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. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Subsection 240.14a-12
LANDAUER, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount Previously Paid: ______________
(2) Form, Schedule or Registration Statement No.: ______________
(3) Filing Party: ______________
(4) Date Filed: ______________
LANDAUER, INC.
2 SCIENCE ROAD, GLENWOOD, ILLINOIS 60425-1586
TELEPHONE (708) 755-7000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of
Landauer, Inc. will be held at the office of Sidley Austin LLP, Conference
Center, One South Dearborn Street, Chicago, Illinois, at 2:00 p.m., local
time, on Thursday, February 11, 2010 for the following purposes:
1. To re-elect the two directors identified in this Proxy
Statement to hold office for an additional term of three years
each.
2. To vote on the proposal to ratify the appointment of
PricewaterhouseCoopers LLP as the independent registered public
accounting firm of the Company for the fiscal year ending
September 30, 2010.
3. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on December 11,
2009 are entitled to notice of and to vote at the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING, THE COMPANY STRONGLY URGES YOU TO
VOTE VIA THE INTERNET, TELEPHONE, OR REQUEST A PAPER PROXY CARD TO COMPLETE
AND RETURN BY MAIL. IF YOU ATTEND THE MEETING AND VOTE IN PERSON, YOUR
PROXY WILL NOT BE USED.
JONATHON M. SINGER
Senior Vice President, Treasurer,
Secretary and Chief Financial Officer
December 22, 2009
PROXY STATEMENT
APPROXIMATE DATE OF NOTICE: DECEMBER 22, 2009
INFORMATION CONCERNING THE PROXY SOLICITATION
This proxy is solicited by the Board of Directors of Landauer, Inc.
for use at its Annual Meeting of Stockholders to be held on Thursday,
February 11, 2010 at 2:00 p.m., local time, at the office of Sidley Austin
LLP, Conference Center, One South Dearborn Street, Chicago, Illinois, or
any adjournments or postponements thereof. You may revoke your proxy at
any time prior to it being voted by giving written notice to the Secretary
of Landauer, by submission of a later dated proxy or by voting in person at
the meeting. The costs of solicitation will be paid by Landauer.
Solicitations may be made by the officers and employees of Landauer
personally or by telephone.
In accordance with rules and regulations adopted by the U.S.
Securities and Exchange Commission, instead of mailing a printed copy of
its proxy materials to each stockholder of record, Landauer furnishes proxy
materials on the Internet. You will not receive a printed copy of the
proxy materials, unless specifically requested. This process is designed
to expedite stockholders' receipt of proxy materials, lower the cost of the
Annual Meeting and help conserve natural resources.
On or around December 22, 2009, the Company mailed to its
stockholders, other than those who previously requested electronic or paper
delivery, a Notice Regarding the Availability of Proxy Materials, which
contains instructions as to how you may access and review all of its proxy
materials, including the Proxy Statement and 2009 Annual Report on
Form 10-K, on the Internet. The Notice Regarding the Availability of Proxy
Materials also instructs you as to how you may vote your proxy on the
Internet or by telephone. However, if you would prefer to receive printed
proxy materials, please follow the instructions for requesting such
materials as contained in the Notice Regarding the Availability of Proxy
Materials.
On December 1, 2009, Landauer had outstanding 9,348,011 shares of
Common Stock, which is its only class of voting stock, held of record by
approximately 343 holders. Only stockholders of record at the close of
business on December 11, 2009 will be entitled to receive notice of and to
vote at the meeting and any adjournment or postponement thereof. With
respect to all matters that will come before the meeting, each stockholder
may cast one vote for each share registered in his or her name on the
record date.
The shares represented by every proxy received will be voted, and
where a choice has been specified, the shares will be voted in accordance
with the specification so made. If no choice has been specified on the
proxy, the shares will be voted FOR the election of the nominees as
directors and FOR the ratification of the appointment of
PricewaterhouseCoopers LLP as the independent registered public accounting
firm. The proxy also gives authority to the proxies to vote the shares at
their discretion on any other matter presented at the meeting. If a proxy
indicates that all or a portion of the shares represented by such proxy are
not being voted with respect to a particular proposal, such non-voted
shares will not be considered present and entitled to vote on such
proposal, although such shares may be considered present and entitled to
vote on other proposals and will count for the purpose of determining the
presence of a quorum. An abstention with respect to a proposal has the
effect of a vote against a proposal. "Broker non-votes" are counted toward
the quorum requirement but they do not affect the determination of whether
a matter is approved. A broker non-vote occurs when a broker cannot vote
on a matter because the broker has not received instructions from the
beneficial owner and lacks discretionary voting authority with respect to
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that matter. It is expected that brokers will lack discretionary voting
authority with respect to the election of directors but will not lack
discretionary voting authority with respect to the proposal regarding
ratification of the independent registered public accounting firm at the
Annual Meeting.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table provides information as of December 1, 2009
concerning beneficial ownership of Common Stock by each person known by
Landauer to own beneficially more than 5% of the outstanding shares of
Common Stock, each director serving during the fiscal year, each director
nominee, each executive officer named under the caption "Executive
Compensation" and all directors and executive officers as a group. Unless
otherwise noted, the listed persons have sole voting and dispositive powers
with respect to shares held in their names, subject to community property
laws, if applicable.
Number of Shares Percent
Beneficially of
Name of Beneficial Owner Owned Class
- ------------------------ ---------------- -------
T. Rowe Price Associates (1) 852,000 9.1%
Barclays Global Investors, NA (2) 683,344 7.3%
Royce & Associates, LLC (3) 658,200 7.0%
Kayne Anderson Rudnick
Investment Management, LLC (4) 493,006 5.3%
Robert J. Cronin (5) 16,665 *
William G. Dempsey 2,013 *
Michael T. Leatherman 1,936 *
David E. Meador 1,936 *
Stephen C. Mitchell 3,990 *
Thomas M. White 4,591 *
Michael D. Winfield 14,264 *
William E. Saxelby (6) 67,910 *
Jonathon M. Singer 16,644 *
Richard E. Bailey 3,820 *
R. Craig Yoder (7) 71,924 *
All directors and executive officers
as a group (11 persons) (8) 205,693 2.2%
* Less than one percent.
(1) As reported in a statement on Schedule 13G filed with the Securities
and Exchange Commission on February 12, 2009. Includes 570,000
shares owned by the T. Rowe Price Small Cap Value Fund, Inc. T. Rowe
Price Associates expressly disclaims that it is the beneficial owner
of such securities. This stockholder's address is 100 East Pratt
Street, Baltimore, MD 21202.
(2) As reported in a statement on Schedule 13G filed with the Securities
and Exchange Commission on February 5, 2009. This stockholder's
address is 400 Howard Street, San Francisco, CA 94105.
(3) As reported in a statement on Schedule 13G filed with the
Securities and Exchange Commission on January 26, 2009. This
stockholder's address is 1414 Avenue of the Americas, New York, NY
10019.
(4) As reported in a statement on Schedule 13G filed with the Securities
and Exchange Commission on February 10, 2009. This stockholder's
address is 1800 Avenue of the Stars, 2nd Floor, Los Angeles, CA
90067.
(5) Includes 4,500 shares subject to options exercisable within 60 days
after December 1, 2009.
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(6) Includes 50,000 shares subject to options exercisable within 60 days
after December 1, 2009.
(7) Includes 40,000 shares subject to options exercisable within 60 days
after December 1, 2009.
(8) Includes 94,500 shares subject to options exercisable within 60 days
after December 1, 2009.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
Landauer's officers and directors and persons who beneficially own more
than ten percent of Landauer's Common Stock ("Reporting Persons") to file
reports of beneficial ownership and changes in such ownership with the
Securities and Exchange Commission ("SEC"). Reporting Persons are required
by SEC regulation to furnish Landauer with copies of all Section 16(a)
reports they file and Landauer is required to post such reports on its
website, http://www.landauerinc.com.
Based solely on a review of the Form 3, 4 and 5 filings received
from, or filed by Landauer on behalf of, Reporting Persons since the
beginning of fiscal year 2009, Landauer is not aware of any failure to file
on a timely basis any Form 3, 4 or 5 during fiscal year 2009.
ELECTION OF DIRECTORS
Members of Landauer's Board of Directors are divided into three
classes serving staggered three-year terms, with a total of nine directors
authorized. The terms of two of the seven current directors expire at the
Annual Meeting. The two directors, Michael T. Leatherman and David E.
Meador, are Landauer's nominees for re-election to a three-year term.
Michael D. Winfield retired in February 2009 due to his reaching the
Board's mandatory retirement age of 70.
Landauer's bylaws provide that nominations for directorships by
stockholders only may be made pursuant to written notice received at the
Company's principal office not less than 90, and not more than 120,
calendar days prior to the first anniversary of the preceding year's annual
meeting. No such nominations were received for the meeting as of
December 22, 2009.
Proxies may not be voted for a greater number of persons than the two
named nominees. Directors are elected by a plurality of the votes present
in person or represented by proxy at the meeting and entitled to vote on
the election of directors. Thus, assuming a quorum is present, the two
persons receiving the greatest number of votes will be elected to serve as
directors. Accordingly, withholding authority to vote for a director and
broker non-votes with respect to the election of directors will not affect
the outcome of the election of directors. If a nominee should become
unavailable for election, the persons voting the accompanying proxy may at
their discretion vote for a substitute.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RE-ELECTION OF MR.
LEATHERMAN AND MR. MEADOR AS DIRECTORS OF LANDAUER.
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The following table contains certain information as to the two
nominees for re-election at the Annual Meeting and each other person whose
term of office as a director will continue after the meeting. The
nominees, Mr. Leatherman and Mr. Meador, for re-election at the meeting are
indicated by an asterisk.
Expira-
tion
Date of
Current Past Business Experience Director
Name Term and Other Directorships Since
- ---- ------- ------------------------ --------
Robert J. 2011 Since 2001, Partner, The Open 1997
Cronin (3) Approach LLC, a provider of
Age - 65 consulting services to the
printing industry. From November
2005 to April 2006, Chairman
and Chief Executive Officer,
York Label, Inc., a supplier of
pressure-sensitive labels
and related systems. Until
January 2000, Chairman of the
Board and Chief Executive
Officer of Wallace Computer
Services; previously President,
Chief Executive Officer and
Director; now retired. Wallace
Computer Services is a provider
of information management
products, services and solutions.
Mr. Cronin is also a director of
various privately held corporations.
William G. 2011 From 1982 to 2007, various senior 2008
Dempsey (2) leadership positions with Abbott
Age - 58 Laboratories including Executive
Vice President, Global Pharmaceuti-
cals from 2006 to 2007. Abbott
Laboratories is a global, broad-
based health care company devoted
to discovering new medicines, new
technologies and new ways to
manage health. From 1977 to 1982,
various positions with Sciaky Bros.,
a manufacturer of high tech
electron beam, laser welding and
heat treating systems. Mr. Dempsey
is also a director of MDS Inc., a
global life sciences company, and
a director of a privately held
corporation.
*Michael T. 2010 Since 2000, Independent Consultant 2008
Leatherman (1,2) primarily to the information
Age - 56 technology industry. From 1990 to
2000, various senior leadership
positions with Wallace Computer
Services including Executive Vice
President, Chief Information Officer
and Chief Financial Officer from 1998
to 2000. From 1984 to 1990, Chief
Executive Officer of FSC Paper
Corporation, a Subsidiary of Smorgon
Industries. Mr. Leatherman is a
director of a non-profit organiza-
tion providing continuous care
retirement services. Mr. Leatherman
is a Certified Public Accountant.
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Expira-
tion
Date of
Current Past Business Experience Director
Name Term and Other Directorships Since
- ---- ------- ------------------------ --------
*David E. 2010 Since 2001, Executive Vice 2008
Meador (1,3) President and Chief Financial
Age - 52 Officer, DTC Energy. From 1997
to 2001, Vice President and
Controller, DTE Energy. DTE
Energy provides safe, reliable
electric and natural gas services
to Michigan businesses and homes
and has energy related businesses
and services nationwide. From
1983 to 1997, served in a
variety of financial and
accounting positions at Chrysler
Corporation. Mr. Meador began
his professional career with
Coopers and Lybrand and is a
Certified Public Accountant.
Stephen C. 2012 Since 2001, President, Knight 2005
Mitchell (3) Group LLC, a privately held firm
Age - 66 providing services for the
start-up and management of
new ventures. Since 1995,
Vice Chairman and Director,
Knight Facilities Management,
Inc., a company providing
outsourcing of facilities
management services for
industrial and commercial
clients worldwide. Until 2001,
President, Chief Operating
Officer and Director, Lester B.
Knight & Associates, Inc.,
a company involved in the
planning, design and construc-
tion of advanced technology
research and development and
manufacturing facilities.
Mr. Mitchell is also a director
of Apogee Enterprises, Inc.,
a manufacturer of glass products
for the construction and art
framing markets.
William E. 2011 Since 2005, President and Chief 2005
Saxelby Executive Officer, Landauer, Inc.
Age - 53 From 2003 to 2005, Mr. Saxelby
provided consulting services to
certain private equity firms.
From 1999 to 2003, President and
Chief Executive Officer, Medical
Research Laboratories, Inc.,
a manufacturer of defibrillators.
From 1996 to 1999, Corporate
Vice President, Allegiance
Healthcare, a spin-off of
Baxter International. From 1978
to 1996, Mr. Saxelby held executive
and non-executive positions with
Baxter International and its
American Hospital Supply subsidiary.
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Expira-
tion
Date of
Current Past Business Experience Director
Name Term and Other Directorships Since
- ---- ------- ------------------------ --------
Thomas M. 2012 Since 2007, Operating Partner for 2004
White (1,2) Apollo Management L.P., a private
Age - 52 equity firm, and serving currently
as Chief Financial Officer of
SkyLink Aviation, Inc. From 2002
to 2007, Mr. White served as Chief
Financial Officer and Treasurer of
Hub Group, Inc., an asset light
transportation management company
providing intermodal, truck brokerage
and logistics services. Prior to
joining Hub Group, Mr. White was
a partner with Arthur Andersen LLP,
which he joined in 1979. Mr. White
is also director of CEVA Group, PLC
and Quality Distribution, Inc.
Mr. White is a Certified Public
Accountant.
Member of the (1) Audit Committee, (2) Compensation Committee, (3)
Governance and Nominating Committee
BOARD OF DIRECTORS AND COMMITTEES
During fiscal 2009, the Board of Directors held a total of eleven
meetings. No director attended fewer than 75 percent of the aggregate of
the total number of meetings of the Board of Directors and the total number
of meetings held by all Committees of the Board on which such director
served during the periods that such director served.
The Board of Directors has an Audit Committee, Compensation
Committee, and Governance and Nominating Committee. The Audit Committee
assists the Board of Directors in fulfilling its oversight responsibilities
with respect to financial reports and other financial information and
recommends to the Board of Directors the appointment of independent public
accountants. The Board of Directors has determined that Thomas M. White,
Michael T. Leatherman, and David E. Meador each qualify as an "audit
committee financial expert" as defined for the purpose of SEC regulation.
The Compensation Committee approves all executive compensation and has
responsibility for granting equity awards to eligible members of management
and administering the Company's equity and incentive compensation plans.
The Governance and Nominating Committee establishes corporate governance
policy and selects nominees for the Board of Directors. (See "Process for
Nominating Directors.") The membership of each Committee consists solely
of non-employee directors who meet the independence standards established
by the New York Stock Exchange. During fiscal 2009, the Audit Committee
met nine times (including the meetings required to conduct its quarterly
financial reviews), the Compensation Committee met eighteen times, and the
Governance and Nominating Committee met five times.
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Each Committee has adopted a formal written charter, approved by the
full Board of Directors, that specifies the scope of the Committee's
responsibilities and procedures for carrying out such responsibilities. A
copy of each charter is available on the Company's website at
http://www.landauerinc.com and printed copies are available from the
Company on request. The Board of Directors has also adopted Governance and
Nominating Standards, a Code of Business Ethics applicable to all directors
and employees and a Code of Conduct for Senior Financial Executives
applicable to the principal executive, financial and accounting officers of
the Company. Copies of each of these documents are available on the
Company's website at http://www.landauerinc.com and printed copies are
available from the Company on request. The Company intends to post on its
website any amendments to its Code of Business Ethics or Code of Conduct
for Senior Financial Executives applicable to such senior officers.
INDEPENDENCE OF DIRECTORS
Under the Company's Governance and Nominating Standards, a
significant majority of the Board of Directors should be composed of
Independent Directors as that term is defined in the New York Stock
Exchange ("NYSE") listing standards. A director is independent under the
NYSE listing standards if the Board affirmatively determines that the
director has no material relationship with the Company directly or as a
partner, stockholder or officer of an organization that has a relationship
with the Company. In addition, the NYSE listing standards provide that a
director will not be independent if he or she has any of the following
relationships (each, a "disqualifying relationship"):
. The director is an employee of the Company or has been an employee
of the Company at any time within the preceding three years.
. A member of the director's immediate family is an executive officer
of the Company or has been an executive officer of the Company at any
time within the preceding three years.
. The director or an immediate family member of the director received
during any 12-month period within the last three years more than
$120,000 in direct compensation from the Company, other than director
and committee fees and pension or other forms of deferred
compensation for prior service (provided such compensation is not
contingent in any way on continued service).
. The director is a current partner or employee of the Company's
internal or external audit firm, or the director was within the past
three years (but is no longer) a partner or employee of such a firm
and personally worked on the Company's audit within that time.
. A member of the director's immediate family (i) is a current partner
of a firm that is the Company's internal or external auditor, (ii) is
a current employee of such a firm and personally works on the
Company's audit or (iii) was within the past three years (but is no
longer) a partner or employee of such a firm and personally worked on
the Company's audit within that time.
. The director is, or within the preceding three years has been,
employed as an executive officer of another company where any of the
Company's present executives at the same time serves or served on
that company's compensation committee.
. A member of the director's immediate family is, or within the
preceding three years has been, employed as an executive officer of
another company where any of the Company's present executives serves
on that company's compensation committee.
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. The director is an executive officer or employee of a company that
has made payments to, or received payments from, the Company for
property or services in an amount that, in any one of the three most
recent fiscal years, exceeded the greater of $1 million, or 2% of
such other company's consolidated gross revenues.
. A member of the director's immediate family is an executive officer
of a company that has made payments to, or received payments from,
the Company for property or services in an amount which, in any one
of the three most recent fiscal years, exceeded the greater of $1
million, or 2% of such other company's consolidated gross revenues.
The Board has affirmatively determined that no non-employee director
has a material relationship with the Company directly or as a partner,
stockholder or officer of an organization that has a relationship with the
Company. The Board considered the relationship of Mr. Dempsey's membership
on the board of a customer of the Company and determined that the
relationship is not material. The Board has also concluded that no
non-employee director has any of the disqualifying relationships identified
previously. Consequently, the Board has determined that all non-employee
directors are independent within the meaning of the NYSE listing standards.
The Company's independent directors are Robert J. Cronin, William G.
Dempsey, Michael T. Leatherman, David E. Meador, Stephen C. Mitchell, and
Thomas M. White. The Company's independent directors meet in regularly
scheduled executive sessions and at other times, as they deem appropriate.
Robert J. Cronin, Chairman of the Board of Directors, presides at these
sessions.
PROCESS FOR NOMINATING DIRECTORS
Landauer's Governance and Nominating Committee establishes and
oversees adherence to the Board's corporate governance policies and
guidelines, and establishes policies and procedures for the recruitment and
retention of Board members. The Governance and Nominating Committee is
comprised of three members, each of whom meets the independence
requirements established by the New York Stock Exchange in respect to
Governance and Nominating Committees.
The Governance and Nominating Committee will consider nominees for
the Board of Directors who have been properly and timely recommended by
stockholders. Any recommendation submitted by a stockholder must include
the same information concerning the candidate and the stockholder as would
be required under Section 1.4 of the Company's bylaws if the stockholder
were nominating that candidate directly. Those information requirements
are summarized in this Proxy Statement under the caption "Stockholder
Proposals." The Governance and Nominating Committee will apply the same
standards in considering director candidates recommended by stockholders as
it applies to other candidates. The Governance and Nominating Committee
has not established any specific, minimum qualification standards for
nominees to the Board. From time to time, the Governance and Nominating
Committee may identify certain skills or attributes (e.g. healthcare
industry experience, technology experience, financial experience) as being
particularly desirable for specific director nominees.
To date, the Governance and Nominating Committee has identified and
evaluated nominees for director positions based on several factors,
including referrals from management, existing directors, advisors and
representatives of the Company or other third parties, business and board
of director experience, professional reputation and personal interviews.
Each of the current nominees for director, who is listed under the caption
"Election of Directors", is an existing director standing for re-election.
8
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
BY STOCKHOLDERS AND OTHER INTERESTED PARTIES
The Company's Annual Meeting of Stockholders provides an opportunity
each year for stockholders and other interested parties to ask questions of
or otherwise communicate directly with members of the Company's Board of
Directors on matters relevant to the Company. Each of the Company's
directors is requested to attend the Annual Meeting in person. All of the
Company's directors attended the Company's 2009 Annual Meeting of
Stockholders. In addition, stockholders and other interested parties may,
at any time, communicate in writing with the full Board of Directors, any
individual director or any group of directors, by sending such written
communication to the full Board of Directors, individual director or group
of directors at the following address: Landauer, Inc., 2 Science Road,
Glenwood, Illinois 60425; Attention: Corporate Secretary (fax
708-441-8556). Copies of written communications received at such address
will be provided to the addressee unless such communications are
considered, in the reasonable judgment of the Corporate Secretary, to be
improper for submission to the intended recipient(s). Examples of such
communications that would be considered improper for submission include,
without limitation, customer complaints, solicitations, communications that
do not relate directly or indirectly to the Company or the Company's
business or communications that relate to improper or irrelevant topics.
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Landauer is required to provide information regarding the
compensation program in place for its CEO, CFO and the three other most
highly compensated executive officers as of its last fiscal year end. In
this Proxy Statement, the Company refers to these individuals as its "Named
Executive Officers" or "NEOs." The Company has only four executive
officers, including the CEO and CFO. Information regarding the
compensation paid to these individuals is included in this Proxy Statement.
This section includes information regarding, among other things, the
overall philosophy of the Company's compensation program and each element
of compensation that it provides.
LANDAUER'S COMPENSATION PHILOSOPHY AND PRINCIPLES
Landauer designs its compensation programs to maintain a performance
and achievement-oriented environment throughout the Company. The goals of
the Company's executive compensation program are to:
. Attract and retain highly talented executives capable of delivering
long-term success;
. Link directly the executives' interests with the interests of
Landauer's stockholders; and
. Motivate executives to achieve the Company's short and long-term
business objectives via performance-driven incentive programs.
Consistent with these goals, the Board has developed and approved an
executive compensation philosophy to provide a framework for the Company's
executive compensation program.
. Total compensation will be targeted to be competitive with the
marketplace in which executive talent is recruited. Competitive is
defined as 50th percentile using market compensation information;
. The mix of compensation elements is designed to reflect strategic
business needs;
9
. Incentive compensation is tied to short-term goals and long-term
strategic plans in a balanced manner so that it supports the
Company's efforts to achieve long-term success;
. The degree of compensation at risk will positively correlate to
responsibility level;
. Performance is assessed on both financial and non-financial goals
using qualitative and quantitative metrics;
. Compensation should be differentiated based on factors that are
relevant to each form of compensation; and
. The interests of executives should be linked with those of the
Company's owners through executive stock ownership.
The executive compensation philosophy results in three major
components of executive compensation: a competitive base salary reflective
of the individual's role, responsibilities, experience and capabilities; a
non-equity incentive tied to Company and individual annual performance; and
long-term equity incentives tied to Company performance and individual
level of responsibility to impact results over time. The Company
determines the appropriate level of these components by using market
compensation information as described more fully below.
THE COMPENSATION COMMITTEE
The Compensation Committee assists the Board of Directors in
fulfilling the Board's oversight responsibilities to administer the
Company's executive compensation program. Each member of the Committee is
independent as defined in the corporate governance listing standards of the
New York Stock Exchange and Landauer's director independence standards.
The Committee reports to the Board of Directors on all compensation
matters regarding Landauer's executives and other key salaried employees.
The Committee reviews annually and recommends to the Board of Directors for
approval the compensation (including annual base salary, annual non-equity
incentive compensation, long-term equity incentive compensation and other
employee benefits) for the Company's executives and other key salaried
employees. You may learn more about the Committee's responsibilities by
reading the Committee's Charter, which is available in the "Corporate
Governance" section on the "Investor Relations" page of Landauer's website
at www.landauerinc.com.
ROLES OF CONSULTANTS AND EXECUTIVES
During and after the end of each fiscal year, the CEO provides the
Compensation Committee with feedback regarding the performance of the NEOs.
Annually and in the cases of NEO promotions or hires, the CEO makes
recommendations to the Compensation Committee regarding the compensation
package for each of the NEOs (other than himself). Based on its review of
individual performance (taking into account input from the CEO), input and
benchmarks from its independent compensation consultant and other factors,
the Compensation Committee makes recommendations to the Board regarding the
compensation for the CEO and the other NEOs. Acting upon the
recommendation of the Compensation Committee, the independent members of
the Board, meeting in executive session, determine the compensation of the
CEO and the other NEOs.
To assist the Compensation Committee in discharging its
responsibilities, the Committee has retained Hay Group, Inc. as its
independent compensation consultant. The consultant's role is to advise
the Committee on all executive compensation matters. Biennially, Hay Group
presents the Compensation Committee with benchmarking data and information
about other relevant market practices and trends, and makes recommendations
to the Compensation Committee regarding target levels for various elements
of total compensation for senior executives, which the Compensation
Committee reviews and considers in its deliberations.
10
The Committee's independent compensation consultant, Hay Group,
reports directly to the Compensation Committee. Periodically the CEO and
CFO may work directly with the Committee's consultant primarily in the
development of offers for new hires and assistance on the development of
recommendations on the design of compensation programs to be presented to
the Compensation Committee or the Board of Directors. This interaction
between the Committee's consultant and management takes place under the
approval of the Compensation Committee Chair.
To ensure that its executive officer compensation is competitive in
the marketplace, the Company uses a formal job evaluation methodology to
determine both the internal and external equity of its NEOs' total
compensation. Internal equity is considered in order to ensure that
members of Landauer's executive management are compensated at an
appropriate level relative to other members of its executive management,
while external equity is a measure of how the Company's compensation of its
executive management compares to compensation for comparable job content at
other companies that are similar to the Company. Hay Group reviews each
executive position using its proprietary method of job evaluation to assess
the position's relative size. In this process, Hay considers the breadth
of responsibilities, the complexity of the role, and the role's impact on
the success of the business. Once each job is valued independently, Hay
compares the jobs to determine relative relationships and then relates
these job content sizes to pay opportunity levels based on compensation
market data from Hay Group's Industrial Compensation report, a proprietary
annual executive compensation survey with data on more than 100 executive
level positions from 282 organizations. Given that Landauer, Inc. competes
in a market with limited competitors, the Compensation Committee has
determined that utilizing a broad industry survey with a focus on publicly
traded companies and significant survey participation by the manufacturing
sector, such as the Hay survey, is an appropriate method for benchmarking
the Company's executive compensation practices.
All components of Landauer's executive compensation program are
aligned with the 50th percentile of Hay Group's survey data for targeted
performance. For short-term incentive compensation, achievement of
overperformance goals can result in a maximum award equal to 200% of the
target opportunity. In the case of long-term incentive compensation, the
75th percentile of Hay Group's long-term incentive survey data is targeted
for achievement of overperformance goals. Actual pay will vary above or
below the 50th percentile depending on a number of factors including
individual performance, tenure with the organization and overall Company
performance.
The Compensation Committee annually reviews relevant compensation
market data, trends and best practices in executive compensation, and
executive pay tallies for the Company's NEOs to ensure that the design of
its program is consistent with its compensation philosophy and that the
amount of compensation is within appropriate competitive parameters. Based
on this review, the Compensation Committee has concluded that the total
compensation of each NEO and, in the case of the severance and
change-in-control scenarios, potential payouts are appropriate and
reasonable.
11
ELEMENTS OF LANDAUER'S COMPENSATION PROGRAM
Landauer's executive officer compensation package includes a
combination of annual cash and long-term incentive compensation. Annual
cash compensation for executive officers is comprised of base salary plus
annual non-equity incentive bonuses. Long-term incentives consist of a
combination of restricted share grants with performance and time based
vesting characteristics.
ELEMENT PURPOSE CHARACTERISTICS
- ------- ------- ---------------
BASE SALARY Compensate executives Fixed component with
for their level of eligibility for annual merit
responsibility and increases based on sustained
sustained individual individual performance.
performance. Also
help attract and
retain strong talent.
ANNUAL Promote the achievement Performance-based cash
NON-EQUITY of Landauer's annual opportunity based on Company
INCENTIVE financial goals, as and individual results as
COMPENSATION well as individual determined by the
goals. Compensation Committee
as outlined in the "Landauer,
Inc. Incentive Compensation
Plan" (Available at
www.landauerinc.com).
LONG-TERM Promote the achieve- Performance-based equity and
EQUITY ment of Landauer's restricted equity grants
INCENTIVE long-term corporate based upon achievement of
COMPENSATION goals, support executive strategic priorities and
retention and encourage retention with the Company.
executive stock Annual grants through the
ownership. "Landauer, Inc. Incentive
Compensation Plan" (Available
at www.landauerinc.com).
RETIREMENT Provide an appropriate Defined contribution
PLANS level of replacement retirement plan with
income upon retirement. Company match and annual
Also provide an profit sharing eligibility
incentive for a long- with a supplemental deferred
term career with compensation contribution
Landauer, which is a available to certain
key objective. executives.
POST- Facilitate the Contingent component;
TERMINATION attraction and reten- only payable if the
COMPENSATION tion of high caliber executive's employment is
executives in a terminated as specified in
competitive labor the arrangements. (Amount
market and provide of severance benefits varies
noncompetition and by level in the
nonsolicitation organization.)
covenants for the
Company's protection.
12
In setting total compensation, Landauer applies a consistent approach
for all executive officers. Also, the Compensation Committee exercises
appropriate business judgment in how it applies its standard approach to
the facts and circumstances associated with each executive. Additional
detail about each pay element follows.
BASE SALARIES: Data on salaries paid to comparable positions in the
Hay Survey are gathered and reported biennially to the Compensation
Committee by its independent compensation consultant. The Compensation
Committee, after receiving input from the compensation consultant,
recommends to the Board for its consideration and approval the salaries for
the CEO, CFO and other NEOs. The CEO provides input for the salaries for
the CFO and other NEOs. The Compensation Committee seeks generally to
establish base salaries for the CEO, CFO and other NEOs at the 50th
percentile of the Company's compensation benchmark, which is the targeted
market position to facilitate the attraction and retention of executive
talent. In fiscal 2009, the salaries of each NEO approximated, within 10%,
the compensation benchmark median.
ANNUAL NON-EQUITY INCENTIVES: Annual non-equity incentive awards to
the CEO, CFO and other NEOs are paid relative to the targets established
annually by the Compensation Committee under the terms of the Landauer,
Inc. Incentive Compensation Plan. Annual incentive awards for the CEO, CFO
and other NEOs are intended to promote the achievement of Landauer's annual
financial goals, as well as individual goals. For fiscal 2009, the plan
establishes an incentive pool which is related to aggregate executive
officer base salary and performance of Landauer relative to (i) budgeted
net income and (ii) budgeted free cash flow (free cash flow is calculated
by subtracting cash used to acquire property plant and equipment from net
cash provided from operating activities as presented on the Consolidated
Statement of Cash Flows).
Similar to the process for base salary, data for non-equity
incentives paid to comparable positions in the Hay Survey are gathered and
reported biennially to the Compensation Committee by the independent
compensation consultant. The Compensation Committee, after receiving input
from the compensation consultant, recommends to the Board for its
consideration and approval the non-equity incentives for the CEO, CFO and
other NEOs. The target incentive compensation award ("ICA"), as a
percentage of individual executive officer base salary, is 50% for the
Chief Executive Officer and 40% for the CFO and other NEOs. These payout
ratios are determined based upon targeting total cash compensation (base
salary plus non-equity incentive compensation) at the 50th percentile as
determined by the benchmarking study performed by the Committee's
independent compensation consultant. Thus, the different payout ratios are
not reflective of a different philosophy at work, but are reflective of
different results driven by benchmarking. The actual size of the incentive
compensation pool available for award varies based upon actual financial
performance for net income and free cash flow.
The net income and free cash flow targets are established as part of
the annual operating planning process. The targets are recommended by
management, reviewed by the Compensation Committee and approved by the
Board. The targets are intended to be representative of strong financial
performance by the Company based upon market conditions and the
expectations of stockholders. The scales of the payout ratios are intended
to compensate management for the perceived effort required to achieve the
targeted performance and reward management for the effort required to
deliver results beyond expected levels.
The net income and free cash flow targets for fiscal 2009 were
established as follows ($'s in millions):
Net Income $24.6
Free Cash Flow $22.2
13
Both the net income and free cash flow targets were established
before the impact of certain non-recurring costs relating to changes to the
Company's U.S. retirement benefit plans, management reorganization costs
and due diligence costs to support the strategic pursuit of growth through
acquisition.
The plan provides for a payout at a ratio of targeted incentive
compensation as follows:
ACTUAL PERFORMANCE PAYOUT RATIO
------------------ ------------
110% Incentive Net Income & 200% of target award
Free Cash Flow Achievement
100% Incentive Net Income & 100% of target award
Free Cash Flow Achievement
<90% Incentive Net Income & 0% of target award
Free Cash Flow Achievement
The range of the scale for net income and free cash flow achievement
is intended to align management with the expectations of stockholders on
earnings growth and cash generation. Performance below 90% of planned net
income and free cash flow would be considered to be below the Company's
expectations. Similarly, performance at 110% to plan is believed to
represent performance well beyond the expectations of the business. Awards
for performance between 90% and 110% of goal are determined by linear
interpolation.
The amount of potential incentive award for any executive officer is
determined by multiplying the executive's base salary times the actual
incentive award percentage. The actual incentive award percentage is the
target award percentage (50% or 40%) multiplied by the percentage of target
award determined by the weighted average of the net income and free cash
flow components in the following ratio:
Net Income 75%
Free Cash Flow 25%
Two-thirds of the target incentive award is payable to the executive
officer based solely on financial performance. With respect to the
one-third balance remaining in the pool for the fiscal year, the
Compensation Committee will have the discretion to award any executive
officer an amount ranging from zero to one-third of the award such
executive officer would otherwise receive based upon achievement against
personal management objectives ("PMO"). Accordingly the total incentive
award is calculated as follows:
Potential ICA = (Annual Salary x Target %) x (Payout Ratio)
Actual ICA = (Potential ICA x 2/3) + (Potential ICA x
1/3 x % PMO achievement)
PMOs are established annually and are aligned with the strategic
priorities of the Company. PMOs are intended to be challenging but
generally capable of being achieved. PMOs for the Company's NEOs in fiscal
2009 included:
. Expansion of product and service offerings;
. Progress toward implementation of the Company's systems initiative;
. Penetration into new market segments and international geographies;
and
. Development of a long-term corporate growth strategy.
14
Any amounts related to PMO achievement not so awarded may, at the
discretion of the Committee, be reallocated to any other executive officer
based upon the Committee's evaluation of the individual performance of the
executive officer relative to written objectives and other factors,
including the CEO's annual report to the Committee of the executive
officer's performance.
The individual and aggregate amounts of incentive compensation awards
for the fiscal year, as approved by the Compensation Committee, are limited
to 200% of the targeted awards.
Recognizing that extraordinary positive or negative non-operating
events can and do occur, the Committee may elect to make adjustments to the
incentive compensation calculations to reflect the impact of those events.
During fiscal 2009, adjustments to net income of $1.9 million were made for
non-recurring pension curtailment and transition costs, management
reorganization costs and due diligence costs to support strategic
expansion. In addition, adjustments of approximately $5 million were made
to free cash flow for the after-tax impact to fund the Company's frozen
defined benefit pension plan. Landauer's adjusted net income was 103% of
target and adjusted free cash flow was 118% of target, resulting in a
weighted average performance of approximately 106% of target. This
performance resulted in non-equity incentive compensation payouts at 163%
of target. The NEOs averaged 86% PMO achievement resulting in an actual
average payout of 154% of target.
As part of the Proxy Statement for the 2008 Annual Meeting,
stockholders approved the Landauer, Inc. Incentive Compensation Plan, or
"the Plan". The Plan is an omnibus incentive compensation plan intended to
provide the Compensation Committee increased flexibility in the design of
the annual non-equity compensation plan. The Plan provides the ability to
change the drivers to other financial measures such as operating income,
revenue growth, earnings per share, or other measures that the Committee
may determine to be more closely aligned with the interests of Landauer's
stockholders. The Plan provides a broad definition of performance drivers,
based on discussions and review by the Compensation Committee. The fiscal
2010 incentive compensation targets will be based upon achievement of
revenue and net income goals.
LONG-TERM EQUITY INCENTIVES: Long-term incentive awards for the CEO,
CFO and other NEOs are granted in order to promote the achievement of
Landauer's long-term strategic goals. Each year, the Compensation
Committee reviews and makes recommendations to the Board as to the
long-term incentive awards for each of the NEOs. In determining the total
value of the long-term incentive opportunity for each executive, the
Compensation Committee reviews the benchmarking data presented by its
independent compensation consultant on a position-by-position basis and
attempts to provide a benefit at a competitive level.
Long-term incentives are provided to Landauer's executives under the
stockholder approved Landauer, Inc. Incentive Compensation Plan. The Plan
permits grants of stock options, stock appreciation rights, restricted
shares, restricted share units and performance shares and units. The Plan
is intended to meet the deductibility requirements of Section 162(m) of the
Internal Revenue Code as performance-based pay, resulting in paid awards
being fully deductible by the Company for federal tax purposes.
Current restricted shares are subject to risk of forfeiture and vest
in accordance with performance and time restrictions. Each grant is
allocated between performance based and time based vesting. For
performance shares of restricted stock that will vest at the end of the
restriction period, vesting is based upon the achievement of one or more
performance goals. Up to 100% of the performance shares may be forfeited
if the performance goals are not achieved. In addition, for certain
financial targets, over-performance shares can be earned for achievement of
over-performance goals.
15
The Compensation Committee believes that providing long-term
incentive awards in the form of equity awards best achieves the long-term
compensation objectives of the organization and links the NEOs' interests
with the interests of Landauer's stockholders.
In March 2007, the Compensation Committee determined that the NEOs'
total long-term incentive opportunity would be 100% in restricted shares.
One-third of the shares granted were targeted to vest upon the achievement
of certain performance milestones, tied to achievement of strategic
objectives, as determined by the Compensation Committee of the Board of
Directors. These milestones corresponded to the Board approved plan to
support continued profitability and growth by investing in two areas:
. Accelerating a program to re-engineer business processes and replace
the Company's information technology systems that support customer
relationship management and the order-to-cash cycle ("Project
Comet"), and
. Expanding its investment in sales and marketing resources to reach
targeted markets for growth ("Small Market").
The performance milestones were time based and budget based as
follows:
PROJECT COMET SMALL MARKET
------------- ------------
Weighting of 75% 25%
Performance-
Based Grant
Time Measure Operational by Operational by
03/31/08 09/30/07
Cost Measure Within +/- 10% of Within 10% of budgeted
original budget of net start-up investment
$9,875,000 of $511,000
Quality Measure Planned applications Achieving within +/- of
are implemented and budgeted revenue
system operates at
expected levels
The performance measures were established to align with the project
budgets and achievement of the project objectives. During fiscal 2008, the
Compensation Committee determined that management did not achieve the
performance milestones as defined above. Accordingly, one-third of the
shares granted in fiscal 2007 were forfeited.
Of the remaining shares granted in fiscal 2007, one-third of the
shares subject to the Award vested on September 30, 2008, and the remaining
one-third of the shares subject to the award vested on September 30, 2009.
The Compensation Committee has determined that equity grants will be
allocated 70% to performance based vesting and 30% to time based vesting.
This balance between performance based and time based shares is in
alignment with the development of Landauer's long-term growth strategy,
motivates management for the appropriate balance between short-term and
long-term decision making and aligns management's long-term compensation
closely with the interest of Landauer's stockholders. Dividend and other
distributions will be accrued for the shares subject to performance based
vesting and will be paid when the performance goals have been achieved and
the restriction on the shares is released by the Board. Dividends on time
based grants are eligible for dividends at the same rate paid to the
stockholders.
16
In November 2007, the Compensation Committee provided grants, aligned
with this approach, with the following performance goals:
WEIGHTING OF
PERFORMANCE OVER
BASED GRANT TARGET PERFORMANCE
------------- ------ -----------
Revenue Growth 40% 5% 7%
Net Income Growth 20% 8% 10%
System Initiative 20% Planned cost savings n/a
Customer Service 20% Targeted improvement n/a
Achievement against these milestones was measured on September 30,
2009 based upon the cumulative average growth of financial results over the
past two fiscal years, subject to the extraordinary net income adjustments
discussed above. In November 2009, the Compensation Committee determined
Landauer achieved the following performance against the performance goals
outlined above:
OVER ACTUAL
TARGET PERFORMANCE RESULTS
------ ----------- --------
Revenue Growth 5% 7% 5.9%
Net Income Growth 8% 10% 9.5%
System Initiative Planned cost savings n/a 0% achievement
Customer Service Targeted improvement n/a 75% achievement
Based upon the level of performance achieved, 75% of the performance
shares were vested and 54% of the overachievement award was granted. The
time vested portion of 30% of the November 2007 grant vested on
September 30, 2009. As discussed above, the targeted and over performance
awards for each executive are determined by the Compensation Committee
based upon reviews of benchmarking data presented by its independent
compensation consultant on a position-by-position basis and attempts to
provide competitive long-term incentive opportunities.
In February 2009, the Compensation Committee provided equity grants
allocated 70% to performance based vesting and 30% to time based vesting,
with the following performance goals:
WEIGHTING OF
PERFORMANCE OVER
BASED GRANT TARGET PERFORMANCE
------------- ------ -----------
Cumulative
Revenue Growth 40% 5% 7%
Cumulative
Net Income Growth 60% 8% 10%
The value of this award to each executive was determined based on the
benchmarking data presented by the Company's independent compensation
consultant on a position-by-position basis. The performance period of
these awards is October 1, 2008 through September 30, 2011. Targets for
the performance period are compounded average growth rates. Achievement of
target goals earns the targeted long-term incentive opportunity.
Achievement of overachievement goals results in the granting of
overachievement shares, with pro-rata shares granted through interpolation
between target and overachievement levels. The timed based grant is
subject to cliff vesting on September 30, 2011, aligned with the retention
objective of the plan.
17
During fiscal 2009, the Board approved an additional level of
performance goals and related long-term equity incentive award opportunity
for the CEO, CFO and Senior Vice President, Marketing and Technology. The
objective of the additional level of performance and long-term incentive is
to accelerate the long-term sustainable growth of Landauer, while providing
the Company's stockholders with an appropriate return on current cost of
capital. In setting the performance goals, the Compensation Committee
consulted with its independent compensation consultant and analyzed
performance data for top-quartile companies in the S&P 600. The
performance goals were established with the objective of aligning
Landauer's performance with the performance of these top-quartile
companies. The program is an extension of the existing long-term equity
incentive award program and the shares will be granted and targets will be
established in conjunction with the annual equity grants. The grant will
enable participants to earn up to 300% of their annual long-term incentive
grant for achievement of the following performance: 3 year revenue
cumulative average growth rate (CAGR) of 25%, 3 year operating income CAGR
of 20% and return on equity (ROE) target for fiscal year 2012 of 22%.
There is no interpolation for performance between the overachievement goals
and the 3-year revenue growth, 3-year operating income, and 2012 ROE goals.
The 300% incentive award is paid only for performance at, or above, these
goals. Achievement of these objectives will be evaluated on September 30,
2012. The maximum award of 300% represents the combination of the
Company's existing long-term equity incentive opportunity and the
aforementioned additional incentive opportunity afforded to the Company's
CEO, CFO and Senior Vice President, Marketing and Technology.
In April 2009, the Board approved a restricted stock grant of 8,656
shares of the Company's stock to the Company's CFO. This restricted stock
was granted under the stockholder-approved Incentive Compensation Plan.
The value of these retention shares was determined based on consultation
with and benchmarking data presented by the Company's independent
compensation consultant. One-third of these shares will vest on April 15,
2011 and the remaining two-thirds will vest on April 15, 2013, provided at
the time of each vesting Mr. Singer is an employee of the Company. The
Committee believes that this vesting schedule is consistent with the
grant's purpose of supporting the Company's executive retention strategy,
as well as aligned with the Company's focus on long-term stockholder value
creation. Dividends will be paid out as scheduled, consistent with other
Landauer grants of time-based restricted stock.
The Board has generally followed a practice of making all equity
grants to executive officers on a single date each year. Prior to the
relevant Board meeting, the Compensation Committee has reviewed an overall
stock award pool for all participating employees (approximately 15 in
fiscal 2009) and proposed individual grants to executives. Based on the
recommendations from the Compensation Committee, the Board reviews and
approves the overall pool and the individual equity grants to executives.
While most of the Company's equity awards to NEOs have been made
historically pursuant to its annual grant program, the Compensation
Committee and Board retain the discretion to make additional awards to
executives at other times for recruiting or retention purposes. The
Company does not have any program, plan or practice to time "off-cycle"
awards in coordination with the release of material non-public information.
All equity awards are made pursuant to the Plan. Awards of equity to
employees below the executive level are made by the Company's CEO, pursuant
to authority delegated by the Board and subject to the Board-approved
allocation.
18
Landauer's CEO, CFO and other NEOs are subject to a stock ownership
goal of two times the executive's current annual base salary. All other
executives are subject to stock ownership goals of one times the
executive's current annual base salary. The Compensation Committee has
established stock ownership goals for the Company's NEOs as the Committee
believes that substantial ownership of the Company's stock will further
align the NEOs' interests with the interests of Landauer's stockholders.
Stock counted towards the ownership goal includes Landauer shares owned
outright or beneficially owned (i.e., held directly or indirectly with
spouse or minority aged dependent children) and grants of time- and/or
performance-based vested restricted shares. Unexercised stock options are
not counted in the calculation of an executive's ownership goal
achievement.
NEOs are not permitted, subject to approved exceptions, to sell
shares of Landauer stock before meeting their applicable ownership goals.
Upon reaching the applicable ownership goal, the expectation is that the
targeted ownership will be maintained by the executive. Exceptions may be
approved in situations involving financial hardship or limited estate
planning transactions. Requests for exceptions will be submitted to the
Company's CFO for review by the CEO on a case-by-case basis. Any
exceptions approved by the CEO will be reported to the Compensation
Committee.
RETIREMENT PLANS: The NEOs participate in the full range of benefits
and are covered by the same plans (with exceptions noted) on the same terms
as provided to all of Landauer's U.S. salaried employees. The plans are
designed to provide an appropriate level of replacement income upon
retirement.
During 2009, the Company redesigned its retirement benefit plans for
U.S. salaried employees to reflect a change in philosophy from a defined
benefit structure to a defined contribution structure. The Company
anticipates that the redesign of its retirement plans will result in future
cost savings while offering market based retirement benefits to its
employees.
As part of this redesign, the Landauer, Inc. Retirement Plan, the
Landauer, Inc. Supplemental Executive Retirement Plan for Managers and the
Supplemental Key Executive Retirement Plan of Landauer were amended to,
among other changes, cease all benefit accruals under such plans. The
Company also adopted a new supplemental defined contribution plan for
certain executives, which allows participating executives to make voluntary
deferrals and provides for employer contributions at the discretion of the
Company. The Company and Mr. Saxelby also amended Mr. Saxelby's Employment
Agreement to reflect the change in retirement philosophy by replacing the
supplemental pension provisions of Mr. Saxelby's Employment Agreement with
a supplemental defined contribution credit under the new supplemental
defined contribution plan for certain executives.
Further discussion of the Company's retirement plans can be found under
the heading "Fiscal 2009 Changes to Retirement Plans" and "Deferred
Compensation Plan" on pages 27 and 28, respectively, of this Proxy
Statement.
19
POST-TERMINATION COMPENSATION: The Company has entered into
severance agreements with certain of its NEOs. NEOs that do not have
individual severance agreements with the Company are covered, at a minimum,
by its Severance Plan applicable to all employees. These severance
agreements and the Severance Plan provide for payments and other benefits
if the NEO's employment terminates for a qualifying event or circumstance,
such as being terminated without "Cause" or leaving employment for "Good
Reason," as these terms are defined in the applicable severance agreement
and the Severance Plan. In addition, certain of Landauer's executives
participate in the Executive Special Severance Plan which provides for
payments and other benefits in the case of a change in control, as defined
under the plan. Further information regarding these individual severance
agreements and the Executive Special Severance Plan, including definitions
of key terms and a quantification of benefits that would have been received
by the Company's NEOs had termination occurred on September 30, 2009, is
found under the heading "Severance Agreements" on page 29 of this Proxy
Statement.
The Compensation Committee believes that these severance arrangements
are an important part of overall compensation for Landauer's NEOs. The
Compensation Committee believes that these arrangements will help to secure
the continued employment and dedication of the Company's NEOs prior to or
following a change in control, notwithstanding any concern that they might
have regarding their own continued employment. The Compensation Committee
also believes that these arrangements are important as a recruitment tool
and, to a lesser extent, retention device, as many of the companies with
which Landauer competes for executive talent have similar arrangements in
place for their senior employees. The Compensation Committee believes that
these benefits are simple to understand, transparent and fair to Landauer's
stockholders and each NEO.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Company has reviewed and discussed
the Compensation Discussion and Analysis required by Item 402(b) of
Regulation S-K with management and, based on such review and discussions,
the Compensation Committee recommended to the Board that the Compensation
Discussion and Analysis be included in this Proxy Statement.
MEMBERS OF THE COMPENSATION COMMITTEE:
William G. Dempsey, Chairman
Michael T. Leatherman
Thomas M. White
20
<table>
SUMMARY COMPENSATION TABLE
For Fiscal Year Ending September 30, 2009
<caption>
Change in
Pension
Value
Non- and Non-
Equity qualified
Incentive Deferred All
Plan Compen- Other
Stock Option Compen- sation Compen-
Bonus Awards Awards sation Earnings sation
Name and Salary (1) (2) (2) (3) (4,5) (6,7,8) Total
Principal Position Year ($) ($) ($) ($) ($) ($) ($) ($)
- ------------------ ---- -------- ------- ------- ------- --------- --------- ------- ---------
<s> <c> <c> <c> <c> <c> <c> <c> <c> <c>
William E. Saxelby
President and
Chief Executive
Officer. . . . . . . 2009 534,449 - 607,577 - 408,745 79,457 29,213 1,659,441
2008 491,400 - 351,816 - 448,070 55,135 1,150 1,347,571
2007 437,122 - 157,889 - 284,514 66,447 1,460 947,432
Jonathon M. Singer
Senior Vice President
and Chief Financial
Officer. . . . . . . 2009 282,655 - 382,979 - 180,595 24,220 19,300 889,749
2008 259,238 - 220,024 - 201,011 4,953 1,150 686,376
2007 236,716 75,000 142,320 - 133,159 8,587 1,150 596,932
Richard E. Bailey
Senior Vice President
- Operations . . . . 2009 194,077 - 125,095 - 128,589 19,968 13,512 481,241
2008 172,157 - 85,163 - 158,869 14,547 1,219 431,955
2007 164,041 50,000 48,197 - 88,820 18,392 1,212 370,662
R. Craig Yoder
Senior Vice President
Marketing and
Technology . . . . . 2009 245,506 - 138,647 - 159,328 758,385 15,674 1,317,540
2008 234,441 - 88,216 - 182,566 - 1,150 506,373
2007 224,887 - 53,029 1,033 119,050 33,963 1,150 433,112
21
<fn>
(1) Bonuses included in this column represent sign-on or discretionary bonuses.
(2) The dollar value of restricted stock and stock options set forth in these columns is equal to the
compensation cost recognized during each fiscal year for financial statement purposes in accordance with
SFAS 123R. A discussion of the assumptions used in the valuation of equity awards is set forth in Note 1 of
the Notes to Consolidated Financial Statements of Landauer's 2009 Annual Report on Form 10-K. One-third of
equity awards granted on March 13, 2007 were subject to the achievement of certain performance milestones
that were not met. The numbers of shares forfeited on this award during fiscal 2008 were as follows: Mr.
Saxelby (1,818), Mr. Singer (1,527), Mr. Bailey (727) and Dr. Yoder (691). The forfeiture of these awards
resulted in a decrease of stock-based compensation expense for fiscal 2008.
(3) Amounts set forth in this column were earned during fiscal 2009 and 2008 under the Landauer, Inc. Incentive
Compensation Plan and during fiscal 2007 under the 2000 Incentive Compensation Plan for Executive Officers.
The amounts were each paid in November of the following fiscal year.
(4) Amounts solely represent the increase in the actuarial present value of the named executive officer's
accumulated benefit under the Company's defined benefit plans. Mr. Saxelby had negative changes of $136,411
in the actuarial present value of his Supplemental Key Executive Retirement Plan for fiscal 2009. Dr. Yoder
had negative changes of $375,615, $51,171 and $9,278 in the actuarial present value of his Supplemental Key
Executive Retirement Plan for fiscal 2009, 2008 and 2007, respectively, and $24,849 in his Retirement Plan
for fiscal 2008 that are not included in the above disclosure.
(5) The significant increase in the actuarial present value of Dr. Yoder's pension value was driven by the
fiscal 2009 changes to the Company's retirement plans. The changes included, for certain employees, a
supplemental accrued benefit under the Landauer, Inc. Retirement Plan to provide for future benefit accruals
which would be foregone with the freezing of both the SERP and the Retirement Plan. The change
automatically reduced the SERP benefits by the amount of the supplemental accrued benefit. The net effect
of this change was to transfer all or a portion of the affected participants' SERP benefits to the
Retirement Plan as well as increase the overall Retirement Plan benefit by the supplemental amount.
(6) Included in this column are Company matching contributions to its 401(k) Plan as follows: Mr. Saxelby
($3,433), Mr. Singer ($5,506), Mr. Bailey ($3,909) and Dr. Yoder ($3,832).
(7) Included in this column are Company profit sharing contributions to its 401(k) Plan earned during fiscal
2009, which the Company will credit to the executives during fiscal 2010 as follows: Mr. Saxelby ($5,427),
Mr. Singer ($2,904), Mr. Bailey ($2,022) and Dr. Yoder ($2,493).
(8) Included in this column are Company deferred compensation contributions under its NQ Excess Plan earned
during fiscal 2009, which the Company will credit to the executives during fiscal 2010 as follows: Mr.
Saxelby ($20,353), Mr. Singer ($10,890), Mr. Bailey ($7,581) and Dr. Yoder ($9,349).
22
</table>
<table>
GRANTS OF PLAN-BASED AWARDS
For Fiscal Year Ending September 30, 2009
<caption> Grant
All Other Date
Stock Fair
Estimated Future Payouts Estimated Future Payouts Awards: Value of
Under Non-Equity Incentive Under Equity Incentive Number Stock
Plan Awards (1) Plan Awards (2) of Shares and
--------------------------- --------------------------- of Stock Option
Thres- Thres- or Units Awards
hold Target Maximum hold Target Maximum (3,4) (5)
Name Grant Date ($) ($) ($) (#) (#) (#) (#) ($)
- ------------------ ---------- -------- -------- -------- -------- -------- -------- --------- --------
<s> <c> <c> <c> <c> <c> <c> <c> <c> <c>
William E.
Saxelby - - 271,360 542,720
02/06/2009 - 5,868 17,491 1,089,339
02/06/2009 2,515 156,634
Jonathon M.
Singer - - 116,161 232,323
02/06/2009 - 3,205 4,781 297,761
02/06/2009 1,373 85,510
04/15/2009 8,656 450,025
Richard E.
Bailey - - 82,710 165,420
02/06/2009 - 1,180 2,866 178,494
02/06/2009 506 31,514
R. Craig
Yoder - - 99,722 199,444
02/06/2009 - 1,235 3,047 189,767
02/06/2009 530 33,008
23
<fn>
(1) Amounts set forth in these columns reflect the annual cash incentive compensation amounts that potentially
could have been earned during fiscal 2009 based upon the achievement of performance goals under the
Landauer, Inc. Incentive Compensation Plan. The amounts earned in fiscal 2009 by Landauer's named
executives have been determined and were paid in November 2009. The amounts paid are included in the
"Non-Equity Incentive Plan Compensation" column of the 2009 Summary Compensation Table.
(2) Equity awards granted on February 6, 2009 are restricted stock awards with performance-based restrictions
that vest on September 30, 2011 upon the achievement of certain performance milestones (as described on
page 17 herein). The target amounts of these awards were granted under the Landauer, Inc. Incentive
Compensation Plan.
(3) Equity awards granted on February 6, 2009 are restricted stock awards with time-based restrictions. These
awards were granted under the Company's Incentive Compensation Plan and vest on September 30, 2011.
(4) Equity awards granted on April 15, 2009 are restricted stock awards with time-based restrictions. One-third
of the shares vests on April 15, 2011. Two-thirds of the shares vest on April 15, 2013. These awards were
granted under the Company's Incentive Compensation Plan.
(5) The values are equal to the aggregate grant date fair value of restricted stock computed in accordance with
SFAS 123R. The values of equity incentive plan awards were determined assuming the maximum payouts. A
discussion of the calculation of the grant date fair value is set forth in Note 1 of the Notes to
Consolidated Financial Statements of Landauer's 2009 Annual Report on Form 10-K.
24
</table>
<table>
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
For Fiscal Year Ending September 30, 2009
<caption>
Option Awards Stock Awards
----------------------------------- --------------------------------------------------
Equity
Equity Incentive
Incentive Plan Awards:
Plan Market or
Awards: Payout
Market Number of Value of
Number of Value of Unearned Unearned
Securities Number of Shares or Shares, Shares
Underlying Shares or Units of Units Units or
Unexercised Units of Stock That or Other Other Rights
Options (#) Option Option Stock That Have Not Rights That That Have
Exercis- Exercise Expira- Have Not Vested Have Not Not Vested
Name able (1) Price ($) tion Date Vested (#) (2) ($) Vested (#) (2) ($)
- ------------------- ----------- ----------- ---------- ----------- ----------- ----------- ------------
<s> <c> <c> <c> <c> <c> <c> <c>
William E. Saxelby 50,000 48.68 09/28/2015 2,515 (3) 138,275 5,868 (6) 322,623
Jonathon M. Singer - - - 500 (4) 27,490 3,205 (6) 176,211
1,373 (3) 75,488
8,656 (5) 475,907
Richard E. Bailey - - - 506 (3) 27,820 1,180 (6) 64,876
R. Craig Yoder 8,000 34.50 11/05/2012 530 (3) 29,139 1,235 (6) 67,900
16,000 39.62 11/13/2013
16,000 46.80 12/03/2014
<fn>
(1) All options were fully vested prior to fiscal 2009.
(2) Amounts set forth in these columns equal the number of shares of restricted stock indicated multiplied by
the closing price of Landauer's common stock ($54.98) on September 30, 2009.
(3) Vests on September 30, 2011.
(4) Vests on October 17, 2009.
(5) One-third vests on April 15, 2011. Two-thirds vest on April 15, 2013.
(6) Vests on September 30, 2011 based upon achievement of certain performance goals. For restricted stock with
performance conditions, the amounts assume the organization will achieve the performance criteria at
targeted levels and the granted shares of restricted stock will vest based upon the achievement of the
performance goals as described on page 17 of this Proxy Statement. The amounts disclosed in this table are
not necessarily indicative of the amounts that may be realized by Landauer's named executives.
25
</table>
OPTION EXERCISES AND STOCK VESTED
For Fiscal Year Ending September 30, 2009
Stock Awards
-------------------------
Number of
Shares Value
Acquired Realized on
on Vesting Vesting (1)
Name (#) ($)
- ------------------ ----------- -----------
William E. Saxelby 16,456 899,979
Jonathon M. Singer 7,160 393,305
Richard E. Bailey 3,455 192,216
R. Craig Yoder 4,391 240,009
(1) The value realized on the vesting of restricted stock awards is based
on the average of the Company's high and low market price of its
common stock on the date of vesting.
PENSION BENEFITS
For Fiscal Year Ending September 30, 2009
Present
Number Value of
of Years Accumulated
Credited Benefit
Service (1,2)
Name Plan Name (#) ($)
- ------------- ------------------------- ---------- -----------
William E.
Saxelby Supplemental Key
Executive Retirement
Plan of Landauer, Inc. 4 -
Landauer, Inc.
Retirement Plan 4 112,590
Jonathon M.
Singer Landauer, Inc.
Retirement Plan 3 37,759
Richard E.
Bailey Landauer, Inc.
Retirement Plan 3 71,064
R. Craig
Yoder Supplemental Key
Executive Retirement
Plan of Landauer, Inc. 26 29,864
Landauer, Inc.
Retirement Plan 26 1,157,824
(1) Information on the valuation method and material assumptions applied
in calculating the present value of accumulated benefit is set forth
in Note 11 of the Notes to Consolidated Financial Statements of
Landauer's 2009 Annual Report on Form 10-K.
(2) The Landauer, Inc. Retirement Plan was amended effective March 31,
2009, to, among other things, provide a supplemental accrued
retirement benefit for certain participants who had an accrued
benefit under the SERP. This change automatically reduced the SERP
benefits of affected participants in the SERP by the amount of the
supplemental accrued benefit provided under the Landauer, Inc.
Retirement Plan. The net effect of this change was to transfer all
or a portion of the affected participants' SERP benefits to the
Landauer, Inc. Retirement Plan.
26
FISCAL 2009 CHANGES TO RETIREMENT PLANS
Prior to the fiscal 2009 changes described below, the Company
provided a qualified defined benefit pension plan for all employees to
provide a basic replacement income benefit upon retirement. For key
executives, the basic benefit was supplemented with a supplemental key
executive retirement plan to address U.S. tax law limitations placed on the
benefits under the qualified pension plan.
Benefits under the Company's qualified defined benefit pension plan
are based upon the average of the annual rates of compensation in effect as
of October 1 of each year for the period of five consecutive years which
produces the highest such average and also based on years of service.
The Employee Retirement Income Security Act of 1974 places
limitations on benefits that may be paid under qualified retirement plans
like the Company's qualified defined benefit plan. For that reason, Mr.
Saxelby and Dr. Yoder also participate in the Supplemental Key Executive
Retirement Plan of Landauer, Inc. (the "SERP"), under which, prior to the
amendments described below, a participant was entitled to such payments
during his life after retirement at age 65, when added to his benefits
under other Company-funded retirement or profit sharing plans, to provide a
minimum annual benefit equal to 50% of his highest five-year average
compensation (including incentive compensation) or final year compensation
(including five-year average incentive compensation), whichever is greater.
Such benefits continued to be paid, at 50% of the full benefit, to a
participant's spouse after the participant's death. In addition, prior to
the amendment described below, Mr. Saxelby's employment agreement provided
that his SERP benefit would accrue at a rate such that after the first five
years of employment (or in the event of his earlier termination by Landauer
without cause or following a change in control) he would be credited with
20 years of service, subject to certain limitations.
On February 5, 2009, Landauer, Inc.'s Board of Directors approved
certain changes to the Company's U.S. retirement benefit plans effective
March 31, 2009. The objective of the changes is to transition from a
defined benefit philosophy for retirement benefits to a defined
contribution approach. The Company anticipates that the redesign of its
retirement plans will result in future cost savings while offering market
based retirement benefits to its employees.
To effectuate these changes, the Landauer, Inc. Retirement Plan was
amended effective March 31, 2009, to (a) provide a supplemental accrued
retirement benefit for certain participants who (i) had attained specified
age and/or service requirements or (ii) had an accrued benefit under the
SERP, and (b) cease all benefit accruals thereunder (i.e., to cause it to
be a "frozen plan"). The change described in (a) automatically reduced the
SERP benefits of affected participants in the SERP by the amount of the
supplemental accrued benefit provided under the Landauer, Inc. Retirement
Plan. The net effect of this change was to transfer all or a portion of
the affected participants' SERP benefits to the Landauer, Inc. Retirement
Plan. The SERP was also amended effective March 31, 2009 to cease all
benefit accruals thereunder.
The Landauer, Inc. 401(k) Retirement Savings Plan was amended
effective April 1, 2009 to enhance the Company's matching contribution,
along with certain other changes.
Effective April 1, 2009, the Company also established a nonqualified
deferred compensation plan (the "NQ Excess Plan") pursuant to which certain
employees, including the Company's executive officers, will be entitled to
make voluntary deferrals and receive employer contributions determined at
the discretion of the Company.
27
On May 1, 2009, Mr. Saxelby and the Company amended the Employment
Agreement originally entered into by the Company and Mr. Saxelby as of
September 28, 2005. The Employment Agreement provided that if Mr. Saxelby
were employed by the Company on September 28, 2010 (or if his employment
were to terminate prior to that date under certain circumstances described
in the Employment Agreement), he would be entitled to receive a
supplemental pension under the SERP, calculated as if he had completed 20
years of service with the Company (the "Supplemental SERP Benefit").
To address the fact that the SERP was frozen effective March 31,
2009, the amendment to Mr. Saxelby's Employment Agreement (the "Amendment")
provides that the Supplemental SERP Benefit will be provided under the NQ
Excess Plan instead of under the SERP. To effectuate this, the Amendment
provides that on September 28, 2010 (or such earlier date on which his
employment terminates under the circumstances referenced above under which
Mr. Saxelby would have been eligible for the Supplemental SERP Benefit),
the Company shall credit approximately $1.3 million to Mr. Saxelby's
account in the NQ Excess Plan. This amount reflects the expected then
present value of the Supplemental SERP Benefit. Distribution of the
Supplemental SERP Benefit shall be made in the form of a life annuity,
subject to terms outlined in the Amendment to the Employment Agreement.
The Amendment also provides that Mr. Saxelby's benefit under the SERP shall
be cancelled as of the date the Company credits the amount described above
to Mr. Saxelby's account in the NQ Excess Plan.
NONQUALIFIED DEFERRED COMPENSATION
For Fiscal Year Ending September 30, 2009
Registrant Aggregate
Contributions Balance
In Last FY at Last
(1) FYE
Name ($) ($)
- -------------------- ------------- ---------
William E. Saxelby 20,352 20,352
Jonathon M. Singer 10,890 10,890
Richard E. Bailey 7,581 7,581
R. Craig Yoder 9,349 9,349
(1) The amounts in this column represent the contributions earned during
fiscal 2009, which the Company will credit to the executives during
fiscal 2010.
DEFERRED COMPENSATION PLAN
Landauer established the NQ Excess Plan effective April 1, 2009.
Under the NQ Excess Plan, certain employees, including the Company's
executive officers, will be entitled to (a) receive Company contributions
based on a percentage of base pay, and (b) elect to defer up to 60% of base
pay and up to 100% of commissions and bonuses, subject to the authority of
the committee that administers the plan (the "Plan Committee") to specify a
different maximum percentage of compensation that may be deferred. Bonuses
include performance-based compensation contingent upon the satisfaction of
pre-established organizational or individual performance criteria relating
to a performance period of at least twelve months and fiscal year
compensation services performed during a period of one or more consecutive
fiscal years of the Company and payable after the period of service has
concluded. Employees' account balances under the NQ Excess Plan are
adjusted to track the investment returns of mutual funds selected by the
employees from a menu of mutual funds selected by the Plan Committee.
Employees may change their investment elections as frequently as permitted
by the Plan Committee.
28
Except as provided in the provisions applicable to Mr. Saxelby
described below, (1) amounts attributable to Company contributions and
voluntary deferrals that are payable under the NQ Excess Plan as a result
of death, disability or separation prior to retirement (defined as
separation after the earlier of (i) age 55 and the completion of at least
10 years of service or (ii) age 65) are distributed in the form of a lump
sum payment, (2) amounts attributable to Company contributions that are
payable as a result of retirement are distributed in 5 annual installments
and (3) amounts attributable to voluntary deferrals that are payable as a
result of retirement are distributed in either a lump sum payment or in
annual installments over a period of 2 to 5 years, as elected by the
employee. Amounts attributable to voluntary deferrals may also be
distributed prior to separation in either a lump sum payment or in annual
installments over a period of 2 to 5 years commencing on a date specified
by the employee which is at least 2 years after the beginning of the
applicable deferral period.
As described above under "Fiscal 2009 Changes to Retirement Plans",
the May 1, 2009 Amendment to Mr. Saxelby's Employment Agreement provides
that on September 28, 2010 (or such earlier date on which his employment
terminates under certain circumstances described in the Employment
Agreement under which Mr. Saxelby would have been eligible for the
Supplemental SERP Benefit), the Company shall credit approximately $1.3
million to Mr. Saxelby's account in the NQ Excess Plan. This amount
reflects the expected then present value of the Supplemental SERP Benefit.
Distribution of the this amount shall be made in the form of a life
annuity, subject to Mr. Saxelby's right to elect to be paid this amount in
a lump sum.
SEVERANCE AGREEMENTS
Landauer has entered into employment agreements with certain of its
executives. Generally these agreements provide that in the event of
termination of employment under certain circumstances by Landauer other
than for cause, death, disability or voluntary termination, as defined, the
executive will be entitled to continuation of base salary, prorated or
average bonuses and certain other benefits. In the cases of termination
without cause and termination for good reason, the terms of Mr. Saxelby's
agreement provide for a lump-sum cash payment equal to two times the sum of
his base salary and the average of his annual incentive bonus earned for
the last three fiscal years. Mr. Singer's agreement provides a severance
payout amount upon termination for any reason, other than for cause, equal
to nine months base salary plus prorated target bonus for the fiscal year
in which termination occurs. Per the terms of Dr. Yoder's agreement, in
the cases of termination without cause and termination for good reason,
Landauer would continue to pay his base salary, bonus based on the average
of the prior three fiscal years bonuses as percentages of his base salary
during those prior three fiscal years, and all other benefits for a period
of twenty-four months following such termination, however, these amounts
may be offset, to a defined limit, by any compensation earned from
employment with a new employer during such severance period. If employment
had been terminated as of September 30, 2009, the lump sum cash payments
payable to Mr. Saxelby, Mr. Singer and Dr. Yoder under these agreements
would have had an estimated value of approximately $1,881,500, $334,000,
and $771,200, respectively. They are also entitled to receive other
benefits, such as vested pension, vested stock or options, and continuation
of health and life benefits, which are available to all employees in those
situations.
29
The Company maintains the Landauer, Inc. Executive Special Severance
Plan as amended and restated on November 12, 2009 (the "Severance Plan") in
which certain of Landauer's executives, including Mr. Saxelby, Mr. Singer,
Mr. Bailey and Dr. Yoder, participate. Under the Severance Plan, in the
event of a change in control if, (i) the executive's employment is
terminated involuntarily without cause or is terminated by the executive
for good reason, as defined in the plan, within two years following a
change in control, or (ii) the executive elects to terminate employment for
any reason during the 30-day period immediately following the one-year
anniversary of a change in control, the executive will receive a lump sum
payment equal to three times, in the case of Mr. Saxelby, or two times, in
the case of Mr. Singer, Mr. Bailey and Dr. Yoder, the sum of: (i) the
highest annual rate of the executive's base salary during the 12-month
period immediately prior to his termination and (ii) the greater of the
executive's target annual bonus for the year of termination or a bonus
calculated based on the average of the prior three fiscal years bonuses as
percentages of the Employee's base salary during those prior three fiscal
years. The terminated executive also will receive continued medical,
dental and life insurance coverage for up to three years, in the case of
Mr. Saxelby, or up to two years, in the case of Mr. Singer, Mr. Bailey and
Dr. Yoder, as well as outplacement services. The Severance Plan requires
the executive to enter into a noncompetition/nonsolicitation agreement and
execute a general release of claims against Landauer and its affiliates to
receive the severance payments and benefits described above.
Additionally, the Severance Plan provides that, immediately upon a
change in control, all of the executive's outstanding stock options and
other equity awards become exercisable, or vested, in full, and any
outstanding stock options will remain exercisable until the earlier of the
first anniversary of the executive's termination of employment and the
original expiration date of the option.
For purposes of the Severance Plan, a "change in control" generally
means (i) certain acquisitions of 30% or more of the then outstanding
shares of Common Stock, (ii) a change in the Board of Directors resulting
in the incumbent directors ceasing to constitute at least a majority of the
Board of Directors, (iii) the consummation of a reorganization, merger or
consolidation, or sale or disposition of all or substantially all of the
assets of Landauer (unless, among other conditions, Landauer's stockholders
receive more than 60% of the stock of the resulting company) or (iv) the
consummation of a plan of complete liquidation or dissolution of Landauer.
The Severance Plan also provides that if any payment made under the
Severance Plan or otherwise to a covered executive would be subject to the
excise tax imposed under Section 4999 of the Internal Revenue Code,
Landauer will make an additional payment to the executive such that the
executive receives a net amount equal to the amount he would have received
if Section 4999 did not apply; provided, however, if the net after-tax
benefit to the executive would not exceed by at least 10% the net after-tax
proceeds without such additional payment and with a reduction of the
benefits to an amount such that no excise tax is payable, Landauer will not
make the additional payment and the executive's benefits will be reduced to
such amount.
30
PAYMENTS UPON TERMINATION FOLLOWING A CHANGE IN CONTROL
Assuming termination on September 30, 2009
Option Retire- Continued
Exercises ment Perquisites
Severance and Stock Plan and
Pay Vesting Benefits Benefits Total
Name (1) ($) (2) ($) (3) ($) (4) ($) ($)
- ------------ ---------- ---------- ---------- ---------- ----------
William E.
Saxelby 2,822,254 775,898 1,344,036 1,305,596 6,247,784
Jonathon M.
Singer 969,341 755,096 10,890 47,229 1,782,556
Richard E.
Bailey 687,561 92,696 7,581 42,737 830,575
R. Craig
Yoder 771,203 637,520 9,349 42,569 1,460,641
(1) Amounts represent lump-sum cash payments equal to three times base
salary, in the case of Mr. Saxelby, or two times base salary, in the
case of Mr. Singer, Mr. Bailey and Dr. Yoder, AND the greater of the
target annual bonus for the year of termination OR a bonus calculated
based on the average of the prior three fiscal years bonuses as
percentages of the employee's base salary during those prior three
fiscal years.
(2) Amounts equal the number of shares of restricted stock outstanding at
September 30, 2009 multiplied by the closing price of our common
stock ($54.98) on September 30, 2009, and the gain on options
outstanding at September 30, 2009, assuming exercise at a price of
$54.98, for Mr. Saxelby ($315,000) and Dr. Yoder ($540,480). For
restricted stock with performance conditions, the amounts assume the
performance criteria will be achieved at target levels at the time of
a change in control.
(3) Amounts represent the contributions earned during fiscal 2009 under
the NQ Excess Plan, which the Company will credit to the executives
during fiscal 2010. Vesting of Company contributions accelerates
upon a change in control and balances are paid upon termination.
Additionally for Mr. Saxelby, in accordance with the terms of his
employment agreement as amended May 1, 2009, the Company must credit
$1,323,684 to his account in the NQ Excess Plan.
(4) Amounts include continued medical, dental and life insurance coverage
for up to 3 years, in the case of Mr. Saxelby, and 2 years for all
others, as well as outplacement services and, in the case of Mr.
Saxelby, an excise tax gross up.
COMPENSATION OF DIRECTORS
During fiscal 2009, each non-employee director was paid an annual
retainer in the amount of $30,000. Additionally, the Board chair and each
Committee chair were paid annual retainers in the amounts of $15,000 and
$4,000, respectively. Each non-employee director was paid a fee in the
amount of $1,000 per Board or Committee meeting attended. All fees are
paid quarterly.
Landauer maintains a long-term incentive plan, revised in 2008 and
approved by stockholders, under which non-employee directors receive annual
grants of restricted stock or restricted stock units. In February 2009,
non-employee directors each were awarded grants of 1,365 restricted shares
of Common Stock that vest in full on the third anniversary of the award or
the date of the third succeeding annual meeting of stockholders, whichever
is earlier. If the director ceases to be a member of the Board for any
reason other than disability, retirement on or after age 70, or death, each
31
Share subject to the award that has not vested prior thereto shall be
forfeited by the director. Non-employee directors who are appointed to the
Board at other than the annual meeting date are granted a prorated award.
For directors, Landauer has a share ownership target of stock valued at
three times their annual retainer. Directors are not permitted, subject to
approved exceptions, to sell shares of Landauer stock before meeting their
applicable ownership goals. Upon reaching the applicable ownership goal,
the expectation is that the targeted ownership will be maintained by the
director.
Landauer formerly maintained a directors' retirement plan that
provides certain retirement benefits for non-employee directors. This plan
was terminated in January 1997 and benefits accrued under the retirement
plan are frozen. The only active director remaining in the plan during
fiscal 2009 was Mr. Winfield, who received a distribution of his benefits
upon retirement in February 2009. All remaining participants or their
beneficiaries are currently receiving benefits.
DIRECTOR COMPENSATION
For Fiscal Year Ending September 30, 2009
Fees
Earned Stock
or Paid Awards
In Cash (3,4,5) Total
Name ($) ($) ($)
- -------------------------- ------- ------- -------
Robert J. Cronin 81,250 46,328 127,578
William G. Dempsey 63,500 30,379 93,879
Michael T. Leatherman 76,000 34,080 110,080
David E. Meador 48,000 34,080 82,080
Stephen C. Mitchell 62,000 46,328 108,328
Thomas M. White 68,000 46,328 114,328
Michael D. Winfield (1,2) 26,000 131,969 157,969
(1) Mr. Winfield retired in February 2009 due to his reaching the Board's
mandatory retirement age of 70.
(2) Mr. Winfield had a negative change of $11,725 in the actuarial
present value of his accumulated benefit under his Directors'
Retirement Plan that is not included in the above disclosure.
(3) The dollar value of restricted stock set forth in this column is
equal to the compensation cost recognized during fiscal 2009 for
financial statement purposes in accordance with SFAS 123R. A
discussion of the assumptions used in the valuation of equity awards
is set forth in Note 1 of the Notes to Consolidated Financial
Statements of Landauer's 2009 Annual Report on Form 10-K. All
outstanding stock options were fully vested and expensed in
accordance with SFAS 123R prior to fiscal 2009.
(4) In February 2009, each director was awarded a grant of 1,365
restricted shares of Common Stock. The aggregate grant date fair
value computed in accordance with SFAS 123R for the shares of
restricted stock that were granted each director was $85,012.
(5) The aggregate numbers of restricted stock and option awards
outstanding, respectively, at September 30, 2009 were as follows: Mr.
Cronin (2,765 and 4,500), Mr. Dempsey (1,896 and 0), Mr. Leatherman
(1,936 and 0), Mr. Meador (1,936 and 0), Mr. Mitchell (2,765 and 0),
and Mr. White (2,765 and 0). Mr. Winfield had no awards outstanding
at September 30, 2009.
32
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of September 30, 2009
regarding the number of shares of Common Stock that may be issued under the
Company's equity compensation plans. All equity compensation plans have
been approved by the Company's stockholders.
(a) (b) (c)
-------------- ------------- ---------------
Number of
securities
remaining
available
for future
Number of Weighted- issuance
securities average under equity
to be issued exercise compensation
upon exercise price of plans
of outstanding outstanding (excluding
options, options, securities
warrants warrants reflected in
Plan category and rights and rights column (a)) (1)
- ------------- -------------- ------------- ---------------
Equity compensation
plans approved by
security holders 138,612 $ 45.06 419,870
Equity compensation
plans not approved by
security holders -- -- --
------- -------- -------
Total 138,612 $ 45.06 419,870
(1) This amount represents shares of Common Stock available for issuance
of stock-based awards under the Landauer, Inc. Incentive Compensation
Plan. Any shares reserved for award and unused under the previous
incentive plans were cancelled.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
As a matter of practice, the Board's Audit Committee is responsible
for review, approval or ratification of related person transactions for
which disclosure would be required under Item 404(a) of Regulation S-K.
The Company has not recently had any such transactions. If a transaction
should occur, management and the Audit Committee would assess the related
facts and only allow for transactions that are in the best interest of the
stockholders.
33
AUDIT COMMITTEE REPORT
Landauer's Audit Committee has reviewed and discussed with management
the Company's audited financial statements as of and for the fiscal year
ended September 30, 2009. Additionally, the Committee has reviewed and
discussed with management and the independent public accountants the
Company's unaudited interim financial statements as of and for the end of
each of the first three fiscal quarters for the year ended September 30,
2009. These discussions occurred prior to the issuance of news releases
reporting such quarterly results and prior to the filing of the quarterly
reports on Form 10-Q with the Securities and Exchange Commission.
The Committee discussed with PricewaterhouseCoopers LLP, the
Company's independent registered public accounting firm, the matters
required to be discussed by the Statement on Auditing Standards No. 61,
"Communication with Audit Committees", as amended, of the Auditing
Standards Board of the American Institute of Certified Public Accountants.
The Committee received and reviewed the written disclosures and the
letter from the independent registered public accounting firm required by
applicable requirements of the Public Company Accounting Oversight Board
regarding the independent accountant's communications with the audit
committee concerning independence. In addition, the Committee considered
whether the provision by the independent accounting firm of non-audit
services is compatible with maintaining the independent accounting firm's
independence from management and the Company.
Based on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors that the audited fiscal year-end
financial statements referred to above be included in the Company's Annual
Report on Form 10-K to be filed with the Securities and Exchange Commission
for the fiscal year ended September 30, 2009.
MEMBERS OF THE AUDIT COMMITTEE:
Thomas M. White, Chairman
Michael T. Leatherman
David E. Meador
34
FEES BILLED BY INDEPENDENT PUBLIC ACCOUNTANTS
AUDIT FEES. PricewaterhouseCoopers LLP fees for fiscal 2009 were
$452,000 for professional services rendered for the audit of the Company's
annual financial statements and reviews of the interim financial statements
included in the Company's Quarterly Reports on Form 10-Q filed during the
fiscal year. For fiscal 2008, the fees in this category were $506,000.
AUDIT-RELATED FEES. PricewaterhouseCoopers LLP fees of $9,000 for
fiscal 2009 were related to agreed upon procedures in Australia, the same
as in fiscal 2008.
TAX FEES. The Company incurred no fees for fiscal 2009 and 2008 for
professional services rendered by PricewaterhouseCoopers LLP for tax
compliance, tax advice and tax planning for the Company and its
subsidiaries.
ALL OTHER FEES. PricewaterhouseCoopers LLP fees to the Company were
$65,000 for fiscal 2009 for plan design review services related to the
Company's pension and post-retirement plans and for due diligence services
related to the Company's acquisition activities. Fees in this category for
fiscal 2008 were approximately $41,000 with respect to services, primarily
project management and project governance, related to the Company's IT
systems initiative to re-engineer various business processes and replace
components of its information technology systems that support customer
relationship management and the order-to-cash cycle.
All audit and non-audit services provided by the Company's principal
accountants must be pre-approved by the Audit Committee. Accordingly,
policies and procedures were established whereby the Committee approves
performance of all audit and non-audit services in advance. Based in part
on consideration of the non-audit services provided by
PricewaterhouseCoopers LLP during fiscal 2009 and 2008, the Committee
determined that such non-audit services were compatible with maintaining
the independence of PricewaterhouseCoopers LLP. The Committee approved
100% of the services described above. The Company believes that none of
the time expended on PricewaterhouseCoopers LLP's engagement to audit the
Company's financial statements for fiscal 2009 and 2008 was attributable to
work performed by persons other than PricewaterhouseCoopers LLP's
full-time, permanent employees.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The stockholders will be asked at the Annual Meeting to ratify the
appointment by the Audit Committee of PricewaterhouseCoopers LLP as the
Company's independent registered public accounting firm for the fiscal year
ending September 30, 2010. PricewaterhouseCoopers LLP, One North Wacker,
Chicago, Illinois, has served as independent public accountants for
Landauer since fiscal 2002, and it will be recommended to the stockholders
that they ratify such appointment again. The Audit Committee, comprised of
Thomas M. White, Michael T. Leatherman and David E. Meador, has approved
this appointment. Representatives of PricewaterhouseCoopers LLP will be
present at the meeting, will have the opportunity to make a statement if
they desire to do so, and will be available to respond to appropriate
questions.
If a quorum is present, in order to ratify the appointment of
PricewaterhouseCoopers LLP as Landauer's independent registered public
accounting firm for the fiscal year ending September 30, 2010, a majority
of the shares present in person or by proxy at the Annual Meeting and
entitled to vote on such proposal must vote in favor of it.
THE BOARD OF DIRECTORS AND THE AUDIT COMMITTEE RECOMMEND A VOTE FOR
THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF LANDAUER FOR THE FISCAL
YEAR ENDING SEPTEMBER 30, 2010.
35
STOCKHOLDER PROPOSALS
Proposals to be presented by stockholders at the Annual Meeting
scheduled for February 10, 2011 must be received by Landauer in order to be
considered for inclusion in Landauer's proxy statement and form of proxy
relating to that meeting not later than August 31, 2010. Such proposals
may be included in next year's proxy statement if they comply with certain
rules and regulations of the Securities and Exchange Commission. In
addition, under Landauer's bylaws, nominations for directorships and
stockholder proposals to be acted on at the 2011 Annual Meeting only may be
made pursuant to written notice received at Landauer's principal office on
or after October 14, 2010 and on or before November 13, 2010.
Landauer's bylaws provide that notice of a stockholder nomination for
director must set forth, as to each person whom the stockholder proposes to
nominate for election or re-election as a director, all information
relating to such person that is required to be disclosed in solicitations
of proxies for election of directors pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended, including such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected. Such notice must also set forth, as to
the stockholder making the nomination, (i) the name and record address of
such stockholder, (ii) the class and number of shares of capital stock of
the corporation that are beneficially owned by such stockholder, and (iii)
certain other descriptions of any agreement or arrangement with respect to
the nomination between the stockholder and beneficial owner, if any. If
the chairman of the stockholder meeting determines that a stockholder
nomination was not made in accordance with the procedure set forth in the
bylaws, he shall so declare to the meeting and the defective nomination
shall be disregarded.
Nominations for director and stockholder proposals should be directed
to Jonathon M. Singer, Secretary, Landauer, Inc., 2 Science Road, Glenwood,
Illinois 60425-1586.
MISCELLANEOUS
Landauer's Proxy Statement and 2009 Annual Report on Form 10-K have
been made available to stockholders on the Internet beginning on or around
December 22, 2009.
The Board of Directors does not know of any business that will come
before the meeting except the matters described in the notice. If other
business is properly presented for consideration at the meeting, it is
intended that the proxies will be voted by the persons named therein in
accordance with their judgment on such matters.
In the event that a quorum is not present when the meeting is
convened, it is intended that the proxies will be voted in favor of
adjourning the meeting from time to time until a quorum is obtained.
JONATHON M. SINGER
Senior Vice President, Treasurer,
Secretary and Chief Financial Officer
December 22, 2009
36
APPENDIX
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LANDAUER, INC. VOTE BY INTERNET - www.proxyvote.com
2 SCIENCE ROAD Use the Internet to transmit your voting
GLENWOOD, IL 60425-1586 instructions and for electronic delivery
of information up until 11:59 P.M. Eastern
Time, February 10, 2010. 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 PROXY MATERIALS
If you would like to reduce the costs
incurred by our 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 proxy materials electronically in
future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your
voting instructions up until 11:59 P.M.
Eastern Time, February 10, 2010. 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 Vote
Processing, c/o Broadridge, 51 Mercedes Way,
Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
- -------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
LANDAUER, INC.
The Board of Directors recommends
that you vote FOR the following:
VOTE ON DIRECTORS FOR WITHHOLD
ALL ALL
1. Election of Directors [ ] [ ]
NOMINEES: FOR ALL
EXCEPT To withhold authority to
01) Michael T. Leatherman vote for any individual
02) David E. Meador [ ] nominee(s), mark "For All
Except" and write the
number(s) of the nominee(s)
on the line below.
------------------------
VOTE ON PROPOSAL
The Board of Directors recommends
you vote FOR the following proposal:
2. To ratify the appointment FOR AGAINST ABSTAIN
of PricewaterhouseCoopers
LLP as the independent [ ] [ ] [ ]
registered public accounting
firm of the Company for
the fiscal year ending
September 30, 2010.
NOTE: Such other business as may properly come before the meeting or any
adjournment thereof.
NOTE: Please sign exactly as your name appears hereon. When shares are
registered in the names of two or more persons, whether as joint tenants,
as community property or otherwise, both or all of such persons should
sign. When signing as attorney, executor, administrator, trustee, guardian
or another fiduciary capacity, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized person. If a partnership, please sign in partnership name by
authorized person.
- ------------------------------ ------------------------------
| | | | | |
- ------------------------------ ------------------------------
Signature Date Signature Date
[PLEASE SIGN WITHIN BOX] (Joint Owners)
PROXY
LANDAUER, INC.
SHARES OWNED THROUGH THE LANDAUER, INC.
401(k) RETIREMENT SAVINGS PLAN
If shares of Landauer, Inc. are issued to or held for the account of the
undersigned under the Landauer, Inc. 401(k) Retirement Savings Plan, the
undersigned hereby directs State Street Bank and Trust Company, Trustee, to
vote, as directed on this card, the shares of Landauer, Inc. common stock
which are allocated to the undersigned's account, at the Annual Meeting of
Stockholders and at any adjournments thereof. In its discretion it is
authorized to vote upon any other business that properly may come before
the meeting. These instructions shall be held in the strictest confidence
by the Trustee. If no direction is made, the Trustee will vote allocated
shares for which it receives no written instructions in the same proportion
as the allocated shares for which voting instructions have been received.
IMPORTANT NOTICE REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING: The proxy materials for the Landauer, Inc. Annual Meeting
of Stockholders, including our Annual Report and Proxy Statement, are
available over the Internet. To view the proxy materials or vote online or
by telephone, please follow the instructions on the Notice of Internet
Availability of proxy materials.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF
PROXY MATERIALS FOR THE ANNUAL MEETING:
The Notice and Proxy Statement and Annual Report
are available at www.proxyvote.com.
- ------------------------------------------------------------------------
PROXY
LANDAUER, INC.
ANNUAL MEETING OF STOCKHOLDERS
Thursday, February 11, 2010
2:00 P.M. Local Time
Sidley Austin LLP, Conference Center
One South Dearborn Street
Chicago, Illinois
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Robert J. Cronin and Jonathon M. Singer, and each
of them, the attorneys and proxies of the undersigned, with power of
substitution to vote all the shares of Landauer, Inc. which the undersigned
is entitled to vote at the Annual Meeting of Stockholders to be held on
February 11, 2010 at the office of Sidley Austin LLP, Conference Center,
One South Dearborn Street, Chicago, Illinois at 2 o'clock p.m. and at any
adjournments thereof.
Receipt of the Notice of Annual Meeting and the Proxy Statement is
acknowledged.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR LISTED IN
PROPOSAL 1 AND FOR PROPOSAL 2. ADDITIONALLY, THE VOTES ENTITLED TO BE CAST
BY THE UNDERSIGNED WILL BE CAST IN THE DIRECTION OF THE PROXY HOLDER ON ANY
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
PLEASE COMPLETE, SIGN AND DATE ON REVERSE SIDE
AND MAIL IN ENCLOSED ENVELOPE.