o Preliminary Proxy Statement | ||
o Confidential, for Use of the Commission Only (as permitted byRule 14a-6(e)(2)) | ||
þ Definitive Proxy Statement | ||
o Definitive Additional Materials | ||
o Soliciting Material Pursuant to Section 240.14a-12 |
þ | No fee required. |
o | Fee computed on table below per Exchange ActRules 14a-6(i)(1) and0-11. |
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange ActRule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) | Proposed maximum aggregate value of transaction: |
(5) | Total fee paid: |
o | Fee paid previously with preliminary materials. |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount Previously Paid: |
(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
DATE: | April 10, 2007 | |
TIME: | 9:00 A.M., Akron Time | |
PLACE: | Offices Of The Company Goodyear Theater 1201 East Market Street Akron, Ohio |
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1. | To elect eleven members of the Board of Directors to serve one-year terms expiring at the 2008 Annual Meeting of Shareholders (Proxy Item 1); and | |
2. | To consider and vote upon a proposal to ratify the appointment of PricewaterhouseCoopers LLP as independent registered public accounting firm for Goodyear for 2007 (Proxy Item 2); and | |
3. | To consider and vote upon three Shareholder Proposals (Proxy Items 3, 4, and 5), if properly presented at the Annual Meeting; and | |
4. | To act upon such other matters and to transact such other business as may properly come before the meeting or any adjournments thereof. |
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Corporate | ||||||||||||||||||||||
Responsibility | ||||||||||||||||||||||
and | ||||||||||||||||||||||
Name of Director | Audit | Compensation | Compliance | Finance | Governance | Class(1) | ||||||||||||||||
Non-Employee Directors | ||||||||||||||||||||||
James C. Boland | X | * | X | III | ||||||||||||||||||
John G. Breen | X | X | * | II | ||||||||||||||||||
Gary D. Forsee | X | X | I | |||||||||||||||||||
William J. Hudson, Jr. | X | X | * | II | ||||||||||||||||||
Steven A. Minter | X | * | X | III | ||||||||||||||||||
Denise M. Morrison | X | X | I | |||||||||||||||||||
Rodney O’Neal | X | X | * | II | ||||||||||||||||||
Shirley D. Peterson | X | X | II | |||||||||||||||||||
G. Craig Sullivan(2) | X | X | I | |||||||||||||||||||
Thomas H. Weidemeyer | X | X | I | |||||||||||||||||||
Michael R. Wessel | X | III | ||||||||||||||||||||
Employee Director | ||||||||||||||||||||||
Robert J. Keegan | II | |||||||||||||||||||||
Number of Meetings in Fiscal 2006 | 7 | 4 | 3 | 4 | 5 |
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• | Goodyear funded a $1 million director gift plan that could impact our directors’ independence. | |
• | No shareholder right to Act by Written Consent. | |
• | No director stock ownership requirement. | |
• | No independent chairman. | |
• | Our lead director was age 72 and may not be optimally independent due to his long tenure. | |
• | Two directors had long tenure of 14 to 21 years each which may negatively impact objectivity or independence. | |
• | Two directors may be overcommitted with more than four (4) board seats each. |
9
1. | The annual incentive or bonus component of the Plan should utilize defined financial performance criteria that can be benchmarked against a disclosed peer group of companies, and provide that an annual bonus is |
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awarded only when the Company’s performance exceeds its peers’ median or mean performance on the selected financial criteria; |
2. | The long-term compensation component of the Plan should utilize defined financial and/or stock price performance criteria that can be benchmarked against a disclosed peer group of companies. Options, restricted shares, or other equity or non-equity compensation used in the Plan should be structured so that compensation is received only when the Company’s performance exceeds its peers’ median or mean performance on the selected financial and stock price performance criteria; and | |
3. | Plan disclosure should be sufficient to allow shareholders to determine and monitor the pay and performance correlation established in the Plan. |
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Shares of Common | Percent of Common | |||||||
Name and Address | Stock Beneficially | Stock Outstanding | ||||||
of Beneficial Owner | Owned | Beneficially Owned | ||||||
Brandes Investment Partners, L.P. | ||||||||
11988 El Camino Real, Suite 500 | ||||||||
San Diego, California 92130 | 23,306,131 | (1) | 12.9 | % | ||||
Impala Asset Management LLC | ||||||||
134 Main Street | ||||||||
New Canaan, Connecticut 06840 | 10,729,094 | (2) | 5.9 | % | ||||
LSV Asset Management | ||||||||
1 N. Wacker Drive, Suite 4000 | ||||||||
Chicago, Illinois 60606 | 9,415,439 | (3) | 5.2 | % |
(1) | Shared dispositive power in respect of 23,306,131 shares and shared voting power in respect of 17,947,230 shares, as stated in a Schedule 13G filed with the Securities and Exchange Commission on February 14, 2007. | |
(2) | Shared voting and dispositive power in respect of 10,729,094 shares, as stated in a Schedule 13G filed with the Securities and Exchange Commission on February 14, 2007. | |
(3) | Sole voting and dispositive power in respect of 9,415,439 shares, as stated in a Schedule 13G filed with the Securities and Exchange Commission on February 12, 2007. |
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Beneficial Ownership at January 31, 2007 (1) | ||||||||||||||||||||
Shares of | Shares of Common | |||||||||||||||||||
Shares of | Common Stock | Stock Subject to | ||||||||||||||||||
Common Stock | Held in Savings | Exercisable | Deferred Share | Percent of | ||||||||||||||||
Name | Owned Directly (2) | Plan (3) | Options (4) | Equivalent Units | Class | |||||||||||||||
James C. Boland | 3,000 | -0- | -0- | 23,266 | (11) | * | ||||||||||||||
John G. Breen | 200 | (5) | -0- | -0- | 53,675 | (11) | * | |||||||||||||
Gary D. Forsee | 1,000 | -0- | -0- | 34,929 | (11) | * | ||||||||||||||
Joseph M. Gingo | 19,344 | (6) | 1,340 | 102,649 | 2,707 | (12) | * | |||||||||||||
C. Thomas Harvie | 36,629 | 1,668 | 201,532 | -0- | * | |||||||||||||||
William J. Hudson, Jr. | 5,000 | -0- | -0- | 42,346 | (11) | * | ||||||||||||||
Robert J. Keegan | 186,015 | (7) | 673 | 818,157 | -0- | * | ||||||||||||||
Richard J. Kramer | 40,991 | (8) | 324 | 134,953 | 455 | (12) | * | |||||||||||||
Steven A. Minter | 4,580 | -0- | -0- | 36,633 | (11) | * | ||||||||||||||
Denise M. Morrison | 1,100 | -0- | -0- | 9,237 | (11) | * | ||||||||||||||
Rodney O’Neal | -0- | -0- | -0- | 15,251 | (11) | * | ||||||||||||||
Shirley D. Peterson | -0- | -0- | -0- | 13,348 | (11) | * | ||||||||||||||
Jonathan D. Rich | 40,589 | (9) | 5,967 | 102,738 | 49,936 | (12) | * | |||||||||||||
G. Craig Sullivan | 5,000 | -0- | -0- | 2,293 | (11) | * | ||||||||||||||
Thomas H. Weidemeyer | 1,000 | -0- | -0- | 10,551 | (11) | * | ||||||||||||||
Michael R. Wessel | -0- | -0- | -0- | 5,497 | (11) | * | ||||||||||||||
All directors, the Named Officers and all other executive officers as a group (30 persons) | 498,638 | (10) | 28,319 | 2,282,826 | 344,631 | 1.5 |
(1) | The number of shares indicated as beneficially owned by each of the directors and named executive officers, and the 2,809,783 shares of Common Stock indicated as beneficially owned by all directors and officers as a group, and the percentage of Common Stock outstanding beneficially owned by each person and the group, has been determined in accordance withRule 13d-3(d)(1) promulgated under the Securities Exchange Act of 1934. | |
(2) | Unless otherwise indicated in a subsequent note, each person named and each member of the group has sole voting and investment power with respect to the shares of Common Stock shown. | |
(3) | Shares held in trust under Goodyear’s Employee Savings Plan for Salaried Employees. | |
(4) | Shares which may be acquired upon the exercise of options which are exercisable prior to April 1, 2007. | |
(5) | Shares acquired by Mr. Breen pursuant to Goodyear’s 1994 Restricted Stock Award Plan for Non-employee Directors, which shares are subject to certain restrictions. | |
(6) | Includes 2,284 shares owned by his spouse. | |
(7) | Includes 13,000 shares owned by his spouse. | |
(8) | Includes 10,000 shares acquired under a Restricted Stock Purchase Agreement, which shares are subject to the Company’s repurchase option and certain restrictions on transfer. | |
(9) | Includes 1,000 shares owned jointly by Mr. Rich and his spouse. |
(10) | Includes 479,289 shares owned of record and beneficially or owned beneficially through a nominee, and 19,349 shares held by or jointly with family members of certain directors and executive officers. | |
(11) | Deferred units, each equivalent to a hypothetical share of Common Stock, accrued to accounts of the director under Goodyear’s Outside Directors’ Equity Participation Plan, payable in cash following retirement from the Board of Directors. See “Director Compensation” at page 44. | |
(12) | Units, each equivalent to a hypothetical share of Common Stock, deferred pursuant to performance awards earned and receivable in cash, shares of Common Stock, or any combination thereof, at the election of the executive officer. |
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• | attract and retain qualified and experienced executive officers and other key personnel, | |
• | motivate executives and other key personnel to attain appropriate short-term and long-term performance goals and manage the company for sustained long-term growth, and | |
• | align executives’ interests with those of our stockholders. |
• | annual salaries, | |
• | annual cash bonuses based on performance measured against specific goals and individual performance, | |
• | long-term compensation in the form of |
• | stock options tied to the growth in the Company’s stock price from the date of grant, | |
• | performance shares tied to the achievement of specific financial objectives during a three-year performance period and the growth in the Company’s stock price, and | |
• | cash awards under a long-term incentive plan tied to achieving the same financial objectives used to determine performance share awards, |
• | retirement benefits, and | |
• | perquisites. |
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• | a group of companies ranked between 60th and 180th on theFortune500 rankings (in the most recent ranking, this represented a range of annual revenues from $11.9 billion to $29.3 billion, with Goodyear’s annual projected revenues representing the median of such group); | |
• | 18 peer companies with annual revenues ranging from $9 billion to $37 billion and median revenues of $14 billion; and | |
• | compensation surveys published by five national human resources consulting firms. |
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• | an individual’s target bonus level for the award is set annually, as a percentage of base salary, at rates slightly above market median levels to make up for the shortfall in targeted base salaries and to provide the opportunity to earn overall annual compensation at market median levels; | |
• | the level of funding of the annual bonus pool is based on the level of achievement of two financial performance criteria (linked to overall companyand/or operating unit results), adjusted for extraordinary items and other relevant factors as recommended by the CEO and approved by the Compensation Committee; | |
• | the amount of individual payouts for executives can range from 0% to 200% of the executive’s target bonus, based on the executive’s performance during the year against individual objectives; and | |
• | the total payout for all participants may not exceed the bonus pool. |
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• | non-recurring restructuring charges are considered for exclusion, consistent with past practice, because the Committee believes senior managers should be encouraged to make decisions with long-term benefits to the Company without being concerned about the impact on their incentive compensation; | |
• | the effects of significant one-time, unanticipated, non-operating or extraordinary events are considered for exclusion, consistent with past practice, because the effect of such events would generally not have been reflected in the performance targets; and | |
• | qualitative factors that might call for adjustment of the actual results are considered upon the recommendation of the CEO based on his overall assessment of our business and performance. |
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• | the target value is $100 per unit; | |
• | the payout amount is based on results over a three-year period as compared with performance goals set at the start of the three-year period; and | |
• | the payout amount can range from $0 per unit to $200 per unit based on actual results (and assuming the recipient remains continuously employed by us through the performance period). |
• | vesting is based on results over a three-year period as compared with performance goals set at the start of the three-year period; and |
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• | once vested, shares are paid 50% in cash (based on the market value of our common stock on the vesting date) and 50% in stock. |
• | options vest in equal, annual installments over a4-year period; and | |
• | the exercise price is equal to the market value of our common stock on the date of grant, with the market value determined by averaging the high and low prices of our common stock on that date. |
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John G. Breen, Chairman | Gary D. Forsee | |
William J. Hudson, Jr. | Denise M. Morrison | |
G. Craig Sullivan |
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Change in | |||||||||||||||||||||||||||||||||||
Pension Value | |||||||||||||||||||||||||||||||||||
and | |||||||||||||||||||||||||||||||||||
Nonqualified | |||||||||||||||||||||||||||||||||||
Non-Equity | Deferred | ||||||||||||||||||||||||||||||||||
Name and | Stock | Option | Incentive Plan | Compensation | All Other | ||||||||||||||||||||||||||||||
Principal | Salary | Bonus | Awards | Awards | Compensation | Earnings | Compensation | Total | |||||||||||||||||||||||||||
Position | Year | ($) | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($)(5) | ($)(6) | ($) | ||||||||||||||||||||||||||
Robert J. Keegan Chairman of the Board, Chief Executive Officer and President | 2006 | $ | 1,133,333 | $ | 2,244,000 | $91,191 | $ | 1,949,118 | $ | 8,000,000 | $ | 3,802,099 | $ | 93,377 | $ | 17,313,118 | |||||||||||||||||||
Richard J. Kramer Executive Vice President and Chief Financial Officer | 2006 | 507,033 | 667,400 | 59,274 | 379,517 | 2,000,000 | 260,948 | 18,006 | 3,892,178 | ||||||||||||||||||||||||||
Jonathan D. Rich President, North American Tire | 2006 | 451,733 | 200,000 | 163,933 | 367,894 | 2,000,000 | 216,409 | 20,629 | 3,420,598 | ||||||||||||||||||||||||||
C. Thomas Harvie Senior Vice President, General Counsel and Secretary | 2006 | 453,367 | 411,800 | 33,741 | 349,033 | 1,600,000 | 547,983 | 11,969 | 3,407,893 | ||||||||||||||||||||||||||
Joseph M. Gingo Executive Vice President Quality Systems and Chief Technical Officer | 2006 | 382,000 | 351,000 | 23,102 | 216,240 | 1,200,000 | 1,050,744 | 8,397 | 3,231,483 |
(1) | Represents amounts awarded under the Performance Recognition Plan for performance during 2006. For additional information regarding amounts awarded to the named executive officers under the Performance Recognition Plan, see “Compensation Discussion and Analysis — Elements of Compensation — Annual Compensation — Annual Cash Bonuses Under the Performance Recognition Plan” and “— 2006 Bonus Payouts Under the Performance Recognition Plan” below. | |
(2) | Represents the amount recognized for financial statement reporting purposes for 2006 in respect of outstanding stock awards in accordance with SFAS 123(R), excluding estimates of forfeitures in the case of awards with service-based vesting conditions. The assumptions made in valuing stock awards reported in this column are discussed in Note 1, “Accounting Policies” under “Stock-Based Compensation” and Note 12, “Stock Compensation Plans” to Goodyear’s consolidated financial statements included in its annual report for the year ended December 31, 2006. On February 22, 2006, performance share units were granted in the amount of 15,000, 9,750, 6,800, 5,550, 3,800 to Messrs. Keegan, Kramer, Rich, Harvie and Gingo, respectively, with a performance period of January 1, 2006, to December 31, 2008. For additional information regarding such grants, see “Compensation Discussion and Analysis — Elements of Compensation — Long-Term Compensation — Performance Shares” and “Grants of Plan-Based Awards — 2006 Performance Share Grants” below. For Mr. Rich, also includes 8,323 stock units issued pursuant to the Goodyear Executive Deferred Compensation Plan in an amount equal to 20% of the amount of Mr. Rich’s 2005 bonus, which Mr. Rich deferred. See “Nonqualified Deferred Compensation.” | |
(3) | Represents the amount recognized for financial statement reporting purposes for 2006 in respect of outstanding option awards in accordance with SFAS 123(R), excluding estimates of forfeitures in the case of awards with service-based vesting conditions. The assumptions made in valuing option awards reported in this column are discussed in Note 1, “Accounting Policies” under “Stock-Based Compensation” and Note 12, “Stock Compensation Plans” to Goodyear’s consolidated financial statements included in its annual report for the year ended December 31, 2006. Includes option grants to those named executive officers who reloaded options during 2006. See “Grants of Plan-Based Awards” below. | |
(4) | Represents amounts awarded under the Executive Performance Plan in respect of the performance period of January 1, 2004, through December 31, 2006. For additional information regarding such awards, see “Compensation Discussion and Analysis — Elements of Compensation — Long-Term Compensation — |
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Cash-Based Awards Under the Executive Performance Plan” and “Grants of Plan-Based Awards — 2006 Grants and Payouts Under the Executive Performance Plan” below. | ||
(5) | Represents change in pension value for each named executive officer. No nonqualified deferred compensation earnings are required to be reported. | |
(6) | Includes amounts for home security system installation and monitoring expenses, personal financial planning services, personal use of company aircraft, annual dues for club memberships, the cost of annual physical exams, and provision of up to two sets of automobile tires per year. For Mr. Keegan, this includes $32,760 for home security system installation and monitoring expense, and also includes $38,162 for premiums on life insurance policies which will be used to cover Goodyear’s obligation to make a charitable donation recommended by Mr. Keegan following his death, pursuant to the Director’s Charitable Award Program. For more information regarding such program, please see “Director Compensation” below. The aggregate incremental cost to the company of providing the home security system is equal to the invoice cost of such system and related services, and the aggregate incremental cost of the life insurance policies is the annual premium and related fees. Also includes $368, $302, $786, and $269 for Messrs. Keegan, Kramer, Rich and Gingo, respectively, which represents reimbursement of taxes in respect of income associated with the company’s provision of up to two sets of automobile tires per year. |
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• | for corporate officers (including Messrs. Keegan, Kramer, Harvie and Gingo): (i) Goodyear’s net sales, less cost of goods sold, selling, administrative and general expenses, and finance charges (“adjusted EBIT”) and (ii) Goodyear’s “operating cash flow” (primarily cash flow from operations and investing activities, each adjusted for exchange, less the change in restricted cash and dividends paid to minority interests in subsidiaries), both equally weighted at 50% and independent of each other; and | |
• | for officers of our six operating units (including Mr. Rich): (i) the operating unit’s net sales, less cost of goods sold and selling, administrative and general expenses (“EBIT”) and (ii) the operating unit’s operating cash flow (as defined above), both equally weighted at 50% and independent of each other. |
• | consistent with past practices, the committee excluded cash restructuring charges and accelerated depreciation expense (including asset impairment charges related to restructuring activities) related to plant closures announced during 2006; | |
• | the committee made certain adjustments related to the impact of the USW strike; and | |
• | certain adjustments were made to the operating cash flow results for the Company based on the CEO’s and Compensation Committee’s overall assessment of the Company’s performance and circumstances during 2006. |
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Target Payout | Payout Range | Actual Award | ||||||||||||||||||||||
as a % of | as a % of | Target Award | Maximum Award | Actual Award | as a % of | |||||||||||||||||||
Name | Salary | Salary | ($) | ($) | ($) | Salary | ||||||||||||||||||
Keegan | 148 | % | 0%-296% | $ | 1,700,000 | $ | 3,400,000 | $ | 2,244,000 | 195 | % | |||||||||||||
Kramer | 89 | % | 0%-178% | 470,000 | 940,000 | 667,400 | 126 | % | ||||||||||||||||
Rich | 88 | % | 0%-176% | 400,000 | 800,000 | 200,000 | 44 | % | ||||||||||||||||
Harvie | 63 | % | 0%-126% | 290,000 | 580,000 | 411,800 | 90 | % | ||||||||||||||||
Gingo | 68 | % | 0%-136% | 260,000 | 520,000 | 351,000 | 91 | % |
All Other | Grant | |||||||||||||||||||||||||||||||||||||||||||||||
All Other | Option | Date Fair | ||||||||||||||||||||||||||||||||||||||||||||||
Stock | Awards: | Closing | Value of | |||||||||||||||||||||||||||||||||||||||||||||
Awards: | Number of | Exercise | Market | Stock | ||||||||||||||||||||||||||||||||||||||||||||
Number | Securities | or Base | Price | and | ||||||||||||||||||||||||||||||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | of Shares | Underlying | Price of | on | Option | ||||||||||||||||||||||||||||||||||||||||||
Grant | Threshold | Target | Maximum | Maximum | of Stock or | Options | Option | Grant | Awards | |||||||||||||||||||||||||||||||||||||||
Name | Date | ($) | ($) | ($) | Threshold (#) | Target (#) | (#) | Units (#)(3) | (#)(4) | Awards ($/Sh)(5) | Date | ($) | ||||||||||||||||||||||||||||||||||||
Keegan | 2/22/06 | $ | 2,300,000 | $ | 4,600,000 | $ | 9,200,000 | 7,500 | 15,000 | 30,000 | — | $ | 220,800 | |||||||||||||||||||||||||||||||||||
Kramer | 2/22/06 | 550,000 | 1,100,000 | 2,200,000 | 4,875 | 9,750 | 19,500 | — | 143,520 | |||||||||||||||||||||||||||||||||||||||
Rich | 2/22/06 | 505,000 | 1,010,000 | 2,020,000 | 3,400 | 6,800 | 13,600 | 100,096 | ||||||||||||||||||||||||||||||||||||||||
Rich | 2/21/06 | 49,936 | 735,557 | |||||||||||||||||||||||||||||||||||||||||||||
Rich | 3/13/06 | 17,240 | $ | 13.16 | $ | 12.99 | 99,302 | |||||||||||||||||||||||||||||||||||||||||
Harvie | 2/22/06 | 385,000 | 770,000 | 1,540,000 | 2,775 | 5,550 | 11,100 | — | 81,696 | |||||||||||||||||||||||||||||||||||||||
Gingo | 2/22/06 | 285,000 | 570,000 | 1,140,000 | 1,900 | 3,800 | 7,600 | 55,936 | ||||||||||||||||||||||||||||||||||||||||
Gingo | 5/11/06 | — | — | 13,390 | 14.81 | 14.65 | 77,126 |
(1) | Represents grants of awards under the Executive Performance Plan. For additional information regarding such awards, see “Compensation Discussion and Analysis — Elements of Compensation — Long-Term Compensation — Cash-Based Awards Under the Executive Performance Plan” and “— 2006 Grants and Payouts Under the Executive Performance Plan” below. |
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(2) | Grants of performance shares under the Performance Plans. For additional information regarding such grants, see “Compensation Discussion and Analysis — Elements of Compensation — Long-Term Compensation — Performance Shares” and “— 2006 Performance Share Grants” below. | |
(3) | Represents Goodyear stock units issued to Mr. Rich pursuant to the Goodyear Executive Deferred Compensation Plan in respect of Mr. Rich’s deferral of his 2005 bonus awarded under the Performance Recognition Plan as well as additional stock units equal to 20% of the deferred bonus amount. See “Nonqualified Deferred Compensation.” | |
(4) | Represents reload grants for Mr. Gingo and Mr. Rich during 2006. These options were granted pursuant to a reload feature in previously granted stock options. Under the reload feature, the optionee has the right to the automatic grant of a new option (a “reinvestment option”) for that number of shares tendered in the exercise of the original stock option plus any shares tendered to pay taxes upon such exercise. The reinvestment option is granted on, and has an exercise price equal to the fair market value of the Common Stock on, the date of the exercise of the original stock option and is subject to the same terms and conditions as the original stock option except for the exercise price and the reinvestment option feature. Such reinvestment options vest one year from the date of grant. On May 11, 2006, Mr. Gingo was granted 13,390 reload options, of which 9,254 expire on December 3, 2012, 3,802 expire on December 2, 2013, and 334 expire on December 9, 2014. On March 13, 2006, Mr. Rich was granted 17,240 options as a reload grant. The reload option vests one year from the date of grant. Of the 17,240 reload options, 3,530 options expire on December 2, 2013, and 13,710 expire on December 3, 2012. For additional information regarding such grants, see “Compensation Discussion and Analysis — Elements of Compensation — Long-Term Compensation — Stock Options” and “— 2006 Stock Option Grants” below. | |
(5) | The exercise price of each stock option is equal to 100% of the per share fair market value of the common stock on the date granted (calculated as the average of the high and low stock price for such date). The option exercise priceand/or withholding tax obligations may be paid by delivery of shares of common stock valued at the fair market value on the date of exercise. |
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Payout per Unit | ||||||||||||||||
$0-$99(1) | $100 | $150 | $200 | |||||||||||||
Performance Measure | ||||||||||||||||
(2004-2006): | ||||||||||||||||
Cumulative net income | $ | <(333)million | $ | (333)million | $93 million | $ | 307 million | |||||||||
% of target | — | 100 | % | 128 | % | 192 | % | |||||||||
Cumulative total cash flow | $ | <(158)million | $ | (158)million | $242 million | $ | 442 million | |||||||||
% of target | — | 100 | % | 253 | % | 380 | % |
(1) | Payouts at less than the target level are made at the discretion of the CEO, with the approval of the Compensation Committee. |
Performance (as % | ||||||||||||||||
Target | Actual Results | Adjusted Results | of target) | |||||||||||||
Performance Measure | ||||||||||||||||
(2004-2006): | ||||||||||||||||
Cumulative net income | $ | (333)million | $13 million | $854 million | >200 | % | ||||||||||
Cumulative total cash flow | (158)million | 2,353 million | 2,509 million | >200 | % |
Target Payout as a | Payout Range as a % | Target Award | Maximum Award | Actual Award | Actual Award as a % | |||||||||||||||||||
Name | % of Salary | of Salary | ($) | ($) | ($) | of Salary | ||||||||||||||||||
Keegan | 348 | % | 0% — 696% | $ | 4,000,000 | $ | 8,000,000 | $ | 8,000,000 | 696 | % | |||||||||||||
Kramer | 188 | % | 0% — 376% | 1,000,000 | 2,000,000 | 2,000,000 | 376 | % | ||||||||||||||||
Rich | 220 | % | 0% — 440% | 1,000,000 | 2,000,000 | 2,000,000 | 440 | % | ||||||||||||||||
Harvie | 175 | % | 0% — 350% | 800,000 | 1,600,000 | 1,600,000 | 350 | % | ||||||||||||||||
Gingo | 155 | % | 0% — 310% | 600,000 | 1,200,000 | 1,200,000 | 310 | % |
30
Stock Awards | ||||||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||||
Incentive | ||||||||||||||||||||||||||||||||||
Plan | Equity | |||||||||||||||||||||||||||||||||
Option Awards | Awards: | Incentive | ||||||||||||||||||||||||||||||||
Equity | Number | Plan | ||||||||||||||||||||||||||||||||
Incentive | of | Awards: | ||||||||||||||||||||||||||||||||
Plan | Market | Unearned | Market or | |||||||||||||||||||||||||||||||
Awards: | Number | Value of | Shares, | Payout | ||||||||||||||||||||||||||||||
Number of | of Shares | Shares or | Units or | Value of | ||||||||||||||||||||||||||||||
Number of | Number of | Securities | or Units | Units of | Other | Unearned | ||||||||||||||||||||||||||||
Securities | Securities | Underlying | of Stock | Stock | Rights | Shares, Units or | ||||||||||||||||||||||||||||
Underlying | Underlying | Unexercised | Option | that Have | that Have | that Have | Other | |||||||||||||||||||||||||||
Unexercised Options | Unexercised Options | Unearned | Exercise | Option | Not | Not | Not | Rights that | ||||||||||||||||||||||||||
Exercisable | Unexercisable | Options | Price | Expiration | Vested | Vested | Vested | Have Not Vested | ||||||||||||||||||||||||||
Name | (#)(1) | (#) | (#) | ($)(2) | Date | (#) | ($)(3) | (#) | ($)(4) | |||||||||||||||||||||||||
Keegan | 250,000 | — | $ | 18.25 | 10/3/2010 | 7,500 | $157,425 | |||||||||||||||||||||||||||
80,000 | — | 17.68 | 12/4/2010 | |||||||||||||||||||||||||||||||
90,000 | — | 22.05 | 12/3/2011 | |||||||||||||||||||||||||||||||
35,000 | — | 7.94 | 12/3/2012 | |||||||||||||||||||||||||||||||
50,000 | 50,000 | (5) | 6.81 | 12/2/2013 | ||||||||||||||||||||||||||||||
28,548 | * | — | 10.91 | 12/3/2012 | ||||||||||||||||||||||||||||||
1,950 | 3,900 | (6) | 12.54 | 12/9/2014 | ||||||||||||||||||||||||||||||
56,300 | 112,600 | (6) | 12.54 | 12/9/2014 | ||||||||||||||||||||||||||||||
25,103 | * | — | 13.62 | 12/3/2012 | ||||||||||||||||||||||||||||||
33,134 | * | — | 13.62 | 12/2/2013 | ||||||||||||||||||||||||||||||
62,500 | 187,500 | (7) | 17.15 | 12/6/2015 | ||||||||||||||||||||||||||||||
24,122 | * | — | 17.18 | 12/3/2012 | ||||||||||||||||||||||||||||||
32,559 | * | — | 17.18 | 12/2/2013 | ||||||||||||||||||||||||||||||
48,941 | * | — | 17.18 | 12/9/2014 |
31
Stock Awards | ||||||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||||
Incentive | ||||||||||||||||||||||||||||||||||
Plan | Equity | |||||||||||||||||||||||||||||||||
Option Awards | Awards: | Incentive | ||||||||||||||||||||||||||||||||
Equity | Number | Plan | ||||||||||||||||||||||||||||||||
Incentive | of | Awards: | ||||||||||||||||||||||||||||||||
Plan | Market | Unearned | Market or | |||||||||||||||||||||||||||||||
Awards: | Number | Value of | Shares, | Payout | ||||||||||||||||||||||||||||||
Number of | of Shares | Shares or | Units or | Value of | ||||||||||||||||||||||||||||||
Number of | Number of | Securities | or Units | Units of | Other | Unearned | ||||||||||||||||||||||||||||
Securities | Securities | Underlying | of Stock | Stock | Rights | Shares, Units or | ||||||||||||||||||||||||||||
Underlying | Underlying | Unexercised | Option | that Have | that Have | that Have | Other | |||||||||||||||||||||||||||
Unexercised Options | Unexercised Options | Unearned | Exercise | Option | Not | Not | Not | Rights that | ||||||||||||||||||||||||||
Exercisable | Unexercisable | Options | Price | Expiration | Vested | Vested | Vested | Have Not Vested | ||||||||||||||||||||||||||
Name | (#)(1) | (#) | (#) | ($)(2) | Date | (#) | ($)(3) | (#) | ($)(4) | |||||||||||||||||||||||||
Kramer | 24,000 | — | $ | 27.00 | 4/10/2010 | 10,000 | $ | 209,900 | 4,875 | $102,326 | ||||||||||||||||||||||||
12,000 | — | 17.68 | 12/4/2010 | |||||||||||||||||||||||||||||||
20,000 | — | 22.05 | 12/3/2011 | |||||||||||||||||||||||||||||||
7,500 | — | 15.55 | 8/6/2012 | |||||||||||||||||||||||||||||||
3,750 | — | 7.94 | 12/3/2012 | |||||||||||||||||||||||||||||||
10,400 | 10,400 | (5) | 6.81 | 12/2/2013 | ||||||||||||||||||||||||||||||
2,861 | * | — | 12.21 | 12/3/2012 | ||||||||||||||||||||||||||||||
1,950 | 3,900 | (6) | 12.54 | 12/9/2014 | ||||||||||||||||||||||||||||||
9,300 | 18,600 | (6) | 12.54 | 12/9/2014 | ||||||||||||||||||||||||||||||
6,822 | * | — | 13.83 | 12/2/2013 | ||||||||||||||||||||||||||||||
2,668 | * | — | 13.83 | 12/3/2012 | ||||||||||||||||||||||||||||||
13,000 | 39,000 | (7) | 17.15 | 12/6/2015 | ||||||||||||||||||||||||||||||
3,253 | * | — | 17.35 | 8/6/2012 | ||||||||||||||||||||||||||||||
2,371 | * | — | 17.35 | 12/3/2012 | ||||||||||||||||||||||||||||||
6,117 | * | — | 17.35 | 12/2/2013 | ||||||||||||||||||||||||||||||
8,961 | * | — | 17.35 | 12/9/2014 | ||||||||||||||||||||||||||||||
Rich | 6,000 | — | 17.68 | 12/4/2010 | 3,400 | 71,366 | ||||||||||||||||||||||||||||
4,000 | — | 28.73 | 6/5/2011 | |||||||||||||||||||||||||||||||
10,400 | — | 22.05 | 12/3/2011 | |||||||||||||||||||||||||||||||
6,250 | — | 7.94 | 12/3/2012 | |||||||||||||||||||||||||||||||
11,250 | 11,250 | (5) | 6.81 | 12/2/2013 | ||||||||||||||||||||||||||||||
3,900 | 3,900 | (6) | 12.54 | 12/9/2014 | ||||||||||||||||||||||||||||||
22,100 | 22,100 | (6) | 12.54 | 12/9/2014 | ||||||||||||||||||||||||||||||
3,775 | * | — | 13.36 | 12/2/2013 | ||||||||||||||||||||||||||||||
11,000 | 33,000 | (7) | 17.15 | 12/6/2015 | ||||||||||||||||||||||||||||||
6,823 | * | — | 17.35 | 12/2/2013 | ||||||||||||||||||||||||||||||
— | 3,530 | (8)* | 13.16 | 12/2/2013 | ||||||||||||||||||||||||||||||
13,710 | (8)* | 13.16 | 12/3/2012 | |||||||||||||||||||||||||||||||
Harvie | 11,000 | — | 63.50 | 12/2/2007 | 2,775 | 58,247 | ||||||||||||||||||||||||||||
13,000 | — | 57.25 | 11/30/2008 | |||||||||||||||||||||||||||||||
35,000 | — | 32.00 | 12/6/2009 | |||||||||||||||||||||||||||||||
�� | 5,000 | — | 22.75 | 2/8/2010 | ||||||||||||||||||||||||||||||
28,000 | — | 17.68 | 12/4/2010 | |||||||||||||||||||||||||||||||
32,000 | — | 22.05 | 12/3/2011 | |||||||||||||||||||||||||||||||
8,000 | — | 7.94 | 12/3/2012 | |||||||||||||||||||||||||||||||
10,675 | 10,675 | (5) | 6.81 | 12/2/2013 | ||||||||||||||||||||||||||||||
6,087 | * | — | 12.27 | 12/3/2012 | ||||||||||||||||||||||||||||||
3,900 | 3,900 | (6) | 12.54 | 12/9/2014 | ||||||||||||||||||||||||||||||
9,600 | 17,600 | (6) | 12.54 | 12/9/2014 | ||||||||||||||||||||||||||||||
7,127 | * | — | 13.36 | 12/2/2013 | ||||||||||||||||||||||||||||||
9,250 | 27,750 | (7) | 17.15 | 12/6/2015 | ||||||||||||||||||||||||||||||
10,117 | * | — | 17.35 | 12/3/2012 | ||||||||||||||||||||||||||||||
6,279 | * | — | 17.35 | 12/2/2013 | ||||||||||||||||||||||||||||||
6,497 | * | — | 17.35 | 12/9/2014 |
32
Stock Awards | ||||||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||||
Incentive | ||||||||||||||||||||||||||||||||||
Plan | Equity | |||||||||||||||||||||||||||||||||
Option Awards | Awards: | Incentive | ||||||||||||||||||||||||||||||||
Equity | Number | Plan | ||||||||||||||||||||||||||||||||
Incentive | of | Awards: | ||||||||||||||||||||||||||||||||
Plan | Market | Unearned | Market or | |||||||||||||||||||||||||||||||
Awards: | Number | Value of | Shares, | Payout | ||||||||||||||||||||||||||||||
Number of | of Shares | Shares or | Units or | Value of | ||||||||||||||||||||||||||||||
Number of | Number of | Securities | or Units | Units of | Other | Unearned | ||||||||||||||||||||||||||||
Securities | Securities | Underlying | of Stock | Stock | Rights | Shares, Units or | ||||||||||||||||||||||||||||
Underlying | Underlying | Unexercised | Option | that Have | that Have | that Have | Other | |||||||||||||||||||||||||||
Unexercised Options | Unexercised Options | Unearned | Exercise | Option | Not | Not | Not | Rights that | ||||||||||||||||||||||||||
Exercisable | Unexercisable | Options | Price | Expiration | Vested | Vested | Vested | Have Not Vested | ||||||||||||||||||||||||||
Name | (#)(1) | (#) | (#) | ($)(2) | Date | (#) | ($)(3) | (#) | ($)(4) | |||||||||||||||||||||||||
Gingo | 5,600 | — | $ | 63.50 | 12/2/2007 | 1,900 | $39,881 | |||||||||||||||||||||||||||
8,000 | — | 57.25 | 11/30/2008 | |||||||||||||||||||||||||||||||
24,000 | — | 32.00 | 12/6/2009 | |||||||||||||||||||||||||||||||
15,000 | — | 17.68 | 12/4/2010 | |||||||||||||||||||||||||||||||
18,000 | — | 22.05 | 12/3/2011 | |||||||||||||||||||||||||||||||
4,500 | — | 7.94 | 12/3/2012 | |||||||||||||||||||||||||||||||
6,000 | 6,000 | (5) | 6.81 | 12/2/2013 | ||||||||||||||||||||||||||||||
3,505 | 3,900 | (6) | 12.54 | 12/9/2014 | ||||||||||||||||||||||||||||||
8,900 | 8,900 | (6) | 12.54 | 12/9/2014 | ||||||||||||||||||||||||||||||
3,894 | * | — | 14.12 | 12/2/2013 | ||||||||||||||||||||||||||||||
5,250 | 15,750 | (7) | 17.15 | 12/6/2015 | ||||||||||||||||||||||||||||||
— | 9,254 | (9)* | 14.81 | 12/3/2012 | ||||||||||||||||||||||||||||||
— | 3,802 | (9)* | 14.81 | 12/2/2013 | ||||||||||||||||||||||||||||||
— | 334 | (9)* | 14.81 | 12/9/2014 |
* | Represents the grant of a “reinvestment option,” see Note 4 under Grants of Plan-Based Awards Table for additional information. | |
(1) | Because the options in this column were fully vested as of December 31, 2006, the vesting schedules for such options are not reported. | |
(2) | The exercise price of each option is equal to 100% of the per share fair market value of the common stock on the date granted (calculated as the average of the high and low stock price for such date). The option exercise priceand/or withholding tax obligations may be paid by delivery of shares of common stock valued at the fair market value on the date of exercise. | |
(3) | Calculated by multiplying $20.99, the closing market price of our common stock on December 29, 2006, by the number of shares which have not vested. | |
(4) | Calculated by multiplying $20.99, the closing market price of our common stock on December 29, 2006, by the number of shares which have not vested. | |
(5) | Vests in full on December 2, 2007. | |
(6) | Vests as to one-half of the shares on December 9, 2007, and one-half of the shares on December 9, 2008. | |
(7) | Vests as to one-third of the shares on each of December 6, 2007, December 6, 2008, and December 6, 2009. | |
(8) | Vests in full on March 13, 2007. | |
(9) | Vests in full on May 11, 2007. |
33
Option Awards | ||||||||||||||||
Number of Shares | Stock Awards | |||||||||||||||
Acquired on | Value Realized On | Number of Shares | Value Realized on | |||||||||||||
Exercise | Exercise | Acquired on Vesting | Vesting | |||||||||||||
Name | (#) | ($)(1) | (#) | ($) | ||||||||||||
Keegan | — | — | ||||||||||||||
Kramer | — | — | ||||||||||||||
Rich | 23,996 | $ | 131,067 | |||||||||||||
Harvie | — | — | ||||||||||||||
Gingo | 19,895 | 140,745 |
(1) | Represents the difference between the exercise price and the fair market value of our common stock on the date of exercise. In accordance with the 2002 Performance Plan, the named executive officers delivered previously owned shares in payment of the exercise price with respect to each option exercised in 2006. |
34
Present Value of | Payments | |||||||||||||
Number of Years | Accumulated Benefit | During Last | ||||||||||||
Credited Service | ($) | Fiscal Year | ||||||||||||
Name | Plan Name | (#) | (1) | ($) | ||||||||||
Keegan | Supplementary Pension Plan | 21.3 | $ | 8,888,688 | — | |||||||||
Salaried Pension Plan | 6.3 | 191,254 | — | |||||||||||
Kramer | Supplementary Pension Plan | 20.4 | 800,649 | — | ||||||||||
Salaried Pension Plan | 6.8 | 82,959 | — | |||||||||||
Rich | Supplementary Pension Plan | 6.3 | 425,744 | — | ||||||||||
Salaried Pension Plan | 6.3 | 134,182 | — | |||||||||||
Harvie | Supplementary Pension Plan | 31.5 | 2,858,370 | — | ||||||||||
Salaried Pension Plan | 11.5 | 350,148 | — | |||||||||||
Gingo | Supplementary Pension Plan | 40.6 | 2,863,310 | — | ||||||||||
Salaried Pension Plan | 40.6 | 1,019,614 | — |
(1) | All amounts shown are estimates as of December 31, 2006; the actual benefits to be paid to the named executive officers will be based on their credited service, compensation, and other factors at the time of their retirement. |
• | the measurement date is December 31, 2006 | |
• | the form of payment is a lump sum | |
• | the interest rate used to calculate the lump sum payment: |
• | Salaried Plan: 5.25% | |
• | benefits commencing in 2007 under the Supplementary Plan (Harvie, Gingo): 3.50% | |
• | benefits commencing2008-2009 under the Supplementary Plan (Keegan): 4.75% | |
• | benefits commencing 2010 or later under the Supplementary Plan (Kramer, Rich): 5.75% |
35
• | the mortality assumptions used to calculate the accumulated benefit are those set forth in Revenue-Ruling2001-62 for the Salaried Plan, and those set forth inUP-1984 Mortality for the Supplementary Plan | |
• | the discount rate used to determine the present value of the accumulated benefit is 5.75% | |
• | the benefit commencement age is 62 (or, if older, age at the measurement date) | |
• | the accumulated benefit is calculated based on credited service and pay as of December 31, 2006 |
Aggregate | ||||||||||||||||||||
Executive | Registrant | Aggregate | Aggregate | Balance | ||||||||||||||||
Contributions in | Contributions in | Earnings in | Withdrawals/ | at Last | ||||||||||||||||
Last FY | Last FY | Last FY | Distributions | FYE | ||||||||||||||||
Name | ($)(1) | ($)(2) | ($)(3) | ($) | ($) | |||||||||||||||
Keegan | — | — | $82,178 | — | $609,827 | |||||||||||||||
Kramer | — | — | 8,493 | — | 113,880 | |||||||||||||||
Rich | $ | 612,964 | $ | 122,593 | 321,659 | $ | 412,632 | 1,264,298 | ||||||||||||
Harvie | — | — | — | — | — | |||||||||||||||
Gingo | — | — | 8,715 | — | 55,948 |
(1) | Represents deferral in 2006 of amounts awarded under the Performance Recognition Plan in respect of performance in 2005. The entire amount of Mr. Rich’s award in respect of 2005 was deferred by Mr. Rich in 2006 into stock units pursuant to the Deferred Compensation Plan. | |
(2) | Represents stock units awarded to Mr. Rich in an amount equal to 20% of the amount Mr. Rich deferred pursuant to the Deferred Compensation Plan in 2006. All of this amount is included in the Summary Compensation Table in the “Stock Awards” column. | |
(3) | No portion of these earnings were included in the Summary Compensation Table because the Executive Deferred Compensation Plan does not provide for “above-market” or preferential earnings as defined in applicable SEC rules. |
36
37
38
Involuntary | ||||||||||||||||||||
Termination | ||||||||||||||||||||
Termination | Within Two | |||||||||||||||||||
Without | Years of | |||||||||||||||||||
Cause/For | Change in | |||||||||||||||||||
Resignation | Good Reason | Termination For | Control | |||||||||||||||||
Benefits or Payments | (1) | (2) | Cause | Retirement | (3) | |||||||||||||||
Annual Cash Bonus under Performance Recognition Plan | $2,244,000 | * | $2,244,000 | * | — | $2,244,000 | * | $2,244,000 | * | |||||||||||
Cash Severance | — | 5,700,000 | — | — | 10,663,080 | |||||||||||||||
Performance Shares-Cash Component | 52,475 | 52,475 | — | 52,475 | 314,850 | |||||||||||||||
Cash Payout under Executive Performance Plan Awards | 15,400,000 | † | 15,400,000 | † | — | 15,400,000 | † | 15,400,000 | † | |||||||||||
Total Cash | 17,696,475 | 23,396,475 | — | 17,696,475 | 28,621,930 | |||||||||||||||
Equity | ||||||||||||||||||||
Restricted Stock | — | — | — | — | — | |||||||||||||||
Performance Shares | 52,475 | 52,475 | — | 52,475 | 314,850 | |||||||||||||||
Stock Options | 2,413,425 | 2,413,425 | — | 2,413,425 | 2,413,425 | |||||||||||||||
Total Equity | 2,465,900 | 2,465,900 | — | 2,465,900 | 2,728,275 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Salaried Pension Plan | 197,144 | 197,144 | $197,144 | 197,144 | 197,144 | |||||||||||||||
Supplementary Pension Plan | 11,512,525 | 11,512,525 | 11,512,525 | 11,512,525 | 11,512,525 | |||||||||||||||
Excess Benefits Plan | — | — | — | — | — | |||||||||||||||
Retiree Medical | — | — | — | — | — | |||||||||||||||
Total Retirement Benefits | 11,709,669 | 11,709,669 | 11,709,669 | 11,709,669 | 11,709,669 | |||||||||||||||
Vested Deferred Compensation | 609,827 | 609,827 | 609,827 | 609,827 | 609,827 | |||||||||||||||
Other Benefits | 148,739 | 172,799 | 110,577 | 148,739 | 172,799 | |||||||||||||||
Excise TaxGross-Up | N/A | 5,525,426(4 | ) | N/A | N/A | 7,731,589(4 | ) | |||||||||||||
Total | $ | 32,630,610 | $ | 43,880,096 | $ | 12,430,073 | $ | 32,630,610 | $ | 51,574,089 |
* | This amount is included in the Summary Compensation Table under the “Bonus” column. | |
† | $8,000,000 of this amount is included in the Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column. The remaining portion would be payable, if at all, only upon achievement of the applicable targets, and following the completion of the applicable three year performance period. | |
(1) | Also includes death and disability. | |
(2) | In accordance with Mr. Keegan’s employment agreement, in connection with a termination without cause or for good reason, Mr. Keegan is entitled to a cash severance payment equal to two times the sum of his annual base salary and target bonus. | |
(3) | The amounts to be paid under “Performance Shares — Cash Component,” “Equity — Performance Shares” and “Equity — Stock Options” are payable following a change in control, regardless of whether there is a subsequent termination. | |
(4) | In accordance with Mr. Keegan’s employment agreement, this is an estimated amount for excise taxes and related gross-up to be paid in connection with the applicable termination event. |
39
Involuntary | ||||||||||||||||||||
Termination | ||||||||||||||||||||
Within Two | ||||||||||||||||||||
Years of | ||||||||||||||||||||
Termination | Change in | |||||||||||||||||||
Resignation | Without | Termination For | Retirement | Control | ||||||||||||||||
Benefits or Payments | (1) | Cause | Cause | (2) | (3) | |||||||||||||||
Annual Cash Bonus under Performance Recognition Plan | $667,400 | * | $667,400 | * | — | $667,400 | * | $667,400 | * | |||||||||||
Cash Severance | — | 1,500,000 | — | — | 2,588,738 | |||||||||||||||
Performance Shares-Cash Component | — | — | — | — | 204,653 | |||||||||||||||
Cash Payout under Executive | ||||||||||||||||||||
Performance Plan Awards | 2,000,000 | † | 2,000,000 | † | — | 2,000,000 | † | 2,000,000 | † | |||||||||||
Total Cash | 2,667,400 | 4,167,400 | — | 2,667,400 | 5,460,791 | |||||||||||||||
Equity | ||||||||||||||||||||
Restricted Stock | 209,900 | 209,900 | $209,900 | 209,900 | 209,900 | |||||||||||||||
Performance Shares | — | — | — | — | 204,653 | |||||||||||||||
Stock Options | — | — | — | — | 487,357 | |||||||||||||||
Total Equity | 209,900 | 209,900 | 209,900 | 209,900 | 901,910 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Salaried Pension Plan | 92,333 | 92,333 | 92,333 | 92,333 | 92,333 | |||||||||||||||
Supplementary Pension Plan | — | — | — | — | — | |||||||||||||||
Excess Benefits Plan | 206,627 | 206,627 | 206,627 | 206,627 | 206,627 | |||||||||||||||
Retiree Medical | — | — | — | — | — | |||||||||||||||
Total Retirement Benefits | 298,960 | 298,960 | 298,960 | 298,960 | 298,960 | |||||||||||||||
Vested Deferred Compensation | 113,880 | 113,880 | 113,880 | 113,880 | 113,880 | |||||||||||||||
Other Benefits | 40,769 | 110,873 | 40,769 | 40,769 | 110,873 | |||||||||||||||
Total | $ | 3,330,909 | $ | 4,901,013 | $ | 663,509 | $ | 3,330,909 | $ | 6,886,414 |
* | This amount is included in the Summary Compensation Table under the “Bonus” column. | |
† | This amount is included in the Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column. | |
(1) | Also includes death and disability. | |
(2) | Mr. Kramer is not eligible for retirement. | |
(3) | The amounts to be paid under “Performance Shares — Cash Component,” “Equity — Performance Shares” and “Equity — Stock Options” are payable following a change in control, regardless of whether there is a subsequent termination. |
40
Involuntary | ||||||||||||||||||||
Termination | ||||||||||||||||||||
Within Two | ||||||||||||||||||||
Years of | ||||||||||||||||||||
Termination | Termination | Change in | ||||||||||||||||||
Resignation | Without | For | Retirement | Control | ||||||||||||||||
Benefits or Payments | (1) | Cause | Cause | (2) | (3) | |||||||||||||||
Annual Cash Bonus under Performance Recognition Plan | $200,000 | * | $200,000 | * | — | $200,000 | * | $200,000 | * | |||||||||||
Cash Severance | — | 1,282,500 | — | — | 2,746,754 | |||||||||||||||
Performance Shares-Cash Component | — | — | — | — | 142,732 | |||||||||||||||
Cash Payout under Executive Performance Plan Awards | 2,000,000 | † | 2,000,000 | † | — | 2,000,000 | † | 2,000,000 | † | |||||||||||
Total Cash | 2,200,000 | 3,482,500 | — | 2,200,000 | 5,089,486 | |||||||||||||||
Equity | ||||||||||||||||||||
Restricted Stock | — | — | — | — | — | |||||||||||||||
Performance Shares | — | — | — | — | 142,732 | |||||||||||||||
Stock Options | — | — | — | — | 640,934 | |||||||||||||||
Total Equity | — | — | — | — | 783,666 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Salaried Pension Plan | 142,483 | 142,483 | $142,483 | 142,483 | 142,483 | |||||||||||||||
Supplementary Pension Plan | — | — | — | — | — | |||||||||||||||
Excess Benefits Plan | 344,063 | 344,063 | 344,063 | 344,063 | 344,063 | |||||||||||||||
Retiree Medical | — | — | — | — | — | |||||||||||||||
Total Retirement Benefits | 486,546 | 486,546 | 486,546 | 486,546 | 486,546 | |||||||||||||||
Vested Deferred Compensation | 1,264,298 | 1,264,298 | 1,264,298 | 1,264,298 | 1,264,298 | |||||||||||||||
Other Benefits | 43,750 | 113,797 | 43,750 | 43,750 | 113,797 | |||||||||||||||
Total | $ | 3,994,594 | $ | 5,347,141 | $ | 1,794,594 | $ | 3,994,594 | $ | 7,737,793 |
* | This amount is included in the Summary Compensation Table under the “Bonus” column. | |
† | This amount is included in the Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column. | |
(1) | Also includes death and disability. | |
(2) | Mr. Rich is not eligible for retirement. | |
(3) | The amounts to be paid under “Performance Shares — Cash Component,” “Equity — Performance Shares” and “Equity — Stock Options” are payable following a change in control, regardless of whether there is a subsequent termination. |
41
C. | Thomas Harvie (Senior Vice President, General Counsel and Secretary) |
Involuntary | ||||||||||||||||||||
Termination | ||||||||||||||||||||
Within Two | ||||||||||||||||||||
Years of | ||||||||||||||||||||
Termination | Termination | Change in | ||||||||||||||||||
Resignation | Without | For | Control | |||||||||||||||||
Benefits or Payments | (1) | Cause | Cause | Retirement | (2) | |||||||||||||||
Annual Cash Bonus under Performance Recognition Plan | $411,800 | * | $411,800 | * | — | $411,800 | * | $411,800 | * | |||||||||||
Cash Severance | — | 1,120,500 | — | — | 2,546,616 | |||||||||||||||
Performance Shares-Cash Component | 19,416 | 19,416 | — | 19,416 | 116,495 | |||||||||||||||
Cash Payout under Executive Performance Plan Awards | 2,963,334 | † | 2,963,334 | † | — | 2,963,334 | † | 2,963,334 | † | |||||||||||
Total Cash | 3,394,550 | 4,515,050 | — | 3,394,550 | 6,038,245 | |||||||||||||||
Equity | ||||||||||||||||||||
Restricted Stock | — | — | — | — | — | |||||||||||||||
Performance Shares | 19,416 | 19,416 | — | 19,416 | 116,495 | |||||||||||||||
Stock Options | 439,607 | 439,607 | — | 439,607 | 439,607 | |||||||||||||||
Total Equity | 459,023 | 459,023 | — | 459,023 | 556,102 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Salaried Pension Plan | 358,679 | 358,679 | $358,679 | 358,679 | 358,679 | |||||||||||||||
Supplementary Pension Plan | 3,044,693 | 3,044,693 | 3,044,693 | 3,044,693 | 3,044,693 | |||||||||||||||
Excess Benefits Plan | — | — | — | — | — | |||||||||||||||
Retiree Medical | 31,534 | 31,534 | 31,534 | 31,534 | 31,534 | |||||||||||||||
Total Retirement Benefits | 3,434,906 | 3,434,906 | 3,434,906 | 3,434,906 | 3,434,906 | |||||||||||||||
Vested Deferred Compensation | — | — | — | — | — | |||||||||||||||
Other Benefits | 35,154 | 105,204 | 35,154 | 35,154 | 105,204 | |||||||||||||||
Total | $7,323,633 | $8,514,183 | $3,470,060 | $7,323,633 | $10,134,457 |
* | This amount is included in the Summary Compensation Table under the “Bonus” column. | |
† | $1,600,000 of this amount is included in the Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column. The remaining portion would be payable, if at all, only upon achievement of the applicable targets, and following the completion of the applicable three year performance period. | |
(1) | Also includes death and disability. | |
(2) | The amounts to be paid under “Performance Shares — Cash Component,” “Equity — Performance Shares” and “Equity — Stock Options” are payable following a change in control, regardless of whether there is a subsequent termination. |
42
Involuntary | ||||||||||||||||||||
Termination | ||||||||||||||||||||
Within Two | ||||||||||||||||||||
Years of | ||||||||||||||||||||
Termination | Termination | Change in | ||||||||||||||||||
Resignation | Without | For | Control | |||||||||||||||||
Benefits or Payments | (1) | Cause | Cause | Retirement | (2) | |||||||||||||||
Annual Cash Bonus under Performance Recognition Plan | $351,000 | * | $351,000 | * | — | $351,000 | * | $351,000 | * | |||||||||||
Cash Severance | — | 967,500 | — | — | 2,085,692 | |||||||||||||||
Performance Shares-Cash Component | 13,294 | 13,294 | — | 13,294 | 79,762 | |||||||||||||||
Cash Payout under Executive Performance Plan Awards | 2,230,000 | † | 2,230,000 | † | — | 2,230,000 | † | 2,230,000 | † | |||||||||||
Total Cash | 2,594,294 | 3,561,794 | — | 2,594,294 | 4,746,454 | |||||||||||||||
Equity | ||||||||||||||||||||
Restricted Stock | — | — | — | — | — | |||||||||||||||
Performance Shares | 13,294 | 13,294 | — | 13,294 | 79,762 | |||||||||||||||
Stock Options | 336,470 | 336,470 | — | 336,470 | 336,470 | |||||||||||||||
Total Equity | 349,764 | 349,764 | — | 349,764 | 416,232 | |||||||||||||||
Retirement Benefits | ||||||||||||||||||||
Salaried Pension Plan | 1,048,220 | 1,048,220 | $1,048,220 | 1,048,220 | 1,048,220 | |||||||||||||||
Supplementary Pension Plan | 3,060,681 | 3,060,681 | 3,060,681 | 3,060,681 | 3,060,681 | |||||||||||||||
Excess Benefits Plan | — | — | — | — | — | |||||||||||||||
Retiree Medical | 63,006 | 63,006 | 63,006 | 63,006 | 63,006 | |||||||||||||||
Total Retirement Benefits | 4,171,907 | 4,171,907 | 4,171,907 | 4,171,907 | 4,171,907 | |||||||||||||||
Vested Deferred Compensation | 55,948 | 55,948 | 55,948 | 55,948 | 55,948 | |||||||||||||||
Other Benefits | 93,239 | 163,038 | 93,239 | 93,239 | 163,038 | |||||||||||||||
Total | $7,265,152 | $8,302,451 | $4,321,094 | $7,265,152 | $9,553,579 |
* | This amount is included in the Summary Compensation Table under the “Bonus” column. | |
† | $1,200,000 of this amount is included in the Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column. The remaining portion would be payable, if at all, only upon achievement of the applicable targets, and following the completion of the applicable three year performance period. | |
(1) | Also includes death and disability. | |
(2) | The amounts to be paid under “Performance Shares — Cash Component,” “Equity — Performance Shares” and “Equity — Stock Options” are payable following a change in control, regardless of whether there is a subsequent termination. |
43
Fees Earned or Paid | ||||||||||||||||
in Cash | Stock Awards | All Other | Total | |||||||||||||
Name | ($) | ($)(1) | Compensation ($)(2) | ($) | ||||||||||||
Boland | $85,000 | $ | 172,009 | $ | 34,622 | $ | 291,631 | |||||||||
Breen | 130,000 | 269,924 | 1,143 | 401,067 | ||||||||||||
Forsee | —(3 | ) | 294,521 | 21,493 | 316,014 | |||||||||||
Hudson | 75,000 | 233,447 | 308,447 | |||||||||||||
Minter | 56,248 | (4) | 237,809 | 346 | 294,403 | |||||||||||
Morrison | 70,000 | 126,835 | 196,835 | |||||||||||||
O’Neal | 75,000 | 146,200 | 904 | 222,104 | ||||||||||||
Peterson | 70,000 | 140,075 | 752 | 210,827 | ||||||||||||
Sullivan | 35,000 | 28,768 | 63,768 | |||||||||||||
Weidemeyer | 70,000 | 131,066 | 965 | 202,031 | ||||||||||||
Wessel | 74,946 | 94,996 | 1,156 | 171,098 |
(1) | Represents the amount recognized for financial statement reporting purposes for 2006. Amounts for all directors include quarterly grants of deferred share equivalent units with a grant date fair value of $20,000 pursuant to the Outside Directors’ Equity Participation Plan. Amounts also reflect the increase in value of the director’s plan account from December 31, 2005 to December 31, 2006. For further information regarding such plan, see the description of the Outside Directors’ Equity Participation Plan below. For Mr. Forsee, the amount also includes additional deferred share equivalent units granted quarterly in lieu of his cash retainer, each grant in the amount of $17,500 (or $70,000 for the year). For Mr. Minter, the amount also includes additional deferred share equivalent units granted quarterly in lieu of a portion of his cash retainer, each grant in the amount of $4,688 (or $18,752 for the year). |
Name | Number of Units | |||
Boland | 22,365 | |||
Breen | 52,774 | |||
Forsee | 33,240 | |||
Hudson | 41,445 | |||
Minter | 35,521 | |||
Morrison | 8,336 | |||
O’Neal | 14,350 | |||
Peterson | 12,448 | |||
Sullivan | 1,392 | |||
Weidemeyer | 9,650 | |||
Wessel | 4,596 |
(2) | Represents reimbursement of taxes in respect of income associated with the company’s provision of up to two sets of automobile tires per year to the directors. For Messrs. Boland and Forsee, this also includes premiums of $34,185 and $20,874, respectively, on life insurance policies which will be used to cover Goodyear’s obligation to make a charitable donation recommended by such directors following their death, pursuant to the Director’s Charitable Award Program, as described below. The aggregate incremental cost to the company of the life insurance policies is the annual premium and related fees. | |
(3) | Mr. Forsee deferred all of his cash retainer for 2006 ($70,000) in the form of deferred share equivalent units. | |
(4) | Mr. Minter deferred $18,752 of his total cash retainer for 2006 ($75,000) in the form of deferred share equivalent units. |
44
45
(in thousands) | 2006 | 2005 | ||||||
Audit Fees and Expenses(1) | $ | 15,498 | $ | 16,095 | ||||
Audit-Related Fees and Expenses(2) | 2,955 | 3,870 | ||||||
Tax Fees and Expenses(3) | 1,293 | 1,866 | ||||||
All Other Fees and Expenses(4) | 370 | 250 | ||||||
Total | $ | 20,116 | $ | 22,081 |
(1) | Audit fees and expenses represents fees and expenses for professional services provided in connection with the audit of our financial statements, management’s assessment of the effectiveness of internal control over financial reporting, the effectiveness of internal control over financial reporting and review of our quarterly financial statements and audit services provided in connection with other statutory or regulatory filings. |
(2) | Audit-related fees and expenses consists primarily of accounting consultations, employee benefit plan audits and services related to business acquisitions and divestitures. |
(3) | Tax fees and expenses consists primarily of assistance in the preparation of international tax returns, consultations on various tax matters worldwide and, prior to June 30, 2006, expatriate tax services. |
(4) | All other fees and expenses principally includes forensic accounting investigative services. |
46
James C. Boland, Chairman | John G. Breen | |
Gary D. Forsee | Shirley D. Peterson |
47
48
49
C/O COMPUTERSHARE TRUST COMPANY, N.A.
P.O. BOX 43069
PROVIDENCE, RI 02940-3069
VOTE BY INTERNET — www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on April 9, 2007. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS
If you would like to reduce the costs incurred by The Goodyear Tire & Rubber Company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access shareholder communications electronically in future years.
VOTE BY TELEPHONE — 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on April 9, 2007. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to The Goodyear Tire & Rubber Company, c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.
If you vote via the Internet or by phone,
please do not mail your card.
Your vote is important. Please vote immediately.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | GOODY1 | KEEP THIS PORTION FOR YOUR RECORDS | ||
DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
THE GOODYEAR TIRE & RUBBER COMPANY | ||||||||||
The Board of Directors Recommends a Vote FOR Election of All Nominees and FOR Item 2, and AGAINST Items 3, 4 and 5. | ||||||||||
Vote on Directors | ||||||||||
ITEM 1. | Election of Directors | |||||||||
NOMINEES: | 01) James C. Boland 02) John G. Breen 03) William J. Hudson Jr. 04) Robert J. Keegan 05) Steven A. Minter 06) Denise M. Morrison | 07) Rodney O'Neal 08) Shirley D. Peterson 09) G. Craig Sullivan 10) Thomas H. Weidemeyer 11) Michael R. Wessel |
Vote on Proposals | For | Against | Abstain | |||||||
ITEM 2. | Ratification of appointment of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm. | o | o | o | ||||||
ITEM 3. | Shareholder Proposal re: Adopt Simple Majority Vote | o | o | o | ||||||
Please sign name exactly as it appears above. Each joint owner should sign. Please indicate title if you are signing as executor, administrator, trustee, custodian, guardian or corporate officer. | ||||||||||
YES | NO | |||||||||
Please indicate if you plan to attend this meeting | o | o | ||||||||
For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | |||||||||
o | o | o | ||||||||||
For | Against | Abstain | ||||||||||
ITEM 4. | Shareholder Proposal re: Pay-for-Superior-Performance | o | o | o | ||||||||
ITEM 5. | Shareholder Proposal re: Supplemental Executive Retirement Plan Policy | o | o | o | ||||||||
The undersigned hereby acknowledges receipt of Notice of 2007 Annual Meeting of Shareholders and Proxy Statement. |
Signature [PLEASE SIGN WITHIN BOX] Date | Signature (Joint Owners) Date |
9:00 a.m.
Goodyear Theater
1201East Market Street
Akron, Ohio
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
C/O COMPUTERSHARE TRUST COMPANY, N.A.
P.O. BOX 43069
PROVIDENCE, RI 02940-3069
VOTE BY INTERNET — www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on April 9, 2007. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS
If you would like to reduce the costs incurred by The Goodyear Tire & Rubber Company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access shareholder communications electronically in future years.
VOTE BY TELEPHONE — 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on April 9, 2007. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to The Goodyear Tire & Rubber Company, c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.
If you vote via the Internet or by phone,
please do not mail your card.
Your vote is important. Please vote immediately.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | GOODY5 | KEEP THIS PORTION FOR YOUR RECORDS | ||
DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
THE GOODYEAR TIRE & RUBBER COMPANY | ||||||||||
The Board of Directors Recommends a Vote FOR Election of All Nominees and FOR Item 2, and AGAINST Items 3, 4 and 5. | ||||||||||
Vote on Directors | ||||||||||
ITEM 1. | Election of Directors | |||||||||
NOMINEES: | 01) James C. Boland 02) John G. Breen 03) William J. Hudson, Jr. 04) Robert J. Keegan 05) Steven A. Minter 06) Denise M. Morrison | 07) Rodney O’Neal 08) Shirley D. Peterson 09) G. Craig Sullivan 10) Thomas H. Weidemeyer 11) Michael R. Wessel |
Vote on Proposals | For | Against | Abstain | |||||||
ITEM 2. | Ratification of appointment of PricewaterhouseCoopers LLP as Independent Registered Public Accounting Firm. | o | o | o | ||||||
ITEM 3. | Shareholder Proposal re: Adopt Simple Majority Vote | o | o | o | ||||||
For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | |||||||||
o | o | o | ||||||||||
For | Against | Abstain | ||||||||||
ITEM 4. | Shareholder Proposal re: Pay-for-Superior-Performance | o | o | o | ||||||||
ITEM 5. | Shareholder Proposal re: Supplemental Executive Retirement Plan Policy | o | o | o | ||||||||
Authorization: I acknowledge receipt of the Notice of 2007 Annual Meeting and Proxy Statement. I hereby instruct the trustee to vote by proxy, in the form solicited by the Board of Directors, the number of full shares in this Plan account(s) as specified above, or, if not specified above, as recommended by the Board of Directors.
YES | NO | |||||||||
Please indicate if you plan to attend this meeting | o | o | ||||||||
Signature [PLEASE SIGN WITHIN BOX] Date | Signature (Joint Owners) Date |
9:00 a.m.
Goodyear Theater
1201East Market Street
Akron, Ohio
THE GOODYEAR TIRE & RUBBER COMPANY EMPLOYEE SAVINGS AND OTHER PLANS
Solicited on Behalf of the Board of Directors
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.