UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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ENERGIZER HOLDINGS, INC. | ||||
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ENERGIZER HOLDINGS, INC.
533 Maryville University Drive
St. Louis, Missouri 63141
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of Energizer Holdings, Inc. to be held at 3:00 p.m. Central Time on Monday, January 27, 2014 at Energizer World Headquarters, 533 Maryville University Drive, St. Louis, Missouri 63141.
In connection with the Annual Meeting, we have prepared a Notice of Annual Meeting of Shareholders, a Proxy Statement, and our 2013 Annual Report. On or about December 12, 2013, we began mailing to our shareholders these materials or a Notice of Availability of Proxy Materials containing instructions on how to access these materials online.
We hope you will attend the Annual Meeting in person. If you plan to do so, please bring the 2014 Annual Meeting Admission Ticket and proof of identification (such as a drivers license or other photo identification).
Whether you plan to attend the Annual Meeting or not, we encourage you to read the Proxy Statement and vote your shares. You may vote over the Internet, as well as by telephone, or, if you received or requested to receive printed proxy materials, by signing, dating and returning the proxy card enclosed with the proxy materials as soon as possible in the postage-paid envelope provided. However you decide to vote, we would appreciate you voting as soon as possible.
We look forward to seeing you at the Annual Meeting!
WARD M. KLEIN
Chief Executive Officer
December 12, 2013
ENERGIZER HOLDINGS, INC.
533 Maryville University Drive
St. Louis, Missouri 63141
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
The Annual Meeting of Shareholders of Energizer Holdings, Inc. will be held at 3:00 p.m. Central Time on Monday, January 27, 2014, at Energizer World Headquarters, 533 Maryville University Drive, St. Louis, Missouri 63141.
The purpose of the meeting is:
1) | to elect four directors to serve three-year terms ending at the Annual Meeting held in 2017, or until their respective successors are elected and qualified; |
2) | to ratify the appointment of PricewaterhouseCoopers LLP as the Companys independent registered public accounting firm for fiscal 2014; |
3) | to cast an advisory vote on executive compensation; |
4) | to vote to amend and restate the Companys Restated Articles of Incorporation to provide for the declassification of the Companys Board of Directors. If approved, the Amended and Restated Articles of Incorporation will provide that (i) commencing with the class of directors standing for election at the Companys 2015 Annual Meeting, directors will stand for election for one year terms; (ii) directors who were elected prior to the 2015 Annual Meeting would continue to hold office until the ends of the terms for which they were elected and until their successors are elected and qualified; and (iii) beginning with the Companys 2017 Annual Meeting, and at each annual meeting thereafter, all directors would stand for election for a one year term; |
5) | to vote to amend and restate the Companys Amended and Restated 2009 Incentive Stock Plan; |
and to act upon such other matters as may properly come before the meeting.
Important Notice Regarding the Internet Availability of Proxy Materials for the 2014 Annual Meeting. We are mailing to many of our shareholders a notice of availability over the Internet of the proxy materials, rather than mailing the proxy materials. The notice of availability contains instructions on how to access our proxy materials on the Internet, as well as instructions on obtaining a paper copy. All shareholders who do not receive such a notice of availability, and any shareholders who request to receive a paper copy of the proxy materials, will receive a full set of paper proxy materials by U.S. mail. This process will reduce our costs to print and distribute our proxy materials.
You may vote if you are a shareholder of record on November 22, 2013. It is important that your shares be represented and voted at the Annual Meeting. Please vote in one of the following ways:
| USE THE FOLLOWING TOLL-FREE TELEPHONE NUMBER: 1-866-894-0537, using the identification number indicated on the notice of availability or proxy card mailed to you; |
| VISIT www.cstproxyvote.com to vote via the Internet, using the identification number indicated on the notice of availability or proxy card mailed to you; |
| MARK, SIGN, DATE AND PROMPTLY RETURN the proxy card in the postage-paid envelope if you received or requested a paper copy of the proxy materials; OR |
| VOTE BY WRITTEN BALLOT at the Annual Meeting. |
This Notice, the Proxy Statement, and the Companys 2013 Annual Report to Shareholders have also been posted at www.cstproxy.com/energizer/2013.
By Order of the Board of Directors,
Mark S. LaVigne
Vice President, General Counsel & Secretary
December 12, 2013
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Corporate Governance, Risk Oversight and Director Independence |
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Compensation Policies and Practices as They Relate to Risk Management |
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Item 5. Proposal to Amend and Restate the Companys Amended and Restated 2009 Incentive Stock Plan |
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Appendix AProposed Amended and Restated Articles of Incorporation |
A-1 | |||
Appendix BProposed Energizer Holdings, Inc. Second Amended and Restated 2009 Incentive Stock Plan |
B-1 |
(i)
This summary highlights information contained in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting.
Annual Meeting of Shareholders | Time and date: 3:00 p.m., Central Time, January 27, 2014
Place: Energizer World Headquarters, 533 Maryville University Drive, St. Louis, Missouri 63141
Record Date: November 22, 2013
Voting: Shareholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the other proposals to be voted on | |
Voting matters with Board recommendation in parentheses | Election of four directors (FOR EACH NOMINEE)
Ratification of the appointment of PricewaterhouseCoopers LLP as the Companys independent registered public accounting firm for fiscal 2014 (FOR)
Advisory vote on executive compensation (FOR)
Vote to amend and restate the Companys Restated Articles of Incorporation to provide for the declassification of the Companys Board of Directors (FOR)
Vote to amend and restate the Companys Amended and Restated 2009 Incentive Stock Plan (FOR) | |
Board nominees | James C. Johnson. General Counsel, Loop Capital Markets LLC. Director since November 2013.
Ward M. Klein. Chief Executive Officer, Energizer Holdings, Inc. since 2005. Director since 2005.
W. Patrick McGinnis. Chief Executive Officer and President, Nestlé Purina PetCare Company. Director since 2002.
John R. Roberts. Former Executive Director, Civic Progress St. Louis and former Managing Partner, Mid-South Region, Arthur Andersen LLP. Director since 2003. | |
Other directors | Term expiring in 2015
Bill G. Armstrong. Former Executive Vice President and Chief Operating Officer, Cargill Animal Nutrition. Director since 2005.
J. Patrick Mulcahy. Chairman of the Board of Energizer Holdings, Inc. since 2007. Director since 2000.
Pamela M. Nicholson. President and Chief Executive Officer, Enterprise Holdings, Inc. since 2013. Director since 2002.
Term expiring in 2016
Daniel J. Heinrich. Former Executive Vice President and Chief Financial Officer, The Clorox Company. Director since 2012. |
(ii)
R. David Hoover. Former Chairman and Chief Executive Officer, Ball Corporation. Director since 2000.
John C. Hunter. Former Chairman, President and Chief Executive Officer of Solutia, Inc. Director since 2005.
John E. Klein. Former President of Randolph College. Director since 2003. | ||
Independent registered public accounting firm | The Board recommends that shareholders ratify the appointment of PricewaterhouseCoopers LLP as our independent registered accounting firm for fiscal 2014. | |
Advisory vote on executive compensation | The Board recommends that shareholders approve on an advisory basis the compensation of our named executive officers. Our Board recommends a FOR vote because we believe that our compensation program achieves its objective of rewarding management based upon its success in increasing shareholder value. | |
Key elements of our compensation program | Aggregate pay package. Our aggregate pay packages are targeted at the 50th percentile for our peer group.
Annual cash bonus program. In 2013, bonuses were payable based on the following components related to the achievement of pre-determined Company targets:
¡ 30% related to adjusted earnings per share;
¡ 30% related to Company-wide pre-tax adjusted operating profit;
¡ 20% related to Company-wide cost savings associated with restructurings; and
¡ 20% related to adjusted net working capital as a percentage of sales.
Three-year equity awards. We award restricted stock equivalents with a three- year vesting period. For awards in fiscal 2013, 70% of the restricted stock equivalents available to be awarded at stretch (54% at target) were performance-based and only vest based on performance targets of three metrics: (i) adjusted return on invested capital, (ii) cumulative adjusted EBITDA and (iii) the Companys relative total shareholder return. The remaining portion vests on the third anniversary of the grant if the recipient remains employed with the Company.
Deferred compensation plan. In 2012, the executives could defer their cash bonus award and receive a 25% Company match. Effective January 1, 2013, this benefit was eliminated.
Supplemental retirement plans. Our executives participate in the retirement plans available for all employees; the supplemental retirement plans restore retirement benefits otherwise limited by federal law.
Severance and other benefits following change of control. We have change of control employment agreements with each of the named executive officers which provide them with increased security and allow them to make decisions focusing on the interests of shareholders. In fiscal 2012, we adopted a policy eliminating tax gross-up payments and adoption of the best-of-net approach for future change of control employment agreements. Executives are entitled to benefits in the event of a change of control only if they are involuntarily terminated (or resign for good cause) following a change of control of the Company. |
(iii)
Changes to the executive compensation program for the 2014 fiscal year | The Nominating and Executive Compensation Committee (the committee) has approved several changes to our executive compensation program for fiscal 2013, including:
Adjustment to Mix of Restricted Stock Equivalents. To continue to enhance the emphasis on Company performance, for fiscal 2014 the committee adjusted the mix of restricted stock equivalents by increasing the performance-based portion to 86% of the restricted stock equivalents available to be earned at stretch (75% at target).
Elimination of Certain Deferred Compensation Plan investment options. By November 2014, all investment options in the Deferred Compensation Plan other than the Prime Rate Fund will be eliminated.
Changing Treatment of Unvested Equity Awards at Retirement. The existing treatment of unvested equity awards at retirement will be changed from complete forfeiture to pro rata forfeiture for any awards granted more than 12 months prior to the executives retirement date after age 55 with at least 10 years of service. Regardless of age and service years, awards granted less than 12 months prior to the retirement date will be forfeited. Performance-based awards will be vested pro rata based on actual performance following the certification of the results of the applicable performance period.
Changes to Pension Plans. Effective January 1, 2014, the pension benefit earned to date by active participants under the legacy Energizer U.S. pension plan will be frozen and future retirement service benefits will no longer be accrued. The elimination of the U.S. pension benefit will be partially offset by an increase in the Company match to contributions made by participants into our defined contribution and excess contribution 401(k) plans. | |
Vote to amend and restate the Companys Restated Articles of Incorporation to declassify the Companys Board of Directors | The Board recommends that shareholders approve the amendment and restatement of the Companys Restated Articles of Incorporation to declassify the Companys Board. Although in the past the Board has concluded that a classified board structure was an important piece of the Companys governance structure in order to promote continuity and stability, after careful consideration, the Board now recommends a FOR vote for declassification of the Board in recognition of the view of many investors that classified boards could have the effect of reducing the accountability of directors to shareholders because classified boards limit the ability of shareholders to evaluate and elect all directors on an annual basis. The election of directors is a primary means for shareholders to influence corporate governance policies and to hold management accountable for implementing those policies, which is enhanced when shareholders have the ability to evaluate and elect all directors on an annual basis. | |
Vote to amend and restate the Companys Amended and Restated 2009 Incentive Stock Plan | The Board recommends that shareholders approve the amendment and restatement of the Companys Amended and Restated 2009 Incentive Stock Plan, including to increase the number of shares available for issuance under the plan. Our Board recommends a FOR vote because the Board believes that the Companys ability to attract, retain and motivate the talent we need to compete in the Companys industry will be seriously and negatively impacted if the plan is not amended as proposed. |
(iv)
PROXY STATEMENTVOTING PROCEDURES
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3
Our Board of Directors currently consists of eleven members and is divided into three classes, with each class consisting of four members other than the class nominated for election at the 2015 Annual Meeting, which has three members. The terms of service of the classes expire at successive annual meetings.
Four directors will be elected at the 2014 Annual Meeting to serve for a three-year term expiring at our Annual Meeting in 2017. The Board has nominated James C. Johnson, Ward M. Klein, W. Patrick McGinnis, and John R. Roberts for election as directors at this meeting. Under the Companys Corporate Governance Principles, a director who has reached the age of 72 is not eligible for re-election unless the Nominating and Executive Compensation Committee determines that he or she continues to meet the criteria for Board service set forth in the Corporate Governance Principles. Mr. Roberts has reached the age of 72, and the committee has determined that Mr. Roberts continues to meet the criteria for Board service set forth in the Corporate Governance Principles. Each nominee is currently serving as a director and has consented to serve for the three-year term. Each nominee elected as a director will continue in office until his or her successor has been elected and qualified. We do not know of any reason why any of the nominees for director named herein would be unable to serve; however, if any nominee is unable to serve as a director at the time of the Annual Meeting, your proxy may be voted for the election of another person the Board may nominate in his or her place, unless you indicate otherwise.
Vote Required. The affirmative vote of a majority of the voting power represented in person or by proxy and entitled to vote is required for the election of each director.
The Board of Directors recommends a vote FOR the election of these nominees as directors of the Company.
INFORMATION ABOUT NOMINEES AND OTHER DIRECTORS
Please review the following information about the nominees and other directors continuing in office. The ages shown are as of December 31, 2013.
JAMES C. JOHNSON, Director Since 2013, Age 61 (Standing for election at this meeting for a term expiring in 2017)
Mr. Johnson has served as General Counsel of Loop Capital Markets LLC (financial services firm) since November 2010. From 1998 until 2009, Mr. Johnson served in a number of responsible positions at The Boeing Company, an aerospace and defense firm, including serving as Vice President, Corporate Secretary and Assistant General Counsel from 2003 until 2007, and as Vice President and Assistant General Counsel, Commercial Airplanes from 2007 to his retirement in March 2009. Also a director of Ameren Corporation and Hanesbrands Inc.
Mr. Johnson has extensive executive management and leadership experience as the General Counsel of a financial services firm; and the former Vice President, Corporate Secretary and Assistant General Counsel of an aerospace and defense firm; and strong legal, compliance, risk management, corporate governance and compensation skills and experience. |
4
WARD M. KLEIN, Director Since 2005, Age 58 (Standing for election at this meeting for a term expiring in 2017)
Mr. Klein has served as Chief Executive Officer, Energizer Holdings, Inc. since 2005. Prior to that time, he served as President and Chief Operating Officer from 2004 to 2005, as President, International from 2002 to 2004, and as Vice President, Asia Pacific and Latin America from 2000 to 2002. Also a director of Brown Shoe Company, Inc., and formerly a director of AmerUs Group Co. Mr. Klein also serves on the Board of Directors as Chairman of the Federal Reserve Bank of St. Louis and as President of Civic Progress, St. Louis.
Mr. Klein has over 20 years of service with Energizer, in international as well as domestic leadership positions, and has obtained extensive knowledge of our business operations and industry dynamics. In his capacity as chief executive officer, and the only management member of the Board of Directors, Mr. Klein provides a necessary and unique perspective to the Board. | ||
W. PATRICK MCGINNIS, Director Since 2002, Age 66 (Standing for election at this meeting for a term expiring in 2017)
Mr. McGinnis has served as Chief Executive Officer and President, Nestlé Purina PetCare Company (pet foods and related products) since 2001. Also a director of Brown Shoe Company, Inc.
Mr. McGinnis has almost forty years of experience in consumer products industries, including almost twenty years as chief executive of the Purina pet food business. As a result, he has expertise with respect to marketing and other commercial issues, competitive challenges, and long-term strategic planning, as well as valuable perspectives with respect to potential acquisitions of consumer products businesses. | ||
JOHN R. ROBERTS, Director Since 2003, Age 72 (Standing for election at this meeting for a term expiring in 2017)
Mr. Roberts served as Executive Director, Civic Progress St. Louis (civic organization) from 2001 through 2006. He is now retired. From 1993 to 1998, he served as Managing Partner, Mid-South Region, Arthur Andersen LLP (public accountancy). Also a director of Regions Financial Corporation with membership on the audit and nominating & corporate governance committees and Centene Corporation with membership on the audit and compliance committees.
Mr. Roberts brings many years of experience as an audit partner at Arthur Andersen to our Board. His extensive knowledge of financial accounting, accounting principles, and financial reporting rules and regulations, and his experience in evaluating financial results and generally overseeing the financial reporting process of large public companies from an independent auditors perspective, provides invaluable expertise to our Board and Audit Committee. His service as a board member and audit committee chair for other public companies reinforces the knowledge and insight he provides to our Board. |
5
BILL G. ARMSTRONG, Director Since 2005, Age 65 (Continuing in OfficeTerm expiring in 2015)
Mr. Armstrong is a private equity investor and is also a former director of Ralcorp Holdings, Inc.
Mr. Armstrong served as Executive Vice President and Chief Operating Officer, Cargill Animal Nutrition (animal feed products), from 2001 to 2004. Prior to his employment with Cargill, Mr. Armstrong served as Chief Operating Officer of Agribrands International, Inc., an international agricultural products business, and as Executive Vice President of Operations of the international agricultural products business of Ralston Purina Company. He also served as managing director of Ralstons Philippine operations, and during his tenure there, was a director of the American Chamber of Commerce. As a result of his international and operational experience, he provides a global perspective to the Board, which has become increasingly important as our international operations have grown to account for approximately half of our annual sales. | ||
J. PATRICK MULCAHY, Director Since 2000, Age 69 (Continuing in OfficeTerm expiring in 2015)
Mr. Mulcahy has served as Chairman of the Board of Energizer Holdings, Inc. since 2007. Mr. Mulcahy served as Vice Chairman of the Board from January 2005 to January 2007, and prior to that time served as Chief Executive Officer, Energizer Holdings, Inc. from 2000 to 2005, and as Chairman of the Board and Chief Executive Officer of Eveready Battery Company, Inc. from 1987 until his retirement in 2005. He is also a director of Hanesbrands Inc. and was formerly a director of Ralcorp Holdings, Inc. and Solutia, Inc. Solutia and certain subsidiaries filed voluntary petitions for bankruptcy in 2003, and emerged from bankruptcy in 2008.
Mr. Mulcahy has over forty years of experience in consumer products industries, including almost twenty years as chief executive of our battery business. He was our first chief executive officer, and managed and directed the acquisition of our Schick-Wilkinson Sword business in 2003. He is very knowledgeable about the dynamics of our various businesses and the categories in which they compete. His experience with the complex financial and operational issues of consumer products businesses brings critical financial, operational and strategic expertise to our Board of Directors. | ||
PAMELA M. NICHOLSON, Director Since 2002, Age 54 (Continuing in OfficeTerm expiring in 2015)
Ms. Nicholson has served as President and Chief Executive Officer of Enterprise Holdings, Inc. (auto rental and leasing) since June 2013. Prior to that time she served as President and Chief Operating Officer from 2008 to 2013. She served as Executive Vice President and Chief Operating Officer for Enterprise from 2004 to 2008, and as Senior Vice President, North American Operations from 1999 to 2004. Ms. Nicholson is a board member of Enterprise Holdings, Inc.
Ms. Nicholson has served for over thirty years at Enterprise, obtaining extensive operational and management expertise. As the first woman president of Enterprise, a private company and one of the largest and most comprehensive vehicle rental businesses worldwide, she has been named seven times to Fortune Magazines Top 50 Most Powerful Women list. Ms. Nicholson provides our Board with global perspective with respect to operational and business issues, and insight with respect to executive compensation and diversity issues. |
6
DANIEL J. HEINRICH, Director Since 2012, Age 57 (Continuing in OfficeTerm expiring in 2016)
Mr. Heinrich served as Executive Vice President and Chief Financial Officer of The Clorox Company, a consumer products company, from June 2009 through November 2011 and as Senior Vice President and Chief Financial Officer from August 2003 through June 2009. Prior to serving in this role, he was Vice President, Controller and Chief Accounting Officer of The Clorox Company.
Mr. Heinrich has extensive experience in financial management. Prior to his employment with The Clorox Company, he was Senior Vice President and Treasurer of Transamerica Finance Corporation. Prior to that, he served in the financial services group of the Ford Motor Company, including as Senior Vice President-Controller of Ford Motor Companys banking subsidiary and as Senior Vice President-Treasurer and Controller of Granite Management Corporation. He began his career at Ernst & Young LLP where he spent over eight years in both audit and tax roles. Mr. Heinrich is a director of ARAMARK Holdings Corporation and serves on its finance and audit committees. Mr. Heinrich previously served on the board and was a member of the audit & finance committee of Advanced Medical Optics Inc. from 2007 until its acquisition by Abbott Labs in 2009. He is also a board member of E&J Gallo Winery.
Mr. Heinrichs extensive knowledge of strategy, business development, operations, financial management, accounting principles and financial reporting rules and regulations provides an invaluable expertise to our Board and Audit Committee, and his understanding of incentive structures that can effectively drive performance in the consumer products industry provides an important perspective on our Nominating and Executive Compensation Committee. | ||
R. DAVID HOOVER, Director Since 2000, Age 68 (Continuing in OfficeTerm expiring in 2016)
Mr. Hoover served as Chairman of Ball Corporation (beverage and food packaging and aerospace products and services) from January 2011 to April 2013. He is now retired. He served as the Chairman and Chief Executive Officer of Ball Corporation from January 2010 to January 2011; Chairman, President and Chief Executive Officer, April 2002 to January 2010 and President and Chief Executive Officer, January 2001 to April 2002. Also a director of Ball Corporation, Eli Lilly and Company and Steelcase, Inc. and formerly a director of Qwest Communications International, Inc. and Irwin Financial Corporation. Mr. Hoover is a member of the finance committee and nominating and governance committee of Ball Corporation (as an ex-officio member), the audit committee of Eli Lilly and Company, and the nominating committee and compensation committee (currently serving as chair) of Steelcase, Inc.
Mr. Hoover began his employment at Ball Corporation in 1970, and has served in numerous finance and administration, treasury and operational capacities during his tenure at Ball, including service as chief financial officer, chief operating officer and chief executive officer. His broad and extensive experience provides our Board with valuable insight into complex business, operational and financial issues. His chairmanship of our Finance and Oversight Committee has been significant, particularly during the recent global recession, as that committee directly advises management on financial and economic issues and strategies. |
7
JOHN C. HUNTER, III, Director Since 2005, Age 66 (Continuing in OfficeTerm expiring in 2016)
Mr. Hunter served as Chairman, President and Chief Executive Officer of Solutia, Inc. (chemical products) from 1999 to 2004. He is now retired. Solutia and certain subsidiaries filed voluntary petitions for bankruptcy in 2003, and emerged from bankruptcy in 2008. Also a director of Penford Corporation, KMG Chemicals, Inc. and formerly a director of Hercules, Inc.
Mr. Hunter has a degree in chemical engineering and a Masters in business administration. During his career with Solutia and its former parent, Monsanto Company, he obtained many years of experience in the specialty chemicals business, as well as an in-depth knowledge of environmental issues. As a result, he provides insightful risk management experience to our Board, and a practical perspective and understanding as we deal with environmental, regulatory and sustainability issues. Mr. Hunters extensive experience as a director also provides him with insight into effective compensation plan design and a thorough understanding of current issues, trends and concerns in executive compensation design that makes him an effective chairman of our Nominating and Executive Compensation Committee. | ||
JOHN E. KLEIN, Director Since 2003, Age 68 (Continuing in OfficeTerm expiring in 2016)
Mr. Klein served as President of Randolph College (education) from 2007 to 2013. He is now retired. Prior to that, Mr. Klein served as Executive Vice Chancellor for Administration, Washington University in St. Louis (education) from 2004 to August 2007. From 1985 to 2004, he served as President and Chief Executive Officer, Bunge North America, Inc. (agribusiness), and formerly served as a director of Embrex, Inc.
Mr. Klein obtained a law degree and practiced law with a firm in New York City for several years before joining Bunge Ltd. He had a number of international postings in Europe and South America and senior positions in the United States before being named chief executive of Bunges North American operations. He has also obtained significant administrative experience in the field of higher education. He brings the benefits of his diverse legal, international, operational and administrative background and experience to our Board, Audit Committee, and Finance and Oversight Committee. |
8
THE BOARD OF DIRECTORS AND ENERGIZERS CORPORATE GOVERNANCE
STANDING COMMITTEES AND MEETINGS
Board Member |
Board | Audit | Executive | Nominating and Executive Compensation |
Finance and Oversight | |||||
Bill G. Armstrong |
ü | ü | ü | |||||||
Daniel J. Heinrich |
ü | ü | ü | |||||||
R. David Hoover |
ü | ü* | ||||||||
John C. Hunter |
ü | ü* | ||||||||
James C. Johnson |
ü | ü | ||||||||
John E. Klein |
ü | ü | ü | |||||||
Ward M. Klein |
ü | ü | ü | |||||||
W. Patrick McGinnis |
ü | ü | ü | |||||||
J. Patrick Mulcahy |
ü* | ü* | ü | |||||||
Pamela M. Nicholson |
ü | ü | ü | |||||||
John R. Roberts |
ü | ü* | ü | ü | ||||||
Meetings held in 2013 |
6 | 5 | 0 | 6 | 5 |
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10
11
12
13
14
15
16
17
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DIRECTOR COMPENSATION TABLE
Name (1) | Fees Earned or Paid in Cash (2) |
Stock Awards (3)(4) |
Option Awards (5) |
Non-Equity Incentive Plan Compensation |
Change in Pension Value and Non- Qualified Deferred Compensation Earnings |
All Other Compensation (6)(7) |
Total | |||||||||||||||||||||
B.G. Armstrong |
$ | 90,500 | $ | 100,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 190,500 | ||||||||||||||
D.J. Heinrich |
$ | 90,500 | $ | 100,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 190,500 | ||||||||||||||
R.D. Hoover |
$ | 96,500 | $ | 100,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 196,500 | ||||||||||||||
J.C. Hunter |
$ | 98,000 | $ | 100,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 198,000 | ||||||||||||||
J.E. Klein |
$ | 89,000 | $ | 100,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 189,000 | ||||||||||||||
W.P. McGinnis |
$ | 80,000 | $ | 100,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 180,000 | ||||||||||||||
J.P. Mulcahy |
$ | 116,500 | $ | 100,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 216,500 | ||||||||||||||
P.M. Nicholson |
$ | 81,500 | $ | 100,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 181,500 | ||||||||||||||
J.R. Roberts |
$ | 105,500 | $ | 100,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 205,500 |
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ITEM 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
Our Audit Committee, in accordance with authority granted in its charter by the Board, appointed PricewaterhouseCoopers LLP (PwC) as independent auditor for the current fiscal year. PwC has served as our independent auditor for every fiscal year since 2000, and PwC has begun certain work related to the 2014 audit as approved by the Audit Committee. Information on independent auditor fees for the last two fiscal years is set forth below. A representative of PwC will be present at the 2014 Annual Meeting and will have an opportunity to make a statement, if desired, as well as to respond to appropriate questions.
Although NYSE listing standards require that the Audit Committee be directly responsible for selecting and retaining the independent auditor, we are providing shareholders with the means to express their views on this issue. Although this vote will not be binding, in the event the shareholders fail to ratify the appointment of PwC, the Audit Committee will reconsider its appointment. Even if the appointment is ratified, the Audit Committee in its discretion may direct the appointment of a different independent auditing firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and its shareholders.
Vote Required. The affirmative vote of a majority of the voting power represented in person or by proxy and entitled to vote is required for ratification.
The members of the Audit Committee and the Board of Directors recommend a vote FOR ratification of the appointment of PwC as the Companys independent auditor for fiscal year 2014.
Fees Paid to PricewaterhouseCoopers LLP
(in thousands)
FY 12 | FY 13 | |||||||
Audit Fees |
$ | 4,203 | $ | 4,383 | ||||
Audit-Related Fees |
185 | 31 | ||||||
Tax Fees |
||||||||
Tax Compliance/preparation |
242 | 104 | ||||||
Other Tax Services |
1,068 | 1,363 | ||||||
|
|
|
|
|||||
Total Tax Fees |
1,310 | 1,467 | ||||||
All Other Fees |
0 | 0 | ||||||
|
|
|
|
|||||
Total Fees |
$ | 5,698 | $ | 5,881 | ||||
|
|
|
|
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The Audit Committee of the Companys Board of Directors consists entirely of non-employee directors that are independent, as defined in Section 303A.02 of the New York Stock Exchange Listed Company Manual.
Management is responsible for the Companys internal controls and the financial reporting process. The independent accountants are responsible for performing an independent audit of the Companys consolidated financial statements and internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the PCAOB) and issuing a report thereon. The committees responsibility is to monitor and oversee these processes.
With respect to the Companys audited financial statements for the Companys fiscal year ended September 30, 2013, management of the Company has represented to the committee that the financial statements were prepared in accordance with generally accepted accounting principles and the committee has reviewed and discussed those financial statements with management and PricewaterhouseCoopers LLP. The Audit Committee has also discussed with PricewaterhouseCoopers LLP, the Companys independent accountants, the matters required to be discussed by Statement on Auditing Standards No. 114 (Communication with Audit Committees) as modified or supplemented, as adopted by the PCAOB in Rule 3200T.
In fulfilling its oversight responsibilities for reviewing the services performed by Energizers independent registered public accountants, the Audit Committee retains sole authority to select, evaluate and replace the outside auditors, discusses with the independent registered public accountants the overall scope of the annual audit and the proposed audit fees, and annually evaluates the qualifications, performance and independence of the independent registered public accountants and its lead audit partner.
The Audit Committee has received the written disclosures from PricewaterhouseCoopers LLP required by PCAOB Rule 3526 (Communication with Audit Committees Concerning Independence), as modified or supplemented, and has discussed the independence of PricewaterhouseCoopers LLP with members of that firm. In doing so, the committee considered whether the non-audit services provided by PricewaterhouseCoopers LLP were compatible with its independence. The Audit Committee met with the internal auditors and PricewaterhouseCoopers LLP, with and without management present, to discuss the results of their examination, the evaluations of the Companys internal controls and the overall quality of the Companys financial reporting.
Based on the review and discussions referred to above, the Audit Committee recommended to the Companys Board of Directors that the audited financial statements for the fiscal year ended September 30, 2013 be included in the Companys Annual Report on Form 10-K for that year and has selected PricewaterhouseCoopers LLP as the Companys independent registered public accountants for fiscal year 2014, subject to shareholder ratification.
John R. RobertsChairman |
Bill G. Armstrong | |
Daniel J. Heinrich |
John E. Klein | |
Pamela M. Nicholson |
No portion of this Audit Committee Report shall be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the Securities Act), the Exchange Act, or through any general statement incorporating by reference in its entirety the Proxy Statement in which this report appears, except to the extent that the Company specifically incorporates this report or a portion of it by reference. In addition, this report shall not be deemed to be filed under either the Securities Act or the Exchange Act.
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The following narratives and tables discuss the compensation paid in fiscal 2013 to our chief executive officer, chief financial officer and our other three most highly compensated executive officers, whom we refer to collectively as our named executive officers. Our named executive officers for 2013 were:
| Ward M. Klein, Chief Executive Officer; |
| Daniel J. Sescleifer, Executive Vice President and Chief Financial Officer; |
| David P. Hatfield, President and Chief Executive Officer, Energizer Personal Care; |
| Alan R. Hoskins, President and Chief Executive Officer, Energizer Household Products; and |
| Peter J. Conrad, Vice President, Human Resources. |
COMPENSATION DISCUSSION AND ANALYSIS
Principles of the Energizer Compensation Program
Our commitment to maintaining superior compensation practices has resulted in strong shareholder support of our compensation philosophy, with over 90% of the votes cast in favor of the advisory resolution on executive compensation at our 2013 Annual Meeting. The principles we follow are:
Pay for Performance
Our primary goal is to instill a pay for performance culture throughout our organization, with a significant portion of targeted compensation for our named executive officers dependent upon achievement of performance goals, and forfeited if goals are not achieved.
Competitive Total Compensation Packages
We strive to attract and retain strong executive leaders, with competitive total compensation opportunities near the 50th percentile of our peer group. Our compensation program is designed to motivate these leaders with objectives aligned with operating results and execution of significant initiatives.
Alignment with Shareholder Interests
A substantial portion of the named executive officers total compensation is in the form of restricted stock equivalents and we have stock ownership guidelines for executive officers and prohibitions on the hedging of Company stock, in order to align the compensation received by executives with the returns received by our shareholders.
Significant Changes to Executive Compensation in Fiscal 2013
In the beginning of fiscal 2013, our Nominating and Executive Compensation Committee (the NECC or the committee) made several significant changes to executive officer compensation in order to improve its linkage to shareholder value and streamline executive compensation programs, as follows:
Adoption of multiple metrics in the long-term incentive program
The NECC adopted three metrics for the long-term incentive program, replacing the Adjusted EPS metric used in past years:
| adjusted return on invested capital (ROIC), to support the Companys focus on cash flow, including improved working capital performance, and to emphasize the importance of capital allocation decisions; |
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| cumulative adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), to emphasize growth in core operating earnings; and |
| relative total shareholder return was incorporated to further ensure that realized results are aligned with shareholder value creation. |
Approval of multiple metrics in the short-term incentive program
The NECC also approved four metrics to measure performance in the short-term incentive program, replacing the Adjusted EPS metric used in past years:
| Company-wide cost savings associated with restructurings, which constitutes 20% of the weighting, to focus on delivering the three year cost savings to investors announced by the Company, which is paid annually as cost savings for the multi-year restructuring project are achieved; |
| adjusted earnings per share (EPS), which constitutes 30% of the weighting, to encourage executives to deliver on bottom-line results; |
| Company-wide pre-tax adjusted operating profit, which constitutes 30% of the weighting, to reward operating performance; and |
| adjusted net working capital as a percentage of sales (NWC), which constitutes 20% of the weighting, to encourage improved management of working capital. |
Additional Changes to Executive Compensation Programs
Effective in fiscal 2013, in connection with its review of market practices, the NECC also:
| eliminated the individual performance component of our named executive officers annual cash bonus for the 2013 fiscal year, so that compensation was entirely based on the achievement of objective, Company-wide performance goals; |
| eliminated the Company match for deferrals of salary and bonus by executives as well as the elimination of the opportunity for executives to defer salary and bonus under the deferred compensation plan; and |
| terminated the Companys executive health plan. |
For fiscal 2014, to continue to enhance the emphasis on Company performance, the NECC adjusted the mix of restricted stock equivalents by increasing the performance-based portion to 86% of the restricted stock equivalents available to be earned at stretch (75% at target).
Several other changes to the compensation of our named executive officers will be effective in fiscal 2014:
| elimination of all investment options in the Deferred Compensation Plan other than the Prime Rate Fund by November 2014 for non-director participants; and |
| changes to the existing treatment of unvested equity awards at retirement from complete forfeiture to pro rata forfeiture for any awards granted more than 12 months prior to the executives retirement date after age 55 with at least 10 years of service. Regardless of age and service years, awards granted less than 12 months prior to the retirement date will be forfeited. Performance-based awards would be vested pro rata based on actual performance following the certification of the results of the applicable performance period. |
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Elements of Compensation
The elements of our fiscal 2013 executive compensation program as well as the purpose of each item are shown in the following table:
Compensation Element | Description | Purpose | ||
Base Salary |
Annual fixed salary, payable in cash. | Helps attract and retain key individuals. | ||
Annual Cash Bonus |
Bonuses are payable in cash upon achievement of the pre-determined Company-wide metrics: Adjusted EPS target (30%) Adjusted Operating Profit (30%) Cost Savings (20%) Adjusted Net Working Capital (20%) |
Promotes achievement of Company-wide performance goals. | ||
Three Year Equity Awards |
70% of the restricted stock equivalents available to be awarded at stretch (54% at target) based on performance targets of three metrics: (i) adjusted return on invested capital, (ii) cumulative adjusted EBITDA and (iii) the Companys relative total shareholder return. The remaining portion vests on the third anniversary of the grant if the recipient remains employed with the Company. |
Promotes achievement of long-term Company-wide earnings performance goals.
Provides a direct link to shareholder interests by tying a significant portion of executives personal wealth to the performance of our common stock.
Vesting requirements help to retain key employees. | ||
Deferred Compensation Plan |
Executives could defer their annual bonus; we matched 25% for deferrals into a fund tracking the performance of our common stock. This benefit has been eliminated for future years. | Links an executives personal wealth to the performance of our common stock. | ||
Supplemental Retirement Plans |
Executives participate in the retirement plans available for all employees; the supplemental retirement plans restore retirement benefits otherwise limited by federal statute. | Ensures that the executives receive the same relative value compared to other employees who are not subject to these limits. | ||
Change of Control Severance Agreements |
Executives are entitled to benefits in the event of a change of control only if they are involuntarily terminated (or they resign for good cause) following a change of control of our Company. | Allows executives to make decisions focusing on the interests of shareholders while using a double trigger (a change of control plus termination) to avoid a windfall. |
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Objectives
The key objective of our compensation philosophy is to reward management based upon their success in increasing shareholder value. With a focus on achieving this overarching goal, the overall executive compensation program is designed to provide a compensation package that will enable us to attract and retain highly talented executives and maintain a performance-oriented culture.
Pay for Performance
Our goal is to instill a pay for performance culture throughout our operations, with total compensation opportunities targeted near the 50th percentile of our peer group.
In 2013, a significant portion of targeted compensation for our named executive officers, consisting of the annual cash bonus and three-year equity awards, was variablenot fixedcompensation, rewarding the named executive officers for the achievement of outstanding and sustained Company performance, which builds shareholder value. We believe this compensation structure offers high potential rewards for superior performance, and a significant reduction for results below target.
Competitive Total Compensation Package
Our executive officers are highly experienced, with average industry experience of over 15 years, and have been successful in diversifying our businesses, improving operating results and sustaining long-term adjusted EPS growth. Because of managements level of experience and successful track record, as well as the value of maintaining continuity in senior executive positions, we view retention of key executives as critical to the ongoing success of our operations. Consequently, we:
| target total compensation packages near the 50th percentile of our peer group of companies to help retain key executives and remain competitive in attracting new employees; and |
| establish vesting periods for our time-based equity-based awards, to provide additional retention incentives. |
Our executive compensation program also includes features to address other compensation-related issues such as retirement concerns of employees, which we believe have played an important role in our executive compensation structure.
Alignment with Shareholder Interests
A significant portion of our compensation program consists of equity grants that align our officers interests with those of shareholders by tying a significant portion of the officers personal wealth to the performance of our common stock.
Our incentive compensation program focuses on a combination of short- and long-term profitability metrics and other metrics which motivate the achievement of significant corporate project goals. Specifically, in the short-term incentive plan, we use two profitability metrics, weighted at 60% of the total annual bonus opportunity, and two project metrics, weighted at 40% of the total bonus opportunity.
Profitability Metrics
Adjusted EPS (30%), aligned with overall performance
Adjusted Operating Profit (30%), aligned with underlying operational performance
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Project Metrics
Company-Wide Cost Savings (20%), supporting our 2013 restructuring
Net Working Capital as a Percentage of Sales (20%), supporting our net working capital initiative
For fiscal 2013, the long-term incentive plan vested performance restricted stock equivalents based on compound annual growth in adjusted EPS, aligned with the overall earnings per share received by shareholders over the performance period.
Implementation of the Compensation Program
Our Board of Directors has delegated authority to the NECC to approve all compensation and benefits for our executive officers. The committee sets executive salaries and bonuses, reviews executive benefit programs, including change in control severance agreements, and grants cash bonus awards to our executive officers under our cash bonus program, as well as equity awards to all eligible employees and executives under our 2009 incentive stock plan. The committee has not delegated this authority to any other individuals or groups, except for certain administrative tasks involving our benefit programs.
To assist the NECC in evaluating our executive and director compensation programs on a competitive market basis, the committee has directly retained an outside consultant, Meridian Compensation Partners LLC, which is asked to:
| provide comparative market data for our peer group (and other companies, as needed) with respect to the compensation of the named executive officers and the directors; |
| analyze our compensation and benefit programs relative to our peer group; and |
| advise the committee on trends in compensation and governance practices and on management proposals with respect to executive compensation. |
The NECC has reviewed the independence of Meridian and has determined that Meridian has no conflicts of interest. In particular:
| Meridian does not provide any other services to the Company. |
| The committee has sole authority to retain or replace Meridian in its role as its consultant. |
| The committee regularly reviews the performance and independence of Meridian, as well as fees paid. |
| Management has retained a separate consultant, Towers Watson, which advises it (but not the committee) on market trends in executive compensation, provides ad hoc analysis and recommendations, and reviews and comments on compensation proposals. |
Management retains a separate compensation consultant. We believe that having separate consultants promotes Meridians independence.
A representative of Meridian attends committee meetings as requested to serve as a resource on executive and director compensation matters. In order to encourage independent review and discussion of executive compensation matters, the committee meets with Meridian in executive session.
Meridian, with input from the committee, has developed a customized peer group of 24 companies based on a variety of criteria, including some or all of consumer products businesses, businesses with a strong brand focus, competitors for executive talent, and similarly-sized businesses in terms of revenues and market capitalization.
Meridian uses data provided by that peer group to determine a market comparison for our executive compensation program. Total compensation opportunities are targeted at the 50th percentile of the peer group. The market comparison is made for each key component of compensation, including base pay, target annual bonus, target total cash compensation and grant-date value of long-term incentives. Meridian also analyzes the
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aggregate equity utilization as compared to the peer group. In addition, Meridian reviews the terms of our change-in-control program for our executives for consistency with market practices.
The peer group utilized by Meridian for its review of fiscal 2013 executive compensation consists of the following companies. The industries in which the companies are engaged are noted: (1) household products; (2) personal care; (3) food and beverage; and (4) apparel.
Avery Dennison(1) | Del Monte Foods(3) | Hasbro(1) | NuSkin Enterprises(2) | |||
Avon Products(2) | Elizabeth Arden(2) | The Hershey Company(3) | Revlon(2) | |||
Brown-Forman(3) | Estee Lauder Companies, Inc.(2) | Masco Corporation(1) | S.C. Johnson & Son(1) | |||
Church & Dwight(1)(2) | Fortune Brands Home & Security, Inc.(1) | Mattel, Inc.(1) | The Scotts Miracle-Gro Company(1) | |||
The Clorox Company(1) | Hallmark Cards(1) | Mead Johnson Nutrition Co.(3) | The Sherwin-Williams Company(1) | |||
Colgate-Palmolive Company(2) | Hanesbrands(4) | Newell Rubbermaid(1) | Tupperware Brands Company(1) |
The following table provides an overview of how we compared to our peer group companies on certain financial criteria:
(in millions of dollars) | Revenue | Market Capitalization |
||||||
75th Percentile |
6,808 | 12,566 | ||||||
50th Percentile |
4,307 | 6,206 | ||||||
25th Percentile |
2,898 | 3,426 | ||||||
Energizer Holdings, Inc. |
4,600 | 4,806 |
Results of 2013 Advisory Vote to Approve Executive Compensation
At our 2013 Annual Meeting of Shareholders on January 28, 2013, we submitted a proposal to our shareholders for an advisory vote on our fiscal year 2012 compensation awarded to our named executive officers. Our shareholders approved the proposal with approximately 90.6% of the votes cast in favor of the proposal. We believe that the outcome of our say-on-pay vote signals our shareholders support of the NECCs approach to executive compensation, specifically our efforts to attract, retain, and motivate our named executive officers.
We were pleased with our shareholders support of our compensation program in fiscal 2012, and the committee continues to review our executive compensation practices to further align our compensation practices with our pay-for-performance philosophy and shareholder interests. We value the opinions of our shareholders and will continue to consider the outcome of future say-on-pay votes, as well as feedback received throughout the year, when making compensation decisions for our named executive officers.
Elements of Compensation
Base Pay
We benchmark base pay against our peer group annually as a guide to setting compensation for key positions, including the named executive officers, in the context of prevailing market practices. Our management and the committee believe that an important benchmark for base salaries is the 50th percentile for the peer group, but that it is important to consider the interplay of all of the benchmarked components of total compensation as well as the individuals performance, in order to make adjustments that are warranted.
At the beginning of each fiscal year the committee establishes the salaries of the executive officers (other than the chief executive officer) based on recommendations of the chief executive officer. These recommendations are based on an assessment of the individuals responsibilities, experience, and individual performance. Where the recommendations of the chief executive officer and the compensation consultant for the salaries of executives remain within the targeted range relative to the peer group, and the NECC concurs with the assessment of performance, the NECC has historically approved the recommendations made by the chief executive officer.
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The salary of the chief executive officer is set by the NECC, taking into account the recommendation of the committees compensation consultant. In connection with that review, Meridian, without input from management, provides the NECC with a range of possible salary and long-term incentive award levels. The NECC uses this information, along with its analysis of the performance and contributions of the chief executive officer against performance goals, to determine an appropriate salary.
The NECC evaluated the base salaries of the named executive officers at its November 2012 meeting. There were no changes to base salaries due to the focus on business transformation, other than for Mr. Hoskins, who was recently promoted to his current role. Base salaries of the named executive officers for fiscal 2013 were as follows: Mr. Klein$1,100,000; Mr. Sescleifer$525,000; Mr. Hatfield$525,000; Mr. Hoskins$440,000 and Mr. Conrad$375,000.
Incentive Programs
The NECC has annually approved a two-tier incentive compensation structure for our key executives, consisting of an annual performance program, paid in cash, and a three-year performance program, paid in restricted stock equivalents. Consistent with the requirements for performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the IRC), awards to officers under our annual performance program are made under the terms of our shareholder-approved executive officer bonus plan, and the three-year performance awards are granted under the terms of our 2009 incentive stock plan.
Annual Cash Bonus Program
Annual cash bonuses to our named executive officers are based on a percentage of the executives annual salary, and adjusted based on performance on metrics determined by the NECC. The 2013 annual bonus program was designed to measure performance against four metrics:
| Adjusted EPS (30% of the named executive officers bonus target) |
| Adjusted Operating Profit (30% of the named executive officers bonus target) |
| Company-wide Cost Savings (20% of the named executive officers bonus target) |
| Adjusted NWC (20% of the named executive officers bonus target) |
The performance goals for each metric were set by the NECC at the beginning of the fiscal year. The committee assigned individual bonus targets to each of the officers, based upon individual performance and prevailing market practice information provided by the committees consultant. For fiscal 2013, the following bonus targets, defined as a percentage of the individuals base pay, were assigned to the named executive officers:
| Mr. Klein - 115% |
| Mr. Sescleifer - 80% |
| Mr. Hatfield - 80% |
| Mr. Hoskins - 80% |
| Mr. Conrad - 60% |
For fiscal 2013, the combined weighted payout ratio for each of the executives was 145.43%, based on outcomes under the following performance metrics.
Adjusted EPS
Adjusted EPS means diluted earnings per share, determined in accordance with U.S. generally accepted accounting principles (GAAP), subject to adjustment for certain limited matters, including the effects of acquisitions, divestitures, extraordinary dividends, stock splits or stock dividends, recapitalizations, extraordinary
29
transactions such as mergers or spin-offs, reorganizations, unusual or non-recurring non-cash accounting impacts and costs associated with restructurings.
The threshold, target and stretch achievement levels, and the percent payout at each level, are as follows:
FY13 Annual Bonus
(30% of Bonus Target) |
Threshold
10% Payout |
Target
100% Payout |
Stretch
200% Payout | |||
Adjusted EPS |
$6.50 | $6.85 | $7.20 |
Bonuses indicated increase proportionately in 1/10th of 1% increments for final results between the goals indicated with maximum bonus at stretch. No bonuses tied to the Company performance are paid for results below the Threshold goal.
The NECC, in consultation with management, considered whether to adjust for the negative financial impact (or whether to exercise its negative discretion to disregard the impact) of the following events when determining the achievement of targets: (i) costs associated with restructuring operations and (ii) various integration and transaction costs. The NECC reviewed the adjustments and, through the use of its negative discretion, reduced the amount of the awards and amounts payable under the annual bonus plan to 142.9% of target.
Adjusted Operating Profit
Adjusted Operating Profit means net earnings plus taxes and interest expense, subject to adjustment for certain limited matters, including the effects of acquisitions, divestitures, extraordinary dividends, stock splits or stock dividends, recapitalizations, extraordinary transactions such as mergers or spin-offs, reorganizations, unusual or non-recurring non-cash accounting impacts and costs associated with restructuring.
The threshold, target and stretch achievement levels, and the percent payout at each level, are as follows:
(30% of Bonus Target) |
Threshold
10% Payout |
Target
100% Payout |
Stretch
200% Payout | |||
Adjusted Operating Profit |
$710M | $745M | $780M |
Bonuses indicated increase proportionately in 1/10th of 1% increments for final results between the goals indicated with maximum bonus at stretch. No bonuses tied to the Company performance are paid for results below the Threshold goal.
The NECC, in consultation with management, considered whether to adjust for the negative financial impact (or whether to exercise its negative discretion to disregard the impact) of the following events when determining the achievement of targets: (i) costs associated with restructuring operations and (ii) various integration and transaction costs. The NECC reviewed the adjustments and, through the use of its negative discretion, reduced the amount of the awards and amounts payable under the annual bonus plan to 105.4% of target.
Cost Savings
Our Cost Savings bonus metric was adopted by the NECC in support of Energizers multi-year restructuring program, under which we expected to realize gross annualized pre-tax cost savings of approximately $200 million by fiscal 2015.
Because the restructuring program encompasses a three year period, the Cost Savings bonus metric is a pool comprised of 20% of each named executive officers total bonus for the three years of the restructuring program. For fiscal 2013, no bonus payment would have been made unless cost savings generated by the restructuring program exceeded $45 million. To the extent cost savings exceeded $45 million; the cost savings generated by the restructuring program would be divided by $200 million, and then multiplied by 100 to give the percentage payout of the three year pool. In fiscal 2013, the restructuring program generated cost savings of $103.1 million.
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Accordingly, the 20% portion of the annual bonus program attributable to Cost Savings paid out 51.6% of the three year pool target, or 154.7% of target on an annualized basis.
Adjusted NWC
Our Adjusted NWC metric was adopted by the NECC in support of Energizers working capital management initiative, under which we are committed to improving working capital as a percent of sales in excess of 400 basis points, over the fiscal 2011 baseline metric of 22.9%, which we estimate would result in a reduction of more than $200 million of working capital. We targeted completion of the actions required to drive this improvement by the end of fiscal 2013 so that we would achieve the full benefit in fiscal 2014.
Adjusted NWC means Average Net Working Capital divided by net sales for the performance period, as adjusted for the effect of restructuring events such as plant closings, sales of facilities or operations and business restructurings; and expressed as a percentage.
Average Net Working Capital means, as of the end of the performance period, the average of the last four quarter end balances for each of (i) receivables, as reported, less the portion of accrued liabilities representing trade allowance, plus (ii) Inventories, as reported, minus (iii) accounts payable.
The threshold, target and stretch achievement levels, and the percent payout at each level, are as follows:
FY13 Annual Bonus Proposed
Metric (20% of Bonus Target) |
Threshold
10% Payout |
Target
100% Payout |
Stretch
200% Payout | |||
Adjusted NWC |
19.8% | 19.2% | 18.2% |
The NECC, in consultation with management, considered whether to adjust for the negative financial impact (or whether to exercise its negative discretion to disregard the impact) of the effect of restructuring events when determining the achievement of targets. The NECC reviewed the adjustments and determined that the payout under the Adjusted NWC metric was 200% of target.
Equity Awards
Our amended and restated 2009 incentive stock plan authorizes the NECC to grant various types of equity awards. Since 2005, the NECC has granted to key executives primarily restricted stock equivalent awards, with achievement of Company performance targets over three years as a condition to vesting of the majority of the award, and continued employment with the Company over the same period as a condition to vesting of the remainder of the award. See Executive CompensationPotential Payments Upon Termination of Change in Control. In December 2012, the NECC continued this practice, awarding three-year incentive awards with a performance based component constituting 70% of the restricted stock equivalents available to be awarded at stretch (54% at target) and a time-vesting component constituting 30% at stretch (46% at target) of the award.
Timing and Procedures for Grants
Other than in exceptional cases, such as promotions or new hires, long-term incentive awards are generally granted in the first quarter of the fiscal year (October through December), at the time when salary levels and bonus programs for the new fiscal year are determined. The NECC and management have agreed that it is also an appropriate time to review and consider additional awards as part of the total compensation packages.
The size of equity awards for the executive officers granted in December 2012 was based in part upon benchmarked data from our peer group provided by Meridian, valued on the date of grant. The size of awards also reflects other factors, such as officers individual performance, current dilution rates, and the market run-rate for equity grants among the peer group. The number of restricted stock equivalents awarded, as well as the mix between time-based and performance-based awards, are based on the amounts targeted to be delivered after three years, and the corresponding grant date value of the restricted stock equivalents. The restricted stock equivalent
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awards are stock-settled at the end of the three-year period, when they convert into unrestricted shares of our common stock if and to the extent that the vesting requirements are met. Performance shares are earned based on performance over the 3-year performance cycle against pre-established goals. In addition to the earned award fluctuating with performance against these goals, the value of the shares also may fluctuate based on performance of the Companys common stock over time. This combination of financial performance and stock price performance enhances the alignment with shareholders.
The chief executive officer recommends to the committee the number of shares or share units to be awarded for each named executive officer (other than the chief executive officer). With respect to awards to the chief executive officer, Meridian, without input from the chief executive officer or other members of management, provides a range of potential awards to the NECC. However, the NECC considers alternatives outside the range and determines the award considering the competitive posture, performance of the Company, returns to shareholders and experience and effectiveness of the chief executive officers leadership, as well as the input from Meridian.
Performance Awards Vesting in 2013
In fiscal 2013, the three-year vesting period for performance awards granted in October 2010 ended. The committee exercised its discretion to adjust the fiscal 2013 adjusted EPS result down to $7.00 per share, representing a compound adjusted EPS growth for that period of 6.95%. This resulted in vesting of 36.9% of the awards granted at stretch (73.8% at target).
Grants During Fiscal 2013
The NECC approved the grant of two types of restricted stock equivalent awards to the named executive officers in fiscal 2013, time-based awards, which vest three years from the date of grant and can increase in value if Energizers stock price rises, and performance-based awards. The performance-based awards granted in 2013 measure performance against two metrics:
| adjusted ROIC, to support the Companys focus on cash flow, including improved working capital performance, and to emphasize the importance of capital allocation decisions; and |
| cumulative adjusted EBITDA, to reward growth in core operating earnings. |
Once the initial award amount is determined, the performance equivalent awards will then be subject to adjustment based on a third metric, the Companys relative total shareholder return during the three-year performance period based on a relevant group of industrial and consumer goods companies.
The number of units granted to each named executive officer is shown in the Grants of Plan-Based Awards table.
Other Equity Awards
The NECC has, from time to time, and most recently in 2009, granted non-qualified stock options as well as restricted stock equivalent awards which vest over time. No such grants were made to named executive officers in fiscal 2013.
Deferred Compensation Plan
In past years, the executive officers and other key employees had been permitted to request the deferral of their annual cash bonus awards under the terms of our deferred compensation plan. Deferrals of an executives cash bonus into the Energizer common stock unit fund of the plan received a 25% Company match, vesting three years from the date of crediting. The ability to defer into this program and the match were eliminated in fiscal 2013. For additional information, see the notes to the Non-qualified Deferred Compensation Table below.
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Supplemental Retirement Plans
In fiscal 2013, our named executive officers were covered, like other employees, by our defined benefit pension plan. As a qualified plan, it is subject to maximum pay and benefit limits under the tax rules. Our named executive officers were also covered by our qualified defined contribution 401(k) plan, and entitled to a Company match on a portion of their deferrals to the plan. The amounts which may be deferred on a tax preferred basis into the qualified plan, as well as the amount of the matching contributions, are also subject to IRS limitations. We have also established supplemental plans to compensate executives for these limits. The pension restoration plan (the executive supplemental retirement plan) provides a supplement to an executives pension benefit equal to the amount that the executive would have received but for the tax limitations. The excess 401(k) plan permits executives to defer any excess contributions and matching payments not permitted into the qualified 401(k) plan. According to market data provided by Meridian, these types of benefits are generally offered by our peer group described above, often with enhanced benefit formulas (which we do not provide).
Details of pension benefits under the pension restoration plan are set forth in the Pension Benefits Table, including the accompanying narrative. Details of the excess 401(k) plan, including the contributions, earnings, and year-end balances, are set forth in the Non-qualified Deferred Compensation Table, including the notes to that table.
In November 2012, we approved and communicated changes for both our qualified and supplemental U.S. pension plans so that, effective January 1, 2014, the pension benefit earned to date by active participants under the legacy Energizer U.S. pension plan will be frozen and future retirement service benefits will no longer be accrued. The elimination of the U.S. pension benefit will be partially offset by an increase in the Company match to contributions made by participants into our defined contribution and excess contribution 401(k) plans.
Severance and Other Benefits Following a Change of Control
Unlike many other public companies, we have not offered employment agreements to our executives. However, we have ongoing change of control employment agreements with each of our executive officers, as discussed under Potential Payments upon Termination or Change of Control.
The change of control employment agreements are designed to provide executives with increased security in the event of a change of control, and allow them to weigh alternative future courses for the Company focused on the interests of shareholders. The NECC annually reviews the cost and the terms of the agreements in light of advice provided by Meridian, based upon surveys of Fortune 500 companies as well as our peer group, and its own internal data and expertise. We believe that the retention value provided by the agreements, and the benefit to us when the executive is provided the opportunity to focus on the interests of shareholders and not the executives own personal financial interests, outweighs the potential cost given that:
| such protections are common among companies of our size, and allow us to offer a competitive compensation package; |
| Meridian has advised that the aggregate projected cost of the agreements is at the lower end of prevailing practice; |
| such costs will only be triggered if the new controlling entity involuntarily terminates the protected executives, or the executives are able to terminate for good reason, during the protected period; |
| the agreements include non-compete and non-solicitation covenants binding on the executives, which can provide significant benefit to the new controlling entity; and |
| the individuals with the agreements are carefully selected by the Board of Directors, and we believe they are critical to the process of evaluating or negotiating a potential change of control transaction or in the operation of our business during the negotiations or integration process, so that their retention would be critical to the success of any such transaction. |
The NECC has, from time to time, in the last several years initiated further limitations on the benefits provided. In November 2011, the Board of Directors, upon the recommendation of the committee, adopted a policy pursuant to which we will not include tax gross-up payments relating to severance payments, and instead adopt the best-of-
33
net approach for change in control employment agreements entered into with executive officers after that date. Of the named executive officers, Mr. Klein, Mr. Sescleifer, Mr. Hatfield and Mr. Conrad have agreements including the prior tax gross-up treatment, and Mr. Hoskins has an agreement providing the best-of-net treatment.
A description of the projected cost, if a change of control were to have occurred on the last day of fiscal 2013 and all of the named executive officers were terminated on that date, is provided under Potential Payments upon Termination or Change of Control.
Perquisites
We offer a limited number of perquisites for our executive officers. Our Board of Directors has authorized the personal use of our Company-owned aircraft for up to 30 flight hours per year by the chief executive officer, but does not permit reimbursement of taxes associated with the chief executive officers personal use of the aircraft. In fiscal 2013, the value of this perquisite to Mr. Klein was $136,785. The Board has also authorized individuals to bring family members and guests along on business flights. The remaining perquisites or executive benefits consist of the executive financial planning program, executive health plan, executive long-term disability plan, and executive excess liability plan. In addition, Mr. Hatfield is reimbursed for commuting expenses as a result of his assignment to our office in Connecticut, but he is not reimbursed for taxes associated with that reimbursement. We regularly review the benefits provided to our executives and make appropriate modifications based on peer group analysis and the committees evaluation of the retentive value of these benefits.
Stock Ownership Requirements
Our stock ownership guidelines provide that the chief executive officer must maintain ownership of our common stock with a value of at least five times his base salary, and other executive officers must maintain common stock ownership with a value of at least three times their base salaries. New executive officers are given a period of five years to attain full compliance with the guidelines.
For purposes of this determination, stock ownership includes shares of our common stock which are owned directly or by family members residing with the executive, or by family trusts, as well as vested options, vested and deferred restricted stock equivalents, unvested restricted stock equivalents (other than equivalents subject to achievement of performance targets), and common stock or stock equivalents credited to an officer under our defined contribution 401(k) plan, our excess 401(k) plan, or our deferred compensation plan. As of September 30, 2013, each of our named executive officers was in compliance with the guidelines.
Trading in Energizer Stock
Under our insider trading policy, directors, officers and employees or their designees are prohibited from engaging in speculative trading or hedging transactions in Energizer securities, including prohibitions on:
| Investing or trading in market-traded options on Energizer securities i.e., puts and calls; or |
| Purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds) that are designed to profit from, hedge or offset any change in the market value of equity securities (1) granted to the director, officer or employee by Energizer as part of the compensation of the employee or member of the Board of Directors; or (2) held, directly or indirectly, by the director, officer or employee; or |
| Engaging in short-sales of Energizer securities i.e., selling Energizer stock not owned at the time of the sale; or |
| Speculating on relatively short-term price movements of Energizer securities i.e., engage in a purchase and sale of Energizer stock within a short period of time. |
The policy also prohibits the transfer of funds into or out of Energizer stock equivalent funds in Energizers benefit plans while in possession or aware of material non-public information; or engaging in any other transaction involving Energizer securities that suggests the misuse of information that is unavailable to the general public.
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Deductibility of Certain Executive Compensation
U.S. tax laws set a limit on deductible compensation of $1,000,000 per year per person for the chief executive officer and the next three highest paid officers (other than the chief financial officer). Performance-based awards, which meet certain requirements, are excluded when determining whether such an executive has received compensation in excess of this limit. The applicable plan provisions give the NECC authority to require the deferral of certain bonus and salary payments to such officers in order to preserve the deductibility of those payments. By making payments under the annual cash bonus program and annual restricted stock equivalent grants contingent upon achievement of shareholder-approved performance goals, such payments may be deductible under the U.S. tax laws. We believe a significant portion of the compensation paid to the named executive officers may remain deductible as performance-based awards under shareholder-approved plans in the future. However, the NECC reserves the flexibility to approve compensation arrangements that are not fully tax deductible where the NECC considers such arrangements to be appropriate and in the best interests of the Company.
The committee intends to continue to review and monitor its policy with respect to the deductibility of compensation.
COMPENSATION POLICIES AND PRACTICES AS THEY RELATE TO RISK MANAGEMENT
As stated above under Corporate Governance, Risk Oversight and Director Independence Risk Oversight and Risk ManagementCompensation Policies and Practices Risk, as part of its responsibilities, the Nominating and Executive Compensation Committee annually reviews the Companys compensation policies and practices for all employees, including executive officers, to determine whether, in its judgment, our compensation programs encourage risk-taking likely to have a material adverse effect on the Company. In particular, there are several design features of those programs that the committee believes reduces the likelihood of excessive risk-taking:
| the executive compensation program design provides a balanced mix of cash and equity, annual and longer-term incentives; |
| for the executive compensation program, maximum payout levels for bonuses and performance awards are capped; |
| the Company does not grant stock options on a regular basis; and |
| executive officers are subject to share ownership and retention guidelines. |
The committee determined that, for all employees, the Companys compensation programs do not encourage excessive risk and instead encourage behavior that supports sustainable value creation.
NOMINATING AND EXECUTIVE COMPENSATION COMMITTEE REPORT
The Nominating and Executive Compensation Committee of the Companys Board of Directors consists entirely of non-employee directors that are independent under the NYSE listing standards. The Committee has reviewed and discussed the Companys Compensation Discussion and Analysis with management. Based on these reviews and discussions, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and in the Companys Annual Report on Form 10-K for the fiscal year ended September 30, 2013.
John C. HunterChairman Daniel J. Heinrich |
Bill G. Armstrong James C. Johnson | |
John R. Roberts |
No portion of this Nominating and Executive Compensation Committee Report shall be deemed to be incorporated by reference into any filing under the Securities Act, the Exchange Act, or through any general statement incorporating by reference in its entirety the Proxy Statement in which this report appears, except to the extent that the Company specifically incorporates this report or a portion of it by reference. In addition, this report shall not be deemed to be filed under either the Securities Act or the Exchange Act.
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Name and Principal Position |
Year | Salary | Bonus (1) |
Stock Awards (2) |
Option Awards |
Non-Equity Incentive Plan Comp. (1)(3) |
Change in Pension Value and Nonquald Deferred Comp. Earnings (4) |
All Other Compensation (5)(6) |
Total ($) |
|||||||||||||||||||||||||||
Ward M. Klein |
2013 | $ | 1,100,000 | $ | 0 | $ | 4,150,822 | $ | 0 | $ | 1,839,943 | $ | 0 | $ | 387,537 | $ | 7,478,302 | |||||||||||||||||||
Chief Executive Officer | 2012 | $ | 1,091,667 | $ | 0 | $ | 4,000,049 | $ | 0 | $ | 1,676,125 | $ | 2,563,614 | $ | 282,197 | $ | 9,613,652 | |||||||||||||||||||
2011 | $ | 991,667 | $ | 0 | $ | 3,651,834 | $ | 0 | $ | 450,000 | $ | 1,041,563 | $ | 378,112 | $ | 6,513,176 | ||||||||||||||||||||
Daniel J. Sescleifer | 2013 | $ | 525,002 | $ | 0 | $ | 1,037,726 | $ | 0 | $ | 610,892 | $ | 93,464 | $ | 86,973 | $ | 2,354,057 | |||||||||||||||||||
Executive Vice President & Chief Financial Officer |
2012 | $ | 523,752 | $ | 0 | $ | 971,014 | $ | 0 | $ | 556,502 | $ | 77,188 | $ | 50,412 | $ | 2,178,868 | |||||||||||||||||||
2011 | $ | 507,090 | $ | 0 | $ | 1,081,376 | $ | 0 | $ | 183,600 | $ | 106,226 | $ | 71,621 | $ | 1,949,913 | ||||||||||||||||||||
David P. Hatfield | 2013 | $ | 525,036 | $ | 0 | $ | 830,231 | $ | 0 | $ | 610,932 | $ | 153,189 | $ | 90,444 | $ | 2,209,832 | |||||||||||||||||||
President & CEO, Energizer Personal Care |
2012 | $ | 523,787 | $ | 0 | $ | 986,318 | $ | 0 | $ | 556,538 | $ | 144,681 | $ | 59,273 | $ | 2,270,597 | |||||||||||||||||||
2011 | $ | 508,371 | $ | 0 | $ | 905,626 | $ | 0 | $ | 244,800 | $ | 185,561 | $ | 103,932 | $ | 1,948,290 | ||||||||||||||||||||
Alan R. Hoskins |
2013 | $ | 435,832 | $ | 0 | $ | 933,581 | $ | 0 | $ | 511,982 | $ | 133,291 | $ | 1,323,927 | $ | 3,338,613 | |||||||||||||||||||
President & CEO, Energizer Household Products | 2012 | $ | 367,076 | $ | 0 | $ | 450,064 | $ | 0 | $ | 413,400 | $ | 119,167 | $ | 692,171 | $ | 2,041,878 | |||||||||||||||||||
Peter J. Conrad | 2013 | $ | 375,002 | $ | 0 | $ | 800,974 | $ | 0 | $ | 327,264 | $ | 84,701 | $ | 47,739 | $ | 1,635,680 | |||||||||||||||||||
Vice President, Human Resources | 2012 | $ | 373,754 | $ | 0 | $ | 624,341 | $ | 0 | $ | 298,126 | $ | 75,717 | $ | 36,354 | $ | 1,408,292 |
36
37
38
Awards to the named executive officers, and to other key executives, were made in fiscal 2013 under three separate plans or programs:
| potential cash awards under our annual cash bonus program, dependent upon achievement of Company performance measures established at the beginning of the fiscal year, as described in more detail in Compensation Discussion and AnalysisElements of CompensationIncentive ProgramsAnnual Cash Bonus Program; |
| three-year restricted stock equivalent awards under the terms of our incentive stock plan, which include a performance component and a time-vesting component, as described in more detail in Compensation Discussion and AnalysisElements of CompensationIncentive ProgramsEquity Awards; and |
| Company-matching deferrals (payable in cash at retirement) under our deferred compensation plan, as described in more detail in the narrative to the Non-qualified Deferred Compensation Table below. |
GRANTS OF PLAN-BASED AWARDS TABLE
Estimated Future Payouts Under Non-Equity Incentive Plan Awards |
Estimated Future Payouts Under Equity Incentive Plan Awards (#) |
|||||||||||||||||||||||||||||||||||||||||
Name | Type of Award | Grant Date |
Date of Comp. Comm. Action(5) |
Threshold | Target | Maximum | Threshold | Target | Maximum | All Other Stock Awards: Number of Shares of Stock(#) |
All Other Option Awards: Number of Shares Underlying Options (#) |
Exercise Option |
Grant Date Fair Value of Stock and Option Awards(6) |
|||||||||||||||||||||||||||||
W.M. Klein |
Bonus: Annl.Perf. | 11/5/12(1) | $ | 126,500 | $ | 1,265,000 | $ | 2,530,000 | ||||||||||||||||||||||||||||||||||
Perf.Awd. | 12/10/12(2) | 5,289 | 26,444 | 52,888 | $ | 2,304,595 | ||||||||||||||||||||||||||||||||||||
Perf.Awd.: TimeVest | 12/10/12(3) | 22,667 | $ | 1,846,227 | ||||||||||||||||||||||||||||||||||||||
Company Match | 11/30/12(4) | 10/17/11 | 0 | $ | 0 | |||||||||||||||||||||||||||||||||||||
D.J. Sescleifer |
Bonus: Annl.Perf. | 11/5/12(1) | $ | 42,000 | $ | 420,000 | $ | 840,000 | ||||||||||||||||||||||||||||||||||
Perf.Awd. | 12/10/12(2) | 1,322 | 6,611 | 13,222 | $ | 576,149 | ||||||||||||||||||||||||||||||||||||
Perf.Awd.: TimeVest | 12/10/12(3) | 5,667 | $ | 461,577 | ||||||||||||||||||||||||||||||||||||||
Company Match | 11/30/12(4) | 10/17/11 | 0 | $ | 0 | |||||||||||||||||||||||||||||||||||||
D.P. Hatfield |
Bonus: Annl.Perf. | 11/5/12(1) | $ | 42,000 | $ | 420,000 | $ | 840,000 | ||||||||||||||||||||||||||||||||||
Perf.Awd. | 12/10/12(2) | 1,058 | 5,289 | 10,578 | $ | 460,937 | ||||||||||||||||||||||||||||||||||||
Perf.Awd.: TimeVest | 12/10/12(3) | 4,534 | $ | 369,294 | ||||||||||||||||||||||||||||||||||||||
Company Match | 11/30/12(4) | 10/17/11 | 0 | $ | 0 | |||||||||||||||||||||||||||||||||||||
A.R. Hoskins |
Bonus: Annl.Perf. | 11/5/12(1) | $ | 35,200 | $ | 352,000 | $ | 704,000 | ||||||||||||||||||||||||||||||||||
Perf.Awd. | 12/10/12(2) | 1,058 | 5,289 | 10,578 | $ | 460,937 | ||||||||||||||||||||||||||||||||||||
Perf.Awd.: TimeVest | 12/10/12(3) | 4,534 | $ | 369,294 | ||||||||||||||||||||||||||||||||||||||
Company Match | 11/30/12(4) | 10/17/11 | 1,396 | $ | 103,350 | |||||||||||||||||||||||||||||||||||||
P.J. Conrad |
Bonus: Annl.Perf. | 11/5/12(1) | $ | 22,500 | $ | 225,000 | $ | 450,000 | ||||||||||||||||||||||||||||||||||
Perf.Awd. | 12/10/12(2) | 926 | 4,628 | 9,256 | $ | 403,330 | ||||||||||||||||||||||||||||||||||||
Perf.Awd.: TimeVest | 12/10/12(3) | 3,967 | $ | 323,112 | ||||||||||||||||||||||||||||||||||||||
Company Match | 11/30/12(4) | 10/17/11 | 1,007 | $ | 74,532 |
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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
40
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name | Number
of (#) |
Number
of (#) Unexercisable |
Option Exercise Price ($) |
Option Expiration Date |
Number of Shares or Units of Stock That Have Not Vested (#) |
Market Value ($) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
Equity Plan Awards: That Have Not Vested ($) |
||||||||||||||||||||||||
W. M. Klein |
45,000 | 0 | $ | 49.18 | 1/13/15 | 71,958 | (1) | $ | 6,558,972 | 167,900 | (6) | $ | 15,304,085 | |||||||||||||||||||
38,000 | 0 | $ | 65.63 | 10/11/19 | ||||||||||||||||||||||||||||
D. J. Sescleifer |
25,000 | 0 | $ | 65.63 | 10/11/19 | 20,602 | (2) | $ | 1,877,872 | 40,718 | (7) | $ | 3,711,446 | |||||||||||||||||||
D. P. Hatfield |
|
5,000 30,000 |
|
|
0 0 |
|
$ $ |
46.13 65.63 |
|
|
10/18/14 10/11/19 |
|
17,184 | (3) | $ | 1,566,322 | 38,074 | (8) | $ | 3,470,445 | ||||||||||||
A. R. Hoskins |
12,500 | 0 | $ | 65.63 | 10/11/19 | 13,661 | (4) | $ | 1,245,200 | 25,622 | (9) | $ | 2,335,445 | |||||||||||||||||||
P. J. Conrad |
7,500 | 0 | $ | 65.63 | 10/11/19 | 14,217 | (5) | $ | 1,295,880 | 26,934 | (10) | $ | 2,455,034 |
41
42
OPTION EXERCISES AND STOCK VESTED
Option Awards | Stock Awards | |||||||||||||||
Name |
Number of Shares (#) |
Value Realized on Exercise ($) |
Number of Shares (#)(1)(2) |
Value Realized on ($) |
||||||||||||
W. M. Klein |
100,000 | $ | 4,426,460 | 66,020 | $ | 4,725,716 | ||||||||||
D. J. Sescleifer |
5,000 | $ | 212,971 | 16,871 | $ | 1,207,542 | ||||||||||
D. P. Hatfield |
10,000 | $ | 496,701 | 16,871 | $ | 1,207,542 | ||||||||||
A. R. Hoskins |
0 | $ | 0 | 10,677 | $ | 764,207 | ||||||||||
P. J. Conrad |
0 | $ | 0 | 10,736 | $ | 768,430 |
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(2) | Receipt of the following numbers of shares was deferred, at the election of each officer, until retirement or other termination of employment: |
| Mr. Klein, 26,000 |
| Mr. Sescleifer, 6,600 |
| Mr. Hatfield, 16,871 |
| Mr. Hoskins, 0 |
| Mr. Conrad, 0 |
44
45
PENSION BENEFITS TABLE
Name | Plan Name |
Number of (#)(1) |
Present Value ($)(2) |
Payments During Last ($) |
||||||||||
W.M. Klein |
Energizer Retirement Plan | 34 | $ | 1,388,735 | $ | 0 | ||||||||
Supplemental Executive Retirement Plan | 33 | $ | 10,673,421 | $ | 0 | |||||||||
D.J. Sescleifer |
Energizer Retirement Plan | 13 | $ | 408,821 | $ | 0 | ||||||||
Supplemental Executive Retirement Plan | 12 | $ | 687,760 | $ | 0 | |||||||||
D.P. Hatfield |
Energizer Retirement Plan | 28 | $ | 763,891 | $ | 0 | ||||||||
Supplemental Executive Retirement Plan | 27 | $ | 1,771,706 | $ | 0 | |||||||||
A.R. Hoskins |
Energizer Retirement Plan | 30 | $ | 911,091 | $ | 0 | ||||||||
Supplemental Executive Retirement Plan | 29 | $ | 1,060,790 | $ | 0 | |||||||||
P.J. Conrad |
Energizer Retirement Plan | 19 | $ | 559,496 | $ | 0 | ||||||||
Supplemental Executive Retirement Plan | 18 | $ | 620,249 | $ | 0 |
NON-QUALIFIED DEFERRED COMPENSATION
We have adopted several plans or arrangements that provide for the deferral of compensation on a basis that is not tax-qualified.
Deferred Compensation Plan
46
47
NON-QUALIFIED DEFERRED COMPENSATION TABLE
Name | Plan | Executive ($)(1) |
Registrant ($)(2) |
Aggregate Last FY ($)(3) |
Aggregate Distributions |
Aggregate Last FYE |
||||||||||||||||
W. M. Klein |
Defd Comp. Plan | $ | 0 | $ | 0 | $ | 3,775,464 | $ | 128,373 | $ | 19,532,356 | |||||||||||
Exec. S.I.P. | $ | 117,068 | $ | 59,221 | $ | 659,607 | $ | 0 | $ | 3,285,334 | ||||||||||||
Vested StockEquivs.(4) | $ | 1,851,706 | $ | 0 | $ | 2,446,341 | $ | 0 | $ | 12,254,432 | ||||||||||||
Total | $ | 1,968,774 | $ | 59,221 | $ | 6,881,412 | $ | 128,373 | $ | 35,072,122 | ||||||||||||
D.J. Sescleifer |
Defd Comp. Plan | $ | 0 | $ | 0 | $ | 219,940 | $ | 56,124 | $ | 4,373,106 | |||||||||||
Exec. S.I.P. | $ | 59,640 | $ | 33,356 | $ | 251,006 | $ | 0 | $ | 1,881,274 | ||||||||||||
Vested StockEquivs.(4) | $ | 470,038 | $ | 0 | $ | 728,047 | $ | 0 | $ | 3,658,039 | ||||||||||||
Total | $ | 529,678 | $ | 33,356 | $ | 1,198,993 | $ | 56,124 | $ | 9,912,419 | ||||||||||||
D. P. Hatfield |
Defd Comp. Plan | $ | 0 | $ | 0 | $ | 1,366,301 | $ | 0 | $ | 7,845,271 | |||||||||||
Exec. S.I.P. | $ | 47,394 | $ | 27,422 | $ | 165,033 | $ | 0 | $ | 735,200 | ||||||||||||
Vested StockEquivs.(4) | $ | 1,181,775 | $ | 0 | $ | 759,756 | $ | 0 | $ | 3,621,380 | ||||||||||||
Total | $ | 1,229,169 | $ | 27,422 | $ | 2,291,090 | $ | 0 | $ | 12,201,851 | ||||||||||||
A.R. Hoskins |
Defd Comp. Plan | $ | 413,400 | $ | 103,350 | $ | 615,880 | $ | 11,218 | $ | 3,645,646 | |||||||||||
Exec. S.I.P. | $ | 2,300 | $ | 3,213 | $ | 14,025 | $ | 0 | $ | 454,440 | ||||||||||||
Vested StockEquivs.(4) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
Total | $ | 415,700 | $ | 106,563 | $ | 629,905 | $ | 11,218 | $ | 4,100,086 | ||||||||||||
P.J. Conrad |
Defd Comp. Plan | $ | 298,126 | $ | 74,532 | $ | 532,444 | $ | 6,972 | $ | 6,507,495 | |||||||||||
Exec. S.I.P. | $ | 13,781 | $ | 9,094 | $ | 26,062 | $ | 0 | $ | 392,856 | ||||||||||||
Vested StockEquivs.(4) | $ | 0 | $ | 0 | $ | 53,571 | $ | 0 | $ | 273,876 | ||||||||||||
Total | $ | 311,907 | $ | 83,626 | $ | 612,077 | $ | 6,972 | $ | 7,174,227 |
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49
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
We have not entered into general employment agreements with any of our named executive officers, nor do we have executive severance plans or programs. However, equity awards under our 2000 and 2009 incentive stock plans and our deferred compensation plan provide for acceleration of vesting of certain awards in the event of certain terminations of employment. In addition, we have entered into change of control employment agreements with our named executive officers and certain of our other key employees which provide for severance compensation, acceleration of vesting, tax reimbursement and continuation of benefits upon certain qualified termination of employment following a change of control.
The information below reflects the value of acceleration or incremental compensation which each officer would receive upon the termination of his or her employment or upon a change in control. Because the value of awards and incremental compensation depend on several factors, actual amounts can only be determined at the time of the event.
The information is based on the following assumptions:
| the event of termination (death, permanent disability, involuntary termination without cause, or voluntary termination), or a change of control of the Company, occurred on September 30, 2013, the last day of our fiscal year; |
| the market value of our common stock on that date was $91.15 (the actual closing price on September 30, 2013); |
| each of the officers were terminated on that date; and |
| corporate and individual federal tax rates were 39.6%, Missouri state tax rate was 6%, Connecticut state tax rate (for Mr. Hatfield) was 6.7%, and FICA was 2.35%. |
The information does not reflect benefits that are provided under our plans or arrangements that do not discriminate in favor of executive officers and are available generally to all salaried employees such as amounts accrued under our savings investment plan, accumulated and vested benefits under our retirement plans (including our pension restoration plan and executive savings investment plan), health, welfare and disability benefits, and accrued vacation pay.
The information below also does not include amounts under our deferred compensation plan or executive savings investment plan that would be paid, or vested stock equivalents that would be issued, all as described in the Non-qualified Deferred Compensation Table, except to the extent that an officer is entitled to an accelerated benefit as a result of the termination.
Death, Disability or Termination of Employment (Other Than Upon a Change of Control)
Upon an officers death, permanent disability, involuntary termination other than for cause (defined as termination for gross misconduct), and, in some cases, retirement, the following plans or programs provide for acceleration of awards. Awards are accelerated for retirement after attainment of age 55 with 10 years of service if granted 12 or more months prior to retirement date. No awards are accelerated upon other voluntary termination or involuntary termination for cause. Performance awards vesting upon retirement are paid when results for the Performance Period are met.
Involuntary Termination |
Death | Disability | Retirement After Age 55 with 10 years of service | |||||
Three-year restricted stock awards granted 10/18/10 or 11/1/10, 11/7/11 and 12/10/12 | Forfeited | Accelerated | Accelerated | Pro Rata Vesting | ||||
Three-year performance awards granted 10/18/10 or 11/1/10, 11/7/11 and 12/10/12 | Forfeited | Accelerated | Accelerated | Pro Rata Vesting | ||||
Unvested 25% Company match |
Accelerated | Accelerated | Accelerated | Accelerated |
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Upon termination of employment for any reason, vested account balances in our deferred compensation plan are paid out in cash to the participant in either a lump sum, or over a five or ten year period, commencing six months from the date of termination.
In the event an officers employment is terminated due to permanent disability, he or she may also be entitled to benefits under our executive long-term disability plan, which pays a supplemental benefit equal to 60% of the amount by which the officers previous years salary and bonus exceeded $150,000. (Amounts below that figure are covered by our long-term disability plan, available generally to salaried U.S. employees.) As noted in the Summary Compensation Table, the Company pays the premiums for $40,000 of term life insurance for all U.S. employees, including the named executive officers.
Previously, upon retirement or death, the officer, or his or her surviving spouse, may have also been entitled to continued coverage under our executive health plan, which generally covers medical/dental/vision expenses and deductibles and co-pays not otherwise covered by our underlying medical insurance plan. However, in order to qualify for continued coverage under the executive health plan, the covered person must pay for retiree coverage under our underlying medical and dental insurance plans. Effective December 31, 2012, the Energizer Holdings, Inc. Executive Health Plan terminated. As such, current and former executives no longer have the opportunity to participate in this plan.
The value of awards which would be accelerated for our named executive officers upon death, disability, involuntary termination of employment or retirement as of September 30, 2013 is shown in the following chart. The value of accelerated restricted stock equivalents (both performance- and time-based) and 25% Company match for deferred annual bonus amounts reflects a stock price of $91.15. Stock market changes since September 30, 2013 are not reflected in these valuations.
Accelerated Awards | ||||||||||||
Officer Termination Events |
Restricted Stock Equivalents, |
Unvested 25% Company Match |
Total | |||||||||
W. M. Klein: 1 |
$ | 14,211,015 | $ | 0 | $ | 14,211,015 | ||||||
W. M. Klein: 2 |
$ | 0 | $ | 0 | $ | 0 | ||||||
W.M. Klein: 3 |
$ | 14,002,667 | $ | 0 | $ | 14,002,667 | ||||||
D. J. Sescleifer: 1 |
$ | 3,446,382 | $ | 209,349 | $ | 3,655,731 | ||||||
D. J. Sescleifer: 2 |
$ | 0 | $ | 209,349 | $ | 209,349 | ||||||
D. P. Hatfield: 1 |
$ | 3,222,609 | $ | 62,546 | $ | 3,285,155 | ||||||
D. P. Hatfield: 2 |
$ | 0 | $ | 62,546 | $ | 62,546 | ||||||
A.R. Hoskins: 1 |
$ | 2,168,641 | $ | 195,593 | $ | 2,364,234 | ||||||
A.R. Hoskins: 2 |
$ | 0 | $ | 195,593 | $ | 195,593 | ||||||
P.J. Conrad: 1 |
$ | 2,279,661 | $ | 195,015 | $ | 2,474,676 | ||||||
P.J. Conrad: 2 |
$ | 0 | $ | 195,015 | $ | 195,015 |
Termination Events:
1Death or permanent disability;
2Involuntary termination of employment other than for cause;
3Retirement following attainment of age 55 (Mr. Klein had attained age 55 as of September 30, 2013).
Change of Control of the Company
Our change of control employment agreements with each of the named executive officers have a term of three years from their effective date (which term is automatically extended every year beginning the first year for an
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additional year unless our Nominating and Executive Compensation Committee elects to terminate an agreement at least 90 days prior to renewal). Each of these agreements provides that the officer will receive severance compensation in the event of his or her involuntary termination (including voluntary termination for good reason), other than for cause, within three years following a change in control of the Company.
Termination for cause means a termination for willful breach of, or failure to perform, employment duties.
Good reason means, among other things, certain changes in the officers status or duties, failure to pay certain compensation or awards or benefits, relocation of his or her office, or improper termination.
Change of control includes, among other things, acquisition of specified amounts of shares by any person, certain changes in the composition of our incumbent Board of Directors, approval of business combinations under certain circumstances, or other matters approved by our Board.
Under the agreements, upon a change of control, each officer, even if not terminated, will receive a pro rata annual bonus (equal to the greater of either the target bonus for the year in which the change of control occurred, or the actual bonus for the preceding year) for the portion of the year occurring prior to a change of control.
The agreements also provide that upon a change of control, outstanding equity awards held by each officer will accelerate and vest in accordance with the terms of the awards, even if the awards have a higher threshold for a change of control. Our equity awards generally define a change of control as an acquisition of 50% or more of the outstanding shares of our common stock. The terms of our outstanding equity awards vary as to the portion of the unvested award that will accelerate and vest upon a change of control, as indicated below:
Three-year performance awards granted 10/18/10 or 11/1/10 and 11/7/11 | If the change of control occurs within 18 months of the date of grant, 50% of the equivalents vest. If the change of control occurs after 18 months of the date of grant, awards will vest at the greater of (i) 50% of the equivalents or (ii) the percentage of total equivalents which would have vested had the performance period ended as of the last fiscal quarter prior to the change of control and the performance been calculated on that period. | |
Three-year performance awards granted 12/10/12 | If a change of control occurs, awards will vest at the greater of (i) 50% of the total performance equivalents granted or (ii) the percentage of total performance equivalents which would have vested had the performance period ended on the date the change of control occurs and the extent to which performance goals have been met. | |
Three-year time based awards granted 10/18/10 or 11/1/10, 11/7/11 and 12/10/12 | 100% vest upon change of control |
If the officer is terminated within 36 months of the change of control, the severance compensation payable under the agreements consists of:
| a lump sum payment in an amount equal to three times the officers annual base salary and target bonus (defined as the most recent five-year actual bonus percentages multiplied by the greater of base salary at either termination or change of control); |
| a pro rata portion of the officers target annual bonus for the year of termination; |
| lump-sum retirement plan payments representing the additional years of age and service credits equal to the severance period; |
| the continuation of other health, dental and welfare benefits for a period of three years following the officers termination; and |
| Company match on retirement plan payments for the severance period. |
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No severance payments under the agreements would be made in the event that an officers termination is voluntary (other than for good reason), is due to death, disability or normal retirement, or is for cause. For a period of three years following termination of employment, the officers are each bound by a covenant not to compete, a non-solicitation covenant, and a covenant of confidentiality.
Other than for Mr. Hoskins, in the event that it is determined that a golden parachute excise tax is due under the IRC, we will, if total benefits payable to the officer are within 10% of the threshold for benefits at which the excise tax is triggered, reduce benefits to the point at which the tax will no longer be due, or, if total benefits are in excess of 10% of the threshold, reimburse the officer for the amount of such tax, including any excise or income taxes associated with such reimbursement. For Mr. Hoskins, in the event that it is determined that a golden parachute excise tax is due under the IRC, we will reduce the aggregate amount of the payments payable to an amount such that no such excise tax will be paid if the resulting amount would be greater than the after-tax amount if the payments were not so reduced.
Payments of cash would be made in a lump sum no sooner than six months following termination of employment, and benefits would be provided for a three-year period following termination, or if such continuation of benefits would not be possible under our benefit programs, the value of such benefits would also be paid in lump sum no sooner than six months following termination.
Estimated Payments and Benefits
Based on the assumptions set out above, the following chart sets forth estimated payments to our named executive officers upon termination following a change of control. If a change of control occurs but their employment is not terminated, the agreements provide a more limited value, as shown in the second chart below. The value of accelerated restricted stock equivalents, performance awards and 25% Company match reflects a stock price of $91.15 (the closing price of our common stock on September 30, 2013). Stock market declines and vesting and forfeitures of unvested restricted stock equivalents since September 30, 2013 are not reflected in these valuations.
Accelerated or Additional BenefitsTermination following Change of Control | ||||||||||||||||||||||||||||
Cash Severance |
Retirement Benefits |
25% Company Match |
Restricted Stock Equivs., Three-Year Performance Awards |
Benefits | Excise Tax Gross-Up/ Reduction |
Total | ||||||||||||||||||||||
W. M. Klein |
$ | 8,839,584 | $ | 3,039,045 | $ | 0 | $ | 14,211,015 | $ | 78,547 | $ | 8,114,440 | $ | 34,282,631 | ||||||||||||||
D. J. Sescleifer |
$ | 3,430,702 | $ | 417,024 | $ | 209,349 | $ | 3,446,382 | $ | 78,547 | $ | 2,296,466 | $ | 9,878,470 | ||||||||||||||
D. P. Hatfield |
$ | 3,517,681 | $ | 615,400 | $ | 62,546 | $ | 3,222,609 | $ | 78,547 | $ | 2,574,359 | $ | 10,071,142 | ||||||||||||||
A. R. Hoskins |
$ | 2,928,889 | $ | 470,519 | $ | 195,593 | $ | 2,168,641 | $ | 60,688 | $ | 0 | $ | 5,824,330 | ||||||||||||||
P. J. Conrad |
$ | 2,118,232 | $ | 315,985 | $ | 195,015 | $ | 2,279,661 | $ | 78,547 | $ | 1,642,553 | $ | 6,629,993 |
For purposes of the calculation of the excise tax gross-up in these charts, the ascribed value of accelerated vesting is based on three assumptions:
| Lapse-of-further-service portion is equal to the gain at the change of control date multiplied by 1% for each full month vesting is accelerated; |
| Early receipt portion is equal to the difference between the gain at normal vesting and the present value of the gain at the time vesting is accelerated (present value based on 120% of the IRS Applicable Federal Rates, compounded semi-annually: 0.38% for short-term and 2.30% for mid-term, using October 1, 2013 rates); and |
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| Performance restricted stock equivalents, under which vesting is contingent upon achievement of certain performance goals and continued employment, have been valued assuming a 100% parachute value for the portions of awards that will vest. |
Accelerated Awards Upon a Change of Control (No Termination of Employment) |
||||||||||
Restricted Stock Equivalents, Three-Year Performance Awards |
Excise Tax Gross-Up |
Total | ||||||||
W. M. Klein |
$ | 14,211,015 | $0 | $ | 14,211,015 | |||||
D. J. Sescleifer |
$ | 3,446,382 | $0 | $ | 3,446,382 | |||||
D. P. Hatfield |
$ | 3,222,609 | $0 | $ | 3,222,609 | |||||
A. R. Hoskins |
$ | 2,168,641 | $0 | $ | 2,168,641 | |||||
P. J. Conrad |
$ | 2,279,661 | $0 | $ | 2,279,661 |
ITEM 3. ADVISORY VOTE ON EXECUTIVE COMPENSATION
As required by Section 14A of the Exchange Act, we are asking our shareholders to provide non-binding advisory approval of the compensation of our named executive officers, as disclosed pursuant to the compensation disclosure rules of the SEC. We encourage shareholders to review the Compensation Discussion and Analysis for details regarding our executive compensation programs. Our 2013 shareholder advisory vote on executive compensation was approved by a significant majority of shareholders, with approximately 90.6% of the votes cast in favor of the advisory resolution at our 2013 Annual Meeting.
This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices that we use. We believe that our executive compensation program was designed appropriately and is working to ensure managements interests are aligned with our shareholders interests. Our compensation programs are designed to enable and reinforce our Companys overall business strategy by aligning pay with achievement of short and long term financial and strategic objectives, while providing a competitive level of compensation which is needed to recruit, retain and motivate talented executives critical to our success. In particular:
| Effective following the end of our 2012 fiscal year, we eliminated the Company match for deferrals of salary and bonus by executives as well as the opportunity for executives to defer salary and bonus under the deferred compensation plan. |
| Effective as of December 31, 2012, we terminated the Companys executive health plan. As such, current and former executives will no longer have the opportunity to participate in this plan. |
| For the 2013 fiscal year, the Nominating and Executive Compensation Committee approved multiple metrics in the long-term performance incentive program, including: |
¡ | adjusted return on invested capital, to support the Companys focus on cash flow, including improved working capital performance, and to emphasize the importance of capital allocation decisions; |
¡ | cumulative adjusted EBITDA, to reward growth in core operating earnings; and |
¡ | once the initial award amount is determined, the performance equivalent awards will then be subject to adjustment based on a third new metric, the Companys relative total shareholder return during the three year performance period based on a relevant group of industrial and consumer goods companies. |
| The Nominating and Executive Compensation Committee also approved multiple metrics in the fiscal 2013 short-term performance incentive program: |
¡ | Company-wide cost savings associated with restructurings, which constitutes 20% of the weighting, to focus on delivering the cost savings to investors announced by the Company, which will be paid annually as cost savings for the multi-year restructuring project are achieved; |
¡ | adjusted earnings per share, which constitutes 30% of the weighting, to encourage the executives to deliver on bottom-line results; |
¡ | Company-wide pre-tax operating profit, which constitutes 30% of the weighting, to reward operating performance; and |
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¡ | net working capital as a percentage of sales, which constitutes 20% of the weighting, to encourage improved management of working capital. |
| Our Nominating and Executive Compensation Committee also determined to eliminate the individual performance component of our named executive officers annual cash bonus for the 2013 fiscal year, so that bonus was entirely based on the achievement of the objective, Company-wide performance goals. |
The Board believes the Companys overall compensation process effectively implements its compensation philosophy and achieves its goals. Accordingly, the Board recommends a vote FOR the adoption of the following advisory resolution, which will be presented at the Annual Meeting:
RESOLVED, that the shareholders of Energizer approve, on an advisory basis, the compensation of the named executive officers, as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables and the accompanying footnotes and narratives.
Vote Required. The affirmative vote of a majority of the voting power represented in person or by proxy and entitled to vote is required for approval of the executive compensation.
The Board of Directors recommends a vote FOR the approval of the executive compensation of our named executive officers as described in this proxy statement under Executive Compensation.
ITEM 4. PROPOSAL TO AMEND AND RESTATE THE COMPANYS RESTATED
ARTICLES OF INCORPORATION TO PROVIDE FOR THE DECLASSIFICATION
OF THE BOARD OF DIRECTORS
The Board unanimously has approved, and recommends that the Companys shareholders approve, an amendment and restatement of the Companys Restated Articles of Incorporation (the Articles of Incorporation) to provide for the phased-in implementation of annual elections for all directors and the resulting phased-in elimination of the classified Board structure. The proposed amendment and restatement would revise Article Six of the Articles of Incorporation. The full text of the proposed amendment and restatement of the Articles of Incorporation is set forth in Appendix A to this proxy statement (proposed new text is underlined twice and proposed deleted text is crossed out) (hereinafter referred to as the Amended and Restated Articles of Incorporation).
Background
Our current classified Board structure has been in place since we became a public company in 2000. The Articles of Incorporation provide that the Board shall be divided into three classes, as nearly equal in number as possible. Directors in each class are elected every three years to three year terms, with the term of one class expiring at each annual meeting.
Our Board is committed to adopting governance practices that the Board believes are the most beneficial to the Company and its shareholders. Since the time of our spin-off from Ralston Purina Company in 2000, the Board has believed that a classified board structure was an important piece of the Companys governance structure in order to promote continuity and stability, and was in the best interests of the Company and its shareholders. The Board also believed that the classified board structure has facilitated our directors understanding of the Company and its long-term strategic planning, enhanced the independence of our directors from both management and shareholder special interests and protected the Company against unfair or abusive takeover practices.
Over the past thirteen years, the Board has thoughtfully considered and executed corporate governance actions which it has determined are the most beneficial to the Company and its shareholders. In recent years, the Companys poison pill has expired, the Board has adopted a policy that eliminates tax gross-up payments in future change of control employment agreements, and the Board has modified other policies that the Board no longer deemed in the best interests of the Company and its shareholders. The Board recognizes that many investors view classified boards as having the effect of reducing the accountability of directors to shareholders because
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classified boards limit the ability of shareholders to evaluate and elect all directors on an annual basis. The election of directors is a primary means for shareholders to influence corporate governance policies and to hold management accountable for implementing those policies. After substantial consideration of the various positions for and against a classified board, the Board has determined that declassification of the Board at this time is in the best interests of the Company and its shareholders.
Proposed Amended and Restated Articles of Incorporation
If the Amended and Restated Articles of Incorporation are approved, then commencing with the class of directors standing for election at the Companys 2015 Annual Meeting, directors will stand for election for one year terms. The term of office for each director elected at the 2015 Annual Meeting and thereafter will expire at the next succeeding annual meeting of shareholders and when his or her successor is elected and qualified or upon his or her earlier death, resignation or other cause for removal. The approval of the Amended and Restated Articles of Incorporation would not shorten the terms to which our shareholders have previously elected directors. Thus, directors elected at the 2013 Annual Meeting will continue to have terms that expire at the 2016 Annual Meeting and directors elected under Item 1 at this Annual Meeting will have terms that expire at the 2017 Annual Meeting.
If the Amended and Restated Articles of Incorporation are approved, beginning with our 2017 Annual Meeting, and at each annual meeting thereafter, our entire Board would stand for election for a one year term, and there would no longer be any class designation for our directors. If there is a vacancy in the Board at or following the 2015 Annual Meeting, because the number of directors is increased or otherwise, any director elected to fill such vacancy would hold office for a term expiring at the next annual meeting. If the Amended and Restated Articles of Incorporation are not approved, then the Board will remain classified.
This general description of the proposed changes to the Articles of Incorporation is qualified in its entirety by reference to the proposed Amended and Restated Articles of Incorporation set forth in Appendix A to this proxy statement. If the Amended and Restated Articles of Incorporation are approved by the shareholders, then the Amended and Restated Articles of Incorporation will become effective upon their filing with the Missouri Secretary of State. The Board also has adopted corresponding amendments to our Amended Bylaws which will become effective only if the Amended and Restated Articles of Incorporation are approved by the shareholders. If the Amended and Restated Articles of Incorporation are not approved by the shareholders, then the Articles of Incorporation and the Amended Bylaws will remain unchanged and the Board will remain classified.
Vote Required. The affirmative vote of two-thirds of the holders of record of outstanding shares of common stock of the Company is required to amend and restate the Articles of Incorporation.
The Board of Directors recommends a vote FOR the amendment and restatement of the Articles of Incorporation to declassify the Board of Directors.
ITEM 5. PROPOSAL TO AMEND AND RESTATE THE COMPANYS AMENDED
AND RESTATED 2009 INCENTIVE STOCK PLAN
The Board is asking you to approve the amendment and restatement of the Energizer Holdings, Inc. Amended and Restated 2009 Incentive Stock Plan (the 2009 Plan) to increase the maximum number of shares authorized for issuance under the 2009 Plan by an additional 4,000,000 shares (for a total of 12,000,000 authorized shares) and to make other changes as described below. The Board approved the proposed share increase and these other changes to the 2009 Plan on November 4, 2013, subject to shareholder approval at the Annual Meeting. The changes to the 2009 Plan are summarized below and the full text of the Energizer Holdings, Inc. Second Amended and Restated 2009 Incentive Stock Plan (the Second Amended Plan) is attached to this proxy statement as Appendix B (proposed new text is underlined twice and proposed deleted text is crossed out). Because this is a summary, it may not contain all the information that may be important to you. You should read Appendix B carefully before you decide how to vote on this proposal.
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Our shareholders approved the original 2009 Incentive Stock Plan in January 2009, and approved the 2009 Plan in January 2011. The 2009 Plan has a term of ten years and currently authorizes the grant of up to 8,000,000 shares of our common stock over that period. The purpose of the 2009 Plan is to promote the interests of the Company and its shareholders by:
| attracting and retaining key employees, |
| tying the compensation of key employees to the performance of the Company, and |
| providing an opportunity for participants to increase their holdings of common stock. |
The 2009 Plan permits the Board to grant stock options and other stock awards to individual directors, if the Board decides to do so. In addition, under the 2009 Plan, we have the ability to grant performance-based compensation awards that meet the requirements of Section 162(m) of the Internal Revenue Code (the Code) in order to preserve our ability to receive federal income tax deductions for the awards. As of November 15, 2013, the closing price of our common stock on the New York Stock Exchange composite index was $106.07.
The Board believes that our traditional policy of providing employees and non-employee directors with equity compensation (and thereby additional incentive and proprietary interest in our success) has been a material factor in our ability to attract and retain highly talented executives and non-employee directors, as well as maintain a performance-oriented culture.
Additional Shares Available for Issuance Under the Second Amended Plan
Our Board and management have determined that, based upon our historical grant rates, the number of shares remaining for issuance under the 2009 Plan will not permit us to continue issuing equity awards in the manner we have historically made such awards. If the Second Amended Plan is not approved by our shareholders, we believe our ability to attract, retain and motivate the talent we need to compete in our industry will be seriously and negatively impacted, which could affect our long-term success. Our Board thus believes that the Second Amended Plan is in the best interests of our shareholders so that the Company can continue to attract and retain highly talented executives, employees and non-employee directors.
The Board and the Nominating and Executive Compensation Committee considered a number of factors in determining the amount of additional shares that could be issued under the Second Amended Plan, including: (1) the number of shares remaining available under the Plan for future awards; (2) the number of outstanding stock options and stock appreciation rights outstanding; (3) the Companys historical burn rate; (4) the Companys historical overhang; and (5) the Companys historical amount of equity awards granted in the past three fiscal years. These factors are discussed below:
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Outstanding Awards and Remaining Share Availability. Set forth below is a table which summarizes certain terms of the equity grants made by the Company under the Energizer Holdings, Inc. 2000 Incentive Stock Plan (the 2000 Plan) and the 2009 Plan as of November 15, 2013:
Aggregate number of stock options and stock appreciation rights outstanding under all of the Companys incentive plans (including the 2009 Plan) |
223,684 | |||
Weighted average exercise price of all outstanding stock options and stock appreciation rights under all of the Companys incentive plans (including the 2009 Plan) |
$ | 59.51 | ||
Weighted average remaining term of all outstanding stock options and stock appreciation rights under all of the Companys incentive plans (including the 2009 Plan) |
4.07 years | |||
Aggregate number of full-value awards under all of the Companys incentive plans (including the 2009 Plan) that have not vested or been earned |
1,513,239 | |||
Total number of shares available for grant under the 2009 Plan(1) |
2,091,066 |
Burn Rate. One measure used by the Board and the committee to calculate the impact of the 2000 Plan and the 2009 Plan is burn rate. Burn rate is a measure of dilution that shows how rapidly a company is depleting its shares reserved for equity compensation plans. As set forth in the table below, our burn rate for the last three fiscal years was calculated using International Shareholder Services, Inc.s (ISS) publicly available burn rate methodology, which is: (i) the amount of options granted in a fiscal year, plus (ii)(a) the full value awards (i.e., restricted stock) granted as reported in our 10-K for such fiscal year, multiplied by (b) 2.5, our full value award multiplier, divided by (iii) our weighted average total common shares outstanding at the end of such fiscal year. Our full value award multiplier of 2.5 was determined from ISSs publicly available guidelines, which indicate that based on our annual stock price volatility, one full value award counts as 2.5 option shares. As set forth in the table below, over the past three years, our annual burn rate has averaged 2.58%, which is below the industry burn rate cap of 2.82%.
Options Granted |
Full Value Awards Granted |
Full Value Award Multiplier |
Weighted Average Total Common Shares Outstanding at Fiscal Year End |
Burn Rate (%) |
||||||||||||||||
Fiscal Year Ended September 30, 2013 |
0 | 500,000 | 2.5 | 62,100,000 | 2.01 | % | ||||||||||||||
Fiscal Year Ended September 30, 2012 |
0 | 760,000 | 2.5 | 64,900,000 | 2.93 | % | ||||||||||||||
Fiscal Year Ended September 30, 2011 |
0 | 780,000 | 2.5 | 69,600,000 | 2.80 | % | ||||||||||||||
Annual Burn Rate Three Year Average | 2.58 | % |
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Overhang. An additional measure used by the Board and the committee to measure the cumulative impact of the 2000 Plan and the 2009 Plan is overhang. As shown in the table below, our overhang was calculated by taking (i) the total number of unexercised stock options, unvested restricted stock and vested deferred stock at the end of a fiscal year, divided by (ii) the weighted average total common shares outstanding at the end of such fiscal year. As set forth in the table below, over the past three fiscal years, our overhang has averaged 4.08%.
Unexercised Stock Options, Unvested Restricted Stock and Vested Deferred Stock |
Weighted Average Total Common Shares Outstanding at Fiscal Year End |
Overhang (%) |
||||||||||
Fiscal Year Ended September 30, 2013 |
2,150,342 | 62,100,000 | 3.46 | % | ||||||||
Fiscal Year Ended September 30, 2012 |
2,914,797 | 64,900,000 | 4.49 | % | ||||||||
Fiscal Year Ended September 30, 2011 |
2,982,421 | 69,600,000 | 4.29 | % | ||||||||
Annual Overhang Three Year Average |
4.08 | % |
Historical Amount of Equity Awards Granted. The total number of shares subject to equity awards granted in each of the last three fiscal years, including shares forfeited or cancelled, based on a 1.95 to 1 ratio as set forth in the 2009 Plan, were approximately 975,000 shares in fiscal year 2013, approximately 1,482,000 shares in fiscal year 2012, and approximately 1,521,000 shares in fiscal year 2011, or an average of approximately 1,326,000 shares per fiscal year. Assuming continuation at such three-year average, the Company would no longer have any shares remaining for issuance under the 2009 Plan by the end of fiscal year 2014. Thus, the Board and the Nominating and Executive Compensation Committee decided that it is appropriate to increase the number of shares available for issuance under the 2009 Plan at this time. They believe the proposed increase of 4,000,000 shares that could be issued under the Second Amended Plan would secure an adequate number of shares to fund restricted stock awards at a 1.95 to 1 ratio for approximately three years.
Our Board and the Nominating and Executive Compensation Committee believe that the proposed 4,000,000 shares are a reasonable increase in shares of common stock available for issuance under the Second Amended Plan, which would allow us to continue awarding equity incentives, an important part of our overall compensation program.
Best Practices Under the Plan
The Second Amended Plan reflects our commitment to best practices, including:
| No Evergreen Features. The maximum number of shares that can be issued under the Second Amended Plan is fixed and cannot be increased without shareholder approval. |
| No Repricing or Reload Rights. The Second Amended Plan prohibits the repricing of outstanding stock options or substituting lower-priced stock options for outstanding higher-priced options without shareholder approval. Additionally, the Second Amended Plan prohibits the grant of any options that contain so-called reload rights, which are provisions entitling the option recipient to the automatic grant of additional options in connection with the exercise of the original option. |
| Administration by Nominating and Executive Compensation Committee. The Second Amended Plan is administered by the Boards Nominating and Executive Compensation Committee, which consists solely of independent, non-employee directors. The committee has the authority to select employees to receive awards, to determine the types of awards and the number of shares of common stock covered by awards, and to set the terms and conditions of awards. However, the full Board of Directors will determine the amount, terms and conditions of restricted stock equivalent awards, stock options or other stock awards granted to directors. |
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Other Proposed Changes to the Plan
In addition to increasing the number of shares for issuance under the 2009 Plan, the amendments to the 2009 Plan would, among other things:
| clarify that the fair market value of our common stock will be determined on the immediately following day if our common stock is not traded on the date at issue; |
| remove phantom stock options from the 2009 Plan; |
| add a definition of Restricted Equivalent Awards to the 2009 Plan, which includes a right to receive shares of common stock or cash equal to either (i) a set number of shares of common stock or (ii) a number of shares of common stock determined under a formula or other criteria, as of specified vesting and/or payment dates. An award of Restricted Stock Equivalents may entitle the holder to an amount of cash dividends that have accrued on shares of common stock issued to the holder since the date of grant only if the related Restricted Stock Equivalents vest; |
| clarify the definition of Termination for Cause to specify that an employees willful engagement in gross misconduct must materially injure the Company (as determined in good faith by the Nominating and Executive Compensation Committee), or the employee must be convicted of a felony or enter a plea of nolo contendere to such a crime in order for his or her termination to be considered for cause; |
| provide that consultants and advisors to the Company or an affiliate of the Company selected by the Nominating and Executive Compensation Committee also are eligible to receive awards under the 2009 Plan; |
| clarify that the following will not be applied to reduce the total number of shares available for awards under the 2009 Plan: (i) dividends or dividend equivalents paid in cash in connection with outstanding awards; (ii) any shares of common stock subject to an award which is forfeited, cancelled, terminated, expires or lapses; (iii) shares of common stock and any awards which are granted through the settlement, assumption, or substitution of outstanding awards previously granted, or through obligations to grant future awards, as a result of an acquisition of the employing company with or by the Company; and (iv) with respect to awards that by their terms will be settled in cash, the number of shares on which the award is based; |
| clarify the ultimate discretion of the Board to determine employees eligible to receive awards and the amount and type of such awards, and to administer the 2009 Plan; |
| give the Nominating and Executive Compensation Committee (or, if no committee has been appointed, the Board) the authority to delegate administration of the 2009 Plan to a Board committee or a sub-committee; |
| provide that the maximum annual cash award that may be granted to an employee or director during one fiscal year in performance-based awards may not exceed $20 million; |
| permit the Nominating and Executive Compensation Committee to include provisions in an award agreement to address treatment of the award in the event of a change of control of the Company, as defined in the 2009 Plan. In the event of a change of control, the committee also may cancel any outstanding awards and pay the holders thereof the value of such awards in cash or stock, or provide for the assumption of or issuance of substitute awards with substantially the same terms; |
| add restrictions on the exercise price and exercisability of an incentive stock option if at the time such option is granted the employee owns more than 10% of the voting power of the Company; |
| specify how all actions related to stock-related deferred compensation must satisfy the requirements of Section 409A of the Code; |
| update the performance-based criteria used to develop performance goals for awarding performance-based awards intended to be exempt from the limitations of Section 162(m) of the Code to covered employees; |
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| add that in addition to the option of reducing the number of shares of common stock payable under an award, the Company shall satisfy any tax withholding obligations resulting from recipients participation in the 2009 Plan by any of the following additional options: (1) withholding from the recipients compensation; (2) requiring the recipient to make a cash payment to the Company before receiving shares or cash pursuant to an award; (3) if the award is settled in cash, withholding from the cash settlement; (4) selling shares of common stock on the market; or (5) any other means set forth in the award agreement; |
| modify the amendment provision to remove the restriction that no amendment may withdraw the authority of the Nominating and Executive Compensation Committee to administer the 2009 Plan; |
| clarify that any award will be subject to such deductions and clawbacks as may be required to be made pursuant to law or any Company policy, and that any award shall be subject to any non-compete provisions under the terms of the award agreement or any other agreement or policy adopted by the Company; |
| clarify that the terms of the 2009 Plan shall be subject to construction under the laws of the State of Missouri; |
| authorize the Nominating and Executive Compensation Committee to establish sub-plans under the 2009 Plan for purposes of satisfying laws of jurisdictions in which the Company intends to grant awards; |
| authorize the Nominating and Executive Compensation Committee to grant awards under the 2009 Plan in substitution for awards held by employees of other corporations who are about to become employees, or whose employer is about to become an affiliate, of the Company due to a merger or acquisition with the Company; and |
| clarify that the Nominating and Executive Compensation Committees determinations under the 2009 Plan need not be uniform and may be made selectively among persons who are eligible to receive, or who actually receive, awards. |
A summary of the principal features of the 2009 Plan, as proposed to be amended and restated under this proposal, appears below. This summary is not a complete description of all provisions of the Second Amended Plan and is qualified in its entirety by the specific language of the Second Amended Plan attached as Appendix B hereto.
Vote Required. The affirmative vote of a majority of the voting power represented in person or by proxy and entitled to vote is required for approval of the amendment and restatement of the 2009 Plan.
The Board of Directors recommends a vote FOR the approval of the amendment and restatement of the 2009 Plan.
Description of the Second Amended Plan
Administration
As noted above, the Second Amended Plan is administered by the Boards Nominating and Executive Compensation Committee. The committee (or the Board, if it so determines in its sole discretion or in the absence of the Committee) will have the following administrative powers under the Second Amended Plan:
| The committee (or Board) shall determine the employees (or directors) eligible to receive awards, and the amount, type, and terms of each award. |
| The committee (or Board) may rely on reports, opinions or statements of officers or employees, as well as those of counsel, public accountants, and other professionals or experts. |
| The committees (or Boards) determinations are final, conclusive, and binding on all parties. |
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| The committee (or Board) has full power and discretionary authority to construe and interpret the Second Amended Plan, establish rules and regulations, and perform all other acts it believes reasonable and proper. |
The committee, or Board if no committee has been appointed, may delegate all or some of its responsibilities and administrative powers under the Second Amended Plan to committees or subcommittees of one or more members of the Board, subject to resolutions adopted from time to time by the Board. Any authority granted to the committee may also be exercised by the Board or another committee of the Board, except to the extent that the grant or exercise of such authority would cause any award intended to qualify for favorable treatment under Code Section 162(m) to cease to qualify for such treatment. To the extent that any permitted action taken by the Board conflicts with action taken by the committee, the Board action shall control. To the extent the Board has delegated any authority under the Second Amended Plan to another committee of the Board, such authority shall not be exercised by the committee unless expressly permitted by the Board in connection with such delegation.
Eligible Participants
| Any employee or officer of the Company or any of its subsidiaries, and consultants and advisors to the Company or an affiliate (approximately 15,000 people) are eligible for any award under the Second Amended Plan if selected by the committee. |
| Any of the non-employee directors of the Company (10 people) is eligible to receive restricted stock equivalents, stock options or other stock awards under the Second Amended Plan if authorized by the full Board of Directors. |
Shares Authorized. As proposed, the number of shares of common stock which are authorized for awards under the Second Amended Plan is 12,000,000. The number of shares authorized is subject to certain adjustments to reflect, for example, stock splits or other corporate restructurings. The pool of authorized shares is a fungible pool, meaning that it may be used for grants of restricted stock and stock equivalent awards, including performance-based awards, as well as for stock options or stock appreciation rights. However, if restricted stock and stock equivalent awards are granted, they will count as utilizing 1.95 of the authorized shares for each share actually granted, while options and stock appreciation rights will count as utilizing one share for each option share actually granted.
If any award is forfeited or expires, all shares which were not issued under the award will become available for additional awards under the Second Amended Plan. However, the following shares will not increase the pool of authorized shares available for awards under the Second Amended Plan:
| shares of common stock tendered as full or partial payment to the Company upon exercise of options, |
| shares reserved for issuance upon grant of stock appreciation rights (SARs), to the extent the number of reserved shares exceeds the number of shares actually issued upon exercise of the SARs, and |
| shares withheld by the Company in satisfaction of withholding obligations upon the lapse of restrictions on restricted stock or stock equivalents or upon any other payment or issuance of shares under the Second Amended Plan. |
Any awards that may be payable in cash will not be counted against the reserve unless the actual payment is made in shares of common stock instead of cash.
The following will not be applied to reduce the total number of shares available for awards under the Second Amended Plan:
| dividends paid in cash in connection with outstanding awards; |
| any shares of common stock subject to an award which is forfeited, cancelled, terminated, expires or lapses; and |
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| shares of common stock and any awards which are granted through the settlement, assumption, or substitution of outstanding awards previously granted, or through obligations to grant future awards, as a result of an acquisition of the employing company with or by the Company. |
Maximum Number of Shares. The maximum number of shares of common stock that may be the subject of performance-based awards for purposes of Section 162(m) of the Code (excluding stock options and stock appreciation rights) granted under the Second Amended Plan to an employee or director during any one fiscal year is 500,000. The maximum number of shares of common stock that may be the subject of stock options and stock appreciation rights granted to any individual during any one fiscal year is also 500,000.
Types of Awards. The Second Amended Plan permits the grant of a variety of different types of awards:
| restricted stock, stock equivalent awards, and restricted equivalent awards, including performance-based awards; |
| stock options, including options with performance conditions; |
| stock appreciation rights; and |
| other awards valued by reference to our common stock. |
Awards may be granted for any amount of cash consideration or for no cash consideration as long as legal requirements are met.
Restricted Stock, Stock Equivalent Awards and Restricted Equivalent Awards: Restricted stock awards are awards of stock that are subject to forfeiture during a pre-established period if certain conditions (for example, continued employment or attainment of pre-determined performance goals) are not met. The terms of a restricted stock award are determined by the Nominating and Executive Compensation Committee (or, for directors, by the Board) and are set forth in an award agreement. Restricted shares may not be sold, assigned, transferred, pledged or otherwise disposed of while the shares are subject to forfeiture. Restricted equivalent awards are awards to receive shares of common stock or cash equal to either a set number of shares of common stock or a number of shares of common stock determined under a formula or other criteria, as of specified vesting and/or payment dates. Restricted stock equivalent awards may be settled in cash, shares of common stock or a combination of cash and shares, as determined by the Nominating and Executive Compensation Committee and as set forth in the award agreement. An employee or director who receives restricted stock equivalents shall have no ownership interest in the shares of common stock to which the restricted stock equivalents relate unless and until payment with respect to such restricted stock equivalents is actually made in shares of common stock. Their terms are also approved by the committee or the Board, and they also may not be sold, assigned or transferred during the restricted period. At the time when a restricted stock award or restricted stock equivalent vests and/or becomes payable, the Company shall pay, unless the award agreement provides otherwise, the holder the amount of cash dividends that have accrued on shares of common stock issued to the holder under the terms of the award since the date of grant.
Stock Options: The Nominating and Executive Compensation Committee or Board may grant stock options that qualify as incentive stock options under Section 422 of the Code (ISOs) or options that do not so qualify (Non-Qualified Options).
All options granted are subject to the following:
| Options are not exercisable (unless accelerated) for at least one year after they are granted, and they are not exercisable more than ten years after grant. |
| The exercise price will not be less than the fair market value of our common stock on the grant date. |
| The Nominating and Executive Compensation Committee or the Board will determine the vesting schedule of options granted under the Second Amended Plan and may also impose additional conditions on exercise, including performance goals. |
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| The exercise price must be paid at the time the option is exercised in either cash or in other shares of common stock or through a broker cashless exercise program authorized by the Company; through Net Exercise or Swap Exercise as described in the Second Amended Plan, or by any other means approved by the Nominating and Executive Compensation Committee prior to the date of the option exercise. |
Stock Appreciation Rights: The holder of a SAR is entitled to receive the excess of the fair market value of a specific number of shares on the date of exercise over the value of those shares on the date the award was granted. Payment of the excess will be in cash unless the Nominating and Executive Compensation Committee or the Board elects to make payment in shares of common stock. If granted, the committee or the Board would determine the vesting schedule of SARs granted under the 2009 Amended Plan and could impose additional conditions on exercise.
Except for adjustments to reflect stock splits, mergers and other certain corporate transactions and restructurings, stock options and SARs may not be repriced (whether through modification of the exercise or grant price after the date of grant or through an option or SAR exchange program) without the approval of the Companys shareholders.
Other Stock-Based Awards: Other stock-based awards are awards other than restricted stock, stock equivalent awards or restricted equivalent awards, stock options or stock appreciation rights which are denominated or valued in whole or in part by reference to the value of our common stock. The purchase, exercise, exchange or conversion of other stock-based awards would be on such terms and conditions and by such methods specified by the Nominating and Executive Compensation Committee and set forth in an award agreement.
Provisions for Foreign Participants: The Board of Directors or the Nominating and Executive Compensation Committee may modify awards granted to participants who are foreign nationals or employed outside the United States or establish sub-plans or procedures under the Second Amended Plan to recognize differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefits or other matters.
Performance Criteria. Any award granted under the Second Amended Plan may be conditioned on the attainment of one or more performance goals over a specified performance period. If the Nominating and Executive Compensation Committee intends that an award made to a covered employee (generally the chief executive officer and the four other most highly compensated executive officers) will constitute performance-based compensation within the meaning of Section 162(m) of the Code, then the performance goals will be based on one or more of the following criteria:
| earnings per share, net earnings per share or growth in such measures; |
| revenue, net revenue, income, net income or growth in revenue or income (all either before or after taxes); |
| return measures (including, but not limited to, return on assets, capital, investment, equity, revenue or sales); |
| cash flow return on investments which equals net cash flows divided by owners equity; |
| controllable earnings (a divisions operating profit, excluding the amortization of goodwill and intangible assets, less a charge for the interest cost for the average working capital investment by the division); |
| operating earnings or net operating earnings; |
| costs or cost control; |
| share price (including, but not limited to, growth measures); |
| total shareholder return (stock price appreciation plus dividends); |
| economic value added; |
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| earnings before interest, taxes, depreciation and amortization (EBITDA); |
| operating margin or growth in operating margin; |
| market share or growth in market share; |
| cash flow, cash flow from operations or growth in such measures; |
| sales revenue or volume or growth in such measures; |
| gross margin or growth in gross margin; |
| productivity; |
| brand contribution; |
| product quality; |
| corporate value measures; |
| goals related to acquisitions, divestitures or customer satisfaction; |
| diversity; |
| index comparisons; |
| debt-to-equity or debt-to-stockholders equity ratio; |
| working capital; |
| risk mitigation; |
| sustainability and environmental impact; or |
| employee retention. |
Performance may be measured on an individual, corporate group, business unit, subsidiary, division, department, region, function or consolidated basis and may be measured absolutely or relatively to the Companys peers. In establishing the performance goals, the committee may provide that the performance goals will be adjusted to account for the effects of:
| acquisitions, divestitures, extraordinary dividends, stock split-ups, stock dividends or distributions, issuances of any targeted stock, recapitalizations, warrants or rights issuances or combinations, or exchanges or reclassifications with respect to any outstanding class or series of the Companys common stock; |
| a corporate transaction, such as any merger of the Company with another corporation, any consolidation of the Company and another corporation into another corporation, any separation of the Company or its business units (including a spin-off or other distribution of stock or property by the Company), or any reorganization of the Company (whether or not such reorganization comes within the definition of such term in Section 368 of the Code); |
| any partial or complete liquidation by the Company; or sale of all or substantially all of the assets of the Company; or |
| other unusual or extraordinary items. |
In no event will dividends or dividend equivalents be paid with respect to any performance-based award which does not vest and/or for which the applicable performance goals are not achieved.
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Federal Income Tax Consequences: The following is a brief description of the principal U.S. federal income tax consequences, based on current law, of awards under the Second Amended Plan:
Restricted Stock, Restricted Stock Equivalents, Restricted Equivalent Awards and Other Stock-Based Awards: Generally, restricted stock, stock equivalent awards or restricted equivalent awards will not be taxed to a recipient until restrictions lapse on all, or any portion, of the award.
| When any portion of an award is released from restrictions, the fair market value of those shares on the date the restrictions lapse will be included in the recipients income for that year and will be taxed at ordinary income tax rates. The Second Amended Plan mandates that the Company shall satisfy any federal, state, foreign or local income tax, social insurance contributions, or other withholding obligations by any of the following means: (1) by reducing the number of shares of common stock otherwise payable under such award to the extent the award is settled in shares; (2) by withholding from the recipients salary, compensation or other payments made to him or her; (3) by requiring the recipient to make a cash payment to the Company or one of its affiliates in advance of receiving shares pursuant to the award; (4) withholding from the cash settlement to the extent the award is settled in cash; (5) selling shares of common stock on the market either through a cashless exercise transaction or other sale on the market; or (6) any other means set forth in the award agreement. |
| The recipients basis in the stock received will be equal to the amount included in income, and the holding period will begin on that date. |
| The recipient may elect to have a restricted stock award (but not a stock equivalent award) treated as taxable income in the year granted, and in that case the recipient will be taxed at ordinary income tax rates on the fair market value of the award on the date of grant. Any future appreciation in value of those shares at the time they are sold will be taxed as capital gain, and any decline will be treated as a capital loss. If the recipient elects to be taxed in the year the award is granted, and the award is later forfeited before restrictions lapse, any income taxes paid will not become recoverable and any income taxes due shall remain due. |
| The Company will have deductible expense equal to the fair market value of the shares equal to the amount included in the individuals ordinary income in whatever year an employee or director recognizes ordinary income as a result of the award. |
Options and SARs: The tax consequences for recipients of options or SARs under the Second Amended Plan are as follows:
| The grant of an option or SAR generally will not result in taxable income for the recipient. |
| Upon the exercise of a Non-Qualified Option, the recipient will be required to include the difference between the fair market value of the shares of common stock acquired and the exercise price. The Company will be entitled to a tax deduction equal to the amount the recipient includes in income. The Second Amended Plan mandates that applicable federal, state, foreign or local income tax, social insurance contributions, or other withholding obligations shall be satisfied as set forth above in the first bullet point under Restricted Stock, Restricted Stock Equivalents, Restricted Equivalent Awards and Other Stock-Based Awards. |
| The recipient will not be required to include any amount in his or her taxable income, and the Company will not be entitled to a deduction, upon the exercise of an ISO if certain requirements are met. However, upon ISO exercise, the recipient may be required to include the difference between the fair market value of the shares underlying an ISO and the ISO exercise price as a tax preference item includible in Alternative Minimum Taxable Income, and this amount may potentially be subject to Alternative Minimum Tax. |
| The recipient will be required to include the amount of cash or fair market value of any shares received upon exercise of a SAR in the recipients ordinary income at the time of such exercise. The Company will be entitled to a deduction equal to the amount included in the recipients income upon such exercise. |
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| The tax consequences upon a sale of the shares acquired in an exercise of a Non-Qualified Option will depend on how long the shares were held prior to sale. Generally, any gain or loss recognized upon sale of the shares acquired in an exercise of a Non-Qualified Option will be capital gain or loss. |
| If the recipient disposes of shares acquired upon the exercise of an ISO within two years from the date of grant of such ISO or within one year of the date of exercise (Early Disposition), the recipient will be required to include, at the time of the disposition, the lesser of (a) the fair market value of the shares on the date of exercise over the option exercise price, or (b) the amount realized on the disposition over the option exercise price. The Company will be entitled to a deduction at the time of such Early Disposition equal to the amount included in the recipients income at such time. The excess, if any, of the amount realized on the Early Disposition of such shares over the fair market value of the shares on the date of exercise will generally be long- or short-term capital gain, depending upon the holding period of the shares. If the recipient disposes of such shares in an Early Disposition for less than his or her basis in the shares, the difference between the amount realized and such basis will generally be a long- or short-term capital loss, depending upon the holding period of the shares. |
| If the recipient exercises an option through the provision of shares owned prior to such exercise (Old Shares), and such Old Shares surrendered were acquired by exercise of an ISO, then the provision of such Old Shares will not constitute an Early Disposition of the Old Shares unless the option being exercised is an incentive stock option and the holding period for such Old Shares, described above, has not been met at the time of the surrender of such Old Shares. The federal income tax consequences of an Early Disposition are discussed above. |
| If shares acquired upon exercise of an ISO are not disposed of for at least one year after exercise and two years from the date that the ISO was granted, the recipient will recognize long-term capital gain or loss in an amount equal to the difference between the option exercise price and the sale price of the shares upon disposition of such shares. |
| Any gain realized upon the sale of shares acquired in the exercise of a Non-Qualified Option or SAR for an amount greater than their fair market value on the date of exercise will be capital gain and any loss will be capital loss. Generally there will be no tax consequences to the Company in connection with the disposition of shares acquired in the exercise of an option or SAR, except that the Company may be entitled to a tax deduction in the case of a sale of ISO shares before the holding periods described above have been satisfied. |
Other Tax Considerations: Section 162(m) of the Code places a $1,000,000 annual limit on the compensation deductible by the Company that is paid to covered employees, as described above. The limit, however, does not apply to performance-based compensation. The Company intends to grant awards of stock options and SARs under the Second Amended Plan that are designed to qualify as performance-based compensation. However, the Company may grant awards resulting in non-deductible compensation where it is in the best interests of the Company and its shareholders. In addition, the Company generally designs restricted stock and restricted stock equivalent awards payable upon the attainment of performance goals under the Second Amended Plan with the goal they qualify as performance-based compensation.
Awards that are granted, accelerated, or enhanced with respect to a change in control may give rise, in whole or in part, to excess parachute payments within the meaning of Section 280G of the Code if the aggregate value of such excess parachute payments exceeds a certain amount determined by reference to historical W-2 compensation. The existence of excess parachute payments upon a change in control could give rise to a 20% excise tax on the recipient on amounts paid as a result of such change in control and a loss of a deduction to the Company with respect to such amounts.
Section 409A of the Code regulates the time and form of payment of non-qualified deferred compensation. Failure to satisfy Section 409A could result in immediate income inclusion of deferred amounts, a 20% addition to income tax for such amounts, and interest penalties. Options and SARs may be exempt from Section 409A if they meet certain requirements, and the options and SARs awarded under the Second Amended Plan are generally intended to be exempt from Section 409A. To the extent awards granted under the Second Amended
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Plan are subject to Section 409A, the Company expects to administer such awards and the Second Amended Plan in a manner consistent with the requirements of that Code section and applicable regulations.
State and local tax consequences may in some cases differ from the federal tax consequences. In addition, awards under the Second Amended Plan may be made to employees who are subject to tax in jurisdictions other than the United States and may result in consequences different from those described above.
Adjustments. Certain corporate transactions or events such as an extraordinary dividend, stock split-up, stock dividend, spin-off, issuance of targeted stock, recapitalization, warrant or rights issuance, or combination, exchange or reclassification with respect to the Companys common stock or any other class or series of Company common stock, or consolidation, merger or sale of all, or substantially all, of the assets of the Company may directly affect the number of outstanding shares and/or the value of the outstanding Company common stock. If such transactions occur, the Nominating and Executive Compensation Committee shall adjust the number of shares which may be granted under the Second Amended Plan, as well as the limits on individual awards. The committee or the Board shall adjust the number of shares and the exercise price under outstanding options, and the performance goals of any options or awards, and may make other adjustments which are thought appropriate to protect the value of the award to the recipient.
Transferability. Awards granted under the Second Amended Plan may not be transferred except:
| by beneficiary designation; |
| by will or the laws of descent and distribution; or |
| if permitted by the Nominating and Executive Compensation Committee, to an immediate family member, family trust or family partnership. |
Amendments. The Board of Directors may amend, suspend or terminate the Second Amended Plan at any time, provided that no such amendment will be made without shareholder approval if such approval is required under applicable law or if such amendment would increase the total number of shares of common stock that may be granted under the Second Amended Plan. In addition, no amendment may:
| increase the limit on the number of shares which are the subject of awards granted to any individual; or |
| change the terms of any awards granted before the amendment in an adverse manner without the consent of the recipient. |
Term. The Plan will continue until December 31, 2018, unless replaced or terminated at an earlier time.
Plan Benefits
Our directors and named executive officers have an interest in this proposal as they would be eligible to receive equity awards under the Second Amended Plan.
Except as discussed under Director Compensation, the selection of individuals who will receive awards under the Second Amended Plan, if the amendment proposal is approved by the shareholders, and the amount of any such awards, is discretionary and determined from time to time by the Nominating and Executive Compensation Committee and the Board and is therefore not presently determinable. Information regarding awards granted under the 2009 Plan to the named executive officers is set forth in the Grants of Plan-Based Awards Table above. Equity awards for a total of approximately 170,338 shares were granted under the 2009 Plan in fiscal year 2013 to all executive officers as a group, and equity awards for a total of approximately 317,676 shares were granted under the 2009 Plan in fiscal year 2013 to employees who are not executive officers.
As discussed in Director Compensation, each non-employee director currently receives an annual $100,000 restricted stock equivalent grant with vesting upon grant, and effective December 31, 2013, each non-employee director will receive a $110,000 restricted stock equivalent grant on the first business day in January of each year with one-year vesting and an option to defer in January of each year. In addition, each new director receives a grant of restricted stock equivalents with a grant date value of $100,000, which equivalents would vest three years from the date of vest. The Director Compensation Table on page 15 sets forth compensation received by independent directors during fiscal year 2013.
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Aggregate Past Grants Under the 2009 Plan
As of November 15, 2013, awards covering 7,194,297 shares of our common stock had been granted under the 2009 Plan. The following table shows information regarding the distribution of those awards among the persons and groups identified below as of that date:
Number of Options Granted |
Number of Time Based Restricted Stock Units Granted |
Number of Performance Based Restricted Stock Units Granted |
||||||||||
Named Executive Officers: |
||||||||||||
Ward M. Klein, Chief Executive Officer |
38,000 | 108,789 | 334,774 | |||||||||
Daniel J. Sescleifer, Executive Vice President and Chief Financial Officer |
25,000 | 27,005 | 88,017 | |||||||||
David P. Hatfield, President & CEO, Energizer Personal Care |
30,000 | 25,010 | 81,097 | |||||||||
Alan R. Hoskins, President and CEO, Energizer Household Products |
12,500 | 17,127 | 57,524 | |||||||||
Peter J. Conrad, Vice President, Human Resources |
15,000 | 17,466 | 54,076 | |||||||||
All current executive officers as a group (9 persons) |
128,000 | 251,702 | 721,795 | |||||||||
All current non-executive officer directors as a group (10 persons) |
0 | 2,411 | 0 | |||||||||
Each nominee for election as a director: |
||||||||||||
James C. Johnson |
0 | 1,009 | 0 | |||||||||
Ward M. Klein |
38,000 | 108,789 | 334,774 | |||||||||
W. Patrick McGinnis |
0 | 0 | 0 | |||||||||
John R. Roberts |
0 | 0 | 0 | |||||||||
Each associate of any such directors, executive officers or nominees |
0 | 0 | 0 | |||||||||
Each other person who received or is to receive 5% or more of the options, warrants or rights under the 2009 Plan |
0 | 0 | 0 | |||||||||
All employees, including all current officers who are not executive officers or directors, as a group |
138,750 | 1,400,906 | 874,321 |
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EQUITY COMPENSATION PLAN INFORMATION
The following table gives information about the Companys common stock that may be issued upon the exercise of options, warrants and rights under all of the Companys existing compensation plans as of September 30, 2013:
Plan Category | (1) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights |
(2) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights |
(3) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (1), and as Noted Below) |
|||||||||
Equity compensation plans approved by security holders |
2,150,342 | $ | 59.57 | 2,678,491 | ||||||||
Equity compensation plans not approved by security holders |
None | N/A | None | |||||||||
Total |
2,150,342 | $ | 59.57 | 2,678,491 |
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Five Percent Owners of Common Stock. The following table shows, as of November 1, 2013, the holdings of the Companys common stock by any entity or person known to the Company to be the beneficial owner of more than 5% of the outstanding shares of the Companys common stock:
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership |
Percent of Class Outstanding(1) |
||||||
T. Rowe Price Associates, Inc. 100 E. Pratt Street, Baltimore, Maryland 21202(2) |
3,859,279 | (2) | 6.18 | % | ||||
BlackRock, Inc. 40 East 52nd Street, New York, New York 10022(3) |
4,877,920 | (3) | 7.81 | % | ||||
JP Morgan Chase & Co. 270 Park Ave., New York, New York 10017(4) |
3,346,338 | (4) | 5.36 | % |
Ownership of Directors and Executive Officers. The table below contains information regarding beneficial common stock ownership of directors and executive officers as of November 15, 2013. It does not reflect any changes in ownership that may have occurred after that date. In general, beneficial ownership includes those shares a director or executive officer has the power to vote or transfer, as well as shares owned by immediate family members that reside with the director or officer. Unless otherwise indicated, directors and executive officers named in the table below have sole voting and investment power with respect to the shares set forth in the table and none of the stock included in the table is pledged. The table also indicates shares that may be obtained within 60 days upon the exercise of options, or upon the conversion of vested stock equivalents into shares of common stock.
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Directors And Executive Officers |
Shares Beneficially |
Shares held in Savings Investment Plan (A) |
Options 60 Days |
Stock Equivalents held in the Deferred Compensation Plan |
% of Shares (*denotes | |||||||||||||
Bill G. Armstrong |
5,500 | 0 | 4,500 | 19,240 | * | |||||||||||||
Daniel J. Heinrich |
1,500 | 0 | 0 | 2,235 | * | |||||||||||||
R. David Hoover |
17,000(D) | 0 | 0 | 30,195 | * | |||||||||||||
John C. Hunter |
0 | 0 | 10,000 | 12,066 | * | |||||||||||||
James C. Johnson |
0 | 0 | 0 | 163 | * | |||||||||||||
John E. Klein |
10,000(D) | 0 | 0 | 20,332 | * | |||||||||||||
W. Patrick McGinnis |
18,025 | 0 | 0 | 8,685 | * | |||||||||||||
J. Patrick Mulcahy |
546,431(C) | 0 | 0 | 20,320 | * | |||||||||||||
Pamela M. Nicholson |
24,674(D) | 0 | 0 | 23,437 | * | |||||||||||||
John R. Roberts |
20,000(D) | 0 | 0 | 8,958 | * | |||||||||||||
Ward M. Klein |
204,639(D) | 5,195 | 83,000 | 141,716 | * | |||||||||||||
David P. Hatfield |
44,705(D) | 314 | 35,000 | 10,805 | * | |||||||||||||
Alan R. Hoskins |
2,100 | 0 | 12,500 | 0 | * | |||||||||||||
Daniel J. Sescleifer |
57,498(D) | 0 | 25,000 | 5,831 | * | |||||||||||||
Peter J. Conrad |
2,937(D) | 0 | 7,500 | 0 | * | |||||||||||||
All Executive Officers and Directors as a Group (19 persons) |
971,854(D) | 5,509 | 177,500 | 310,948 | 2.3% |
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Board knows of no business which will be presented at the 2014 Annual Meeting other than that described above. Our bylaws provide that shareholders may nominate candidates for directors or present a proposal or bring other business before an annual meeting only if they give timely written notice of the nomination or the matter to be brought not less than 90 nor more than 120 days prior to the first anniversary of the prior years meeting, as described under Shareholder Proposals for 2015 Annual Meeting.
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Householding of Annual Meeting Materials. The SEC has approved a rule permitting the delivery of a single Notice Regarding the Availability of Proxy Materials, and set of Annual Reports and Proxy Statements (if paper copies of such documents have been delivered or requested), to any household at which two or more shareholders reside, unless we have received contrary instructions from one or more of the shareholders residing in such household. Each shareholder will continue to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information you receive, as well as our expenses. In order to take advantage of this opportunity, we will deliver only one copy of the Notice Regarding the Availability of Proxy Materials, and this Proxy Statement and related Annual Report (if paper copies of such documents have been delivered or requested) to multiple shareholders who share an address, unless we receive contrary instructions from the impacted shareholders prior to the mailing date. If you prefer to receive separate copies of our Notice Regarding the Availability of Proxy Materials, our Proxy Statement or Annual Report, either now or in the future, we will promptly deliver, upon your written or oral request submitted as set forth below, a separate copy of the Notice Regarding the Availability of Proxy Materials, Proxy Statement or Annual Report, as applicable and as requested, to any shareholder at your address to which a single copy was delivered. If you and other shareholders in your household are currently receiving multiple copies of the Notice Regarding the Availability of Proxy Materials, and this Proxy Statement and our Annual Report (if paper copies of such documents have been delivered or requested) and would like only one copy to be sent to your household, upon your written request, we will discontinue delivering multiple copies of such document(s) to your household and only deliver one copy. Notice should be given to the Secretary, Energizer Holdings, Inc., 533 Maryville University Drive, St. Louis, Missouri 63141 (Tel. No. (314) 985-2000).
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SHAREHOLDER PROPOSALS FOR 2015 ANNUAL MEETING
Any proposals to be presented at the 2015 Annual Meeting of Shareholders, which is expected to be held on January 26, 2015, must be received by the Company, directed to the attention of the Secretary, no later than August 14, 2014 in order to be included in the Companys Proxy Statement and form of proxy for that meeting. Upon receipt of any proposal, the Company will determine whether or not to include the proposal in the Proxy Statement and proxy card in accordance with regulations governing the solicitation of proxies. The proposal must comply in all respects with the rules and regulations of the SEC and our bylaws.
In order for a shareholder to nominate a candidate for director under our bylaws, timely notice of the nomination must be received by us in advance of the meeting. Ordinarily, such notice must be received not less than 90, nor more than 120, days before the first anniversary of the prior years meeting. For the 2015 Annual Meeting, the notice would have to be received between September 29, 2014 and October 29, 2014. However, in the event that (i) no annual meeting is held in 2014 or (ii) the date of the 2015 Annual Meeting is more than 30 days before or more than 60 days after the first anniversary of the 2014 Annual Meeting, notice must be received not earlier than the 120th day prior to the date of the 2015 Annual Meeting and not later than the close of business on the later of the 90th day prior to the date of 2015 Annual Meeting, or the seventh day following the day on which notice of the date of the meeting was mailed or on which public notice of the meeting was given. The notice of nomination must include, as to each person whom the shareholder proposes to nominate for election, information required by our bylaws, including:
| the nominees name, age, business and residential address; |
| the nominees principal occupation for the previous five years; |
| the nominees consent to being named as a nominee and to serving on the Board; |
| the nominees disclosable interests as of the date of the notice (which information shall be supplemented by such person, if any, not later than ten days after the record date of the Annual Meeting to disclose such ownership as of the record date), which includes: |
¡ | shares of common stock; options, warrants, convertible securities, stock appreciation rights, or similar rights with respect to our common stock; any proxy, contract, arrangement, understanding, or relationship conveying a right to vote common stock; |
¡ | any short interest with respect to common stock; |
¡ | any derivative instruments held by a partnership in which the nominee has a partnership interest; and |
¡ | rights to any performance-related fee based on any increase or decrease in the value of common stock or any related derivative instrument; and |
| a description of all monetary or other material agreements, arrangements or understandings between the nominating shareholder and the nominee during the prior three years. |
In addition, the nominating shareholder must provide their name and address and disclosable interests (as such term is described above). The shareholder must be present at the Annual Meeting of Shareholders at which the nomination is to be considered, and must provide a completed questionnaire regarding the nominees background and qualification and compliance with our corporate governance, conflict of interest, and other pertinent policies and guidelines. To assist in the evaluation of shareholder-recommended candidates, the Nominating and Executive Compensation Committee may request that the shareholder provide certain additional information required to be disclosed in the Companys proxy statement under Regulation 14A of the Exchange Act. The shareholder nominating the candidate must also include his or her name and address, and the number of shares of common stock beneficially owned.
In order for a shareholder to bring other business before a shareholder meeting, timely notice must be received by the Company during the same period as director nominations described above. Such notice must include a description of the proposed business and the reasons for the proposal, the name and address of the shareholder making the proposal, any financial or other interests of the shareholder in the proposal made, and the shareholders disclosable interests. These requirements are separate from the requirements a shareholder must meet to have a proposal included in the Companys Proxy Statement.
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In each case, the notice must be given to the Secretary of the Company, whose address is 533 Maryville University Drive, St. Louis, Missouri 63141. A copy of our bylaws will be provided without charge upon written request to the Secretary.
By order of the Board of Directors, |
Mark S. LaVigne Vice President, General Counsel & Secretary |
December 12, 2013
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APPENDIX A PROPOSED AMENDED AND RESTATED ARTICLES OF INCORPORATION
(Additions are underlined twice; deletions are struck out.)
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
ENERGIZER HOLDINGS, INC.
ARTICLE ONE
The name of the corporation is Energizer Holdings, Inc.
ARTICLE TWO
The address, including street and number, if any, of the Corporations registered office in this state is 120 South Central Avenue, Clayton, Missouri 63105 and the name of its agent at such address is C T Corporation System.
ARTICLE THREE - AUTHORIZED SHARES
A. CLASSES AND NUMBER OF SHARES
The aggregate number, class and par value of shares of capital stock which the Corporation shall have authority to issue is Three Hundred and Ten Million (310,000,000) shares of stock, consisting of:
1. Three hundred million (300,000,000) shares of common stock, par value $.01 per share (Common Stock); and
2. Ten million (10,000,000) shares of preferred stock, par value $.01 per share (Preferred Stock).
All preemptive rights of shareholders are hereby denied, so that no stock or other security of the Corporation shall carry with it and no holder or owner of any share or shares of stock or other security or securities of the Corporation shall have any preferential or preemptive right to acquire additional shares of stock or of any other security of the Corporation. All cumulative voting rights are hereby denied, so that no stock or other security of the Corporation shall carry with it and no holder or owner of any share or shares of such stock or security shall have any right to cumulative voting in the election of directors or for any other purpose. The foregoing provisions within this paragraph are not intended to modify or prohibit any provisions of any voting trust or agreement between or among holders or owners of shares of stock or other securities of the Corporation.
In addition to those general qualifications, limitations and restrictions applicable to each and every class and series of capital stock of the Corporation as a matter of law or as stated in the immediately preceding paragraph, the preferences, qualifications, limitations, restrictions, and the special or relative rights, including convertible rights, if any, in respect of the shares of each class are as follows:
B. TERMS OF PREFERRED STOCK
1. Subject to the requirements of the General and Business Corporation Law of Missouri, as amended from time to time (the GBCL), and to the provisions of these Articles of Incorporation, Preferred Stock may be issued from time to time by the Board of Directors as shares of one or more series. The description of shares of each series of Preferred Stock, including any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption shall be as set forth in these Articles of Incorporation or any amendment hereto, or in a resolution or resolutions duly adopted by the Board of Directors and, to the extent set forth in any such resolution or resolutions, such information shall be certified to the Secretary of State of Missouri and filed as required by law from time to time, prior to the issuance of any shares of such series.
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2. The Board of Directors is expressly authorized, prior to issuance, by adopting resolutions providing for the issuance of, or providing for a change in the number of, shares of any particular series of Preferred Stock and, if and to the extent from time to time required by law, by filing certification thereto with the Secretary of State of Missouri, to set or change the number of shares to be included in each series of Preferred Stock and to set or change (in any one or more respects) the designations, preferences, conversion, relative, participating, optional or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms and conditions of redemption relating to the shares of each such series. The authority of the Board of Directors with respect to each series of Preferred Stock shall include, but not be limited to, setting or changing the following:
(a) the distinctive serial designation of such series and the number of shares constituting such series (provided that the aggregate number of shares constituting all series of Preferred Stock shall not exceed the aggregate number of authorized shares set out in Section A(ii) of this Article Three);
(b) the dividend rate, if any, on shares of such series, whether and the extent to which dividends shall be cumulative or non-cumulative, the relative rights of priority, if any, of payment of any dividends, and the time at which, and the terms and conditions on which, any dividends shall be paid;
(c) whether the shares of such series shall be redeemable or purchasable and, if so, the terms and conditions of such redemption or purchase, including the date or dates upon and after which such shares shall be redeemable or purchasable, and the amount per share payable in case of redemption or purchase, which amount may vary under different conditions and at different redemption or purchase dates;
(d) the obligation, if any, of the Corporation to retire shares of such series pursuant to a sinking fund and the terms and conditions of any such sinking fund;
(e) whether shares of such series shall be convertible into, or exchangeable for, shares of stock of any other series, class or classes, now or hereafter authorized, and, if so, the terms and conditions of such conversion or exchange, including the price or prices or the rate or rates of conversion or exchange and the terms of adjustment, if any;
(f) whether the shares of such series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights;
(g) the rights of the holders of shares of such series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation, and the relative rights of priority, if any, of such holders with respect thereto; and
(h) any other relative rights, powers, preferences, qualifications, limitations or restrictions thereof relating to such series.
C. TERMS OF COMMON STOCK
1. Voting Rights. Subject to the provisions of Article Four hereof or as otherwise provided by the GBCL, each holder of the Common Stock shall be entitled to one vote per share of Common Stock held by such holder on all matters to be voted on by the shareholders.
2. Dividend Rights. Subject to the express terms of any outstanding series of Preferred Stock, dividends may be declared and paid upon the Common Stock out of funds of the Corporation legally available therefor, in such amounts and at such times as the Board of Directors may determine. Funds otherwise legally available for the payment of dividends on the Common Stock shall not be restricted or reduced by reason of there being any excess of the aggregate preferential amount of any series of Preferred Stock outstanding over the aggregate par value thereof.
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ARTICLE FOUR- RESTRICTIONS ON VOTING STOCK, CERTAIN BUSINESS COMBINATIONS
A. CERTAIN DEFINITIONS
For purposes of this Article Four, the following words have the meanings indicated:
1. Affiliate means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by or is under common control with, such Person. The term control (including the terms controlling, controlled by and under common control with) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
2. Associate means, with respect to any Person, (i) any other Person (other than the Corporation or a Subsidiary of which a majority of each class of equity securities is owned by the Corporation) of which such Person is an officer, director, trustee or partner or is directly or indirectly the beneficial owner of ten percent (10%) or more of any class of equity securities; (ii) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as a trustee or in a similar fiduciary capacity; (iii) any relative or spouse of such Person, or any relative of such spouse, who has the same home as such Person or who is a director or officer of the Corporation or any of its Affiliates or Subsidiaries; or (iv) any investment company registered under the Investment Company Act of 1940, as amended, for which such Person or any Affiliate of such Person serves as investment adviser.
3. Business Combination means:
(a) any merger or consolidation of the Corporation or any Subsidiary with (i) any Substantial Shareholder or (ii) any other Person which, after such merger or consolidation, would be a Substantial Shareholder, regardless of which entity survives;
(b) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or in a series of transactions) to or with any Substantial Shareholder, of any assets of the Corporation or any Subsidiary, or both, that have an aggregate Fair Market Value of more than twenty percent of the book value of the total assets of the Corporation as shown on its consolidated balance sheet as of the end of the calendar quarter immediately preceding any such transaction;
(c) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of a Substantial Shareholder;
(d) the acquisition by the Corporation or any Subsidiary of any securities of any Substantial Shareholder;
(e) any transaction involving the Corporation or any Subsidiary, including the issuance or transfer of any securities of, any reclassification of securities of, or any recapitalization of, the Corporation or any Subsidiary, or any merger or consolidation of the Corporation with any Subsidiary (whether or not involving a Substantial Shareholder), if the transaction would have the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary of which shares a Substantial Shareholder is the beneficial owner; or
(f) any agreement, contract or other arrangement entered into by the Corporation providing for any of the transactions described in this definition of Business Combination.
4. Continuing Director shall mean any member of the Board of Directors of the Corporation who is not an Affiliate or an Associate of a Substantial Shareholder and who was a member of the Board of Directors prior to the time that any Substantial Shareholder became a Substantial Shareholder, and any successor of a Continuing Director if such successor is not an Affiliate or an Associate of any Substantial Shareholder and is designated as a Continuing Director by a majority of the then Continuing Directors.
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5. Exchange Act means the Securities Exchange Act of 1934, as amended, or any successor statute thereto.
6. Fair Market Value shall mean:
(a) in the case of stock, the highest closing sale price per share of a share of such stock during the 30-day period immediately preceding the approval of the Business Combination by the Board of Directors as reported by any United States securities exchange registered under the Exchange Act on which such shares are listed, or, if such shares are not listed on any exchange, then the highest closing bid quotation for any of such shares, as reported on the National Association of Securities Dealers, Inc. Automated Quotations System or any such system then in use, or if no such closing sales price or bid quotation is reported, the fair market value as determined on the date in question by a majority of Continuing Directors; or
(b) in the case of property or securities other than cash or stock, the fair market value of such property or securities on the date in question as determined by a majority of the Continuing Directors.
7. Group, with respect to any Person, shall include:
(a) such Person;
(b) any Affiliates and Associates of such Person; and
(c) those additional Persons that, together with such Person, jointly file, or would be required to jointly file (notwithstanding whether such Persons have ever actually filed), or would be mentioned as a holder of shares with either sole or shared voting power and/or sole or shared dispositive power in an individual filing of, a statement of beneficial ownership with respect to securities of the Corporation pursuant to Section 13(d) of the Exchange Act or any rules and regulations promulgated thereunder, as in effect from time to time, or any similar successor provisions, irrespective of any disclaimers of beneficial ownership.
8. A Person shall be deemed to own any shares of Voting Stock:
(a) that such Person beneficially owns directly or indirectly, whether or not of record; or
(b) that such Person has the right to acquire pursuant to any agreement, arrangement or understanding or upon exercise of conversion rights, exchange rights, warrants or options or otherwise, whether or not conditional; or
(c) that are beneficially owned, directly or indirectly (including shares deemed to be owned through application of clause (b) above), whether or not of record, by an Affiliate or Associate of such Person; or
(d) that are beneficially owned, directly or indirectly, whether or not of record, by any other Person (including any shares which such other Person has the right to acquire pursuant to any agreement, arrangement or understanding or upon exercise of conversion rights, warrants or options or otherwise, whether or not conditional) with whom such Person has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of Voting Stock; provided, however, that (i) directors, officers and employees of the Corporation shall not be deemed to have any such agreement, arrangement or understanding solely on the basis of their status, or actions taken in their capacities, as directors, officers or employees of the Corporation or any Affiliates of the Corporation, and (ii) a Person shall not be deemed the owner of or to own any shares of Voting Stock solely because (A) such shares of Voting Stock have been tendered pursuant to a tender or exchange offer made by such Person or any of such Persons Affiliates or Associates until such tendered shares of Voting Stock are accepted for payment or exchange or (B) such Person or any of such Persons Affiliates or Associates has or shares the power to vote or direct the voting of such shares of Voting
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Stock pursuant to a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, applicable rules and regulations under the Exchange Act, except if such power (or arrangements relating thereto) is then reportable under Item 6 of Schedule 13D under the Exchange Act (or any similar provision of a comparable or successor report).
The outstanding shares of capital stock of the Corporation shall include those shares deemed owned through the application of clauses (b) and (c) above, but shall not include any other shares that may be issuable pursuant to any agreement, arrangement or understanding or upon exercise of conversion rights, warrants, options or otherwise, whether or not conditional.
For all purposes hereof beneficial ownership, with respect to any securities, shall include, without limitation, (i) the power to vote, or direct the voting of, such securities or (ii) the power to exercise investment discretion over such securities, including the power to dispose, or to direct the disposition, of such securities. Furthermore, a Person shall be deemed to own beneficially any securities that such Person owns beneficially for purposes of Sections 13(d) of the Exchange Act or any rules and regulations promulgated thereunder, as in effect from time to time (or any similar successor provisions of law).
9. Person means any individual, corporation, association, partnership, joint venture, trust, organization, business, government or any government agency or political subdivision thereof or any other entity.
10. Subsidiary means any Person of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of Section D of this Article Four, the term Subsidiary shall mean only a Person of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation.
11. Substantial Shareholder shall mean and include any Person which, together with its Affiliates and Associates, is the Beneficial Owner of shares of Voting Stock constituting in the aggregate twenty percent (20%) or more of the outstanding Voting Stock.
12. Voting Stock means all outstanding shares of capital stock of the Corporation entitled to vote in the election of Directors; and each reference to a portion of shares of Voting Stock shall refer to such proportion of the votes entitled to be cast by such shares.
B. RIGHT OF INQUIRY OF THE CORPORATION
The Corporation shall have the right but not the obligation to inquire of any Person whom the Corporation believes may be a Substantial Shareholder or any other Person who purports to exercise similar voting rights with respect to any Voting Stock, and each such Person shall have the obligation to provide such information to the Corporation as the Corporation may reasonably request, with respect to any matters pertinent to the operation or implementation of this Article Four, including, without limitation, (a) the number of shares owned by such Person, (b) whether shares owned of record by such Person are owned by other Persons and the identity of such other Persons and the nature of their ownership interest, (c) whether any Affiliates or Associates of such Person own any Voting Stock, (d) whether such Person is a member of a Group of Persons owning Voting Stock, or (e) whether such Person or any of such Persons Affiliates or Associates has any agreement, arrangement or understanding with any other Person with respect to any Voting Stock. Any determinations made by the Board of Directors pursuant to this Article Four in good faith, and on the basis of such information as was actually known by the Board of Directors and such advice as was then actually provided to the Board of Directors for such purpose, shall be conclusive and binding upon the Corporation and its shareholders.
C. ADDITIONAL SHAREHOLDER VOTE REQUIRED FOR CERTAIN BUSINESS COMBINATIONS
The approval of any Business Combination shall, in addition to any affirmative vote required by the GBCL or otherwise, require the affirmative vote of the holders of not less than two-thirds of the aggregate voting power
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of the outstanding shares of the Voting Stock entitled to vote, at a meeting of shareholders called for such purpose, and of a majority of the voting power of all such shares of which a Substantial Shareholder is not a Beneficial Owner; provided, however, that any such Business Combination may be approved upon any affirmative vote required by the GBCL if:
1. there are one or more Continuing Directors, and the Business Combination shall have been approved by a majority of them; or
2. the cash, or Fair Market Value of the property, securities or other consideration, to be received per share by the shareholders of each class of stock of the Corporation in the Business Combination is not less than the higher of:
(a) the highest per share price paid by the Substantial Shareholder for the acquisition of any shares of such class, with appropriate adjustments for stock splits, stock dividends and like distributions; or
(b) the Fair Market Value of such shares, on the date the Business Combination is approved by the Board of Directors.
D. PERSONS TO WHOM THIS ARTICLE DOES NOT APPLY
The provisions of Section C of this Article Four shall not apply to (1) any savings, profit-sharing, stock bonus or employee stock ownership plan or plans established by the Corporation or a Subsidiary and qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended, or any successor provision, which holds shares of Voting Stock on behalf of participating employees and their beneficiaries with the right to instruct the trustee how to vote such shares of Voting Stock with respect to all matters submitted to shareholders for voting or (2) participating employees and beneficiaries under the plans referred to in the immediately preceding clause (1) because of their participation in such savings, profit-sharing, stock bonus or employee ownership plans.
E. AMENDMENT
In addition to such other vote or consent as shall then be required by the GBCL, and by Article Eleven hereof, this Article shall be amended or repealed only upon the affirmative vote of not less than two-thirds (2/3) of the voting power of all shares of Voting Stock not owned by a Substantial Shareholder; provided however, that this Article may be amended or repealed upon any affirmative vote otherwise required by the GBCL, and by Article Eleven hereof, (i) if there is not a Substantial Shareholder, such amendment has been approved by a majority of the Board of Directors, or (ii) if there is a Substantial Shareholder, such amendment has been approved by a majority of the Continuing Directors.
ARTICLE FIVE
The name and place of residence of each incorporator is as follows:
Name |
Street | City | ||||
Timothy L. Grosch |
Checkerboard Square | St. Louis, Missouri 63164 |
ARTICLE SIX DIRECTORS
A. NUMBER AND CLASSIFICATION
The number of Directors to
constitute the Board of Directors of the Corporation is nine. Thereafter, the number of Directors shall be fixed by or in the manner provided in the Bylaws of the Corporation. Any changes in the number of Directors shall be reported
to the Missouri Secretary of State to the extent and within the time
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periods required by the GBCL. The Directors shall be divided into three classes, as nearly equal in number as reasonably possible, with the mode of such classification to be provided for
in the Bylaws of the Corporation. Directors other than Directors constituting the Board of Directors shall be elected to hold office for a term of three (3) years, with the term of office of one class expiring each
yearEach person elected as a Director of the Corporation after the 2014 annual meeting of shareholders, whether to succeed a person whose term of office as a Director has expired
or to fill any vacancy, shall be elected for a term expiring at the annual meeting of shareholders held in the year following the year of his or her election. Each Director elected at or prior to the 2014 annual meeting of shareholders shall
continue to serve as a Director for the term for which he or she was elected. In each case, Directors shall hold office until their successors are elected and qualified, or until their earlier death, resignation or removal. Notwithstanding the
foregoing, whenever the holders of any one or more classes or series of stock of the Corporation, other than shares of Common Stock, shall have the right, voting separately by class or series, to elect Directors, then the election, term of office,
filling of vacancies and other features of such directorship shall be governed by the terms of the Articles of Incorporation of the Corporation or any certificate of designation thereunder applicable thereto; and such directors so elected
shall not be divided into classes pursuant to this Article Six unless expressly provided by such terms. As used in these Articles of Incorporation, the term entire Board of Directors or the entire Board means the
total number fixed by, or in accordance with, these Articles of Incorporation and the Bylaws of the Corporation.
B. REMOVAL OF DIRECTORS
Subject to, and in addition to, the rights, if any, of the holders of any class of capital stock of the Corporation (other than the Common Stock) then outstanding or any limitation imposed by law, any Director, or the entire Board of Directors, may be removed from office at any time prior to the expiration of his, her or their term of office only for cause and only by the affirmative vote of the holders of record of outstanding shares representing not less than two-thirds of all of the then outstanding shares of capital stock of the Corporation then entitled to vote generally in the election of Directors, voting together as a single class, at a special meeting of shareholders called expressly for that purpose (such vote being in addition to any required class or other vote).
C. VACANCIES
Subject to the rights, if any, of the holders of any class of capital stock of the Corporation (other than the Common Stock)
then outstanding, any vacancies in the Board of Directors which occur for any reason prior to the expiration of the respective term of office of the class in which the vacancy occurs, including vacancies which occur by reason of an
increase in the number of Directors or the removal of a Director, shall be filled only by the Board of Directors, acting by the affirmative vote of a majority of the remaining Directors then in office (although less than a quorum). Any replacement
Director so elected shall hold office only for so long as the respective term of office of the class in which the vacancy occurs has not expired, unless removed prior to the expiration of such term, pursuant to Section B
hereofa term expiring at the next annual meeting of shareholders held immediately following such person being elected to fill the vacancy and until such Directors successor
is elected and qualified or until such Directors earlier death, resignation or removal.
ARTICLE SEVEN
The duration of the Corporation is perpetual.
ARTICLE EIGHT PURPOSES
The Corporation is formed to engage in the manufacture, distribution, marketing and sale of batteries and power supply systems and products, the services and products related thereto, and to engage in any lawful act or activity for which a corporation now or hereafter may be organized under the laws of the State of Missouri.
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ARTICLE NINE BYLAWS
Only a majority of the entire Board of Directors may make, amend, alter, change or repeal any provision or provisions of the Bylaws of the Corporation; provided, however, that in no event shall the Bylaws be inconsistent with law or, in substance to a material degree, with any of the terms, conditions or provisions of these Articles of Incorporation.
ARTICLE TEN INDEMNIFICATION
A. ACTIONS INVOLVING DIRECTORS, OFFICERS AND EMPLOYEES
The Corporation shall indemnify each person (other than a party plaintiff suing on his or her own behalf or in the right of the Corporation) who at any time is serving or has served as a Director, officer or employee of the Corporation against any claim, liability or expense incurred as a result of such service, or as a result of any other service on behalf of the Corporation, or service at the request of the Corporation (which request need not be in writing) as a director, officer, employee, member, or agent of another corporation, partnership, joint venture, trust, trade or industry association, or other enterprise (whether incorporated or unincorporated, for-profit or not-for-profit), to the maximum extent permitted by law. Without limiting the generality of the foregoing, the Corporation shall indemnify any such person (other than a party plaintiff suing on his or her behalf or in the right of the Corporation), who was or is a party or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including, but not limited to, an action by or in the right of the Corporation) by reason of such service against expenses (including, without limitation, costs of investigation and attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding.
B. ACTIONS INVOLVING AGENTS
1. Permissive Indemnification. The Corporation may, if it deems appropriate and as may be permitted by this Article Ten, indemnify any person (other than a party plaintiff suing on his or her own behalf or in the right of the Corporation) who at any time is serving or has served as an agent of the Corporation against any claim, liability or expense incurred as a result of such service, or as a result of any other service on behalf of the Corporation, or service at the request of the Corporation as a director, officer, employee, member or agent of another corporation, partnership, joint venture, trust, trade or industry association, or other enterprise (whether incorporated or unincorporated, for-profit or not-for-profit), to the maximum extent permitted by law or to such lesser extent as the Corporation, in its discretion, may deem appropriate. Without limiting the generality of the foregoing, the Corporation may indemnify any such person (other than a party plaintiff suing on his or her own behalf or in the right of the Corporation), who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including, but not limited to, an action by or in the right of the Corporation) by reason of such service, against expenses (including, without limitation, costs of investigation and attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding.
2. Mandatory Indemnification. To the extent that an agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section B.1 of this Article Ten, or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys fees) actually and reasonably incurred by him or her in connection with the action, suit or proceeding.
C. DETERMINATION OF RIGHT TO INDEMNIFICATION IN CERTAIN CIRCUMSTANCES
Any indemnification required under Section A of this Article Ten or authorized by the Corporation in a specific case pursuant to Section B of this Article Ten (unless ordered by a court) shall be made by the
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Corporation unless a determination is made reasonably and promptly that indemnification of the Director, officer, employee or agent is not proper under the circumstances because he or she has not met the applicable standard of conduct set forth in or established pursuant to this Article Ten. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or even if obtainable a quorum of disinterested Directors so directs, by independent legal counsel in a written opinion, or (3) by majority vote of the shareholders; provided, however, that no such determination shall preclude an action brought in an appropriate court to challenge such determination, and provided further that there shall be no presumption that the Corporation is released from any obligation under Sections A or B of this Article Ten unless a written instrument, subscribed by an appropriate officer of the Corporation, expressly so provides by making reference to this Subsection C of this Article Ten.
D. ARTICLE TEN PROVISIONS NOT EXCLUSIVE RIGHT
The indemnification provided by this Article Ten shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled, whether under the Bylaws of the Corporation or any statute, agreement, vote of shareholders or disinterested Directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office.
E. INDEMNIFICATION AGREEMENTS AUTHORIZED
Without limiting the other provisions of this Article Ten, the Corporation is authorized from time to time, without further action by the shareholders of the Corporation, to enter into agreements with any Director, officer, employee or agent of the Corporation providing such rights of indemnification as the Corporation may deem appropriate, up to the maximum extent permitted by law. Any agreement entered into by the Corporation with a Director may be authorized by the other Directors, and such authorization shall not be invalid on the basis that different or similar agreements may have been or may thereafter be entered into with other Directors.
F. STANDARD OF CONDUCT
Except as may otherwise be permitted by law, no person shall be indemnified pursuant to this Article Ten (including without limitation pursuant to any agreement entered into pursuant to Section F of this Article Ten) from or on account of such persons conduct which is finally adjudged to have been knowingly fraudulent, deliberately dishonest or willful misconduct. The Corporation may (but need not) adopt a more restrictive standard of conduct with respect to the indemnification of any agent of the Corporation.
G. INSURANCE
The Corporation may purchase and maintain insurance on behalf of any person who is or was a Director, officer, employee or agent of the Corporation, or who is or was otherwise serving on behalf or at the request of the Corporation in any capacity against any claim, liability or expense asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of this Article Ten.
H. CERTAIN DEFINITIONS
For the purposes of this Article Ten:
1. Service in Representative Capacity. Any Director, officer or employee of the Corporation who shall serve as a director, officer or employee of any other corporation, partnership, joint venture, trust or other enterprise of which the Corporation, directly or indirectly, is or was the owner of 20% or more of either the outstanding equity interests or the outstanding voting stock (or comparable interests), shall be deemed to be so
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serving at the request of the Corporation, unless the Board of Directors of the Corporation shall determine otherwise. In all other instances where any person shall serve as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise of which the Corporation is or was a stockholder or creditor, or in which it is or was otherwise interested, if it is not otherwise established that such person is or was serving as a director, officer, employee or agent at the request of the Corporation, the Board of Directors of the Corporation may determine whether such service is or was at the request of the Corporation, and it shall not be necessary to show any actual or prior request for such service.
2. Predecessor Corporations. References to a corporation include all constituent corporations absorbed in a consolidation or merger as well as the resulting or surviving corporation so that any person who is or was a director, officer, employee or agent of a constituent corporation or is or was serving at the request of a constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise shall stand in the same position under the provisions of this Article Ten with respect to the resulting or surviving corporation as he or she would if he or she had served the resulting or surviving corporation in the same capacity.
3. Service for Employee Benefit Plan. The term other enterprise shall include, without limitation, employee benefit plans and voting or taking action with respect to stock or other assets therein; the term serving at the request of the Corporation shall include, without limitation, any service as a director, officer, employee or agent of a corporation which imposes duties on, or involves services by, a director, officer, employee or agent with respect to any employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he or she reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have satisfied any standard of care required by or pursuant to this Article Ten in connection with such plan; the term fines shall include, without limitation, any excise taxes assessed on a person with respect to an employee benefit plan and shall also include any damages (including treble damages) and any other civil penalties.
I. SURVIVAL
Each person who was or is a Director, officer or employee of the Corporation is a third party beneficiary to this Article Ten and shall be entitled to enforce against the Corporation all indemnification rights provided or contemplated by this Article Ten. Such indemnification rights shall continue as to a person who has ceased to be a Director, officer or employee, and shall inure to the benefit of the heirs, executors and administrators of such a person.
This Article Ten may be hereafter amended or repealed as provided in Article Eleven hereof; provided however, no such amendment or repeal shall reduce, terminate or otherwise adversely affect the right of any person who was or is a Director, officer or employee to obtain indemnification or an advance of expenses with respect to a proceeding that pertains to or arises out of actions or omissions that occurred prior to the Deadline Indemnification Date. For purposes of this Section J of this Article Ten, the term Deadline Indemnification Date shall mean the later of: (1) the effective date of any amendment or repeal of this Article Ten which reduces, terminates or otherwise adversely affects the rights hereunder of any person who was or is a Director, officer or employee; (2) the expiration of such persons then current term of office with, or service for, the Corporation (provided such person has a stated term of office or service and completes such term); or (3) the effective date such person resigns his office or terminates his service (provided such person has a stated term of officer or service but resigns prior to the expiration of such term).
K. LIABILITY OF THE DIRECTORS, OFFICERS AND EMPLOYEES
It is the intention of the Corporation to limit the personal liability of the Directors, officers and employees of the Corporation, in their capacity as such, whether to the Corporation, its shareholders or otherwise, to the fullest extent permitted by law. Consequently, should the GBCL or any other applicable law be amended or adopted
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hereafter so as to permit the elimination or limitation of such liability, the liability of the Directors and/or officers and/or employees of the Corporation shall be so eliminated or limited without the need for amendment of these Articles or for further action on the part of the shareholders of the Corporation.
ARTICLE ELEVEN AMENDMENT OF THE ARTICLES OF INCORPORATION
The Corporation reserves the right to amend, alter, change or repeal any provision contained in these Articles of Incorporation in the manner now or hereafter prescribed by law, and all rights and powers conferred herein on the shareholders, Directors, officers, employees or agents of the Corporation are subject to this reserved power; provided, that (in addition to any required class or other vote, including, without limitation, the vote required by Article Four, Section E hereof) the affirmative vote of the holders of record of outstanding shares representing not less than two-thirds of all of the outstanding shares of capital stock of the Corporation then entitled to vote generally in the election of Directors, voting together as a single class, shall be required to amend, alter, change or repeal, or adopt any provision or provisions inconsistent with, Articles Four, Six, Nine, or this Article Eleven of these Articles of Incorporation, notwithstanding the fact that a lesser percentage may be specified by the laws of Missouri.
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APPENDIX B PROPOSED ENERGIZER HOLDINGS, INC. SECOND AMENDED AND RESTATED 2009 INCENTIVE STOCK PLAN
(Additions are underlined twice; deletions are struck out.)
Energizer Holdings, Inc.
Second Amended and Restated
2009
Incentive Stock Plan
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Section I.
General Provisions
A. Purpose of Plan
The purpose of the Energizer Holdings, Inc. Second Amended and Restated 2009 Incentive Stock Plan (the Plan) is to enhance the profitability and value of the Company for the benefit of its shareholders by providing for stock options and other stock awards to attract, retain and motivate officers and other key employees who make important contributions to the success of the Company, and to provide equity-linked compensation for directors.
B. Definitions of Terms as Used in the Plan
Affiliate shall mean any entity in an unbroken chain of entities beginning with the Company if, at the time of the granting of an Award, each of the entities other than the last entity in the unbroken chain owns stock (or beneficial ownership for non-corporate entities) possessing 50 percent or more of the total combined voting power of all classes of stock (or beneficial ownership for non-corporate entities) in one of the other entities in such chain.
Award shall mean an Option or any Other Stock Award granted under the terms of the Plan, which shall include such agreements, including but not limited to, non-competition provisions, as determined in the sole discretion of the Committee.
Award Agreement shall mean the written or
electronic document or documents(s) evidencing an Award granted under the Plan.
Board shall mean the Board of Directors of the Company.
Change of Control shall mean either of the following, provided that the following constitutes a change in the ownership of the Company or change in the ownership of a substantial portion of the Companys assets within the meaning of Code Section 409A:
(i) | The acquisition by one person, or more than one person acting as a group, of ownership of stock (including Common Stock) of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company. Notwithstanding the above, if any person or more than one person acting as a group, is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons will not constitute a Change of Control; or |
(ii) | A majority of the members of the Companys Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Companys Board of Directors before the date of the appointment or election. |
Persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering. However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.
Code shall mean the Internal Revenue Code of 1986, as amended, and the regulations and other guidance promulgated thereunder.
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Committee shall mean the Nominating and Executive Compensation Committee of the Board, or any successor committee the Board may designate to administer the Plan, provided such Committee consists of two or more individuals. Each member of the Committee shall be (i) an outside director within the meaning of Section 162(m) of the Code and (ii) a Non-Employee Director within the meaning of Rule 16b-3 under the Exchange Act, or otherwise qualified to administer the Plan as contemplated by that Rule or any successor Rule under the Exchange Act.
Common Stock shall mean Energizer Holdings, Inc. $.01 par value Common Stock or common stock of the Company outstanding upon the reclassification of the Common Stock or any other class or series of common stock, including, without limitation, by means of any stock split, stock dividend, creation of targeted stock, spin-off or other distributions of stock in respect of stock, or any reverse stock split, or by reason of any recapitalization, merger or consolidation of the Company.
Company shall mean Energizer Holdings, Inc., a Missouri corporation, or any successor to all or substantially all of its business by merger, consolidation, purchase of assets or otherwise.
Competition shall mean, directly or indirectly, owning, managing, operating, controlling, being employed by (whether as an employee, consultant, independent contractor or otherwise, and whether or not for compensation) or rendering services to any person, firm, corporation or other entity, in whatever form, engaged in any business of the same type as any business in which the Company or its Affiliates is engaged or in which they have proposed to be engaged in and in which the recipient of an Award has been involved to any extent (on other than a de minimus basis) at any time during the previous one (1) year period, in any locale of any country in which the Company or its Affiliates conducts business. Competition shall not include owning not more than one percent of the total shares of all classes of stock outstanding of any publicly held entity engaged in such business.
Corporate Officer shall mean any President, Chief Executive Officer, Corporate Vice President, Controller, Secretary or Treasurer of the Company, and any other officers designated as corporate officers by the Board.
Director shall mean any member of the Board.
Employee shall mean any person who is employed by the Company or an Affiliate, including Corporate Officers.
Exchange Act shall mean the Securities Exchange Act of 1934, as amended.
Fair Market Value of the Common Stock shall mean the closing price
as reported on the Composite Tape of the New York Stock Exchange, Inc. on the date that such Fair Market Value is to be determined, or if no shares were traded on the determination date, the immediately
precedingfollowing next day on which the Common Stock wasis traded, or the fair market
value as determined by any other method that may be required in order to comply with or to conform to the requirements of applicable laws or regulations.
Incentive Stock Options shall mean Options that qualify as such under Section 422 of the Code.
Non-Qualified Stock Options shall mean Options that do not qualify as Incentive Stock Options.
Option shall mean the right, granted under the Plan, to purchase a specified number of shares of Common Stock, at a fixed price for a specified period of time.
Other Stock Award shall mean any Award granted under Section III of the Plan.
Phantom Stock Option shall mean an Option, granted under the Plan, which provides that in lieu of receiving shares of Common
Stock upon exercise, the recipient will receive an amount equal to the excess of the Fair Market Value of the Common Stock at exercise over the exercise price set forth in the Award Agreement for the
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Phantom Stock Option.Restricted Equivalent Award shall mean a right granted under the terms of the Plan
to receive shares of Common Stock or cash equal to either (i) a set number of shares of Common Stock or (ii) a number of shares of Common Stock determined under a formula or other criteria, as of specified vesting and/or payment dates. By
way of example, Restricted Equivalent Awards may include market stock units, which involve a grant of Restricted Stock Equivalents, the number of which are paid as of the vesting and/or payment date based on (a) the passage of a
certain prescribed period of time; or (b) the performance of the Common Stock Fair Market Value over the performance period.
Restricted Stock Award shall mean an Award of shares of Common Stock on which are imposed restrictions on transferability or other shareholder rights, including, but not limited to, restrictions which subject such Award to a substantial risk of forfeiture as defined in Section 83 of the Code.
Stock Appreciation Right shall mean a right granted under the terms of the Plan to receive an amount equal to the excess of the Fair Market Value of one share of Common Stock as of the date of exercise of the Stock Appreciation Right over the price per share of Common Stock specified in the Award Agreement of which it is a part.
Termination for Cause shall mean an Employees termination of employment with the Company or an Affiliate because of the Employees willful engaging in gross misconduct that materially injures the Company (as determined in good faith by the Committee), or the Employees conviction of a felony or a plea of nolo contendere to such a crime, provided, however, that a Termination for Cause shall not include termination attributable to (i) poor work performance, bad judgment or negligence on the part of the Employee, (ii) an act or omission believed by the Employee in good faith to have been in or not opposed to the best interests of the Company and reasonably believed by the Employee to be lawful, or (iii) the good faith conduct of the Employee in connection with a change of control of the Company (including opposition to or support of such change of control).
C. Scope of Plan and Eligibility
Any Employee selected by the Committee, and any member of the
Board, and consultants and advisors to the Company or an Affiliate selected by the Committee shall be eligible for any Award contemplated under the Plan.
D. Authorization and Reservation
1. | The Company shall establish a reserve of authorized shares of Common Stock in the amount of
|
2. | Upon the forfeiture or expiration of an Award, all shares of Common Stock not issued thereunder shall become available for the granting of additional Awards. Awards under the Plan which are payable in cash will not be counted against the reserve unless actual payment is made in shares of Common Stock instead of cash. |
3. | Shares of Common Stock tendered as full or partial payment upon exercise of Options or Stock Appreciation Rights granted under the Plan, shares of Common Stock reserved for issuance upon grants of Stock Appreciation Rights (to the extent the number of reserved shares exceeds the number of shares actually issued upon exercise of the Stock Appreciation Rights), and shares of Common Stock withheld by, or otherwise remitted to, the Company to satisfy an Employees tax withholding obligations with respect to Awards under the Plan shall not become available for the granting of additional Awards under the Plan. |
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4. | The following will not be applied to the share limitations of subsection 1 above: (i) dividends or dividend equivalents paid in cash in connection with outstanding Awards, (ii) any shares of Common Stock subject to an Award under the Plan which Award is forfeited, cancelled, terminated, expires or lapses for any reason, and (iii) shares of Common Stock and any Awards that are granted through the settlement, assumption, or substitution of outstanding awards previously granted, or through obligations to grant future awards, as a result of a merger, consolidation, spin-off or acquisition of the employing company with or by the Company. If an Award is to be settled in cash, the number of shares of Common Stock on which the Award is based shall not count toward the share limitations of subsection 1. |
5. | No fractional shares of Common Stock may be issued under this Plan. Fractional shares of Common Stock will be rounded down to the nearest whole share of Common Stock. |
E. Grant of Awards and Administration of the Plan
1. | The Committee (or, in the Boards sole discretion or in the absence of the Committee, the Board) shall determine those Employees eligible to receive Awards and the amount, type and terms of each Award, subject to the provisions of the Plan. The Board shall determine the amount, type and terms of each Award to a Director in his or her capacity as a Director, subject to the provisions of the Plan. In making any determinations under the Plan, the Committee or the Board, as the case may be, shall be entitled to rely on reports, opinions or statements of officers or employees of the Company, as well as those of counsel, public accountants and other professional or expert persons. Any such report, opinions or statements may take into account Award grant practices, including the rate of grant of Awards and any performance criteria related to such awards, at publicly traded or privately held corporations that are similar to or are industry peers with the Company. All determinations, interpretations and other decisions under or with respect to the Plan or any Award by the Committee or the Board, as the case may be, shall be final, conclusive and binding upon all parties, including without limitation, the Company, any Employee or Director, and any other person with rights to any Award under the Plan, and no member of the Board or the Committee shall be subject to individual liability with respect to the Plan. |
2. | The Committee (or, in the Boards sole discretion or in the absence of the Committee, the Board) shall administer the Plan and, in connection therewith, it shall have full power and discretionary authority to construe and interpret the Plan, establish rules and regulations and perform all other acts it believes reasonable and proper, including the power to delegate responsibility to others to assist it in administering the Plan, to the extent permitted by applicable laws, and the power to adopt sub-plans or establish special rules for grants to individuals outside the U.S., as further described in Sections VI.Q, R and S. To the extent, however, that such construction and interpretation or establishment of rules and regulations relates to or affects any Awards granted to a Director in his or her capacity as a Director, the Board must ratify such construction, interpretation or establishment. |
3. | The Committee, or if no Committee has been appointed, the Board, may delegate administration of the Plan to a committee or committees of one or more members of the Board, and the term Committee shall apply to any person or persons to whom such authority has been delegated. The Committee shall have the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board or the Committee shall thereafter be to the committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may abolish, suspend or supersede the Committee at any time and revest in the Board the administration of the Plan. The members of the Committee shall be appointed by and serve at the pleasure of the Board. From time to time, the Board may increase or decrease the size of the Committee, add additional members to, remove members (with or without cause) from, appoint new |
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members in substitution therefor, and fill vacancies, however, caused, in the Committee. Subject to the limitations prescribed by the Plan and the Board, the Committee may establish and follow such rules and regulations for the conduct of its business as it may determine to be advisable. Any authority granted to the Committee may also be exercised by the Board or another committee of the Board, except to the extent that the grant or exercise of such authority would cause any Award intended to qualify for favorable treatment under Section 162(m) of the Code to cease to qualify for the favorable treatment under Section 162(m) of the Code. To the extent that any permitted action taken by the Board conflicts with action taken by the Committee, the Board action shall control. Without limiting the generality of the foregoing, to the extent the Board has delegated any authority under this Plan to another committee of the Board, such authority shall not be exercised by the Committee unless expressly permitted by the Board in connection with such delegation. |
4. | During the term of the Plan, the aggregate number of shares of Common Stock that may be the subject of performance-based Awards (as defined in Section 162(m) of
the Code) that may be granted to an Employee or Director during any one fiscal year may not exceed 500,000. |
Awards granted under the Plan shall be evidenced in the manner prescribed by the Committee from time to time |
6. | The Committee may, in its discretion, include provisions in an Award Agreement to address treatment of an Award in the event of a Change of Control, which may include, by way of example, 100% vesting, lapse of restrictions or deemed achievement of performance goals. In addition, in the event of a Change in Control, an Award may be treated, to the extent determined by the Committee to be both appropriate and permitted under Section 409A of the Code, in accordance with one of the following methods as determined by the Committee in its sole discretion: (i) upon at least ten days advance notice to the affected persons, cancel any outstanding Awards and pay to the holders thereof, in cash or stock, or any combination thereof, the value of such Awards based upon the price per share received or to be received by other shareholders of the Company in the event; or (ii) provide for the assumption of or the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted under the Plan, as determined by the Committee in its sole discretion. In the case of any Option or Stock Appreciation Right with an exercise price that equals or exceeds the price paid for a share in connection with the Change in Control, the Committee may cancel the Option or Stock Appreciation Right without the payment of consideration therefor. |
Section II.
Stock Options
A. Description
The Committee may grant Incentive Stock Options and/or Non-Qualified Stock Options to Employees eligible to receive Awards under the Plan. The Board may grant Non-Qualified Stock Options to Directors under the Plan.
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B. Terms and Conditions
1. | Each Option shall |
2. | The option price of shares of Common Stock subject to any Option shall not be less than the Fair Market Value of the Common Stock on the date that the Option is granted. |
3. | The Committee, or in the case of Awards granted to Directors, the Board, shall determine the vesting schedules and the terms, conditions and limitations governing exercisability of Options granted under the Plan. Unless accelerated in accordance with its terms, an Option may not be exercised until a period of at least one year has elapsed from the date of grant, and the term of any Option granted hereunder shall not exceed ten years. |
4. | The purchase price of any shares of Common Stock pursuant to exercise of any Option must be paid in full upon such exercise. The payment shall be made in cash, in
United States dollars, |
AnySubject to any additional tax withholding provided for
in Section VI.H., any individual electing a Net Exercise of an Option shall receive upon such net exercise a number of shares of Common Stock equal to the aggregate number shares of Common Stock being purchased upon exercise less the number of
shares of Common Stock having a Fair Market Value equal to the aggregate purchase price of the shares of Common Stock as to which the Non-Qualified Stock Option is being exercised.
AnySubject to any additional tax withholding provided for
in Section VI.H., any individual electing a Swap Exercise shall pay the purchase price of the Option by tendering shares of Common Stock owned by such individual prior to exercising the Option with a Fair Market Value equal to the exercise of
the Option. Any such Swap Exercise shall occur without regard to the six month holding period described in the third sentence of this Paragraph 4.
5. | The terms and conditions of any Incentive Stock Options granted hereunder shall be subject to and shall be designed to comply with, the provisions of Section 422 of the Code, and any other administrative procedures adopted by the Committee from time to time. Incentive Stock Options may not be granted to any person who is not an Employee at the time of grant. To the extent that the aggregate Fair Market Value (determined at the time an Incentive Stock Option is granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by an Optionee during any calendar year under all incentive stock option plans of the Company exceeds $100,000, the Options in excess of such limit shall be treated as Non-Qualified Stock Options. If, at the time an Incentive Stock Option is granted, the Employee recipient owns (after application of the rules contained in Section 424(d) of the Code, or its successor provision) shares of Common Stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or its subsidiaries, (a) the option price for such Incentive Stock Option shall be at least 110% of the Fair Market Value of the shares of Common Stock subject to such Incentive Stock Option on the date of grant and (b) such Option shall not be exercisable after the date five years from the date such Incentive Stock Option is granted. |
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Section III.
Other Stock Awards
In addition to Options, the Committee or, in the case of Awards granted to Directors, the Board, may grant Other Stock Awards payable in Common Stock or cash, upon such terms and conditions as the Committee or Board may determine, subject to the provisions of the Plan. Other Stock Awards may include, but are not limited to, the following types of Awards:
A. Restricted Stock Awards and Restricted Stock Equivalents
1. | The Committee or, in the case of Awards granted to a Director in his or her capacity as Director, the
Board, may grant Restricted Stock Awards, each of which consists of a grant of shares of Common Stock, |
2. | The shares of Common Stock granted will be restricted and may not be sold, pledged, transferred or
otherwise disposed of until the lapse or release of restrictions in accordance with the terms of the Award Agreement and the Plan. Prior to the lapse or release of restrictions, all shares of Common Stock which are the subject of a Restricted Stock
Award are subject to forfeiture in accordance with Section IV of the Plan. |
3. | Restricted Stock Equivalents that become payable in accordance with their terms and conditions shall be settled in cash, shares of Common Stock, or a combination of cash and shares, as determined by the Committee and set forth in an Award Agreement. Any person who holds Restricted Stock Equivalents shall have no ownership interest in the shares of Common Stock to which the Restricted Stock Equivalents relate unless and until payment with respect to such Restricted Stock Equivalents is actually made in shares of Common Stock. The payment date shall be as soon as practicable after the earliest of (A) any vesting date that can be pre-determined at grant under the terms of an Award Agreement, and (B) the occurrence date of an applicable vesting event specified in the applicable Award Agreement. Restricted Stock Equivalents may not be sold, assigned or transferred during the restricted period. |
4. | Unless otherwise determined by the Committee as set forth in an Award Agreement, on the date all restrictions lapse or are released so that a Restricted Stock Award or Restricted Stock Equivalents vest and/or become payable, the Company shall pay the recipient or his or her beneficiary an amount equal to the amount of cash dividends, if any, that would have been paid to him or her between the date of grant of such Award and such vesting and/or payment date had vested shares of Common Stock been issued to the recipient in lieu of the Restricted Stock Award or Restricted Stock Equivalents that so vested and/or became payable. Such amounts shall be paid in a single lump sum as soon as practicable following such vesting and/or payment date, but in no event later |
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than the 15th day of the third month following the end of the calendar year in which such date occurs. No interest shall be included in the calculation of such additional cash payment. In no event will dividends or dividend equivalents be paid with respect to any Award which does not vest and/or meet its performance goals. Therefore, dividends and dividend equivalents shall be paid only on vested Restricted Stock Awards or Restricted Stock Equivalents. |
B. Stock Related Deferred Compensation
The Committee may, in its discretion, permit the deferral of payment of an Employees cash bonus or, other cash
compensation or an Award to a Participant under this Plan in the form of either Common Stock or Common Stock equivalents (with each such equivalent corresponding to a share of Common
Stock), under such terms and conditions as the Committee may prescribe in the Award Agreement relating thereto or a separate election form made available to such Participant, including
the terms of any deferred compensation plan under which such Common Stock equivalents may be granted. In addition, the Committee may, in any fiscal year, provide for an additional matching deferral to be credited to an Employees account under
such deferred compensation plans. The Committee may also permit hypothetical account balances of other cash or mutual fund
accountsequivalents maintained pursuant to such deferred compensation plans to be converted, at the discretion of the participant, into the form of Common Stock
equivalents, or to permit Common Stock equivalents to be converted into account balances of such other cash or mutual fund accountsequivalents, upon the terms set forth
in such plans as well as such other terms and conditions as the Committee may, in its discretion, determine. The Committee may, in its discretion, determine whether any deferral in the form of Common Stock equivalents, including deferrals under the
terms of any deferred compensation plans of the Company, shall be paid on distribution in the form of cash or in shares of Common Stock. To the extent Code Section 409A is applicable, all actions pursuant to this Section III.B. must satisfy the
requirements of Code Section 409A and the regulations and guidance thereunder, including but not limited to the following:
1. | A Participants election to defer must be filed at such time as designated by the Committee, but in no event later than the December 31 preceding the first day of the calendar year in which the services are performed which relate to the compensation or Award being deferred. An election may not be revoked or modified after such December 31. However, notwithstanding the previous two sentences, if the compensation or Award is subject to a forfeiture condition requiring the Participants continued services for a period of at least 12 months from the date the Participant obtains the legally binding right to the compensation or Award, the Committee may permit a Participant to file an election on or before the 30th day after the Participant obtains the legally binding right to the compensation or Award, provided that the election is filed at least 12 months in advance of the earliest date at which the forfeiture condition could lapse. |
A Participants election to defer must include the time and form of payment, within the parameters made
available by the Committee, and such timing of payment must comply with the permitted payment events under Code Section 409A. |
3. | If payment is triggered due to the Participants termination of employment or separation from service, such termination or separation must be a separation from service within the meaning of Code Section 409A, and, for purposes of any such provision of this Plan or an election, references to a termination, termination of employment or like terms shall mean such a separation from service. The determination of whether and when a separation from service has occurred for purposes of this Agreement shall be made in accordance with the presumptions set forth in Section 1.409A-1(h) of the Treasury Regulations, unless the Committee has established other rules in accordance with the requirements of Code Section 409A. If payment is made due to a Participants separation from service, and if at the time of the Participants separation from service, he or she is a specified employee, within the meaning of Code Section 409A, then to the extent any payment or benefit that the Participant becomes entitled to under this provision on account of such separation from service would be considered nonqualified deferred compensation under Code Section 409A, such payment or |
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benefit shall be paid or provided at the date which is the earlier of (i) six (6) months and one day after such separation from service, and (ii) the date of the Participants death (the Delay Period). All payments and benefits delayed pursuant to this provision shall be paid in a lump sum upon expiration of the Delay Period. |
C. Stock Appreciation Rights and Phantom Stock Options
The Committee, or in the case of Awards granted to Directors, the Board, may, in its discretion, grant Stock Appreciation Rights or
Phantom Stock Options to Employees or Directors. Subject to the provisions of the Plan, the Committee or Board in its sole discretion shall determine the terms and conditions of the Stock Appreciation Rights and Phantoms Stock
Options. Such terms and conditions shall be set forth in a written Award Agreement. Each Stock Appreciation Right or Phantom Stock Option shall entitle the holder thereof to elect, prior to its cancellation or termination,
to exercise such unit or option and receive either cash or shares of Common Stock, or both, as the Committee or Board may determine, in an aggregate amount equal in value to the excess of the Fair Market Value of the Common Stock on the date of such
election over the Fair Market Value on the date of grant of the Stock Appreciation Right or Phantom Stock Option; except that if an option is amended to include Stock Appreciation Rights, the designated Fair Market Value in the
applicable Award Agreement may be the Fair Market Value on the date that the Option was granted. The term of any Stock Appreciation Right or Phantom Stock Option granted hereunder shall not exceed ten years. The
Committee or Board may provide that a Stock Appreciation Right may only be exercised on one or more specified dates. Stock Appreciation Rights may be granted on a free-standing basis or in conjunction with all or a portion of the shares
of Common Stock covered by an Option. In addition to any other terms and conditions set forth in the Award Agreement, Stock Appreciation Rights and Phantom Stock Options shall be subject to the following terms: (i) Stock
Appreciation Rights and Phantom Stock Options, unless accelerated in accordance with their terms, may not be exercised within the first year after the date of grant, (ii) the Committee or Board, as the case may be, may, in its
sole discretion, disapprove an election to surrender any Stock Appreciation Right or Phantom Stock Option for cash in full or partial settlement thereof, provided that such disapproval shall not affect the recipients right to
surrender the Stock Appreciation Right or Phantom Stock Option at a later date for shares of Common Stock or cash, and (iii) no Stock Appreciation Right or Phantom Stock Option may be exercised unless the
holder thereof is at the time of exercise an Employee or Director and has been continuously since the date the Stock Appreciation Right or Phantom Stock Option was granted, except that the Committee or Board may permit the exercise
of any Stock Appreciation Right or Phantom Stock Option for any period following the recipients termination of employment or retirement or resignation from the Board, not in excess of the original term of the Award, on such
terms and conditions as it shall deem appropriate and specify in the related Award Agreement.
D. Performance-Based Other Stock Awards
The payment under any Other Stock Award that the Committee or Board determines shall be a performance-based Award (as defined in Section 162(m) of the Code) (hereinafter Target Award)
shall be contingent upon the attainment of one or more pre-established performance goals established by the Committee in writing within ninety (90) days after the commencement of the Target Award performance period (or in the case of a newly
hired Employee, before 25% of such Employees service for such Target Award performance period has lapsed). Such performance goals will be based upon one or more of the following performance-based criteria: (a) earnings per share;
(b) income or net income, net earnings per share or growth in such measures; (b) revenue, net revenue, income, net income or growth in revenue or income (all either
before or after taxes); (c) return measures (including, but not limited to, return on assets, capital, investment,
equity, revenue or sales); (d) cash flow return on investments which equals net cash flows divided by owners equity; (e) controllable earnings (a
divisions operating profit, excluding the amortization of goodwill and intangible assets, less a charge for the interest cost for the average working capital investment by the division); (f) operating earnings or net
operationoperating earnings; (g) costs or cost control; (h) share price (including, but not
limited to, growth measures); (i) total shareholder return (stock price appreciation plus dividends); (j) economic value added; (k) EBITDA;
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(l) operating margin or growth in operating margin; (m) market share and (n) cash flow from
operationsor growth in market share; (n) cash flow, cash flow from operations or growth in such measures; (o) sales revenue or volume or growth in such measures;
(p) gross margin or growth in gross margin; (q) productivity; (r) brand contribution; (s) product quality; (t) corporate value measures; (u) goals related to acquisitions, divestitures or customer satisfaction;
(v) diversity; (w) index comparisons; (x) debt-to-equity or debt-to-stockholders equity ratio; (y) working capital, (z) risk mitigation; (aa) sustainability and environmental impact; or (bb) employee retention.
Performance may be measured on an individual, corporate group, business unit, subsidiary, division, department, region, function or consolidated basis and may be measured absolutely or
relatively to the Companys peers. In establishing the Performance Goalsperformance goals, the Committee
may provide that the performance goals will be adjusted to account for the effects of acquisitions, divestitures, extraordinary dividends, stock split-ups, stock dividends or
distributions, issuances of any targeted stock, recapitalizations, warrants or rights issuances or combinations, exchanges or reclassifications with respect to any outstanding class or series of Stock, or a corporate transaction, such as any merger
of the Company with another corporation, any consolidation of the Company and another corporation into another corporation, any separation of the Company or its business units (including a spinoff or other distribution of stock or property by the
Company), any reorganization of the Company (whether or not such reorganization comes within the definition of such term in Code Section 368) or any partial or complete liquidation by the Company, or sale of all or substantially all of the
assets of the Company, or other extraordinary items. Unless otherwise specifically provided by the Committee when authorizing an Award, all performance-based criteria, including any
adjustments described in the preceding sentence, shall be determined by applying U.S. generally accepted accounting principles, as reflected in the Companys audited financial statements.
The Committee, in its discretion, may cancel or decrease an earned Target Award, but, except as otherwise permitted by Treasury Regulation Section 1.162-27(e)(2)(iii)(C), may not, under any circumstances, increase such award. Before payments are made under a Target Award, the Committee shall certify in writing that the performance goals justifying the payment under Target Award have been met. In no event will dividends or dividend equivalents be paid with respect to any Award which does not vest and/or meet its performance goals. Therefore, dividends and dividend equivalents shall be paid only on the vested portion of Target Awards for which the applicable performance goals are achieved.
Section IV.
Forfeiture of Awards
A. Unless the Committee, or in the case of a Director, the Board, shall have determined otherwise in an Award Agreement, the recipient of any Award pursuant to the Plan shall forfeit the Award, to the extent not then payable or exercisable, upon the occurrence of any of the following events, subject to compliance with any applicable local laws:
1. | The recipient is Terminated for Cause. |
2. | The recipient voluntarily terminates his or her employment, except as otherwise provided in the Award Agreement. |
3. | The recipient engages in |
4. | The recipient engages in any activity or conduct contrary to the best interests of the Company or any Affiliate, including, but not limited to, conduct that breaches the recipients duty of loyalty to the Company or an Affiliate or that is materially injurious to the Company or an Affiliate, monetarily or otherwise. Such activity or conduct may include, without limitation: (i) disclosing or misusing any confidential information pertaining to the Company or an Affiliate; (ii) any attempt, directly or indirectly, to induce any Employee of the Company or any Affiliate to be employed or perform services elsewhere, or (iii) any direct or indirect attempt to solicit, or assist another employer in soliciting, the trade of any customer or supplier or prospective customer of the Company or any Affiliate. |
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B. The Committee or the Board, as the case may be, may include in any Award Agreement any additional or different conditions of forfeiture it may deem appropriate, and may waive any condition of forfeiture stated above or in the Award Agreement.
C. In the event of forfeiture, the recipient shall lose all rights in and to portions of the Award which are not vested or which are not exercisable. Except in the case of Restricted Stock Awards as to which restrictions have not lapsed, this provision, however, shall not be invoked to require any recipient to transfer to the Company any Common Stock already received under an Award.
D. Such determinations as may be necessary for application of this Section, including any grant of authority to others to make determinations under this Section, shall be at the sole discretion of the Committee, or in the case of Awards granted to Directors, of the Board, and such determinations shall be conclusive and binding.
Section V.
Beneficiary Designation; Death of Awardee
A. AnIf permitted by the Committee, an Award recipient may file with the
Committee a written designation of a beneficiary or beneficiaries (subject to such limitations as to the classes and number of beneficiaries and contingent beneficiaries as the Committee may from time to time prescribe) to exercise, in the event of
the death of the recipient, an Option, or Stock Appreciation Right or Phantom Stock Option, or to receive, in such event, any Other Stock Awards. The
Committee reserves the right to review and approve beneficiary designations and/or require that a particular form be used to be effective with respect to an Award. A recipient may from
time to time revoke or change any such designation orof beneficiary and any designation of beneficiary under the Plan shall be controlling over any other disposition,
testamentary or otherwise. However, if the Committee shall be in doubt as to the right of any such beneficiary to exercise any Option, or Stock Appreciation Right
or Phantom Stock Option, or to receive any Other Stock Award, the Committee may determine to recognize only an exercise by, or right to receive of, the legal representative of the recipient, in which case the Company, the Committee
and the members thereof shall not be under any further liability to anyone.
B. Upon the death of an Award recipient, the following rules shall apply:
1. | An Option, to the extent exercisable on the date of the recipients death, may be exercised at any time within three years after the recipients death, but not after the expiration of the term of the Option. The Option may be exercised by the recipients designated beneficiary (to the extent there is a beneficiary designation on file which the Committee has allowed) or personal representative or the person or persons entitled thereto by will or in accordance with the laws of descent and distribution, or by the transferee of the Option in accordance with the provisions of Section VI.A. |
2. | In the case of any Other Stock Award, any shares of Common Stock or cash payable shall be determined as of the date of the recipients death, in accordance with the terms of the Award Agreement, and the Company shall issue such shares of Common Stock or pay such cash to the recipients designated beneficiary or personal representative or the person or persons entitled thereto by will or in accordance with the laws of descent and distribution. |
Section VI.
Other Governing Provisions
A. Transferability
Except as otherwise provided herein, no Award shall be transferable other than by beneficiary designation, will or the laws of descent and distribution, and any right granted under an Award may be
exercised during the lifetime of the holder thereof only by the Award Recipientrecipient or by his/her
guardian or legal representative; provided,
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however, that an Award recipient may be permitted, in the sole discretion of the Committee or its delegee, to transfer to a member of such recipients immediate family,
family trust or family partnership as defined by the Committee or its delegee, an Option granted pursuant to Section II. hereof, other than an Incentive Stock Option, subject to such
terms and conditions as the Committee or its delegee, in their sole discretion, shall determine.
B. Rights as a Shareholder
A recipient of an Award shall have no rights as a shareholder, with respect to any OptionsAwards or shares of Common Stock
which may be issued in connection with an Award, until the issuance of a Common Stock certificate for such shares, and no adjustment other than as stated herein shall be made for dividends or other rights for which the record date is prior to the
issuance of such Common Stock certificate. In addition, with respect to Restricted Stock Awards, recipients shall have only such rights as a shareholder as may be set forth in the terms of the Award
Agreement. Notwithstanding the previous language in this Section VI.B, in no event will dividends or dividend equivalents be paid with respect to any Award which does not vest and/or meet
its performance goals. Therefore, dividends and dividend equivalents shall be paid only on the vested portion of Awards on or after the date such Awards, or portion thereof, vest.
C. General Conditions of Awards
No Employee, Director or other person shall have any rights with respect to the Plan, the shares of Common Stock reserved or in any Award, contingent or otherwise, until an Award Agreement shall have been delivered to the recipient and all of the terms, conditions and provisions of the Plan applicable to such recipient shall have been met.
D. Reservation of Rights of Company
Neither the establishment of the Plan nor the granting of an Award shall confer upon any Employee any right to continue in the employ of the Company or any Affiliate or interfere in any way with the right of the Company or any Affiliate to terminate such employment at any time, provided in compliance with applicable local laws and individual employment contracts (if any). No Award shall be deemed to be salary or compensation for the purpose of computing benefits under any employee benefit, pension or retirement plans of the Company or any Affiliate, unless the Committee shall determine otherwise, applicable local law provides otherwise or the terms of such plan specifically include such compensation.
E. Acceleration
The Committee, or, with respect to any Awards granted to Directors, the Board, may, in its sole discretion, accelerate the vesting or date of exercise of any Awards except to the extent such acceleration will result in adverse tax consequences under Code Section 409A.
F. Effect of Certain Changes
Subject to Treasury Regulation §1.409A-1(b)(5)(v)(D) & (H),
inIn the event of any extraordinary dividend, stock split-up, stock dividend, spin-off, issuance of targeted
stock, recapitalization, warrant or rights issuance, or combination, exchange or reclassification with respect to the Common Stock or any other class or series of common stock of the Company, or consolidation, merger or sale of all, or substantially
all, of the assets of the Company, the Committee or its delegate shall cause equitable adjustments to be made to the shares reserved under Section I.D. of the Plan and the limits on Awards set forth in Section I.E.3. of the Plan,
and the Committee or Board shall cause such adjustments to be made to the terms of outstanding Awards to reflect such event and preserve the value of such Awards. Any such adjustments to a Non-Qualified Stock Option or a Stock Appreciation Right
shall comply with the requirements of the regulations under Section 409A of the Code. If any such adjustment would result in a fractional share of Common Stock being issued or awarded under this Plan, such fractional share shall be disregarded.
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G. Repricing
Without the prior approval of the Companys shareholders, the Company will not
effectaffect a repricing (as defined below) of any Options or Other Stock Awards granted under the terms of the Plan. For purposes of the immediately
preceding sentence, a repricing shall be deemed to mean any of the following actions or any other action havehaving the same effect: (a) the lowering
of the purchase price of an Option or Other Stock Award after it is granted; (b) the cancelling of an Option or Other Stock Award in exchange for another Option or Other Stock Award at a time when the purchase price of the cancelled Option or
Other Stock Award exceeds the Fair Market Value of the underlying Stock (unless the cancellation and exchange occurs in connection with a merger, acquisition, spin-off or other similar corporate transaction); (c) the purchase of an Option or
Other Stock Award for cash or other consideration at a time when the purchase price of the purchased Option or Other Stock Award exceeds the Fair Market Value of the underlying Stock (unless the purchase occurs in connection with a merger,
acquisition, spin-off or other similar corporate action); or (d) an action that is treated as a repricing under generally accepted accounting principles.
H. Withholding of Taxes
The Company
and its Affiliates shall satisfy any federal, state, foreign or local
taxincome tax, social insurance contributions, payment on account or other withholding obligations (including income taxes and the employee portion of
employment taxes) resulting from the payment or vesting of Awards (other than Non-Qualified Stock OptionsTax Withholdings) resulting from recipients participation
in the Plan by any of the following means as determined by the Committee (or Board in the case of Awards granted to Directors), in its discretion: (1) by reducing the number of shares of Common Stock otherwise payable under such
Awards. To to the extent that the shares of Common Stock under the Awards are insufficient to satisfy the tax withholding obligations, the
Company shall deduct from any cash payment under the Plan, or otherwise collect from the recipient, any amounts necessary to satisfy such tax obligations. settled in shares;
(2) by withholding from recipients salary, compensation or other payments made to him or her; (3) by requiring recipient to make a cash payment to the Company or one of
its Affiliates in advance of receiving shares or cash pursuant to the Award; (4) withholding from the cash settlement to the extent the Award is settled in cash; (5) selling shares of Common Stock on the market either through a cashless
exercise transaction or other sale on the market; or (6) any other means set forth in the Award Agreement.
In the event that the number of shares of Common Stock otherwise payable are reduced in satisfaction of tax obligations, such number of shares shall be calculated by reference to the Fair Market Value of the Common Stock on the date that such taxes are determined.
In the case of Non-Qualified Stock Options, the Company shall satisfy any federal, state or local tax withholding obligations through
payroll deduction or any other cash payment by the recipient.
With respect to Corporate Officers, Directors or other recipients subject to Section 16(b) of the Exchange Act, the Committee, or, with respect to Awards granted to Directors, the Board, may impose such other conditions on the recipients election as it deems necessary or appropriate in order to exempt such withholding from the penalties set forth in said Section.
I. No Warranty of Tax Effect
Except as may be contained in the terms of any Award Agreement,
noNo opinion is expressed nor warranties made as to the tax effects under federal, foreign, state or local laws or regulations of any Award granted under the
Plan. Regardless of whether Awards are intended to qualify for favorable tax treatment, the Company does not warrant or represent that such treatment will be available.
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J. Amendment of Plan
Except as otherwise provided in this Section VI.J., the Board may, from time to time, amend, suspend or terminate the Plan in whole or in part, and if
terminated, may reinstate any or all of the provisions of the Plan, except that (i) no amendment, suspension or termination may apply to the terms of any outstanding Award
(contingent or otherwise) granted prior to the effective date of such amendment, suspension or termination, in a manner which would reasonably be considered to be adverse to the recipient, without the recipients consent; (ii) except as
provided in Section VI.F., no amendment may be made to increase the number of shares of Common Stock reserved under Section I.D. of the Plan; and (iii) except as provided in
Section VI.F., no amendment may be made to increase the limitations set forth in Section 1.E.3 of the Plan, and (iv) no amendment may withdraw the authority of the Committee to
administer3. of the Plan.
To the extent a portion of the Plan is subject to Code Section 409A, the Board may terminate the Plan, and distribute all vested accrued benefits, without consent from affected Award recipients, subject to the restrictions set forth in Treasury Regulation §1.409A-3(j)(4). A termination of any portion of the Plan that is subject to Code Section 409A must comply with the provisions of Code Section 409A and the regulations and guidance promulgated thereunder, including, but not limited to, restrictions on the timing of final distributions and the adoption of future deferred compensation arrangements.
K. Construction of Plan
The place of administration of the Plan shall be in the State of Missouri and the validity, construction, interpretation, administration and effect of the Plan and of its rules and regulations, and rights relating to the Plan, shall be determined solely in accordance with the laws of the State of Missouri, without giving regard to the conflict of laws provisions thereof.
L. Choice of Law/Venue
The validity, construction and effect of the Plan and any actions taken or relating to the Plan shall be determined in accordance with the laws of the State of Missouri without giving effect to its choice of law provisions. Any legal action against the Plan, the Company, an Affiliate, or the Committee may only be brought in the Circuit Court in St. Louis County and/or the United States District Court in St. Louis, Missouri.
M. Unfunded Nature of Plan
The Plan, insofar as it provides for cash payments, shall be unfunded, and the Company shall not be required to segregate any assets which may at any time be awarded under the Plan. Any liability of the Company to any person with respect to any Award under the Plan shall be based solely upon any contractual obligations which may be created by the terms of any Award Agreement entered into pursuant to the Plan. No such obligation of the Company shall be deemed to be secured by any pledge of, or other encumbrance on, any property of the Company.
N. Successors
All obligations of the Company under the Plan, with respect to any Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business and/or assets of the Company.
O. Compliance with Code Section 409A
To the extent applicable, this Plan and all Awards granted hereunder shall be construed in a manner consistent with the requirements of Code Section 409A.
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P. Clawback and Noncompete
Notwithstanding any other provisions of this Plan, any Award will be subject to such deductions and clawback as may be required to be made pursuant to any law, government regulation or stock exchange listing requirement, or any policy adopted by the Company. In addition and notwithstanding any other provisions of this Plan, any Award shall be subject to such noncompete provisions under the terms of the Award Agreement or any other agreement or policy adopted by the Company, including, without limitation, any such terms providing for immediate termination and forfeiture of an Award if and when the recipient becomes an employee, agent or principal of an entity engaging in Competition with the Company.
Q. Sub-Plans
The Committee may from time to time establish sub-plans under the Plan for purposes of satisfying blue sky, securities, tax or other laws of various jurisdictions in which the Company intends to grant Awards. Any sub-plans shall contain such limitations and other terms and conditions as the Committee determines are necessary or desirable. All sub-plans shall be deemed a part of the Plan, but each sub-plan shall apply only to the Participants in the jurisdiction for which the sub-plan was designed.
R. Non-Uniform Treatment
The Committees determinations under the Plan need not be uniform and may be made by it selectively among persons who are eligible to receive, or actually receive, Awards. Without limiting the generality of the foregoing, the Committee shall be entitled to make non-uniform and selective determinations, amendments and adjustments and to enter into non-uniform and selective Award Agreements.
S. Employees Employed in Foreign Jurisdictions
In order to enable participants who are foreign nationals or employed outside the
United States, or both, to receive awardsAwards under the Plan, the Committee may adopt such amendments, administrative policies,
subplanssub-plans and the like as are necessary or advisable, in the opinion of the Committee, to effectuate the purposes of the Plan and achieve favorable tax
treatment or facilitate compliance under the laws of the applicable foreign jurisdiction without otherwise violating the terms of the
Plan. Therefore, to the extent the Committee determines that the restrictions imposed by this Plan preclude the achievement of material purposes of the Awards in jurisdictions outside of
the United States, the Committee has the authority and discretion to modify those restrictions as the Committee determines to be necessary or appropriate to conform to applicable requirements or practices of jurisdictions outside of the United
States.
T. Substitute Awards.
Awards may be granted under this Plan from time to time in substitution for Awards held by employees of other corporations who are about to become Employees, or whose employer is about to become an Affiliate, as the result of a merger or consolidation of the Company or an Affiliate with another corporation, the acquisition by the Company or an Affiliate of all or substantially all the assets of another corporation or the acquisition by the Company or an Affiliate of at least 50% of the issued and outstanding stock of another corporation. The terms and conditions of the substitute Awards so granted may vary from the terms and conditions set forth in this Plan to such extent as the Board at the time of the grant may deem appropriate to conform, in whole or in part, to the provisions of the Awards in substitution for which they are granted, but with respect to Awards which are Incentive Stock Options, no such variation shall be permitted which affects the status of any such substitute option as an Incentive Stock Option.
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Section VII.
Effective Date and Term
Subject to the prior approval of the Company shareholders,
the Planthis Amendment and Restatement shall be effective January 26, 2009November 4,
2013 and shall continue in effect until December 31, 2018, when it shall terminate. Upon termination, any balances in the reserve established under Section I.D. shall be cancelled, and no Awards shall be granted under the Plan thereafter.
The Plan shall continue in effect, however, insofar as is necessary, to complete all of the Companys obligations under outstanding Awards or to conclude the administration of the Plan.
Section VIII.
Expiration of Prior Incentive Stock Plan
Upon approval of this
Plan by the Company shareholders, the Energizer Holding, Inc. 2000 Incentive Stock Plan will terminate as to future grants or awards thereunder, but this termination shall not affect in any manner outstanding grants or awards under the plan, which
shall continue to be governed by the terms of the plan and the individual grant or award agreements.
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PROXY
Signature Signature Date
Please sign exactly as your name(s) appear(s) hereon. When signing as Attorney, Executor, Trustee, Guardian, or Officer of a Corporation, please give title as such. For joint accounts, all named holders should sign. If you receive more than one proxy card, please sign all cards and return in the accompanying postage-paid envelopes.
p FOLD AND DETACH HERE AND READ THE REVERSE SIDE p
VOTE BY INTERNET OR TELEPHONE QUICK ««« EASY ««« IMMEDIATE |
Energizer Holdings, Inc.
Voting by telephone or Internet is quick, easy and immediate. As a shareholder of Energizer Holdings, Inc., you have the option of voting your shares electronically through the Internet or on the telephone, eliminating the need to return the proxy card. Your electronic vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed, dated and returned the proxy card. Votes submitted electronically over the Internet or by telephone must be received by 7:00 p.m., Eastern Standard Time, on January 26, 2014.
Vote Your Proxy on the Internet:
Go to www.cstproxyvote.com
Have your proxy card available when you access the above website. Follow the prompts to vote your shares.
Vote Your Proxy by Phone:
Call 1 (866) 894-0537
Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares.
PLEASE DO NOT RETURN THE PROXY CARD IF YOU ARE
VOTING ELECTRONICALLY OR BY PHONE
Vote Your Proxy by Mail:
Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided.
ENERGIZER HOLDINGS, INC.
This Proxy is Solicited on Behalf of the Board of Directors
for the Annual Meeting of Shareholders on January 27, 2014
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This proxy when properly executed will be voted in the manner directed herein by the undersigned Shareholder. If no direction is made, this Proxy will be voted FOR all nominees in Item 1, FOR Items 2, 3, 4, and 5 and in the discretion of the proxies on any other business that may properly come before the meeting. The undersigned hereby appoints W.M. Klein and M.S. LaVigne, or either of them, as true and lawful attorneys-in-fact, agents and proxies, with the power of substitution and revocation, to represent and to vote, as designated below, all the shares of the undersigned held of record on November 22, 2013, at the Annual Meeting of Shareholders to be held on January 27, 2014 and any adjournments or postponement thereof.
As described more fully in the proxy statement, if shares of Energizer Common Stock are credited to the account of the undersigned in the Energizer Holdings, Inc. Savings Investment Plan as of November 15, 2013, this proxy card will also serve as voting instructions to the trustee for that plan, Vanguard Fiduciary Trust Company, an affiliate of The Vanguard Group of Investment Companies, for such shares. If the trustee does not receive directions with respect to the shares of Energizer Common Stock credited to the undersigneds account by January 24, 2014, it will vote those shares in the same proportion as it votes shares for which directions were received. |
(Important To be signed and dated on reverse side)
p FOLD AND DETACH HERE AND READ THE REVERSE SIDE p
2014 ANNUAL MEETING ADMISSION TICKET
ENERGIZER HOLDINGS, INC.
2014 ANNUAL MEETING OF SHAREHOLDERS
January 27, 2014
3:00 p.m. local time
Energizer World Headquarters
533 Maryville University Drive
St. Louis, Missouri 63141
Please present this ticket and photo identification for admittance to the Annual Meeting.
Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting:
The Notice of Annual Meeting of Shareholders, Proxy Statement
and our 2013 Annual Report are available at:
www.cstproxy.com/energizer/2013.
December 12, 2013
Dear Savings Investment Plan Participant:
Enclosed are a proxy statement, a proxy card and an Annual Report for the Annual Meeting of Shareholders of Energizer Holdings, Inc. to be held on January 27, 2014. The enclosed proxy card relates to shares of Energizer Common Stock of which you are the record holder and to shares of Energizer Common Stock credited to your account in the Energizer Holdings, Inc. Savings Investment Plan (the Plan).
The Trustee of the Plan will vote all shares of Energizer Common Stock held in the Plan as of November 22, 2013. Shares credited to your account as of November 15, 2013 will be voted in accordance with your instructions on the enclosed proxy card. Any credited shares for which no instructions are received by the Trustee, and any shares in the Plan that were credited between November 16, 2013 and November 22, 2013, will be voted by the Trustee in the same proportion as the shares for which instructions were received from all participants in that Plan.
Please complete, sign and date the enclosed proxy card, which also serves as a voting instruction form for the Trustee. It should be returned, in the postage-paid envelope provided, to Continental Stock Transfer & Trust Company, which acts as tabulator. Alternatively, you may vote by telephone or via Internet. However you decide to vote, in order to provide the tabulator sufficient time to tabulate the votes, it has been requested that all proxy cards be returned, or votes be cast, as promptly as possible, but no later than January 24, 2014.
You may also have received (i) a Notice Regarding the Availability of Proxy Materials with instructions about how to access the proxy statement and Annual Report with respect to other shares of Energizer Common Stock held by you and/or (ii) additional proxy statements and proxy cards relating to other shares of Energizer Common Stock held by you. If you received a Notice Regarding the Availability of Proxy Materials, please use that notice to access the proxy statement, Annual Report and instructions about how to vote your other shares. If you received additional proxy cards, please be advised that these proxies are not duplicates of the one enclosed and we ask that those other shares also be voted as described in the instructions enclosed with such proxies.
WARD M. KLEIN
Chief Executive Officer