Board of Directors Compensation
Director compensation is set by the Board of Directors upon the recommendation of the Corporate Governance Committee. The Corporate Governance Committee conducts an annual review of director compensation, including consideration of surveys of companies considered comparable to the Company in total revenues and market capitalization. The independent compensation advisor serving the Compensation Committee of the Board of Directors, Compensia, Inc., has also provided guidance to the Corporate Governance Committee with respect to director compensation recommendations. For fiscal year 2007, directors received compensation for services as directors pursuant to a director compensation policy which is reviewed annually. As approved on December 12, 2006, the director compensation policy provided for compensation of directors as follows: For 2007, each non-employee director is entitled to receive a base annual fee of $32,000 for services provided from the date of the Company’s annual meeting to the next annual meeting. The Chairman of the Board receives an additional annual fee of $14,000. Non-employee directors receive additional cash compensation for service on committees. The Chairman of the Audit Committee receives $16,000 and each other member of the Audit Committee receives $8,000. Each Chairman of the Compensation Committee, the Corporate Governance Committee and the Finance Committee receives $8,000 and each other member of those committees receives $4,000. All annual fees are payable in March. For service during the year, non-employee directors also received non-qualified stock options to purchase 3,800 shares of the Company’s common stock. The options were granted on the date of the Company’s Annual Meeting in 2006 pursuant to the Company’s 1990 Incentive Stock Option Plan. The stock options are immediately exercisable with a termination date ten years from the grant date. The exercise price for options granted to the directors was $32.78, equal to the closing price of the Company’s shares as of the day of the Annual Meeting.
The Company has maintained the 1999 Non-Employee Director Restricted Stock Plan (the “Director Stock Plan”) providing for the issuance of shares of restricted common stock of the Company to each non-employee member of the Board of Directors. Shares have been issued under the Director Stock Plan in lieu of cash compensation according to an election made by the director prior to November 30th of the year prior to the year of service. A director who held shares of the Company having a value of at least $50,000 has been entitled to elect to receive the entire annual director’s fee in cash. Otherwise, directors received restricted stock in lieu of $5,500 of cash compensation and they have been permitted to elect to receive restricted stock in lieu of the balance of their base annual fee in increments of $5,500. The restricted shares have been issued in accordance with a director’s election as soon as practicable after the first day of March of the year of service. The number of shares issued is equal to the amount of compensation to be paid in shares divided by 90% of the closing price of the Company’s shares as of the first business day of March.
Restricted shares issued to a director do not become vested for resale for a period of five years or until the director’s retirement from the Board following the director’s 65th birthday. Unless a director has reached age 65, the shares are subject to forfeiture if, during the five year vesting period, the director resigns from service as a director.
The Company also maintains a Director Contributions Fund from which each incumbent director has the right, at a specified time each fiscal year, to designate $6,000 in charitable contributions to be made by the Company to properly qualified (under Internal Revenue Code Section 501(c)(3)) charitable organizations.
The following Director Compensation table provides information concerning director compensation earned by each non-employee director for services rendered in fiscal year 2007. Amounts earned and reported in the Director Compensation table for each director are dependent upon each director’s election to receive discounted shares in lieu of all or part of the director’s annual base fee under the Director Stock Plan as described above and on the various committees on which each director served as a member or as chairman during the fiscal year.
DIRECTOR COMPENSATION
Fiscal Year 2007
| Name | Fees Earned or Paid in Cash ($)1 |
Stock Awards ($)2 |
Option Awards ($)3 |
All Other Compensation ($)4 |
Total ($) |
||||
|---|---|---|---|---|---|---|---|---|---|
| John C. Adams, Jr. | $41,330 | $0 | $26,676 | $6,000 | $74,006 | ||||
| Giles H. Bateman | $53,192 | $0 | $26,676 | $6,000 | $85,868 | ||||
| Peter D. Bewley | $47,989 | $0 | $26,676 | $6,000 | $80,665 | ||||
| Richard A. Collato | $48,989 | $0 | $26,676 | $6,000 | $81,665 | ||||
| Mario L. Crivello | $35,500 | $0 | $26,676 | $6,000 | $68,176 | ||||
| Linda A. Lang | $46,989 | $0 | $26,676 | $6,000 | $79,665 | ||||
| Gary L. Luick | $42,125 | $0 | $26,676 | $6,000 | $74,801 | ||||
| Kenneth E. Olson | $42,500 | $0 | $26,676 | $6,000 | $75,176 | ||||
| Neal E. Schmale | $50,330 | $0 | $26,676 | $6,000 | $83,006 |
1 For services rendered during fiscal year 2007, directors received restricted shares of the Company’s common stock in lieu of all or part of their base annual fees pursuant to their respective elections under the Director Stock Plan (as described in the narrative preceding the Director Compensation table) as follows: John C. Adams, Jr. and Neal E. Schmale received shares valued at $8,330; Giles H. Bateman received shares valued at $16,817; Peter D. Bewley, Richard A. Collato and Linda A. Lang received shares valued at $34,989; and Gary L. Luick received shares valued at $1,524.
2 No amounts are included in the Stock Awards column since all of the shares awarded to the directors pursuant to the Director Stock Plan were awarded pursuant to elections to receive shares in lieu of all or part of the directors’ base annual fees. The value of the shares received by each director pursuant to their respective elections to receive shares is included in the Fees Earned or Paid in Cash column and detailed in footnote 1.
3 Non-qualified stock options to acquire 3,800 shares of the Company’s common stock were granted to the directors on December 12, 2006 at an exercise price of $32.78 per share. The options were fully vested upon the date of grant. The Option Awards fair value of $7.02 per share for such options has been determined as of the grant date of December 12, 2006 using the Black-Scholes Option Valuation model. The following assumptions were used in determining the value: (i) a dividend yield of 3.05%; (ii) expected volatility of 0.2389; (iii) a 5.61-year risk free interest rate of 4.45%; and (iv) an expected option term/life of 5.61 years. The reported amounts equal the grant date fair value for the stock options computed under FAS 123R since the options were fully vested as of the date of grant. The outstanding options for each director as of the end of the fiscal year is reported with respect to such director’s security ownership as of October 18, 2007 on page 4 of this proxy statement.
4 Amounts represent charitable contributions made by the Company as designated by each non-employee director pursuant to the Company’s Director Contribution Fund.