Table of
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION
14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT
NO. )
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AGILENT TECHNOLOGIES,
INC. |
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Table of
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Agilent Technologies, Inc.
5301 Stevens
Creek Blvd.
Santa Clara, California 95051
Michael R. McMullen
Chief Executive
Officer
February 2016
To our
Stockholders:
I am pleased to invite you to
attend the annual meeting of stockholders of Agilent Technologies, Inc.
(Agilent) to be held on Wednesday, March 16, 2016 at 8:00 a.m., Pacific Time,
at Agilents headquarters located at 5301 Stevens Creek Blvd., Building No. 5,
Santa Clara, California (U.S.A.). Details regarding admission to the annual
meeting and the business to be conducted are more fully described in the
accompanying Notice of Annual Meeting and Proxy Statement.
If you are unable to attend
the annual meeting in person, you may listen through the Internet or by
telephone. To listen to the live webcast, log on at www.investor.agilent.com and
select the link for the webcast. To listen by telephone, please call (877)
312-5529 (international callers should dial (253) 237-1147). The meeting
identification number is 94999805. The webcast will begin at 8:00 a.m. and will
remain on Agilents website for one year. You cannot record your vote or ask
questions on this website or at this phone number.
We have elected to take
advantage of Securities and Exchange Commission rules that allow issuers to
furnish proxy materials to their stockholders on the Internet. We believe that
the rules allow us to provide our stockholders with the information they need,
while lowering the costs of delivery and reducing the environmental impact of
the annual meeting.
Your vote is important.
Whether or not you plan to attend the annual meeting, I hope that you will vote
as soon as possible. Please review the instructions on each of your voting
options described in the Proxy Statement and the Notice of Internet Availability
of Proxy Materials you received in the mail.
Thank you for your ongoing
support of, and continued interest in, Agilent.
Sincerely,
Admission to the annual
meeting will be limited to stockholders. You are entitled to attend the annual
meeting only if you are a stockholder of record as of the close of business on
January 19, 2016, the record date, or hold a valid proxy for the meeting. In
order to be admitted to the annual meeting, you must present proof of ownership
of Agilent stock on the record date. This can be a brokerage statement or letter
from a bank or broker indicating ownership on January 19, 2016, the Notice of
Internet Availability of Proxy Materials, a proxy card, or legal proxy or voting
instruction card provided by your broker, bank or nominee. Any holder of a proxy
from a stockholder must present the proxy card, properly executed, and a copy of
the proof of ownership. Stockholders and proxyholders may also be asked to
present a form of photo identification such as a drivers license or passport.
Backpacks, cameras, cell phones with cameras, recording equipment and other
electronic recording devices will not be permitted at the annual meeting.
Agilent reserves the right to inspect any persons or proposals prior to their
admission to the annual meeting. Failure to follow the meeting rules or permit
inspection will be grounds for exclusion from the annual meeting.
Table of
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AGILENT TECHNOLOGIES,
INC.
5301 Stevens Creek
Blvd.
Santa Clara, California 95051
(408) 553-2424
Notice of Annual Meeting
of Stockholders
TIME |
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8:00 a.m.,
Pacific Time, on Wednesday, March 16, 2016 |
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PLACE |
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Agilents
Headquarters |
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5301 Stevens
Creek Boulevard, Building No. 5 |
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Santa Clara,
California (U.S.A.) |
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ITEMS
OF BUSINESS |
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(1) To elect
three directors to a 3-year term. At the annual meeting, the Board of
Directors intends to present the following nominees for election as
directors: |
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●Paul N. Clark
●James G. Cullen;
and
●Tadataka Yamada,
M.D. |
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(2) To
ratify the Audit and Finance Committees appointment of
PricewaterhouseCoopers LLP as Agilents independent registered public
accounting firm. |
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(3) To
approve, on a non-binding advisory basis, the compensation of Agilents
named executive officers. |
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(4) To
approve amendments to our Amended and Restated Certificate of
Incorporation and Bylaws to declassify the Board. |
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(5) To
consider such other business as may properly come before the annual
meeting. |
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RECORD
DATE |
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You are
entitled to vote at the annual meeting and at any adjournments or
postponements thereof if you were a stockholder at the close of business
on Tuesday, January 19, 2016. |
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ANNUAL
MEETING ADMISSION |
|
To be
admitted to the annual meeting, you must present proof of ownership of
Agilent stock as of the record date. This can be a brokerage statement or
letter from a bank or broker indicating ownership on January 19, 2016, the
Notice of Internet Availability of Proxy Materials, a proxy card, or legal
proxy or voting or voting instruction card provided by your broker, bank
or nominee. You may also be asked to present a form of photo
identification such as a drivers license or passport. The annual meeting
will begin promptly at 8:00 a.m. Limited seating is available on a first
come, first served basis. |
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VOTING |
|
For
instructions on voting, please refer to the instructions on the Notice of
Internet Availability of Proxy Materials you received in the mail or, if
you received a hard copy of the Proxy Statement, on your enclosed proxy
card. |
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By Order of the
Board, |
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MICHAEL TANG |
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Senior Vice
President, General Counsel and |
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Secretary |
This Proxy Statement and the
accompanying proxy card are being sent or made available
on or about February
4, 2016.
1
Table of
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SUMMARY INFORMATION
|
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This proxy statement contains
forward-looking statements as defined in the Securities Exchange Act of 1934 and
is subject to the safe harbors created therein. The forward-looking statements
contained herein are generally identified by the words believe, project,
expect, anticipate, estimate, intend, strategy, future,
opportunity, plan, may, should, will, would, will be, will
continue, will likely result, and similar expressions. Forward-looking
statements are based on the beliefs and assumptions of Agilents management and
on currently available information. A detailed discussion of risks and
uncertainties that could cause actual results and events to differ materially
from such forward-looking statements is included in our annual report on Form
10-K for the year ended October 31, 2015. Agilent undertakes no responsibility
to publicly update or revise any forward-looking statement.
PROXY SUMMARY
The following is a summary
which highlights information contained elsewhere in this Proxy Statement. This
summary does not contain all of the information you should consider, and you are
urged to read the entire Proxy Statement carefully before voting.
Voting Matters and Vote
Recommendations
There are four items of
business which Agilent currently expects to be considered at the Annual Meeting.
The following table lists those items of business and the Agilent Boards vote
recommendation.
PROPOSAL |
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BOARD
VOTE RECOMMENDATION |
(1) |
Election of
Directors |
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For each director
nominee |
(2) |
Ratification of the Independent Registered Public Accounting
Firm |
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For |
(3) |
Advisory vote to
approve Named Executive Officer Compensation |
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For |
(4) |
Amendments to our Amended and
Restated Certificate of Incorporation and Bylaws to declassify the
Board |
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For |
Director
Nominees
Agilents Board is currently
divided into three classes serving staggered three-year terms. The following
table provides summary information about each of the three director nominees who
are being voted on at the Annual Meeting.
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COMMITTEE |
OTHER |
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DIRECTOR |
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INDE- |
MEMBERSHIPS |
PUBLIC |
NAME |
AGE |
SINCE |
OCCUPATION |
PENDENT |
AC |
CC |
NCG |
EC |
BOARDS |
Paul N.
Clark |
68 |
2006 |
Strategic Advisory Board |
Yes |
M |
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M |
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2 |
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Member of Genstar |
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Capital,
LLC |
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James G.
Cullen |
73 |
2000 |
Retired President and |
Yes |
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C |
C |
4 |
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Chief Operating Officer of |
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Bell Atlantic Corporation |
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(now known as
Verizon) |
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Tadataka Yamada,
M.D. |
70 |
2011 |
Venture Partner, Life |
Yes |
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M |
M |
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Sciences Team, and Senior |
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Advisor, Growth Buyout |
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Team, Frazier
Healthcare |
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Key: |
AC: Audit Committee; CC:
Compensation Committee; NCG: Nominating/Corporate Governance Committee;
EC: Executive
Committee; C: Chairperson; M:
Member |
2
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SUMMARY INFORMATION
|
New Executive Officer
Compensation Program
Listening to Our
Shareholders
Agilent has historically
received over 90% shareholder support on our Say-on-Pay proposals along with
support from the major shareholder advisory firms. However, early in 2015 the
major shareholder advisory firms recommended an Against vote on our fiscal
year 2014 Say on Pay proposal. In response, our Compensation Committee Chair and
members of management met with 15 of our largest shareholders who own more than
40% of Agilents outstanding shares to hear their concerns. While our fiscal
year 2014 Say on Pay proposal passed with 60% shareholder support, we were
disappointed with this result and commenced a full review of our programs.
Following these meetings, the Compensation Committee, our independent
Compensation Committee consultant, and Agilent management considered the
feedback received from shareholders and proposed a number of changes to our
executive compensation programs for fiscal year 2016. In August 2015, our
Compensation Committee Chair and members of management met again with 8 of our
largest shareholders to preview our proposed program design changes. The
feedback on our proposals was positive and in September, the Compensation
Committee approved the design changes set forth below and as more fully
described in the Compensation Discussion and Analysis and Executive Compensation
sections of the proxy statement to take effect in fiscal year 2016.
Program |
FY15 Design |
FY16 Design |
|
Performance Period |
Semi-Annual |
Annual |
Primary
Financial Metrics |
Operating
Margin (OM) / Revenue |
Return on Invested
Capital |
(ROIC) /
Revenue |
|
Stock Options |
50% of target LTI
value |
n/a |
(Time-Based Vesting) |
LTPP Shares |
50% of target LTI
value |
30% of target LTI
value |
(Relative
Total Shareholder |
Return (TSR)) |
LTPP Shares |
n/a |
30% of target LTI
value |
(Financial Metric: |
OM for FY16) |
RSUs |
n/a |
40% of target LTI
value |
(Time-Based Vesting) |
One Year Post-Vest |
None |
Apply to LTPP and
RSUs |
Holding Period |
|
✓ 2X cap on LTPP
shares ✓ No cap on payout dollar
value |
Lower of: |
Payout Caps |
✓ 2X cap on # of
shares |
|
✓ 3X cap on payout dollar
value |
The Compensation Committee will continue to consider the outcome of the Companys say-on-pay votes when making future compensation decisions for the named executive officers.
3
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|
SUMMARY INFORMATION
|
Business Highlights
Fiscal Year 2015
was a momentous year for Agilent. We entered the year as a stand-alone Life
Sciences, Diagnostics and Applied Markets company, having just completed the
spin-off of Keysight Technologies. On March 18, 2015, we appointed Mike McMullen
as Agilents 3rd Chief Executive Officer, succeeding Bill Sullivan
who announced his decision to retire last year. This year also marks Agilents
50th anniversary in analytical instrumentation.
Agilent is a
global leader in life sciences, diagnostics and applied chemical markets and the
premier laboratory partner for a better world. Ultimately, our fiscal year 2015
results reflect the dedication and passion of over 12,000 employees worldwide,
in more than 100 countries providing instruments, software, services and
consumables for the entire laboratory workflow. A few of our most notable
performance highlights include the following:
➢ |
We closed the acquisitions of (a)
Cartagenia, a provider of software solutions for variant assessment and
reporting of clinical genomics data from next-generation sequencing and
microarrays in May 2015 and (b) Seahorse Bioscience, a leading provider of
instruments and assay kits for measuring cell metabolism and
bioenergetics. Seahorses unique technology is the perfect complement to
Agilents market-leading separations and mass spec solutions, in
particular for metabolomics and disease research in pharma in November
2015. |
➢ |
We returned $400 million to
shareholders in the form of dividends and buybacks and generated $491
million in operating cash flow. |
➢ |
Our Life Sciences and Applied
Markets Group (LSAG) introduced the following new
products: |
|
●The 5977B High Efficiency Source (HES)
GC/MSD System, a tandem gas chromatograph and mass spectrometer that
delivers lower limits of detection than any other instrument in its
class.
●The
4200 TapeStation system, a fully automated instrument that enables scientists to rapidly analyze up to 96 DNA samples at a time,
and sets a new sample QC standard for next-gen sequencing; and
●The 1290 Infinity II Vialsampler that
shortens injection cycles, lowers carryover and enlarges sample
capacity-at a pressure range of up to 1300 bar. |
|
|
➢ |
Our Diagnostics and Genomics Group
(DGG) partnered with Merck & Co. and Bristol-Myers Squibb and
received FDA approval of two new companion diagnostic tests for Mercks
Keytruda and Bristol Myers Squibbs OPTDIVO therapies, both drugs targeted
at treating non-small cell lung
cancer. |
4
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|
TABLE OF CONTENTS
|
2016 ANNUAL MEETING OF
STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY
STATEMENT
TABLE OF
CONTENTS
5
Table of
Contents
|
TABLE OF CONTENTS
|
2016 ANNUAL MEETING OF
STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY
STATEMENT
TABLE OF
CONTENTS
6
Table of
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|
ELECTION OF DIRECTORS
|
PROPOSAL 1 ELECTION OF
DIRECTORS
Director Nomination
Criteria: Qualifications and Experience
The Nominating/Corporate
Governance Committee (the Nominating Committee) performs an assessment of the
skills and the experience needed to properly oversee the interests of the
Company. Generally the Nominating Committee reviews both the short and long term
strategies of the Company to determine what current and future skills and
experience are required of the Board in exercising its oversight function. The
Nominating Committee then compares those skills to the skills of the current
directors and potential director candidates. The Nominating Committee conducts
targeted efforts to identify and recruit individuals who have the qualifications
identified through this process. The Nominating Committee looks for its current
and potential directors collectively to have a mix of skills and qualifications,
some of which are described below:
|
● |
a reputation for personal
and professional integrity and ethics; |
|
● |
executive or similar policy-making
experience in relevant business or technology areas or national prominence
in an academic, government or other relevant field; |
|
● |
breadth of
experience; |
|
● |
soundness of
judgment; |
|
● |
the ability to make
independent, analytical inquiries; |
|
● |
the willingness and
ability to devote the time required to perform Board activities
adequately; |
|
● |
the ability to represent
the total corporate interests of Agilent; and |
|
● |
the ability to represent
the long-term interests of stockholders as a
whole. |
In
addition to these minimum requirements, the Nominating Committee will also
consider whether the candidates skills are complementary to the existing Board
members skills; the diversity of the Board in factors such as age, experience
in technology, manufacturing, finance and marketing, international experience
and culture; and the Boards needs for specific operational, management or other
expertise. The Nominating Committee from time to time reviews the appropriate
skills and characteristics required of board members, including factors that it
seeks in board members such as diversity of business experience, viewpoints and,
personal background, and diversity of skills in technology, finance, marketing,
international business, financial reporting and other areas that are expected to
contribute to an effective Board of Directors. In evaluating potential
candidates for the Board of Directors, the Nominating Committee considers these
factors in the light of the specific needs of the Board of Directors at that
time.
Current Director
Terms
Agilents Board is divided
into three classes serving staggered three-year terms. Directors for each class
are elected at the annual meeting of stockholders held in the year in which the
term for their class expires. Agilents Bylaws, as amended, allow the Board to
fix the number of directors by resolution. Our Board currently consists of ten
directors divided into three classes.
If Proposal 4 is approved by
the requisite percentage of stockholders at the Annual Meeting, the Company will
transition to a declassified structure under which the entire Board will stand
for election annually beginning in 2019. As part of the transition, at the
Annual Meetings of Stockholders in 2017 and 2018, each of the Class II and Class
III directors, respectively, will begin standing for annual election. The
proposed amendments will not affect the unexpired term of any director elected
prior to the Annual Meeting of Stockholders in 2017.
7
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|
ELECTION OF DIRECTORS
|
The terms of the three
director nominees will expire at this Annual Meeting. The current composition of
the Board and the term expiration dates for each director is as
follows:
Class |
Directors |
Term Expires |
I |
Paul N. Clark, James G.
Cullen and Tadataka Yamada, M.D. |
2016 |
II |
Heidi Fields, Sue H. Rataj
and George A. Scangos, Ph.D. |
2017 |
III |
Robert J. Herbold, Koh
Boon Hwee, Michael R. McMullen and Daniel K. Podolsky, M.D. |
2018 |
Directors elected at the 2016 annual meeting will hold office for a
three-year term expiring at the annual meeting in 2019 (or until their
respective successors are elected and qualified, or until their earlier death,
resignation or removal). All nominees are currently directors of Agilent.
Information regarding each nominee is provided below as of December 31, 2015.
There are no family relationships among Agilents executive officers and
directors.
Director Nominees for
Election to New Three-Year Terms That Will Expire in 2019
PAUL N. CLARK |
|
|
|
Age: 68 |
Agilent Committees: |
Public Directorships: |
Director Since: |
● Audit and
Finance |
● Biolase,
Inc. |
May 2006 |
● Nominating/Corporate
Governance |
● Keysight Technologies,
Inc. |
|
|
|
|
|
Former Public Directorships Held During the Past Five
Years: |
|
|
● Amylin Pharmaceuticals,
Inc. |
|
|
● Talecris
Biotherapeutics Holdings Corp |
Mr. Clark has been a Strategic Advisory Board
member of Genstar Capital, LLC since August 2007 and was an Operating Partner
from August 2007 to January 2013. Genstar Capital LLC is a middle market private
equity firm that focuses on investments in selected segments of life sciences
and healthcare services, industrial technology, business services and software.
Prior to that, Mr. Clark was the Chief Executive Officer and President of ICOS
Corporation, a biotherapeutics company, from June 1999 to January 2007, and the
Chairman of the Board of Directors of ICOS from February 2000 to January 2007.
From 1984 to December 1998, Mr. Clark worked in various capacities for Abbott
Laboratories, a health care products manufacturer, retiring from Abbott
Laboratories as Executive Vice President and a board member. His previous
experience included senior positions with Marion Laboratories, a pharmaceutical
company, and Sandoz Pharmaceuticals (now Novartis Corporation), a pharmaceutical
company.
Mr. Clark has significant
experience in the pharmaceutical and biotechnology industries, including his
experience serving in senior management positions with ICOS Corporation (where
he served as Chief Executive Officer and President), Abbott Laboratories, Marion
Laboratories and Sandoz Pharmaceuticals. In addition, Mr. Clark brings
considerable public company director experience and perspective on company
management and governance issues and practices.
8
Table of Contents
|
ELECTION OF
DIRECTORS |
JAMES G. CULLEN |
|
|
Age: 73 Director
Since: April 2000 |
Agilent
Committees:
●Nominating/Corporate Governance
(Chair)
●Executive (Chair) |
Public
Directorships:
●Avinger, Inc.
●Keysight Technologies, Inc
●Neustar, Inc.
●Prudential Financial, Inc.
Former Public Directorships
Held During the Past Five Years:
●Johnson &
Johnson |
Mr. Cullen has served as
Non-Executive Chairman of our Board since March 2005. Mr. Cullen was President
and Chief Operating Officer of Bell Atlantic Corporation (now known as Verizon)
from 1997 to June 2000 and a member of the office of chairman from 1993 to June
2000. Prior to this appointment, Mr. Cullen was the President and Chief
Executive Officer of the Telecom Group of Bell Atlantic from 1995 to 1997. Prior
to the creation of Bell Atlantic on January 1, 1984, Mr. Cullen held management
positions with New Jersey Bell from 1966 to 1981 and AT&T from 1981 to
1983.
Mr. Cullen has considerable
managerial and operational experience and expertise from his senior leadership
position with Bell Atlantic and its predecessors. In addition, Mr. Cullen brings
significant public company director experience and perspective on public company
management and governance. Mr. Cullen has a strong understanding of Agilent
having served on the board for over 10 years, including more than 5 years as the
non-executive chairman.
TADATAKA YAMADA, M.D. |
|
|
Age: 70 Director
Since: January 2011 |
Agilent
Committees:
●Compensation
●Nominating/Corporate
Governance |
Public
Directorships:
None
Former Public Directorships
Held During the Past Five Years:
●Covidien plc.
●Takeda Pharmaceutical Co.
Ltd. |
Dr. Yamada is currently a
Venture Partner on the Life Sciences team of Frazier Healthcare Partners, a
healthcare-focused investment firm. From June 2011 to June 2015 Dr. Yamada
served as the Chief Medical and Scientific Officer of Takeda Pharmaceuticals
International, Inc., a research-based global pharmaceutical company. Dr. Yamada
previously served as President of the Global Health Program of the Bill &
Melinda Gates Foundation from June 2006 to June 2011. From 2000 to 2006, Dr.
Yamada was Chairman of Research and Development for GlaxoSmithKline Inc. and
prior to that, he held research and development positions at SmithKline Beecham.
Prior to joining SmithKline Beecham, Dr. Yamada was Chairman of the Department
of Internal Medicine at the University of Michigan Medical School and
Physician-in-Chief of the University of Michigan Medical Center.
Dr. Yamada brings to our Board
a unique perspective with his experience as the former President of the Global
Health Program of the Bill & Melinda Gates Foundation as well as his
significant research and development experience. Dr. Yamadas extensive
pharmaceutical industry knowledge gives him an insight into a number of issues
facing Agilent that other directors might not possess.
Agilents Board
recommends a vote FOR the election to the Board of each of the
foregoing
nominees.
9
Table of Contents
|
ELECTION OF
DIRECTORS |
Continuing Directors Not
Being Considered for Election at this Annual Meeting
The Agilent directors whose
terms are not expiring this year are listed below. They will continue to serve
as directors for the remainder of their terms or such other date, in accordance
with Agilents Bylaws. Information regarding each of such directors is provided
below.
Directors Whose Terms Will
Expire in 2017
HEIDI FIELDS |
|
|
Age: 61 Director
Since: February 2000 |
Agilent
Committees:
●Audit and Finance (Chair)
●Nominating/Corporate
Governance |
Public
Directorships:
●Financial Engines, Inc.
●Halyard Health, Inc.
Former Public Directorships
Held During the Past Five Years:
None |
Ms. Fields served as Executive
Vice President and Chief Financial Officer of Blue Shield of California from
September 2003 through December 2012. She served as Executive Vice President and
the Chief Financial Officer of Gap, Inc. from 1999 to January 2003. Prior to
assuming that position, Ms. Fields served as the Chief Financial Officer of ITT
Industries, Inc. from 1995 to 1999. From 1979 to 1995, she held senior financial
management positions at General Motors Corporation, including Vice President and
Treasurer.
Ms. Fields possesses
significant experience and experience in management and financial matters,
having served as the Chief Financial Officer of both public and private
companies, including at Blue Shield of California, Gap, Inc. and ITT Industries,
Inc. Ms. Fields is the chairperson of our Audit and Finance Committee and is
qualified as a financial expert under SEC guidelines. In addition, Ms. Fields
has considerable experience and expertise with Agilent having been a member of
Agilents board of directors for over 10 years.
SUE H. RATAJ |
|
|
Age: 58 Director
Since: September 2015 |
Agilent
Committees:
●Compensation
●Nominating/Corporate
Governance |
Public
Directorships:
●Cabot Corporation
●Bayer A.G.
Former Public Directorships
Held During the Past Five Years:
None |
Ms. Rataj was Chief Executive,
Petrochemicals for BP, a global energy company until she retired in April 2011.
In this role, she held responsibility for all BPs global petrochemical
operations. Prior to that, Ms. Rataj held a variety of senior management
positions with BP, most recently serving as Group Vice President, Health,
Safety, Operations and Technology for the Refining and Marketing
Segment.
Ms. Rataj possesses
significant leadership experience and business expertise from her executive
positions with BP. Ms. Rataj has lived and worked extensively in the Asia
Pacific and European regions, and brings a global perspective to the Agilent
Board. In addition, Ms. Rataj brings public company director experience and
knowledge of public company management and governance practices.
10
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|
ELECTION OF
DIRECTORS |
GEORGE A. SCANGOS, Ph.D. |
|
|
Age: 67 Director
Since: September 2014 |
Agilent
Committees:
●Compensation
●Nominating/Corporate
Governance |
Public
Directorships:
●Biogen Inc.
●Exelixis, Inc.
Former Public Directorships
Held During the Past Five Years:
●Anadys Pharmaceuticals,
Inc. |
Dr. Scangos has served as the
Chief Executive Officer and a director of Biogen Inc. since July 2010. From 1996
to July 2010, Dr. Scangos served as the President and Chief Executive Officer of
Exelixis, Inc., a drug discovery and development company. From 1993 to 1996, Dr.
Scangos served as President of Bayer Biotechnology, where he was responsible for
research, business development, process development, manufacturing, engineering
and quality assurance of Bayers biological products. Before joining Bayer in
1987, Dr. Scangos was a Professor of Biology at Johns Hopkins University for six
years. Dr. Scangos served as non-executive Chairman of Anadys Pharmaceuticals,
Inc., a biopharmaceutical company, from 2005 to July 2010 and was a director of
the company from 2003 to July 2010. Dr. Scangos served as the Chair of the
California Healthcare Institute in 2010 and was a member of the Board of the
Global Alliance for TB Drug Development from 2006 until 2010. He is also a
member of the National Board of Visitors of the University of California, Davis
School of Medicine and is currently an Adjunct Professor of Biology at Johns
Hopkins University.
Dr. Scangos has extensive
training as a scientist, significant knowledge and experience with respect to
the biotechnology, healthcare and pharmaceutical industries, and a comprehensive
leadership background resulting from service on various boards of directors and
as an executive in the pharmaceutical industry.
Directors Whose Terms will
Expire in 2018
ROBERT J. HERBOLD |
|
|
Age: 73 Director
Since: June 2000 |
Agilent
Committees:
●Audit and Finance
●Nominating/Corporate
Governance |
Public
Directorships:
●Neptune Orient Lines Limited
Former Public Directorships
Held During the Past Five Years:
None |
Mr. Herbold has served as the
Managing Director of the consulting firm The Herbold Group, LLC since 2003. He
served as Executive Vice President and Chief Operating Officer of Microsoft
Corporation from 1994 to April 2001 and served as an Executive Vice President
(part-time) of Microsoft Corporation until June 2003. Prior to joining
Microsoft, Mr. Herbold was employed by The Procter & Gamble Company for
twenty-six years, and served as a Senior Vice President at The Procter &
Gamble Company from 1990 to 1994.
Mr. Herbold possesses
significant leadership experience and business expertise from his executive
leadership positions with Microsoft Corporation and The Procter & Gamble
Company. Having been a member of the Agilent board for over 10 years, Mr.
Herbold has a strong knowledge of Agilents business. In addition, Mr. Herbold
brings considerable public and private company director experience and
perspective on public company management and governance issues and
practices.
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|
ELECTION OF
DIRECTORS |
KOH BOON HWEE |
|
|
Age: 65 Director
Since: May 2003 |
Agilent
Committees:
●Compensation (Chair)
●Nominating/Corporate
Governance |
Public
Directorships:
●AAC Technologies Holdings, Inc.
●Sunningdale Tech, Ltd.
●Yeo Hiap Seng Ltd.
●Far East Orchard Ltd.
Former Public Directorships
Held During the Past Five Years:
●Yeo Hiap Seng (Malaysia)
Bhd |
Mr. Koh is the managing
partner of Credence Capital Fund II (Cayman) Ltd., a private equity fund. Mr.
Koh has served as the non-Executive Chairman of Sunningdale Tech Ltd. since
January 2009 and previously served as its Executive Chairman and Chief Executive
Officer from July 2005 to January 2009. He has served as the non-Executive
Chairman of Yeo Hiap Seng Ltd. since April 2010, the non-Executive Chairman of
Rippledot Capital Advisers Pte. Ltd. since February 2011 and the non-Executive
Chairman of Far East Orchard Ltd. since April 2013. He served as Executive
Director of MediaRing Limited from February 2002 to August 2009; Chairman of DBS
Bank Ltd. from January 2006 to April 2010; Chairman of Singapore Airlines from
July 2001 to December 2005 and Chairman of Singapore Telecom from April 1992 to
August 2001. Mr. Koh spent fourteen years with Hewlett-Packard Company in its
Asia Pacific region.
Mr. Koh possesses a strong mix
of leadership and operational experience from his various senior positions with
Sunningdale Tech, AAC Technologies, MediaRing Limited, DBS Bank, Singapore
Airlines and Singapore Telecom. In addition, Mr. Koh has deep experience in the
Asia Pacific region and brings that knowledge and perspective to the Board. Mr.
Koh has extensive experience with Agilent and its predecessor, Hewlett-Packard,
having served on the Agilent board for over 10 years and having spent 14 years
with Hewlett-Packard.
MICHAEL R. MCMULLEN |
|
|
Age: 54 Director
Since: March 2015 |
Agilent
Committees:
●Executive Committee
|
Public
Directorships:
None
Former Public Directorships
Held During the Past Five Years:
None |
Mr. McMullen has served as
Chief Executive Officer since March 2015 and as President since September 2014.
From September 2014 to March 2015 he also served as Chief Operating Officer.
From September 2009 to September 2014 he served as Senior Vice President,
Agilent and President, Chemical Analysis Group. From January 2002 to September
2009, he served as our Vice President and General Manager of the Chemical
Analysis Solutions Unit of the Life Sciences and Chemical Analysis Group. Prior
to assuming this position, from March 1999 to December 2001, Mr. McMullen served
as Country Manager for Agilents China, Japan and Korea Life Sciences and
Chemical Analysis Group. Prior to this position, Mr. McMullen served as our
Controller for the Hewlett-Packard Company and Yokogawa Electric Joint Venture
from July 1996 to March 1999.
Mr. McMullen has broad and
deep experience with Agilent and its businesses having been an employee of
Agilent and its predecessor, Hewlett-Packard, for over 20 years. During the
course of his career, he has developed considerable expertise in, and in-depth
knowledge of, Agilents businesses, having seen them as an individual
contributor and at numerous levels of management. This perspective gives
valuable insight to the Agilent board.
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|
ELECTION OF DIRECTORS |
DANIEL K. PODOLSKY, M.D. |
|
|
Age: 62 Director
Since: July 2015 |
Agilent
Committees:
●Audit and Finance
●Nominating/Corporate
Governance |
Public
Directorships:
●GlaxoSmithKline PLC
Former Public Directorships
Held During the Past Five Years:
None |
Dr. Podolsky has served as
President of the University of Texas Southwestern Medical Center, a leading
academic medical center, patient care provider and research institution, since
September 2008. Previously Dr. Podolsky also served concurrently as Mallinckrodt
Professor of Medicine at Harvard Medical School, the Chief of Gastroenterology
at Massachusetts General Hospital. From 2005 to 2008, Dr. Podolsky served as
Chief Academic Officer and Faculty Dean, Academic Programs of Partners
Healthcare System, Inc., a non-profit health care system committed to patient
care, research, teaching and service. Dr. Podolsky holds the Philip OBryan
Montgomery, Jr., M.D. Distinguished Presidential Chair in Academic
Administration, and the Doris and Bryan Wildenthal Distinguished Chair in
Medical Science. He is a member of the Institute of Medicine of the US National
Academy of Sciences, member of the Board of the Southwestern Medical Foundation
and is a member of the Scientific Advisory Board of Antibe Therapeutics, Inc., a
company focused on the treatment of diseases characterized by inflammation, pain
and/or vascular dysfunction. Dr. Podolsky is also a member of the National
Academies of Sciences Board on Army Science and Technology.
Dr. Podolskys current
responsibilities in leading a large academic medical center give him relevant
insight into healthcare delivery and bring scientific expertise to the
Board.
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|
COMPENSATION OF
NON-EMPLOYEE DIRECTORS |
COMPENSATION OF NON-EMPLOYEE DIRECTORS
Directors who are employed by
Agilent do not receive any compensation for their Board services. As a result,
Mr. McMullen, an employee of Agilent, received no additional compensation for
his Board services. The general policy of the Board is that compensation for
non-employee directors should be a mix of cash and equity-based compensation
that is competitive with the compensation paid to non-employee directors within
Agilents peer group. The non-employee directors compensation plan year begins
on March 1 of each year (the Plan Year).
The table below sets forth the
annual retainer, equity grants and committee premiums for the non-employee
directors and the Non-Executive Chairman for the 2015 Plan Year:
Summary of Non-Employee
Director Annual Compensation for the 2015 Plan Year
|
|
|
Committee Chair |
Audit Committee |
|
Cash Retainer (1) |
Equity Grant (2) |
Premium (3) |
Member Premium (4) |
Non-employee
director |
$90,000 |
Stock Grant with a value
equivalent to $180,000 |
$15,000 - Audit and
Finance
Committee and Nominating/
Corporate Governance
Committee Chair
$20,000 - Compensation
Committee Chair |
$10,000 |
Non-Executive
Chairman |
$245,000 |
Stock Grant with a
value
equivalent to $180,000 |
Not eligible |
$10,000 |
|
(1) |
|
Each non-employee
director may elect to defer all or part of the cash compensation to the
2005 Deferred Compensation Plan for Non-Employee Directors. Any deferred
cash compensation is converted into shares of Agilent common
stock. |
|
|
|
(2) |
|
The stock will be
granted on the later of (i) March 1 or (ii) the first trading day after
each Annual Meeting of Stockholders. The number of shares underlying the
stock grant is determined by dividing $180,000 by the average fair market
value of Agilents common stock over 20 consecutive trading days up to and
including the day prior to the grant date. The stock grant vests
immediately upon grant. Voluntary deferral is available as an option for
the non-employee directors. |
|
|
|
(3) |
|
Non-employee
directors (excluding the Non-Executive Chairman) who serve as the
chairperson of a Board committee receive a committee chair premium. The
chair of the Audit Committee and Nominating/Corporate Governance Committee
receive a premium of $15,000 and the chair of the Compensation Committee
receives a premium of $20,000, payable in cash, at the beginning of each
Plan Year. |
|
|
|
(4) |
|
Non-employee
directors (including the Non-Executive Chairman) who serve as a member of
the Audit and Finance Committee receive an additional $10,000 in cash,
paid at the beginning of each Plan Year. |
A non-employee director who
joins the Board of Directors after the start of the Plan Year will have his or
her cash retainer, equity grant and committee chair premium pro-rated based upon
the remaining days in the Plan Year that the director will serve.
In September 2015, the
Compensation Committee and the Board, based on the recommendation of the
Compensation Committees independent compensation consultant, F.W. Cook,
concluded that the current non-employee director compensation is competitive
with Agilents peer group and would remain unchanged for the 2016 Plan Year,
except that the annual Committee Chair Premium for the chair of the Compensation
Committee was increased from $15,000 to $20,000, effective September
2015.
14
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|
COMPENSATION OF
NON-EMPLOYEE DIRECTORS |
Non-Employee Director
Compensation for Fiscal Year 2015
The table below sets forth
information regarding the compensation earned by each of Agilents non-employee
directors during the fiscal year ended October 31, 2015:
Non-Employee Director Compensation for
Fiscal Year 2015 |
|
Cash |
Committee |
Audit Committee |
Stock |
|
|
Retainer |
Chair
Premium |
Member Premium |
Awards |
Total |
Name |
($) (1) |
($)
(1) |
($) (1) |
($) (2)(3) |
($) |
Paul N.
Clark |
$90,000 |
|
$ |
|
|
$10,000 |
|
$181,967 |
$281,967 |
James G. Cullen
(4) |
$245,000 |
|
$ |
|
|
$ |
|
$181,967 |
$426,967 |
Heidi
Fields |
$90,000 |
|
$15,000 |
|
|
$10,000 |
|
$181,967 |
$296,967 |
Robert J.
Herbold |
$90,000 |
|
$ |
|
|
$10,000 |
|
$181,967 |
$281,967 |
Koh Boon
Hwee |
$90,000 |
|
$15,000 |
|
|
$ |
|
$181,967 |
$286,967 |
Daniel K.
Podolsky, M.D. (5) |
$36,720 |
|
$ |
|
|
$6,120 |
|
$110,005 |
$152,845 |
A. Barry Rand
(6) |
$90,000 |
|
$ |
|
|
$ |
|
$181,967 |
$271,967 |
Sue H. Rataj
(7) |
$20,656 |
|
$ |
|
|
$ |
|
$82,784 |
$103,440 |
George A.
Scangos, Ph.D. |
$90,000 |
|
$ |
|
|
$ |
|
$181,967 |
$271,967 |
Tadataka
Yamada, M.D. |
$90,000 |
|
$ |
|
|
$ |
|
$181,967 |
$271,967 |
(1) |
|
Reflects all cash
compensation earned during fiscal year 2015, whether or not any of the
cash compensation was deferred into Agilent common stock pursuant to the
2005 Deferred Compensation Plan for Non-Employee Directors. The number of
shares of Agilent common stock received in lieu of cash is determined by
dividing the dollar value of the deferred cash amount by the twenty (20)
day average fair market value for the applicable deferral date. The
aggregate number of shares of Agilent common stock deferred by each
non-employee director is set forth in the footnotes to the Beneficial
Ownership Table included in this proxy statement. |
|
(2) |
|
Reflects the
aggregate grant date fair value for stock awards granted in fiscal year
2015 calculated in accordance with FASB ASC Topic 718. The assumptions
used by the Company in calculating these amounts are included in Note 4
under the heading Valuation Assumptions of the Notes to the Consolidated
Financial Statements in the Companys 2015 Annual Report on Form
10-K. |
|
(3) |
|
A supplemental table
following these footnotes sets forth: (i) the aggregate number of stock
awards and option awards outstanding at fiscal year-end; (ii) the
aggregate number of stock awards granted during fiscal year 2015; and
(iii) the grant date fair market value of equity awards granted by Agilent
during fiscal year 2015 to each of our non-employee
directors. |
|
(4) |
|
Mr. Cullen has served
as the Non-Executive Chairman of the Board since March 1,
2005. |
|
(5) |
|
Dr. Podolsky joined
the Board on July 21, 2015. |
|
(6) |
|
Mr. Rand retired from
the Board on October 31, 2015. |
|
(7) |
|
Ms. Rataj joined the
Board on September 15, 2015. |
15
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|
COMPENSATION OF NON-EMPLOYEE DIRECTORS |
Additional Information With
Respect to Director Equity Awards
The following table provides
additional information on the outstanding equity awards at fiscal year-end and
awards granted during fiscal year 2015 for non-employee directors.
|
|
|
|
|
|
|
|
Grant Date Fair
|
|
Stock
Awards |
Option Awards |
Stock Awards |
Value of
Stock |
|
Outstanding at |
Outstanding at |
Granted During |
Awards Granted
in |
|
Fiscal
Year-End |
Fiscal Year-End |
Fiscal Year 2015 |
Fiscal Year
2015 |
Name |
(#)
(1) |
(#) |
(#) |
(#) (1)(2) |
Paul N.
Clark |
|
|
|
|
|
|
4,311 |
$181,967 |
James G.
Cullen |
|
|
|
|
32,179 |
|
4,311 |
$181,967 |
Heidi
Fields |
|
|
|
|
41,049 |
|
4,311 |
$181,967 |
Robert J.
Herbold |
|
|
|
|
32,179 |
|
4,311 |
$181,967 |
Koh Boon
Hwee |
|
|
|
|
32,179 |
|
4,311 |
$181,967 |
Daniel K.
Podolsky, M.D. (3) |
|
|
|
|
|
|
2,780 |
$110,005 |
A. Barry Rand
(4) |
|
|
|
|
32,179 |
|
4,311 |
$181,967 |
Sue H. Rataj
(5) |
|
|
|
|
|
|
2,290 |
$82,784 |
George A.
Scangos, Ph.D. |
|
|
|
|
|
|
4,311 |
$181,967 |
Tadataka
Yamada, M.D. |
|
|
|
|
|
|
4,311 |
$181,967 |
(1) |
|
Stock awards granted
to non-employee directors vest immediately upon grant. |
|
(2) |
|
Reflects the
aggregate grant date fair value for stock awards granted in fiscal year
2015 calculated in accordance with FASB ASC Topic 718. The assumptions
used by the Company in calculating these amounts are included in Note 4
under the heading Valuation Assumptions of the Notes to the Consolidated
Financial Statements in the Companys 2015 Annual Report on Form
10-K. |
|
(3) |
|
Dr. Podolsky joined
the Board on July 21, 2015. |
|
(4) |
|
Mr. Rand retired from
the Board on October 31, 2015. |
|
(5) |
|
Ms. Rataj joined the
Board on September 15, 2015. |
Non-Employee Director
Reimbursement Practice for Fiscal Year 2015
Non-employee directors are
reimbursed for travel and other out-of-pocket expenses connected to Board
travel.
Non-Employee Director Stock
Ownership Guidelines
In 2005, the company adopted a
policy that requires each non-employee director to own Agilent shares having a
value of at least three times the annual cash retainer. In May 2010, the
Compensation Committee, based on the recommendation of the Committees
independent compensation consultant, F.W. Cook, amended the guidelines to
increase the alignment of the non-employee directors interest with stockholder
interests by requiring each non-employee director to own Agilent shares having a
value of at least six times an amount equal to $90,000 (for the 2014 Plan Year).
The shares counted toward the ownership guidelines include shares owned outright
and the shares of Agilent stock in the non-employee directors deferred
compensation account. For recently appointed non-employee directors, these
ownership levels must be attained within five years from the date of their
initial election or appointment to the board of directors. As of September 2015,
all of our incumbent non-employee directors had achieved the recommended
ownership level except for: (1) Dr. Yamada who was appointed to the Board in
January 2011 and has until January 2016 to meet the ownership requirements (2)
Dr. Scangos who was appointed to the Board in September 2014 and has until
September 2019 (3) Dr. Podolsky who was appointed to the Board in March 2015 and
has until March 2020 to meet the ownership requirements, and (4) Ms. Rataj who
was appointed to the Board in September 2015 and has until September 2020 to
meet the ownership requirements.
16
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|
CORPORATE GOVERNANCE |
Corporate Governance
Matters
Agilent has had formal
corporate governance standards in place since the Companys inception in 1999.
We have reviewed internally and with the Board the provisions of the
Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act), the rules of the SEC and the
NYSEs corporate governance listing standards regarding corporate governance
policies and processes and are in compliance with the rules and listing
standards.
We have adopted charters for
our Compensation Committee, Audit and Finance Committee, Nominating/Corporate
Governance Committee and Executive Committee consistent with the applicable
rules and standards. Our committee charters, Amended and Restated Corporate
Governance Standards and Standards of Business Conduct are located in the
Investor Relations section of our website and can be accessed by clicking on
Governance Policies in the Corporate Governance section of our web page at
www.investor.agilent.com.
Board Leadership
Structure
Agilent currently separates
the positions of chief executive officer and chairman of the Board. Since March
2005, Mr. Cullen, one of our independent directors, has served as our chairman
of the Board. The responsibilities of the chairman of the Board include: setting
the agenda for each Board meeting, in consultation with the chief executive
officer; chairing the meetings of independent directors; and facilitating and
conducting, with the Nominating/Corporate Governance Committee, the annual
self-assessments by the Board and each standing committee of the Board,
including periodic performance reviews of individual directors. Separating the
positions of chief executive officer and chairman of the Board allows our chief
executive officer to focus on our day-to-day business, while allowing the
chairman of the Board to lead the Board in its fundamental role of providing
advice to and independent oversight of management. The Board believes that
having an independent director serve as chairman of the Board is the appropriate
leadership structure for Agilent at this time.
However, our Corporate
Governance Standards permit the roles of the chairperson of the Board and the
chief executive officer to be filled by the same or different individuals. This
provides the Board with flexibility to determine whether the two roles should be
combined in the future based on Agilents needs and the Boards assessment of
Agilents leadership from time to time. Our Corporate Governance Standards
provide that, in the event that the chairperson of the Board is also the chief
executive officer, the Board may consider the election of an independent Board
member as a lead independent director.
In 2014, we amended the
Corporate Governance Standards to raise the mandatory retirement age for
directors from 72 to 75.
The Board made the change in
recognition of the contribution that experienced directors, with knowledge of
the Company, bring to effective board oversight.
Boards Role in Risk
Oversight
The Board executes its risk
management responsibility directly and through its committees. The Audit and
Finance Committee has primary responsibility for overseeing Agilents enterprise
risk management process. The Audit and Finance Committee receives updates and
discusses individual and overall risk areas during its meetings, including the
Companys financial risk assessments, risk management policies and major
financial risk exposures and the steps management has taken to monitor and
control such exposures. The Compensation Committee oversees risks associated
with our compensation policies and practices with respect to both executive
compensation and compensation generally.
The Compensation Committee
receives reports and discusses whether Agilents compensation policies and
practices create risks that are reasonably likely to have a material adverse
effect on the Company.
The full Board is kept abreast
of its committees risk oversight and other activities via reports of the
committee chairpersons to the full Board during Board meetings.
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|
CORPORATE
GOVERNANCE |
Majority Voting for
Directors
Our Bylaws provide for
majority voting of directors regarding director elections. In an uncontested
election, any nominee for director shall be elected by the vote of a majority of
the votes cast with respect to the director. A majority of the votes cast
means that the number of shares voted FOR a director must exceed 50% of the
votes cast with respect to that director. The votes cast shall include votes
to withhold authority and exclude votes to ABSTAIN with respect to that
directors election. If a director is not elected due to a failure to receive a
majority of the votes cast and his or her successor is not otherwise elected and
qualified, the director shall promptly tender his or her resignation following
certification of the stockholder vote.
The Nominating/Corporate
Governance Committee will consider the resignation offer and recommend to the
Board whether to accept or reject it, or whether other action should be taken.
The Board will act on the Nominating/Corporate Governance Committees
recommendation within 90 days following certification of the stockholder vote.
Thereafter, the Board will promptly disclose their decision and the rationale
behind it in a press release to be disseminated in the same manner as Company
press releases typically are distributed.
Any director who tenders his
or her resignation pursuant to this provision shall not participate in the
Nominating/Corporate Governance Committee recommendation or Board action
regarding whether to accept the resignation offer.
Board
Communications
Stockholders and other
interested parties may communicate with the Board and Agilents Non-Executive
Chairperson of the Board of Directors by filling out the form at Contact
Chairman under Corporate Governance at www.investor.agilent.com or by writing
to James G. Cullen, c/o Agilent Technologies, Inc., General Counsel, 5301
Stevens Creek Blvd., MS 1A-11, Santa Clara, California 95051. The General
Counsel will perform a legal review
in the normal discharge of
duties to ensure that communications forwarded to the Non-Executive Chairperson
preserve the integrity of the process. For example, items that are unrelated to
the duties and responsibilities of the Board such as spam, junk mail and mass
mailings, product complaints, personal employee complaints, product inquiries,
new product suggestions, resumes and other forms of job inquiries, surveys,
business solicitations or advertisements (the Unrelated Items) will not be
forwarded to the Non-Executive Chairperson. In addition, material that is unduly
hostile, threatening, illegal or similarly unsuitable will not be forwarded to
the Non-Executive Chairperson.
Any communication that is
relevant to the conduct of Agilents business and is not forwarded will be
retained for one year (other than Unrelated Items) and made available to the
Non-Executive Chairperson and any other independent director on request. The
independent directors grant the General Counsel discretion to decide what
correspondence shall be shared with Agilent management and specifically instruct
that any personal employee complaints be forwarded to Agilents Human Resources
Department.
Director
Independence
Agilent adopted the following
standards for director independence in compliance with the NYSE corporate
governance listing standards:
1. No director qualifies as
independent unless the Board affirmatively determines that the director has no
material relationship with Agilent or any of its subsidiaries (either directly,
or as a partner, stockholder or officer of an organization that has a
relationship with Agilent). Agilent or any of its subsidiaries must identify
which directors are independent and disclose the basis for that
determination.
In addition, a director is not
independent if:
2. The director is, or has
been within the last three years, an employee of Agilent or any of its
subsidiaries, or an immediate family member is, or has been within the last
three years, an executive officer of Agilent or any of its subsidiaries.
18
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|
CORPORATE
GOVERNANCE |
3. The director has received,
or has an immediate family member who has received, during any twelvemonth
period within the last three years, more than $120,000 in direct compensation
from Agilent or any of its subsidiaries, other than director and committee fees
and pension or other forms of deferred compensation for prior service (provided
such compensation is not contingent in any way on continued service).
4. (A) The director is a
current partner or employee of a firm that is Agilents internal or external
auditor; (B) the director has an immediate family member who is a current
partner of such a firm; (C) the director has an immediate family member who is a
current employee of such a firm and personally works on Agilents audit; or (D)
the director or an immediate family member was within the last three years a
partner or employee of such a firm and personally worked on Agilents or any of
its subsidiaries audit within that time.
5. The director or an
immediate family member is, or has been within the last three years, employed as
an executive officer of another company where any of Agilents or any of its
subsidiaries current executive officers at the same time serves or served on
that companys compensation committee.
6. The director is a current
employee, or an immediate family member is a current executive officer, of a
company that has made payments to, or received payments from, Agilent or any of
its subsidiaries for property or services in an amount which, in any of the last
three fiscal years, exceeds the greater of $1 million, or 2% of such other
companys consolidated gross revenues.
The Board determined that Paul
N. Clark, James G. Cullen, Heidi Fields, Robert J. Herbold, Koh Boon Hwee,
Daniel K. Podolsky, M.D., Sue H. Rataj, George A. Scangos, Ph.D., and Tadataka
Yamada, M.D. met the aforementioned independence standards. Michael R. McMullen
did not meet the independence standards because he is Agilents President and
Chief Executive Officer.
Agilents non-employee
directors meet at regularly scheduled executive sessions without management. As
the Non-Executive Chairman of the Board, James G. Cullen was chosen to preside
at executive sessions of the non-management directors.
Compensation Committee
Member Independence
Agilent has adopted standards
for compensation committee member independence in compliance with the NYSE
corporate governance listing standards. In affirmatively determining the
independence of any director who will serve on the compensation committee, the
board of directors considers all factors specifically relevant to determining
whether such director has a relationship to Agilent or any of its subsidiaries
which is material to such directors ability to be independent from management
in connection with the duties of a compensation committee member, including, but
not limited to:
|
(A) |
the source of
compensation of such director, including any consulting, advisory or other
compensatory fee paid by Agilent to such director; and |
|
|
|
(B) |
whether such director
is affiliated with Agilent, a subsidiary of Agilent or an affiliate of a
subsidiary of Agilent. |
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CORPORATE
GOVERNANCE |
COMMITTEES OF THE BOARD OF
DIRECTORS
The Board has four standing
committees as set forth in the table below. Each director attended at least 75%
of the aggregate number of Board and applicable committee meetings held when the
director was serving on the Board.
|
|
|
|
Nominating/ |
|
|
|
Audit and |
|
Corporate |
|
Director |
Board |
Finance |
Compensation |
Governance |
Executive |
Paul N. Clark |
✓ |
✓ |
|
✓ |
|
James G. Cullen |
CHAIR |
|
|
CHAIR |
CHAIR |
Heidi Fields |
✓ |
CHAIR |
|
✓ |
|
Robert J. Herbold |
✓ |
✓ |
|
✓ |
|
Koh Boon Hwee |
✓ |
|
CHAIR |
✓ |
|
Michael R. McMullen |
✓ |
|
|
|
✓ |
Daniel K. Podolsky, M.D. (1) |
✓ |
✓ |
|
✓ |
|
Sue H. Rataj (2) |
✓ |
|
✓ |
✓ |
|
George A. Scangos, Ph.D. |
✓ |
|
✓ |
✓ |
|
Tadataka Yamada, M.D. |
✓ |
|
✓ |
✓ |
|
No. of Meetings in FY2015 |
12 |
12 |
7 |
6 |
0 |
(1) |
Dr. Podolsky joined
our Board on July 21, 2015. |
|
(2) |
Ms. Rataj joined our
Board on September 15, 2015. |
Agilent encourages, but does
not require, its Board members to attend the annual meeting of stockholders.
Last year, all of our directors who were serving at such time, attended the
annual meeting of stockholders.
Audit and Finance Committee
The Audit and Finance
Committee is responsible for the oversight of the quality and integrity of
Agilents consolidated financial statements, its compliance with legal and
regulatory requirements, the qualifications and independence of its independent
registered public accounting firm, the performance of its internal audit
function and independent registered public accounting firm and other significant
financial matters. In discharging its duties, the Audit and Finance Committee is
expected to:
● |
have the sole authority to appoint, retain,
compensate, oversee, evaluate and replace the independent registered public accounting firm;
|
● |
review and approve the scope of the annual
internal and external audit; |
● |
review and pre-approve the engagement of
Agilents independent registered public accounting firm to perform audit and non-audit services
and the related fees; |
● |
meet independently with Agilents internal
auditing staff, independent registered public accounting firm and senior management; |
● |
review the adequacy and effectiveness of the
system of internal control over financial reporting and any significant changes in internal
control over financial reporting; |
● |
review Agilents consolidated financial
statements and disclosures including Managements Discussion and Analysis of Financial
Condition and Results of Operations in the Companys reports on Form 10-K or Form
10-Q; |
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CORPORATE
GOVERNANCE |
● |
establish and oversee procedures for (a) the receipt,
retention and treatment of complaints received by the Company regarding accounting, internal accounting
controls or auditing matters,
and (b) the confidential anonymous submission by employees of the Company
of concerns regarding
questionable accounting or auditing matters; |
● |
review funding and investment policies, implementation of
funding policies and investment performance of Agilents benefit plans; |
● |
monitor compliance with Agilents Standards of Business
Conduct; and |
● |
review disclosures from Agilents independent registered
public accounting firm required by the
applicable requirements of the Public Company Accounting Oversight Board
regarding the independence of
accountants communications with the audit
committee. |
Compensation Committee
The Compensation Committee
reviews the performance of Agilents elected officers and other key employees
and determines, approves and reports to the Board on the elements of their
compensation, including total cash compensation and long-term equity based
incentives. In addition, the Compensation Committee:
● |
approves and monitors Agilents benefit plan offerings;
|
● |
supervises and oversees the administration of Agilents
incentive compensation, variable pay
and stock programs, including the impact of Agilents compensation
programs and arrangements on
Company risk; |
● |
recommends to the Board the annual retainer fee as well
as other compensation for non-employee directors; |
● |
establishes comparator peer group and compensation
targets based on this peer group for the Companys named executive officers; and |
● |
has sole authority to retain and terminate executive
compensation consultants. |
For more information on the
responsibilities and activities of the Compensation Committee, including the
committees processes for determining executive compensation, see Compensation
Discussion and Analysis, Compensation Committee Report, Executive
Compensation and the Compensation Committees charter.
The Compensation Committee
also helps determine compensation for non-employee directors. The process the
Compensation Committee undertakes for setting non-employee director compensation
is similar to that of setting executive officer compensation. The Compensation
Committee is aided by an independent consultant, currently Frederic W. Cook
& Co., Inc. (F.W. Cook), who is selected and retained by the Compensation
Committee. The role of the independent consultant is to measure and benchmark
our non-employee director compensation against a certain peer group of companies
with respect to appropriate compensation levels for positions comparable in the
market. The independent consultant recommends appropriate retainers, committee
chair retainers, grant values and stock ownership guidelines to the Compensation
Committee. This information is reviewed, discussed and finalized at a
Compensation Committee meeting and a recommendation is made to the full Board.
The full Board makes the final determination on non-employee director
compensation.
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CORPORATE
GOVERNANCE |
Nominating/Corporate
Governance Committee
The Nominating/Corporate
Governance Committee proposes a slate of directors for election by Agilents
stockholders at each annual meeting and recommends to the Board candidates to
fill any vacancies on the Board. It is also responsible for reviewing management
succession plans, recommending to the Board the appropriate Board size and
committee structure and developing and reviewing corporate governance principles
applicable to Agilent.
The Nominating/Corporate
Governance Committee will consider director candidates recommended for
nomination by stockholders, provided that the recommendations are made in
accordance with the procedures described in the section entitled General
Information about the Meeting located at the end of this Proxy Statement.
Candidates recommended for nomination by stockholders that comply with these
procedures will receive the same consideration as other candidates recommended
by the Nominating/Corporate Governance Committee.
Agilent typically hires a
third party search firm to help identify and facilitate the screening and
interview process of candidates for director. To be considered by the
Nominating/Corporate Governance Committee, a director nominee must have:
● |
a reputation for personal and professional integrity and
ethics; |
● |
executive or similar policy-making experience in relevant
business or technology areas or national prominence in an academic, government or other relevant
field; |
● |
breadth of experience; |
● |
soundness of judgment; |
● |
the ability to make independent, analytical inquiries;
|
● |
the willingness and ability to devote the time required
to perform Board activities adequately; |
● |
the ability to represent the total corporate interests of
Agilent; and |
● |
the ability to represent the long-term interests of
stockholders as a whole. |
In addition to these minimum
requirements, the Nominating/Corporate Governance Committee will also consider
whether the candidates skills are complementary to the existing Board members
skills; the diversity of the Board in factors such as age, experience in
technology, manufacturing, finance and marketing, international experience and
culture; and the Boards needs for specific operational, management or other
expertise. The Nominating/Corporate Governance Committee from time to time
reviews the appropriate skills and characteristics required of board members,
including factors that it seeks in board members such as diversity of business
experience, viewpoints and, personal background, and diversity of skills in
technology, finance, marketing, international business, financial reporting and
other areas that are expected to contribute to an effective Board of Directors.
In evaluating potential candidates for the Board of Directors, the
Nominating/Corporate Governance Committee considers these factors in the light
of the specific needs of the Board of Directors at that time. The search firm
screens the candidates, does reference checks, prepares a biography for each
candidate for the Nominating/Corporate Governance Committee to review and helps
set up interviews. The Nominating/Corporate Governance Committee and Agilents
Chief Executive Officer interview candidates that meet the criteria, and the
Nominating/Corporate Governance Committee selects candidates that best suit the
Boards needs. We do not use a third party to evaluate current Board members.
The Nominating/Corporate
Governance Committee also administers Agilents Related Person Transactions
Policy and Procedures. See Related Person Transactions Policy and Procedures
for more information.
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CORPORATE
GOVERNANCE |
Executive
Committee
The Executive Committee meets
or takes written action when the Board is not otherwise meeting. The Committee
has full authority to act on behalf of the Board, except that it cannot amend
Agilents Bylaws, recommend any action that requires the approval of the
stockholders, fill vacancies on the Board or any Board committee, fix director
compensation, amend or repeal any non-amendable or non-repealable resolution of
the Board, declare a distribution to the stockholders except at rates determined
by the Board, appoint other committees or take any action not permitted under
Delaware law to be delegated to a committee.
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The members of the
Compensation Committee are Koh Boon Hwee, Sue H. Rataj, George A. Scangos, Ph.D.
and Tadataka Yamada, M.D. During the most recent fiscal year, no Agilent
executive officer served on the compensation committee (or equivalent), or the
board of directors, of another entity whose executive officer(s) served on
Agilents Compensation Committee.
The members of the
Compensation Committee are considered independent under the Companys Board of
Directors and Compensation Committee Independence Standards as set forth in the
Companys Amended and Restated Corporate Governance Guidelines.
RELATED PERSON TRANSACTIONS
POLICY AND PROCEDURES
The Companys Standards of
Business Conduct and Director Code of Ethics require that all employees and
directors avoid conflicts of interests that interfere with the performance of
their duties or the best interests of the Company. In addition, the Company has
adopted a written Related Person Transactions Policy and Procedures (the
Related Person Transactions Policy) that prohibits any of the Companys
executive officers, directors or any of their immediate family members from
entering into a transaction with the Company, except in accordance with the
policy. For purposes of the policy, a related person transaction includes any
transaction (within the meaning of Item 404(a) of the Securities and Exchange
Commissions Regulation S-K) involving the Company and any related person that
would be required to be disclosed pursuant to Item 404(a) of the Securities and
Exchange Commissions Regulation S-K.
Under our Related Person
Transactions Policy, the General Counsel must advise the Nominating/ Corporate
Governance Committee of any related person transaction of which she becomes
aware. The Nominating/Corporate Governance Committee must then either approve or
reject the transaction in accordance with the terms of the policy. In the course
of making this determination, the Nominating/ Corporate Governance Committee
shall consider all relevant information available to it and, as appropriate,
must take into consideration the following:
● |
the size of the transaction and the amount payable to the
related person; |
● |
the nature of the interest of the related person in the
transaction; |
● |
whether the transaction may involve a conflict of
interest; and |
● |
whether the transaction involved the provision of goods
or services to the Company that are available from unaffiliated third parties and, if so, whether the
transaction is on terms and made under circumstances that are at least as favorable to the
Company as would be available in comparable transactions with or involving unaffiliated third
parties. |
Under the Related Person
Transactions Policy, Company management screens for any potential related person
transactions, primarily through the annual circulation of a Director and Officer
Questionnaire (D&O Questionnaire) to each member of the Board of Directors
and each officer of the Company that is a reporting person under Section 16 of
the Securities Exchange Act of 1934. The D&O Questionnaire contains
questions intended to identify related persons and transactions between
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|
CORPORATE
GOVERNANCE |
the Company and related
persons. If a related person transaction is identified, such transaction is
brought to the attention of the Nominating/Corporate Governance Committee for
its approval, ratification, revision, or rejection in consideration of all of
the relevant facts and circumstances.
The Nominating/Corporate
Governance Committee must approve or ratify each related person transaction in
accordance with the policy. Absent this approval or ratification, no such
transaction may be entered into by the Company with any related person.
In March 2008, the
Nominating/Corporate Governance Committee amended the Related Person
Transactions Policy to provide for standing pre-approval of limited transactions
with related persons. Pre-approved transactions include:
|
(a) |
Any transaction with
another company at which a related persons only relationship is as an
employee (other than an executive officer or an equivalent), director or
beneficial owner of less than 10% of that companys shares, if the
aggregate amount involved does not exceed the greater of (i) $1,000,000,
or (ii) 2 percent of that companys total annual revenues. |
|
|
|
(b) |
Any charitable
contribution, grant or endowment by the Company to a charitable
organization, foundation or university at which a related persons only
relationship is as an employee (other than an executive officer or an
equivalent), a director or a trustee, if the aggregate amount involved
does not exceed the lesser of $500,000, or 2 percent of the charitable
organizations total annual receipts. |
Agilent will disclose the
terms of related person transactions in its filings with the SEC to the extent
required.
Transactions with Related
Persons
We purchase services,
supplies, and equipment in the normal course of business from many suppliers and
sell or lease products and services to many customers. In some instances, these
transactions occur with companies with which members of our management or Board
of Directors have relationships as directors or executive officers. For
transactions entered into during fiscal year 2015, no related person had or will
have a direct or indirect material interest. None of the fiscal year 2015
transactions exceeded or fell outside of the pre-approved thresholds set forth
in our Related Party Transaction Policy except for the transactions with Biogen
Inc. (Biogen) and University of Texas Southwestern Medical Center (UTSW).
George A. Scangos, Ph.D. is the Chief Executive Officer of Biogen and Daniel K.
Podolsky, M.D., is the President of UTSW. The members of the Nominating/
Corporate Governance Committee, excluding Dr. Scangos and Dr. Podolsky for their
respective transactions only, reviewed, approved and ratified the transactions
with Biogen and UTSW in accordance with the policy.
The following list identifies
which of these companies purchased from Agilent, or sold to Agilent, more than
$120,000 in products and/or services in fiscal 2015.
● |
Biogen Inc. (Biogen). Mr. George A.
Scangos, Ph.D. is the Chief Executive Officer and a director of Biogen. Biogen, or its affiliates,
purchased from Agilent an aggregate of approximately $2.6 million in products and/or services.
|
● |
Bayer A.G. (Bayer). Ms. Sue H. Rataj
is a director of Bayer. Bayer, or its affiliates, purchased from Agilent an aggregate of approximately
$17.9 million of products and/or services. |
● |
GlaxoSmithKline (GSK). Dr. Daniel K.
Podolsky is a director of GSK. GSK, or its affiliates, purchased from Agilent an aggregate of
approximately $15.4 million of products and/or
services. |
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|
CORPORATE
GOVERNANCE |
● |
Johns Hopkins University (JHU). Mr. George A.
Scangos, Ph.D. is an adjunct professor with the JHU Department of Biology. JHU, or its affiliates, purchased
from Agilent an aggregate of approximately $2.9 million in products and/or services.
|
● |
Keysight Technologies, Inc. (Keysight). Messrs.
Paul N. Clark and James G. Cullen are directors of Keysight. Agilent, or its affiliates,
purchased from Keysight an aggregate of approximately $3.9 million of products and/or services and
Keysight, or its affiliates, purchased from Agilent an aggregate of approximately $67,000 in
products and/or services. These amounts exclude payments for rents and utilities covered
under certain cost sharing agreements between Agilent and Keysight which are set forth below under
Agreements with Keysight. |
● |
Nanyang Technological University (Nanyang). Mr. Koh
Boon Hwee is the Chair of the Board of
Trustees of Nanyang. Nanyang, or its affiliates, purchased from Agilent an
aggregate of approximately
$1.02 million of products and/or services. |
● |
Takeda Pharmaceutical Co. Ltd. and Takeda Pharmaceuticals
International, Inc. (collectively, Takeda). Dr. Tadataka Yamada served as a director of
Takeda Pharmaceutical Co. Ltd. and as the Chief Medical and Scientific Officer of Takeda
Pharmaceuticals International, Inc. until June 2015. Takeda or its affiliates,
purchased from Agilent an aggregate of approximately $3.7 million of products and/or
services. |
● |
University of Texas Southwestern Medical Center
(UTSW). Daniel K. Podolsky, Ph.D. is the President of UTSW. UTSW, or its affiliates, purchased from
Agilent an aggregate of approximately $297,000 of products and/or
services. |
Agreements with Keysight
On November 1, 2014, we
completed the spin-off of Keysight Technologies, Inc. (Keysight), our
electronic measurement business (the Spin-off). Following the Spin-off,
Agilent and Keysight have operated as separate publicly-traded companies and
neither entity has any ownership interest in the other. However, two of our
directors, James G. Cullen and Paul N. Clark, serve on the board of directors of
Keysight. In connection with the Spin-off, Agilent and Keysight entered into
various agreements, as described below.
Effective as of November 1,
2014, Agilent and Keysight each operate separately as independent
publicly-traded companies. Agilent has entered into a separation and
distribution agreement with Keysight, which is referred to in this proxy
statement as the separation agreement or the separation and distribution
agreement. In connection with the Spin-off, Agilent also entered into various
other agreements to effect the Spin-off and provide a framework for its
relationship with Keysight after the Spin-off, including a services agreement, a
tax matters agreement, an employee matters agreement, an intellectual property
matters agreement, a trademark license agreement and a real estate matters
agreement (collectively, the Agreements).
These Agreements provide for
the allocation between Agilent and Keysight of Agilents assets, employees,
liabilities and obligations (including its investments, property and employee
benefits and tax-related assets and liabilities) attributable to periods prior
to, at and after Keysights separation from Agilent and govern certain
relationships between Keysight and Agilent after the Spin-off. The summaries of
the Agreements are qualified in their entirety by reference to the full text of
the applicable Agreements, which have been filed as exhibits to Agilents
Current Report on Form 8-K filed with the Securities Exchange Commission on
August 5, 2014.
Pursuant to the Agreements,
Agilent and Keysight share certain costs related to rents and utilities. In
fiscal 2015, Agilent paid approximately $5.3 million in rent/utilities to
Keysight and Keysight paid approximately $13 million in rent/utilities to
Agilent.
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|
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM |
PROPOSAL 2
|
RATIFICATION OF THE INDEPENDENT REGISTERED
PUBLIC ACCOUNTING
FIRM |
The Audit and Finance
Committee of the Board has appointed PricewaterhouseCoopers LLP (PwC) as
Agilents independent registered public accounting firm to audit its
consolidated financial statements for the 2016 fiscal year. During the 2015
fiscal year, PwC served as Agilents independent registered public accounting
firm and also provided certain tax and other non-audit services. Although
Agilent is not required to seek stockholder approval of this appointment, the
Board believes it to be sound corporate governance to do so. If the appointment
is not ratified, the Audit and Finance Committee will investigate the reasons
for stockholder rejection and will reconsider the appointment.
Representatives of PwC are
expected to attend the annual meeting where they will be available to respond to
questions and, if they desire, to make a statement.
Agilents Board
recommends a vote FOR the ratification of the
Audit and Finance Committees
appointment of
PricewaterhouseCoopers LLP as Agilents Independent Registered Public
Accounting Firm.
Fees Paid to
PricewaterhouseCoopers LLP
The following table sets forth
the aggregate fees charged to Agilent by PwC for audit services rendered in
connection with the audited consolidated financial statements and reports for
the 2015 and 2014 fiscal years and for other services rendered during the 2015
and 2014 fiscal years to Agilent and its subsidiaries, as well as all
out-of-pocket costs incurred in connection with these services:
|
|
|
%
of |
|
|
|
%
of |
|
Fee
Category: |
Fiscal 2015 |
|
Total |
|
Fiscal 2014 |
|
Total |
|
Audit Fees |
$ |
4,119,000 |
|
80.7 |
|
$ |
7,791,000 |
|
76.8 |
|
Audit-Related Fees |
|
706,000 |
|
13.8 |
|
|
1,695,000 |
|
16.7 |
|
Tax Fees: |
|
|
|
|
|
|
|
|
|
|
Tax
compliance/preparation |
|
227,000 |
|
4.4 |
|
|
265,000 |
|
2.6 |
|
Other tax
services |
|
0 |
|
|
|
|
0 |
|
0 |
|
Total
Tax Fees |
|
227,000 |
|
4.4 |
|
|
265,000 |
|
2.6 |
|
All Other Fees |
|
54,000 |
|
1.1 |
|
|
392,000 |
|
3.9 |
|
Total
Fees |
$ |
5,106,000 |
|
100 |
|
$ |
10,143,000 |
|
100 |
|
Audit Fees: Consists of fees billed for professional services
rendered for the integrated audit of Agilents consolidated financial statements
and its internal control over financial reporting and review of the interim
condensed consolidated financial statements included in quarterly reports.
Fiscal 2015 and 2014 fees also consist of fees billed for services that are
normally provided by PricewaterhouseCoopers LLP in connection with statutory
reporting and regulatory filings or engagements, and attest services, except
those not required by statute or regulation. Fiscal 2014 audit fees reflect
additional fees of $2,800,000 for services performed by PricewaterhouseCoopers
LLP in connection with the separation and spin-off of Keysight.
Audit-Related
Fees: Consists of fees billed for
assurance and related services that are reasonably related to the performance of
the audit or review of Agilents consolidated financial statements and are not
reported under Audit Fees. These services include employee benefit plan
audits, accounting consultations in connection with acquisitions and
divestitures, attest services that are not required by statute or regulation,
and consultations concerning financial accounting and
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RATIFICATION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM |
reporting standards. Fiscal 2014 and fiscal 2015 audit-related fees
reflect additional fees of $1,670,000 and $665,000 respectively for services
performed by PricewaterhouseCoopers LLP in connection with the separation and
spin-off of Keysight.
Tax Fees: Consists of fees billed for professional services
for tax compliance, tax advice and tax planning. These services include
assistance regarding federal, state and international tax compliance, tax audits
and appeals, customs and duties, mergers and acquisitions and international tax
planning.
All Other
Fees: Consists of fees for all
other services other than those reported above Agilent has minimized services in
this category for fiscal 2015. Total services for fiscal 2015 include $50,000
for a logistics benchmark study provided by PRTM, an affiliate of
PricewaterhouseCoopers LLP and a license for specialized accounting research
software. In making its recommendation to ratify the appointment of
PricewaterhouseCoopers LLP as Agilents independent registered public accounting
firm for the fiscal year ending October 31, 2016, the Audit and Finance
Committee has considered whether services other than audit and audit-related
services provided by PricewaterhouseCoopers LLP are compatible with maintaining
the independence of PricewaterhouseCoopers LLP.
Policy on Audit and Finance
Committee Preapproval of Audit and Permissible Non-Audit Services of Independent
Registered Public Accounting Firm
The Audit and Finance
Committees policy is to preapprove all audit and permissible non-audit services
provided by the independent registered public accounting firm. These services
may include audit services, audit-related services, tax services and other
services. Preapproval is generally provided for up to one year and any
preapproval is detailed as to the particular service or category of services and
is subject to a specific budget. The Audit and Finance Committee has delegated
its preapproval authority up to a specified maximum to the Chairperson of the
Audit and Finance Committee, Heidi Fields, who may preapprove all audit and
permissible non-audit services so long as her preapproval decisions are reported
to the Audit and Finance Committee at its next scheduled meeting.
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|
AUDIT AND FINANCE
COMMITTEE REPORT |
AUDIT AND FINANCE COMMITTEE REPORT |
The Audit Committee Report does not constitute soliciting material,
and shall not be deemed to be filed or incorporated by reference into any
other Company filing under the Securities Act of 1933, as amended, or the
Exchange Act, except to the extent that the Company specifically
incorporates the Audit Committee Report by reference
therein.
AUDIT AND FINANCE
COMMITTEE REPORT
During fiscal year 2015, the Audit and Finance Committee of the
Board reviewed the quality and integrity of Agilents consolidated
financial statements, the effectiveness of its system of internal control
over financial reporting, its compliance with legal and regulatory
requirements, the qualifications and independence of its independent
registered public accounting firm, the performance of its internal audit
function and independent registered public accounting firm and other
significant financial matters. Each of the Audit and Finance Committee
members satisfies the definition of independent director and is
financially literate as established in the New York Stock Exchange Listing
Standards. In accordance with section 407 of the Sarbanes-Oxley Act of
2002, the Board of Directors has identified Heidi Fields as the Audit and
Finance Committees Financial Expert. Agilent operates with a November 1
to October 31 fiscal year. The Audit and Finance Committee met twelve
times, including telephone meetings, during the 2015 fiscal
year.
The Audit and Finance Committees work is guided by a written
charter that the Board has approved. The Audit and Finance Committee
regularly reviews its charter to ensure that it is meeting all relevant
audit committee policy requirements of the U.S. Securities and Exchange
Commission, the Public Company Accounting Oversight Board and the New York
Stock Exchange. You can access the latest Audit and Finance Committee
charter by clicking on Governance Policies in the Corporate Governance
section of the Web page at www.investor.agilent.com or by writing to us at
Agilent Technologies, Inc., 5301 Stevens Creek Blvd., Santa Clara,
California 95051, Attention: Investor Relations.
The Audit and Finance Committee has reviewed and discussed with
management and PricewaterhouseCoopers LLP, Agilents independent
registered public accounting firm, Agilents audited consolidated
financial statements and Agilents internal control over financial
reporting. The Audit and Finance Committee has discussed with
PricewaterhouseCoopers LLP, during the 2015 fiscal year, the matters
required to be discussed by Statement on Auditing Standards No. 61, as
amended (Communication with Audit Committees) as adopted by the Public
Company Accounting Oversight Board in Rule 3200T.
The Audit and Finance Committee has
received and reviewed the written disclosures and the letter from
PricewaterhouseCoopers LLP required by the applicable requirements of the
Public Company Accounting Oversight Board regarding the independent
accountants communications with the Audit and Finance Committee
concerning independence, and has discussed with PricewaterhouseCoopers LLP
its independence from Agilent. Based on the review and discussions noted
above, the Audit and Finance Committee recommended to the Board that
Agilents audited consolidated financial statements be included in
Agilents Annual Report on Form 10-K for the fiscal year ended October 31,
2015, and be filed with the U.S. Securities and Exchange
Commission.
Submitted by:
Audit and Finance Committee
Heidi Fields, Chairperson Paul N.
Clark Robert J. Herbold Daniel K. Podolsky,
M.D. |
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Dear Agilent
Stockholder,
FY15 was a momentous year for
Agilent. We entered the year as a stand-alone Life Sciences, Diagnostics and
Applied Markets company, having just completed the spin-off of Keysight
Technologies. On March 18, 2015, we appointed Mike McMullen as Agilents
3rd Chief Executive Officer, succeeding Bill Sullivan who announced
his decision to retire last year. We offer Bill our heartfelt thanks for his
leadership over more than 35 years with HP/Agilent, including 10 years as
CEO.
Establishing Agilent as a pure
Life Sciences company and the appointment of a new CEO were both catalysts for
the Compensation Committee to review our Executive Compensation programs to
ensure they were competitive with Agilents new peer group, supported the
companys future growth strategy, and clearly aligned our officers pay with
strong business performance and shareholder value creation. In addition to these
catalysts for change, we were disappointed that our 2015 Management Say on Pay
proposal only received 60% support from shareholders following many years of
receiving support of 90% or better. While much of this low support is
attributable to Mr. Sullivans fiscal year 2014 retention RSU and the size of
his grants in the year of his retirement (which at the time of grant, we thought
was consistent with our pay-for-performance philosophy), we decided to take a
wholesale review of our entire program.
Accordingly, in the Spring, we
first met with 15 of our largest shareholders who own more than 40% of Agilents
outstanding shares to hear their perspective. The feedback from these sessions
touched on a wide range of topics that led directly to the program changes we
considered during the year. For example, shareholders stressed the importance of
continuing our efforts to strengthen the ties between pay and performance,
several voiced concern with the CEOs fiscal year 2014 retention RSU award, and
some questioned the size of his annual long-term incentive award in the year
preceding his retirement. In addition, shareholders provided valuable
suggestions regarding changes to our short and long-term incentive
plans.
Based on the feedback we
received, we made several changes to our programs for FY16, including increasing
our short-term incentive plans performance period from six months to one year,
adding a financial metric to our long-term performance plan, and adding a
one-year post-vest holding period to our stock. In August, our Compensation
Committee Chair and members of management met again with a number of our largest
shareholders to preview our proposed program design changes for FY16. We were
encouraged by the positive feedback on our proposals as shareholders felt we
addressed many of their concerns, so we formally implemented these changes for
fiscal year 2016.
In the Compensation Discussion
and Analysis that follows, we discuss our CEOs and Officers FY15 compensation,
where you will see our commitment to both pay for performance and clear,
transparent disclosure is strong. We also provide additional detail on our FY16
executive compensation changes and our approach to our CEOs and Officers pay
for the year ahead. We encourage you to review this analysis carefully and hope
you agree that our executive compensation programs support the companys growth
strategy and are well aligned with creating long-term shareholder
value.
Koh Boon Hwee
(Compensation Committee Chair)
Sue H.
Rataj
Dr. George A. Scangos
Tadataka Yamada, M.D.
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COMPENSATION DISCUSSION AND
ANALYSIS
This section of the Proxy
Statement describes the compensation arrangements for our Named Executive
Officers (NEOs) for fiscal year 2015, which were exclusively determined by our
independent Compensation Committee, and which are set forth in the 2015 Summary
Compensation Table and other compensation tables contained in this proxy
statement. This Compensation and Discussion Analysis (CD&A) also includes
additional information on how the Compensation Committee of our Board (the
Compensation Committee) arrived at their FY15 compensation decisions for the
NEOs, and an overview of our executive compensation philosophy and our executive
compensation program.
Named Executive Officers
for FY15
|
Michael R. McMullen,
President and Chief Executive Officer (CEO) (1) |
|
Didier Hirsch,
Senior Vice President, Chief Financial Officer (CFO) |
|
Mark Doak,
Senior Vice President, President Cross-Lab Group (ACG) |
|
Henrik
Ancher-Jensen, Senior Vice President, President Order
Fulfillment and Supply Chain |
|
Patrick Kaltenbach,
Senior Vice President, President Life Sciences and Applied Markets Group
(LSAG) |
|
William P.
Sullivan, former Chief Executive Officer (2) |
|
____________________ |
|
(1) |
Mr. McMullen was appointed CEO on March 18, 2015. |
|
(2) |
Mr. Sullivan served as CEO until March 17, 2015. He served as a
special advisor to the Board and to the CEO for the remainder of fiscal
year 2015. |
Introduction
In this CD&A, we provide
the following:
● |
Executive Summary |
● |
Compensation Philosophy |
● |
Determining Executive Pay |
● |
Fiscal 2015 Compensation |
● |
Additional Information
|
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Executive
Summary
Fiscal 2015 was a year of
leadership transition and our first year as a standalone company. Fiscal 2015 at
a glance:
Performance and Compensation Highlights
In November 2014, we successfully
completed the spin-off of Keysight Technologies, Inc. Mr. Sullivan, our
CEO since 2005, retired in March 2015 and remained an executive advisor
through fiscal 2015, and Mr. McMullen, our former President and COO,
became our CEO as part of our established CEO succession
plan. Mr. McMullen implemented a new executive
leadership team (with the exception of our continuing CFO) to lead Agilent
into its next phase of growth, and the three new Business Presidents
report directly to Mr. McMullen. |
Continuing NEOs and New Compensation
Philosophy
Michael McMullen
CEO
Didier Hirsch
CFO
Mark Doak
SVP
Henrik Ancher-Jensen
SVP
Patrick Kaltenbach
SVP
We established the total direct compensation of our new CEO and the
new Business Presidents targeted at
the 25th
percentile of our peer
group, and we expect to increase them to the median over time assuming
they perform as expected. |
Say On Pay 60% Approval Last
Year
While 60% support from our
shareholders is a passing grade, we are disappointed with that result and
understand the lack of support for our former CEOs nonperformance-based
retention grant for fiscal 2014 and his retirement grants for fiscal 2015.
As a result, we engaged with many of our largest shareholders and in
direct response to their feedback, we are making significant changes to our fiscal 2016 program. See Listening to Our Shareholders.
|
Fiscal 2013 2015
LTPP Pay For Performance
Our Long-Term Performance Plan (LTPP) for the period ended
October 31, 2015 did not pay out
as our TSR fell below the
25th percentile of our S&P 500 Information Technology,
Health Care and Industrials Sector peer group. This outcome illustrates
our commitment to pay for performance.
|
Financial Objectives and TSR
Year-over-year financial results were
approximately the same (excluding Keysight Technologies, Inc. from fiscal
2014 results) and our one-year and three-year TSR was -4.6% and 49.5%,
respectively. |
CEO Total Direct
Compensation
Mr. McMullen
Fiscal 2015: $7,207,852 at the 25th
percentile of our peer
group and over 88% performance based.
Mr. Sullivan (Former CEO)
Fiscal 2015: $6,467,847, a reduction of more than 50% from FY14,
with over 90% performance
based. Fiscal 2014:
$13,914,733. |
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Listening to Our
Shareholders
Agilent has historically
received over 90% shareholder support on our Say-on-Pay proposals along with
support from the major shareholder advisory firms. However, early in 2015 the
major shareholder advisory firms recommended an AGAINST vote on our fiscal year
2014 Say on Pay proposal. In response, our Compensation Committee Chair and
members of management met with 15 of our largest shareholders who own more than
40% of Agilents outstanding shares to hear their concerns. While our Say on Pay
proposal passed with 60% shareholder support, we were disappointed with this
result and commenced a full review of our programs. We considered the invaluable
feedback received from shareholders in this review, including the following
recommendations:
● |
Incorporate a balance
sheet metric such as ROIC into the executive compensation program to focus
management on efficient use of capital |
● |
Change the short-term
incentive plan with semi-annual payouts to an annual plan with a single
year-end payout to align incentives with annual business
results |
● |
Reduce the use of stock
options for long-term awards |
● |
Add a financial
performance metric to the long-term incentive plan to create greater line
of sight for executives rather than rely solely on relative
TSR |
● |
Consider additional
limits on long-term awards, such as post-vest holding periods, to further
strengthen executive alignment with shareholders
|
Following these meetings, the
Compensation Committee, Frederic W. Cook (the independent Compensation Committee
Consultant), and Agilent Management considered the feedback received from
shareholders and proposed a number of changes to our executive compensation
programs for fiscal year 2016. In August, we extended an invitation to many of
our largest shareholders to preview our proposed program design changes for
fiscal year 2016. Our Compensation Committee Chair and
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members of management met
again with 8 of our largest shareholders who accepted our invitation. The
feedback on our proposals was positive and shareholders felt we addressed many
of their concerns. In September, the Compensation Committee approved the design
changes outlined in the following table to take effect in fiscal year
2016.
Program |
FY15 Design |
FY16 Design |
|
Performance Period |
Semi-Annual |
Annual |
Primary Financial Metrics |
OM /
Revenue |
ROIC /
Revenue |
|
Stock Options (Time-Based
Vesting) |
50% of target LTI
value |
n/a |
LTPP Shares (Relative TSR) |
50% of target LTI
value |
30% of target LTI
value |
LTPP Shares (Financial Metric: OM for
FY16) |
n/a |
30% of target LTI
value |
RSUs (Time-Based
Vesting) |
n/a |
40% of target LTI
value |
One Year Post-Vest Holding
Period |
None |
Apply to LTPP and RSUs
|
Payout Caps |
✓ 2X cap on
LTPP shares
✓ No cap on LTPP payout dollar
value |
Lower
of: ✓ 2X cap on #
of LTPP shares
✓ 3X cap on LTPP payout dollar
value |
Agilents Fiscal 2015
Financial Performance Compared to Fiscal 2014
|
Fiscal
2014 (Restated) |
Fiscal 2015 |
Total Shareholder Return (1-Year) |
9.93% |
-4.56% |
Total Shareholder Return (3-Year) |
53.26% |
49.51% |
Revenue (Target / Actual) |
$4.14B
/ $4.05B |
$4.21B
/ $4.04B |
Results
as a Percentage of Target |
98% |
96% |
Operating Margin (Target / Actual) |
20% /
19% |
19% /
19% |
Results
as a Percentage of Target |
96% |
100% |
Fiscal year 2014 numbers exclude Keysight
Technologies |
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Aligning CEO Pay with
Performance
Aligning CEO pay with company
performance and shareholder value creation is a core tenet of our program. As
the following chart illustrates, our CEOs compensation tracks appropriately
when compared to our absolute TSR over the past 5 years.
2011-2014 data represents
Mr. Sullivans CEO pay; 2015 data represents Mr. McMullens CEO
pay
Agilent began FY15 as a
standalone life sciences company having just completed the spin-off of Keysight
Technologies, which we believe was in the best interest of shareholders. While
we are disappointed that our FY15 absolute TSR was slightly negative, we are
executing on a multi-year financial plan to accelerate our organic revenue
growth, increase our operating margins, return greater than 85% of free cash to
shareholders and implement our Agile Agilent program to streamline and simplify
the company.
The Agilent stock price
started fiscal year 2015 at a premium for a number of reasons including
anticipation of the spinoff of Keysight Technologies, strategic optionality
speculation, shareholder churn and premium associated with the broader rise of
the S&P 500 health care sector. As the year went on, the stock price premium
slowly dissipated despite our strong FY15 financial results, which included year
over year revenue growth above market, Agilents highest revenue growth in the
last four years, and increased adjusted operating margins. Nonetheless, these
financial results translated into a slightly below target short-term financial
incentive payout. Meanwhile, the companys strong performance resulted in our
CEO receiving just over 100% of his overall target short-term incentive payout,
when including the weighted average payout of the strategic objectives.
However, as the chart above
indicates, our total CEO compensation has declined by approximately 50 percent,
and our FY13-FY15 LTPP payout was zero percent given the relative performance of
our stock.
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Pay
Practices
Our executive compensation
program is supported by a set of strong governance provisions and pay
practices.
We structure compensation to create a
strong alignment with shareholder interests |
● Majority of pay is delivered via
performance-based vehicles such as long-term performance shares and annual
cash incentives
● Adding mandatory one-year post-vest holding
period on Annual LTI awards beginning in fiscal year
2016 |
We design our programs to avoid excessive risk
taking |
● Strong recoupment and anti-hedging policies
in place
● Robust stock ownership
guidelines
● Annual compensation risk
assessment |
We follow best practices
in executive compensation design |
● Limited perquisites
● No single trigger on change in control
benefit provisions or new tax gross-ups
● No dividends / dividend-equivalents on
unearned performance awards
● Continued vesting of equity awards and earn
out of LTPP shares based on performance (rather than acceleration of
target) upon retirement
● Independent Compensation Committee
Consultant |
Compensation
Philosophy
The main objectives of our
executive compensation program are to pay for performance while aligning executives
interests with shareholder interests. Our pay levels are reasonable and competitive to attract and retain the
best talent and structure pay to support our business objectives with
appropriate rewards for short-term operating results and long-term shareholder
value creation. Accordingly, we structure our executive compensation program
with three basic direct elements:
Base Salary.
Base salaries have historically accounted
for 20% or less of total compensation for our NEOs. This element is intended to
establish the minimum or base-line competitive compensation level that sits
beneath the variable compensation components. The remaining 80% or more of our
total compensation is performance-based as described below.
Short-Term Cash
Incentives. For fiscal year 2015,
we used financial metrics such as revenue growth and operating profit percentage, as well as strategic objectives, to determine
our short-term cash performance incentives. The short-term incentives are used
to provide a competitive element of total direct compensation and to focus the
efforts of our executives on critical operating and strategic goals that are
best measured within annual periods, where there is downside risk for
underperforming and upside reward for success.
Long-Term
Incentives. For fiscal year 2015,
our long-term incentives consist of a combination of (1) stock options that vest
over four years and have a 10-year term and (2) performance shares that vest at
the end of a three-year period based on continued employment and our relative
TSR versus peer companies. The purpose of the long-term incentives is to provide
a competitive element of total direct compensation, enable employment retention,
facilitate executive stock ownership, and reward for multi-year shareholder value creation through the performance of our stock as measured
against (1) historical prices and (2) the shareholder return of our
peers.
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Our total compensation for
each NEO varies based on (i) company performance measured against external
metrics that correlate to long-term stockholder value, (ii) performance of the
business organizations against specific targets, and (iii) individual
performance. These three factors are considered in positioning salaries,
determining earned short-term incentives and determining long-term incentive
grant values.
Compensation Risk
Controls
F.W. Cook conducts an annual
review of Agilents compensation related risks. The risk assessment conducted
during fiscal year 2015 confirmed that Agilents executive compensation program
is well designed to encourage
behaviors aligned with the long-term interests of shareholders. F.W. Cook also found an appropriate balance in
fixed versus variable pay, cash and equity, corporate, business unit, and
individual goals, financial and non-financial performance measures, and formulas
and discretion. Finally, it was determined that there are appropriate policies
and controls in place to mitigate compensation-related risk, as set forth
below:
Recoupment Policy
|
We have adopted an
Executive Compensation Recoupment Policy that applies to all of our
executive officers covered by Section 16 of the Securities Exchange Act.
Under this Policy, in the event of (A) a material restatement of financial
results (wherein results were incorrect at the time published due to
mistake, fraud or other misconduct), or (B) fraud or misconduct by an
executive officer, the Compensation Committee will, in the case of a
restatement, review all short and long-term incentive compensation awards
that were paid or awarded to executive officers for performance periods
beginning after July 14, 2009 that occurred, in whole or in part, during
the restatement period. In the case of fraud or misconduct, the Committee
will consider actions to remedy the misconduct, prevent its recurrence,
and impose discipline on the wrongdoers, in each case, as the Committee
deems appropriate.
These actions may
include, without limitation:
●requiring reimbursement of
compensation,
●the cancellation of outstanding restricted
stock or deferred stock awards, stock options, and other equity incentive
awards, limiting future awards or compensation, and
●requiring the disgorgement of profits
realized from the sale of Agilent stock to the extent such profit resulted
from fraud or misconduct. |
Hedging and Insider
Trading Policy |
Our insider trading
policy expressly prohibits:
●ownership of financial instruments or
participation in investment strategies that hedge the economic risk of
owning Agilent stock
●officers and directors from pledging Agilent
securities as collateral for loans
●officers, directors and employees from
purchasing or selling Agilent securities while in possession of material,
non-public information, or otherwise using such information for their
personal benefit.
Our executives and
directors are permitted to enter into trading plans that are intended to
comply with the requirements of Rule 10b5-1 of the Securities Exchange Act
so that they can prudently diversify their asset portfolios and exercise
their stock options before expiration. |
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Stock
Ownership Guidelines |
|
Our stock ownership guidelines are
designed to encourage our NEOs and other executive officers to achieve and
maintain a significant equity stake in Agilent and more closely align
their interests with those of our stockholders. The guidelines provide
that the CEO, COO, CFO and other executive officers should accumulate and
hold, within five years from election to his or her position, an
investment level in our stock equal to a multiple of his or her annual
base salary or accumulate a direct ownership of Agilent stock as set forth
below: |
|
|
|
|
|
|
|
|
Investment Level = |
|
Direct Ownership of |
|
|
|
|
Multiple of Annual |
|
Agilent Stock |
|
|
|
Executive |
Base Salary |
|
(# of
Shares) |
|
|
|
CEO |
6X |
|
N/A |
|
|
|
|
CFO/COO |
3X |
|
80,000 |
|
|
|
|
All other executive
officers |
3X |
|
40,000 |
|
|
|
|
|
|
|
|
|
|
|
|
An annual review is conducted to
assess compliance with the guidelines. By the end of fiscal year 2015, all
of our NEOs had either met or were on track to reach their stock ownership
guideline requirements within the applicable timeframe. |
|
Determining Executive Pay
Process for Determining
Compensation
For fiscal year 2015, the
Compensation Committee retained F.W. Cook as its compensation consultant. F.W.
Cook performs no other work for Agilent, does not trade Agilent stock, has an
Independence Policy that is reviewed annually by F.W. Cooks Board of Directors,
and proactively notifies the Compensation Committee chair of any potential or
perceived conflicts of interest. The Compensation Committee found no conflict of
interest with F.W. Cook during fiscal year 2015.
To determine total
compensation for the upcoming fiscal year, the Compensation Committee considers
1) the performance of each individual executive for the last fiscal year, 2) the
most recent peer group data from F.W. Cook, 3) our business and strategic goals
for the coming fiscal year and 4) detailed tally sheets for the CEO and each
NEO. F.W. Cook presents and analyzes market data for benchmarking each
individual position and provides insight to market practices for the
Compensation Committees actions, but it does not make any specific compensation
recommendations on the individual NEOs. The Compensation Committee determines
the form and amount of compensation for all executive officers after considering
the market data and company, business unit and individual performance. For
fiscal year 2015, F.W. Cook advised the Compensation Committee on a number of
compensation matters, including but not limited to:
● |
Criteria used to
identify peer companies for executive compensation and performance
metrics; |
● |
Evaluation of our total
direct compensation levels and mix for the NEOs and four other senior
officers; |
● |
Mix of long-term
incentives, grant types and allocation of stock options and full value
shares; |
● |
Reviewing various other
proposals presented to the Compensation Committee by management;
|
● |
Guidance on CEO
transition planning; and |
● |
Support for shareholder
outreach campaign. |
The Compensation Committee,
which is composed solely of independent members of the Board, operates under a
Board-approved charter that spells out the Committees major duties and
responsibilities. This charter is available on Agilents website at
http://www.investor.agilent.com/phoenix.zhtml?c=103274&p=irol-govhighlights.
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Role of Management
The CEO and the Senior Vice
President, Human Resources consider the responsibilities, performance and
capabilities of each of the Companys executive officers, including the NEOs,
other than the CEO, and what compensation package they believe will attract,
retain and motivate. The Senior Vice President, Human Resources does not provide
input on setting his own compensation. A comprehensive analysis is conducted
using a combination of the market data based on our peer group and survey data,
performance against targets, and overall performance assessment. This data and
analysis is used as the primary consideration to determine if an increase in
compensation is warranted and the amount and type of any increase for each of
the total compensation components for the then-current fiscal year. After
consulting with the Senior Vice President, Human Resources, the CEO makes
compensation recommendations, other than for his own compensation, to the
Compensation Committee at the first Compensation Committee meeting of the fiscal
year.
Benchmarking
NEO Compensation Peer
Group
At the beginning of each
fiscal year, the Compensation Committee meets with F.W. Cook to review and
approve the peer group companies that satisfy our selection criteria. We revised
the peer group used for setting fiscal year 2015 NEO compensation given the
spin-off of Keysight Technologies. For fiscal year 2015, our
peer group for NEO compensation consisted of 29 product, capital market and
labor market competitors in the S&P 500 Health Care Sector with revenues
between 0.25x and 2.5x times Agilents projected revenue, supplemented with two
of our most direct competitors (Thermo Fisher and Danaher). The range of annual revenues for peer group
members was determined so that Agilents size measured in annual revenue would
be at the median of the peer group. F.W. Cook used the compensation information
reported in the public filings of our peer group companies and survey data to
make our comparisons and adjusted the data to reflect the age of the reported
information. We used this peer group data, targeting the market median, to set each NEOs compensation for fiscal year
2015.
FISCAL YEAR 2015 NEO
COMPENSATION PEER GROUP
Agilents peer group for
setting fiscal year 2015 NEO compensation consists of the following 31
companies.
Actavis |
Celgene |
Intuitive Surgical |
Stryker |
Alexion Pharma |
Cerner |
Lab
Corp of America |
Thermo Fisher |
Allergan |
Covidien |
Mylan |
Varian Medical Systems |
Bard
(C.R.) |
Danaher |
PerkinElmer |
Vertex Pharmaceutical |
Becton, Dickinson |
DENTSPLY Intl |
Perrigo |
Waters |
Biogen Idec |
Edwards Lifesciences |
Quest Diagnostics |
Zimmer Holdings |
Boston Scientific |
Forest Labs |
Regeneron Pharma |
Zoetis |
CareFusion |
Hospira |
St.
Jude Medical |
|
Peer Group for the
Long-Term Performance Program
The Compensation Committee
believes that an expanded peer group is more appropriate for determining
relative TSR under the Companys LTPP, as an expanded peer group provides a
broader index for comparison and better alignment with shareholder investment
choices. Therefore, the Compensation Committee uses the companies in
the S&P 500, Health Care,
Materials and Industrials Sectors Indexes (approximately 150 companies) for determining TSR under the LTPP. Only
companies that are included in one of these sectors at the beginning of the
performance period
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and have 3 years of stock
price performance at the end of the performance period are included in the final
calculation of results. The S&P 500 constituent list is maintained by the
S&P Index Committee, which is available at www.standardandpoors.com/indices/main/en/us. Any change in the expanded peer group is solely due to
Standard & Poors criteria for inclusion in the index.
CEO Compensation
The Compensation Committee
establishes the CEOs compensation based on a thorough review of the CEOs
performance that includes: (i) an objective assessment against agreed-to metrics
set by the Compensation Committee; (ii) tally sheets, (iii) market data from
F.W. Cook, (iv) a self-evaluation by the CEO that the Compensation Committee
discusses with the independent directors; and (v) a qualitative evaluation of
the CEOs performance that is developed by the independent directors, including
each member of the Compensation Committee, in executive session. The CEOs total
direct compensation package is reviewed annually by the Compensation Committee,
which then presents its recommendation to the other independent directors for
review and comment. The Compensation Committee then makes the final
determinations on compensation for the CEO.
Fiscal Year 2015
Compensation
For fiscal year 2015,
approximately 88% of Mr.
McMullens and 84% of our NEOs
total direct compensation consisted of short-term and long-term incentives and
is at-risk which means that this component can vary year
to year depending on company and Agilents stock price performance.
CEO |
|
Other Named
Executive Officers (Average)
|
|
|
|
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A Year in Transition
In FY15, Bill Sullivan retired
after 10 years of being CEO and was succeeded by Mr. McMullen. In determining
FY15 CEO compensation, the Committee considered Mr. Sullivans planned
retirement and role as advisor to Mr. McMullen and the Board for the remainder
of the year. The Committee followed its compensation philosophy in setting
Mr. McMullens CEO compensation
near the 25th
percentile of the peer
group.
|
Mr. Sullivan |
Mr.
McMullen |
|
|
CEO |
2015 |
YOY% |
CEO |
CEO
YOY |
|
2014 |
Change |
2015 |
%
Change |
Base
Salary |
$1,050,000 |
$630,000 |
-40.0% |
$845,833 |
-19.4% |
Short-Term Incentive |
|
|
|
|
|
(non-equity) |
$1,631,089 |
$894,285 |
-45.2% |
$1,110,963 |
-31.9% |
Performance Shares / |
|
|
|
|
|
Restricted Stock |
$6,632,830 |
$3,057,116 |
-53.9% |
$2,520,205 |
-62.0% |
Stock
Options |
$4,569,033 |
$1,946,094 |
-57.4% |
$2,434,524 |
-46.7% |
Total |
$13,882,952 |
$6,527,495 |
-53.0% |
$6,911,525 |
-50.2% |
|
All data from Summary
Compensation Table. Mr. McMullen and Mr. Sullivan did not receive any
restricted stock in fiscal year
2015 |
Base Salary
Our salaries reflect the
responsibilities of each NEO, the competitive market for comparable
professionals in our industry, and are set to create an incentive for executives
to remain with Agilent. Base salaries and benefits packages are the fixed
components of our NEOs compensation and do not vary with company performance.
NEOs base salaries are set by considering benchmark market data as well as the
performance of each NEO. In aggregate, we target market 50th
percentile of our peer group for base salaries. For fiscal year 2015, NEO base salaries were on
average between the 25th and
35th
percentile. We believe this
positioning is appropriate as the majority of our NEOs were new to their
positions in 2015.
In November 2014, the
Compensation Committee increased the base salary for Messrs. Doak and
Ancher-Jensen from $400,000 to $425,000 and $386,000 to $400,000 respectively,
to compensate them appropriately against their respective peers. Mr. Kaltenbach
received a salary increase from $348,000 to $475,000 for his promotion to Senior
Vice President. Since Mr. Kaltenbach was on the German payroll during fiscal
year 2015, this amount was converted to his local currency (Euro) on December 1,
2014. As a result, his local currency base salary is 379,905 Euro. Mr. McMullen
received a salary increase in March 2015 from $700,000 to $950,000 to reflect
his promotion to CEO. Mr. Sullivans base salary for the fiscal year decreased
40% from $1,050,000 to $630,000 to reflect his part-time status after serving as
CEO from November 1, 2014 to March 17, 2015.
Short-Term Cash Incentives
The Performance-Based
Compensation Plan applies to our NEOs and for fiscal year 2015, provided the
opportunity for cash awards every six months linked to specific six-month
financial goals and annual strategic goals for the overall company and the three
business groups (LSAG, ACG and DGG). Effective fiscal year 2016, the short-term incentive program will change
to an annual program with a single payout at year end. Annual cash incentives are paid to reward
achievement of critical shorter-term operating, financial and strategic measures
and goals that are expected to contribute to shareholder value creation over
time. Financial goals for each six-month period are pre-established by the
Compensation Committee at the beginning of the period, based on recommendations
from management. The financial goals are based on Agilents fiscal year 2015
40
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|
COMPENSATION
DISCUSSION AND ANALYSIS |
financial plan established by
the Board of Directors. After the Compensation Committee certifies the
calculations of performance against the goals for each period, payouts, if any,
are made in cash. Metrics and goals cannot be changed after they have been
approved by the Compensation Committee. The Performance-Based Compensation Plan
reflects our pay-for-performance philosophy and directly ties short-term incentives to short-term
business performance.
For fiscal year 2015, the
awards under the Performance-Based Compensation Plan were calculated by
multiplying the individuals base salary for the performance period by the
individuals target award percentage and the performance, determined as follows:
H1 |
Annual Salary / 2 |
|
Individual Target Bonus (varies by individual) |
|
Financial Portion of Target Bonus (0% to 100%) |
|
Attainment % (based on actual performance) |
Financial |
X |
X |
X |
H2 |
Financial |
|
|
|
FY Strategic |
Annual Salary |
|
Individual Target Bonus (varies by individual) |
|
Strategic
Portion |
|
Attainment % |
X |
X |
of Target Bonus |
X |
(based on
actual |
|
|
(0% to
25%) |
|
performance) |
The payouts under the
Performance-Based Compensation Plan for fiscal year 2015 are provided in the
table below and in the Non-Equity Incentive Plan Compensation column in the
Summary Compensation Table.
|
|
|
|
|
|
|
|
|
|
Annual FY15 |
|
Target Short- |
|
|
|
|
|
First Half
FY15 |
|
Second Half
FY15 |
|
Strategic
Objectives |
|
Term Incentive |
|
Actual Short-Term |
|
|
Target |
|
Actual |
|
Target |
|
Actual |
|
Target |
|
Actual |
|
for the Fiscal |
|
Incentives Paid for |
|
|
Incentive |
|
Award |
|
Incentive |
|
Award |
|
Incentive |
|
Award |
|
Year |
|
the Fiscal Year |
Name |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
Michael R. McMullen |
|
$368,078 |
|
$344,373 |
|
$427,500 |
|
$427,500 |
|
$265,349 |
|
$339,090 |
|
$1,060,927 |
|
|
$1,110,963 |
|
Didier Hirsch |
|
$180,000 |
|
$168,408 |
|
$180,000 |
|
$180,000 |
|
$120,000 |
|
$168,000 |
|
$480,000 |
|
|
$516,408 |
|
Mark
Doak |
|
$127,500 |
|
$131,719 |
|
$127,500 |
|
$132,728 |
|
$85,000 |
|
$157,250 |
|
$340,000 |
|
|
$421,697 |
|
Henrik Ancher-Jensen |
|
$120,000 |
|
$126,396 |
|
$120,000 |
|
$112,122 |
|
$80,000 |
|
$120,000 |
|
$320,000 |
|
|
$358,518 |
|
Patrick Kaltenbach |
|
$121,534 |
|
$120,112 |
|
$125,439 |
|
$115,459 |
|
$82,337 |
|
$76,161 |
|
$329,310 |
|
|
$311,732 |
|
William P. Sullivan |
|
$787,500 |
|
$736,785 |
|
$157,500 |
|
$157,500 |
|
$0 |
|
$0 |
|
$945,000 |
|
|
$894,285 |
|
Mr. McMullens fiscal year
2015 bonus of $1,110,963 reflects our slightly below target fiscal year 2015
financial results and above target performance for Mr. McMullens strategic
objectives for the fiscal year. Mr. Sullivans final year bonus of $894,285
reflects his reduced base salary and our slightly below target fiscal year 2015
financial results. Mr. Sullivan was not assigned any strategic objectives for
fiscal year 2015.
Target Award Percentages
Our Compensation Committee set
the monetary value of the fiscal year 2015 short-term incentive targets based on
a percent of base salary pre-established for each NEO. The Compensation
Committee also considered the relative responsibility of each NEO. In aggregate,
we target market
50th
percentile of our peer group, and
in fiscal year 2015 our NEOs short-term incentive target bonus was set between
80% and 150% of base salary (depending on position).
Financial Target Metrics
and Fiscal Year 2015 Operational Results
The Performance-Based
Compensation Plan financial target metrics were based on (1) Agilents Operating
Margin and Agilents revenue goals for Mr. McMullen, Mr. Hirsch and Mr. Sullivan
at 100% and Messrs. Doak, Ancher-Jensen and Kaltenbach at 50%, (2) the other 50%
is tied to the respective
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DISCUSSION AND ANALYSIS |
business units Operating
Margin and revenue goals for Messrs. Doak and Kaltenbach, and (3) Agilent Gross
Margin Percentage and Agilents revenue goals for the other 50% of Mr.
Ancher-Jensens financial target bonus for each of the first half and second
half of fiscal year 2015.
The Compensation Committee
chose those metrics because:
● |
Revenue places focus on
our continued growth; and |
● |
Operating Margin and
Gross Margin both emphasize innovation, profitability and efficiency in
our core business operations. |
The Compensation Committee
sets the financial targets that must be met to receive the target payout based
on the companys business plan, which establishes higher financial goals than
external guidance provided to shareholders.
To determine earned awards, we
use payout matrices (as described below) that link the metrics and reflect
threshold-to-maximum opportunities based on various achievement levels of the
metrics. No awards are paid unless the Operating Margin or Gross Margin
threshold is achieved. The maximum award under the plan is capped at 200% of the
target award. The target metrics set for our short-term incentives and their
corresponding results were as follows:
First Half
FY15 |
|
|
|
|
|
Operating Margin /
Gross Margin % |
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payout % |
|
|
|
|
|
|
|
|
|
|
Goal |
|
Target |
|
Max |
|
Results |
|
Goal |
|
(Per |
|
|
Threshold |
|
Target |
|
Max |
|
Results |
|
Attainment |
|
(Mil) |
|
(Mil) |
|
(Mil) |
|
Attainment |
|
Matrix) |
Agilent |
|
13.0% |
|
17.7% |
|
21.5% |
|
17.3% |
|
98% |
|
|
$2,071 |
|
$2,278 |
|
$1,989 |
|
96% |
|
94% |
|
LSAG
& ACG |
|
14.2% |
|
18.8% |
|
22.5% |
|
19.1% |
|
102% |
|
|
$1,728 |
|
$1,901 |
|
$1,672 |
|
97% |
|
104% |
|
ACG |
|
15.7% |
|
20.1% |
|
23.8% |
|
21.1% |
|
105% |
|
|
$662 |
|
$728 |
|
$652 |
|
99% |
|
113% |
|
OFS |
|
54.6% |
|
56.2% |
|
57.4% |
|
56.6% |
|
101% |
|
|
$1,648 |
|
$1,813 |
|
$1,579 |
|
96% |
|
117% |
|
Second Half
FY15 |
|
|
|
|
|
Operating Margin /
Gross Margin % |
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payout % |
|
|
|
|
|
|
|
|
|
|
Goal |
|
Target |
|
Max |
|
Results |
|
Goal |
|
(Per |
|
|
Threshold |
|
Target |
|
Max |
|
Results |
|
Attainment |
|
(Mil) |
|
(Mil) |
|
(Mil) |
|
Attainment |
|
Matrix) |
Agilent |
|
16.1% |
|
20.5% |
|
24.1% |
|
20.6% |
|
100% |
|
|
$2,144 |
|
$2,359 |
|
$2,049 |
|
96% |
|
100% |
|
LSAG |
|
15.9% |
|
20.3% |
|
23.9% |
|
19.4% |
|
96% |
|
|
$1,081 |
|
$1,189 |
|
$1,026 |
|
95% |
|
84% |
|
ACG |
|
19.0% |
|
23.1% |
|
26.5% |
|
23.9% |
|
103% |
|
|
$698 |
|
$768 |
|
$678 |
|
97% |
|
108% |
|
OFS |
|
56.3% |
|
57.7% |
|
58.8% |
|
57.5% |
|
100% |
|
|
$1,703 |
|
$1,874 |
|
$1,617 |
|
95% |
|
87% |
|
Notes: |
There are no thresholds
for Revenue metrics. |
|
Operating Margin
(segment level) is a non-GAAP measure defined as revenue less the sum of
cost of products and services, research and development expense and
selling, general and administrative
expenses. |
Payout Matrices to Measure
Financial Metrics
Agilent used the following
payout matrices to determine payout percentages for our FY15 short-term
incentive program. The payout matrices are designed to reward profitable growth by increasing payout percentages commensurate
with increased operating margin achievement rather than increased revenue
achievement once the revenue target is met. The payout percentages are
determined by finding the intersection between the goal attainments as a
percentage of plan for each financial metric. Payout percentages are assigned to
each intersection of OM and Revenue throughout the payout matrix. These specific
matrices were used to determine the Agilent level payout percentages. Payout
matrices vary by business group.
42
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|
COMPENSATION
DISCUSSION AND ANALYSIS |
|
|
H1 FY15 - Revenue (% of
plan) |
|
|
0 -
90% |
92% |
94% |
96% |
98% |
100% |
102% |
104% |
106% |
108% |
110% |
|
121% |
120.00% |
126.00% |
132.00% |
138.00% |
144.00% |
150.00% |
166.67% |
183.33% |
200.00% |
200.00% |
200.00% |
118% |
117.14% |
122.29% |
127.43% |
132.57% |
137.71% |
142.86% |
160.07% |
179.05% |
185.72% |
185.72% |
185.72% |
114% |
113.33% |
117.33% |
121.33% |
125.33% |
129.33% |
133.33% |
151.28% |
166.67% |
166.67% |
166.67% |
166.67% |
110% |
109.52% |
112.38% |
115.24% |
118.10% |
120.95% |
123.81% |
142.49% |
147.62% |
147.62% |
147.62% |
147.62% |
106% |
105.71% |
107.43% |
109.14% |
110.86% |
112.57% |
114.29% |
128.58% |
128.58% |
128.58% |
128.58% |
128.58% |
102% |
101.90% |
102.48% |
103.05% |
103.62% |
104.19% |
104.76% |
109.53% |
109.53% |
109.53% |
109.53% |
109.53% |
100% |
100.00% |
100.00% |
100.00% |
100.00% |
100.00% |
100.00% |
100.00% |
100.00% |
100.00% |
100.00% |
100.00% |
98% |
93.33% |
93.41% |
93.48% |
93.56% |
93.63% |
93.70% |
93.70% |
93.70% |
93.70% |
93.70% |
93.70% |
96% |
86.67% |
86.81% |
86.96% |
87.11% |
87.26% |
87.41% |
87.41% |
87.41% |
87.41% |
87.41% |
87.41% |
88% |
60.00% |
60.44% |
60.89% |
61.33% |
61.78% |
62.22% |
62.22% |
62.22% |
62.22% |
62.22% |
62.22% |
80% |
33.33% |
34.07% |
34.81% |
35.56% |
36.30% |
37.04% |
37.04% |
37.04% |
37.04% |
37.04% |
37.04% |
73% |
10.00% |
11.00% |
12.00% |
13.00% |
14.00% |
15.00% |
15.00% |
15.00% |
15.00% |
15.00% |
15.00% |
|
|
H2 FY15 - Revenue (% of
plan) |
|
|
0 -
90% |
92% |
94% |
96% |
98% |
100% |
102% |
104% |
106% |
108% |
110% |
|
118% |
120.00% |
126.00% |
132.00% |
138.00% |
144.00% |
150.00% |
170.00% |
190.00% |
200.00% |
200.00% |
200.00% |
116% |
117.78% |
123.11% |
128.44% |
133.78% |
139.11% |
144.44% |
164.89% |
188.89% |
188.89% |
188.89% |
188.89% |
112% |
113.33% |
117.33% |
121.33% |
125.33% |
129.33% |
133.33% |
154.66% |
166.67% |
166.67% |
166.67% |
166.67% |
108% |
108.89% |
111.56% |
114.22% |
116.89% |
119.56% |
122.22% |
144.44% |
144.44% |
144.44% |
144.44% |
144.44% |
104% |
104.44% |
105.78% |
107.11% |
108.44% |
109.78% |
111.11% |
122.22% |
122.22% |
122.22% |
122.22% |
122.22% |
100% |
100.00% |
100.00% |
100.00% |
100.00% |
100.00% |
100.00% |
100.00% |
100.00% |
100.00% |
100.00% |
100.00% |
96% |
82.86% |
83.05% |
83.24% |
83.43% |
83.62% |
83.81% |
83.81% |
83.81% |
83.81% |
83.81% |
83.81% |
92% |
65.71% |
66.10% |
66.48% |
66.86% |
67.24% |
67.62% |
67.62% |
67.62% |
67.62% |
67.62% |
67.62% |
88% |
48.57% |
49.14% |
49.71% |
50.29% |
50.86% |
51.43% |
51.43% |
51.43% |
51.43% |
51.43% |
51.43% |
84% |
31.43% |
32.19% |
32.95% |
33.71% |
34.48% |
35.24% |
35.24% |
35.24% |
35.24% |
35.24% |
35.24% |
80% |
14.29% |
15.24% |
16.19% |
17.14% |
18.10% |
19.05% |
19.05% |
19.05% |
19.05% |
19.05% |
19.05% |
79% |
10.00% |
11.00% |
12.00% |
13.00% |
14.00% |
15.00% |
15.00% |
15.00% |
15.00% |
15.00% |
15.00% |
Tables have been simplified
for illustrative purposes, but the actual payout percentages are shown.
Strategic Component and
Fiscal Year 2015 Results
For fiscal year 2015, under
the Performance-Based Compensation Plan, we continued to utilize annual strategic goals to align each continuing NEOs objectives with
strategic company
priorities. The strategic
component is established within the time prescribed by Section 162(m) of the
Internal Revenue Code and is determined on an annual basis. The strategic
component accounts for 25% of the total target bonus for each NEO who was
assigned strategic objectives. The maximum payout per NEO for satisfaction of
the strategic component is the lesser of (1) up to 200% of strategic objective
performance results or (2) 0.75% of non-GAAP pre-tax earnings, and the
Compensation Committee may exercise negative discretion to the maximum payout to
determine the strategic award percentage. The percentage of non-GAAP pre-tax
earnings increased this year from 0.50% to 0.75% due to the smaller company size
after the Keysight spin-off.
Non-GAAP pre-tax earnings
is defined as earnings before income taxes that exclude primarily the impact of
acquisition and integration costs, restructuring costs, transformational
initiatives, non-cash intangibles amortization as well as business exit and
divestiture costs.
43
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DISCUSSION AND ANALYSIS |
Fiscal year 2015 strategic
objectives were selected to focus
NEOs on key business initiatives such as revenue growth in specific markets and products, company-wide gross
margin expansion, streamlined and more efficient operations, and regulatory
compliance. The following table
describes each strategic objective, including the threshold, target and maximum
achievement levels for each, identifies the NEOs who were assigned to each
strategic objective, and reports the final attainment and payout percentage for
each objective. If an NEO is assigned to more than one objective, the weighting
is equally distributed. For competitive purposes, specific threshold, target and
maximum amounts are not shown in the descriptions that follow.
|
FY15 Strategic |
|
|
|
|
|
NEOs |
Objective |
Threshold |
Target |
Maximum |
|
Payout |
Assigned |
Description |
(50% Payout) |
(100% Payout)
|
(200% Payout)
|
Attainment |
% |
Messrs. McMullen and Doak |
CSD - Revenue |
Achieve 90% of |
Target revenue |
Achieve 119% of |
Achieved |
|
|
Growth |
Target revenue |
growth % vs. |
target revenue |
122% of |
200% |
|
|
growth % vs. |
FY14 |
growth vs. FY14 |
target |
|
|
FY14 |
|
|
|
|
Messrs. McMullen and Doak |
SSD - Operating |
-$XM OP |
Achieve FY15 |
+$XM OP |
Achieved |
|
|
Profit |
decline vs Fall |
Fall Plan |
improvement vs |
70% of OP |
170% |
|
|
Plan |
|
Fall Plan |
improvement |
|
|
|
|
|
plan |
|
Mr.
McMullen |
OMNIS |
Achieve 87.5% |
Achieve target |
Achieve 125% |
94% of plan |
|
|
Shipments |
of target units |
units placed |
of target units |
for units and |
|
|
|
placed and |
and a specified |
placed and |
MTBF* target |
70% |
|
|
a specified |
MTBF* target |
a specified |
achieved |
|
|
|
MTBF* target |
|
MTBF* target |
|
|
Mr.
McMullen |
LSAG Sales |
Achieve 104% |
LSAG/ACG |
Achieve 96% of |
Missed target |
|
|
Cost Per Order |
of LSAG/ACG |
cost per order |
LSAG/ACG cost |
by 1.2% pts |
85% |
|
Dollar (CPOD) |
cost per order |
dollar Target % |
per order dollar |
|
|
|
dollar target % |
|
Target % |
|
|
Messrs. McMullen and |
OFS - Gross |
-0.2 ppts GM |
Achieve FY15 |
+ 0.25 ppt GM |
Achieved |
|
Ancher-Jensen |
Margin |
decline vs Fall |
Fall Plan |
improvement |
FY15 Fall |
100% |
|
|
Plan |
|
|
Plan |
|
Messrs. McMullen, |
Dako FDA** |
First FDA |
Dako Denmark |
Dako Denmark |
Warning |
|
Ancher-Jensen |
|
warning letter |
does not |
receives |
letter lifted |
|
|
|
not lifted but |
receive a 2nd |
confirmation |
on April 15, |
|
|
|
Dako Denmark |
FDA warning |
from the FDA |
2015 |
200% |
|
|
can continue |
letter in FY15 |
of the lifting |
|
|
|
to export |
and also meets |
of the warning |
|
|
|
|
products to the |
remediation |
letter by |
|
|
|
|
US
in FY15. |
timeline. |
10/31/2015 |
|
|
Messrs. McMullen and |
NMR - Operating |
-$XM |
Achieve FY15 |
+$XM OP |
Achieved |
|
Kaltenbach |
Profit |
attainment vs. |
Fall Plan |
improvement vs |
30% of OP |
130% |
|
|
Fall Plan |
|
Fall Plan |
improvement |
|
|
|
|
|
plan |
|
Messrs. McMullen and |
LC/MS - Revenue |
Achieve 67% of |
Target Revenue |
Achieve 233% of |
Achieved |
|
Kaltenbach |
Growth |
target revenue |
growth % vs |
target revenue |
70% of target |
55% |
|
|
growth vs FY14 |
FY14 |
growth vs FY14 |
revenue |
|
|
|
|
|
growth |
|
Messrs. McMullen and Hirsch |
Infrastructure |
Achieve 102% |
Achieve 100% |
Achieve 95% |
Exceeded |
|
|
Expenses |
adjusted actual |
actual adjusted |
actual adjusted |
target by 2% |
140% |
|
|
expenses vs |
expenses vs |
expenses vs |
pts |
|
|
Fall
Plan |
Fall
Plan |
Fall
Plan |
|
|
____________________
* |
|
MTBF = mean time before
failure |
** |
|
In FY14 Dako received an
FDA warning letter citing a number of deficiencies at the Dako Denmark
manufacturing site that required remediation. Failure to address these
deficiencies could have prevented Dako Denmark from exporting products to
the US. To address the issues raised by the FDA Agilent assembled a
dedicated team and created this strategic objective to focus management
attention on this critical issue. As a result of this teams efforts the FDA lifted the warning letter in April
2015. |
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Actual payout tables for
strategic objectives use a straight-line payout slope from threshold to target
and from target to maximum. The payout table for the FDA was objective and
milestone based as described above. Final payouts for each strategic objective
are recommended by the CEO and approved by the Compensation
Committee.
Long-Term Incentives
Stock Options, Performance Stock Units and Performance Cash
No Performance Stock Units
Earned in Fiscal Year 2015
The performance stock units
granted in fiscal year 2013 were measured based on relative TSR versus all
companies in the S&P 500 Health Care, Industrials and IT Sectors for fiscal
years 2013 through 2015. The company did not establish an absolute TSR target as
we believe performance is best measured on a relative basis against our selected
peer group
As noted in the Executive
Summary, no performance stock
units were earned in fiscal year 2015 for the 2013 to 2015 awards because our relative TSR fell below the 25th percentile of the peer group.
Peer Group TSR |
Payout % |
75th Percentile |
110.7% |
200% |
Median |
67.2% |
100% |
25th Percentile |
41.5% |
25% |
Agilent |
38.4% / 23rd percentile |
0% |
Agilents TSR performance
relative to peers and the payout percentages for the LTPP for the past 5 years
are set forth in the following table:
Fiscal Year |
Agilent TSR Relative |
Payout % |
Rank to Peer Group |
2013 2015 |
38.4% |
0.0% |
2012 2014 |
39.7% |
69.0% |
2011 2013 |
45.8% |
87.0% |
2010 2012 |
46.9% |
91.0% |
2009 2011 |
54.9% |
120.0% |
Long-Term Incentives
Granted in Fiscal Year 2015
When determining individual
LTI award values, we target our NEO grants to be at the 50th
percentile of the peer group, in aggregate. For fiscal year 2015, the
Compensation Committee granted long-term incentives with target values for each NEO that were on average
between the 25th and
35th percentile of our peer group.
Stock grant values were delivered as follows:
● |
Approximately half the
value was in the form of stock options that vest 25% each year over four
years. The exercise price of the option was the closing price of our
common stock on the date of grant. To determine the number of stock
options granted, we divided the target award amount by the product of the
8-day average closing price of Agilent stock multiplied by the
Black-Scholes accounting valuation. |
● |
The remaining value of
the long-term award is a performance stock unit award, delivered under the
LTPP. These performance stock units vest 100% after the conclusion of the
three-year performance period, and the resulting final payout may range
from 0 to 200% of the originally awarded stock units. To determine the
number of performance stock units, we divided the target award amount by
the product of the 8-day average stock price multiplied by a Monte Carlo
valuation. |
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|
COMPENSATION DISCUSSION AND ANALYSIS |
● |
We typically use a
20-day average closing price of our common stock to determine the number
of options and performance stock units for our awards. However, for fiscal
year 2015, we used the 8-day average stock price due to the timing of the
Keysight spin-off on November 1, 2014. This approach allowed us to begin
our average closing price after our stock began trading without
Keysight. |
Targeting approximately half
of the long-term incentive value in stock options and half of the value in
performance stock units keeps focus on improving Agilents stock price and
Agilents stock price performance relative to its peers. For fiscal year 2016 performance stock units will
represent 60% of the target LTI value with the other 40% delivered in RSUs rather than stock options. Fiscal
year 2016 LTPP and RSU awards will
include a mandatory one-year post vest holding period.
The target value of the
long-term incentive awards is determined at the beginning of the then-current
fiscal year for each NEO and is partially derived from the peer group data
provided by Frederic W. Cook. The target value also reflects the Compensation
Committees judgment on the relative role of each NEOs position within Agilent,
as well as the performance of each NEO.
In November 2014, Mr. McMullen
was awarded stock options and long-term performance shares with a target value
of $3,600,000. Upon his promotion to CEO, he received additional stock options
and long-term performance shares with a target value of $1,400,000. Mr.
Sullivans long-term incentive equity award was reduced over 51% from fiscal
year 2014, commensurate with his new role and was delivered 60% in performance
stock units and 40% in stock options. Mr. Sullivans awards will continue to
vest following his retirement, but
will only have value if Agilent performs. As the fiscal year 2013-2015 LTPP program illustrates, there is no
guaranteed value.
|
|
Number &
Type of Award |
|
Total Target
Value |
|
|
Stock Options |
|
Performance |
|
Restricted |
|
of Long Term- |
Name |
|
(#)
1 |
|
Stock Units
(#) (1) |
|
Stock Units (#) |
|
Incentive
Awards ($) |
Michael R. McMullen (2) |
|
|
228,763 |
|
|
|
50,801 |
|
|
|
|
|
$5,000,000 |
|
Didier Hirsch |
|
|
94,850 |
|
|
|
21,337 |
|
|
|
|
|
$2,100,000 |
|
Mark
Doak |
|
|
49,683 |
|
|
|
11,176 |
|
|
|
|
|
$1,100,000 |
|
Henrik Ancher-Jensen |
|
|
24,841 |
|
|
|
5,588 |
|
|
|
|
|
$550,000 |
|
Patrick Kaltenbach |
|
|
45,167 |
|
|
|
10,160 |
|
|
|
|
|
$1,000,000 |
|
William P. Sullivan |
|
|
184,281 |
|
|
|
62,182 |
|
|
|
|
|
$5,100,000 |
|
____________________
(1) |
Regular stock options
and performance stock units were granted on November 19, 2014 to Messrs.
McMullen, Hirsch, Doak, Ancher-Jensen and Sullivan and on November 20,
2014 for Mr. Kaltenbach. Mr. McMullen received 162,601 stock options and
36,577 performance stock units. |
|
|
(2) |
Mr. McMullen received
an additional 66,162 stock options and 14,224 performance stock units upon
his promotion to CEO on March 18, 2015. |
Performance Condition for
Stock Units Granted in Fiscal Year 2015
The performance stock units
granted in fiscal year 2015 will be measured and paid out based on relative TSR
versus all companies in our new peer group, the S&P 500 Health Care,
Industrials and Materials Sectors Indexes for fiscal year 2015 through fiscal
year 2017. The peer group companies are established at the beginning of the
performance period and need to have three full years of stock
46
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|
COMPENSATION DISCUSSION AND ANALYSIS |
price data to be used in the
final relative TSR calculation. The company does not establish an absolute TSR
target as we believe performance is best measured on a relative basis against
our selected peer group. The performance schedule determined by the Compensation
Committee in fiscal year 2015 was as follows:
|
Payout as a |
|
% of |
Relative TSR
Performance |
|
Target |
Below 25th Percentile Rank (threshold) |
|
0% |
|
25th Percentile Rank |
|
25% |
|
50th Percentile Rank (target) |
|
100% |
|
75th Percentile Rank and Above |
|
200% |
|
Performance stock units are
completely at-risk compensation because Agilents performance must be at or
above the 25th percentile in order for the individuals to receive a
payout. As noted, no shares were earned for the fiscal 2013-2015 performance
period.
The Compensation Committee has
established rolling three-year performance periods for determining earned awards
under our LTPP and currently uses relative TSR as a single metric. This metric
aligns with shareholder interests as higher TSR results in higher potential
returns for shareholders as well as ensuring a correlation between performance
and payouts. As noted above, our short-term incentive program focuses on
Operating Profit Percent and Revenue, which drive internal business strategies
that in turn impact our TSR. In
fiscal year 2016, we added operating margin as a financial metric for 50% of the
long-term performance shares, which provides a direct line of sight for our
executives between the companys financial performance and their long-term
incentive rewards.
For purposes of determining
the awards, relative TSR reflects (i) the aggregate change in the 20-day average
closing price of Agilents stock versus each of the companies in Agilents LTPP
peer group, each as measured at the beginning and end of the three-year
performance period plus (ii) the value (if any) returned to shareholders in the
form of dividends or similar distributions, assumed to be reinvested on
distribution date on a pre-tax basis.
Performance Cash Awards
Earned in Fiscal Year 2015
Mr. Ancher-Jensen did not
receive a grant or a payout for the LTPPs fiscal year 2013 through fiscal year
2015 performance period. Instead, at the beginning of fiscal year 2013, he
received a long-term cash incentive award for fiscal years 2013 through 2015 as
part of the Dako acquisition agreement. The metrics for this three-year
performance period were (1) Dako Revenue and Operating Profit from distribution
of Dako products in Asia and (2) Agilent Genomics Solutions Division sales
through Dako channels (GSD Sales).
One of the sources of value
behind the Dako acquisition was to leverage Agilents footprint and presence in
Asia to grow the Dako business in that region, as it was deemed to be
underrepresented versus Europe and the Americas. In order to tie those sources
of value with the three-year incentive plan for Dako executives, 80% of the
incentive pay was tied to achieving the combination of the standalone Dako
revenue and operating profit goals as well as the incremental revenues and
related profit from accelerating the growth in Asia.
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COMPENSATION DISCUSSION AND ANALYSIS |
To determine the earned award
for Mr. Ancher-Jensen, we used a payout matrix that links the metrics and
reflects threshold-to-maximum opportunities based on various achievement levels
of the metrics. No award was paid unless the Revenue and Operating Profit
thresholds were achieved. The maximum award was capped at 200% of the target
award. The target metrics and results for these awards are set forth in the
table below:
FY13-FY15 Dako
Long-Term Cash Incentive Plan (1) |
|
|
|
Revenue ($ Mil) |
Operating Profit ($
Mil) |
Name |
Component |
% of Long-term bonus |
Threshold |
Target |
Max |
Results |
Threshold |
Target |
Max |
Results |
Mr.
Ancher-Jensen |
Dako
& Agilent Asia Synergy |
80% |
80% of Target |
$X |
120% of Target |
89%
of Target |
21%
of Target |
$X |
179%
of Target |
55%
of Target |
|
Agilent Genomics |
20% |
80% of Target |
$X |
120% of Target |
2%
of Target |
|
|
|
|
____________________
(1) |
For
competitive purposes, specific threshold, target and maximum amounts are
not shown. |
Based on actual results over
the performance period, the Dako incentive plan paid out at 40% of target, which
resulted in a payment of $815,844 to Mr. Ancher-Jensen.
Equity Grant Practices
The Compensation Committee
generally makes grants of stock awards to our NEOs at the first Compensation
Committee meeting of our fiscal year. Awards are neither timed to relate to the
price of Agilents stock nor to correspond with the release of material
non-public information, although grants are generally made when Agilents
trading window is open. Grants to current employees are generally effective on
the date of the Compensation Committee meeting approving such grants. Grants to
new employees, including potential NEOs, are typically made at the next
regularly scheduled Compensation Committee meeting following the employees
start date. The standard vesting schedule for our equity grants is shown in the
table below. In fiscal year 2016,
we added a one-year post vest holding period to each of the LTI grants.
Equity Vehicle |
FY15 Design |
FY16 Design |
Standard Vesting Schedule |
Stock Options |
50% |
0% |
25%
each year over four years |
Performance Stock Units |
50% |
60% |
100%
after the third year |
Restricted Stock Units |
0% |
40% |
25%
each year over four years |
If an NEO dies or is fully
disabled, his or her unvested stock options or stock awards fully vest. In
addition, when an NEO retires from Agilent, his or her stock options and stock
awards continue to vest per their original vesting schedule rather than
accelerate at termination. We
believe continued vesting into retirement better aligns NEO interests with
shareholders beyond the date they retire from the company. Meanwhile, performance stock units are earned
based on the satisfaction of the performance metrics. In addition, within the
first 12 months of a performance period, the entire performance stock unit award
is pro-rated based upon completion of the first 12 months of the performance
period. As of October 31, 2015, Mr. Sullivan, Mr. Hirsch and Mr. Doak were
entitled to retirement vesting. Mr. McMullen will become retiree eligible in
February 2016. Finally, stock options and stock awards vest on a
double-trigger basis in connection with a change in control as
described below.
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|
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Additional Information
Benefits
Agilents global benefits
philosophy is to provide NEOs with protection and security through health and
welfare, retirement, disability insurance and life insurance programs. During
fiscal year 2015, the CEO and other NEOs were eligible to receive the same
benefits that are generally available to other Agilent employees.
In addition to the
company-wide benefits, Agilents NEOs have company-paid financial counseling
through a third party service to assist with their personal finances. We believe
that providing this service gives our NEOs a better understanding of their pay
and benefits, allowing them to concentrate on Agilents future success.
Financial counseling is a benefit generally provided by our peer companies and
is available at a reasonable group cost to Agilent.
Generally, it is our
Compensation Committees philosophy to not provide perquisites to our NEOs
except in limited circumstances. For example, in fiscal year 2015, there were no
special perquisites for our NEOs except for financial counseling and the
occasional use by executive officers of company drivers to transport them and
their family members to the airport for personal travel. In addition, the
company provided some relocation expenses for Mr. McMullen and some expenses
related to the temporary relocation assignment for Mr. Kaltenbach pursuant to
our standard relocation policy applicable to all employees. The company
previously provided an Executive Physical benefit to Officers, which we
discontinued in fiscal year 2015. These perquisites are included and footnoted
in the All other Compensation column in the Summary Compensation Table.
Deferred Compensation
NEOs on the U.S. payroll are
eligible to voluntarily defer base salary, short-term incentives in the form of
awards under the Performance-Based Compensation Plan and long-term incentives in
the form of stock awards under the LTPP. The deferrals are made through our 2005
Deferred Compensation Plan, which is available to all active employees on the US
payroll with total target cash salary, including the short-term Performance
Based Compensation Plan, greater than or equal to $265,000. This is a common
benefit arrangement offered by our peer companies, and our plan does not
guarantee above market or a specific rate of return on deferrals.
These benefits and an
additional description of plan features are set forth in the section entitled
Non-Qualified Deferred Compensation in Last Fiscal Year below and the
narrative descriptions accompanying this section.
Pension Plans
We provide a pension plan, the
Agilent Technologies, Inc. Retirement Plan (Retirement Plan), to our current
NEOs on U.S. payroll, as well as other eligible Agilent employees, who were
hired before November 1, 2014, for long-term employment retention and to support
our career-employment strategy, as well as to provide employee retirement
savings. In addition, we provide the Agilent Technologies, Inc. Supplemental
Benefit Retirement Plan (the Supplemental Benefit Retirement Plan) to our NEOs
in the U.S. and other eligible Agilent employees who were hired before November
1, 2014. The Supplemental Benefit Retirement Plan is an unfunded, non-qualified
pension plan which pays amounts upon retirement that would be due under the
regular Retirement Plan benefit formula, but are limited under the tax-qualified
Retirement Plan by the Internal Revenue Code. Both the Retirement Plan and the
Supplemental Benefit Retirement Plan were closed to new entrants effective
November 1, 2014. We also provide a pension plan to a current NEO and other
eligible employees in Germany. The German Pension plan is described in further
detail on page 60.
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|
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Additionally, we provide the
Agilent Technologies, Inc. Deferred Profit-Sharing Plan (the Deferred
Profit-Sharing Plan) that provides certain amounts to our NEOs and other
Agilent employees who provided services to our predecessor company,
Hewlett-Packard Company (Hewlett-Packard), prior to November 1, 1993. None of
these plans provide any credit of benefits prior to the date of hire or where
there is a break in service.
Retirement benefits are set
forth in the table entitled Pension Benefits on page 56 and the narrative
descriptions accompanying this table.
Policy Regarding
Compensation in Excess of $1 Million a Year
Section 162(m) of the Internal
Revenue Code generally disallows a tax deduction for compensation in excess of
$1 million paid to our CEO, CFO and the three other most highly compensated NEOs
employed at the end of the year. Certain compensation is specifically exempt
from the deduction limit to the extent that it is performance based as defined
in Section 162(m) of the Code.
Our Compensation Committee
considers the impact of Section 162(m) in setting and determining executive
compensation because it is concerned with the net cost of executive compensation
to Agilent (i.e., taking into account the tax treatment of the compensation),
and its ability to effectively administer executive compensation in the
long-term interests of stockholders.
For fiscal year 2015, stock
options, short-term cash incentives and long-term performance stock units are
intended to comply with the exception for performance-based compensation under
Section 162(m). Of course, in order to maintain flexibility in rewarding
individual performance and contributions, the Compensation Committee will not
limit all the amounts paid under all of Agilents compensation programs to just
those that qualify for tax deductibility. Agilent cannot guarantee that
compensation that is intended to comply with the performance-based compensation
exception under Section 162(m) of the Code will in fact so qualify.
Termination and Change
of Control
Consistent with the practice
of many of our peers, the Compensation Committee adopted change-of-control
agreements designed to provide protection to the NEOs so they are not distracted
by their personal, professional and financial situations at a time when Agilent
needs them to remain focused on their responsibilities, Agilents best interests
and those of all its stockholders. These agreements provide for a
double-trigger payout only in the event of a change in control
and the executive officer is either terminated from his-or-her position or moved
into a position that represents a substantial change in responsibilities within
a limited period of time after the transaction (these agreements do not become
operative unless both events occur).
We have eliminated excise tax gross-ups for officers entering into newly executed
change-of-control agreements after July 14, 2009, including our CEO, Mr.
McMullen. Only one officer that had such protection under an ongoing agreement
will continue to have this benefit as long as the existing agreement remains in
effect without material amendment. Potential payments to our NEOs in the event
of a change of control under our existing agreements are reported in the
Termination and Change of Control Table.
In addition, we have a
Workforce Management Program in place that is applicable to all Agilent
employees, including NEOs. Employment security is tied to competitive realities
as well as individual results and performance, but from time to time, business
circumstances could dictate the need for Agilent to reduce its workforce. The
Workforce Management Program is intended to assist employees affected by
restructuring by providing transition income in the form of severance
benefits.
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EXECUTIVE COMPENSATION |
Summary Compensation
Table
Agilents NEOs for fiscal 2015
include Agilents (i) President and Chief Executive Officer, (ii) Senior Vice President, Chief Financial
Officer, (iii) Agilents Former President and Chief Executive Officer and (iv)
the other three most highly compensated executive officers who were serving as
executive officers at the end of fiscal 2015.
Summary Compensation
Table |
|
|
|
|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension |
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and |
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified |
|
|
|
|
|
|
|
|
|
|
Non-Equity |
Deferred |
|
|
|
|
|
|
|
|
Stock |
Option |
Incentive Plan |
Compensation |
All other |
|
Name and |
|
Salary |
Bonus |
Awards |
Awards |
Compensation |
Earnings |
Compensation |
|
Principal Position |
Year |
($) |
($) (1) |
($)
(2)(3) |
($)
(2)(3) |
($)
(4) |
($)
(5) |
($)
(6) |
Total ($) |
Michael R. McMullen |
2015 |
$845,833 |
$0 |
$2,520,205 |
$2,434,524 |
|
$1,110,963 |
|
|
$70,994 |
|
|
$225,333 |
|
$7,207,852 |
President |
2014 |
$606,250 |
$0 |
$2,332,309 |
$994,432 |
|
$467,177 |
|
|
$91,716 |
|
|
$39,056 |
|
$4,530,940 |
Chief Executive Officer |
2013 |
$575,000 |
$0 |
$802,571 |
$876,960 |
|
$465,704 |
|
|
$106,498 |
|
|
$30,108 |
|
$2,856,840 |
|
Didier Hirsch |
2015 |
$600,000 |
$0 |
$1,049,012 |
$1,001,660 |
|
$516,408 |
|
|
$111,075 |
|
|
$18,643 |
|
$3,296,798 |
Senior Vice President, |
2014 |
$600,000 |
$0 |
$1,044,826 |
$1,048,187 |
|
$633,396 |
|
|
$111,158 |
|
|
$16,275 |
|
$3,453,842 |
Chief Financial Officer |
2013 |
$597,917 |
$0 |
$869,456 |
$950,040 |
|
$382,152 |
|
|
$110,862 |
|
|
$21,701 |
|
$2,932,127 |
|
Mark
Doak (7) |
2015 |
$422,917 |
$0 |
$549,457 |
$524,676 |
|
$421,697 |
|
|
$29,986 |
|
|
$16,354 |
|
$1,965,087 |
Senior Vice President, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President Cross-Labs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henrik Ancher-Jensen (7) |
2015 |
$398,867 |
$0 |
$274,728 |
$262,333 |
|
$1,174,362 |
|
|
$124,798 |
|
|
$28,227 |
|
$2,263,315 |
Senior Vice President, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President Order |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fulfillment and Supply |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chain |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick Kaltenbach (7)(8) |
2015 |
$407,262 |
$0 |
$505,138 |
$481,253 |
|
$311,732 |
|
|
$792,590 |
|
|
$153,102 |
|
$2,651,077 |
Senior Vice President, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President Life Sciences |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
Applied Markets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William P. Sullivan (9) |
2015 |
$630,000 |
$0 |
$3,057,116 |
$1,946,094 |
|
$894,285 |
|
|
($88,146) |
|
|
$28,498 |
|
$6,467,847 |
Former President and |
2014 |
$1,050,000 |
$0 |
$6,632,830 |
$4,569,033 |
|
$1,631,089 |
|
|
$0 |
|
|
$31,781 |
|
$13,914,733 |
Chief Executive Officer |
2013 |
$1,045,000 |
$0 |
$3,789,936 |
$4,141,200 |
|
$1,228,875 |
|
|
$0 |
|
|
$30,661 |
|
$10,235,672 |
____________________
(1) |
None of the executive
officers received any service awards or cash bonuses for fiscal years
2015, 2014 or 2013, other than provided in the Non-Equity Incentive
Compensation Plan. |
|
|
(2) |
Reflects the
aggregate grant date fair values, computed in accordance with Financial
Accounting Standards Board, Accounting Standards Codification, Topic 718,
Stock Compensation (FASB ASC Topic 718). The assumptions used in
calculating the expense are provided in additional detail in the tables
below. |
|
(3) |
The expenses listed
in these columns include expenses for stock awards and options awarded in
accordance with the LTP Program and 2009 Stock Plan, as shown in the table
below. The threshold and maximum amounts for performance shares granted
under the LTP program can be found in the Grants of Plan-Based Awards in
Fiscal Year 2015 below. |
|
(4) |
Amounts consist of
incentive awards earned by the NEOs during the fiscal year under the
Performance-Based Compensation Plan for Covered Employees. In addition,
Mr. Ancher-Jensen received a payout from a long-term cash incentive bonus
that was originally granted in November 2012. This bonus is described
above in the Performance Cash Awards Earned in fiscal year 2015
section. |
51
Table of
Contents
|
EXECUTIVE COMPENSATION |
(5) |
Amounts represent the
change in pension value for the following Agilent sponsored pension plans:
Agilent Technologies, Inc. Deferred Profit-Sharing Plan, Agilent
Technologies, Inc. Retirement Plan, Agilent Technologies, Inc.
Supplemental Benefit Retirement Plan and the Agilent Technologies, Inc.
German Pension Plan. |
|
|
(6) |
Amounts reflect (i)
employer contributions of $10,600 to Messrs. McMullen, Hirsch and
Ancher-Jensen, $10,500 to Mr. Sullivan and $6,296 to Mr. Doak for the
Agilent Technologies, Inc. 401(k) Plan in fiscal year 2015, and , (ii)
$19,968 for Mr. McMullen, $17,944 to Mr. Sullivan, $8,168 for Mr. Doak and
$16,582 for Mr. Ancher-Jensen for services incurred from The Ayco Company,
LP, the provider designated by Agilent to provide financial counseling
services to our NEOs, and $11,745 for Mr. McMullen and $7,045 for Mr.
Hirsch for services incurred by KPMG, LLC, a tax provider designated by
Agilent to provide tax preparation services for certain NEOs, (iii) travel
expenses of $1,981 for Mr. McMullen, $290 for Mr. Hirsch, $580 for Mr.
Doak, $145 for Mr. Ancher-Jensen and $531 for Mr. Kaltenbach for use of
Agilent drivers and vehicles for personal travel, (iv) $1,300 for Mr.
McMullen, $708 for Mr. Hirsch, $1,310 for Mr. Doak, $900 for Mr. Ancher-Jensen and $54 for Mr. Sullivan, for employer contribution to a health
savings account, (v) $179,739 for Mr. McMullens relocation expenses, and
vi) $152,571 for expenses related to Mr. Kaltenbachs temporary work
assignment in the U.S. |
|
(7) |
Messrs. Doak,
Ancher-Jensen and Kaltenbach were not named executive officers in the
Companys 2014 and 2015 Proxy Statements. Therefore, this table does not
provide fiscal 2013 and fiscal 2014 compensation data for
them. |
|
(8) |
Amounts included for
Mr. Kaltenbach, with the exception of stock awards and option awards, are
shown in U.S. Dollars but were paid to him in Euro. To convert the amounts
paid to U.S. Dollars, we used the prevailing exchange rate as of the last
business day of the applicable fiscal year (for FY15 amounts, an exchange
rate of 1.10060927 U.S. Dollars per Euro). |
|
(9) |
Mr. Sullivan is
included as he served as CEO through March 17,
2015. |
The following table itemizes
the full grant date fair value of equity grants made during the 2013, 2014 and
2015 fiscal years in accordance with FASB ASC Topic 718 for the Stock Awards
and Option Awards columns of the Summary Compensation table.
Long-term Incentive
Awards |
|
|
Long-Term Performance
Program |
|
|
Total FY15 Expense |
|
Total FY14 Expense |
|
Total FY13
Expense |
|
|
|
|
|
|
Restricted |
|
|
|
|
|
Restricted |
|
|
|
|
|
Restricted |
|
|
|
|
|
|
Stock |
|
|
|
|
|
Stock |
|
|
|
|
|
Stock |
|
|
Stock |
|
Option |
|
Unit |
|
Stock |
|
Option |
|
Unit |
|
Stock |
|
Option |
|
Unit |
|
|
Awards |
|
Awards |
|
Awards |
|
Awards |
|
Awards |
|
Awards |
|
Awards |
|
Awards |
|
Awards |
Mr. McMullen |
|
$2,520,205 |
|
$2,434,524 |
|
|
|
$2,332,309 |
|
$994,432 |
|
|
|
$802,571 |
|
$876,960 |
|
|
Mr. Hirsch |
|
$1,049,012 |
|
$1,001,660 |
|
|
|
$1,044,826 |
|
$1,048,187 |
|
|
|
$869,456 |
|
$950,040 |
|
|
Mr. Doak |
|
$549,457 |
|
$524,676 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Ancher-Jensen |
|
$274,728 |
|
$262,333 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Kaltenbach |
|
$505,138 |
|
$481,253 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
Sullivan |
|
$3,057,116 |
|
$1,946,094 |
|
|
|
$4,554,407 |
|
$4,569,033 |
|
$2,078,423 |
|
$3,789,936 |
|
$4,141,200 |
|
|
FASB ASC Topic 718
Assumptions
The following table sets forth
the weighted average FASB ASC Topic 718 assumptions used in 2012 to 2015 in the
calculation of the stock awards and option awards presented in our Summary
Compensation Table. For all periods presented, the fair value of share-based
awards for employee stock options awards was estimated using the Black-Scholes
option pricing model, while shares granted under the LTP Program were valued
using a Monte Carlo simulation. The estimated fair value of restricted stock
unit awards was determined based on the market price of Agilents common stock
on the date of grant, adjusted for expected dividend yield. On January 17, 2012,
the companys Board of Directors approved the initiation of quarterly cash
dividends to the companys shareholders. The fair value of all the awards
granted prior to the declaration of quarterly cash dividends was measured based
on an expected dividend yield of 1%.
52
Table of
Contents
|
EXECUTIVE COMPENSATION |
|
|
Years Ended October
31, 2015 |
|
|
2015 |
|
2014 |
|
2013 |
|
2012 |
Stock Option Plans: |
|
|
|
|
|
|
|
|
Weighted average
risk-free interest rate |
|
1.75% |
|
1.69% |
|
0.86% |
|
0.88% |
Dividend
yield |
|
1% |
|
1% |
|
1% |
|
0% |
Weighted average
volatility |
|
28% |
|
39% |
|
39% |
|
38% |
Expected
life |
|
5.5
yrs |
|
5.8
yrs |
|
5.8
yrs |
|
5.8
yrs |
|
LTPP: |
|
|
|
|
|
|
|
|
Volatility of
Agilent shares |
|
25% |
|
36% |
|
37% |
|
41% |
Volatility of
selected peer-company shares |
|
12%-57% |
|
13%-57% |
|
6%-64% |
|
17%-75% |
Price-wise
correlation with selected peers |
|
37% |
|
47% |
|
49% |
|
62% |
Grants of Plan-Based Awards
in Last Fiscal Year
The following table sets forth
certain information regarding grants of plan-based awards to each of our NEOs
during fiscal year 2015. For more information please refer to the Compensation
Discussion and Analysis.
Grants of Plan-Based
Awards in Fiscal Year 2015 |
|
|
Estimated Possible
Payouts Under Non-Equity Incentive Plan Awards (1) |
Estimated Payouts Under
Equity Incentive Plan Awards (2) |
All Other Option Awards: Number
of Securities Underlying |
All Other Stock |
Exercise or
Base Price of Option |
Grant Date Fair Value of
Stock
and Option |
|
Grant |
Threshold |
Target |
Maximum |
Threshold |
Target |
Maximum |
Options |
Awards |
Awards |
Awards |
Name |
Date |
($) |
($) |
($) |
($) |
($) |
($) |
(#)
(3) |
(#) |
($/Sh) |
($) |
Michael R. McMullen |
11/19/2014 |
$145,714 |
$633,427 |
$1,266,854 |
|
|
|
|
|
|
|
|
|
|
5/19/2015 |
$42,750 |
$427,500 |
$855,000 |
|
|
|
|
|
|
|
|
|
|
11/19/2014 |
|
|
|
$449,568 |
$1,798,272 |
$3,596,543 |
|
|
|
|
|
$1,798,272 |
|
11/19/2014 |
|
|
|
|
|
|
162,601 |
|
|
$40.80 |
|
$1,717,143 |
|
3/18/2015 |
|
|
|
$180,483 |
721,933 |
$1,443,867 |
|
|
|
|
|
721,933 |
|
3/18/2015 |
|
|
|
|
|
|
66,162 |
|
|
$42.12 |
|
$717,381 |
Didier Hirsch |
11/19/2014 |
$78,000 |
$300,000 |
$600,000 |
|
|
|
|
|
|
|
|
|
|
5/19/2015 |
$18,000 |
$180,000 |
$360,000 |
|
|
|
|
|
|
|
|
|
|
11/19/2014 |
|
|
|
$262,253 |
$1,049,012 |
$2,098,025 |
|
|
|
|
|
$1,049,012 |
|
11/19/2014 |
|
|
|
|
|
|
94,850 |
|
|
$40.80 |
|
$1,001,660 |
Mark
Doak |
11/19/2014 |
$55,250 |
$212,500 |
$425,000 |
|
|
|
|
|
|
|
|
|
|
5/19/2015 |
$12,750 |
$127,500 |
$255,000 |
|
|
|
|
|
|
|
|
|
|
11/19/2014 |
|
|
|
$137,364 |
$549,457 |
$1,098,914 |
|
|
|
|
|
$549,457 |
|
11/19/2014 |
|
|
|
|
|
|
49,683 |
|
|
$40.80 |
|
$524,676 |
Henrik Ancher-Jensen |
11/19/2014 |
$52,000 |
$200,000 |
$400,000 |
|
|
|
|
|
|
|
|
|
|
5/19/2015 |
$12,000 |
$120,000 |
$240,000 |
|
|
|
|
|
|
|
|
|
|
11/19/2014 |
|
|
|
$68,682 |
$274,728 |
$549,457 |
|
|
|
|
|
$274,728 |
|
11/19/2014 |
|
|
|
|
|
|
24,841 |
|
|
$40.80 |
|
$262,333 |
Patrick Kaltenbach |
11/19/2014 |
$51,760 |
$203,870 |
$407,741 |
|
|
|
|
|
|
|
|
|
|
5/19/2015 |
$12,544 |
$125,439 |
$250,877 |
|
|
|
|
|
|
|
|
|
|
11/20/2014 |
|
|
|
$126,284 |
$505,138 |
$1,010,276 |
|
|
|
|
|
$505,138 |
|
11/20/2014 |
|
|
|
|
|
|
45,167 |
|
|
$41.26 |
|
$481,253 |
William P. Sullivan |
11/19/2014 |
$78,750 |
$787,500 |
$1,575,000 |
|
|
|
|
|
|
|
|
|
|
5/19/2015 |
$15,750 |
$157,500 |
$315,000 |
|
|
|
|
|
|
|
|
|
|
11/19/2014 |
|
|
|
$764,279 |
$3,057,116 |
$6,114,232 |
|
|
|
|
|
$3,057,116 |
|
11/19/2014 |
|
|
|
|
|
|
184,281 |
|
|
$40.80 |
|
$1,946,094 |
____________________
(1) |
Reflects the value of
the potential payout targets for fiscal year 2015 pursuant to the annual
award program under Agilents Performance-Based Compensation Plan. Actual
payout amounts under this plan are disclosed in the Summary Compensation
Table. Mr. McMullens target amounts for November 19, 2014 and May 19,
2015 include his increase in target bonus as a result of his promotion to
CEO on March 18, 2015. |
53
Table of
Contents
|
EXECUTIVE
COMPENSATION |
(2) |
Reflects
the value of potential payout of the target number of performance shares
granted in fiscal year 2015 for the FY15 through FY17 performance period
under Agilents LTP Program. Actual payout of these awards, if any, will
be determined by the Compensation Committee after the end of the
performance period depending on whether the performance criteria set forth
in Agilents LTP Program were met. Payout, if any, will be in the form of
Agilent common stock. Please see section entitled Long-Term Incentives
for disclosure regarding material terms of the LTP Program. Mr. McMullens
target award shares under the LTP Program increased as a result of his
promotion to CEO on March 18, 2015. |
|
(3) |
Reflects
options granted in fiscal year 2015 under the 2009 Stock Plan in
accordance with Agilents long-term incentive goals as described in the
Compensation Discussion and AnalysisLong-Term Incentives. Such options
vest at 25% per year over four years. Mr. McMullens target award options
increased as a result of his promotion to CEO on March, 18,
2015. |
Outstanding Equity Awards
at Fiscal Year-End
The
following table provides information on the current holdings of options,
performance-based stock awards and restricted stock units, by our NEOs as of
October 31, 2015.
Outstanding Equity
Awards at Fiscal Year 2015 Year End |
|
|
|
|
|
Option Awards
(1) |
|
Restricted
Stock Unit Awards |
|
Performance
Share Awards |
|
|
|
Grant Date |
|
Number of Securities Underlying Unexercised Options (#) |
|
Option Exercise Price ($) |
|
Option Vesting Date |
|
Option Expiration Date |
|
Number of
Shares or
Units of
Stock That Have
Not Vested (#)
(2) |
|
Market Value
of Shares or
Units That Have
Not Vested ($) |
|
Number of Unearned Shares That Have Not Vested (#) (3) |
|
Market Value
of Shares That
Have Not
Vested ($) |
|
Name |
|
Exercisable |
|
Unexercisable |
Michael R. McMullen |
|
11/18/2008 |
|
|
26,885 |
|
|
|
0 |
|
|
|
$ |
13.89 |
|
|
11/18/2009 |
|
11/17/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/18/2009 |
|
|
130,037 |
|
|
|
0 |
|
|
|
$ |
21.53 |
|
|
11/18/2010 |
|
11/17/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/17/2010 |
|
|
94,962 |
|
|
|
0 |
|
|
|
$ |
25.73 |
|
|
11/17/2011 |
|
11/16/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/17/2011 |
|
|
65,550 |
|
|
|
21,853 |
|
|
|
$ |
27.19 |
|
|
11/17/2012 |
|
11/16/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/21/2012 |
|
|
49,270 |
|
|
|
49,273 |
|
|
|
$ |
26.19 |
|
|
11/21/2013 |
|
11/20/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/20/2013 |
|
|
18,178 |
|
|
|
54,538 |
|
|
|
$ |
39.12 |
|
|
11/20/2014 |
|
11/19/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/19/2014 |
|
|
0 |
|
|
|
162,601 |
|
|
|
$ |
40.80 |
|
|
11/19/2015 |
|
11/18/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
3/18/2015 |
|
|
0 |
|
|
|
66,162 |
|
|
|
$ |
42.12 |
|
|
3/18/2016 |
|
3/17/2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/21/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,061 |
|
|
$946,321 |
|
|
|
11/20/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,210 |
|
|
$763,113 |
|
|
|
9/17/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,738 |
|
|
$367,706 |
|
|
|
9/17/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,479 |
|
|
$546,727 |
|
|
|
11/19/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,577 |
|
|
$1,381,148 |
|
|
|
3/18/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,224 |
|
|
$537,098 |
|
Total |
|
|
|
|
384,882 |
|
|
|
354,427 |
|
|
|
|
|
|
|
|
|
|
|
0 |
|
$0 |
|
|
120,289 |
|
|
$4,542,113 |
|
|
|
Didier Hirsch |
|
11/17/2010 |
|
|
89,026 |
|
|
|
0 |
|
|
|
$ |
25.73 |
|
|
11/17/2011 |
|
11/16/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/17/2011 |
|
|
69,407 |
|
|
|
23,138 |
|
|
|
$ |
27.19 |
|
|
11/17/2012 |
|
11/16/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/21/2012 |
|
|
53,376 |
|
|
|
53,379 |
|
|
|
$ |
26.19 |
|
|
11/21/2013 |
|
11/20/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/20/2013 |
|
|
19,161 |
|
|
|
57,486 |
|
|
|
$ |
39.12 |
|
|
11/20/2014 |
|
11/19/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/19/2014 |
|
|
0 |
|
|
|
94,850 |
|
|
|
$ |
40.80 |
|
|
11/19/2015 |
|
11/18/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/21/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,150 |
|
|
$1,025,185 |
|
|
|
11/20/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,303 |
|
|
$804,406 |
|
|
|
11/19/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,337 |
|
|
$805,685 |
|
Total |
|
|
|
|
230,970 |
|
|
|
228,853 |
|
|
|
|
|
|
|
|
|
|
|
0 |
|
$0 |
|
|
69,790 |
|
|
$2,635,276 |
|
54
Table of
Contents
|
EXECUTIVE
COMPENSATION |
Outstanding Equity
Awards at Fiscal Year 2015 Year End |
|
|
|
|
|
Option Awards
(1) |
|
Restricted
Stock Unit Awards |
|
Performance
Share Awards |
|
|
|
Grant Date |
|
Number of Securities Underlying Unexercised Options (#) |
|
Option Exercise Price ($) |
|
Option Vesting Date |
|
Option Expiration Date |
|
Number of Shares or Units of Stock That Have Not Vested (#) (2) |
|
Market Value
of Shares or Units That Have Not Vested ($) |
|
Number of Unearned Shares That Have Not Vested (#) (3) |
|
Market Value
of Shares That Have Not Vested ($) |
|
Name |
Exercisable |
|
Unexercisable |
Mark Doak |
|
11/18/2009 |
|
|
6 |
|
|
|
0 |
|
|
|
$ |
21.53 |
|
|
11/18/2010 |
|
11/17/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/17/2011 |
|
|
11,180 |
|
|
|
3,730 |
|
|
|
$ |
27.19 |
|
|
11/17/2012 |
|
11/16/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/21/2012 |
|
|
0 |
|
|
|
7,938 |
|
|
|
$ |
26.19 |
|
|
11/21/2013 |
|
11/20/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/20/2013 |
|
|
3,143 |
|
|
|
9,434 |
|
|
|
$ |
39.12 |
|
|
11/20/2014 |
|
11/19/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/19/2014 |
|
|
0 |
|
|
|
49,683 |
|
|
|
$ |
40.80 |
|
|
11/19/2015 |
|
11/18/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/21/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,038 |
|
|
$152,457 |
|
|
|
11/20/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,496 |
|
|
$131,992 |
|
|
|
9/17/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,524 |
|
|
$133,077 |
|
|
|
9/17/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,241 |
|
|
$197,884 |
|
|
|
11/19/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,176 |
|
|
$422,006 |
|
Total |
|
|
|
|
14,329 |
|
|
|
70,785 |
|
|
|
|
|
|
|
|
|
|
|
0 |
|
$0 |
|
|
27,475 |
|
|
$1,037,416 |
|
|
|
Henrik Ancher-Jensen |
|
11/19/2014 |
|
|
0 |
|
|
|
24,841 |
|
|
|
$ |
40.80 |
|
|
11/19/2015 |
|
11/18/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/20/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,925 |
|
|
$412,513 |
|
|
|
11/19/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,588 |
|
|
$211,003 |
|
Total |
|
|
|
|
0 |
|
|
|
24,841 |
|
|
|
|
|
|
|
|
|
|
|
0 |
|
$0 |
|
|
16,513 |
|
|
$623,516 |
|
|
|
Patrick Kaltenbach |
|
11/17/2011 |
|
|
3,658 |
|
|
|
1,608 |
|
|
|
$ |
27.19 |
|
|
11/17/2012 |
|
11/16/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/21/2012 |
|
|
5,200 |
|
|
|
6,571 |
|
|
|
$ |
26.19 |
|
|
11/21/2013 |
|
11/20/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/20/2013 |
|
|
2,358 |
|
|
|
7,074 |
|
|
|
$ |
39.12 |
|
|
11/20/2014 |
|
11/19/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/20/2014 |
|
|
0 |
|
|
|
45,167 |
|
|
|
$ |
41.26 |
|
|
11/20/2015 |
|
11/19/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/21/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,341 |
|
|
$126,152 |
|
|
|
11/20/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,621 |
|
|
$98,968 |
|
|
|
11/20/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,160 |
|
|
$383,642 |
|
Total |
|
|
|
|
11,216 |
|
|
|
60,420 |
|
|
|
|
|
|
|
|
|
|
|
0 |
|
$0 |
|
|
16,122 |
|
|
$608,762 |
|
|
|
William P. Sullivan |
|
11/17/2011 |
|
|
0 |
|
|
|
100,258 |
|
|
|
$ |
27.19 |
|
|
11/17/2012 |
|
11/16/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/21/2012 |
|
|
232,670 |
|
|
|
232,672 |
|
|
|
$ |
26.19 |
|
|
11/21/2013 |
|
11/20/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/20/2013 |
|
|
83,526 |
|
|
|
250,579 |
|
|
|
$ |
39.12 |
|
|
11/20/2014 |
|
11/19/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/19/2014 |
|
|
0 |
|
|
|
184,281 |
|
|
|
$ |
40.80 |
|
|
11/19/2015 |
|
11/18/2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11/20/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,641 |
|
$1,345,804 |
|
|
|
|
|
|
|
|
|
11/21/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
118,346 |
|
|
$4,468,745 |
|
|
|
11/20/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,861 |
|
|
$3,506,431 |
|
|
|
11/19/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,182 |
|
|
$2,347,992 |
|
Total |
|
|
|
|
316,196 |
|
|
|
767,790 |
|
|
|
|
|
|
|
|
|
|
|
35,641 |
|
$1,345,804 |
|
|
273,389 |
|
|
$10,323,168 |
|
____________________
(1) |
All share amounts
reflect shares outstanding as of October 31, 2015. In November 2014, all
outstanding shares from grants made prior to November 1, 2014 were
adjusted due to the spin-off of Keysight Technologies. |
|
(2) |
Amounts reflect
unvested restricted stock units. As of October 31, 2015. The remainder of
Mr. Sullivans award will vest on November 19, 2015 and November 19,
2016. |
|
(3) |
Amounts reflect
multiple unvested performance share awards that are outstanding
simultaneously as of the end of fiscal year 2015 for each NEO under the
LTP Program. The performance share awards granted on November 21, 2012
were vested and assessed on November 18, 2015. The performance share
awards granted on November 20, 2013 will vest and be assessed in November
2016. The performance share awards granted on November 19, 2014 will vest
and be assessed in November 2017. |
55
Table of
Contents
|
EXECUTIVE
COMPENSATION |
Option Exercises and
Stock Vested at Fiscal Year-End
The
following table sets forth information on stock option exercises and stock
vesting in fiscal year 2015 and the value realized on the date of exercise, if
any, by each of our NEOs.
Option
Exercises and Stock Vested in Fiscal Year 2015 |
|
|
|
|
|
|
|
|
|
|
Restricted Stock & |
|
|
|
|
|
|
Option
Awards |
|
Restricted
Stock Units |
|
Performance
Awards |
|
|
Number of |
|
|
|
|
|
Number of |
|
|
|
|
|
Number of |
|
|
|
|
Shares Acquired |
|
Value Realized |
|
Shares Acquired |
|
Value Realized |
|
Shares Acquired |
|
Value Realized |
|
|
on Exercise |
|
on Exercise |
|
Upon Vesting |
|
on Vesting |
|
Upon Vesting |
|
on Vesting |
Name |
|
(#) |
|
($) |
|
(#) |
|
($) |
|
(#)
(1) |
|
($) (2) |
Michael R. McMullen |
|
|
43,130 |
|
|
|
$715,436 |
|
|
|
41,061 |
|
|
|
$1,693,356 |
|
|
0 |
|
$0 |
Didier Hirsch |
|
|
55,243 |
|
|
|
$1,153,474 |
|
|
|
2,530 |
|
|
|
$104,337 |
|
|
0 |
|
$0 |
Mark Doak |
|
|
25,095 |
|
|
|
$376,978 |
|
|
|
0 |
|
|
|
$0 |
|
|
0 |
|
$0 |
Henrik Ancher-Jensen |
|
|
0 |
|
|
|
$0 |
|
|
|
0 |
|
|
|
$0 |
|
|
0 |
|
$0 |
Patrick Kaltenbach |
|
|
2,249 |
|
|
|
$36,293 |
|
|
|
1,177 |
|
|
|
$48,022 |
|
|
0 |
|
$0 |
William P. Sullivan |
|
|
404,640 |
|
|
|
$5,987,528 |
|
|
|
17,819 |
|
|
|
$735,212 |
|
|
0 |
|
$0 |
____________________
(1) |
Amounts reflect the
performance shares granted in fiscal year 2013 pursuant to the LTP Program
for the fiscal year 2013-2015 performance period and paid out in calendar
year 2015. |
|
(2) |
The market value of
these awards is based on the closing price of Agilents common stock on
November 18, 2015. |
Pension
Benefits
The
following table shows the estimated present value of accumulated benefits,
including years of service, payable at normal retirement age (65) to our NEOs
under the Deferred Profit-Sharing Plan (DPSP), the Retirement Plan and the
Supplemental Benefit Retirement Plan. To calculate an eligible employees years
of service, the pension plans will bridge each eligible employees service, if
any, with Hewlett-Packard Company prior to June 2, 2000 to that eligible
employees service with Agilent on or after June 2, 2000; the total years of
service will reflect employment service from both Hewlett-Packard and Agilent,
capped at 30 years of service. The cost of all three plans is paid entirely by
Agilent. The present value of accumulated benefit is calculated using the
assumptions under Accounting Standards Codification Topic 715: Compensation
Retirement Benefits for the fiscal year end measurement (as of October 31,
2015). The present value is based on a lump sum interest rate of 6.00%, DPSP
rate of return of 7.5% and the applicable mortality table described in section
417(e)(3) of the Internal Revenue Code. See also Note 15 to Agilents
consolidated financial statements in its Annual Report on Form 10-K for the
fiscal year ended October 31, 2015, as filed with the SEC on December 18, 2015.
Pension
Benefits |
|
|
|
|
Agilent Technologies, Inc. |
|
|
|
|
|
|
|
|
|
Eligible for |
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
|
Present |
|
|
Full |
|
Deferred |
|
|
|
|
Supplemental |
|
|
of Years |
|
Payments |
|
Value of |
|
|
Retirement |
|
Profit-Sharing |
|
Retirement |
|
|
Benefit Plan |
|
|
of Credited |
|
During Last |
|
Accumulated |
Name |
|
Benefits? |
|
Plan
($) |
|
Plan ($) |
|
|
($) |
|
|
Service
(#) |
|
Fiscal Year
($) |
|
Benefit
($) |
Michael R. McMullen |
|
Y |
|
|
$189,004 |
|
|
$786,972 |
|
|
|
$784,355 |
|
|
|
30 |
|
$0 |
|
$1,760,330 |
Didier Hirsch |
|
Y |
|
|
$0 |
|
|
$593,960 |
|
|
|
$527,445 |
|
|
|
16 |
|
$0 |
|
$1,121,405 |
Mark
Doak |
|
Y |
|
|
$180,956 |
|
|
$688,753 |
|
|
|
$45,632 |
|
|
|
30 |
|
$0 |
|
$915,341 |
Henrik Ancher-Jensen |
|
N |
|
|
$0 |
|
|
$79,736 |
|
|
|
$45,061 |
|
|
|
2 |
|
$0 |
|
$124,798 |
Patrick Kaltenbach |
|
N |
|
|
$0 |
|
|
$0 |
|
|
|
$0 |
|
|
|
0 |
|
$0 |
|
$0 |
William P. Sullivan |
|
Y |
|
|
$626,932 |
|
|
$408,501 |
|
|
|
$3,364,219 |
|
|
|
30 |
|
$0 |
|
$4,399,652 |
56
Table of
Contents
|
EXECUTIVE
COMPENSATION |
Retirement Plan
The
Retirement Plan, which was closed to new participants as of November 1, 2014,
guarantees a minimum retirement benefit payable at normal retirement age (the
later of age 65 or termination). Benefits are accrued on a monthly basis as a
lump sum payable at normal retirement age based on eligible pay and years of
service up to a maximum of 30 years as follows:
For participants who have fewer than 15 years of service:
11% × target pay at the
end of the month
PLUS
5% × target pay at the end of the month in excess of 50% of the Social
Security Wage Base
For participants who have 15 or more years of service:
14% × target pay at the
end of the month
PLUS
5% × target pay at the end of the month in excess of 50% of the Social
Security Wage Base
Benefits under the Retirement Plan are payable as either (a) a single
life annuity for single participants or as (b) a 50% joint and survivor annuity
for married participants. Participants may elect to receive payments at any time
following termination or retirement and in the above forms or as an actuarially
equivalent 75% or 100% joint and survivor annuity, or as a one-time lump sum.
Payments made prior to normal retirement age will be reduced in accordance with
the plan provisions.
All
regular full-time or regular part-time employees who were employees of Agilent
prior to November 1, 2014 automatically become participants in the Retirement
Plan on the May 1 or November 1 following completion of two years of
service.
Deferred Profit-Sharing Plan
The
Deferred Profit-Sharing Plan is a closed, defined contribution plan. The
Deferred Profit-Sharing Plan was created by Hewlett-Packard and covers
participants service with Hewlett-Packard before November 1, 1993 and is used
as a floor offset for the Retirement Plan for service prior to November 1, 1993.
There have been no contributions into the plan since October 31,
1993.
For
service prior to November 1, 1993 (if any), the benefit due is the greater of
(i) the benefit defined by the Retirement Plan formula, or (ii) the annuity
value of the Deferred Profit-Sharing Plan account balance. Therefore, for
service prior to November 1, 1993, the Retirement Plan guarantees a minimum
retirement benefit.
Benefits under the Deferred Profit-Sharing Plan are payable at normal
retirement age as either (i) a single life annuity for single participants, or
(ii) a 50% joint and survivor annuity for married participants. Participants may
elect to receive payments at any time following termination or retirement and in
the above forms or as 75% or 100% joint and survivor annuity, or as a one-time
lump sum.
57
Table of
Contents
|
EXECUTIVE
COMPENSATION |
Supplemental Benefit Retirement Plan
The
Supplemental Benefit Retirement Plan, which was closed to new participants as of
November 1, 2014, is an unfunded, non-qualified deferred compensation plan.
Benefits payable under this plan are equal to the excess of the combined
qualified Retirement Plan and Deferred Profit-Sharing Plan amount that would be
payable in accordance with the terms of the Retirement Plan disregarding the
benefit and compensation limitations imposed pursuant to sections 415 and
401(a)(17) of the Internal Revenue Code.
Benefits under the Supplemental Benefit Retirement Plan are payable upon
termination or retirement as follows:
● |
Accruals prior to
January 1, 2005 are paid in a single lump sum in the January following the
fiscal year in which the participant takes his qualified Retirement Plan
benefit. |
● |
Accruals after December
31, 2004 are paid based on the date the participant retires or terminates:
in January immediately following if retirement or termination occurs
during the first six months of the year; or in July if retirement or
termination occurs during the second six months of the year. Participants
will receive a benefit in the form of either five annual installments (if
the lump sum value is at least $150,000); or in a single lump sum (if the
lump sum value is less than $150,000). |
Non-Qualified Deferred
Compensation in Last Fiscal Year
For
fiscal year 2015, the non-qualified deferred compensation plan was available to
all active employees on the US payroll with total target cash salary, including
the short-term Performance-Based Compensation Plan, greater than or equal to
$265,000.
There are three types of earnings that may be deferred under the
program:
|
1. |
100% of annual base
pay earnings in excess of the IRS qualified plan limit of $265,000 for
2015; |
|
|
|
2. |
95% of bonus
earnings, discretionary and cash compensation paid under the
Performance-Based Compensation Plan; and |
|
|
|
3. |
95% of performance
based compensation paid out in accordance with the terms of Agilents LTP
Program. Awards under this program are paid out in the form of Agilent
common stock. |
Deferral elections may be made annually and are part of overall tax
planning for many executives. There are several investment options available
under the Plan, most of which mirror the investment choices under our
tax-qualified 401(k) plan. All investment choices are made by the participant.
Based on market performance, dividends and interest are credited to
participants accounts from the funds that the participant has
elected.
At
the time participation is elected, employees must also elect payout in one of
three forms, which can commence upon termination or be delayed by an additional
one, two or three years following termination:
|
1. |
|
a single lump sum payment; |
|
2. |
|
annual installments over a five-to-fifteen year period;
or |
|
3. |
|
a single lump sum payment in January or July on or after
2017. |
58
Table of
Contents
|
EXECUTIVE
COMPENSATION |
Payouts are distributed to eligible participants in January of the year
following termination, if termination occurs during the first six months of the
calendar year. Otherwise, payouts are distributed to eligible participants in
July of the year following termination where termination occurs during the
second half of the calendar year. No early distributions or withdrawals are
allowed. When and if received, a participant in the LTP Program may elect to
defer his or her shares through our 2005 Deferred Compensation Plan. The LTP
Program shares are deferred in the form of Agilent common stock only. At the end
of the deferral period, the LTP Program shares are simply released to the
executive.
We
have established a rabbi trust as a source of funds to make payments under the
non-qualified deferred compensation plan. As of October 31, 2015, the rabbi
trust with Fidelity Management Trust Company was fully funded, so there is no
need for additional funding.
The
table below provides information on the non-qualified deferred compensation of
the NEOs for fiscal year 2015.
Non-Qualified Deferred Compensation |
|
|
Executive |
|
Registrant |
|
Aggregate |
|
|
|
Aggregate |
|
|
Contributions |
|
Contributions |
|
Earnings in |
|
Aggregate |
|
Balance at |
|
|
in Last Fiscal |
|
in Last Fiscal |
|
Last Fiscal |
|
Withdrawals/ |
|
Fiscal |
|
|
Year |
|
Year |
|
Year |
|
Distributions |
|
Year-End |
Name |
|
($) (1) |
|
($) |
|
($) (2) |
|
($) |
|
($)
(3) |
Michael R. McMullen |
|
|
$0 |
|
|
$0 |
|
$525 |
|
$0 |
|
$10,610 |
Didier Hirsch |
|
|
$1,310,163 |
|
|
$0 |
|
-$1,277,386 |
|
$0 |
|
$6,534,635 |
Mark
Doak |
|
|
$105,430 |
|
|
$0 |
|
-$16,679 |
|
$0 |
|
$188,221 |
Henrik Ancher-Jensen |
|
|
$0 |
|
|
$0 |
|
$0 |
|
$0 |
|
$0 |
Patrick Kaltenbach |
|
|
$0 |
|
|
$0 |
|
$0 |
|
$0 |
|
$0 |
William P. Sullivan |
|
|
$0 |
|
|
$0 |
|
-$3,633,666 |
|
$0 |
|
$12,136,333 |
____________________
(1) |
The salary portion of
the amounts reflected above is included in the amount reported as salary
in the Summary Compensation Table. |
|
(2) |
Amounts reflected are
not included in the Summary Compensation Table because the earnings are
not above-market. These amounts include dividends, interest and change
in market value. |
|
(3) |
Aggregate Balance at
Last Fiscal Year End for Mr. Hirsch includes $166,386, equivalent to the
aggregate lump sum balance for the Agilent Technologies, Inc. France
Pension Plan (as described below). The present value is of accumulated
benefit based on an interest rate of 3.00% and rate of return of 3.64% (as
of January 1, 2015). The France Pension Plan is only valued once a year,
and the benefit value as of October 31, 2015 is the same as that on
January 1, 2015. |
Agilent Technologies, Inc.
France Pension Plan
The
Agilent Technologies France Pension Plan is a defined contribution plan created
by Hewlett-Packard in 1982 and is open to all exempt employees in France. Since
Mr. Hirsch was originally employed by Hewlett-Packard France, he is the only NEO
participating in this plan. The French Pension Scheme is not a tax-qualified
defined contribution plan under the U.S. Internal Revenue Code.
Eligible employees must have Pensionable Salary above eight times the
French Social Security Ceiling (Tranche C threshold) to be a participant of
this plan. Agilent contributes 5% of Pensionable Salary and eligible employees
contribute 3% of Pensionable Salary. Agilent no longer contributes to this plan
on Mr. Hirschs behalf. Benefits under this plan are payable at the plans
normal retirement age (age 65) or from age 60 with a 5% reduction per annum as a
lifetime annuity resulting from the accumulated contributions and actual return
on investments. Should the participant die prior to receiving benefits, the
surviving spouse would receive 60% of the annuity accrued at the time of the
participants death (death in service) or 60% of the actual annuity (death in
retirement). In case of employment termination the accrued benefit retirement
annuity and, where appropriate, contingent spouses pension is deferred to
normal retirement age.
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COMPENSATION |
The Agilent Technologies,
Inc. German Pension Plan
The
Agilent Technologies German Pension Plan (PPL) is a Defined Benefit plan
inherited from Hewlett-Packard and has been closed to new entrants since Dec 31,
1994. Mr. Kaltenbach is the only NEO participating in this plan. The plan offers
retirement, disability and death benefits. Benefits under the plan are
calculated as 0.5% of the last two years Pensionable Salary up to the SSC
(Social Security Ceiling) plus 2% of the last 2 years Pension Salary in excess
of the SSC, multiplied by the pensionable service (max 40 years). There is no
employee contribution. Benefits are payable at age 65 with accrual reductions
before age 60. The plan also provides death and disability coverage (60% for
widow and widower and 15% for orphans).
The Agilent Technologies,
Inc. International Relocation Benefit Plan
The
Agilent Technologies, Inc. International Relocation Benefit Plan (IRBP) is an
unfunded program that was created by Hewlett-Packard in 1989 and was open to
employees who transferred from one country payroll to another at the Companys
request prior to December 1, 2001. Mr. Hirsch transferred from France to the
United States at the Companys request in September 1999. Upon transfer to the
US payroll, he became eligible to participate in the Companys US retirement
programs and was no longer eligible to accrue benefits under the France Pension
Plan. As he transferred at the Companys request, he became eligible for the
IRBP. The objective of the IRBP is to mitigate the possible estimated retirement
income loss under country social security plans, governmental programs and
Agilent retirement schemes to an employee who has transferred internationally on
a permanent, company-sponsored basis. The plan was closed to new participants
effective November 30, 2001. Effective May 1, 2012, the IRBP benefit was frozen
for all participants. Mr. Hirschs benefit was $98,422 as of October 31, 2015.
The frozen IRBP benefit will accrue interest at 2% annum until his retirement.
Any loss of retirement income resulting from Mr. Hirschs no longer accruing
benefits under the foregoing French arrangements will be paid to Mr. Hirsch in a
single lump sum upon retirement from the Companys general assets as soon as
administratively feasible.
Termination and Change of
Control Arrangements
Set
forth below is a description of the plans and agreements that could result in
potential payments to the NEOs in the case of their termination of employment
and/or a change of control of Agilent.
Change of Control
Agreements
Each
NEO has signed a Change of Control Agreement. Under these agreements, in the
event that within 24 months after a change of control of Agilent, Agilent or its
successor terminates the employment of such executive without cause or an event
constituting good reason occurs and the executive resigns within three months
after such an event, the executive will be entitled to: (i) two times, or solely
with respect to the CEO, three times, the sum of such executives base salary
and target bonus, (ii) payment of $80,000 for medical insurance premiums, (iii)
full vesting of all outstanding options and stock awards not subject to
performance-based vesting, and (iv) a prorated portion of any bonus. The
Compensation Committee amended our forms of change of control agreement to
remove tax gross-ups of parachute payments. These amended forms of agreements
are used with any newly executed agreements after July 14, 2009. In September
2014, the Compensation Committee further amended these agreements to expand the
change of control definition, add anticipatory termination language, more
clearly define how the prorated bonus is calculated and clarify treatment of
LTPP awards.
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COMPENSATION |
For
agreements entered into before July 14, 2009 and to the extent that the payment
of these benefits triggers the excise tax under Section 4999 of the Code or any
comparable federal, state, local or foreign excise tax, Agilent will be
responsible for payment of any additional tax liability arising from the
application of such excise tax, subject to certain exceptions. Only one officer,
not the CEO, has an agreement entered into prior to July 14, 2009 that contains
a tax gross-up provision. In exchange for such consideration, this executive has
agreed to execute a release of all of the executives rights and claims relating
to his or her employment.
Under the current agreements a change of control means occurrence of
any of the following events: (i) the sale, exchange, lease or other disposition
or transfer of all or substantially all of the assets of Agilent to a third
party; (ii) a merger or consolidation involving Agilent in which the
stockholders of Agilent immediately prior to such merger or consolidation are
not the owners of more than 75% of the total voting power of the outstanding
voting securities of Agilent after the transaction; (iii) the acquisition of
beneficial ownership of at least 25% of the total voting power of the
outstanding voting securities of Agilent by a third person; or (iv) Individuals
who, as of Effective Date, constitute the Board (the Incumbent Board) cease
for any reason to constitute at least a majority of the Board.
Good reason means (i) the reduction of the officers rate of pay, other
than reductions that apply to employees generally and variable and performance
reductions; (ii) reduction in benefits or failure to receive the same benefits
as similarly situated employees; (iii) a change in the officers duties,
responsibilities, authority, job title, or reporting relationships resulting in
a significant diminution of position, subject to certain exceptions; (iv) the
relocation to a worksite that is more than 35 miles from his prior worksite and
which increases the distance between such executives home and principal office
by more than 35 miles, unless executive accepts such relocation opportunity; (v)
the failure or refusal of a successor to Agilent to assume Agilents obligations
under the agreement, or (vi) a material breach by Agilent or any successor to
Agilent of any of the material provisions of the agreement.
Under these agreements, cause means misconduct, including: (i)
conviction of any felony or any crime involving moral turpitude or dishonesty
which has a material adverse effect on Agilents business or reputation; (ii)
repeated unexplained or unjustified absences from Agilent; (iii) refusal or
willful failure to act in accordance with any specific directions, orders or
policies of Agilent that has a material adverse effect on Agilents business or
reputation; (iv) a material and willful violation of any state or federal law
that would materially injure the business or reputation of Agilent as reasonably
determined by the Board; (v) participation in a fraud or act of dishonesty
against Agilent which has a material adverse effect on Agilents business or
reputation; (vi) conduct by the officer which the Board determines demonstrates
gross unfitness to serve; or (vii) intentional, material violation by the
officer of any contract between the officer and Agilent or any statutory duty of
the officer to Agilent that is not corrected within thirty days after written
notice to the officer.
In
addition, in the event of a change of control:
1. |
Participants in the LTP Program would receive at the earlier of the
end of the performance period or termination of the program, an LTP
Program payout equivalent to the greater of the target award or the
accrued amount of the payout, and in the case of termination during the
first 12 months of the performance cycle, prorated for the amount of time
elapsed during the first twelve months of the performance period;
and |
|
2. |
Participants who receive restricted stock unit awards would vest in
full immediately prior to the closing of the transaction, unless the
awards are assumed, converted or replaced in full by the successor
corporation or a parent or subsidiary of the
successor. |
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COMPENSATION |
Termination and Change of
Control Table
For
each of the NEOs, the table below estimates the amount of compensation that
would be paid in the event of the following:
i. |
a change of control
of Agilent occurs and executive is terminated without cause or voluntarily
terminates at a time when an event constituting good reason has occurred,
in both cases either within 24 months following the change of control or
within 3 months prior to such change of control; |
|
ii. |
a voluntary
termination by executive or an involuntary termination of the executive by
Agilent with or without cause; |
|
iii. |
the termination of
executive due to death or disability; |
|
iv. |
the retirement of
executive; or |
|
v. |
the termination of
executive as part of a Workforce Management
Program. |
The amounts shown assume that
each of the terminations was effective October 31, 2015.
|
|
|
(i) |
|
(ii) |
|
|
|
|
|
|
|
|
|
Involuntary |
|
Voluntary |
|
|
|
|
|
|
|
|
|
Termination or |
|
Termination
or |
|
|
|
|
|
|
|
|
|
Resignation for |
|
Involuntary |
|
|
|
|
|
(v) |
|
|
|
Good Cause in |
|
Termination |
|
(iii) |
|
|
|
Workforce |
|
|
|
Connection with |
|
with or
without |
|
Death or |
|
(iv) |
|
Management |
|
|
|
a
Change of |
|
Cause |
|
Disability |
|
Retirement |
|
Program |
Name |
|
Type of Benefit |
Control ($) |
|
($) |
|
($) (1) |
|
($) (2) |
|
($) (3) |
Michael R. |
|
Cash Severance
Payments |
$6,270,000 |
|
$0 |
|
|
$0 |
|
$0 |
|
$0 |
McMullen |
|
Continuation of
Benefits (4) |
$80,000 |
|
$0 |
|
|
$0 |
|
$0 |
|
$0 |
|
|
Stock Award
Acceleration |
$4,542,113 |
|
$0 |
|
|
$4,542,113 |
|
$0 |
|
$0 |
|
|
Stock Award Contd
Vesting |
$0 |
|
$0 |
|
|
$0 |
|
$4,542,113 |
|
$4,542,113 |
|
|
Stock Option
Acceleration (5) |
$801,075 |
|
$0 |
|
|
$801,075 |
|
$0 |
|
$801,075 |
|
|
Stock Option Contd
Vesting (5) |
$0 |
|
$0 |
|
|
$0 |
|
$801,075 |
|
$0 |
|
|
Pension Benefits
(6) |
$1,198,011 |
|
$1,198,011 |
|
|
$1,198,011 |
|
$1,198,011 |
|
$1,198,011 |
|
|
Total Termination
Benefits: |
$12,891,199 |
|
$1,198,011 |
|
|
$6,541,199 |
|
$6,541,199 |
|
$6,541,199 |
|
Didier |
|
Cash Severance
Payments |
$2,160,000 |
|
$0 |
|
|
$0 |
|
$0 |
|
$0 |
Hirsch
(7) |
|
Continuation of
Benefits (4) |
$80,000 |
|
$0 |
|
|
$0 |
|
$0 |
|
$0 |
|
|
Stock Award
Acceleration |
$2,635,276 |
|
$0 |
|
|
$2,635,276 |
|
$0 |
|
$0 |
|
|
Stock Award Contd
Vesting |
$0 |
|
$0 |
|
|
$0 |
|
$2,635,276 |
|
$2,635,276 |
|
|
Stock Option
Acceleration (5) |
$862,164 |
|
$0 |
|
|
$862,164 |
|
$0 |
|
$0 |
|
|
Stock Option Contd
Vesting (5) |
$0 |
|
$0 |
|
|
$0 |
|
$862,164 |
|
$862,164 |
|
|
Pension Benefits
(6) |
$1,192,825 |
|
$1,192,825 |
|
|
$1,192,825 |
|
$1,192,825 |
|
$1,192,825 |
|
|
Excise Tax Gross-Up
(8) |
$0 |
|
$0 |
|
|
$0 |
|
$0 |
|
$0 |
|
|
Total Termination
Benefits: |
$6,930,265 |
|
$1,192,825 |
|
|
$4,690,265 |
|
$4,690,265 |
|
$4,690,265 |
|
Mark Doak |
|
Cash Severance
Payments |
$1,530,000 |
|
$0 |
|
|
$0 |
|
$0 |
|
$0 |
|
|
Continuation of
Benefits (4) |
$80,000 |
|
$0 |
|
|
$0 |
|
$0 |
|
$0 |
|
|
Stock Award
Acceleration |
$1,037,416 |
|
$0 |
|
|
$1,037,416 |
|
$0 |
|
$0 |
|
|
Stock Award Contd
Vesting |
$0 |
|
$0 |
|
|
$0 |
|
$1,037,418 |
|
$1,037,418 |
|
|
Stock Option
Acceleration (5) |
$131,269 |
|
$0 |
|
|
$131,269 |
|
$0 |
|
$0 |
|
|
Stock Option Contd
Vesting (5) |
$0 |
|
$0 |
|
|
$0 |
|
$131,269 |
|
$131,269 |
|
|
Pension Benefits
(6) |
$808,204 |
|
$808,204 |
|
|
$808,204 |
|
$808,204 |
|
$808,204 |
|
|
Total Termination
Benefits: |
$3,586,889 |
|
$808,204 |
|
|
$1,976,889 |
|
$1,976,889 |
|
$1,976,889 |
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|
EXECUTIVE
COMPENSATION |
|
|
(i) |
(ii) |
|
|
|
|
|
Involuntary |
Voluntary |
|
|
|
|
|
Termination or |
Termination or |
|
|
|
|
|
Resignation for |
Involuntary |
|
|
(v) |
|
|
Good Cause in |
Termination |
(iii) |
|
Workforce |
|
|
Connection with |
with or without |
Death or |
(iv) |
Management |
|
|
a Change of |
Cause |
Disability |
Retirement |
Program |
Name |
Type of Benefit |
Control ($) |
($) |
($) (1) |
($) (2) |
($)
(3) |
Henrik |
Cash
Severance Payments |
$1,440,000 |
$0 |
$0 |
$0 |
$0 |
Ancher- |
Continuation of Benefits
(4) |
$80,000 |
$0 |
$0 |
$0 |
$0 |
Jensen |
Stock Award Acceleration |
$623,516 |
$0 |
$623,516 |
$0 |
$0 |
|
Stock Award Contd Vesting |
$0 |
$0 |
$0 |
$623,516 |
$623,516 |
|
Stock Option Acceleration
(5) |
$0 |
$0 |
$0 |
$0 |
$0 |
|
Stock Option Contd Vesting
(5) |
$0 |
$0 |
$0 |
$0 |
$0 |
|
Pension Benefits (6) |
$60,767 |
$60,767 |
$60,767 |
$60,767 |
$60,767 |
|
Total Termination Benefits: |
$2,204,283 |
$60,767 |
$684,283 |
$684,283 |
$684,283 |
|
Patrick |
Cash
Severance Payments (9) |
$1,504,561 |
$0 |
$0 |
$0 |
$0 |
Kaltenbach |
Continuation of Benefits
(4) |
$80,000 |
$0 |
$0 |
$0 |
$0 |
|
Stock Award Acceleration |
$608,762 |
$0 |
$608,762 |
$0 |
$0 |
|
Stock Award Contd Vesting |
$0 |
$0 |
$0 |
$608,762 |
$608,762 |
|
Stock Option Acceleration
(5) |
$93,023 |
$0 |
$93,023 |
$0 |
$93,023 |
|
Stock Option Contd Vesting
(5) |
$0 |
$0 |
$0 |
$93,023 |
$0 |
|
Pension Benefits (6) |
$0 |
$0 |
$0 |
$0 |
$0 |
|
Total Termination Benefits: |
$2,286,346 |
$0 |
$701,785 |
$701,785 |
$701,785 |
|
William P. |
Cash
Severance Payments |
$4,725,000 |
$0 |
$0 |
$0 |
$0 |
Sullivan (10) |
Continuation of Benefits
(4) |
$80,000 |
$0 |
$0 |
$0 |
$0 |
|
Stock Award Acceleration |
$11,668,972 |
$0 |
$11,668,972 |
$0 |
$0 |
|
Stock Award Contd Vesting |
$0 |
$0 |
$0 |
$11,668,972 |
$11,668,972 |
|
Stock Option Acceleration
(5) |
$3,751,742 |
$0 |
$3,751,742 |
$0 |
$0 |
|
Stock Option Contd Vesting
(5) |
$0 |
$0 |
$0 |
$3,751,742 |
$3,751,742 |
|
Pension Benefits (6) |
$5,230,677 |
$5,230,677 |
$5,230,677 |
$5,230,677 |
$5,230,677 |
|
Total Termination Benefits: |
$25,456,391 |
$5,230,677 |
$20,651,391 |
$20,651,391 |
$20,651,391 |
____________________
(1) |
Under the 2009 Stock
Plan and the LTP Program, if an employee dies or is fully disabled, his or
her unvested stock options and stock awards shall fully vest. In both
cases, unvested stock awards under the LTP Program will be paid out only
to the extent the performance goals are satisfied. |
|
(2) |
Under the 2009 Stock
Plan and the LTP Program, if an employee retires from Agilent, all
unvested restricted stock awards and/or stock options continue to vest per
the original terms of the grant. Unvested stock awards under the
LTP Program will be paid
out only to the extent the performance goals are satisfied. As of October
31, 2015, Mr. Hirsch, Mr. Doak and Mr. Sullivan were eligible for such
continued vesting upon retirement. |
|
(3) |
If an employee is
part of a Workforce Management Program, all unvested stock options fully
vest upon termination and all unvested restricted stock awards continue to
vest per the original terms of the grant. Unvested stock awards under the
LTP Program will be paid out only to the extent the performance goals are
satisfied. If an employee is retiree eligible and part of a Workforce
Management Program, all unvested stock options and unvested restricted
stock units continue to vest. |
|
(4) |
Flat lump sum benefit
for healthcare expenses, including additional health plan premium payments
that may result from termination in the event of change of
control. |
|
(5) |
Calculated using the
in-the-money value of unvested options as of October 31, 2015, the last
business day of Agilents last completed fiscal year. The closing price of
Agilent common stock as of October 31, 2015 was $37.76. |
|
(6) |
For information
regarding potential payments upon termination under the 2005 Deferred
Compensation Plan and the Retirement Plan, the Supplemental Benefit
Retirement Plan and the Deferred Profit-Sharing Plan, in which our NEOs
participate, see Non-Qualified Deferred Compensation in Last Fiscal Year
and Pension Benefits above. |
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|
EXECUTIVE
COMPENSATION |
(7) |
In the case of Mr.
Hirsch, to the extent that the payment of the listed benefits triggers the
excise tax under Section 4999 of the Code or any comparable federal,
state, local or foreign excise tax, Agilent will be responsible for
payment of any additional tax liability arising from the application of
such excise tax. However, Mr. Hirsch shall not be entitled to receive a
gross-up payment if (i) the payment of the listed benefits may be reduced
to an amount (the Reduced Amount) sufficient to result in no portion of
such payment being subject to an excise tax, and (ii) after reducing such
payment by the Reduced Amount, the executive would receive, on a pre-tax
basis, an amount not less than 90% of the value of the unreduced payment
on a pre-taxed basis. |
|
(8) |
We determined the
amount of the excise tax payment in accordance with the provisions of
Section 280G of the Code. We utilized the following key assumptions to
determine the tax gross-up payment: (i) the interest rate assumption was
120% of the applicable federal rate effective for the month of October
2015, compounded semiannually; (ii) a statutory federal income tax rate of
39.6%, Medical tax rate of 2.35%, California income tax rate of 13.3%;
(iii) Section 280G base amount was determined based on average W-2
compensation for the period from 2010-2014; and (iv) equity grants made
within one year of transaction were in the ordinary course of business and
were not in contemplation of a transaction. |
|
(9) |
Since Mr. Kaltenbach
lived in Germany during fiscal year 2015, his amount of cash severance
payments was determined based on two times (i) his fiscal year 2015 base
salary of 379,905 Euro and (ii) his target bonus of 80% of base salary,
which was then converted from Euro to U.S. dollars based on the exchange
rate in effect on the last day of fiscal year 2015, or 1.101 U.S. dollars
per Euro. |
|
(10) |
Mr. Sullivan retired
as Chief Executive Officer effective March 18, 2015 and continued his
employment with Agilent as a senior advisor from March 18, 2015 through
October 31, 2015. Notwithstanding the inclusion of the various termination
scenarios in the table above, based on his retirement effective October
31, 2015, he is only eligible for the benefits with respect to the
retirement scenario set forth above. |
COMPENSATION COMMITTEE
REPORT |
|
The information contained
in this report shall not be deemed to be soliciting material, to be
filed with the SEC, or to be subject to Regulation 14A or Regulation 14C
(other than as provided in Item 407 of Regulation S-K) or to the
liabilities of Section 18 of the Securities Exchange Act of 1934, and
shall not be deemed to be incorporated by reference in future filings with
the SEC except to the extent that Agilent specifically incorporates it by
reference into a document filed under the Securities Act of 1933 or the
Securities Exchange Act of 1934. |
|
Agilents executive
compensation program is administered by the Compensation Committee of the
Board (the Compensation Committee). The Compensation Committee, which is
composed entirely of independent, non-employee directors, is responsible
for approving and reporting to the Board on all elements of compensation
for the executive officers. In this regard, the Compensation Committee has
reviewed and discussed the Compensation Discussion and Analysis section
of this Proxy Statement with management. Based on this review and
discussion, the Compensation Committee recommended to the Board of
Directors that the Compensation Discussion and Analysis section be
included in this Proxy Statement and incorporated by reference into
Agilents 2015 Annual Report on Form 10-K. |
Submitted by: |
|
Compensation
Committee |
|
Koh Boon Hwee,
Chairperson |
|
Sue H.
Rataj |
|
George A. Scangos,
Ph.D. |
|
Tadataka Yamada,
M.D. |
|
|
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|
APPROVAL OF NAMED
EXECUTIVE OFFICER COMPENSATION |
PROPOSAL 3
|
NON-BINDING
ADVISORY VOTE TO APPROVE THE COMPENSATION OF AGILENTS NAMED EXECUTIVE
OFFICERS |
The stockholders of Agilent
are entitled to cast an advisory vote at the Annual Meeting to approve the
compensation of the Companys named executive officers, as disclosed in this
proxy statement. The stockholder vote is an advisory vote only and is not
binding on Agilent or its Board of Directors. The Company currently intends to
submit the compensation of the Companys named executive officers annually,
consistent with the advisory vote of the stockholders at the Companys 2011
Annual Meeting.
Although the vote is
non-binding, the Compensation Committee and the Board of Directors value your
opinions and will consider the outcome of the vote in establishing compensation
philosophy and making future compensation decisions.
As described more fully in the
Compensation Discussion and Analysis and in Executive Compensation sections
of the proxy statement, the Companys named executive officers, as identified on
page 30 are compensated in a manner consistent with our business strategy,
competitive practice, sound compensation governance principles, and stockholder
interests and concerns. Our compensation policies and decisions are focused on
pay-for-performance.
We are requesting your
non-binding vote to approve the compensation of the Companys named executive
officers as described in the Compensation Discussion and Analysis and
Executive Compensation sections of the proxy statement.
Vote
Required
The affirmative vote of a
majority of the shares of Agilent common stock present or represented by proxy
and voting at the annual meeting, together with the affirmative vote of a
majority of the required quorum, is required for approval of this proposal. If
you own shares through a bank, broker or other holder of record, you must
instruct your bank, broker or other holder of record how to vote in order for
them to vote your shares so that your vote can be counted on this
proposal.
Agilents Board
recommends a vote FOR the approval of the compensation of
Agilents named
executive officers for fiscal 2015.
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|
AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION AND BYLAWS TO DECLASSIFY THE BOARD |
PROPOSAL 4
|
APPROVAL OF
AMENDMENTS TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AND
BYLAWS TO DECLASSIFY THE BOARD |
The Companys Amended and
Restated Certificate of Incorporation (Certificate) and Amended and Restated
Bylaws (the Bylaws) currently provide that the Board will be classified into
three classes, as nearly equal in number as possible, with one class to be
elected by the stockholders each year. As part of the Companys commitment to
effective governance practices, management and the Board undertook a review of
current corporate governance trends and considered the view held by many
institutional stockholders that transitioning to an annually elected board is
preferable to maintaining a classified board. After careful consideration the
Board has determined that it is appropriate to propose for stockholder
consideration amendments to our Certificate and Bylaws that, if adopted, would
eliminate the classified structure of our Board over a three-year
period.
If this proposal is approved
by the requisite percentage of stockholders, the Company will transition to a
declassified structure under which current directors will serve out their
remaining terms prior to standing for election and the entire Board will stand
for election annually beginning in 2019. As part of the transition, at the
Annual Meetings of Stockholders in 2017 and 2018, each of the Class II and Class
III directors, respectively, will begin standing for annual election. The
proposed amendments will not affect the unexpired term of any director elected
prior to the Annual Meeting of Stockholders in 2017.
The proposed amendments to
Article VII of the Certificate and Article III of the Bylaws are attached hereto
as Annexes A and B, respectively.
If the requisite percentage of
stockholders approve the amendments, the Company anticipates filing the amended
Certificate with the Delaware Secretary of State promptly following the Annual
Meeting. Additionally, the Bylaws will be amended and restated to reflect these
changes thereafter.
Vote
Required
The affirmative vote of the
holders of at least eighty percent (80%) of the outstanding voting stock of the
Company is required for approval of this proposal.
Agilents Board
recommends a vote FOR the approval of the proposed amendments to
our
Certificate and Bylaws to declassify the Board.
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|
COMMON STOCK OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
COMMON STOCK OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth
information, as of December 31, 2015, concerning each person or group known by
Agilent, based on filings pursuant to Section 13(d) or (g) under the Securities
Exchange Act of 1934, as amended (the Exchange Act), to own beneficially more
than 5% of the outstanding shares of our Common Stock
Name and Address of Beneficial
Owner |
Amount and Nature |
Percent of Class |
T.
Rowe Price Associates, Inc. |
35,472,940 (1) |
10.5% |
100
E. Pratt Street |
|
|
Baltimore, MD 21202 |
|
|
FMR
LLC |
23,189,364 (2) |
6.915% |
245
Summer Street |
|
|
Boston, MA 02210 |
|
|
BlackRock, Inc. |
21,338,354 (3) |
6.4% |
55
East 52nd Street |
|
|
New York, NY 10022 |
|
|
The
Vanguard Group |
17,939,853 (4) |
5.35% |
100
Vanguard Blvd. |
|
|
Malvern, PA 19355 |
|
|
(1) |
Based solely on
information contained in a Schedule 13G/A filed with the SEC on February
13, 2015 by T. Rowe Price Associates, Inc. The Schedule 13G/A indicates
that T. Rowe Price Associates, Inc. has sole voting power with respect to
8,452,239 shares and sole dispositive power with respect to 35,472,940
shares. These securities are owned by various individual and institutional
investors including T. Rowe Price International Ltd. and T. Rowe Price
Mutual Funds which T. Rowe Price Associates, Inc. serves as an investment
adviser with power to direct investments and/or sole power to vote the
securities. For purposes of the reporting requirements of the Securities
Exchange Act of 1934, T. Rowe Price Associates, Inc. is deemed to be a
beneficial owner of such securities; however, T. Rowe Price Associates,
Inc. expressly disclaims that it is, in fact, the beneficial owner of such
securities. |
|
(2) |
Based solely on
information contained in a Schedule 13G filed with the SEC on February 13,
2015 by FMR LLC. The Schedule 13G indicates that FMR LLC has sole voting
power with respect to 2,857,299 shares and sole dispositive power with
respect to 23,189,364 shares. The Schedule 13G filing reflects the
securities beneficially owned, or that may be deemed to be beneficially
owned, by FMR LLC, certain of its subsidiaries and affiliates, and other
companies (collectively, the FMR Reporters). The filing does not reflect
securities, if any, beneficially owned by certain other companies whose
beneficial ownership of securities is disaggregated from that of the FMR
Reporters. |
|
(3) |
Based solely on
information contained in a Schedule 13G/A filed with the SEC on January
25, 2016 by BlackRock, Inc. The Schedule 13G/A indicates that BlackRock,
Inc. has sole voting power with respect to 18,309,634 shares and sole
dispositive power with respect to 21,338,354 shares. |
|
(4) |
Based solely on
information contained in a Schedule 13G filed with the SEC on February 11,
2015 by The Vanguard Group. The Schedule 13G indicates that The Vanguard
Group has sole voting power with respect to 575,215 shares and sole
dispositive power with respect to 17,398,018
shares. |
The following table sets forth
information, as of December 31, 2015, concerning:
● |
the beneficial ownership
of Agilents common stock by each director and each of the named executive
officers included in the Summary Compensation Table herein;
and |
● |
the beneficial ownership
of Agilents common stock by all directors and executive officers as a
group. |
The number of shares
beneficially owned by each entity, person, director or executive officer is
determined under the rules of the SEC, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such rules,
beneficial ownership includes any shares as to which the individual has the sole
or shared voting power or investment power and also any shares that the
individual has the right to acquire as of February 29, 2016, 60 days after
December 31, 2015,
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|
COMMON STOCK OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
through the exercise of any
stock option or other right. Unless otherwise indicated, each person has sole
investment and voting power, or shares such powers with his or her spouse, with
respect to the shares set forth in the following table.
|
Number of |
|
|
|
Total Number |
Number of |
Total Shares |
|
Shares of |
|
|
|
of Shares |
Shares Subject |
Beneficially |
|
Common |
Deferred |
Beneficially |
to
Exercisable |
Owned
Plus |
Name of Beneficial Owner |
Stock |
Stock (1) |
Owned (2) |
Options (3) |
Underlying Units |
Henrik
Ancher-Jensen |
7,027 |
|
|
0 |
|
|
7,027 |
|
|
6,120 |
|
|
13,147 |
|
Paul N. Clark |
764 |
|
|
85,372 |
|
|
86,136 |
|
|
0 |
|
|
86,136 |
|
James G. Cullen |
29,969 |
(4) |
|
71,449 |
|
|
101,418 |
|
|
32,179 |
|
|
133,597 |
|
Mark Doak |
25,259 |
|
|
1,589 |
|
|
26,848 |
|
|
37,593 |
|
|
64,441 |
|
Heidi Fields |
31,042 |
|
|
51,408 |
|
|
82,450 |
|
|
32,179 |
|
|
114,629 |
|
Robert J. Herbold |
45,760 |
(5) |
|
0 |
|
|
45,760 |
|
|
32,179 |
|
|
77,939 |
|
Didier Hirsch |
35,832 |
(6) |
|
92,914 |
|
|
128,745 |
|
|
323,670 |
|
|
452,415 |
|
Koh Boon Hwee |
47,520 |
|
|
12,355 |
|
|
59,876 |
|
|
32,179 |
|
|
92,055 |
|
Patrick Kaltenbach |
20,463 |
|
|
0 |
|
|
20,463 |
|
|
29,757 |
|
|
50,220 |
|
Michael R. McMullen |
144,588 |
|
|
0 |
|
|
144,588 |
|
|
490,199 |
|
|
634,787 |
|
Daniel K. Podolsky,
M.D. |
0 |
|
|
3,562 |
|
|
3,562 |
|
|
0 |
|
|
3,562 |
|
Sue H. Rataj |
2,290 |
|
|
0 |
|
|
2,290 |
|
|
0 |
|
|
2,290 |
|
George A. Scangos,
Ph.D. |
5,880 |
|
|
792 |
|
|
6,672 |
|
|
0 |
|
|
6,672 |
|
William P. Sullivan |
26,761 |
|
|
220,571 |
|
|
247,331 |
|
|
662,385 |
|
|
155,209 |
|
Tadataka Yamada,
M.D. |
12,486 |
|
|
17,730 |
|
|
30,216 |
|
|
0 |
|
|
30,216 |
|
All directors
and executive officers |
491,706 |
|
|
557,742 |
|
|
1,049,447 |
|
|
1,822,621 |
|
|
2,878,188 |
|
as
a group (18) persons (7) |
|
|
|
|
|
|
|
(1) |
Represents the number of deferred shares or
share equivalents held by Fidelity Management Trust Company under the
Deferred Compensation Plan as to which voting or investment power
exists. |
|
(2) |
Individual directors and executive officers
as well as all directors and executive officers as a group beneficially
own less than 1% of the 327,623,925 shares of Common Stock outstanding, as
of December 31, 2015. |
|
(3) |
Exercisable Options means options that may
be exercised as of February 19, 2016. |
|
(4) |
Includes 3,000 shares held by Mr. Cullens
Family Limited Partnership. |
|
(5) |
Includes 43,260 shares held by Mr. Herbolds
Revocable Trust. |
|
(6) |
Includes 100 shares held by Mr. Hirschs
spouse. |
|
(7) |
Includes 56,065 direct and indirect shares,
and 150,301 exercisable options for a total of 206,366 shares held by
executive officers not separately listed in this
table. |
Section 16(a) Beneficial
Ownership Reporting Compliance
Section 16(a) of the Exchange
Act, requires Agilents directors, executive officers and holders of more than
10% of Agilent common stock to file reports with the SEC regarding their
ownership and changes in ownership of Agilent stock. Agilent believes that
during the 2015 fiscal year, its executive officers, directors and holders of
10% or more of our common stock complied with all Section 16(a) filing
requirements.
In making these statements,
Agilent has relied upon examination of copies of Forms 3, 4 and 5 provided to
Agilent and the written representations of its directors and
officers.
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|
GENERAL INFORMATION
ABOUT THE MEETING |
Q: |
Why
did I receive a one-page notice in the mail regarding the Internet
availability of proxy materials instead of a full set of proxy
materials? |
|
A: |
In
accordance with rules and regulations adopted by the Securities and
Exchange Commission (the SEC), instead of mailing a printed copy of our
proxy materials to each stockholder of record, we are furnishing proxy
materials, including this Proxy Statement and our 2015 Annual Report to
Stockholders, by providing access to such documents on the Internet.
Stockholders will not receive printed copies of the proxy materials unless
they request them. Instead, commencing on or about February 4, 2016, a
Notice of Internet Availability of Proxy Materials (the Notice) was sent
to most of our stockholders which will instruct you how to access and
review the proxy materials on the Internet. The Notice also instructs you
to submit your proxy via the Internet. If you would like to receive a
paper or email copy of our proxy materials, please follow the instructions
for requesting such materials in the Notice. |
|
Q: |
Why
am I receiving these materials? |
|
A: |
Agilents
Board is providing these proxy materials to you on the Internet or, upon
your request, has delivered printed versions of these materials to you by
mail, in connection with Agilents 2016 annual meeting of stockholders,
which will take place on March 16, 2016. Stockholders are invited to
attend the annual meeting and are requested to vote on the proposals
described in this Proxy Statement. |
|
Q: |
Who
is soliciting my proxy? |
|
A: |
Agilents
Board is soliciting proxies to be used at the annual meeting of
stockholders on March 16, 2016, for the purposes set forth in the
foregoing Notice. |
Q: |
What is included in these materials? |
|
A: |
These materials include: |
|
|
|
●our Proxy Statement for Agilents annual
meeting; and
●our 2015 Annual Report to Stockholders,
which includes our audited consolidated financial
statements. |
|
|
If you requested printed versions of these materials by mail, these
materials also include the proxy card for the annual meeting. |
|
Q: |
What information is contained in these
materials? |
|
A: |
The information included in this Proxy Statement relates to the
proposals to be voted on at the annual meeting, the voting process, the
compensation of directors and our most highly paid officers and certain
other required information. |
|
Q: |
What shares owned by me can be voted? |
|
A: |
All shares owned by you as of the close of business on January 19,
2016 (the Record Date) may be voted. You may cast one vote per share of
common stock that you held on the Record Date. These include shares that
are: (1) held directly in your name as the stockholder of record,
including shares received or purchased through the Agilent Technologies,
Inc. 1999 Stock Plan and 2009 Stock Plan and the Agilent Technologies,
Inc. Employee Stock Purchase Plan, and (2) held for you as the beneficial
owner through a stockbroker, bank or other nominee or held for your
account by the Deferred Compensation Plans. On the Record Date, Agilent
had approximately 327,768,902 shares of common stock issued and
outstanding. |
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GENERAL INFORMATION
ABOUT THE MEETING |
Q: |
What is the
difference between holding shares as a stockholder of record and as a
beneficial owner? |
|
A: |
Most stockholders of
Agilent hold their shares through a stockbroker, bank or other nominee
rather than directly in their own name. As summarized below, there are
some differences between shares held of record and those owned
beneficially. |
|
|
Stockholder of
Record |
|
|
If your shares are
registered directly in your name with Computershare, you are considered,
with respect to those shares, the stockholder of record, and the Notice,
or if requested, these proxy materials are being sent directly to you. As
the stockholder of record, you have the right to grant your voting proxy
directly to the persons named as proxy holders, Michael R. McMullen,
Agilents Chief Executive Officer and Michael Tang, Agilents Senior Vice
President, General Counsel and Secretary, or to vote in person at the
annual meeting. If you requested printed copies of the proxy materials,
Agilent has enclosed a proxy card for you to use. You may also vote on the
Internet or by telephone, as described below under the heading How can I
vote my shares without attending the annual meeting? |
|
|
Beneficial
Owner |
|
|
If your shares are
held in a stock brokerage account or by a bank or other nominee, you are
considered the beneficial owner of shares held in street name, and these
proxy materials are being forwarded to you by your broker or nominee who
is considered, with respect to those shares, the stockholder of record. As
the beneficial owner, you are invited to attend the annual meeting. You
also have the right to direct your broker on how to vote these shares.
Your broker or nominee should have enclosed a voting instruction card for
you to direct your broker or nominee how to vote your shares. You may also
vote by Internet or by telephone, as described below under How can I vote
my shares without |
|
attending the annual
meeting? However, shares held in street name may be voted in person by
you only if you obtain a signed proxy from the record holder (stock
brokerage, bank, or other nominee) giving you the right to vote the
shares. |
|
Q: |
How can I vote
my shares in person at the annual meeting? |
|
A: |
Shares held directly
in your name as the stockholder of record may be voted in person at the
annual meeting. If you choose to vote your shares in person at the annual
meeting, please bring proof of ownership of Agilent stock on the record
date, such as the Notice of Internet Availability of Proxy Materials,
legal proxy, voting instruction card provided by your broker, bank or
nominee, or a proxy card as well as proof of identification. Even if you
plan to attend the annual meeting, Agilent recommends that you vote your
shares in advance as described below so that your vote will be counted if
you later decide not to attend the annual meeting. |
|
Q: |
How can I vote
my shares without attending the annual meeting? |
|
A: |
Whether you hold your
shares directly as the stockholder of record or beneficially in street
name, you may direct your vote without attending the annual meeting by
proxy. You can vote by proxy over the Internet or by telephone. Please
follow the instructions provided in the Notice, or, if you request printed
copies of proxy materials, on the proxy card or voting instruction
card. |
|
Q: |
Can I revoke my
proxy or change my vote? |
|
A: |
You may revoke your
proxy or change your voting instructions prior to the vote at the annual
meeting. You may enter a new vote by using the Internet or the telephone
or by mailing a new proxy card or new voting instruction card bearing a
later date (which will automatically revoke your earlier voting
instructions) or by attending the annual meeting and voting in person.
Your |
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|
GENERAL INFORMATION
ABOUT THE MEETING |
|
attendance
at the annual meeting in person will not cause your previously granted
proxy to be revoked unless you specifically so request. |
|
Q: |
How
are votes counted? |
|
A: |
In the
election of directors, your vote may be cast FOR or AGAINST one or
more of the nominees, or you may ABSTAIN from voting with respect to one
or more of the nominees. Shares voting ABSTAIN have no effect on the
election of directors. |
|
|
For
proposals 2, 3 and 4 your vote may be cast FOR or, AGAINST or you may
ABSTAIN. If you ABSTAIN, it has the same effect as a vote AGAINST.
If you sign your proxy card or broker voting instruction card with no
further instructions, your shares will be voted as described below in
Abstentions and Broker Non-Votes |
|
|
Abstentions and Broker Non-Votes |
|
|
Any shares
represented by proxies that are marked to ABSTAIN from voting on a
proposal will be counted as present in determining whether we have a
quorum. They will also be counted in determining the total number of
shares entitled to vote on a proposal. Abstentions and, if applicable,
broker non-votes will not be counted as votes FOR or AGAINST a
director nominee. Accordingly, abstentions are not counted for the purpose
of determining the number of votes cast in the election of
directors. |
|
|
If your
shares are held in street name and you do not instruct your broker on how
to vote your shares, your broker, in its discretion, may either leave your
shares unvoted or vote your shares on routine matters. Only Proposal 2
(ratifying the appointment of our independent registered public accounting
firm) is considered a routine matter. In accordance with federal
legislation adopted in 2010, the SEC has approved changes to NYSE Rule
452, the broker vote rule, that make executive compensation matters,
including |
|
say-on-pay, non-
routine matters. If your broker returns a proxy card but does not vote
your shares, this results in a broker non-vote. Broker non-votes will be
counted as present for the purpose of determining a quorum. |
|
|
Proposals 1 (election
of directors) 3 (approval of the compensation of Agilents named executive
officers), and 4 (approval of amendments to the Amended and Restated
Certificate of Incorporation and Bylaws to declassify the board) are not
considered routine matters, and without your instruction, your broker
cannot vote your shares. Because brokers do not have discretionary
authority to vote on these proposals, broker non-votes will not be counted
for the purpose of determining the number of votes cast on these
proposals. |
|
Q: |
What is the
voting requirement to approve each of the proposals? |
|
A: |
Proposal 1,
Election of Directors: |
|
Under our majority
voting standard, in uncontested elections of directors, such as this
election, each director must be elected by the affirmative vote of a
majority of the votes cast by the shares present in person or represented
by proxy and entitled to vote. A majority of the votes cast means that
the number of votes cast FOR a director must exceed 50% of the votes
cast with respect to that director. Abstentions and broker non-votes will
not count as a vote for or against a nominees election and thus will
have no effect in determining whether a director nominee has received a
majority of the votes cast. |
|
|
Our board has adopted
a policy under which, in uncontested elections, an incumbent director
nominee who does not receive the required votes for re-election is
expected to tender his or her resignation to our Board. The
Nominating/Corporate Governance Committee, or another duly appointed
committee of the Board, will determine whether to accept or reject the
tendered resignation generally within 90 days after certification of the
election results. Agilent will publicly disclose
the |
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|
GENERAL INFORMATION
ABOUT THE MEETING |
committees determination
regarding the tendered resignation and the rationale behind the decision in a
Current Report on Form 8-K filed with the SEC.
Proposal 2, Ratification of the Independent
Registered Public Accounting Firm: The appointment of PricewaterhouseCoopers LLP as our independent
registered public accounting firm requires the affirmative vote of a majority of
shares present at the annual meeting, in person or by proxy, and entitled to
vote on the proposal. Abstentions will have the same effect as a vote against
Proposal 2. The approval of Proposal 2 is a routine proposal on which a broker
or other nominee is generally empowered to vote in the absence of voting
instructions from the beneficial owner, so broker non-votes are unlikely to
result from this proposal.
Proposal 3, Approval of the Compensation of
Agilents Named Executive Officers: The advisory vote regarding approval of the compensation of Agilents
named executive officers requires the affirmative vote of a majority of shares
present at the annual meeting, in person or by proxy, and entitled to vote on
the proposal. Abstentions will have the same effect as votes against this
proposal. Broker non-votes will have
no effect on this proposal as brokers are not entitled to vote on such proposal
in the absence of voting instructions from the beneficial owner.
Proposal 4, Approval of amendments to the
Amended and Restated Certificate of Incorporation and Bylaws to declassify the
Board: The vote regarding
amendment of the Amended and Restated Certificate of Incorporation and Bylaws to
declassify the board requires the affirmative vote of eighty percent (80%) of
the outstanding voting stock. Abstentions will have the same effect as votes
against this proposal. Broker
non-votes will have no effect on this proposal as brokers are not entitled to
vote on such proposal in the absence of voting instructions from the beneficial
owner
Q: |
What
does it mean if I receive more than one Notice, proxy or voting
instruction card? |
A: |
It means
your shares are registered differently or are in more than one
account. For each Notice you receive, please enter your vote on the Internet for each
control number you have been assigned. If you receive paper copies of
proxy materials, please provide voting instructions for all proxy and
voting instruction cards you receive. |
Q: |
Where
can I find the voting results of the annual meeting? |
A: |
Agilent
will announce preliminary voting results at the annual meeting and publish
preliminary, or final results if available, in a Current Report on
Form 8-K within four business
days of the annual meeting. |
Q: |
What
happens if additional proposals are presented at the annual
meeting? |
A: |
Other than
the four proposals described in this Proxy Statement, Agilent does not
expect any matters to be presented for a vote at the annual meeting. If
you grant a proxy, the persons
named as proxy holders,
Michael R. McMullen, Agilents Chief Executive Officer, and Michael Tang,
Agilents Senior Vice President, General Counsel and Secretary, will have
the discretion to vote your shares on any additional matters properly
presented for a vote at the annual
meeting. If for any unforeseen
reason, any one or more of Agilents nominees is not available as a
candidate for director, the persons named as proxy holders will vote your
proxy for such other candidate or candidates as may be nominated by the
Board |
Q: |
What
is the quorum requirement for the annual meeting? |
A: |
The quorum
requirement for holding the annual meeting and transacting business is a
majority of the outstanding shares |
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ABOUT THE MEETING |
|
entitled
to be voted. The shares may be present in person or represented by proxy
at the annual meeting. Both abstentions and broker non-votes are counted
as present for the purpose of determining the presence of a quorum. Broker
non-votes, however, are not counted as shares present and entitled to be
voted with respect to the matter on which the broker has expressly not
voted. Thus, broker non-votes will not affect the outcome of any of the
matters being voted on at the annual meeting. Generally, broker non-votes
occur when shares held by a broker for a beneficial owner are not voted
with respect to a particular proposal because (1) the broker has not
received voting instructions from the beneficial owner and (2) the broker
lacks discretionary voting power to vote such shares. |
Q: |
Who
will count the vote? |
A: |
A
representative of Computershare will tabulate the votes and act as the
inspector of election. |
Q: |
Is
my vote confidential? |
A: |
Proxy
instructions, ballots and voting tabulations that identify individual
stockholders are handled in a manner that protects your voting privacy.
Your vote will not be disclosed either within Agilent or to third parties
except (1) as necessary to meet applicable legal requirements, (2) to
allow for the tabulation of votes and certification of the vote and (3) to
facilitate a successful proxy solicitation by the Board. Occasionally, stockholders provide written comments on their proxy
card, which are then forwarded to Agilents management. |
Q: |
Who
will bear the cost of soliciting votes for the annual
meeting? |
A: |
Agilent will pay the entire cost of preparing,
assembling, printing, mailing and distributing these proxy materials.
Agilent has retained the services of Georgeson, Inc. (Georgeson) to aid
in the solicitation of proxies from banks, brokers, nominees and
intermediaries. Agilent |
|
estimates that it
will pay Georgeson a fee of $13,000 for its services. In addition to the
mailing of these proxy materials, the solicitation of proxies or votes may
be made in person, by telephone or by electronic communication by
Agilents directors, officers and employees, who will not receive any
additional compensation for such solicitation activities. In addition,
Agilent may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
material to such beneficial owners. |
Q: |
May I propose
actions for consideration at next years annual meeting of stockholders or
nominate individuals to serve as directors? |
A: |
You may submit
proposals for consideration at future annual stockholder meetings,
including director nominations. |
|
Stockholder
Proposals: In order for a
stockholder proposal to be considered for inclusion in Agilents proxy
statement for next years annual meeting, the written proposal must be
received by Agilent no later than October 7, 2016 and should contain such
information as is required under Agilents Bylaws. Such proposals will
need to comply with the SECs regulations regarding the inclusion of
stockholder proposals in Agilent sponsored proxy materials. In order for a
stockholder proposal to be raised from the floor during next years annual
meeting, written notice must be received by Agilent no later than October
7, 2016 and should contain such information as required under Agilents
Bylaws. |
|
Nomination of
Director Candidates: Agilents Bylaws permit stockholders to
nominate directors at a stockholder meeting. In order to make a director
nomination at an annual stockholder meeting, it is necessary that you
notify Agilent not less than 120 days before the first anniversary of the
date that the proxy statement for the preceding years annual meeting was
first sent to stockholders. |
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Agilents 2016 Proxy
Statement was first sent to stockholders on February 4, 2016. Thus, in
order for any such nomination notice to be timely for next years annual
meeting, it must be received by Agilent not later than October 7, 2016. In
addition, the notice must meet all other requirements contained in
Agilents Bylaws and include any other information required pursuant
to Regulation 14A under the Exchange Act. |
|
Copy of Bylaw
Provisions: You may contact
the Agilent Corporate Secretary at Agilents corporate headquarters for a
copy of the relevant Bylaw provisions regarding the requirements for
making stockholder proposals and nominating director candidates.
Additionally, a copy of Agilents Bylaws can be accessed on the Agilent
Investor Relations Web site at http://www.investor.agilent.com. Click
Corporate Governance and then Governance Policies on the left hand
side of the screen. |
Q: |
How do I obtain
a separate set of proxy materials if I share an address with other
stockholders? |
A: |
To reduce expenses,
in some cases, we are delivering one set of the proxy materials or, where
applicable, one Notice to certain stockholders who share an address,
unless otherwise requested by one or more of the stockholders. For
stockholders receiving hard copies of the proxy materials, a separate
proxy card is included with the proxy materials for each stockholder.
For |
|
stockholders
receiving a Notice, the Notice will instruct you as to how you may access
and review all of the proxy materials on the Internet. The Notice also
instructs you as to how you may submit your proxy on the Internet. If you
have only received one set of the proxy materials or one Notice, you may
request separate copies at no additional cost to you by calling us at
(408) 553-2424 or by writing to us at Agilent Technologies, Inc., 5301
Stevens Creek Blvd., Santa Clara, California 95051, Attn: Shareholder
Records. If you received a Notice and you would like to receive a paper or
email copy of our proxy materials, you should follow the instructions for
requesting such materials in the Notice. |
|
You may also request
separate paper proxy materials or a separate Notice for future annual
meetings by following the instructions for requesting such materials in
the Notice, or by contacting us by calling or writing. |
Q: |
If I share an
address with other stockholders of Agilent, how can we get only one set of
voting materials for future meetings? |
A: |
You may request that
we send you and the other stockholders who share an address with you only
one Notice or one set of proxy materials by calling us at (408) 553-2424
or by writing to us at: Agilent Technologies, Inc., 5301 Stevens Creek
Blvd., Santa Clara, California 95051, Attn: Shareholder
Records. |
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You
may receive a copy of Agilents Annual Report on Form 10-K for the fiscal year
ended October 31, 2015 without charge by sending a written request to Agilent
Technologies, Inc., 5301 Stevens Creek Blvd., Santa Clara, California 95051,
Attn: Investor Relations.
By Order of the
Board,
MICHAEL TANG
Senior Vice President, General Counsel
and Secretary
Dated:
February 4, 2016
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ABOUT THE MEETING |
DIRECTIONS TO AGILENTS
HEADQUARTERS
From the South (San
Jose)
Take Highway 280 North towards
San Francisco. Take the Stevens Creek/Lawrence Expressway exit and turn left
onto Stevens Creek Blvd. for approximately 0.1 miles and then turn right into
Agilents parking lot at the second stop light.
From the North (San
Francisco)
Take Highway 280 South towards
San Jose. Take the Stevens Creek Blvd/Lawrence Expressway exit. Turn left on
Stevens Creek Blvd. for approximately 0.2 miles and turn left into Agilents
parking lot at the first stop light.
Parking
Parking will be designated as
you enter the parking lot.
© |
Agilent Technologies,
Inc. 2016 Printed in U.S.A. February, 2016 |
|
Printed on recycled
paper with 30% post-consumer waste |
Admission to the annual
meeting will be limited to stockholders. You are entitled to attend the annual
meeting only if you are a stockholder of record as of the close of business on
January 19, 2016, the record date, or hold a valid proxy for the meeting. In
order to be admitted to the annual meeting, you must present proof of ownership
of Agilent stock on the record date. This can be a brokerage statement or letter
from a bank or broker indicating ownership on January 19, 2016, the Notice of
Internet Availability of Proxy Materials, a proxy card, or legal proxy or voting
instruction card provided by your broker, bank or nominee. Any holder of a proxy
from a stockholder must present the proxy card, properly executed, and a copy of
the proof of ownership. Stockholders and proxyholders may also be asked to
present a form of photo identification such as a drivers license or passport.
Backpacks, cameras, cell phones with cameras, recording equipment and other
electronic recording devices will not be permitted at the annual meeting.
Agilent reserves the right to inspect any persons or items prior to their
admission to the annual meeting. Failure to follow the meeting rules or permit
inspection will be grounds for exclusion from the annual meeting.
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Annex A
PROPOSED AMENDMENTS
TO
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
AGILENT TECHNOLOGIES,
INC.
(Additions are
underlined, deletions are struck-out)
Article VII of the Amended and
Restated Certificate of Incorporation shall be amended and restated to read as
follows:
ARTICLE VII
For the management of the
business and for the conduct of affairs of the Corporation, and in further
definition, limitation and regulation of powers of the Corporation, of its
directors and of its stockholder or any class thereof, as the case may be, it is
further provided that:
A. The management of the
business and the conduct of the affairs of the Corporation shall be vested in
its Board of Directors. The number of directors of this Corporation shall be
fixed and may be changed from time to time by resolution of the Board of
Directors.
B. Until the election of
directors at the 2019 annual meeting of stockholders, tThe Directors, other than
those who may be elected by the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation, shall be
classified, with respect to the time for which they severally hold office, into
three classes, as nearly equal in number as possible, one class to be originally
elected for a term expiring at the annual meeting of stockholders to be held in
2000, another class to be originally elected for a term expiring at the annual
meeting of stockholders to be held in 2001, and another class to be originally
elected for a term expiring at the annual meeting of stockholders to be held in
2002, with each class to hold office until its successor is duly elected and
qualified. At each succeeding annual meeting of stockholders prior to the
2017 annual meeting of stockholders, directors elected to succeed those
directors whose terms then expire shall be elected for a term of office to
expire at the third succeeding annual meeting of stockholders after their
election., with each director to hold office until such persons successor
shall have been elected and qualified. Commencing at the 2017 annual meeting of
stockholders, directors, other than those who may be elected by the holders of
any class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation, shall be elected to hold office for a term
expiring at the next annual meeting of stockholders following their election and
until their successors are duly elected and qualified. Accordingly, at the 2017
annual meeting of stockholders, directors in the class whose terms expire at
that meeting shall be elected to hold office for a term expiring at the 2018
annual meeting of stockholders and until their successors are duly elected and
qualified; at the 2018 annual meeting of stockholders, directors in the class
whose terms expire at that meeting shall be elected to hold office for a term
expiring at the 2019 annual meeting of stockholders and until their successors
are duly elected and qualified; and at the 2019 annual meeting of stockholders
and at each annual meeting of stockholders thereafter, all directors shall be
elected to hold office for a term expiring at the next annual meeting of
stockholders following their election and until their successors are duly
elected and qualified. All directors, subject to such directors earlier death,
resignation, retirement, disqualification or removal from office, shall hold
office until the expiration of the term for which he or she was elected, and
until his or her successor is duly elected and qualified. From and after the
election of directors at the 2019 annual meeting of stockholders, any director
or the entire board of directors may be removed from office for cause or without
cause by the holders of a majority of the shares then entitled to vote at an
election of directors.
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C. Notwithstanding the foregoing
provisions of this Article VII, each director shall serve until his or her
successor is duly elected and qualified or until his or her death, resignation
or removal. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
D. Any vacancies on the Board of Directors
resulting from death, resignation, disqualification, removal, or other causes
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by stockholders, except as
otherwise provided by law, shall be filled only by the affirmative vote of a
majority of the remaining directors then in office, even though less than a
quorum of the Board of Directors and not by the stockholders.
E. In furtherance and not in limitation of
the powers conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized to make, alter, amend or repeal the Bylaws of the
Corporation.
F. The directors of the Corporation need
not be elected by written ballot unless the Bylaws of the Corporation so
provide.
G. Advance notice of stockholder
nomination for the election of directors and of any other business to be brought
by stockholders before any meeting of the stockholders of the Corporation shall
be given in the manner provided in the Bylaws of the Corporation.
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Annex B
PROPOSED AMENDMENTS
TO
AMENDED AND RESTATED BYLAWS
OF AGILENT TECHNOLOGIES,
INC.
(Additions are
underlined, deletions are struck-out)
Sections 3.3, 3.4 and 3.5 of
Article III of the Amended and Restated Bylaws shall be amended and restated as
follows:
3.3 Election and Term of Office of
Directors. Except as provided
in the Certificate of Incorporation or Section 3.4 of these Bylaws, until the
election of directors at the 2019 annual meeting of stockholders, directors
shall be classified, with respect to the time for which they severally hold
office, into three classes, as nearly equal in number as possible, one class to
be originally elected for a term expiring at the annual meeting of stockholders
to be held in 2000, another class to be originally elected for a term expiring
at the annual meeting of stockholders to be held in 2001, and another class to
be originally elected for a term expiring at the annual meeting of stockholders
to be held in 2002, with each class to hold office until its successor is duly
elected and qualified. At each succeeding annual meeting of stockholders
prior to the 2017 annual meeting of stockholders, directors elected to
succeed those directors whose terms then expire shall be elected for a term of
office to expire at the third succeeding annual meeting of stockholders after
their election, with each director to hold office until such persons successor
shall have been elected and qualified or until such persons earlier resignation
or removal. Each director, including a director elected or appointed to fill a
vacancy, shall hold office until his successor is elected and qualified or until
his earlier resignation or removal. Commencing at the 2017 annual meeting of
stockholders, directors, other than those who may be elected by the holders of
any class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation, shall be elected to hold office for a term
expiring at the next annual meeting of stockholders following their election and
until their successors are duly elected and qualified. Accordingly, at the 2017
annual meeting of stockholders, directors in the class whose terms expire at
that meeting shall be elected to hold office for a term expiring at the 2018
annual meeting of stockholders and until their successors are duly elected and
qualified; at the 2018 annual meeting of stockholders, directors in the class
whose terms expire at that meeting shall be elected to hold office for a term
expiring at the 2019 annual meeting of stockholders and until their successors
are duly elected and qualified; and at the 2019 annual meeting of stockholders
and at each annual meeting of stockholders thereafter, all directors shall be
elected to hold office for a term expiring at the next annual meeting of
stockholders following their election and until their successors are duly
elected and qualified. All directors, subject to such directors earlier death,
resignation, retirement, disqualification or removal from office, shall hold
office until the expiration of the term for which he or she was elected, and
until his or her successor is duly elected and qualified.
Except as provided in Section
3.4 of these Bylaws, each director shall be elected by the vote of a majority of
the votes cast with respect to the director at any meeting for the election of
directors at which a quorum is present, provided that if the number of nominees
exceeds the number of directors to be elected, the directors shall be elected by
the vote of a plurality of the shares represented in person or by proxy at any
such meeting and entitled to vote on the election of directors. For purposes of
this paragraph, a majority of the votes cast means that the number of shares
voted for a director must exceed 50% of the votes cast with respect to that
director. The votes cast shall include votes to withhold authority in each case
and exclude abstentions with respect to that directors election. If an
incumbent director is not elected due to a failure to receive a majority of the
votes cast as described above and his or her successor is not otherwise elected
and qualified, the director shall offer to tender his or her resignation to the
Board of Directors promptly following the certification of the stockholder vote.
The Nominating/Corporate Governance Committee will consider the offer to resign
and make a recommendation to the Board of Directors on whether to accept or
reject the resignation, or whether
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other action should be taken. The Board of
Directors will act on the Committees recommendation and publicly disclose its
decision and the rationale behind it within 90 days from the date of the
certification of the election results. Any director who tenders his or her offer
to resign shall not participate in either the Nominating/Corporate Governance
Committees or Board of Directors consideration or other actions regarding
whether to accept the resignation offer. However, if each member of the
Nominating/Corporate Governance Committee failed to receive a majority of the
votes cast at the same election, then the independent directors who did receive
a majority of the votes cast shall appoint a committee amongst themselves to
consider the resignation offers and recommend to the Board of Directors whether
to accept them. However, if the only directors who received a majority of the
votes cast in the same election constitute three or fewer directors, all
directors may participate in the action regarding whether to accept the
resignation offers.
If an incumbent director offers to resign
pursuant to the foregoing paragraph and the resignation offer is not accepted by
the Board of Directors, such director shall continue to serve until the next
annual meeting and until his or her successor is duly elected, or his or her
earlier resignation or removal. If a directors resignation is accepted by the
Board of Directors, or if a nominee for director is not elected and the nominee
is not an incumbent director, then the Board of Directors, in its sole
discretion, may fill any resulting vacancy pursuant to the provisions of Section
3.4 hereof or may decrease the size of the Board of Directors pursuant to the
provisions of Section 3.2 hereof.
Except as otherwise provided in the
foregoing two paragraphs, each director, including a director elected or
appointed to fill a vacancy, shall hold office until his successor is elected
and qualified or until his earlier resignation or removal.
Directors need not be stockholders unless
so required by the Certificate of Incorporation or by these Bylaws; wherein
other qualifications for directors may be prescribed. Election of directors need
not be by written ballot unless so required by the Certificate of Incorporation
or by these Bylaws; wherein other qualifications for directors may be
prescribed.
3.4 Resignation and Vacancies. Any
director may resign effective on giving written notice to the chairman of the
board, the chief executive officer, the secretary or the board of directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a director is effective at a future time, the
board of directors may elect a successor to take office when the resignation
becomes effective.
Unless otherwise provided in the
Certificate of Incorporation or these Bylaws:
(i) |
Vacancies and newly created
directorships resulting from any increase in the authorized number of
directors elected by all of the stockholders having the right to vote as a
single class may be filled by a majority of the directors then in office,
even if less than a quorum, or by a sole remaining director. Each director
so elected shall hold office for the remainder of the full term of the
class of directors in which the new directorship was created or the
vacancy occurred and until a successor has been elected and
qualified. |
(ii) |
Whenever the holders of any class
or classes of stock or series thereof are entitled to elect one or more
directors by the provisions of the Certificate of Incorporation, vacancies
and newly created directorships of such class or classes or series may be
filled by a majority of the directors elected by such class or classes or
series thereof then in office, or by a sole remaining director so
elected. |
If at any time, by reason of death or
resignation or other cause, the corporation should have no directors in office,
then any officer or any stockholder or an executor, administrator, trustee or
guardian of a stockholder, or other fiduciary entrusted with like responsibility
for the person or estate
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of a stockholder, may call a
special meeting of stockholders solely for the purpose of electing directors in
accordance with the provisions of the Certificate of Incorporation or these
Bylaws, or may apply to the Court of Chancery for a decree summarily ordering an
election as provided in Section 211 of the General Corporation Law of Delaware.
If,
at the time of filling any vacancy or any newly created directorship, the
directors then in office constitute less than a majority of the whole board (as
constituted immediately prior to any such increase), then the Court of Chancery
may, upon application of any stockholder or stockholders holding at least ten
percent (10%) of the total number of the then outstanding shares having the
right to vote for such directors, summarily order an election to be held to fill
any such vacancies or newly created directorships, or to replace the directors
chosen by the directors then in office as aforesaid, which election shall be
governed by the provisions of Section 211 of the General Corporation Law of
Delaware as far as applicable.
3.5 Removal. Unless
otherwise restricted by statute, by the Certificate of Incorporation or by these
Bylaws, prior to the election of directors at the 2019 annual meeting of
stockholders, any director or the entire board of directors may be removed
from office only for cause by the holders of a majority of the shares then
entitled to vote at an election of directors. From and after the election of
directors at the 2019 annual meeting of stockholders, any director or the entire
board of directors may be removed from office for cause or without cause by the
holders of a majority of the shares then entitled to vote at an election of
directors.
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Electronic Voting Instructions
Available 24 hours a day, 7 days a
week!
Instead of
mailing your proxy, you may choose one of the voting methods outlined below to
vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN
THE TITLE BAR.
Proxies submitted by the Internet or
telephone must be received by 1:00 a.m., Central Time, on March 16,
2016.
|
|
Vote by
Internet
● Go to www.envisionreports.com/agilent
● Or scan the QR code
with your smartphone
● Follow the steps
outlined on the secure website |
Vote by telephone
● Call toll free
1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch
tone telephone
● Follow the instructions
provided by the recorded message
Using a black
ink pen, mark your votes with an X as shown in this example. Please do not
write outside the designated areas. |
|
|
Annual Meeting Proxy
Card |
|
▼ IF YOU HAVE NOT VOTED VIA THE
INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM
PORTION IN THE ENCLOSED ENVELOPE. ▼
|
A |
Proposals The Board recommends a vote FOR all
nominees and FOR Proposals 2, 3 and 4. |
1. |
Election of
Directors: To elect three directors to a 3-year term. At the annual
meeting, the Board of Directors intends to present the following nominees
for election as directors: |
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For |
Against |
Abstain |
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For |
Against |
Abstain |
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For |
Against |
Abstain |
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01 - |
Paul N.
Clark |
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☐ |
☐ |
☐ |
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02 - |
James G.
Cullen |
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☐ |
☐ |
☐ |
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03
- |
Tadataka Yamada,
M.D. |
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☐ |
☐ |
☐ |
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For |
Against |
Abstain |
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For |
Against |
Abstain |
2. |
To ratify the Audit and Finance
Committees appointment of PricewaterhouseCoopers LLP as Agilents
independent registered public accounting firm. |
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☐ |
☐ |
☐ |
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3. |
To approve, on a non-binding advisory
basis, the compensation of Agilents named executive officers. |
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☐ |
☐ |
☐ |
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4. |
To approve amendments to our Amended
and Restated Certificate of Incorporation and Bylaws to declassify the
Board. |
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☐ |
☐ |
☐ |
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5. |
To consider such other business as
may properly come before the annual meeting. |
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|
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Change of Address Please print
your new address below. |
|
Comments Please print your
comments below. |
|
Meeting Attendance |
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|
|
Mark the box
to the right if you plan to attend the Annual Meeting. |
|
☐ |
C |
Authorized Signatures This section must be
completed for your vote to be counted. Date and Sign
Below |
Please sign exactly as name(s) appears
hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, corporate officer, trustee, guardian, or custodian, please
give full title. |
Date (mm/dd/yyyy) Please print date
below. |
|
Signature 1 Please keep signature within the
box. |
|
Signature 2 Please keep signature within the
box. |
/ / |
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Table of Contents
▼ IF YOU HAVE NOT VOTED VIA THE INTERNET
OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM
PORTION IN THE ENCLOSED ENVELOPE. ▼ |
Proxy AGILENT TECHNOLOGIES,
INC. |
Annual Meeting of StockholdersMarch
16, 2016
This Proxy is solicited on behalf of the Board
of Directors.
The undersigned hereby appoints Michael R.
McMullen and Michael Tang, and each of them, as proxies for the undersigned,
with full power of substitution, to act and to vote all the shares of Common
Stock of Agilent Technologies, Inc. held of record by the undersigned on January
19, 2016, at the Annual Meeting of Stockholders to be held on Wednesday, March
16, 2016, or any postponement or adjournment thereof.
IMPORTANTThis Proxy must be signed and
dated on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL
BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2, 3 AND 4.
In their discretion, the Proxies are
authorized to vote upon such other business as may properly come before the
Annual Meeting.
THIS PROXY CARD IS VALID ONLY WHEN
SIGNED AND DATED
If you vote by telephone or the
Internet, please DO NOT mail back this proxy card.
(Continued and to be voted on reverse
side.)
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