ernst & Young on-line reference tool in 2012 totaled approximately $5,000. In 2011, $17,000 was spent for an International Financial Reporting Standards review for one of the Company’sour international subsidiaries and the Ernst & Young on-line reference tool in 2011 totaled approximately $17,000. In 2010, $15,000 was spent for a compliance attestation report and the Ernst & Young on-line reference tool.
Tax Fees
Fees for tax services, including tax compliance, tax advice and tax planning, totaled approximately $464,800 in 2012 and approximately $305,100 in 2011 and approximately $402,100 in 2010.2011.
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All Other Fees
There were no fees for other services in 20112012 and 2010.2011.
Pre-Approval Policies and Procedures
The Audit Committee’s current practice is to consider for pre-approval annually all audit and non-audit services (including tax services) proposed to be provided by the independent registered public accounting firm each year. The pre-approval policy is set forth in an Audit Committee position statement. In setting forth pre-approved services in its position statement, the Audit Committee details the particular services that may be provided and the policy reason why it is logical to use Ernst & Young instead of another service provider. Should the need arise to consider engaging Ernst & Young to provide non-audit services beyond the scope of what is outlined in the position statement or in an amount in excess of the amounts pre-approved by the Audit Committee, management will bring such proposals to the Audit Committee Chairman for consideration. The Audit Committee Chairman has the authority to either act on behalf of the Audit Committee or to call a special meeting of the Audit Committee to consider any such proposal. In the event that the Audit Committee Chairman acts on behalf of the Audit Committee and pre-approves such service, the decision is reported at the next meeting of the full Audit Committee. In considering whether to approve non-audit services, the Audit Committee considers whether the provision of such services by Ernst & Young is compatible with the maintenance of that firm’s independence.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee hereby furnishes its report to the stockholders of the Companycompany in accordance with rules adopted by the SEC.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on that review and discussion, has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in the Company’scompany’s Annual Report on Form 10-K for the fiscal year ended December 30, 2011.28, 2012.
F. Philip Handy, Chair
Lord James Blyth
Frederic F. Brace
Linda Walker Bynoe
Melvyn N. Klein
George Muñoz
Stuart Sloan
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COMPENSATION CONSULTING FEES
The Compensation Committee has retained PricewaterhouseCoopers (the “Consultant”)PwC as its independent compensation consultant. The ConsultantPwC provides the Compensation Committee with data, analysis and assessment of alternatives related to the amount and form of executive and director compensation, but does not provide recommendations on compensation decisions for individual executive officers.
In 2011,2012, fees paid to PwC related to providing advice to the Compensation Committee were approximately $114,000.$104,000. Fees related to other services provided by the ConsultantPwC to the Companyus in 20112012 were approximately $862,000$858,000 of which $796,000$643,000 related to the administration of the Company’sour defined benefit pension plans. The decision to use the ConsultantPwC for these other services, none of which related to executive compensation matters, was made by management. Although management reports on the nature and scope of these services, they were not specifically approved by the Compensation Committee.
As part of its annual review process in determining whether to renew the Consultant’s executiveengage PwC as compensation consulting engagement, the Committee considers the independence of the Consultant from the
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other divisions of their firm and from the Company’s management. The Committee retains the Consultantconsultant for the upcoming year, only after determiningthe Compensation Committee assessed the independence of PwC, taking into consideration the following factors: (1) the provision of other services to us by PwC; (2) the amount of fees we paid to PwC as a percentage of PwC’s total revenue; (3) PwC’s policies and procedures that such independence exists.are designed to prevent conflicts of interest; (4) any business or personal relationship of PwC or the individual compensation advisors employed by the firm with any of our executive officers; (5) any business or personal relationship of the individual compensation advisors with any member of the Compensation Committee; and (6) any of our stock owned by PwC or the individual compensation advisors employed by the firm. Based on its analysis of the above factors, the Compensation Committee has concluded that no conflict of interest exists that would prevent PwC from serving as an independent consultant to the Compensation Committee. The Compensation Committee believes that the nature and scope of the other services provided to the Companyus do not impair the Consultant’sPwC’s ability to render independent advice to the Compensation Committee.
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
This section of the Proxy Statement discusses our executive compensation policies and programs, our compensation philosophy and objectives, the components of our executive compensation program and the process through which compensation is determined for the named executive officers. Our named executive officers for 2012 were:
| Robert J. Eck | President and Chief Executive Officer | |
| Ted A. Dosch | Executive Vice President — Finance and Chief Financial Officer | |
| Terrance A. Faber | Vice President — Controller | |
| Rodney A. Smith | Vice President — Human Resources | |
| Rodney A. Shoemaker | Vice President — Treasurer | |
In 2012, we followed substantially the same general policies and procedures for executive compensation that we had applied in 2011. The primary elements of our executive compensation program, which are discussed in greater detail below, include base salary, annual cash incentive awards and equity awards. These are considered together and benchmarked against compensation paid by peer companies using a reference range at the 50th and 75th percentiles of the range paid to executives in comparable positions at peer companies. We also provide deferred compensation and retirement benefits as part of our executive compensation program.
Highlights of our executive compensation program in 2012 include the following:
| • | The base salaries for each of the named executive officers were increased for 2012, based on the Compensation Committee’s assessment of the individual’s performance, potential for advancement and tenure. Mr. Eck’s base salary was increased 6.3% to $850,000 (placing him at approximately 6.6% below the 50th percentile of salaries paid to CEOs of peer companies) and the base salaries of the other named executive officers saw increases ranging from 3.7% to 12.4% (placing them at 1.8% to 17.4% below the 50th percentile of the range of base salaries for comparable executives at peer companies). |
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| • | We provided our executives with annual incentive award plans under our Management Incentive Plan that are designed to reward performance that supports our short term performance goals. Consistent with recent practice, these awards were based on the executives meeting certain annual performance objectives approved by the Compensation Committee, including our achievement of certain specified operating earnings and rates of return on tangible capital, as well as the achievement of other quantitative or qualitative individual goals. The annual performance objectives are determined so that target total cash compensation of each named executive officer is between the 50th and 75th percentile of the range of total cash compensation provided to similarly situated executives in peer companies. The target amounts set for the named executive officers for 2012 provided total cash compensation ranging from 10.0% below to 1.3% above the 50th percentile. |
| • | In March 2012, all named executive officers received restricted stock units (RSUs), and Mr. Eck and Mr. Dosch also received stock options. These grants are shown in the Summary Compensation Table and the Grants of Plan-Based Awards Table in this Proxy Statement. Consistent with past practice, we provided equity-based awards to our named executive officers so that their total compensation is between the 50th and 75th percentile of the total compensation provided to similarly situated executives in peer companies. We believe that the use of equity-based awards as a substantial part of compensation aligns the economic interests of the named executive officers with those of our stockholders and ensures that they maintain focus on the goal of enhancing long-term value for stockholders. The awards to the named executive officers for 2012 provided target total compensation ranging from 8.7% below to 8.5% above the 50th percentile. |
Compensation Philosophy and Objectives
We believe that the talents, experience, dedication and entrepreneurial skills of our senior executives, including the named executive officers, have been and will continue to be essential to the Company’sour success. Accordingly, the objectives of our compensation program are to:
be market competitive to attract and retain talented executives
recognize sustained above-market performance with comparably superior compensation
motivate continuing improvement and future performance at above-market levels relative to competitive peer group companies
drive the achievement of specific strategic objectives designed to enhance long term stockholder value creation
encourage prudent levels of business risk to meet our short and long term performance goals of the Company
promote ownership in the Companycompany at a reasonable cost to the Company’sour stockholders
be transparent and understandable to the participants and stockholders
be consistent with the Company’sour corporate governance principles
To achieve these objectives, we use a variety of compensation elements, including base salary, annual cash incentive awards, equity-based awards, deferred compensation and retirement benefits, all of which are discussed below.
What our compensation program is designed to reward
Our compensation program is designed to motivate and align individual performance with our strategic Company objectives by rewarding and incentingincentivizing our executives for assuming responsibilities deemed important to the Company’sour success, for excelling in the discharge of those responsibilities, for achieving competitively superior performance over annual and longer periods of time and for achieving yearly financial and non-financial goals that we believe are important to the creation and maintenance of stockholder value.
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The elements of our compensation program
Base salary, annual cash incentive awards and equity-based awards for senior executives, including those named in the Summary Compensation Table in this Proxy Statement (“named executive officers”),officers, are considered together and benchmarked against compensation paid at appropriate comparable companies. The CompanyWe and the Compensation Committee believe that the use of benchmarking data is useful in determining the range that should be considered in setting the compensation of the senior executives.named executive officers. The Compensation Committee, working with the Consultant,PwC, selects the companies for the comparison group which it believes are representative of the types of companies with which the Company competeswe compete for executives. These companies are chosen from organizations of a similar size or representative range of revenues, market capitalization and number of employees. The selection is also based on one or more characteristics that they share in common with the Company,us, such as similar operational models, business sectors and selected financial metrics. PwC conducts a periodic peer group review to confirm the reasonableness of the peer organizations based on the above factors and may, from time to time, make adjustments to the composition of the comparison group.
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The 17 companies in the comparison group for 20112012 were:
| Acuity Brands, Inc. | Owens & Minor, Inc. | |||
| Air Products & Chemicals | Fastenal Company | Patterson Companies, Inc. | ||
| Airgas, Inc. | Genuine Parts Company | |||
| Applied Industrial Technologies | W.W. Grainger, Inc. | Watsco, Inc. | ||
| Arrow Electronics, Inc. | ||||
| Henry Schein, | ||||
| Wesco International, Inc. | ||||
| MSC Industrial Direct Co., Inc. |
The benchmarking data provided by the ConsultantPwC shows base salaries, total cash compensation (i.e., base salary and annual cash incentives) and total compensation (i.e., base salary, annual cash incentives and equity-based awards) at the 50th and 75th percentiles of the range paid by the comparison group of companies to executives holding comparable positions, which is the reference range chosen by the Compensation Committee as appropriate for benchmarking the compensation of the Company’s senior executives.our named executive officers. This information, together with recommendations from management, the Chairman of the Board and the Chairman of the Compensation Committee, are reviewed and considered by the Compensation Committee in reaching its final determination of executive compensation. See the Corporate Governance — Compensation Committee section of this Proxy Statement for more information on how management’s recommendations factor into the setting of compensation for executives other than the Chief Executive Officer and how recommendations of the Chairman of the Board and the Chairman of the Compensation Committee factor into the setting of compensation for the Chief Executive Officer.
In addition to the benchmarking data and individual executive performance, another factor affecting 2011 compensation decisions was the lack of a sustained economic recovery from the recession that began to affect the Company in September 2008. As a general matter, the Company had implemented an 18 month interval for salary and annual cash incentive increases beginning in 2009. Accordingly, no general salary and annual cash incentive review occurred for January 1, 2011. However, two of the continuing named executive officers received increases in salary and annual cash incentive opportunity in 2011. Mr. Eck, our chief executive officer, who has been consistently below the 50th percentile of the range paid by the comparison group of companies for CEOs, received a salary and annual cash incentive opportunity increase effective January 1, 2011. Mr. Dosch, our chief financial officer, had a salary and annual cash incentive increase approved in February 2011, effective July 1, 2011 upon his promotion to chief financial officer following Mr. Letham’s retirement.
Base Salary: We provide our executives with a fixed level of annual income necessary to attract and retain executives. The Compensation Committee meets in the early part of each year to review executive salaries. The principal factors considered in making salary adjustment decisions include the individual’s performance, potential for advancement within the Company,company, tenure with the Companycompany and tenure in the particular position. Annual salary adjustments typically are effective as of January 1 of each year. However, increases for 2011 were deferred to January 1, 2012 consistent with the approach taken throughout the Company, except for the two continuing named executive officers discussed above.
Mr. Eck’s base salary was increased 14.3%6.3% from $700,000$800,000 to $800,000$850,000 effective January 1, 2011.2012. His salary, as adjusted, placed him at approximately 8.0%6.6% below the 50th percentile of salaries paid by the comparison group of companies to their chief executive officers. The Compensation Committee believed that this was an appropriate salary for a chief executive officer in his thirdfourth year in the position and allowed for a reasonable progression in compensation based on future performance and increased tenure as a chief executive officer.
Mr. Dosch’s annual base salary was increased from $357,000Salaries paid to $420,000 effective July 1, 2011 in connection with his promotion. His salary, as adjusted, placed him at approximately 22% below the 50% percentile of salaries paid by the comparison group of companies to their chief financial officers. The Compensation Committee believed this was an appropriate salary for a newly-appointed chief financial officer.
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The base salary rates for the other named executive officers are shown in the “Salary” column of the Summary Compensation Table in this Proxy Statement, and represent increases ranging from 3.7% to 12.4% over base salaries paid in 2011. These base salary rates ranged from 13.9%1.8% to 17.4% below to 8% above the 50th percentile of the range of base salaries paid by the comparison group of companies to executives holding comparable positions. Salaries in excess of the 50th percentile reflected factors such as the tenure of the executive in the position and with the Company and relatively greater responsibilities as compared to benchmarked positions. Salaries were below the 50th percentile due to thean 18 month salary increase interval and due to anythat was in effect from 2009 through 2011, as a result of which salary increases lagginglagged those of the benchmarking salaries for comparable companies. We returned to a 12 month interval for salary increases in 2012.
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Annual Incentive Awards: The Company provides itsWe provide our executives with annual incentive award plans designed to reward performance that supports the Company’sour short term performance goals. Annual incentive award plans for senior executivesthe named executive officers are provided under the Company’sour Management Incentive Plan (“MIP”) approved by our stockholders in 2004. Under the MIP,this plan, each year the Compensation Committee establishes an award pool equal to 3% of the Company’sour operating income as reported on the Company’sour consolidated statements of operations for the plan year. A percentage of the award pool is assigned each year by the Compensation Committee to each senior executive.named executive officer. The total amount of all awards for any year may not exceed the amount in the award pool for that year, and the maximum award for any participant in a given year may not exceed 50% of the applicable award pool. The Compensation Committee may, in its discretion, decrease the size of the award pool or the maximum award for any participant.
Each year, the Compensation Committee also approves a target annual incentive for each executive that can be earned upon meeting the performance goals contained in the annual budget. Historically, and in 2011,2012, these incentive plans provided an opportunity to earn an award for: (1) the achievement of the operating earnings specified in the Company’scompany’s annual budget approved by the Board of Directors; (2) the achievement of the rate of return on tangible capital specified in the Company’scompany’s approved annual budget; and (3) the achievement of other quantitative or qualitative individual goals specified in the plan.
The budget process for determining operating earnings and the rate of return on tangible capital goals for 20112012 began after the Companywe completed its 2010our 2011 mid-year review and forecast for the remainder of the year. The CompanyWe then considered planned actions and the potential for a changed operating environment or specific events that could have an effect on theour financial performance of the Company in 20112012 and considered the potential magnitude of those effects. Planned actions may include but are not limited to the opening or closing of offices or warehouses in new or existing geographies, initiatives to increase market share or market penetration, new product introductions, the introduction of existing products into new geographies and acquisitions or divestitures. The CompanyWe also took into account the completion of large contracts which were not likely to be repeated or replaced, gross margin trends and macro-economic expectations, and a variety of other risks which may affect results.
Finalization of the budget by management included input from sales, marketing, operations, information technology, human resources and finance management with responsibilities for various end market sales initiatives, geographic segment profitability or global functional support. The 20112012 budget was submitted in November of 20102011 to the Board of Directors for review, discussion and approval.
The Company hasWe have chosen to reward the achievement of budgeted operating earnings and rate of return on tangible capital because it believeswe believe that these items are among the most meaningful measures of the Company’sour performance. By emphasizing earnings over sales, for example, the annual incentive plan helps to ensure that an acceptable level of profitability is maintained and enhanced.
Rate of return on tangible capital is deemed to be an important measure of the Company’sour success because the wholesale distribution industry in which the Company competeswe compete is working capital-intensive. The Company’scapital intensive. Our assets consist primarily of inventories and accounts receivable, and the management of these assets to control borrowing costs and write downs in the value of these assets is crucial to the Company’sour profitability.
Operating earnings and rate of return on tangible capital are key drivers of net income, earnings per share and return on equity, and have been chosen over these latter measures in order to eliminate the effects of decisions about the Company’sour capital structure, which tend to be longer-term in nature and therefore not well-suited to the annual incentive plan.
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The final component of each executive’s annual incentive plan consists of one or more quantitative or qualitative objectives, the achievement of which is deemed by his or her immediate superior (or by the Compensation Committee in the case of the Chief Executive Officer) to be within the executive’s ability to influence and to be an important contribution to theour short and/or long term success of the Company.success.
The amount of compensation that would be earned by an executive if all objectives in the annual incentive plan were fully met (but not exceeded) is the “target” amount for that executive. The 2012 target incentives, expressed as a percentage of salary, for each named executive officer were as follows: Mr. Eck: 100%; Mr. Dosch: 83%; Mr. Faber: 39%; Mr. Smith: 50% and Mr. Shoemaker: 40%. See the Grants of Plan-Based Awards Table in this Proxy Statement for disclosure of threshold, target and maximum payouts for the named executive officers.
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The target annual incentives are determined so that total cash compensation of senior executiveseach named executive officer is at approximatelybetween the 50th and 75th percentile of the range of total cash compensation provided to similarly situated executives in the comparison group of companies. The 2011 target, threshold and maximum annual incentive award opportunities did not increase from 2010 for the continuing named executive officers, except for Mr. Eck and Mr. Dosch. The target amounts set for the named executive officers for 20112012 provided total cash compensation ranging from 12.5%10.0% below to 20.6%1.3% above thisthe 50th percentile. The same factors that accounted for variances between actual and benchmarked base salaries apply to the variances between actual and benchmarked total cash compensation.
Because the Companycompany benchmarks total cash compensation rather than annual incentives per se, and total cash compensation includes base salary, recommendations for target annual incentives can be affected by base salary determinations. However, the Compensation Committee believes that its target annual incentives are consistent with the Company’sour philosophy that senior executivesnamed executive officers should have a sizable amount of their cash compensation at risk. During the fourfive year period from 2008-2011,2008-2012, annual incentives paid to the senior executives who were named executive officers during thissuch period have ranged from 33% to 150% of their target amounts.
For 2011,2012, (1) the operating earnings component for each seniornamed executive officer whose plan was based on worldwide operating earnings was established with respect to the executive’s scope of authority, and represented 35%38% to 60%42% of the total target annual incentive under the plan; (2) the return on tangible capital component for each seniornamed executive officer whose plan is based on worldwide return on tangible capital was established with respect to the executive’s scope of authority and represented 20%28% to 40%37% of the total target annual incentive under the plan; and (3) the individual objective component of each senior executive’snamed executive officer’s plan was consistent with the strategies and actions underlying the annual operating plan, and represented 10%25% to 30% of the total target annual incentive under the plan.
The individual qualitative objectives for each named executive officer who received an annual incentive payment were as follows:
Mr. Eck: | ||
| ||
Mr. Dosch: | ||
Mr. Faber: | ||
Mr. Smith: | ||
Mr. Shoemaker: | ||
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When the financial results for the year are finalized, calculations of the amounts earned by each of the senior executivesnamed executive officers pursuant to the terms of his or her annual incentive plan are prepared by management and furnished to the Compensation Committee and the Consultant.PwC. Payments for achievement of the operating earnings and rate of return on tangible capital objectives are based on the application of the formula in the annual incentive plan to the audited financial results, while payments for achievement of individual objectives assigned to each executive are based on evaluation and recommendation by the executive’s immediate superior or, in the case of the Chief Executive Officer, by the Chairman of the Board in consultation with the Chairman of the Compensation Committee, for review and approval by the Compensation Committee.
For 20112012 the target incentive and the relative weight assigned to each performance goal for each named executive officer who received an annual incentive payment were as follows:
| Robert J. Eck | Dennis J. Letham | Ted A. Dosch | Rodney A. Smith | Terrance A. Faber | Rodney A. Shoemaker | |||||||||||||||||||
Target Incentive | $ | 750,000 | $ | 475,000 | $ | 325,000 | * | $ | 130,000 | $ | 105,000 | $ | 84,000 | |||||||||||
Financial Performance Goals: | ||||||||||||||||||||||||
Worldwide Operating Earnings | 38 | % | 38 | % | 38 | % | 42 | % | 42 | % | 42 | % | ||||||||||||
Worldwide Return on Tangible Capital | 37 | % | 37 | % | 37 | % | 28 | % | 28 | % | 28 | % | ||||||||||||
Individual Objectives | 25 | % | 25 | % | 25 | % | 30 | % | 30 | % | 30 | % | ||||||||||||
| Robert J. Eck | Ted A. Dosch | Terrance A. Faber | Rodney A. Smith | Rodney A. Shoemaker | ||||||||||||||||
Target Incentive | $ | 850,000 | $ | 375,000 | $ | 110,000 | $ | 150,000 | $ | 95,000 | ||||||||||
Financial Performance Goals: | ||||||||||||||||||||
Worldwide Operating Earnings | 38 | % | 38 | % | 40 | % | 42 | % | 40 | % | ||||||||||
Worldwide Return on Tangible Capital | 37 | % | 37 | % | 30 | % | 28 | % | 30 | % | ||||||||||
Individual Objectives | 25 | % | 25 | % | 30 | % | 30 | % | 30 | % | ||||||||||
For each performance goal there is a threshold level of performance, below which no incentive is paid. Attainment of the threshold level results in payment of 25% of the target incentive amount, attainment of the target level of performance results in payment of 100% of the target incentive amount, and attainment of the maximum level of performance results in payment of 150% of the target incentive amount. In each case, a pro rata percentage is earned for performance between the threshold and the target and for performance between the target and the maximum.
The following table sets forth for 20112012 the target and payout levels for each financial performance goal, actual performance and the actual percentage of the target incentive paid.
| Worldwide Operating Earnings Target: $307,801,000 | ||||||||||||||||
Worldwide Operating | Multiplier | Actual Performance | % Attainment of Target | Actual % of Target Incentive Paid | ||||||||||||
| $ | 362,762,000 | 117.9 | % | 150 | % | |||||||||||
Less than $247,372,000 | .0 | |||||||||||||||
$247,372,000 | .2 | 5 | ||||||||||||||
$307,801,000 | 1.0 | |||||||||||||||
$320,000,000 or more | 1.5 | |||||||||||||||
| Worldwide Return on Tangible Capital Target: 23.8% | ||||||||||||||||
Worldwide Return on | Multiplier | Actual Performance | % Attainment of Target | Actual % of Target Incentive Paid | ||||||||||||
| 25.4 | % | 106.7 | % | 150 | % | |||||||||||
Less than 19.5% | .0 | |||||||||||||||
19.5% | .2 | 5 | ||||||||||||||
23.8% | 1.0 | |||||||||||||||
24.0% or more | 1.5 | |||||||||||||||
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Worldwide Operating Earnings Target: $411,936,000 | ||||||||||||||||
Worldwide Operating Earnings Tiers | Multiplier | Actual Performance | % Attainment of Target | Actual % of Target Incentive Paid | ||||||||||||
| $ | 282,489,000 | 68.6 | % | 0 | % | |||||||||||
Less than $350,146,000 | .0 | |||||||||||||||
$350,146,000 | .25 | |||||||||||||||
$411,936,000 | 1.0 | |||||||||||||||
$444,891,000 or more | 1.5 | |||||||||||||||
Worldwide Return on Tangible Capital Target: 29.7% | ||||||||||||||||
Worldwide Return on Tangible Capital Tiers | Multiplier | Actual Performance | % Attainment of Target | Actual % of Target Incentive Paid | ||||||||||||
| 24.1 | % | 81.2 | % | 0 | % | |||||||||||
Less than 25.7% | .0 | |||||||||||||||
25.7% | .25 | |||||||||||||||
29.7% | 1.0 | |||||||||||||||
31.4% or more | 1.5 | |||||||||||||||
Multipliers also apply to the individual objectives. For other than the Chief Executive Officer, the executive’s immediate superior evaluates the executive’s achievement of the objective. TakenThis evaluation takes into account are any particular challenges encountered in performing the objective, including developments which were outside of the executive’s control. Based on this evaluation, the executive’s immediate superior makes a qualitative judgment about the extent to which the executive has met the Company’s expectations for achievement of the
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objective, and recommends a multiplier to be applied to the target incentive. The multipliers are submitted, along with supporting commentary, to the Compensation Committee for review and approval. The Compensation Committee makes the same evaluation and determination for the Chief Executive Officer. In addition, the Compensation Committee can, at its discretion, apply a multiplier in excess of 1.5, provided the resulting total award under the annual incentive plan does not exceed the limitations imposed by the MIPour Management Incentive Plan on the amount of the aggregate award.
The performance of the continuing named executive officers during 20112012 resulted in the following multipliers applied to their target annual incentive with respect to their individual objectives: Mr. Eck: 1.5; Mr. Dosch: 1.2;1.5; Mr. Faber: 1.2;1.5; Mr. Smith: 1.0;1.5; and Mr. Shoemaker: 1.25. (In connection with his retirement, Mr. Letham received a prorated annual cash incentive payment based on a multiplier of 1.5 for corporate performance goals and a multiplier of 1.0 for individual objectives.)
Annual incentive awards paid to the continuing named executive officers with respect to the corporate performance goals and the individual objectives in accordance with these results are shown in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table in this Proxy Statement and the annual incentive award to Mr. Letham is shown in the “Bonus” column of that table.Statement.
Equity-Based Awards: The Company isWe are dedicated to enhancing long-term value for itsour stockholders, and believesbelieve that the best way to ensure itsour senior executives, including the named executive officers, maintain focus on this goal is to provide a substantial part of their total compensation in the form of equity-based awards. The Company’sOur use of equity-based awards is designed to promote ownership and align the economic interests of senior executives to those of theour stockholders at a reasonable cost to the Company and to reward and retain senior executives identified as key to the continuity and success of theour business or as high potential succession candidates. Because the Company believeswe believe that it is duplicative to apply the performance-based criteria used to determine annual cash incentives to equity-based compensation, it haswe have historically, and in 2011,2012, chosen to condition the vesting of equity-based awards on the passage of time.
The Company’sOur Stock Incentive Plan approved by stockholders in 2010, as well as predecessor plans, provide for various types of awards, including stock options, stock appreciation rights, stock awards, performance shares, stock units, performance units and dividend equivalent rights.
The Company hasWe have traditionally provided long term incentive compensation to our named executive officers through a combination of stock options and restricted stock units (RSUs). Stock options provide an element of risk to executives in that value is created for the executives only when value is created for stockholders, and they provide a more leveraged vehicle for accomplishing this objective. RSUs manage potential increased dilution that would result from using only options, and provide executives with outright value that supports executive retention. As compared to options, fewer RSUs can be used to meet long-term compensation objectives.
In March, 2011,2012, all continuing named executive officers received RSUs, and Mr. Eck and Mr. Dosch also received stock options (their awards consisted of 50% of the value in RSUs and 50% in options). In light of his planned retirement in July 2011, Mr. Letham did not receive an equity grant. In connection with his promotion, Mr. Dosch received an additional award of stock options and RSUs in July 2011 valued at $499,992.
The CompanyWe generally providesprovide equity-based awards to its senior executivesthe named executive officers so that their total compensation is between the 50th and 75th percentile of the total compensation provided to similarly situated executives in the comparison group of companies. This reflects the Company’sour practice of leveraging total compensation relative to the benchmark rates which is consistent with the Company’sour philosophy that senior executives, including the named executive officers, should receive a sizable amount of their total compensation as equity in the Company.company. Because the Company benchmarkswe benchmark total compensation for its senior executivesour named executive officers rather than equity-based awards per se, and
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total compensation includes total cash compensation, recommendations for equity-based awards can be affected by total cash compensation determinations.
In determining the total amount of equity to award each year, the Compensation Committee also reviews the dilution and value transfer rates of the companies in the comparison group. With respect to dilution, the ConsultantPwC presents, for each company in the comparison group, shares reserved as a percentage of total diluted shares outstanding, along with the percentages associated with the 25th, 50th and 75th percentiles. Lower percentiles correlate to lower dilution. Based on that data, the Companycompany was between the 50th and 75th percentiles. The value of long term incentives over the 2010 awards increased approximately 0.5%.
With respect to value transfer, the ConsultantPwC presents, for each company in the comparison group, the value (as a percentage of market capitalization) of equity grants to all recipients and to the chief executive officer for each of the three most recent years available, and the three year average. Percentages associated with the 25th, 50th and 75th percentiles are also presented. Lower percentiles correlate to lower award values in relation to market capitalization. Based on that data, the Companycompany was between the 50th and 75th percentiles in total value transferred in 2011,2012, and between the 50th and 75th percentiles in value transferred to its Chief Executive Officer in 2011.2012. Management also presents the year-end value of all the Company’sof our outstanding equity-based awards.
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These grants to the named executive officers are shown in the Summary Compensation Table and the Grants of Plan-Based Awards Table in this Proxy Statement.
Pensions: The Company believesWe believe that providing a measure of retirement income to itsour employees, including its senior executives,our named executive officers, is important to the Company’sour recruitment and retention goals. Accordingly, certain U.S. employees and employees of certain foreign subsidiaries participate in Company-sponsoredcompany-sponsored plans. For certain highly compensated employees in the U.S., the Company provideswe provide a non-qualified excess benefit plan which extends the applicable benefit formula in the qualified pension plan to eligible compensation that exceeds the amount allowed by the Internal Revenue Code (“Code”) to be taken into account under the qualified plan.plan ($250,000 in 2012). All named executive officers participate in the excess benefit plan. See the discussion accompanying the Pension Benefits Table in this Proxy Statement.
Deferred Compensation: The Company believesWe believe that providing a method for employees, including its senior executives,the named executive officers, to save for retirement on a tax-deferred basis is important to the Company’sour recruitment and retention goals. Accordingly, substantially all U.S. employees are eligible to participate in the Company’scompany’s 401(k) plan. For certain highly compensated employees, including its senior executives, the Company providesnamed executive officers, we provide a non-qualified deferred compensation plan that enables participants to defer up to 50% of their salary and 100% of their annual incentive until retirement or other specified future date. The Company paysWe pay interest on these deferrals and providesprovide an enhanced crediting rate if the Companycompany meets certain pre-determined financial performance goals. See the discussion accompanying the Nonqualified Deferred Compensation Table in this Proxy Statement.
Perquisites: Except for Mr. Dosch’s relocation expenses and related tax gross-up in 2010, theThe named executive officers do not receive perquisites.
Dul Separation Agreement
On March 26, 2012, the Company entered into a separation agreement with John A. Dul in connection with his termination of employment that occurred on December 8, 2011. The material terms of the separation agreement are as follows: (i) base salary continuation for 24 months; (ii) a 2011 bonus; (iii) continued coverage under the Company’s health plan at active employee rates for the lesser of 18 months following December 8, 2011 or until he obtains comparable coverage from a new employer; (iv) a tax gross-up on the imputed income resulting from such continued health coverage; and (v) outplacement services until the earlier of June 19, 2013 or the date he finds new employment. Mr. Dul’s unvested restricted stock units due to vest on March 1, 2012 vested on such date, and stock options due to vest on March 1, 2012 vested on such date and may be exercised until December 7, 2012. Mr. Dul will provide consulting services to the Company on an independent contractor basis until December 7, 2012. The agreement contains a two year noncompete and nonsolicitation provision and a release of claims provision.
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Deductibility of Compensation
Section 162(m) of the Code limits the deductibility for federal income tax purposes of executive compensation paid to the chief executive officer and the three other most highly compensated officers of a public company other than the chief financial officer to $l,000,000 per year, but contains an exception for certain performance-based compensation. It is theour policy of the Company to structure itsour incentive and equity-based compensation in a manner that will minimize the impact of limitations imposed by Section 162(m) to the extent itwe can reasonably do so consistent with itsour goal of retaining and motivating itsour executives in a cost effective manner. We review compensation plans in light of applicable tax provisions, including Section 162(m), and may revise compensation plans from time to time to maximize deductibility. However, we may approve compensation that does not qualify for deductibility when we deem it to be in the Company’sour best interest. The Company’s grantsGrants of stock options under itsour Stock Incentive Plans and awards under itsour Management Incentive Plan qualify as “performance-based compensation” under Section 162(m). Base salary does not by its nature qualify as performance-based compensation under Section 162(m). RSUs granted under the Company’sour Stock Incentive Plan generally are not considered performance-based, and may not be fully deductible if paid to an executive officer while he is subject to Section 162(m).
Stock Ownership Guidelines
To promote the alignment of the interests of directors and senior executives, including the named executive officers, with those of theour stockholders, the Company haswe have established the following minimum Companycompany stock ownership guidelines:guidelines. Under these guidelines, directors shallare required to hold stock valued at three times their annual retainer and the Chief Executive Officer shallis required to hold stock valued at five times his base salary. The Chief Executive Officer shall setsets the minimum Companycompany stock ownership guidelines for the other senior executives. The value of shares owned, vested RSUs and vested stock options is used to determine whether the guidelines have been met. The Compensation Committee is responsible for recommending appropriate actions in respect of persons failing to meet the ownership guidelines within five years of those persons becoming subject to the guidelines. The Company’sOur Global Business Ethics and Conduct Policy prohibits hedging against a decline in the Company’sour share price.
All directors and executives subject to these requirements are either above their ownership requirements or, taking into account the continued vesting of previous and/or anticipated equity-based awards, are expected to achieve their requirement within the prescribed five year timeframe.
Executives are not subject to minimum holding periods; however, in the event an executive does not meet the Company’scompany’s stock ownership guidelines, the Board may take corrective action including, but not limited to, prohibiting sales of stock until the executive meets the applicable guideline.
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Timing of Awards
Annual cash incentive awards for the most recently completed fiscal year are determined by the Compensation Committee at its regularly scheduled meeting in February each year, after the financial statements for the recently completed year are finalized and results are publicly reported. These financial statements are necessary to complete the calculation of the amount of awards earned.
Base salaries, annual cash incentive targets and equity-based awards for the current year are also determined at the February meeting, after the Board of Directors has approved the operating budgets for the year, the ConsultantPwC has provided benchmarking data and management has formulated its recommendations.
Equity-based awards are generally granted on March 1 of each year. The Compensation Committee chose March 1 of each year as the grant date in order to reduce the administrative burden of issuing shares on multiple dates each year as previously issued RSUs vested. Under certain limited circumstances, such as in connection with a promotion or new hire, the Compensation Committee will make grants on a date other than March 1.
These awards are approved at the meeting as dollar-value awards to each recipient rather than a number of shares, units or options. The number of shares or units to be granted to each recipient is determined by dividing the dollar-value award to each participant as approved by the Compensation Committee, by the closing price of the Company’sour stock on the grant date or, if not a trading day, the immediately preceding
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trading day. The number of options to be granted is similarly determined, using their Black-Scholes value on the grant date or, if not a trading day, the immediately preceding trading day. The exercise price of stock options is the closing price of the underlying common stock on the grant date or, if not a trading day, the immediately preceding trading day.
Recovery of Awards
Beginning in 2010, all annual incentive and long term incentive awards to senior executives, including the named executive officers, are expressly conditioned upon the Company’sour right to recoup a portion or all of any such award granted in respect of any fiscal year for which theour financial results of the Company are restated.
Subsequent Compensation DecisionsConsideration of Prior Say-on-Pay Vote
At the 20112012 Annual Meeting of Stockholders, the “Advisory Vote on Executive Compensation” proposal (the “say on pay” vote) received support from approximately 97.7%95.1% of shares present at the meeting and entitled to vote. The Compensation Committee considered these results and, based on theour strategic objectives, of the Company, the Company’sour performance and the close alignment of the compensation program with stockholder interests and the overwhelming support of stockholders from stockholders in 2011,2012, determined not to make any major changes to compensation plans and programs for fiscal year 2012.2013. Accordingly, the Compensation Committee has decided to follow the same general policies and procedures described above in setting compensation for 2011, except that as scheduled, the effective date of base salary and annual incentive target increases began to occur on an annual basis effective January 1, 2012, consistent with historical practice.2013.
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EXECUTIVE COMPENSATION
20112012 SUMMARY COMPENSATION TABLE
This table shows the compensation for the fiscal years ended December 28, 2012, December 30, 2011 and December 31, 2010 and January 1, 2010 of the Company’s Chief Executive Officer, the two individuals who served as Chief Financial Officer during 2011, the three other most highly compensatedour named executive officers who were serving at year end and one former executive officer whose employment terminated during 2011 (the “named executive officers”).officers.
Name and Principal | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(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 ($) | Year | Salary ($)(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 ($)(5) | Total ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Robert J. Eck | 2011 | 800,000 | 0 | 1,150,008 | 1,149,997 | 1,125,000 | 933,817 | (6) | 5,094 | 5,163,916 | 2012 | 850,000 | 1,199,995 | 1,200,000 | (6) | 318,750 | 1,129,288 | (7) | 8,068 | 4,706,101 | ||||||||||||||||||||||||||||||||||||||||||||||||
President & Chief | 2010 | 665,000 | 0 | 1,000,012 | 999,934 | 948,350 | 359,944 | 4,125 | 3,977,365 | 2011 | 800,000 | 1,150,008 | 1,149,997 | 1,125,000 | 933,817 | 5,094 | 5,163,916 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 2009 | 630,000 | 0 | 750,014 | 750,005 | 243,750 | 302,822 | 5,903 | 2,682,494 | 2010 | 665,000 | 1,000,012 | 999,934 | 948,350 | 359,944 | 4,125 | 3,977,365 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Dennis J. Letham | 2011 | 283,461 | 326,563 | (7) | 0 | (8) | 0 | (8) | 0 | 8,968 | (9) | 5,393 | 624,385 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Former Executive Vice President — Finance and Chief Financial Officer (through June 30, 2011) | 2010 | 540,000 | 0 | 1,199,980 | 0 | 633,650 | 500,856 | 4,125 | 2,878,611 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2009 | 530,000 | 0 | 1,199,987 | 0 | 178,125 | 964,100 | 9,905 | 2,882,117 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ted A. Dosch | 2011 | 388,500 | 0 | 499,962 | (10) | 500,013 | (10) | 463,125 | 10,908 | (11) | 4,136 | 1,866,644 | 2012 | 450,000 | 349,984 | 349,995 | (6) | 140,625 | 13,974 | (8) | 4,848 | 1,309,426 | ||||||||||||||||||||||||||||||||||||||||||||||
Executive Vice | 2010 | 351,000 | 0 | 149,998 | 149,990 | 408,000 | 2,689 | 58,989 | 1,120,666 | 2011 | 388,500 | 499,962 | 500,013 | 463,125 | 10,908 | 4,136 | 1,866,644 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 2009 | 325,096 | 0 | 275,013 | 0 | 96,000 | 2,084 | 117,006 | 815,199 | 2010 | 351,000 | 149,998 | 149,990 | 408,000 | 2,689 | 58,989 | 1,120,666 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
John A. Dul | 2011 | 354,904 | 0 | 187,514 | (12) | 187,486 | (12) | 0 | 279,471 | (13) | 4,293 | 1,013,668 | (14) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Former Vice President — General Counsel and Secretary (through December 8, 2011) | 2010 | 317,500 | 0 | 174,983 | 174,980 | 173,415 | 100,199 | 4,125 | 945,202 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2009 | 310,000 | 0 | 149,991 | 150,877 | 47,000 | 95,930 | 6,014 | 759,812 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Terrance A. Faber | 2011 | 270,000 | 0 | 249,971 | 0 | 147,900 | 112,466 | (15) | 4,473 | 784,810 | 2012 | 280,000 | 249,979 | 0 | 49,500 | 118,216 | (9) | 5,729 | 703,424 | |||||||||||||||||||||||||||||||||||||||||||||||||
Vice President —Controller | 2010 | 266,000 | 0 | 249,982 | 0 | 137,860 | 71,151 | 4,125 | 729,118 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2009 | 262,000 | 0 | 450,002 | 0 | 43,000 | 77,114 | 5,903 | 838,019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vice President — Controller | 2011 | 270,000 | 249,971 | 0 | 147,900 | 112,466 | 4,473 | 784,810 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2010 | 266,000 | 249,982 | 0 | 137,860 | 71,151 | 4,125 | 729,118 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rodney A. Smith | 2011 | 267,000 | 0 | 209,990 | 0 | 175,250 | 9,812 | (16) | 4,314 | 666,366 | 2012 | 300,000 | 249,979 | 0 | 67,500 | 11,671 | (10) | 4,971 | 634,121 | |||||||||||||||||||||||||||||||||||||||||||||||||
Vice President — Human Resources | 2010 | 263,500 | 0 | 185,020 | 0 | 170,735 | 4,307 | 4,125 | 627,687 | 2011 | 267,000 | 209,990 | 0 | 175,250 | 9,812 | 4,314 | 666,366 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| 2009 | 260,000 | 0 | 179,989 | 0 | 47,000 | 2,590 | 3,875 | 493,454 | 2010 | 263,500 | 185,020 | 0 | 170,735 | 4,307 | 4,125 | 627,687 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Rodney A. Shoemaker | 2011 | 231,000 | 0 | 149,983 | 0 | 119,750 | 124,578 | (17) | 4,075 | 629,386 | 2012 | 240,000 | 159,967 | 0 | 35,625 | 118,498 | (11) | 4,804 | 558,894 | |||||||||||||||||||||||||||||||||||||||||||||||||
Vice President —Treasurer | 2010 | 228,000 | 0 | 149,998 | 0 | 110,555 | 73,195 | 3,954 | 565,702 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2009 | 225,000 | 0 | 119,993 | 0 | 34,000 | 62,464 | 4,215 | 445,672 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Vice President — Treasurer | 2011 | 231,000 | 149,983 | 0 | 119,750 | 124,578 | 4,075 | 629,386 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2010 | 228,000 | 149,998 | 0 | 110,555 | 73,195 | 3,954 | 565,702 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | The amounts in this column reflect salary earned by each named executive officer for the applicable year. |
| (2) | The amounts in these columns are the grant date fair value of restricted stock unit awards and option awards computed in accordance with FASB ASC Topic 718 for each fiscal year shown. For an explanation of assumptions used in valuing the awards, see Note 11 to the Consolidated Financial Statements contained in our 2010 Form 10-K, Note 9 to the Consolidated Financial Statements contained in |
| (3) |
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| (4) | Amounts shown in this column include the annual increase for the fiscal year in the actuarial present value of each executive’s accumulated benefit under all |
| (5) | For components of the amounts in this column, see the |
| (6) | In accordance with the anti-dilution provisions of our stock incentive plans, the number of outstanding options and the exercise prices were adjusted to reflect the special cash dividend declared on April 24, 2012. The adjusted number of options and the adjusted exercise prices are set forth in the Outstanding Equity Awards at 2012 Fiscal Year-End Table of this Proxy Statement. This adjustment did not affect the grant date fair value. |
| (7) | Includes the annual increase for |
| (8) |
| Includes |
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| (9) | Includes the annual increase for 2012 in the actuarial present value of the accumulated benefit under all company defined benefit plans of $117,942 and |
| (10) | Includes |
| (11) | Includes the annual increase for |
20112012 All Other Compensation
Named Executive Officer | Company Matching | Interest on Dividend Equivalents(1) | Company Matching | Interest on Dividend Equivalents(1) | ||||
Robert J. Eck | $4,125 | $969 | $4,250 | $3,818 | ||||
Dennis J. Letham | $4,125 | $1,268 | ||||||
Ted A. Dosch | $3,998 | $138 | $4,098 | $750 | ||||
John A. Dul | $4,125 | $168 | ||||||
Terrence A. Faber | $4,125 | $348 | ||||||
Terrance A. Faber | $4,250 | $1,479 | ||||||
Rodney A. Smith | $4,125 | $189 | $4,250 | $721 | ||||
Rodney A. Shoemaker | $3,954 | $121 | $4,250 | $554 | ||||
| 1 | These amounts reflect interest on dividend equivalents credited to stock units that was paid to the executive when the stock units vested. |
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Employment Agreements
Until his retirement from the Company on June 30, 2011, the Company was a party to an Employment Agreement dated as of January 1, 2006 with Mr. Letham which provided for certain compensation and benefits during employment:
Salary: The minimum annual base salary was at least $385,000 for Mr. Letham. Salary could not be reduced except with his consent or in connection with an overall reduction in salary paid to senior executives of the Company as a group.
Annual Incentives: Mr. Letham was eligible to participate in the Management Incentive Plan and the minimum target annual incentive amount was at least $365,000. The target incentive amount could not be reduced except with his consent or in connection with an overall reduction in the target incentive amount paid to senior executives of the Company as a group.
Other Benefits: Mr. Letham was eligible to participate in the Company’s 2001 Stock Incentive Plan and successor plans in accordance with their terms and was eligible for other employee benefits on the same basis as other similarly situated senior executives.
The Company hasWe have no employment agreements with any otherof our executives.
20112012 GRANTS OF PLAN-BASED AWARDS
This table sets forth information for each named executive officer with respect to (1) estimated payouts under non-equity incentive plans in 20112012 and (2) restricted stock units and options awarded in 2011.2012.
Name | Grant Date | Committee Approval Date(1) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(3) | Grant Date | Committee Approval Date(1) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Awards: Number of Securities Underlying Options (#)(3) | Exercise or Base Price of Option Awards ($/Sh)(3) | Grant Date Fair Value of Stock and Option Awards ($)(4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Threshold ($) | Target ($) | Maximum ($) | Threshold ($) | Target ($) | Maximum ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert J. Eck | 2/17/11 | 187,500 | 750,000 | 1,125,000 | — | — | — | — | 2/23/12 | 212,500 | 850,000 | 1,275,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/1/11 | 2/17/11 | 16,424 | 39,986 | 70.02 | 2,300,006 | 3/1/12 | 2/23/12 | 17,291 | 42,796 | 69.40 | 2,399,995 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dennis J. Letham | 2/17/11 | 118,750 | 475,000 | 712,500 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ted A. Dosch | 2/17/11 | 81,250 | 325,000 | 487,500 | — | — | — | — | 2/23/12 | 93,750 | 375,000 | 562,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/1/11 | 2/17/11 | 3,570 | 8,693 | 70.02 | 499,982 | 3/1/12 | 2/23/12 | 5,043 | 12,482 | 69.40 | 699,979 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 7/1/11 | 2/17/11 | 3,782 | 9,388 | 66.10 | 499,993 | (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John A. Dul | 2/17/11 | 43,750 | 175,000 | 262,500 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/1/11 | 2/17/11 | 2,678 | 6,519 | 70.02 | 375,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Terrance A. Faber | 2/17/11 | 26,250 | 105,000 | 157,500 | — | — | — | — | 2/23/12 | 27,500 | 110,000 | 165,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/1/11 | 2/17/11 | 3,570 | 0 | 0 | 249,971 | 3/1/12 | 2/23/12 | 3,602 | 0 | 69.40 | 249,979 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rodney A. Smith | 2/17/11 | 32,500 | 130,000 | 195,000 | — | — | — | — | 2/23/12 | 37,500 | 150,000 | 225,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/1/11 | 2/17/11 | 2,999 | 0 | 0 | 209,990 | 3/1/12 | 2/23/12 | 3,602 | 0 | 69.40 | 249,979 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rodney A. Shoemaker | 2/17/11 | 21,000 | 84,000 | 126,000 | — | — | — | — | 2/23/12 | 23,750 | 95,000 | 142,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/1/11 | 2/17/11 | 2,142 | 0 | 0 | 149,983 | 3/1/12 | 2/23/12 | 2,305 | 0 | 69.40 | 159,967 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | The Compensation Committee generally approves equity awards at its February meeting, to be granted on the following March 1. March 1 was chosen as the annual grant date to reduce the administrative burden in issuing awards with varying grant dates. |
| (2) | Payouts under the Management Incentive Plan were based on performance in |
| (3) | The number of outstanding options and their exercise prices were adjusted in accordance with the anti-dilution provisions of our stock incentive plans to reflect the special cash dividend declared on April 24, |
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| 2012. The adjusted number of options and the adjusted exercise prices are set forth in the Outstanding Equity Awards at 2012 Fiscal Year-End Table of this Proxy Statement. |
| (4) | Calculated in accordance with FASB ASC Topic 718. The stock options and/or restricted stock units vest in 1/3 increments during employment beginning on the second anniversary of the March 1, |
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| The exercise price of the option awards granted on March 1 was |
Management Incentive Plan
For 2011,2012, the Compensation Committee approved annual incentive awards composed of three components: Operating Earnings, Returnoperating earnings, return on Tangible Capitaltangible capital and individual objectives. The Compensation Committee set a target incentive amount for each named executive officer ranging from 36%39% to 94%100% of base salary. The actual payout for each component of the annual incentive award can range from zero to 150% of the target incentive opportunity for each component. For each component, a pro rata percentage is earned for performance between the threshold and the target and for performance between the target and the maximum.
A significant portion of each named executive officer’s incentive opportunity (70% or 75%) was based on the two financial components. Each year, the Compensation Committee sets Operating Earningsoperating earnings target, threshold and maximum amounts. If the Companycompany reaches the threshold Operating Earningsoperating earnings amount, the executive is eligible for a threshold payment of 25% of the Operating Earningsoperating earnings component of the incentive award, with pro rata increases in payout as Operating Earningsoperating earnings reach the target amount. Exceeding the Operating Earningsoperating earnings target amount will result in payments above the target incentive award amount, up to a maximum of 150%. Similarly, the Compensation Committee sets yearly Returnreturn on Tangible Capitaltangible capital target, threshold and maximum amounts. At the threshold Returnreturn on Tangible Capitaltangible capital amount, the executive receives 25% of the Returnreturn on Tangible Capitaltangible capital component of the incentive award, with pro rata increases in payout as Returnreturn on Tangible Capitaltangible capital reaches the target amount. Exceeding the target Returnreturn on Tangible Capitaltangible capital amount will result in payments above the target incentive amount up to a maximum of 150%. The remaining portion of the annual incentive opportunity is based on achievement of individual objectives, which are determined subjectively by the named executive officer’s immediate superior or, in the case of the Chief Executive Officer, by the Chairman of the Board in consultation with the Chairman of the Compensation Committee.
See “Annual Incentive Awards” in the Compensation Discussion and Analysis section of this Proxy Statement for a more detailed discussion of the Management Incentive Plan.
Restricted Stock Units
RestrictedFor 2012, restricted stock units were granted under the Company’scompany’s 2010 Stock Incentive Plan. Generally, one-third of the restricted stock units vest during employment on each anniversary of the grant date beginning with the second anniversary of the grant date. Due to his planned retirement, Mr. Letham did not receive stock units in 2011. Units convert to an equal number of unrestricted shares of common stock on the date they vest. Holders of restricted stock units have the right to receive dividend equivalents, which are credited at the time dividends are paid and are held by the Companycompany until the units vest. Dividend equivalents are credited with interest equal to 4%3.5% per year until the units vest.
Stock Options
StockFor 2012, stock options were granted under the Company’scompany’s 2006 Stock Incentive Plan. Options granted to the named executive officers in 20112012 vest during employment in one-third increments on each anniversary of the grant date beginning with the second anniversary of the grant date.
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OUTSTANDING EQUITY AWARDS AT 20112012 FISCAL YEAR-END
This table sets forth information for each named executive officer with respect to (1) each grant of stock options outstanding as of December 30, 201128, 2012 and (2) each outstanding restricted stock unit that has not vested as of December 30, 2011.28, 2012.
| Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||
| Option Awards(1) | Number of Shares or Units of Stock That Have Not Vested (#)(4) | Market Value of Shares or Units of Stock that Have Not Vested($)(5) | Option Awards(1) | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable(2) | Option Exercise Price ($) | Option Expiration Date(3) | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable(2) | Option Exercise Price ($) | Option Expiration Date(3) | Number of Shares or Units of Stock That Have Not Vested (#)(4) | Market Value of Shares or Units of Stock that Have Not Vested ($)(5) | ||||||||||||||||||||||||||||||||||||||
Robert J. Eck |
| 2,780 34,112 15,489 13,221 19,499 9,294 21,544 0 0 | (6) (7) (9) (9) (9) (9) (9)
|
| 0 17,056 0 0 9,750 4,647 43,089 62,340 39,986 | (8)
(10) (10) (10) (10) (10) |
| 21.00 43.42 57.18 78.81 61.34 56.49 27.59 40.07 70.02 |
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| 02/21/2012 03/01/2016 03/01/2017 10/01/2017 03/01/2018 07/01/2018 03/01/2019 03/01/2020 03/01/2021 |
| 61,813 | 3,686,527 | 54,750 | (6) | 0 | 40.58 | 03/01/2016 | 57,825 | 3,622,158 | |||||||||||||||||||||||||||
| 16,573 | (7) | 0 | 53.44 | 03/01/2017 | ||||||||||||||||||||||||||||||||||||||||||||
| 14,146 | (7) | 0 | 73.65 | 10/01/2017 | ||||||||||||||||||||||||||||||||||||||||||||
| 31,296 | (7) | 0 | 57.33 | 03/01/2018 | ||||||||||||||||||||||||||||||||||||||||||||
| 14,917 | (7) | 0 | 52.79 | 07/01/2018 | ||||||||||||||||||||||||||||||||||||||||||||
| 46,105 | (7) | 23,052 | (8) | 25.79 | 03/01/2019 | |||||||||||||||||||||||||||||||||||||||||||
| 22,235 | (7) | 44,469 | (8) | 37.45 | 03/01/2020 | |||||||||||||||||||||||||||||||||||||||||||
| 0 | 42,785 | (8) | 65.44 | 03/01/2021 | ||||||||||||||||||||||||||||||||||||||||||||
| 0 | 45,792 | (8) | 64.86 | 03/01/2022 | ||||||||||||||||||||||||||||||||||||||||||||
Ted A. Dosch |
| 0 0 0 |
|
| 9,351 8,693 9,388 | (10) (10) (10) |
| 40.07 70.02 66.10 |
|
| 03/01/2020 03/01/2021 07/01/2021 |
| 17,098 | 1,019,725 | 3,335 | (7) | 6,670 | (8) | 37.45 | 03/01/2020 | 17,853 | 1,118,312 | ||||||||||||||||||||||||||
John A. Dul |
| 7,477 6,777 6,750 4,334 0 |
|
| 0 0 3,375 8,668 10,909 |
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| 21.00 57.18 61.34 27.59 40.07 |
|
| 02/21/2012 03/01/2017 03/01/2018 03/01/2019 03/01/2020 | (11) (11) (11) (11) | 4,213 | (12) | 251,263 | |||||||||||||||||||||||||||||||||
| 0 | 9,302 | (8) | 65.44 | 03/01/2021 | ||||||||||||||||||||||||||||||||||||||||||||
| 0 | 10,045 | (8) | 61.78 | 07/01/2021 | ||||||||||||||||||||||||||||||||||||||||||||
| 0 | 13,356 | (8) | 64.86 | 03/01/2022 | ||||||||||||||||||||||||||||||||||||||||||||
Terrance A. Faber |
| 0 8,249 | (9) |
| 14,213 4,125 | (8) (10) |
| 43.42 61.34 |
|
| 03/01/2016 03/01/2018 |
| 21,026 | 1,253,991 | 15,208 | (6) | 0 | 40.58 | 03/01/2016 | 16,174 | 1,013,139 | |||||||||||||||||||||||||||
| 13,240 | (7) | 0 | 57.33 | 03/01/2018 | ||||||||||||||||||||||||||||||||||||||||||||
Rodney A. Smith | 3,749 | (9) | 1,875 | (10) | 61.34 | 03/01/2018 | 12,048 | 718,543 | 6,018 | (7) | 0 | 57.33 | 03/01/2018 | 11,529 | 722,177 | |||||||||||||||||||||||||||||||||
Rodney A. Shoemaker | 3,749 | (9) | 1,875 | (10) | 61.34 | 03/01/2018 | 9,011 | 537,416 | 6,018 | (7) | 0 | 57.33 | 03/01/2018 | 8,148 | 510,391 | |||||||||||||||||||||||||||||||||
| (1) | In accordance with the anti-dilution provisions of |
| (2) | Unvested awards are generally forfeited upon termination of employment for any reason. |
| (3) | Each option was granted 10 years prior to the expiration date shown in this column. |
| (4) | Restricted stock units vest during employment in 1/3 increments beginning on the second anniversary of each grant date. Unvested awards are generally forfeited upon termination of employment for any reason. |
The unvested restricted stock units for the continuing named executive officers will vest as follows:
Unit Vesting
Name | 3/1/2012 | 7/1/2012 | 3/1/2013 | 7/1/2013 | 3/1/2014 | 7/1/2014 | 3/1/2015 | 7/1/2015 | 3/1/2013 | 7/1/2013 | 3/1/2014 | 7/1/2014 | 3/1/2015 | 7/1/2015 | 3/1/2016 | |||||||||||||||||||||||||||||||||||||||||||||
Robert J. Eck | 19,618 | 1,661 | 21,780 | 0 | 13,279 | 0 | 5,475 | 0 | 21,780 | 0 | 19,043 | 0 | 11,238 | 0 | 5,764 | |||||||||||||||||||||||||||||||||||||||||||||
Ted A. Dosch | 4,288 | 0 | 5,477 | 1,261 | 2,361 | 1,260 | 1,190 | 1,261 | 5,477 | 1,261 | 4,042 | 1,260 | 2,871 | 1,261 | 1,681 | |||||||||||||||||||||||||||||||||||||||||||||
Terrance A. Faber | 8,454 | 0 | 8,241 | 0 | 3,141 | 0 | 1,190 | 0 | 8,241 | 0 | 4,342 | 0 | 2,390 | 0 | 1,201 | |||||||||||||||||||||||||||||||||||||||||||||
Rodney A. Smith | 4,121 | 0 | 4,484 | 0 | 2,443 | 0 | 1,000 | 0 | 4,484 | 0 | 3,644 | 0 | 2,200 | 0 | 1,201 | |||||||||||||||||||||||||||||||||||||||||||||
Rodney A. Shoemaker | 3,168 | 0 | 3,244 | 0 | 1,885 | 0 | 714 | 0 | 3,244 | 0 | 2,653 | 0 | 1,483 | 0 | 768 | |||||||||||||||||||||||||||||||||||||||||||||
| (5) | Represents the value of shares of common stock covered by the restricted stock units, using |
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| (6) | These stock options vested in 1/ |
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| (7) | These stock options vested in 1/3 increments beginning on the |
| (8) | These stock options vest during employment in 1/3 increments beginning on the |
2011 OPTION EXERCISES AND STOCK VESTED
This table sets forth information relating to (1) the exercise of stock options during 2011fiscal 2012 by each named executive officer, (2) the dollar amount realized upon such exercise, (3) the number of shares of common stock acquired by each named executive officer during 2011fiscal 2012 as a result of the vesting of restricted stock units and (4) the value of those vested shares.
| Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | ||||||||||||||||||||||||
Robert J. Eck | 16,620 | 703,324 | 17,349 | 1,181,369 | 2,780 | 118,570 | 21,279 | 1,458,531 | ||||||||||||||||||||||||
Dennis J. Letham | 92,947 | 2,820,522 | 28,639 | 2,030,219 | ||||||||||||||||||||||||||||
Ted A. Dosch | 0 | 0 | 3,117 | 220,964 | 0 | 0 | 4,288 | 299,538 | ||||||||||||||||||||||||
John A. Dul | 2,500 | 119,512 | 3,804 | 269,666 | ||||||||||||||||||||||||||||
Terrance A. Faber | 38,107 | 786,169 | 7,869 | 557,833 | 0 | 0 | 8,454 | 590,554 | ||||||||||||||||||||||||
Rodney A. Smith | 0 | 0 | 4,278 | 303,267 | 0 | 0 | 4,121 | 287,872 | ||||||||||||||||||||||||
Rodney A. Shoemaker | 6,656 | 294,591 | 2,736 | 193,955 | 0 | 0 | 3,168 | 221,301 | ||||||||||||||||||||||||
| (1) |
| (2) | Represents the value of |
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20112012 PENSION BENEFITS
The Company providesWe provide defined pension benefits under the Company’sour Pension Plan and our Excess Benefit Plan and the Supplemental Executive Retirement Plan (“SERP”).Plan. This table shows (1) the years of service credited to each named executive officer under each plan and (2) the present value of the accumulated benefit payable under each plan to each named executive officer upon retirement at age 65.
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Name | Plan Name | Number of Years Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(2) | Payments During Last Fiscal Year ($) | ||||||||||
Robert J. Eck | Anixter Inc. Pension Plan | 23.00 | 1,563,904 | 0 | ||||||||||
| Anixter Inc. Excess Benefit Plan | 23.00 | 1,737,375 | 0 | |||||||||||
Ted A. Dosch | Anixter Inc. Pension Plan(3) | 3.95 | 12,535 | 0 | ||||||||||
| Anixter Inc. Excess Benefit Plan(3) | 3.95 | 15,906 | ||||||||||||
Terrance A. Faber | Anixter Inc. Pension Plan | 12.42 | 522,407 | 0 | ||||||||||
| Anixter Inc. Excess Benefit Plan | 12.42 | 63,248 | 0 | |||||||||||
Rodney A. Smith | Anixter Inc. Pension Plan(3) | 6.38 | 22,016 | 0 | ||||||||||
| Anixter Inc. Excess Benefit Plan(3) | 6.38 | 6,741 | 0 | |||||||||||
Rodney A. Shoemaker | Anixter Inc. Pension Plan | 26.83 | 583,606 | 0 | ||||||||||
| Anixter Inc. Excess Benefit Plan | 26.83 | 22,944 | 0 | |||||||||||
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| (1) | The number of years of service credited to the named executive officer under the specified plan, computed as of December |
| (2) | The actuarial present value of the named executive officer’s accumulated benefits under the applicable plan, computed as of the same December |
| (3) |
Pension Plan and Excess Benefit Plan
TheOur Pension Plan is a tax-qualified pension plan covering all US employees, excluding any person subject to a collective bargaining agreement which does not provide for coverage under the Pension Plan. The monthly benefit formula for all employees hired prior to June 1, 2004 provides an amount equal to the employee’s years of continuous service (not to exceed 30) multiplied by the sum of 0.65% of the portion of the employee’s Final Average Pay that is less than or equal to 1/ 1/12 of the employee’s Covered Compensation (an amount specified in the Pension Plan based on year of birth), plus 1.3% of the portion of the employee’s Final Average Pay in excess of 1/12 of the employee’s Covered Compensation. Final Average Pay means the highest average monthly salary and bonus (including, but not limited to, overtime, commissions, performance-based bonuses, employee referral bonuses, and amounts deferred under a nonqualified deferred compensation plan or under Code Sections 125, 401(k), and 132 plans) paid during a 60-consecutive month period occurring in the 120-month period prior to termination of employment, taking into account the applicable Code limits. For certain participants, the qualified plan benefit was increased through an amendment which resulted in a corresponding decrease in the Excess Benefit Plan benefit. The monthly benefit formula for employees hired on or after June 1, 2004 is the sum of 0.15% of salary excluding bonuses (up to the applicable Code limits) for each plan year in which the participant’s years of continuous service is fewer than five, plus 0.20% of salary (up to the applicable Code limits) for each plan year in which the participant’s years of continuous service is five or greater. Salary for this purpose includes amounts deferred under a nonqualified deferred compensation plan or under Code Sections 125, 401(k), and 132 plans. In addition, each participant hired after June 1, 2004 has a Personal
30
Retirement Account that is treated as a minimum benefit, whether taken as a lump sum or annuity. The Personal Retirement Account is a notional account that receives an annual pay credit equal to 2.0% of salary excluding bonuses (up to the applicable Code limits) for each plan year in which the participant’s years of continuous service is fewer than five or 2.5% of salary (up to the applicable Code limits) for each plan year in which the participant’s years of continuous service is five or greater.
The Excess Benefit Plan is available to US employees who are recommended by the Chief Executive Officer and approved by the Compensation Committee. For employees hired prior to June 1, 2004, it utilizes the same benefit formulas in the Pension Plan, except that the formula is applied to the portion of the salary and bonus (as described above) and annual benefits that cannot be taken into account under the Pension Plan due to Code limits. For employees hired on or after June 1, 2004, the Excess Benefit Plan provides a Personal Retirement Account that is credited with an annual pay credit of 2.0% of salary and bonus for each plan year after 2010 in which the participant'sparticipant’s years of continuous service is fewer than five or 2.5% of salary and bonus for each plan year after 2010 in which the participant'sparticipant’s years of continuous service is five or greater, less the annual amount credited to the Pension Plan Personal Retirement Account. The Excess Benefit Plan Personal Retirement Account grows with interest based on current 10-year Treasury rates. The purpose of the Excess Benefit Plan is to provide those eligible participants with a retirement benefit that recognizes the participant’s full salary and bonus and any benefit amounts restricted by Code limits.
Participants hired prior to June 1, 2004 are eligible to receive a retirement benefit under the Pension Plan and the Excess Benefit Plan after completing five years of service. The normal retirement age for receiving full benefits under the Pension Plan and the Excess Benefit Plan is 65. Employees hired prior to June 1, 2004, after attaining age 55, may retire and elect to receive early payment, although the amounts paid are actuarially reduced to reflect the longer payment period. AnAny such employee who terminates employment prior to age 55 but has five years of service is eligible for a deferred vested benefit beginning at age 65 (or age 55 subject to an actuarial
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reduction). Employees hired on or after June 1, 2004 may retire at any age after completing three years of service and receive benefit payments subject to actuarial reduction. The Company doesWe do not grant extra years of credited service under the Pension Plan or Excess Benefit Plan. Participants in the Pension Plan hired prior to June 1, 2004 may elect to receive payments as follows: single life annuity, 10-year certain with life annuity, joint and survivor annuity, and joint and contingent annuity. Participants in the Excess Benefit Plan hired prior to June 1, 2004, may elect to receive payments as follows: single life annuity and joint and survivor annuity. For these participants, a lump sum payment is also available under the Pension Plan and Excess Benefit Plan if the value of the benefit is under $10,000. Participants in the Pension Plan hired on or after June 1, 2004 may elect to receive payments as follows: single life annuity, joint and survivor annuity, and lump sum. Participants in the Excess Benefit Plan hired on or after June 1, 2004 will receive their benefit payment as a lump sum. The lump sum payable to employees hired on or after June 1, 2004 cannot be less than the Personal Retirement Account. Currently, Mr.Messrs. Faber, isSmith and Shoemaker are eligible for early retirement payments under the Pension Plan and the Excess Benefit Plan. Mr. Letham retired during 2011 and commenced benefits under the Pension Plan as of July 1, 2011 and benefits under the Excess Benefit Plan as of January 1, 2012 (the benefits are actuarially reduced to reflect commencement prior to age 65).
SERP
Effective as of August 4, 2004, Mr. Letham participated in the SERP. The SERP provides a monthly normal retirement benefit commencing at age 65 equal to 50% of his Final Average Pay, offset by the monthly retirement benefits payable to him under Social Security, the Pension Plan and Excess Benefit Plan. Under the terms of the SERP, Mr. Letham was required to commence payments on the first day of the seventh month following retirement. Retirement prior to age 65 actuarially reduced Mr. Letham’s retirement benefit (using the factors set forth in the Pension Plan). Mr. Letham was fully vested in the SERP when he retired on June 30, 2011 and he commenced actuarially reduced payments as of January 1, 2012.
Assumptions
The assumptions used in calculating the present value of the projected accumulated benefits under the Pension Plan and Excess Benefit Plan and SERP are set forth in Note 8 to the Company’scompany’s Consolidated Financial Statements contained in the Company’s 2011our 2012 Form 10-K.
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20112012 NONQUALIFIED DEFERRED COMPENSATION
Deferrals under the Company’s Deferred Compensation Plan
This table shows information regarding each named executive officer’s benefit under the Company’sour Deferred Compensation Plan (“DCP”).Plan.
Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(3) | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(3) | ||||||||||||||||||||||||||||||
Robert J. Eck | 0 | 0 | 45,738 | 0 | 930,027 | 0 | 0 | 29,624 | 0 | 959,651 | ||||||||||||||||||||||||||||||
Dennis J. Letham | 0 | 0 | 108,807 | 152,869 | 2,329,618 | |||||||||||||||||||||||||||||||||||
Ted A. Dosch | 51,000 | 0 | 2,926 | 0 | 75,189 | 51,000 | 0 | 3,465 | 0 | 129,654 | ||||||||||||||||||||||||||||||
John A. Dul | 0 | 0 | 26,453 | 0 | 546,407 | |||||||||||||||||||||||||||||||||||
Terrance A. Faber | 0 | 0 | 2,680 | 0 | 54,494 | 0 | 0 | 1,736 | 0 | 56,230 | ||||||||||||||||||||||||||||||
Rodney A. Smith | 85,368 | 0 | 11,797 | 12,559 | 249,958 | 87,625 | 0 | 10,331 | 0 | 347,913 | ||||||||||||||||||||||||||||||
Rodney A. Shoemaker | 108,461 | 0 | 22,506 | 0 | 470,388 | 112,596 | 0 | 18,030 | 0 | 601,015 | ||||||||||||||||||||||||||||||
| (1) | These amounts are reflected in the Summary Compensation Table in this Proxy Statement, as “Salary” or “Non-Equity Incentive Plan Compensation”. |
| (2) | The following amounts are reflected as above market earnings in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table: Mr. Eck: |
| (3) | The following amounts have been reported as compensation in this or prior years’ Summary Compensation Tables: Mr. Eck: |
Selected employees are eligible to participate in the DCP.our Deferred Compensation Plan. Under the DCP,this plan, employees may defer up to 50% of base salary and up to 100% of annual non-equity incentive. Elections are made annually, prior to the beginning of the calendar year for which the election is effective. Once made, deferral elections are irrevocable for the year. Deferred amounts are credited to an account established for each participant. Interest is credited at the end of each month and accrues on the average daily balance of the account at 140% of the three month average of the previous quarter’s 10 year Treasury Note rate. This rate was designed to approximate the Company’sour long-term borrowing rate. For 2011,2012, the average crediting rate was 5.17%3.19%. Active participants are eligible to receive an enhanced crediting rate of up to one-half percentage point per quarter if the Company meetswe meet or exceedsexceed certain quarterly performance goals. The enhanced crediting rate is credited at the end of each eligible calendar quarter. Participants must be employed for at least one-half the quarter to be eligible for this enhanced rate. In 2011,2012, partial enhanced crediting was paid for allthree out of four quarters.
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All deferrals must remain in the DCPDeferred Compensation Plan for at least five years from deferral date, except for terminations due to retirement, disability or death. At the time they make their deferral election, participants also elect the form and time of distribution. Retirement and disability payment options are: lump sum, monthly installments or a combination of lump sum and monthly installments. For pre-2005 deferrals, the number of monthly installments may not exceed 120. For post-2004 deferrals, the number of monthly installments may not exceed 180. For all other terminations, excluding death, participants receive a lump sum on the first of the calendar year two years following employment termination, provided deferrals have been in the DCPplan for five years. Participants terminating prior to age 55 may elect to defer receipt of pre-2005 deferrals to a specified date not later than age 55. Pre-2005 deferrals are eligible for an accelerated distribution at any time, subject to a 10% penalty. Post-2004 deferrals have no such accelerated distribution allowance. A participant may receive early distribution without penalty by providing evidence of severe financial hardship as defined by the DCPplan and IRS. In the event of termination due to the participant’s death, the beneficiary receives a lump sum distribution if the participant is under age 55, or in the form the participant had elected for retirement benefits if age 55 or older.
Employees may change their elections with respect to the form and timing of distributions. Such changes must be made at least two calendar years prior to the current distribution date for pre-2005 deferrals. For post-
32
2004post-2004 deferrals, such changes must be made at least 12 months prior to the date any amount is distributable, provided that any change must defer the distribution for at least five years beyond the date the payment would otherwise have been made or begun.
Deferrals under the 2001 and 2006 Stock Incentive Plans
This table shows information regarding each named executive officer’s deferral account under the Company’s 2001 and 2006 Stock Incentive Plans.
Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | |||||||||||||||
Robert J. Eck | 0 | 0 | 6,456 | (1) | 57,354 | (2) | 154,431 | (3) | ||||||||||||
Dennis J. Letham | 0 | 0 | 68,775 | (4) | 523,159 | (5) | 0 | |||||||||||||
Ted A. Dosch | 0 | 0 | 1,330 | (1) | 10,268 | (2) | 33,160 | (6) | ||||||||||||
John A. Dul | 0 | 0 | 168 | (1) | 12,531 | (2) | 0 | |||||||||||||
Terrance A. Faber | 0 | 0 | 2,431 | (1) | 25,922 | (2) | 59,392 | (7) | ||||||||||||
Rodney A. Smith | 0 | 0 | 1,265 | (1) | 14,093 | (2) | 30,789 | (8) | ||||||||||||
Rodney A. Shoemaker | 0 | 0 | 949 | (1) | 9,013 | (2) | 23,371 | (9) | ||||||||||||
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Restricted stock units were granted under the Company’s 2001 and 2006 Stock Incentive Plans. Generally, one-third of the units vests during employment on each anniversary of the grant date beginning with the second anniversary of the grant date. Units generally convert to an equal number of unrestricted shares of common stock on the date they vest and are paid to the holder of the units at such time. Holders of restricted stock units are credited with dividend equivalents at the time dividends are paid. The deferred dividend equivalents are credited annually with interest at a rate equal to 4% per year until the units vest, at which time the dividend equivalents and accrued interest are paid to the executive. The interest credited on the deferred dividend equivalents is reflected in the “Aggregate Earnings in Last FY” column above.
Executive officers covered by Section 162(m) of the Code could make an advance election to defer receipt of the restricted stock units granted in 2005 through 2007 to a date later than the date on which the units vest, although they receive the related accrued dividend equivalents and interest at the time the units vest. At the later date selected by the executive, the units are converted to unrestricted shares of common stock and paid to the executive. Any dividend equivalents accruing after the vesting date are paid to the executive at the time they are accrued. The first deferral of stock units pursuant to such an election did not occur until 2007, when the first portion of the grants made in 2005 vested. Conversions of stock units granted after 2007 are not permitted to be deferred past the date of vesting. Mr. Letham was the only executive officer with deferred units and these were paid to him in 2011.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Employment Agreement
The Company had an Employment Agreement with Mr. Letham that terminated with his retirement on June 30, 2011. The Company does not have employment agreements with any continuing executive officers.
Separation Agreement
In connection with Mr. Dul’s separation, the Company entered into an agreement that provides for the following severance benefits, quantified as follows: (i) continued base salary for 24 months ($700,000); (ii) a bonus payment for 2011 ($236,250); (iii) continued health coverage at active employee rates for 18 months or, if earlier, until attainment of coverage from a new employer plus a related tax gross-up on the imputed income ($18,155, which represents 18 months of such coverage using 2011 rates); (iv) outplacement services until June 19, 2013 or, if earlier, until attainment of new employment ($8,500); (v) vesting of certain stock options ($210,061, which represents the difference between the option exercise price and the $59.64 closing price of the stock on December 30, 2011); and (vi) vesting of 4,213 restricted stock units ($251,263, which is based on the $59.64 closing price of the stock on December 30, 2011).
Stock Incentive Plans
The Company’sOur Stock Incentive Plans provide that (i) if an employee’s employment is terminated for other than death or cause, vested stock options can be exercised for 90 days after termination (or if earlier, the expiration of the option term), and if the employee subsequently dies within such 90-day period, such vested options can be exercised for 12 months following such death (or if earlier, the expiration of the option term); (ii) if an employee’s employment is terminated due to death, the stock option can be exercised for 12 months (or if earlier, the expiration of the option term); and (iii) if an employee’s employment is terminated for cause (as determined by the Compensation Committee in its sole discretion), all options expire on the date of such termination. In addition, options granted in 20112010 and after may be exercised until the earlier of their stated term or 12 months after retirement to the extent the options are exercisable at retirement. If the employee should die within this period, the above described options may be exercised for 15 months following retirement or if earlier, the end of their stated term.
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NON-EMPLOYEE DIRECTOR COMPENSATION(1)(1)
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(2) | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards ($)(2) | Total ($) | ||||||||||||||||||
Lord James Blyth | 0 | 160,212 | 160,212 | 0 | 172,631 | 172,631 | ||||||||||||||||||
Frederic F. Brace | 69,000 | 125,170 | 194,170 | 63,000 | 137,540 | 200,540 | ||||||||||||||||||
Linda Walker Bynoe | 75,250 | 125,170 | 200,420 | 0 | 211,499 | 211,499 | ||||||||||||||||||
Robert W. Grubbs | 0 | 140,100 | 140,100 | 0 | 152,635 | 152,635 | ||||||||||||||||||
F. Philip Handy | 0 | 172,618 | 172,618 | 0 | 180,091 | 180,091 | ||||||||||||||||||
Melvyn N. Klein | 89,000 | 125,170 | 214,170 | 86,500 | 137,540 | 224,040 | ||||||||||||||||||
George Muñoz | 0 | 191,736 | 191,736 | 0 | 204,005 | 204,005 | ||||||||||||||||||
Stuart M. Sloan | 0 | 162,717 | 162,717 | 0 | 172,631 | 172,631 | ||||||||||||||||||
Matthew Zell | 0 | 140,100 | 140,100 | 0 | 152,635 | 152,635 | ||||||||||||||||||
Samuel Zell | 0 | 300,096 | 300,096 | 0 | 312,674 | 312,674 | ||||||||||||||||||
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| (1) | Directors who are employees of the |
| (2) | Amounts shown were calculated in accordance with FASB ASC Topic 718 and reflect |
Name | Vested Outstanding Stock Units | |||
Lord James Blyth | ||||
Frederic F. Brace | ||||
Linda Walker Bynoe | ||||
Robert W. Grubbs | ||||
F. Philip Handy | ||||
Melvyn N. Klein | ||||
George Muñoz | ||||
Stuart M. Sloan | ||||
Matthew Zell | ||||
Samuel Zell | ||||
35-33-
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 12, 2012,11, 2013, certain information with respect to the Common Stockour common stock that may be deemed to be beneficially owned by each director or nominee for director of the Company,company, the continuing named executive officers in the Summary Compensation Table and by all directors and officers as a group.
Name of Beneficial Owner(1) | Stock Units(2) | Common Stock | Options for Common Stock(3) | Total(4) | Percent of Class | Stock Units(2) | Common Stock | Options for Common Stock(3) | Total(4) | Percent of Class | ||||||||||||||||||||||||||||||
Lord James Blyth | 47,408 | — | — | 0 | * | 50,357 | — | — | 0 | * | ||||||||||||||||||||||||||||||
Frederic F. Brace | 7,333 | 200 | — | 200 | * | 9,711 | 200 | — | 200 | * | ||||||||||||||||||||||||||||||
Linda Walker Bynoe | 17,176 | 2,000 | (5) | — | 2,000 | * | 20,754 | 2,000 | (5) | — | 2,000 | * | ||||||||||||||||||||||||||||
Robert W. Grubbs | 10,910 | 168,943 | 64,151 | 233,094 | * | 13,548 | 167,133 | 68,641 | 235,774 | * | ||||||||||||||||||||||||||||||
F. Philip Handy | 20,394 | 53,795 | (6) | — | 53,795 | * | 23,472 | 53,795 | (6) | — | 53,795 | * | ||||||||||||||||||||||||||||
Melvyn N. Klein | 23,597 | 32,400 | — | 32,400 | * | 25,975 | 32,400 | — | 32,400 | * | ||||||||||||||||||||||||||||||
George Muñoz | 14,847 | 12,619 | — | 12,619 | * | 18,302 | 12,619 | — | 12,619 | * | ||||||||||||||||||||||||||||||
Stuart Sloan | 20,485 | 62,942 | — | 62,942 | * | 23,434 | 62,942 | — | 62,942 | * | ||||||||||||||||||||||||||||||
Matthew Zell | 30,031 | 12,500 | (7) | — | 12,500 | * | 32,669 | 12,500 | (7) | — | 12,500 | * | ||||||||||||||||||||||||||||
Samuel Zell | 55,686 | 4,928,397 | (8) | — | 4,928,397 | 14.8 | 60,938 | 4,928,397 | (8) | — | 4,928,397 | 15.2 | % | |||||||||||||||||||||||||||
Robert J. Eck | 59,486 | 52,655 | 182,290 | 234,945 | * | 53,892 | 66,311 | 258,637 | 324,948 | * | ||||||||||||||||||||||||||||||
Ted A. Dosch | 17,853 | 7,094 | 3,117 | 10,211 | * | 17,839 | 10,798 | (9) | 9,568 | 20,366 | * | |||||||||||||||||||||||||||||
Terrance A. Faber | 16,174 | 20,302 | 26,587 | 46,889 | * | 11,575 | 19,728 | 13,240 | 32,968 | * | ||||||||||||||||||||||||||||||
Rodney A. Smith | 11,529 | 8,262 | 5,624 | 13,886 | * | 11,051 | 11,299 | 6,018 | 17,317 | * | ||||||||||||||||||||||||||||||
Rodney A. Shoemaker | 8,148 | 10,489 | 5, 624 | 16,113 | * | 7,235 | 10,572 | — | 10,572 | * | ||||||||||||||||||||||||||||||
All directors and executive officers as a group including the above named persons | 370,142 | 5,382,359 | 293,017 | 5,675,376 | 16.9 | 397,588 | 5,401,631 | 362,122 | 5,763,753 | 17.6 | % | |||||||||||||||||||||||||||||
| * | Percentage of shares beneficially owned does not exceed one percent of the class. |
| (1) | Unless otherwise indicated, each person included in the group has sole investment power and sole voting power with respect to the securities beneficially owned by such person. |
| (2) | Stock units convert to fully vested common stock on a 1-for-1 basis at a time specified prior to grant. None of the stock units listed in this column will convert within 60 days. |
| (3) | All options listed in this column are exercisable within 60 days. In accordance with the anti-dilution provisions of our stock incentive plans, this table reflects the adjustment to the number of outstanding options to reflect the special cash dividends declared on September 23, 2010 and April 24, 2012. |
| (4) | Totals presented in this column include only common stock, options for common stock exercisable within 60 days and stock units which covert to common stock within 60 days. |
| (5) | Includes 2,000 shares owned by Ms. Bynoe’s husband to which Ms. Bynoe disclaims beneficial ownership. |
| (6) | All shares are held in a margin account. |
| (7) | All shares are held by the Matthew Zell Revocable Trust, of which Mr. Zell is the sole trustee and beneficiary. |
| (8) | The shares of |
| (9) | Includes 2,000 shares held by the Ann E. Dosch Trust, the trustee of which is Ann E. Dosch, spouse of Mr. Dosch. |
36-34-
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon its review of the Forms 3, 4 and 5 furnished to the Companycompany pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, and written representations from the officers and directors that no other reports were required, the Company believeswe believe that all of itsour directors, officers and beneficial owners of more than 10% of its common stock have filed all such reports on a timely basis during 2011, except for one Form 4 filing by Mr. Eck, that was filed late due to an oversight by the Company.2012.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
The following table sets forth information as of March 12, 201211, 2013 with respect to each person who is known by theour management of the Company to be the beneficial owner of more than 5% of the outstanding shares of Common Stock.our common stock. Unless otherwise indicated, the beneficial owner has sole voting and investment power.
Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | |||||||
Common | Samstock/SIT, L.LC. Samstock/ZFT, L.L.C. Samstock/Alpha, L.L.C. SZ Intervivos QTIP Trust Samuel Zell Two North Riverside Plaza Chicago, IL 60606 |
| 4,647,147 55,588 55,587 28,700 141,375 | (1)
| % | |||||
Common | Lord, Abbett & Co. LLC 90 Hudson Street Jersey City, NJ 07302 | (2) | % | |||||||
Common |
Charlotte, NC 28255 | (3) | ||||||||
|
| % | ||||||||
Common | BlackRock, Inc. 40 East 52nd Street New York, NY 10022 | (4) | 7.1 | % | ||||||
Common | The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355 | 2,224,297 | (5) | % | ||||||
| (1) | Samstock/SIT, L.L.C. is a limited liability company whose sole member is Sam Investment Trust, whose trustee is Chai Trust Company, LLC, a limited liability company (“Chai Trust”). The beneficiaries of Sam Investment Trust are Samuel Zell and members of his family. Samstock/ZFT, L.L.C. is a limited liability company whose sole member is ZFT Partnership, an Illinois general partnership, whose sole partners are various trusts for the benefit of Samuel Zell and members of his family (the “Zell Trusts”). Samstock/Alpha, L.L.C. is a limited liability company whose sole member is Alphabet Partners, an Illinois general partnership, whose sole partners are the Zell Trusts. The trustee of all of the Zell Trusts and the SZ Intervivos QTIP Trust is Chai Trust. Mr. Zell is not a director of Chai Trust and does not have voting or dispositive power over such shares indirectly held by such trusts, and accordingly, Mr. Zell has disclaimed beneficial ownership of such common shares, except to the extent of his pecuniary interest therein. The amounts shown for Mr. Zell include 1,000 shares held by Helen Zell Revocable Trust to which Mr. Zell disclaims beneficial ownership. (Also, see the Security Ownership of Management Table in this Proxy Statement.) The total does not include |
| (2) | According to Schedule 13G, dated |
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| (3) | According to Schedule 13G, dated February 14, |
| (4) | According to Schedule 13G, dated February |
| (5) | According to Schedule 13G, dated February 7, 2013, The Vanguard Group, Inc. has sole power to vote |
37
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
David Grubbs, brother of Robert Grubbs (a director of the Company)company), has an interest in Structured Innovations Ltd., which acts as a manufacturer representative (the “Representative”) to certain Companyof our suppliers. The suppliers’ relationship with the Companycompany predates their relationship with the Representative.Structured Innovations. Although the Company iswe are not a party to any arrangements between the RepresentativeStructured Innovations and the Company’sour suppliers, the Company iswe are aware that the RepresentativeStructured Innovations receives a commission from such suppliers on the Company’sour sales of such suppliers’ products into certain regions. Total CompanyOur total sales (on a cost of goods sold basis) of these suppliers’ products in 20112012 were approximately $159.7$145.1 million, of which only a portion of these sales result in a commission to the Representative. Total CompanyStructured Innovations. Our total sales into regions for which the RepresentativeStructured Innovations may receive a commission were approximately $10.4$8.1 million.
In 2011, the Company2012, we sold approximately $0.2 million of product to Covanta Energy Corporation (“Covanta”) in arms’ length transactions. Our Chairman, Samuel Zell, is the non-executive chairman of the board of Covanta Holding Corporation (“Covanta Holdings”), the parent entity of Covanta. Various trusts established for the benefit of Mr. Zell and members of his family indirectly own approximately 11% of the equity of Covanta Holdings. The trustee of these trusts is Chai Trust Company, LLC. Mr. Zell is not a director of Chai Trust Company, LLC, and does not have any voting or dispositive power regarding such shares indirectly held by such trusts, and accordingly, Mr. Zell has disclaimed beneficial ownership of all such shares of Covanta, except to the extent of his pecuniary interest therein. In addition, Mr. Zell’s spouse is trustee of a trust that owns 25,418 shares of Covanta Holdings, as to which Mr. Zell may be attributed beneficial ownership, and Mr. Zell personally owns 28,93856,596 shares of Covanta Holdings. To the extent of his pecuniary interest in all such shares of Covanta Holdings, Mr. Zell may be deemed to have an interest in these transactions.
Various Companycompany policies and procedures, which include the Global Business Ethics and Conduct Policy (applicable to all directors and executive officers) and annual questionnaires completed by all Companyof our directors and executive officers, require disclosure of transactions or relationships that may constitute conflicts of interest or otherwise require disclosure under applicable SEC rules. The Audit Committee reviews and, where necessary, approves transactions throughout the year, as they arise. At its February meeting, the Audit Committee’s February meeting itCommittee reviews transactions that require disclosure in the Proxy Statement under applicable SEC rules, and approves the form of disclosure to be contained in the Proxy Statement.
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes information, as of December 30, 2011,28, 2012, relating to our equity compensation plans of the Company under which the Company’sour common stock is authorized for issuance.
| Number of securities to be issued upon exercise of outstanding options, warrants and rights(1) | Weighted-average exercise price of outstanding options, warrants and rights(2) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)(3) | ||||||||||
Equity compensation plans approved by security holders | 1,623,533 | $ | 49.26 | 2,346,894 | ||||||||
| Number of securities to be issued upon exercise of outstanding options, warrants and rights(1) | Weighted-average exercise price of outstanding options, warrants and rights(2) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)(3) | ||||||||||
Equity compensation plans approved by security holders | 1,539,086 | $ | 50.14 | 2,203,779 | ||||||||
| (1) | The number shown is the number of shares that, as of December |
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| (2) | Weighted-average exercise price of outstanding stock options (excludes restricted stock units, which vest at no cost to participants). |
| (3) | The number shown is the number of shares that, as of December |
38
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 20132014 Annual Meeting of Stockholders must be received by the Companyus at itsour principal offices by December 5, 20122013 in order to be considered for inclusion in the Company’s Proxy Statementcompany’s proxy statement and Proxyproxy relating to the 20132014 Annual Meeting of Stockholders. Under the Company’sour by-laws, any stockholder proposal submitted other than for inclusion in the proxy statement must be received by the Companyus no earlier than January 10, 20139, 2014 and no later than February 9, 20138, 2014 in order to be considered at the 20132014 Annual Meeting of Stockholders, and must contain the information required by the by-laws.
“HOUSEHOLDING” PROXY MATERIALS
Only one Annual Report and Proxy Statement is being delivered to consenting multiple stockholders sharing an address unless Anixter International Inc. haswe have received contrary instructions from one or more of the holders. Stockholders at a shared address who are receiving a single copy of the Annual Report and Proxy Statement and who wish to receive separate copies now and/or in the future should make a request in writing to the Corporate Secretary at Anixter International Inc., 2301 Patriot Boulevard, Glenview, Illinois 60026 or by phone at 224-521-8000. Additional copies of the Annual Report and Proxy Statement may be obtained without charge by writing to the Corporate Secretary or from the Company’sour website at http://www.anixter.com/IRContacts. Stockholders at a shared address who are receiving multiple copies of those documents and who wish to receive a single copy should direct their request to the bank or brokerage firm which holds their shares.
CONCLUSION
The Board of Directors knows of no other matters to be presented for stockholder action at the meeting. However, if other matters do properly come before the meeting, it is intended that the persons named in the proxies will vote upon them in accordance with their best judgment.
April 4, 20122013
By Order of the Board of Directors
BJRADDUSTIN EC. CASTONHOI,
AssistantGeneral Counsel & Secretary
39-37-
| Shareowner Services P.O. Box 64945 | |||||||
St. Paul, MN 55164-0945 | COMPANY # | |||||||
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24 Hours a Day, 7 Days a Week
proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. | ||||
| INTERNET/MOBILE– www.eproxy.com/axe Use the Internet to vote your proxy until 12:00 p.m. (CT) on May 8, 2013. | |||
| PHONE–1-800-560-1965 Use a touch-tone telephone to vote your proxy until 12:00 p.m. (CT) on May 8, 2013. | |||
| MAIL– Mark, sign and date your proxy card and return it in the postage-paid envelope provided. | |||
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 Items 1 through 13.
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The Board of Directors Recommends a Vote FOR all items in all proposals. | ||||||||||||||||||||||||
Proposal 1 – Election of directors: | ||||||||||||||||||||||
| FOR | AGAINST | ABSTAIN | FOR | AGAINST | ABSTAIN | FOR | AGAINST | ABSTAIN | ||||||||||||||
1. Lord James Blyth | ¨ | ¨ | ¨ |
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| ¨ | ¨ | ¨ | 9. Stuart M. Sloan | ¨ | ¨ | ¨ | |||||||||||||||
| ¨ | ¨ | ¨ | 6. F. Philip Handy | ¨ | ¨ | ¨ | 10. Matthew Zell | ¨ | ¨ | ¨ | |||||||||||
| ¨ | ¨ | ¨ | 7. Melvyn N. Klein | ¨ | ¨ | ¨ | 11. Samuel Zell | ¨ | ¨ | ¨ | |||||||||||
| ¨ | ¨ | ¨ | 8. George Muñoz | ¨ | ¨ | ¨ | |||||||||||||||
Proposal 2 | ||||||||||||||||||||||||||||||||||
| ¨ | For | ¨ | Against | ¨ | Abstain | ||||||||||||||||||||||||||||
Proposal 3 | ||||||||||||||||||||||||||||||||||
accounting firm for Fiscal | ¨ | For | ¨ Against | ¨ Abstain | ||||||||||||||||||||||||||||||
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED AS THE BOARD RECOMMENDS FOR ALL ITEMS IN ALL PROPOSALS 1, 2 AND 3 AND FOR SUCH OTHER MATTERS AS PROPERLY MAY COME BEFORE THE MEETING OR AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
| Address Change? Mark box, sign, and indicate changes below: ¨ | Date |
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| Signature(s) in Box | ||||||||||||||
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. | ||||||||||||||
ANIXTER INTERNATIONAL INC.
ANNUAL MEETING OF STOCKHOLDERS
Thursday, May 10, 20129, 2013
8:30 A.M. Central time
Two North Riverside Plaza
24th Floor
Chicago, Illinois
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE
STOCKHOLDER MEETING TO BE HELD ON MAY 10, 2012.9, 2013.
The 20122013 Proxy Statement is available at
www.anixter.com/Proxy
The 20112012 Annual Report is available at
www.anixter.com/AnnualReports
  Anixter International Inc. | proxy |
This proxy is solicited by the Board of Directors for use at the Annual Meeting on May 10, 2012.9, 2013.
The shares of stock you hold will be voted as you specify on the reverse side.
If no choice is specified, the proxy will be voted “FOR” Items 1 through 13.all items in all proposals.
By signing the proxy, you revoke all prior proxies and appoint Robert J. Eck, Ted A. Dosch and Bradd EastonJustin Choi and each of them with full power of substitution, to vote your shares on the matters shown on the reverse side and, in their discretion, on any other matters which may come before the Annual Meeting and any adjournment or postponement thereof.
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.
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If you vote your proxy by Internet or by Telephone, you do NOT need to mail back your Proxy Card.See reverse for voting instructions.
Please