Your Board of Directors joins me in extending an invitation to attend the 2017 Annual Meeting of Shareholders, which will be
held on Wednesday, April 19, 2017, at the Wyndham Hamilton Park Hotel and Conference Center, 175 Park Avenue, Florham Park, New Jersey 07932. The meeting will start promptly at 10:00 a.m.
We sincerely hope you will be able to attend and participate in the meeting. We will be acting on the items set forth in the
accompanying Notice and Proxy Statement.
If you plan to attend the meeting and were a shareholder of record at the close
of business on February 27, 2017, please mark your proxy card in the space provided for that purpose. An admission ticket is included with the proxy card for each shareholder of record. If your shares are not registered in your name, please
advise the shareholder(s) of record (your bank, broker or other nominee) that you wish to attend. That firm must provide you with evidence of your ownership, which will enable you to gain admission to the meeting.
Whether or not you plan to attend, it is important that your shares be represented and voted at the meeting. As a shareholder
of record, you can vote your shares by telephone or over the Internet in accordance with the instructions set forth on the enclosed proxy card, or mark your vote on the proxy card, sign and date it and mail it in the envelope provided. Under NYSE
rules, banks, brokers or other nominees cannot exercise discretionary voting on most items to be voted upon at the meeting. If you are not a shareholder of record, please follow the instructions provided by your bank, broker or other nominee so that
your shares are voted at the meeting on all matters accordingly.
TIMOTHY M. RING
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EXECUTIVE COMPENSATION PROGRAM HIGHLIGHTS
|
Our ongoing shareholder engagement efforts and discussions with our investors have produced
meaningful learning for the Compensation Committee and for management regarding investors’ views on our executive compensation program. We continue to actively seek opportunities to gather feedback on our compensation programs and practices
throughout the year from many of our shareholders’ portfolio managers and corporate governance advisors by telephone and
in-person.
We have set forth below certain of the key features of our executive compensation program applicable to our named executive
officers and key compensation governance practices that strengthen the alignment of our named executive officers’ interests with those of our shareholders:
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Key Compensation Program Features
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Key Compensation Governance Practices
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• 89.2% of our CEO’s target direct compensation is performance-based pay
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• Robust stock
ownership guidelines to align executives with our shareholders regarding our long-term performance
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• Mix of fixed and variable compensation, with a strong emphasis on variable,
at-risk
performance-based compensation
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• Clawback policy that allows the Company to recoup incentive-based compensation paid to
executive officers under certain circumstances
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• Short- and long-term incentive compensation with balanced performance metrics (including
relative total shareholder return (TSR)) that are tied to our business strategy and performance
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• No option
repricing or cash buyout of underwater options without shareholder approval
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• 66% of target long-term incentive opportunity is performance-contingent and measured
over
2-
and
3-year
periods
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• No payment of dividend equivalents on unvested performance-contingent
awards
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• 100% of our full-value stock-based awards are tied to performance conditions
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• No
“walk away” rights or excise tax
gross-up
payments in any new change of control agreements since January 1, 2010
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• Double trigger change of control provision in the 2012 Long Term Incentive
Plan
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• Active investor outreach program enabling us to obtain ongoing feedback concerning our
compensation program and disclosure
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• Management Stock Purchase Program (MSPP) designed to incentivize executives to defer
their annual performance-based cash bonus into restricted stock units
¡
Mandatory deferral until stock ownership
requirements are met
¡
Minimum
4-year
deferral
¡
Further aligns executives with shareholders
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• Engagement of an independent compensation consultant with no other ties to the Company
or its management
|
(ii)
As part of Bard’s commitment to high ethical standards, our Board follows sound
governance practices. These practices are described in more detail on pages 15 - 24 and in our Corporate Governance Guidelines, which can be found in the Governance section of our website.
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Independence
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|
•
9 out of our 11 directors are independent.
•
All of the Board Committees are composed
exclusively of independent directors.
•
Each
member of the Audit Committee is independent under the Sarbanes-Oxley Act of 2002.
•
Each member of the Compensation Committee meets
the NYSE enhanced independence standards pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act.
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Independent Lead
Director
|
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•
We have an independent lead director, who is
selected annually by the independent directors.
•
The lead director serves as liaison between
management and the other
non-management
directors.
•
The lead director’s term is limited to three consecutive,
one-year
terms.
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Executive Sessions
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•
The independent directors regularly meet in
private without management.
•
The lead
director presides at these executive sessions.
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Board Oversight
of Risk Management
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•
The Board and Committee meeting process is
designed to ensure that key risks are reviewed.
•
Directors are informed of and review various
areas of risk including those associated with operational matters, finance, regulatory and product quality issues, and legal proceedings, among others.
•
The Board and Committee risk discussions are
supplemented through annual reports by management.
•
The Audit Committee reviews our overall
enterprise risk management policies and practices and financial risk exposures, while other Committees also play a role in risk oversight.
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Stock Ownership
Requirements
|
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•
Our independent directors must hold at least
four times the annual cash retainer payable to each director of our common stock within five years of joining the Board.
•
Stock ownership guidelines require our
executives to hold significant amounts of our common stock to align executives with our shareholders.
¡
Our Chairman and CEO must hold our
common stock valued at five times his base salary.
¡
Our Vice Chairman, President and COO must hold our common stock valued at four times his
base salary, and other named executive officers must hold our common stock valued at three times their base salary.
•
Our MSPP program incentivizes eligible
employees to defer annual bonuses into common stock.
¡
Further aligns our employees’ interests with our shareholders
¡
Promotes employee retention
◾ 301 out of 316 eligible employees (95%) participated in the MSPP program in 2016.
◾ With the exception of a retiring executive, all of the corporate officers participated in the
MSPP program in 2016, with over 78% deferring nearly 100% of their annual bonuses into common stock.
|
(iii)
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GOVERNANCE HIGHLIGHTS (continued)
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|
Board Practices
|
|
•
Our Board annually evaluates the effectiveness of the Board and its Committees,
including through a new peer evaluation process conducted in 2016.
• The Board
considers nomination of directors in light of their strength of character, mature judgment, career specialization, relevant technical skills, diversity and present needs on the Board.
• Any incumbent director who receives less than a majority of the votes cast in an
uncontested election must tender his or her resignation promptly.
• The maximum
discretionary stock-based award value for each director may not to exceed $150,000.
•
Effective 2017, no director may serve on the board of directors of more than five
public company boards, including the Company.
• Effective 2017, independent
directors who are employed as a sitting CEO with another company shall not serve on more than three public company boards, including the Company.
|
|
Accountability
|
|
• In 2016, the Company adopted proxy access rights for shareholders.
•
Effective February 2017, directors and executive officers are prohibited from hedging
securities of the Company, purchasing or holding securities of the Company in a margin account or pledging securities of the Company.
• Clawback policy that allows the Company to recoup incentive-based compensation paid to
executive officers under certain circumstances, which we amended in February 2015 to broaden the group of executives covered and to apply to certain instances of misconduct and negligent supervision.
• All directors stand for election annually.
• In uncontested elections, directors must be elected by a majority of votes cast for each
nominee.
|
(iv)
TABLE OF CONTENTS
C. R. BARD, INC.
730 Central Avenue
Murray Hill, New Jersey 07974
PROXY
STATEMENT
GENERAL INFORMATION
We are furnishing this proxy statement to the shareholders of C. R. Bard, Inc. in connection with the solicitation by our Board
of Directors of proxies to be voted at the 2017 Annual Meeting of Shareholders (the “Annual Meeting”) referred to in the attached notice and at any adjournments of that meeting. The Annual Meeting will be held on Wednesday, April 19,
2017, at the Wyndham Hamilton Park Hotel and Conference Center, 175 Park Avenue, Florham Park, NJ 07932, at 10:00 a.m. We expect to mail this proxy statement and the accompanying proxy card or voting instruction form beginning on March 15, 2017
to each shareholder entitled to vote.
When used in this proxy statement, the terms “we”, “us”,
“our”, “the Company”, “Bard” and “C. R. Bard” refer to C. R. Bard, Inc. The terms “Board of Directors” and “Board” refer to the Board of Directors of C. R. Bard, Inc.
WHO IS ENTITLED TO VOTE?
All record holders of our common stock as of the close of business on February 27, 2017, which is the record date, are
entitled to vote. You are a “record holder” if your shares are held in your name. If your shares are held through a bank, broker or other nominee, your shares are held in “street name.” See the information below on instructing
your bank, broker or other nominee to vote your shares.
HOW DO I VOTE, IF I AM A RECORD HOLDER?
If you are a record holder, you may vote using any one of the following methods:
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•
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By mail
: You may vote by completing, signing and dating the enclosed proxy card and returning it in the
self-addressed envelope provided. You must sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as an officer of a corporation, executor or trustee), you must indicate your name and
title;
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•
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By telephone or over the Internet:
Follow the telephone or Internet voting instructions on your proxy
card or voting instruction form. If you vote by telephone or over the Internet, you need not return your proxy card; or
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•
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In Person:
Attend the Annual Meeting to vote by ballot.
|
HOW DO I HAVE MY SHARES VOTED IF THEY ARE HELD IN STREET NAME?
If your shares are held in street name, please refer to the voting instructions provided by your bank, broker or other nominee
in order to have your shares voted.
If you hold your shares in street name and you wish to vote your shares in person at
the Annual Meeting, you must obtain a valid proxy issued in your name from your bank, broker or other nominee.
CAN I ACCESS THE PROXY MATERIALS ON THE
INTERNET INSTEAD OF RECEIVING PAPER COPIES?
This proxy statement (along with a letter and notice to shareholders), the
2016 Annual Report to Shareholders and the Form
10-K
of C. R. Bard for 2016 (the “Proxy Materials”) are available for viewing at
www.edocumentview.com/bcr.
If you are a record holder, you can vote this proxy on the Internet at
www.envisionreports.com/bcr
. You may also enroll
in the electronic proxy delivery service at any time by going directly to
www.computershare-na.com/green
and following the instructions.
1
If you hold your shares in street name, please refer to the information provided
by your bank, broker or other nominee for instructions on how to elect to access future proxy materials on the Internet.
WHAT IS THE VOTING REQUIREMENT
TO ELECT THE DIRECTORS?
Our Restated Certificate of Incorporation provides for majority voting in uncontested
elections of directors. As a result, directors must be elected by the affirmative vote of a majority of the votes cast in an uncontested election. A majority of the votes cast means that the number of votes cast in favor of a director nominee must
exceed the number of votes cast against that director nominee. For purposes of determining the number of votes cast at the Annual Meeting, only those votes cast “For” or “Against” are included in the calculation of votes cast. In
the event that an incumbent director nominee fails to receive the vote required for election to the Board of Directors, that director nominee is required to promptly tender his or her resignation pursuant to the director resignation policy adopted
as part of our Corporate Governance Guidelines. See “Proposal No. 1 – Election of Director Nominees for a Term of One Year” below for further discussion regarding such a tendered resignation.
In a contested election, which is any election in which the number of nominees exceeds the number of directors to be elected,
our directors must be elected by a plurality of the votes cast.
HOW DO I VOTE IF I HOLD MY SHARES IN BARD’S 401(K) PLAN?
Participants in our 401(k) plan may direct the plan trustee how to vote the shares allocated to their accounts. The 401(k) plan
provides that the trustee will vote any shares for which the trustee does not receive voting instructions in the same proportion as the shares voted by the plan’s participants. To allow sufficient time for the trustee to vote your shares under
our 401(k) plan, your voting instructions must be received by 9:00 a.m. New York time on April 17, 2017.
WHAT HAPPENS IF I DO NOT GIVE SPECIFIC
VOTING INSTRUCTIONS?
Shareholders of Record.
If you are a shareholder of record and you:
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•
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Indicate when voting over the Internet or by telephone that you wish to vote as recommended by the Board; or
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•
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Sign and return a proxy card without giving specific voting instructions,
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then the persons named as proxies will vote your shares in the manner recommended by the Board on all matters presented in this
proxy statement and as the persons named as proxies may determine in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting. In the absence of such instructions from you, the persons named as proxies
will vote the shares represented by a signed and dated proxy card in the manner recommended by the Board.
Street Name
Holders.
If you hold your shares in street name (through a bank, broker or other nominee) and do not provide specific voting instructions, then, under the rules of the New York Stock Exchange, the bank, broker or other nominee may generally vote
on routine matters but cannot vote on
non-routine
matters.
If you do not provide voting instructions on
non-routine
matters, your shares will not be voted by your
bank, broker or other nominee.
This is referred to as a “broker
non-vote.”
WHAT ARE BROKER
NON-VOTES?
A broker
non-vote
occurs when a
bank or brokerage firm does not receive voting instructions from the beneficial owner and does not have the discretion to direct the voting of the shares. Absent voting instructions from the beneficial owner, a bank or brokerage firm may not vote on
any proposal that is considered
“non-routine.”
HOW CAN I CHANGE MY VOTE OR REVOKE MY PROXY?
Any record holder delivering a proxy has the power to change his, her or its vote and/or revoke his, her or its proxy at any
time before it is voted by:
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•
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giving notice of revocation in writing to our Secretary, at C. R. Bard, Inc., 730 Central Avenue,
Murray Hill, New Jersey 07974 (by mail or overnight delivery);
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2
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•
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executing and delivering to our Secretary or our transfer agent, Computershare Trust Company, a proxy card
relating to the same shares bearing a later date than the original proxy card; or
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•
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voting in person at the Annual Meeting.
|
Please note, however, that under the rules of the national stock exchanges, any holder of our common stock whose shares are
held in street name by a member brokerage firm may revoke his, her or its proxy and vote his, her or its shares in person at the Annual Meeting only in accordance with applicable rules and procedures of those exchanges, as employed by the street
name holder’s brokerage firm. In addition, if you hold your shares in street name, you must have a valid proxy from the record holder of the shares to vote in person at the Annual Meeting.
WHAT CONSTITUTES A QUORUM?
Under New Jersey law and our
by-laws,
the presence in person or by proxy of the holders
of a majority of the shares of our common stock issued and outstanding and entitled to vote at the Annual Meeting constitutes a quorum. On February 27, 2017, the record date for the determination of shareholders entitled to notice of and to
vote at the Annual Meeting, our outstanding voting securities consisted of 72,312,522 shares of common stock. Each share is entitled to one vote.
WHO
CAN ATTEND THE ANNUAL MEETING?
If you are a record holder as of the record date, you may attend the Annual Meeting and
must present the Admission Ticket attached to your proxy card. If you hold your shares in street name, you will need to provide proof of ownership from your bank, broker or other nominee.
HOW CAN I FIND VOTING RESULTS OF THE ANNUAL MEETING?
We will announce preliminary voting results at the Annual Meeting and file a Form
8-K
with the Securities and Exchange Commission, or the “SEC”, indicating final results.
HOW CAN I GET A COPY OF THE DOCUMENTS REFERRED TO IN
THIS PROXY STATEMENT?
This proxy statement refers to certain documents, including our annual report on Form
10-K
for the fiscal year ended December 31, 2016, that are available, free of charge, on the Investor Relations page of our website located at
www.crbard.com
. A copy of these documents and the related
exhibits is also available, free of charge, upon written request sent to C. R. Bard, Inc., 730 Central Avenue, Murray Hill, New Jersey 07974, Attention: Secretary.
WHO BEARS THE COST OF SOLICITING PROXIES?
We have retained Georgeson Shareholder Communications, Inc. to solicit proxies for a fee of $9,000, plus reasonable
out-of-pocket
expenses. Our officers and other employees may also solicit proxies. The cost of solicitation will be borne by the Company.
HOW DO I COMMUNICATE WITH BARD’S BOARD OF DIRECTORS?
Shareholders may communicate directly with our Board of Directors, the independent members of our Board of Directors or our
Audit Committee. The process for doing so is described on our website at
www.crbard.com
on the “Contact” page.
3
SECURITY OWNERSHIP OF MANAGEMENT
The table below contains information as of February 27, 2017 with respect to the beneficial ownership of our common stock
by each of the following individuals, in each case, based on information provided by these individuals:
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•
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directors and director nominees;
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•
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our Chief Executive Officer, Chief Financial Officer and the three other most highly compensated executive
officers during the last fiscal year, whom we collectively refer to as the “named executive officers”; and
|
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•
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all directors and executive officers as a group.
|
Unless otherwise noted in the footnotes following the table, the persons as to whom the information is given had sole voting
and investment power over the shares of our common stock shown as beneficially owned. The address of the executive officers and directors of the Company is c/o C. R. Bard, Inc., 730 Central Avenue, Murray Hill, New Jersey 07974.
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Directly or
Indirectly
owned as of
February 27,
2017
(1)(2)
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Shares of Common Stock
Beneficially Owned
|
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Name
|
|
|
Right to Acquire
Within 60 Days of
February 27,
2017
Under Options
|
|
Total Stock
– Based
Ownership
(1)(2)
|
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Percent of
Class
|
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David M. Barrett
|
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4,950
|
|
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–
|
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4,950
|
|
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*
|
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Jim C. Beasley
|
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3,117
|
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–
|
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3,117
|
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*
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Timothy P. Collins
|
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356
|
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64,206
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64,562
|
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*
|
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Robert M. Davis
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1,004
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–
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1,004
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*
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Herbert L. Henkel
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11,470
|
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–
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11,470
|
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*
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Christopher S. Holland
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899
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52,050
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52,949
|
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*
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John C. Kelly
|
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6,270
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1,200
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7,470
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*
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David F. Melcher
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2,109
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–
|
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2,109
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*
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Gail K. Naughton
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1,622
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–
|
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1,622
|
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*
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Timothy M. Ring
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11,129
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(3)
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170,166
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181,295
|
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*
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Tommy G. Thompson
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7,004
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3,100
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10,104
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*
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John H. Weiland
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5,976
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56,909
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62,885
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*
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Anthony Welters
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2,376
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(4)
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3,600
|
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5,976
|
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*
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Tony L. White
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14,001
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3,600
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17,601
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*
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All Directors and Executive Officers as a group (21 people)
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82,439
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508,520
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590,959
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*
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*
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Represents less than 1% of our outstanding common stock.
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(1)
|
Excludes phantom stock shares credited to the accounts of
non-employee
directors, which are paid in cash, under our Deferred Compensation Contract, Deferral of Directors’ Fees, as follows: David M. Barrett, 3,577; Herbert L. Henkel, 17,681; John C. Kelly, 4,957;
Tommy G. Thompson, 7,900; Anthony Welters, 20,294; and Tony L. White, 19,965. See “Director Compensation – Director Compensation Summary – Deferred Compensation Contract.” Also excludes share equivalent units
credited to the accounts of
non-employee
directors, which are paid in cash, under the Stock Equivalent Plan for Outside Directors of C. R. Bard, Inc., as follows: David M. Barrett, 4,929; Robert M. Davis,
817; Herbert L. Henkel, 12,421; John C. Kelly, 4,929; David F. Melcher, 1,230; Gail K. Naughton, 9,271; Tommy G. Thompson, 8,296; Anthony Welters, 17,563; and Tony L. White, 24,757.
Non-employee
directors do
not have the right to vote phantom stock shares or share equivalent units. See “Director Compensation – Stock Equivalent Plan for Outside Directors.”
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(2)
|
Excludes restricted stock units purchased under our Management Stock Purchase Program, as follows: Jim C.
Beasley, 18,972; Timothy P. Collins, 23,383; Christopher S. Holland, 22,760; Timothy M. Ring, 57,529; John H. Weiland, 37,129; and all executive officers (other than the named executive officers) as a group, 71,186. See “Executive Officer
Compensation – Nonqualified Deferred Compensation – MSPP.” Participants in the Management Stock Purchase Program do not have the right to vote restricted stock units. Also excludes
performance-
|
4
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contingent restricted stock units granted under our 2012 Long Term Incentive Plan, as follows: Jim C. Beasley, 3,263; Timothy P. Collins, 3,263; Christopher S. Holland, 3,263; Timothy M. Ring,
9,969; John H. Weiland, 5,767; and all executive officers (other than the named executive officers) as a group 20,350. See the narrative following the Summary Compensation Table, under the heading “Stock Awards.”
|
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(3)
|
Includes 802 shares owned by family members and as to which beneficial ownership is disclaimed by
Mr. Ring.
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(4)
|
Includes 767 shares held by a family trust, over which Mr. Welters has shared voting and investment
power but has no pecuniary interest.
|
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Under the federal securities laws, our directors, certain of our officers and our ten percent shareholders
are required to report to the SEC, and the New York Stock Exchange, or the “NYSE,” by specific dates, transactions and holdings in our common stock. Based on our review of these reports and other information provided by those persons, we
believe that during fiscal year 2016 all of these filing requirements were timely satisfied.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below indicates all persons who, to our knowledge, beneficially owned
more than 5% of our outstanding common stock as of February 27, 2017.
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Name and Address of Beneficial Owner
|
|
Number of Shares
of Common Stock
Beneficially Owned
|
|
Percent
of Class
(1)
|
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The Vanguard Group, Inc.
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7,676,278
|
(2)
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10.62%
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100 Vanguard Blvd.
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Malvern, PA 19355
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BlackRock, Inc.
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7,389,529
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(3)
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10.22%
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55 East 52
nd
Street
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New York, NY 10055
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State Street Corporation.
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3,704,298
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(4)
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5.12%
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State Street Financial Center
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One Lincoln Street
Boston, MA 02111
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(1)
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Percentage of class calculation made based on 72,312,522 shares outstanding as of February 27, 2017.
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(2)
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Reflects sole voting power with respect to 114,479 shares, shared voting power with respect to 17,479 shares,
shared dispositive power with respect to 132,593 shares and sole dispositive power with respect to 7,543,685 shares. Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd., each a wholly-owned subsidiary of The Vanguard Group,
Inc., beneficially own 94,014 shares and 59,044 shares, respectively. The foregoing information is based solely on Amendment No. 6 to the Schedule 13G filed by Vanguard Group, Inc. with the SEC on February 10, 2017 that reported beneficial
ownership as of December 31, 2016.
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(3)
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Reflects sole voting power with respect to 6,293,420 shares, sole dispositive power with respect to 7,389,529
shares, and shared voting and shared dispositive power with respect to 0 shares. The foregoing information is based solely on Amendment No. 5 to the Schedule 13G filed by BlackRock, Inc. with the SEC on February 8, 2017 that reported
beneficial ownership as of January 31, 2017.
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(4)
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Reflects sole voting power and sole dispositive power with respect to 0 shares, and shared voting power and
shared dispositive power with respect to 3,704,298 shares. The foregoing information is based solely on the Schedule 13G filed by State Street Corporation with the SEC on February 9, 2017 that reported beneficial ownership as of
December 31, 2016.
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5
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR”
PROPOSAL NO. 1 – THE ELECTION OF ALL DIRECTOR NOMINEES
PROPOSAL NO. 1 – ELECTION OF DIRECTOR NOMINEES FOR A TERM OF ONE YEAR
The Board has nominated 11 nominees for
re-election
as directors for a
one-year
term expiring at the 2018 Annual Meeting of Shareholders. We have no reason to believe that any nominee will be unable to serve. Upon election by the shareholders, directors serve for their elected term and
until their successors are elected and qualified. The 11 nominees each must receive a majority of the votes cast to be elected. A majority of the votes cast means that the number of votes cast “For” a director nominee must exceed the
number of votes cast “Against” that director nominee. For purposes of determining the number of votes cast at the Annual Meeting, only those votes cast “For” or “Against” are included in the calculation of votes cast.
Mr. Breslawsky retired from the Board of Directors in October 2016, after 20 years of service.
Under New Jersey law,
a director’s term extends until his or her successor is elected and qualified. This is referred to as the “director holdover rule.” As a result, an incumbent director who is not
re-elected
because he or she does not receive a majority of the votes cast would nonetheless continue in office because no successor has been elected. To address this situation, we adopted a policy, which is included in our Corporate Governance Guidelines,
that requires any incumbent director nominee who receives less than a majority of the votes cast in an uncontested election to tender his or her resignation promptly. Our Governance Committee will consider the resignation offer and recommend to the
Board of Directors whether to accept it. The Board of Directors will then act on the Governance Committee’s recommendation within 90 days following certification of the shareholders’ vote. In the event that the Board of Directors accepts
the resignation, the Board of Directors may decrease the number of directors, fill the vacancy or take other appropriate action. See “Corporate Governance – The Board of Directors and Committees of the
Board – Governance Committee – Director Resignation Policy.”
If the enclosed proxy card
or voting instruction form is properly executed and received in time for the Annual Meeting, it is the intention of the persons named as proxies to vote the shares represented thereby “For” or “Against” the persons nominated for
election as directors, or “Abstain” from voting, as instructed. If your shares are not registered in your name, please follow the directions you receive from the shareholder(s) of record (your bank, broker or other nominee), so that your
shares are voted in accordance with your intent. The ability of brokers to exercise discretionary voting in uncontested director elections has been eliminated, which means that your broker may not vote your shares for the election of directors at
the Annual Meeting unless you inform your broker how you want your shares voted. In the event that any nominee is unable to serve as a director, the accompanying proxy card will be voted for such other person or persons as may be nominated by our
Board of Directors.
Set forth below are the names, principal occupations and directorships with public companies, in each
case, for the past five years, and ages of the directors and any information relating to other positions held by them with us and other companies. Additionally, there is a brief discussion of each director’s experience, qualifications,
attributes and/or skills that led to the conclusion that such person should serve as a director. There are no family relationships between or among any of the directors, executive officers and nominees for director.
6
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David M. Barrett, M.D., Age 74
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Position, Principal Occupation and Business
Experience:
Emeritus President and Chief Executive Officer of
Lahey Clinic (a nonprofit, multispecialty healthcare organization). Dr. Barrett retired from his position as President and CEO of Lahey Clinic having served in this role from September 1999 to November 2010 and as a member of its Board of
Trustees and Chair of the Board of Governors from September 1999 to November 2010, having been Chair of the Department of Urology of the Mayo Clinic, Vice Chair of the Board of Governors, Trustee of the Mayo Foundation and a member of its Executive
Committee since 1975. He is Emeritus Anson L. Clark Professor of Urology at the Mayo Clinic Medical School and currently Clinical Professor of Surgery at Dartmouth Medical School. Dr. Barrett is an Emeritus Trustee of the Lahey Clinic and the
Mayo Clinic. Dr. Barrett served as a flight surgeon in the U.S. Air Force. Dr. Barrett was formerly a director of ProUroCare Medical, Inc.
Key Attributes, Experience and Skills:
Dr. Barrett has been nominated to serve an additional term as a director as a result of, among other things, the breadth of healthcare
experience that he brings to C. R. Bard. As President and Chief Executive Officer of Lahey Clinic, Dr. Barrett oversaw one of the largest healthcare systems in New England. He also currently serves on the executive and compensation
committees and as chair of the governance committee of the CommonFund, an institutional investment firm that works with the nonprofit and pension investment communities. Dr. Barrett also serves as a director of AdvantEdge Health Solutions, a
privately-held medical billing company. In addition, before joining Lahey Clinic in September 1999, he had a distinguished career as a physician, teacher and administrator at the Mayo Clinic. Dr. Barrett is an authority on urologic oncology,
urinary incontinence, bladder reconstruction and genitourinary prostheses. He is the former president of the Urodynamic Society, the American Board of Urology and the American Association of Genitourinary Surgeons. He has served on the FDA New
Products Panel for Gastroenterology and Urology. Dr. Barrett received his B.A. from Albion College and his M.D. from Wayne State University School of Medicine.
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Director
Since:
2009
Board Committees:
Audit, Regulatory
Compliance and
Science and
Technology
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7
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Robert M. Davis, Age 50
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Position, Principal Occupation and Business
Experience:
Executive Vice President and Chief Financial Officer
of Merck & Co., Inc. (“Merck”) (global health care company) since April 2014. Prior to that, Mr. Davis served as Corporate Vice President and President of Baxter Renal Division from June 2010 to October 2010 and Corporate
Vice President and President of Baxter Medical Products from October 2010 to April 2014, having been Corporate Vice President and Chief Financial Officer of Baxter Healthcare from May 2006 to June 2010, and Treasurer of Baxter Healthcare from
November 2004 to May 2006. He also served as Director of Corporate Financial Planning of Eli Lilly and Company from 2002 to 2004, and as Assistant Treasurer and various financial positions at Eli Lilly and Company from 1990 to 2002.
Key Attributes, Experience and Skills:
Mr. Davis has been nominated to serve as a director as a result of,
among other things, his significant experience in management, strategy, business development, finance, accounting for public companies and technical operations for global companies. This experience includes his service as the Chief Financial Officer
of Merck, as well as his prior experience gained in a variety of management and finance roles at Baxter International. He holds both a B.S. in business from Miami University in Ohio, as well as an M.B.A. and a J.D. from Northwestern University in
Chicago.
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Director
Since:
2015
Board Committees:
Audit, Finance and Science and
Technology
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Herbert L. Henkel, Age 68
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Position, Principal Occupation and Business
Experience:
Retired Chairman and Chief Executive Officer of
Ingersoll-Rand Company (a global diversified industrial company). Mr. Henkel served as Chairman from February 2010 to June 2010, having been Chairman and Chief Executive Officer from May 2000 to February 2010, President and Chief Executive
Officer from October 1999 to May 2000 and President and Chief Operating Officer from April to October 1999. Prior to that, Mr. Henkel served as President and Chief Operating Officer of Textron, Inc. from 1998 to 1999, having been President of
Textron Industrial Products from 1995 to 1998. He is also a director of 3M Company, Allstate Corporation and Herc Holdings Inc. Mr. Henkel was formerly a director of Visteon Corporation. Mr. Henkel served as lead director from
January 1, 2011 until June 30, 2014.
Key Attributes,
Experience and Skills:
Mr. Henkel has been nominated to serve
an additional term as a director as a result of the breadth and significance of his experience in management, sales and marketing, as well as research and technical operations for global companies in a variety of industries. This experience includes
his service as the Chairman and Chief Executive Officer of Ingersoll-Rand Company, a global diversified industrial company, as well as his prior service on C. R. Bard’s Board and experience on the audit, governance and nominating committees of
other large public companies. He holds both a B.S. and an M.S. in engineering from Polytechnic University of New York, as well as an M.B.A. from Pace University, New York.
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Director
Since:
2002
Board Committees:
Compensation, Executive, Finance
and Governance
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8
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John C. Kelly, Age 74
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Position, Principal Occupation and Business
Experience:
Former Senior Vice President, Finance of Pfizer Inc.
(pharmaceutical products). Mr. Kelly served as Senior Vice President, Finance of Pfizer Inc. from October 2009 to February 2010, having been Vice President and Controller of Wyeth (pharmaceutical and healthcare products) since March 2008.
Mr. Kelly held various other positions, including Vice President, Finance Operations, since joining Wyeth in 2002. He is also a director of The Medicines Company.
Key Attributes, Experience and Skills:
Mr. Kelly has been nominated to serve an additional term as a
director as a result of over 45 years of experience in accounting and finance, as well as his background in healthcare. Prior to joining Wyeth (and then Pfizer), where he handled a wide range of assignments in finance, he spent more than 35 years in
public accounting at Arthur Andersen in various leadership capacities, including as the partner in charge of audit and business consulting practices in the New York metropolitan area. He is a certified public accountant and was an elected member of
the Council of the American Institute of Certified Public Accountants. He earned both his B.S. in business administration and M.B.A. in international finance from Seton Hall University.
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Director
Since:
2009
Board Committees:
Audit and Finance
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David F. Melcher, Age 62
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Position, Principal Occupation and Business
Experience:
President and Chief Executive Officer of Aerospace
Industries Association (a trade association representing major aerospace and defense manufacturers and suppliers) since June 2015. Prior to that, Lieutenant General (Ret.) Melcher served as Chief Executive Officer, President and member of the Board
of Directors of Exelis Inc. (a diversified, global aerospace defense, information and technology services company) from November 2011 to May 2015, having been President of ITT Defense & Information Solutions from December 2008 until the
spin-off
of Exelis Inc. from ITT in October 2011. Mr. Melcher also served as Vice President of Strategy and Business Development for ITT Defense & Information Solutions from August 2008 to December
2008, following 32 years of distinguished service in the U.S. Army. He currently serves on the Executive Committee and Board of Governors of the Aerospace Industries Association.
Key Attributes, Experience and Skills:
Mr. Melcher has been nominated to serve an additional term as a
director as a result of his significant leadership in program management, strategy development and finance, as well as extensive international strategic business, budget and policymaking experience gained during more than 25 years of leadership
positions in the defense community, including his role as Chief Executive Officer and President of Exelis Inc. He has also demonstrated leadership and management experience with the U.S. Army, having served as the Army’s Military Deputy for
Budget and Deputy Chief of Staff for Programs in the Pentagon, and as Commander of the Corps of Engineers, Southwestern Division in Dallas, Texas. He is a 2014 recipient of the Association of the United States Army John W. Dixon award for
contributions to the Defense Industry. Mr. Melcher holds a bachelor’s degree in civil engineering from the U.S. Military Academy at West Point and two Masters degrees, including one in business administration from Harvard University and
another in public administration from Shippensburg University.
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Director
Since:
2014
Board Committees:
Audit, Compensation
and Finance
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9
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Gail K. Naughton, Ph.D., Age 61
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Position, Principal Occupation and Business
Experience:
Chairman and Chief Executive Officer of Histogen, Inc.
(regenerative medicine). Dr. Naughton has served as the Chairman and Chief Executive Officer of Histogen, Inc. since June 2007, having been Vice Chairman of Advanced Tissue Sciences, Inc. (ATS) (human-based tissue engineering) from March 2002
to October 2002, President from August 2000 to March 2002, President and Chief Operating Officer from 1995 to 2000 and
Co-Founder
and Director since inception in 1991. Dr. Naughton also served as Dean of
the College of Business Administration at San Diego State University from August 2002 to June 2011. She is also a director of Cytori Therapeutics, Inc.
Key Attributes, Experience and Skills:
Dr. Naughton has been nominated to serve an additional term as a director because of the breadth of her life sciences industry knowledge
and experience, including her experience as Chairman and Chief Executive Officer of Histogen, Inc. Dr. Naughton was the first woman to be awarded the National Inventor of the Year award by The Intellectual Property Owners Association. She has
conducted extensive research, authored numerous scientific publications and holds more than 95 U.S. and foreign patents. Dr. Naughton has also built a distinguished academic career, including serving as the Dean of the College of Business
Administration, San Diego State University and on the boards of several academic institutions,
non-profit
organizations and foundations. Dr. Naughton earned a B.S. from St. Francis College, Brooklyn,
New York, and both an M.S. in Histology and a Ph.D. in Hematology from New York University Medical Center. She also holds an M.B.A. in Executive Management from the Anderson School at the University of California, Los Angeles.
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Director
Since:
2004
Board Committees:
Governance,
Regulatory
Compliance and
Science and
Technology
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Timothy M. Ring, Age 59
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Position, Principal Occupation and Business
Experience:
Chairman and Chief Executive Officer of C. R. Bard.
Mr. Ring has served as Chairman and Chief Executive Officer of the Company since August 2003, having been Group President from April 1997 to August 2003, Group Vice President from December 1993 to April 1997 and Vice President-Human Resources
from June 1992 to December 1993. He is also a director of Quest Diagnostics Incorporated.
Key Attributes, Experience and Skills:
Mr. Ring has been nominated to serve an additional term as a director due to his prior service on C. R. Bard’s Board and more than 20
years of experience in various leadership capacities at C. R. Bard, including as the Company’s Chairman and Chief Executive Officer. He was previously responsible for the Company’s global Vascular and Specialty Access businesses.
Mr. Ring has been instrumental in developing and implementing C. R. Bard’s current strategic direction. Prior to joining the Company, he gained valuable experience in leadership roles at Abbott Laboratories in both human resources and
general management. Mr. Ring is a Trustee of the Foundation of The University of Medicine & Dentistry of New Jersey. He holds a B.S. in Industrial and Labor Relations from Cornell University.
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Director
Since:
2003
Board Committees:
Executive
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10
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Tommy G. Thompson, Age 75
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Position, Principal Occupation and Business
Experience:
Former Secretary of the U.S. Department of Health and
Human Services. Mr. Thompson served as Secretary of the U.S. Department of Health and Human Services from January 2001 to January 2005, having been Governor of Wisconsin from November 1986 to January 2001. He is also Chairman and Chief
Executive Officer of Thompson Holdings (a consulting firm) since 2012. Mr. Thompson also serves as an adjunct senior advisor at the Akin Gump Strauss Hauer & Feld LLP law firm since January 2017, having been a partner of the law firm
from March 2005 to January 2012. He served as Independent Chairman of the Deloitte Center for Health Solutions from March 2005 to May 2009. Mr. Thompson was Chairman of the Board of Logistics Health, Inc. from January 2011 to June 2011, having
been President of Logistics Health, Inc. from February 2005 to January 2011. He is also a director of Centene Corporation, Physicians Realty Trust, United Therapeutics Corporation and Therapeutics MD, Inc. Mr. Thompson was formerly a director
of Cancer Genetics, Inc., CareView Communications, Inc., Cytori Therapeutics, Inc., PURE Bioscience, SpectraScience, Inc. and Tyme Technologies, Inc.
Key Attributes, Experience and Skills:
Mr. Thompson has been nominated to serve an additional term as a director as a result of his significant experience in the healthcare
industry, both as a public official and in the private sector. As Secretary of the U.S. Department of Health and Human Services, he oversaw the principal public agency for protecting the health of Americans and providing essential human services
through its eleven divisions, including the U.S. Food and Drug Administration, the Office of Inspector General, the Center for Medicare and Medicaid Services, and the Centers for Disease Control and Prevention. His experience also includes his prior
service as Chairman of the Board and President of Logistics Health, Inc., which provides third party administrative support to public and private employers requiring occupational medical services. Mr. Thompson is a recipient of the prestigious
Horatio Alger Award. He is also a member of the District of Columbia and Wisconsin bars. Mr. Thompson received both his B.S. and his J.D. from the University of Wisconsin-Madison.
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Director
Since:
2005
Board Committees:
Governance,
Regulatory
Compliance and
Science and
Technology
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11
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John H. Weiland, Age 61
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Position, Principal Occupation and Business
Experience:
Vice Chairman, President and Chief Operating Officer
of C. R. Bard. Mr. Weiland was elected as Vice Chairman in August 2016 and has served as President and Chief Operating Officer of the Company since August 2003, having been Group President from April 1997 to August 2003 and Group Vice President
from March 1996 to April 1997. Mr. Weiland joined C. R. Bard from Dentsply International, where he was a Senior Vice President, until March 1996. He is also a director of West Pharmaceutical Services, Inc.
Key Attributes, Experience and Skills:
Mr. Weiland has been nominated to serve an additional term as a
director as a result of his extensive knowledge and experience in the medical device industry, his prior service on C. R. Bard’s Board, and more than 20 years of experience in various leadership capacities at the Company. Mr. Weiland
joined C. R. Bard in 1996 as Group Vice President and was promoted to Group President in 1997, with responsibility for C. R. Bard’s Surgical, Urological and Endoscopic Technology businesses, and its worldwide manufacturing operations. He was
promoted to President and Chief Operating Officer in August 2003. Mr. Weiland also held senior management positions at Dentsply International, American Hospital Supply and Baxter Healthcare. In 1987, he was named a White House Fellow and served
as a Special Assistant to two members of President Reagan’s cabinet. Mr. Weiland is a 2012 recipient of the prestigious Horatio Alger Award and serves as a director of the Horatio Alger Association. Mr. Weiland received a B.S. in
Biology from DeSales University and an M.B.A. from New York University.
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Director
Since:
2005
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12
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Anthony Welters, Age 62
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Position, Principal Occupation and Business
Experience:
Executive Chairman of BlackIvy Group, LLC (a private
investment company focused on investments in
Sub-Saharan
Africa) since January 2013. Mr. Welters served as Senior Advisor to the Chief Executive Officer of UnitedHealth Group, Inc. (a diversified health
and well-being company) from January 2013 to January 2016, having served as Executive Vice President of UnitedHealth Group, Inc. from November 2006 to January 2013 and as a Member of the Office of the Chief Executive Officer from January 2011 to
January 2013. He also served as President of the Public and Senior Markets Group from September 2007 to December 2010. Mr. Welters has also served as President and Chief Executive Officer of AmeriChoice Corporation, a UnitedHealth Group
Company, and Chairman and Chief Executive Officer of AmeriChoice Corporation and its predecessor companies from 1989 until its acquisition by UnitedHealth Group. He is also a director of Loews Corporation and The Carlyle Group.
Key Attributes, Experience and Skills:
Mr. Welters has been nominated to serve an additional term as a
director as a result of over 25 years of experience in the healthcare industry and his prior service on C. R. Bard’s Board. This experience includes his service as Executive Vice President of UnitedHealth Group, which designs products,
provides services and applies technologies designed to improve access to health and well-being services. He is a recipient of the prestigious Horatio Alger Award and serves as a director of the Horatio Alger Association. He is also Emeritus Chairman
of the Board of Trustees for the Morehouse School of Medicine in Atlanta. Mr. Welters holds a B.A. from Manhattanville College and a J.D. from New York University School of Law.
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Director
Since:
1999
Board Committees:
Compensation,
Governance and
Regulatory
Compliance
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Tony L. White, Age 70
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Position, Principal Occupation and Business
Experience:
Retired Chairman, President and Chief Executive
Officer of Applied Biosystems, Inc. (formerly Applera Corporation). Mr. White served as Chairman, President and Chief Executive Officer of Applied Biosystems, Inc. from September 1995 through November 2008. He is also a director of CVS Health
Corp. and Ingersoll-Rand Company. Mr. White was appointed as lead director effective July 2014.
Key Attributes, Experience and Skills:
Mr. White has been nominated to serve an additional term as a director as a result of his significant experience in the life sciences
industry. His experience includes his service as Chairman, President and Chief Executive Officer of Applied Biosystems, Inc., a life sciences and products company, as well as his prior service on C. R. Bard’s Board and experience on both the
executive and compensation committees of other large public companies. He also held a number of management positions both in the United States and internationally during a
26-year
career at Baxter
International, Inc. Mr. White received his B.A. from Western Carolina University.
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Director
Since:
1996
Board Committees:
Compensation,
Executive and
Governance
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH NOMINEE
|
13
Retired Director
The Company wishes to acknowledge with gratitude Marc C. Breslawsky’s many years of service on our Board.
Mr. Breslawsky retired from the Board of Directors in October 2016.
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Marc C. Breslawsky
Position,
Principal Occupation and Business Experience:
Retired Chairman and
Chief Executive Officer of Imagistics International Inc. (formerly Pitney Bowes Office Systems) (document imaging solutions). Mr. Breslawsky served as Chairman and Chief Executive Officer of Imagistics International Inc. from December 2001 to
December 2005, having been President and Chief Operating Officer of Pitney Bowes Inc. from 1996 to 2001, Vice Chairman from 1994 to 1996 and President of Pitney Bowes Office Systems from 1990 to 1994. Mr. Breslawsky was Chair of the Finance
Committee and a member of the Audit Committee and Science and Technology Committee until his retirement.
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14
CORPORATE GOVERNANCE
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Governance Materials
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The following materials relating to corporate governance at C. R.
Bard are available on our website at
www.crbard.com/About-BARD/Corporate-Governance.html
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• Restated Certificate of Incorporation of C. R. Bard, Inc.
• By-Laws
of C. R. Bard, Inc.
• Corporate Governance Guidelines
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• Business Ethics Policy
• Code of Ethics for Senior Financial Officers
• Charters of Audit, Compensation, Governance and Regulatory
Compliance Committees
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Director Independence
The NYSE listing standards require that a majority of our Board of Directors be independent. No director qualifies as
independent unless our Board affirmatively determines that the director has no material relationship with us, either directly or as a partner, shareholder or officer of an organization that has a relationship with us. In accordance with the NYSE
listing standards, our Board has adopted Corporate Governance Guidelines. The Corporate Governance Guidelines contain categorical standards for director independence. These standards provide that the following relationships will not be considered a
material relationship that would impair a director’s independence:
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A director who is a director, an executive officer or an employee, or whose immediate family member is a
director, an executive officer or an employee, of a company that makes payments to, or receives payments from, the Company for goods or services in an amount which, in any single fiscal year, is less than the greater of $1,000,000 or 2% of that
other company’s consolidated gross revenues; or
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A director who serves, or whose immediate family member serves, as an executive officer, director, trustee or
employee of a charitable organization and our discretionary charitable contributions to the organization are less than the greater of $1,000,000 or 2% of that organization’s consolidated gross revenues.
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The Board of Directors has determined that all of the current members of the Board, other than Messrs. Ring and Weiland, are
independent under the NYSE listing standards and satisfy our categorical standards. In making this determination, the Board considered ordinary course,
arm’s-length
commercial transactions with companies
for which Dr. Barrett and Messrs. Breslawsky, Davis, Henkel and White or an immediate family member served as a director, an executive officer, a trustee or an employee during 2016. In each case, the amount of the transactions with these
companies was below the thresholds set forth in the NYSE listing standards and in the categorical standards in our Corporate Governance Guidelines.
In addition, in accordance with the NYSE listing standards and SEC rules, where applicable, the Board of Directors has
determined that the Audit Committee, Compensation Committee and Governance Committee are composed entirely of independent directors. The Board of Directors has also determined that each member of the Audit Committee is independent under the
provisions of the Sarbanes-Oxley Act of 2002 and the rules of the SEC thereunder applicable to audit committee independence. In addition, the Board of Directors considered the NYSE enhanced independence standards applicable to members of the
Compensation Committee and has determined that each member of the Compensation Committee is independent.
We have also
adopted a Code of Ethics for Senior Financial Officers of C. R. Bard, Inc.
The Board of Directors and Committees of the Board
The Board of Directors held six meetings in 2016. During 2016, each director attended more than 75% of all meetings of
the Board of Directors and Committees on which he or she served.
15
Director Attendance at Annual Meetings
We encourage all of the directors to attend the annual meeting of shareholders. To that end, and to the extent reasonably
practicable, we regularly schedule a meeting of the Board of Directors on the same day as the annual meeting of shareholders. Each member of the Board of Directors attended the 2016 Annual Meeting of Shareholders.
Board Committees
The Board of Directors had the following standing committees in 2016: an Audit Committee, a Compensation Committee, a Finance
Committee, a Governance Committee, a Regulatory Compliance Committee, a Science and Technology Committee and an Executive Committee. The following table names the directors and identifies the Committees on which they presently serve:
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Board Member
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Audit
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Compensation
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Finance
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Governance
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Regulatory
Compliance
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Science &
Technology
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Executive
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David M. Barrett*
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Marc C. Breslawsky*
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Chair**
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Robert M. Davis*
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Herbert L. Henkel
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Chair
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John C. Kelly*
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Chair
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David F. Melcher*
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Gail K. Naughton, Ph. D.
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Chair
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Timothy M. Ring
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Chair
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Tommy G. Thompson
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John H. Weiland
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Anthony Welters
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Chair
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Tony L. White***
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Chair
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Number of Meetings in 2016
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7
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4
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4
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5
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4
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4
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*
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Audit Committee designated Financial Expert
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Mr. Breslawsky retired from the Board in October 2016. He served as the Chair of the Finance Committee
from January through October 2016. Mr. Kelly was appointed the Interim Chair of the Finance Committee in December 2016.
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Audit Committee
In addition to the full Audit Committee meetings noted above, as chair of and as delegated by the Audit Committee in 2016,
Mr. Kelly also conducted interim meetings with management to review our quarterly earnings press releases and filings relating to certain of our benefit plans. Other members of the Audit Committee also participate in these interim meetings from
time-to-time.
The Audit Committee has been established in accordance with Section 3(a)(58)(A) of the Securities and Exchange Act of 1934, as amended (the
“Exchange Act”).
The principal functions of the Audit Committee are to:
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appoint, determine the compensation of, terminate and oversee the work of our independent registered public
accounting firm;
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approve in advance all audit and
non-audit
services provided by our
independent registered public accounting firm;
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review with management and our independent registered public accounting firm, prior to public dissemination,
our earnings press releases and annual and quarterly financial statements, including disclosure contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations;
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review, in consultation with our independent registered public accounting firm, management and our internal
auditors, our financial reporting processes, including internal controls;
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produce a report for inclusion in the annual proxy statement in accordance with applicable rules and
regulations; and
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report regularly to the full Board of Directors, including with respect to any issues that arise regarding the
quality or integrity of our financial statements, the performance and independence of our independent registered public accounting firm or the performance of our internal audit function.
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Compensation Committee
For 2016, the Board of Directors determined that each member of the Compensation Committee met the enhanced independence
standards under the rules of the NYSE, Rule
16b-3
under the Exchange Act and Section 162(m) of the Internal Revenue Code, respectively. Except for the standard compensation received in connection with
service on the Board of Directors and its Committees, the members of the Compensation Committee are not eligible to participate in any of our compensation plans or programs that they administer.
The principal functions of the Compensation Committee are to:
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establish and review our overall compensation philosophy;
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review and approve corporate goals and objectives relevant to the CEO’s and other executive
officers’ compensation;
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evaluate the performance of the CEO and, with the assistance of the CEO, the performance of our other
executive officers, and determine and approve the annual salary, bonus, equity-based incentives and other benefits of the CEO and our other executive officers;
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periodically review compensation programs and policies;
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review, monitor and approve equity-based compensation plans;
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produce a report for inclusion in the annual proxy statement in accordance with applicable rules and
regulations;
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assess the independence of Compensation Committee advisors; and
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report regularly to the full Board of Directors on compensation matters.
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Grants of equity compensation to new hires and eligible employees (other than corporate officers or division heads) made
outside of the annual equity grant cycle are either approved by the Compensation Committee directly, or by management pursuant to a delegation of authority within
pre-determined
value targets approved by the
Compensation Committee each year.
Executive Officer Compensation Process
The Compensation Committee generally fulfills certain of its key responsibilities at periodic meetings throughout the year. At
its February meeting, the Committee typically approves the amount of the annual incentive bonus awards, if any, for the prior plan year under our Executive Bonus Plan, evaluates the CEO’s performance for the past year and establishes his goals
for the current year, approves increases to base salaries for senior executives for the current year and establishes the performance targets for the current plan year under our Executive Bonus Plan. At its December meeting, the Committee approves
annual equity awards under our 2012 Long Term Incentive Plan and reviews the budget for merit-based increases in base salaries that are made early in the following year. The Compensation Committee has the authority to select and/or retain
compensation consultants to assist in the evaluation of executive compensation. To obtain access to independent compensation data, analysis and advice, an independent compensation consulting firm, Pearl Meyer, was retained in 2016 by the
Compensation Committee. A representative of the consultant attends Compensation Committee meetings as necessary. The principal projects assigned to the consultant include evaluation of the composition of the peer group of companies, evaluation of
levels of executive compensation as compared to general market
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compensation data and the peer companies’ compensation data, evaluation of proposed compensation programs or changes to existing programs, quarterly
say-on-pay
and compensation analyses and an annual
pay-for-performance
analysis. Pearl Meyer does not provide any other services
to the Company and works with the Company’s management only on matters for which the Compensation Committee is responsible. The Compensation Committee is required to consider all factors relevant to a compensation consultant’s independence
from management. The Compensation Committee has determined that the engagement of Pearl Meyer does not raise any independence, conflict of interest or similar concerns.
In making its executive compensation decisions, the Compensation Committee also receives recommendations from the CEO for all
executive officers other than himself, as discussed in more detail in the Compensation Discussion and Analysis below. The CEO considers the compensation consultant’s reports in order to make base salary, annual bonus target and long-term
incentive recommendations for the other named executive officers. He also regularly attends Compensation Committee meetings, although he is not present when the Committee discusses his compensation.
Although the Compensation Committee believes that input from the consultant and management provides it with a useful
perspective, the Committee makes the final decisions as to the compensation programs and levels for all executive officers. The Compensation Committee has authority under its charter to delegate its responsibilities to a subcommittee of the
Committee, but did not do so in 2016.
Compensation Committee Interlocks and Insider Participation
None of the directors on the Compensation Committee is or was formerly an officer or employee of C. R. Bard or had
any relationship or related person transaction requiring disclosure under the rules of the SEC. None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more of its executive
officers serving as a member of our Compensation Committee. In addition, none of our executive officers serves as a member of the compensation committee of any entity that has one or more of its executive officers serving as a member of our Board of
Directors.
Governance Committee
The principal functions of the Governance Committee, which also performs the nominating committee role, are to:
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identify individuals qualified to become directors and select, or recommend that the Board of Directors
select, the candidates for director to be elected by the Board or by the shareholders at an annual or special meeting;
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advise and make recommendations to the Board on all matters concerning Board procedures and directorship
practices;
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take a leadership role in shaping our corporate governance; and
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consider and make recommendations to the Board of Directors regarding directors’ compensation and
benefits.
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Director Nomination Process
In considering possible candidates for director, the Governance Committee takes into account all factors it considers
appropriate, which may include strength of character, mature judgment, career specialization, relevant technical skills, diversity and the extent to which the candidate would fill a present need on the Board of Directors. In addition, the Governance
Committee seeks candidates who contribute knowledge, experience and skills in at least one of the following core competencies in order to promote a Board that, as a whole, possesses a good balance in these core competencies: accounting and finance,
business judgment, management, industry knowledge, international markets, leadership and strategy/vision. In considering candidates for the Board, the Governance Committee considers the entirety of each candidate’s credentials and believes
that, at a minimum, each nominee should satisfy the following criteria: highest character and integrity; experience and understanding of strategy and policy-setting; reputation for working constructively with others; sufficient time to devote to our
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Board matters; and no conflict of interest that would interfere with performance as a director. The Governance Committee also takes into account the core competencies of incumbent directors with
a particular focus on their individual professional backgrounds, with the goal of ensuring diversity in the skill sets and applicable professional experience of directors, while promoting balanced perspectives of the Board as a whole.
In the case of incumbent directors, the Governance Committee considers these directors’ overall service to us during their
term, including attendance at meetings, level of participation and quality of performance. In the case of new director candidates, the Governance Committee compiles a list of potential candidates, but may also engage, if it deems appropriate, a
professional search firm to assist in identifying potential candidates. The Governance Committee then meets to discuss and consider candidates’ qualifications and independence and solicits input from other directors. One or more of the
directors will discuss the position with those prospective candidates who appear likely to be able to fill a significant need of the Board of Directors and satisfy the criteria described above. If there appears to be sufficient interest, an
in-person
meeting will be arranged. If the Governance Committee, based on the results of these contacts, believes it has identified a viable candidate, it will discuss the matter with the full Board of Directors. In
2016, the Board conducted a new peer evaluation process specifically to seek feedback from each director on each other director on a number of factors, including personal interactions, engagement, skills and performance. Our Board views the self-
and peer evaluation processes as an integral part of its commitment to cultivating excellence and measuring fulfillment of its duties.
The Governance Committee will consider all properly submitted candidates recommended by shareholders for Board membership. The
same identifying and evaluating procedures apply to all candidates for director, whether submitted by shareholders or otherwise. Our Corporate Governance Guidelines (available on our website at
www.crbard.com/About-Bard/Corporate-Governance.html
) set forth the policy regarding the consideration of all properly submitted candidates recommended by shareholders as well as candidates recommended by current Board members and others.
Any shareholder wishing to recommend a director candidate for consideration for nomination by the Governance Committee or for
inclusion in our proxy statement pursuant to the proxy access
by-law
must provide written notice to C. R. Bard, Inc., 730 Central Avenue, Murray Hill, New Jersey 07974, Attention: Secretary and satisfy the
other requirements as set forth in our
by-laws.
The written notice must include, among other things, the candidate’s name, biographical data and qualifications and a written consent from the candidate
agreeing to be named as a nominee and to serve as a director if nominated and elected.
Information regarding procedures
for the shareholder submission of director nominations to be considered at our next Annual Meeting may be found in “Corporate Governance – Proxy Access” and “Proposals of Shareholders and Nomination of Directors”
below.
Director Resignation Policy
Directors must be elected by the affirmative vote of a majority of the votes cast in an uncontested election. Under New Jersey
law, a director’s term extends until his or her successor is elected and qualified. This is referred to as the “director holdover rule.” Consequently, an incumbent director who is not
re-elected
because he or she does not receive a majority of the votes cast would nonetheless continue in office because no successor has been elected. To address this situation, we adopted a policy, which is included in our Corporate Governance Guidelines,
that requires any incumbent director nominee who receives less than a majority of the votes cast in an uncontested election to tender his or her resignation promptly. Our Governance Committee will consider the resignation offer and recommend to the
Board of Directors whether to accept it. In making their determinations, the Governance Committee and the Board may consider any factors or other information that they consider appropriate and relevant. Thereafter, the Board of Directors will
promptly disclose its decision whether to accept the director’s resignation offer (and the reasons for rejecting the resignation offer, if applicable) in a press release or filing with the SEC. The Board will then act on the Governance
Committee’s recommendation within 90 days following certification of the shareholders’ vote, and in the event that the Board of Directors accepts the resignation, the Board may decrease the number of directors, fill the vacancy, or take
other appropriate action.
Any director who tenders his or her resignation pursuant to the policy will not participate in
the Governance Committee’s recommendation or Board of Directors action regarding whether to accept the
19
resignation offer. However, if each member of the Governance Committee did not receive a majority vote at the same election, then the remaining independent directors who did receive a majority
vote will consider the resignation offers to determine whether to accept them. A director whose resignation is not accepted by the Board will continue to serve until the next annual meeting or until his or her earlier resignation or removal.
Director Compensation Process
The Governance Committee typically conducts an analysis of director compensation each year at its meeting held in October. The
Governance Committee reviews survey data that is compiled by management from several independent sources in an effort to compare the amount and types of compensation offered by us against that of other companies and establishes an overall aggregate
range of targeted compensation for
non-employee
directors. The survey data includes information from companies in healthcare and other industries. Among other factors, the Governance Committee considers the
aggregate value of all forms of director compensation and the mix of compensation provided in the form of cash versus
non-cash
compensation, such as equity awards. In general, changes in director compensation
are made by the Board of Directors upon the recommendation of the Governance Committee. The Governance Committee has discretion, under our 2005 Directors’ Stock Award Plan, to make stock or option awards. A description of the various elements
of compensation provided to
non-employee
directors is set forth below under the heading “Director Compensation.” Directors who are also our employees do not receive additional compensation for their
services as directors of the Company. The Governance Committee has authority under its charter to delegate its responsibilities to a subcommittee, but did not do so in 2016.
Leadership Structure
Our Chief Executive Officer, Mr. Ring, also serves as the Chairman of the Board of Directors. The Board of Directors
believes that the decision as to who should serve as Chairman, and whether that office should be combined with the Chief Executive Officer role, belongs to the Board of Directors. Our directors possess significant experience and are in the best
position to assess the structure of the Board of Directors and its Committees, which includes matching the capabilities and expertise of each individual to their roles. Furthermore, the Board’s administration of its risk oversight function has
not specifically affected the Board’s leadership structure. The Board also believes in the importance of maintaining a strongly independent Board of Directors. The Board of Directors has determined that the current governance structure promotes
a cohesive, strong and consistent vision and strategy for the Company and that this structure ensures independent oversight and is in the best interests of shareholders.
The Board of Directors believes that Mr. Ring is best-positioned, as the person responsible for the
day-to-day
operations of the business, to set the agenda and to identify and lead strategic discussions for the Company. The Board also believes that it is important to employ
certain safeguards to ensure that the Board of Directors fulfills its duty to shareholders and protects the interests of our shareholders. Accordingly, the Corporate Governance Guidelines require that the Board make its own determination of what
leadership structure works best for the Company and retain the ability to separate the roles of Chief Executive Officer and Chairman of the Board. The Board annually reviews the designation and appointment of the Lead Director and considers the
leadership structure.
Lead
Director
In conjunction with the Board of Directors, the Governance Committee annually considers the appointment
of an independent lead director if the position of Chairman of the Board is held by the CEO or another
non-independent
director. In order to ensure that the independent directors continue to play a leading
role in the Company’s governance, the Board of Directors established the position of a lead director commencing in January 2011. At the June 2016 meeting of the Board of Directors, Mr. White was elected by the independent directors to
serve a third
one-year
term as lead director.
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Lead Director Responsibilities and Term Limits
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Board Meetings and Executive Sessions
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Preside at all meetings of the Board of Directors at which the Chairman is not present, including executive sessions of the independent and nonmanagement directors; and
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Call special meetings of the independent directors and/or
nonmanagement directors as needed
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Communication with Management
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Serve as the primary liaison between the Chairman and the independent directors;
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Counsel the CEO on the issues of interest/concern to directors
and encourage all directors to engage the CEO with their interests and concerns; and
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Monitor information delivered by management to the Board of
Directors and provide input, as appropriate, as to the quantity, quality and timeliness of such information that is necessary for the directors to effectively and responsibly perform their duties
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Agendas
and Meeting Schedules
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Approve meeting agendas for the Board of Directors; and
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Approve meeting schedules to assure that directors can perform
their duties responsibly and that there is sufficient time for discussion of all agenda items
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Chair and
CEO Performance
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Lead the Board in all deliberations involving CEO’s employment, including hiring, contract negotiations, performance evaluations and dismissal
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Term
Limits
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Three consecutive,
one-year
terms
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Independent Committee Chairs
The Board of Directors has also appointed an independent
(non-employee)
director as the Chair of each Committee of the Board. The Chair of the Audit Committee, the Compensation Committee and the Governance Committee, as appropriate, consult with management in advance of meetings to discuss the agenda for Committee
meetings as well as the materials intended for distribution and use at the meetings. Many actions, such as determining the compensation of our executive officers and approving the financial statements and filings with the SEC, are determined by
Committees of the Board comprised solely of independent directors.
In addition, our Corporate Governance Guidelines, which
were adopted by the Board of Directors, mandate that the Board of Directors hold regular executive sessions of independent directors without management present. These sessions are typically held following each meeting of the Board. In 2016, the lead
director presided over the executive sessions. This format ensures that the Board considers issues independently outside the presence of management.
Regulatory Compliance Committee
The principal functions of the Regulatory Compliance Committee are to:
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oversee our compliance with laws, regulations (including reviewing quality assurance requirements and matters)
and standards of conduct administered by, and commitments to, regulatory agencies worldwide with jurisdiction over us and our products; and
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oversee our compliance program, including by recommending or approving revisions to our policies, procedures
and administration of our compliance program.
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Science and Technology Committee
The principal function of the Science and Technology Committee is to review and make recommendations on our science and
technology portfolio and strategies. In addition, certain members of the Science and Technology Committee met one time during 2016 to review technology for certain proposed business development opportunities.
Finance Committee
The principal functions of the Finance Committee are to review certain financial matters, including our dividend policy, share
repurchase authorizations, capital structure, financial hedging programs, and investment and borrowing programs.
Executive Committee
The Executive Committee has all of the authority of the Board of Directors, except as limited by law, rule or NYSE
listing standards.
Executive Sessions of Independent Directors
The independent directors hold regular executive sessions without management present, over which the lead director presides.
Communications with the Board of Directors
Shareholders and other interested parties may communicate directly with the Board of Directors, including the independent
members of the Board and the Audit Committee members. The process for doing so is described on our website at
www.crbard.com
on the “Contact” page.
Succession Planning
Our Board of Directors is actively engaged and involved in talent management to identify and cultivate our future leaders.
Throughout the year, directors discuss the Company’s leadership and talent development. Our directors also have an opportunity to meet with leaders of our Company, including executive officers and business unit leaders through regular reports
to the Board. In addition, Board members have access to all employees and periodically make site visits to meet local management.
We maintain a robust annual performance review process for our employees, as well as a leadership development program that
cultivates leadership principles in our future leaders. Management develops leadership at other levels in our Company by identifying talented employees and exposing them to the skills and capabilities that will allow these individuals to become
future leaders.
Board Oversight of Risk Management
The Board of Directors plays an important role in the oversight of risk for the Company, with the primary responsibility for
managing risk at the Company resting with senior management. The Board and Committee meeting process is designed to ensure that key risks are reviewed at Board and Committee meetings. At each meeting of the Board, directors are informed of and
review, as appropriate, various areas of risk including those associated with operational matters (such as issues impacting the Company’s facilities or manufacturing plants), finance, regulatory and product quality issues, and legal
proceedings, among others. For example, while our General Counsel is primarily responsible for managing legal proceedings, he provides the Board with regular updates on significant developments in these proceedings. As another example, the
Company’s risk management function establishes and maintains the Company’s insurance programs, and, as necessary, reviews insurance-related risks typically with the Finance Committee or the full Board.
These Board and Committee level risk discussions are supplemented through annual reports by the Company’s internal audit
function to the Audit Committee on management’s process for identifying and
22
evaluating company-wide, financial and information technology risks. As part of this process, the internal audit function presents key risks for the Company, indicates the Board or Committee
responsible for oversight of the most significant of these risks, identifies the management committees (each, a cross-functional team including members of senior management) responsible for identifying and managing these risks, and summarizes
planned measures to address and/or reduce the most significant risks through targeted actions. A summary of this report is also presented on an annual basis to the Board. In addition, building upon the enterprise risk oversight survey conducted in
2014 and reviewed in 2015, management in 2016, through an Executive Risk Committee, engaged a third-party to work with the Company to create a robust framework for identifying and evaluating risks facing the Company. Management reported the results
to the Board, addressed the Board’s feedback and will be implementing selected process improvements.
The Audit
Committee oversees risks related to the Company’s information technology systems, global economic conditions, and external financial reporting, among others. The Board’s Regulatory Compliance Committee oversees the Company’s
compliance with laws, regulations and standards of conduct administered by regulatory agencies worldwide with jurisdiction over the Company and our products. The Regulatory Compliance Committee regularly reviews quality and regulatory matters with
members of our senior management. These reviews generally include discussion of the risks associated with particular matters and management’s plans to mitigate these risks.
Other Committees also play a role in risk oversight. For instance, the Finance Committee periodically reviews with management
certain financial matters, including our dividend policy, share repurchase authorizations, capital structure, financial hedging programs and the Company’s investment and borrowing decisions.
Insider Trading and Material
Non-Public
Information Policy
The Company maintains an insider trading policy that generally provides that the Company’s employees and directors may
not: buy, sell or engage in other transactions in the Company’s stock while aware of material
non-public
information; buy or sell securities of other companies while aware of material
non-public
information about those companies that they become aware of as a result of business dealings between the Company and those companies; disclose our material
non-public
information to any unauthorized persons outside of the Company; or engage in short-term investment activity in the Company’s securities, such as arbitrage trading or “day trading.”
Additionally, transactions in puts, calls or other derivative securities, on an exchange or in any other organized market, are prohibited by all Company employees and directors. Effective February 2017, all employees are prohibited from hedging
securities of the Company.
The Company also maintains a separate policy that further restricts trading in Company
securities for certain designated employees of the Company (including executive officers) and directors generally to defined window periods that follow our quarterly earnings releases. Under that policy, these designated employees and directors are
permitted to enter into Rule
10b5-1
trading plans only during open window periods. Corporate officers, directors and certain other designated employees are subject to additional
pre-clearance
requirements. Effective February 2017, directors and executive officers are prohibited from hedging securities of the Company, purchasing or holding securities of the Company in a margin account
or pledging securities of the Company.
Directors’ Ownership Guidelines
To more closely align the interests of Directors and the Company’s shareholders, the Corporate Governance Guidelines
include share ownership guidelines for
non-employee
directors. Under the guidelines, each
non-employee
director is required to hold shares of the Company’s common
stock and/or share equivalent units with an aggregate value of at least four times the annual cash retainer payable to such director. Directors are given five years from December 14, 2011 or their date of election, as applicable, to comply with
the guidelines. Included in the determination of stock ownership for purposes of the guidelines are all shares beneficially owned and any share equivalent units held by a director under a Deferred Compensation Contract, Deferral of Directors’
Fees or the Stock Equivalent Plan for Outside Directors of C. R. Bard, Inc. Upon the request of a director, the Governance Committee will consider on a
case-by-case
basis whether modification of the ownership level is appropriate in light of a Director’s personal circumstances. All of our directors have satisfied this requirement.
23
Director Orientation and Continuing Education
The Company has established an orientation program for all newly elected directors in order to ensure that the Company’s
directors are well informed of their responsibilities and have the means at their disposal for the effective discharge of those responsibilities. The orientation program was developed by the Company’s management with the guidance of the
Governance Committee. The new directors are introduced to management and other personnel, and representatives of the Company’s outside legal, accounting and other outside advisors as needed or appropriate to familiarize them with the resources
available to them. Additionally, the Governance Committee considers the appropriateness and timing of periodic informational sessions for the Board and directors are encouraged to attend director continuing education programs, including those that
the Company may from
time-to-time
suggest, arrange or present. The Company will reimburse directors for any fees and expenses that they may incur in connection with such
attendance.
Proxy Access
In December 2016, the Board adopted amendments to our
by-laws
to implement proxy
access. Our amended
by-laws
generally permit a shareholder, or a group of up to 20 shareholders, owning at least 3% of the Company’s outstanding common stock continuously for at least three years to
nominate and include in the Company’s proxy materials director nominees constituting up to the greater of two individuals or 20% of the number of directors currently serving on the Company’s Board, provided that the shareholders and the
nominees satisfy the requirements specified in, and otherwise comply with the provisions of, our
by-laws.
The amended
by-laws
are available on our website at
www.crbard.com/About-BARD/Corporate-Governance.html
.
In considering whether to adopt proxy access for director
nominations, the Board reviewed the potential impact of proxy access on the Company, as well as current standards for proxy access terms. The Board also took into consideration the various views of our investors concerning this issue.
24
EXECUTIVE OFFICER COMPENSATION
Compensation Discussion and Analysis
In this Compensation Discussion and Analysis (“CD&A”), we detail our compensation philosophy, practices and
programs and the Compensation Committee’s (the “Committee”) decisions for 2016 as they relate to the Company’s named executive officers:
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•
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Timothy M. Ring, Chairman and Chief Executive Officer;
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•
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John H. Weiland, Vice Chairman, President and Chief Operating Officer;
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•
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Christopher S. Holland, Senior Vice President and Chief Financial Officer;
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•
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Jim C. Beasley, Group President; and
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•
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Timothy P. Collins, Group President.
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Executive Summary
Bard has a history of delivering solid financial results. In 2015, driven by our strategic investment plan (which we started in
2013), the Company returned to the top tier of the medical device sector in revenue growth. The results in 2016 were even stronger than the previous year, exceeding the Company’s expectations and investor consensus estimates, with above-average
revenue growth across our businesses and geographies. The balanced nature of the performance across our portfolio demonstrated that the execution of our strategic investment plan drove these results. The focus of the strategic investment plan is
increased revenue growth, which we believe is correlated to stock price valuation. The following chart shows the quarterly revenue (in bars) over the last 10 years on the left axis and the share price (line) on the right axis:
Historical Quarterly Sales and Share Price
Increased Focus on Investment
Since 2012, we have dramatically increased our investments in emerging markets and new product development with the objective
of increasing the revenue growth rate of the company. That increase is evident when you compare our combined Marketing, Selling and Administrative expense and Research and Development expense of approximately $1.0 billion in 2012 to
approximately $1.4 billion in 2016, an increase of 37%. This increase significantly exceeds the average of our competitors over the same four-year period, and we continue to invest in these areas.
25
A key focus has been on emerging markets, where the underlying growth rates are
faster than those in developed markets. We have significantly expanded the number of sales representatives and the registration activity for our product portfolio in these markets over the last few years. As a result, emerging markets expanded to
10% of total company sales in 2016, with a growth rate above 20%, and with international registrations up more than five-fold since 2012.
We have also made a significant investment in healthcare economics, enhancing our ability to
produce data that supports the use of our products from both a clinical and financial perspective. Three years ago, we had only one full-time employee focused on the study of healthcare economics; today there are 44 such employees working in every
division and major geography.
2016 Performance and Shareholder Value Creation
Driven by the returns from our strategic investment plan as described above, in 2016, our net sales grew 9% on a generally
accepted accounting principles (“GAAP”) basis and 10% on a constant currency basis (a
Non-GAAP
figure). The results exceeded investor consensus for each quarter and for the full year.
26
Our reported net income in 2016 was $531.4 million and our diluted EPS were
$7.03, an increase of 292% and 297% respectively over 2015. Adjusted net income and adjusted diluted earnings per share, which excludes amortization of intangible assets and certain items that affect comparability (“Adjusted Diluted EPS”),
were $777.3 million and $10.29, an increase of 12% and 13% respectively over 2015. Our strong results on both a GAAP and
Non-GAAP
basis continue to demonstrate our effective execution of our strategic
investment plan, with a broad contribution to growth across the portfolio.
Investors have responded positively to the execution of our strategic investment plan and to
the sustainability of above-average revenue growth and reliable profitability, as demonstrated by our share price and total shareholder returns (“TSR”) relative to our competitors in the charts below. Three-year and five-year TSR are
presented as the compound annual growth rate (“CAGR”).
Net sales “on a constant currency basis,” “Adjusted Net Income” and
“Adjusted Diluted EPS” are not prepared in accordance with GAAP measures and should not be viewed as a replacement of the GAAP results; see Appendix A to this proxy statement for a reconciliation to the most directly comparable GAAP
measures.
This proxy statement may contain forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, which are based on management’s current expectations, the accuracy of which is necessarily subject to risks and uncertainties. Please refer to “Risks and Uncertainties; Cautionary Statement Regarding
Forward-Looking Information” and the information under the caption “Risk Factors” in our
Form 10-K
for the year ended December 31, 2016, for more detailed information about these and
other factors that may cause actual results to differ materially from those expressed or implied.
27
Pay for Performance
Paying for performance is a critical element of our executive compensation program. For 2016, as shown below, our CEO’s
performance-based pay comprised 89.2% of his target direct compensation elements (which consists of salary, target annual bonus and the grant date fair value of long-term incentives). As shown for the other named executive officers as a group
(“All Other NEOs”), performance-based pay for 2016 comprised an average of 81% of target direct compensation.
Say-on-Pay
and Shareholder
Engagement
At our Annual Meeting of Shareholders held in April 2016, shareholders approved our
say-on-pay
proposal with 83.05% of the votes cast in favor of the proposal. We have considered the
say-on-pay
vote and we believe that our shareholders’ support over recent years indicates that the key components and overall design of our executive compensation
program effectively address shareholder concerns and are aligned with the long-term interests of our shareholders.
Our
active shareholder engagement efforts and discussions with our investors have produced meaningful learning for the Compensation Committee and for management regarding investors’ views on our executive compensation program. We have received
positive feedback from our investors regarding (i) our executive compensation structure, pay and practices, (ii) the many improvements we have made to our compensation program over the last number of years, and (iii) the
Company’s pay and performance alignment. We continue to actively seek opportunities to gather feedback on our compensation programs and practices throughout the year from many of our shareholders’ portfolio managers and corporate
governance advisors by telephone and
in-person.
28
Key Compensation Program Features and Governance Practices
Based on our annual evaluation of all elements of our program, last year’s
say-on-pay
vote results and the feedback we have received from investors, we did not make changes to our executive compensation program or structure in 2016.
Below we have highlighted several key features of our executive compensation program applicable to our named executive officers
and key compensation governance practices that strengthen the alignment of our named executive officers’ interests with those of our shareholders:
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Key Compensation Program Features
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Key Compensation Governance Practices
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• 89.2% of our
CEO’s target direct compensation is performance-based pay consisting of long-term equity awards and an annual performance bonus
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• Robust stock
ownership guidelines that require our executive officers to hold significant amounts of our stock to align executives with our shareholders regarding our long-term performance
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• Mix of fixed and
variable compensation, with a strong emphasis on variable,
at-risk
performance-based compensation
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• Clawback policy
that allows the Company to recoup incentive-based compensation paid to executive officers under certain circumstances, which we amended in February 2015 to broaden the group of executives covered and to apply to certain instances of misconduct and
negligent supervision
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• Short- and long-term
incentive compensation with balanced performance metrics (including relative total shareholder return (TSR)) that are tied to our business strategy and performance
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• No option
repricing or cash buyout of underwater options without shareholder approval
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• 66% of target
long-term incentive opportunity is performance-contingent and measured over
2-
and
3-year
periods
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• No payment of
dividend equivalents on unvested performance-contingent awards
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• 100% of our
full-value stock-based awards are tied to performance conditions
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• No “walk
away” rights or excise tax
gross-up
payments in any new change of control agreements since January 1, 2010
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• Double trigger
change of control provision in the 2012 Long Term Incentive Plan
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• Active investor
outreach program enabling us to obtain ongoing feedback concerning our compensation program and disclosure
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• Management Stock Purchase Program (MSPP) designed to incentivize executives to defer their
annual performance-based cash bonus into restricted stock units
¡
Mandatory deferral until stock ownership
requirements are met
¡
Minimum
4-year
deferral
¡
Further aligns executives with shareholders
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• Engagement of an independent compensation consultant with no other ties to the Company or
its management
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29
Key Compensation Decisions for 2016
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•
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Base Salary.
We implemented annual U.S. salary increases effective March 1, 2016 based upon a 3.0%
merit increase budget. Salary for our CEO and COO were held flat with no increase over the prior year. Salaries for our other named executive officers were increased consistent with the budget and based upon each executive’s individual
achievement against goals for 2015, and market positions for salary relative to our peer group.
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•
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Annual Incentives.
We achieved 101.7% of our corporate global revenue growth goal and 103.3% of our
corporate net income goal for 2016 under our Executive Bonus Plan, which included the adjustments set forth below in the table under “Key Performance Measures – Short-Term Incentives –Corporate Performance
Measures”. This combined achievement of our primary goals along with our achievement of 102.3% of our secondary goal based on cash flow from operations resulted in annual bonus payouts at 110.9% of the individual bonus targets for Messrs. Ring,
Weiland and Holland, and for the portion of the annual bonus opportunity for Messrs. Beasley and Collins that was based on corporate performance measures. Achievement levels for the portion of annual bonus opportunities for Messrs. Beasley and
Collins that was based on performance criteria for their respective business units are set forth below under “Elements of Executive Compensation – Cash Compensation – Annual Bonus Awards for 2016”.
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2013 Performance-Contingent Restricted Stock Units Achieved and Certified:
In December 2013, the Committee approved the
grant of performance-contingent restricted stock units to certain officers of the Company, including our named executive officers. The vesting of this grant was made contingent upon the Company’s absolute achievement of an average emerging
market sales goal over a
two-year
period (2014-2015). In February 2016, the Committee reviewed the Company’s achievement against the
pre-established
performance
criteria for the
two-year
period and certified that the
all-or-nothing
performance goal had been satisfied. For additional
information, see “2013 Performance-Contingent Restricted Stock Units Achieved and Certified” below.
2013
Performance Units Achieved and Certified
: In February 2013, the Committee approved the grant of performance units to certain officers of the Company, including our named executive officers. The 2013 performance units featured a three-year
performance period (2013-2015) and the ability to earn a maximum of 240% of target number of performance units based upon the degree of the Company’s achievement of
pre-established
average sales growth
and relative total shareholder return performance goals. In February 2016, the Committee reviewed the Company’s achievement against the
pre-established
performance goals over the performance period and
determined that the payout percentage for the 2013-2015 performance periods was 232.0% of the individual target number of performance units. The Committee certified this percentage based on the Company’s achievement for the 2013-2015
performance period of 200.0% of the average sales growth goal, as modified by the 70
th
percentile ranking of the Company’s total shareholder return of 95.9% within the S&P Healthcare
Index (excluding services, facilities and managed care companies). For additional information, see “2013 Performance Units Achieved and Certified” below.
New Awards Granted
: In December 2016, the Committee determined the long-term incentive grant values for each named
executive officer by taking into account market data and trends, recommendations from the Compensation Committee’s independent consultant, and individual performance and potential. The equity award value approved by the Committee was between
the 50
th
and 75
th
percentiles of the market for Messrs. Ring, Beasley and Collins, and above the market 75
th
percentile for Messrs. Weiland and Holland. Each executive was then awarded a December 2016 grant of performance-contingent restricted stock units (with performance measured over a
two-year
period) and stock options, with a combined value of 2/3 of the long-term incentive grant value approved by the Committee. The remaining 1/3 of the approved target grant value was awarded to each named
executive officer on February 8, 2017 in the form of performance units with performance measured over a three-year period. For additional information, see “2016 Performance Units, Performance-Contingent Restricted Stock Units and Stock
Options” below.
30
CEO Pay Considerations
The Committee’s decisions regarding 2016 CEO pay were reflective of the following:
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• Our overall strong performance for fiscal 2016 (see key business results
above under the heading “Executive Summary”) including the CEO’s performance against key 2016 financial and
non-financial
goals (described below under the heading “Annual Individual
Performance Assessment”)
• Our shareholders benefit from Mr. Ring’s depth of knowledge
and experience in our industry, knowledge of the Company, credibility with investors and our Board of Directors, proven track record, effective leadership, and ability to build strong leadership teams
• Stable CEO leadership has fostered a deeply embedded results-oriented
culture
• Mr. Ring has been in his role for more than 13 years and is among
the most tenured CEOs within our peer group, which has a median tenure of 4.2 years
• Ongoing tenure of our CEO allows for rebalancing of the senior team to
address new challenges while limiting organizational disruption
• Mr. Ring’s pay is reflective of more than 13 years as CEO
leading the Company through geographic growth and expansion, economic downturn and dramatic changes in the U.S. healthcare environment
• Mr. Ring’s base salary is the only portion of his pay that is
not at risk, and has been held flat without an increase since 2012
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Note
: In the above chart, the grant value shown for the Performance Units is equal to the fair
market value of the Performance Units calculated using the Company’s stock price on the date of grant, with the number of Performance Units based on the target long-term incentive dollar value that was approved by the Compensation Committee in
the prior year consistent with the Compensation Committee’s approval process. As such, in the Summary Compensation Table, the 2014 Performance Units are included in the “Stock Awards” column for the year 2015, the 2015 Performance
Units are included in the “Stock Awards” column for the year 2016, and the 2016 Performance Units will be included in the “Stock Awards” column for the year 2017 in next year’s Summary Compensation Table. The values included
in the above table and in the Summary Compensation Table and the Grant of Plan-Based Awards in 2016 Table may be different as the values in these tables are calculated using the grant date fair market value in accordance with FASB ASC Topic 718.
Percentages in the above chart do not add due to rounding.
31
General Compensation Philosophy and Procedures
Objectives
The primary objective of our overall executive compensation program is to provide balanced, comprehensive and competitive
rewards for the short- and long-term in a cost-effective manner to the Company. The Compensation Committee has designed and administered our executive compensation program with the following objectives in mind:
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Objectives
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Description
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Compensation is performance-based
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A substantial portion of the total compensation
opportunity should be variable and dependent upon our operating and financial performance against
pre-established
goals approved annually by the Committee
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Compensation is aligned with shareholder interests
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The program should align the
interests of executives with the long-term interests of our shareholders by encouraging ownership of our stock and providing other performance-based incentives to maximize shareholder value
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Compensation supports our business strategy
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Our compensation program should
reinforce our underlying business strategy and objectives by rewarding successful achievement of these business goals
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Compensation opportunities are market competitive
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Our compensation program should
attract and reward experienced executives who are proven managers and consistently deliver operational and financial results
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Compensation promotes the retention of key executives
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Our compensation program should
promote retention of key executives to provide leadership stability, to facilitate effective succession and to foster the growth and development of individuals who are key to our succession planning
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We have designed our executive compensation program to incentivize achievement of growth in
revenue, net income, sales, total shareholder return and other financial metrics that we believe deliver value to our shareholders, drive operational results and promote high levels of individual performance. Our compensation program provides a
combination of fixed and variable pay with an emphasis on
at-risk
compensation linked to performance goals. We believe that compensation levels in the medical device industry are dynamic and very competitive
as a result of the need to attract and retain qualified executives with the necessary skills and experience to operate successfully in our industry’s complex regulatory environment and to understand the rapidly changing medical technology in
our industry. We believe that the structure of our executive compensation program achieves our objectives effectively.
Target
Compensation
As a result of the competitive environment discussed above, market practices greatly influence our
executive compensation programs. When making annual compensation decisions, the Compensation Committee reviews annual market data analyses prepared by its independent compensation consultant. For our named executive officers, we generally target
compensation opportunities for cash and equity-based compensation in a manner that references the median of the market as an initial benchmark in setting and adjusting our compensation program. This approach enables us to attract and retain the
level of qualified executive talent necessary to deliver sustained performance in a complex, global, medical device organization. While the Committee attempts to base compensation decisions on the most recent market data available, it also
recognizes the importance of flexibility, and may go above or below the market median for any individual or for any specific element of compensation. In addition, the position of each particular executive with respect to the market median may vary
based on experience, changes in the market, the executive’s salary increases, annual bonuses and the value of the executive’s equity plan grants. These factors are driven by attainment of the individual and corporate financial goals
described below, as well as the performance of our stock.
32
Each year, the Committee also considers the gap between Mr. Ring’s
total compensation opportunity and the total compensation opportunity of the other named executive officers. The consultant’s compensation benchmarking report provided to the Committee in October 2016 concluded that Mr. Ring’s total
compensation continues to be less than three times the total compensation of our other named executive officers, and that this multiple is below the peer group 25
th
percentile.
Compensation Benchmarking
The Compensation Committee reviews the compensation paid for similar positions at other companies within a designated peer
group as one step in the process of setting the compensation levels for our named executive officers. Each year, the compensation consultant reviews our named executive officers’ base salary, total cash compensation, and long-term incentive
compensation in relation to the peer group, using compensation market data obtained from proxy statements filed by the peer group companies and from compensation survey information that the consultant has gathered and evaluated. The Committee
reviews the consultant’s reports and peer group comparisons.
Given the changing and competitive environment of the
medical device industry, the Committee annually reviews the composition of the peer group and considers whether modifications are appropriate. The selected peer group companies are generally U.S.-based companies in the healthcare industry that fall
within a reasonable range of comparison factors relative to our Company.
Specifically, from within the pool of potential
peers, the Committee considers each potential peer company’s revenue – targeting those with revenue within the range of approximately 1/3 to 3x Bard’s revenue, and market capitalization – targeting those with
market capitalization within the range of approximately 1/4 to 4x Bard’s market capitalization. The Committee also considers and gives preference to those peers with which we compete for executive talent in the marketplace, as well as companies
with business complexity comparable to ours (focusing on percentage of revenue from foreign sales, market capitalization to revenue ratio and product diversity).
Note:
Occasionally, leniency on parameters may be exercised for close comparators and year-over-year consistency given the summary
statistics and percentile positioning among the peer group.
33
During its June 2016 review, the Compensation Committee removed two companies
(CareFusion Corporation and Hospira, Inc.) following the acquisition of these companies, and added two new companies to the peer group (Baxter International, Inc. and DENTSPLY Sirona, Inc.) based upon the criteria described above. The table below
lists the companies that comprise our 2016 peer group along with select business characteristics (dollars in millions).
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Peer Company
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Market Cap as
of 12/31/16 ($)
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Revenue
($)
(1)
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Net Income
($)
(1)
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Employees
(2)
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Agilent Technologies Inc.
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14,659
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4,241
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509
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12,500
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Baxter International,
Inc.
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24,117
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10,163
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4,965
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50,000
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Becton, Dickinson and Company
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35,233
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12,419
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1,309
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50,928
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Bio-Rad
Laboratories, Inc.
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5,387
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2,068
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28
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7,770
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Boston Scientific Corporation
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29,462
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8,386
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347
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25,000
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DENTSPLY Sirona, Inc.
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13,318
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3,745
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430
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11,400
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Edwards Lifesciences Corp.
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19,911
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2,964
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570
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11,100
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Hologic Inc.
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11,205
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2,872
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332
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5,333
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ResMed Inc.
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8,790
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1,968
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327
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5,250
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Steris Plc
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5,724
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2,616
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142
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14,000
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St. Jude Medical Inc.
(3)
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N/A
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N/A
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N/A
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N/A
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Stryker Corporation
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44,675
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11,325
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1,647
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33,000
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Teleflex Incorporated
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7,383
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1,868
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237
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12,200
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Varian Medical Systems,
Inc.
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8,391
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3,224
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334
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7,800
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Waters Corporation
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10,800
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2,167
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522
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6,594
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Zimmer Biomet Holdings,
Inc.
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20,681
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7,684
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306
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17,500
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C. R. Bard, Inc.
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16,182
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3,714
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531
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16,300
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(1)
|
Based on financial data reported by each company in their respective SEC filings.
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(2)
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Based on recently reported figures.
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(3)
|
Following the Committee’s approval of the peer
group companies for 2016, St. Jude Medical Inc. was acquired by another company. Therefore no
10-K
filing was available for 2016.
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Annual
Pay-for-Performance
Analysis
Pay-for-performance
represents a significant
element used in the development of our executive compensation program. The Compensation Committee structures our executive pay so that a substantial portion of the total compensation opportunity consists of variable compensation and is dependent
upon our operational, financial and stock performance.
In October 2016, the Committee reviewed a historical
pay-for-performance
analysis conducted by the compensation consultant to evaluate the alignment of realizable pay to performance at the Company versus our peer group for the
most recently completed
one-
and three-year periods (2015 and the three-year period from 2013 through 2015). In this analysis, the Committee considers realizable pay rather than pay opportunity because it
reflects the Committee’s consideration of actual earned cash and the realizable value of equity compensation based upon actual performance and stock price at the end of the measured performance period. The analysis reviewed during 2016
considered how each of the following compared with our peer group:
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•
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the Company’s relative
one-year
and three-year performance using
operational and shareholder performance metrics, specifically revenue growth, net income growth and total shareholder return;
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•
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the short-term alignment comparing our executives’ 2015 annual bonus payouts and the Company’s
one-year
relative performance; and
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34
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•
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the long-term alignment comparing our executives’ potential realizable long-term incentive compensation
for the three-year period from 2013 through 2015 and the Company’s three-year relative performance.
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The analysis concluded that our executives’ short-term pay for 2015 and long-term pay for the three-year period from 2013
through 2015 were in alignment with our performance for the same periods. The chart below illustrates the comparison of our CEO’s realizable three-year long-term incentive value and total shareholder return relative to our peer group.
Key Performance Measures
The following depicts the 2016 performance measures as they apply to short- and long-term incentives for the named executive
officers:
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Annual Bonus
Award
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Stock
Options
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Performance-
Contingent
RSUs
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Performance
Units
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Weighting
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50%
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50%
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34%
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33%
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33%
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Performance Measures
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Global
Revenue Growth
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Global
Net Income Growth
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Growth in
Common Share Price
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2-year Emerging
Markets Sales Growth
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3-year Average
Sales Growth and TSR ranking relative to Dow
Jones Medical Equipment Index
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Cash Flow Growth
(or decline)
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Variable Short-Term Incentive Opportunity
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Variable Long-Term Incentive
Opportunity
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35
We have set forth below a description and rationale for each of the 2016
corporate performance measures under our annual Executive Bonus Plan (under which each of the named executive officers is covered):
SHORT-TERM INCENTIVES – CORPORATE PERFORMANCE MEASURES
1
Adjusted for foreign currency exchange impact and other such items to normalize
year-over-year measurement performance.
2
The items are changes in tax laws and
accounting rules or practices; severance and related costs related to certain reductions in force; charges related to legal or regulatory proceedings exceeding $1 million; nonrecurring royalty or licensing payments by the Company over
$1 million; dilution related to acquisitions, including purchased research and development charges; charges related to divestitures of a business, division or fixed assets; and charges related to impairments of assets made to adjust carrying
value to fair value.
In addition to the corporate performance measures above, the 2016 business unit performance criteria for Messrs.
Beasley and Collins included goals based on operations variance (applicable solely to global operations), actual gross profit improvement (applicable to U.S. and international divisions and regions), quality (applicable solely to U.S. divisions),
and new product sales (applicable solely to international divisions and regions). The Committee approved these additional performance measures for our executives with direct business unit responsibilities, because they (1) focus executives on
year-over-year
top-line
growth, and bottom-line efficiency and profitability, and (2) reflect the business unit growth drivers and directly impact overall corporate performance. The performance targets
and methodology for calculating the awards for 2016 under the Executive Bonus Plan are discussed in greater detail below under “Elements of Executive Compensation – Cash Compensation – Annual Bonus Awards of
2016” and in the narrative following the Summary Compensation Table under the heading
“Non-Equity
Incentive Plan Compensation.”
36
MEASURES DESCRIPTION RATIONALE Revenue (primary goal: 50% weighting) Sales measured in constant
currency and adjusted for changes in accounting rules or practices and revenue reductions relating to divestitures of a business or division1 Focuses executives on year-over-year
top-line
growth Net Income
(primary goal: 50% weighting) Net income attributable to common shareholders as reported in our audited annual consolidated financial statements and adjusted for certain items2 Focuses executives on our year-over-year bottom-line efficiency and
profitability Cash Flow (secondary goal) Operating cash flow on the consolidated statement of cash flows. Functions as positive or negative modifier that applies if at least 100% of combined primary goals are achieved Important indicator of our
ability to service debt, make capital expenditures and pursue growth initiatives and/or return value to shareholders
A description and rationale for the performance measures applicable to long-term
incentive awards granted to each of the named executive officers during 2016 is below:
LONG-TERM INCENTIVES
1
Adjusted for foreign currency exchange impact and other such items to normalize
year-over-year measurement performance.
Annual Individual Performance Assessment
In addition to market data and corporate performance, the Compensation Committee considers the individual performance of our
executive officers in making its decisions on executive compensation. At the beginning of each year, the Committee reviews and as necessary adjusts the key financial and
non-financial
goals under which it
evaluates the Chief Executive Officer’s performance. For 2016, these goals included growth in sales and net income, improved research and development productivity, additional sales from new products and business development activities, emerging
markets sales growth, enhanced sales execution and sales force retention, continued implementation of a global product launch process and related growth in international sales, continued execution of an ethics/training compliance program globally,
gross margin improvement, targeted improvement in medical device reports and customer complaint levels and achievement of targeted W.L. Gore & Associates, Inc. (“Gore”) initiative revenue results.
The goals of the other named executive officers in 2016 generally mirrored those of Mr. Ring. Messrs. Beasley and Collins
were also assessed on the achievements of their respective business units against those goals. Each year at the February Compensation Committee meeting, the Committee evaluates Mr. Ring’s performance, and Mr. Ring reports on his
evaluation of the performance of the other named executive officers. Each executive officer receives an individual performance rating based on achievement against his or her goals and overall contribution to corporate performance, with the rating
based on an overall evaluation of the executive’s performance rather than a formula. The Committee then considers a combination of market data, corporate
37
MEASURES DESCRIPTION RATIONALE Sales Growth (Measure for Performance Units) Average adjusted sales
growth for
3-year
performance period Net sales measured in constant currency and adjusted for changes in accounting rules or practices and revenue reductions relating to divestitures of a business or division1
Meaningful indication of our execution of the Company’s business strategy and alignment with shareholders Total Shareholder Return (Measure for Performance Units) Our TSR relative to TSR of all other companies in the Dow Jones Medical Equipment
Index (adjusted to eliminate the impact of industry acquisitions) TSR is based on the average closing price of each company’s common stock for the thirty days preceding the start and end dates of the
3-year
performance period Aligns executive pay with our shareholders based on TSR Relative TSR used to measure performance against a broad industry group Emerging Market Sales (Measure for
Performance-contingent RSUs) Average emerging market sales growth for 2-year performance period Sales for identified geographies measured in constant currency and adjusted for changes in accounting rules or practices and revenue reductions relating
to divestitures of a business or division1 Focuses executives on year-over-year top-line growth for faster growing markets Aligns with the Company’s objective to accelerate expansion into faster-growing geographies
performance and individual performance ratings in evaluating base salary, annual bonus awards for the prior year, and bonus and equity targets for the current year, as described below. There is
no
pre-established
weight assigned to these considerations.
Elements of Executive Compensation
In making annual compensation determinations for the named executive officers, the Compensation Committee focuses
primarily on each executive’s target direct compensation. The elements of target direct compensation for our executive officers are base salary, a performance-based annual incentive award paid in cash that we refer to as the executive’s
annual bonus, and annual long-term equity awards.
The Compensation Committee evaluated and established 2016 executive pay
levels in the context of Company and individual performance for 2015 and 2016, and competitive benchmarking with the Company’s peer group. The Committee also considered the shareholder advisory vote results from the 2015 and 2016 Annual
Meetings of Shareholders regarding the compensation of our named executive officers.
38
Total Direct Compensation
The table below provides an overview of the elements of our total direct compensation for all named executive officers:
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Base Salary
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Description and Purpose
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• Fixed pay
• Cash
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Provide a Stable Component of Compensation
• Base salaries are an integral component of our total compensation program and help
to attract and retain senior executives by providing financial certainty and stability
• Base salaries compensate our executives for their level of responsibility,
experience, skills and knowledge
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Considerations & Process
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Base Salary Levels
• During our annual merit review process or upon hire, base salaries are set for our
executive officers, including the named executive officers, by evaluating the competitive marketplace, the salaries of other executives of the Company, the scope of each executive’s responsibilities, and each executive’s skills
CEO Recommendations
• The Compensation Committee also considers the recommendations of our Chief Executive
Officer in reviewing and approving the base salaries of all other executive officers, including the other named executive officers. In formulating recommendations to the Committee, our Chief Executive Officer considers the consultant’s report
together with the performance of the individual, our overall corporate performance and, as applicable, the performance of the individual’s business unit(s)
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Annual Bonus
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Description and Purpose
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• Variable pay
• Cash
• % of base salary
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Provide Short-Term Variable Compensation
• Our annual bonus opportunity is intended to incentivize the achievement of
challenging but realistic financial goals that drive our performance during the fiscal year
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Considerations & Process
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Performance Criteria
• Early in each new fiscal year, the Committee establishes Company performance
criteria and targets applicable to the new bonus year for the named executive officers under the Executive Bonus Plan
Performance Certification
• Upon completion of each fiscal year, the Compensation Committee determines and
certifies the payout levels under our Executive Bonus Plan and determines bonus awards for the named executive officers. The amount of the annual bonus award for each named executive officer is based upon the level of achievement of the
pre-established
objective performance criteria for the bonus year, which is determined formulaically, as well as individual performance assessments
Performance Rating and Negative Discretion
• In order to receive full payment of the annual bonus award, an executive must, at a
minimum, receive a satisfactory individual performance rating. If the executive receives less than a satisfactory rating, the formula-based bonus payment may be reduced to reflect the level of individual performance. If the executive achieves better
than a satisfactory rating, no additional compensation is added under the bonus formula because we believe that rewards for higher individual performance are adequately reflected in salary and equity decisions
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39
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Long-Term Incentives
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Description and Purpose
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• Variable pay
• Annual equity awards in the form of:
• Performance Units
•
Performance-Contingent
RSUs
• Stock Options
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Provide Long-Term Variable Compensation
• The most significant portion of our named executive officers’ total compensation
opportunity is in the form of equity awards under the 2012 Long Term Incentive Plan, which provide variable compensation with meaningful performance-based components
Align Executives with Shareholders
• Our long-term equity awards are provided in large part because we believe executive ownership
of our common stock aligns executives’ interests with those of our shareholders and promotes long-term sustainable shareholder value creation
Recruit Talent
• Equity awards are especially valuable for recruiting executive talent, particularly given the
extensive use of equity-based incentives in the market in which we compete for executive talent
Retain Executives
• These awards are also a valuable tool to retain executives with long-term potential,
consistent with succession planning goals
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Considerations & Process
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Award Levels
• In assessing the appropriate equity compensation levels during our annual long-term incentive
grant process, the Compensation Committee reviews a peer group benchmarking report prepared by the compensation consultant which details market-based equity grant trends and provides grant value recommendations for each named executive officer
Performance-Based Mix
• The total long-term incentive value determined by the Committee for each named executive
officer is delivered 33% in the form of performance units, 33% in the form of performance-contingent restricted stock units and 34% in the form of stock options
Balanced Opportunities
• The Committee believes that this approach balances the performance potential among the three
elements of equity compensation and improves the deductibility of our LTI compensation, with 2/3 of each named executive’s LTI opportunity tied to Company performance
Timing Linked to Fiscal Year Planning
• The Committee made the annual grant of stock options and performance-contingent restricted
stock units at the Committee’s regularly scheduled meeting in December 2016, which aligns both the timing of equity grants with the setting of performance targets, and equity grant expensing with fiscal year planning. The
3-year
performance awards were granted in February 2016 based on the annual long-term incentive analysis and review conducted in December 2015
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40
Cash Compensation
Following is a summary of the determinations made by the Compensation Committee with respect to 2016 cash compensation for the
named executive officers.
Base Salaries for 2016
During the annual merit review in February 2016, the Committee made no change to Mr. Ring’s salary, maintaining his
salary at the same level in effect since 2012. The Committee similarly made no change to Mr. Weiland’s salary during 2016. Commensurate with our 3.0% merit increase budget for all U.S. sites in 2016 and taking into account other
considerations discussed above, the Committee approved salary increases for the named executive officers other than Messrs. Ring and Weiland to recognize internal roles and contributions, and to help maintain market competitiveness. The following
table sets forth the base salaries for the named executive officers effective March 1, 2016:
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Name
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Dec. 31, 2015 Base Salary
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March 1, 2016 Base Salary
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Percentage Increase
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Timothy M. Ring
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$
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1,092,000
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$
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1,092,000
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0%
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John H. Weiland
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$
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913,610
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$
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913,610
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0%
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Christopher S. Holland
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$
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613,829
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$
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632,200
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3.0%
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Jim C. Beasley
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$
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609,363
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$
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633,700
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4.0%
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Timothy P. Collins
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$
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646,100
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$
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671,900
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4.0%
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Annual Bonus Awards for 2016
The Committee maintained target bonus opportunities at the same levels in place during 2015 for each of the named executive
officers. As a result, 2016 bonus target levels as a percentage of base salary for the named executive officers were as follows:
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Name
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Percentage
of
Base
Salary
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Timothy M. Ring
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135%
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John H. Weiland
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100%
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Christopher S. Holland
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80%
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Jim C. Beasley
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80%
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Timothy P. Collins
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80%
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41
For the 2016 performance period under the Executive Bonus Plan (under which each
of the named executive officers is covered), annual bonus awards were determined based upon the following achievement of our
pre-established
primary performance goals for 2016, as certified by the Compensation
Committee (in accordance with the requirements of Section 162(m) of the Internal Revenue Code):
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Short-Term Incentives – 2016 Corporate Performance Achievement
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Weighting
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Threshold
$ (millions)
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Adjusted Target
$ (millions)
(1)
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Maximum
$ (millions)
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Percentage
Achieved
(2)
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Corporate
Achievement
Percentage
(2)
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Primary criteria:
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Revenue
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50%
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$
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3,087.1
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$3,653.3
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$
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4,219.6
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101.7%
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}
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108.3%
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Net Income
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50%
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$
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563.7
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$ 667.0
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$
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770.3
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103.3%
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Secondary criteria:
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Cash Flow
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(% achievement over 2016 budgeted cash flow from operations)
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$ 592.3
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102.3%
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Final
2016
Corporate
Bonus
Percentage:
110.9%
(108.3% x 102.3%)
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Rationale:
The Committee set the revenue and net income targets for 2016 consistent with the annual budgeted performance for 2016, which is based upon the
expected growth rate for the year
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(1)
Subject to adjustment based on
pre-determined
criteria approved by the Committee at the time the target was established in February 2016.
(2)
Percentage Achieved is translated into Corporate
Achievement Percentage based on predetermined slopes of possible percentages achieved for each criteria.
In addition to
the 2016 corporate performance achievement noted above, annual bonus opportunities for Messrs. Beasley and Collins were based in part upon achievement of each executive’s business unit criteria. In 2016, the business unit portion of the annual
bonus awards for Messrs. Beasley and Collins was determined based upon the achievement of the following
pre-established
primary and secondary business unit performance goals for 2016, as certified by the
Compensation Committee (in accordance with the requirements of Section 162(m) of the Internal Revenue Code):
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Short-Term Incentives – 2016 Business Unit Performance Achievement
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Mr. Beasley
(applicable to 50% of bonus opportunity)
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Mr. Collins
(applicable to 50% of bonus opportunity)
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Division/Regions
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Combined
Percentage
Achieved
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Division/Regions
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Combined
Percentage
Achieved
|
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Primary
Criteria:
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Revenue
Net Income
|
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157.7%
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Primary
Criteria:
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Revenue
Net Income
|
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169.7
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%
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(50% weighting each)
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(50% weighting each)
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Operations
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Operations Variance
(50% weighting)
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79.1
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%
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Adjustment
to Bonus Target
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Adjustment
to Bonus Target
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Secondary
Criteria:
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Actual Gross Profit
New Product Sales
Quality
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5.0%
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Secondary
Criteria:
|
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Actual Gross Profit
New Product Sales
Quality
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5.0
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%
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4.2%
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0
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%
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5.0%
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(3.0
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%)
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42
The corporate performance achievement for 2016 noted above resulted in annual
bonus award payouts for Messrs. Ring, Weiland and Holland, and all employees with bonus awards based solely on those results, equal to 110.9% of their bonus targets, resulting in payouts as a percentage of base salary for Messrs. Ring, Weiland and
Holland of 149.72%, 110.9% and 88.72%, respectively. Based upon the level of business unit achievement and the level of corporate performance achievement (each noted above), the 2016 bonus award, as a percentage of base salary, for each of Messrs.
Beasley and Collins was equal to 116.4% and 94.80%, respectively.
The annual bonus award earned in the 2016 plan year by
each named executive officer is set forth in the
“Non-Equity
Incentive Plan Compensation” column in the Summary Compensation Table. More details regarding the calculation of 2016 bonus awards,
including a
step-by-step
calculation based on Corporate Performance Measures and Business Unit Performance Measures, are provided in the narrative following the Summary
Compensation Table under the heading
“Non-Equity
Incentive Plan Compensation”.
Long-Term Equity-Based Compensation
Following is a summary of the determinations made by the Compensation Committee with respect to 2016 long-term equity-based
compensation for the named executive officers.
2016 Performance Units, Performance-Contingent Restricted Stock Units and Stock Options
To enhance the alignment of management’s interests with shareholders and help drive long-term performance, the
Committee has approved the following long-term incentive award mix for the named executive officers:
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• 1/3 of total value in the form of performance units
(three-year measure)
• 1/3 of total value in of the form of performance-
contingent restricted stock units
(two-year
measure)
• 1/3 of total value in the form of
stock options
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Performance Units:
Provide an opportunity to earn units (settled in shares of common
stock) based on our average sales growth performance against goals over the three-year performance period (2016-2018). The payout factor is determined by a scale, with threshold performance set at 2 percentage points below the sales growth target
(resulting in a 25% payout factor), and maximum performance set at 2 percentage points above this target (resulting in a 200% payout factor). There is a zero payout factor for performance below the threshold level. Units earned based on the sales
growth performance measure may be increased or decreased by up to 20% based on our TSR rank relative to the Dow Jones Medical Equipment Index for the performance period. Depending on the performance, the earned award vests fully at the end of the
three-year performance period following certification of achievement by the Compensation Committee.
Performance-contingent Restricted Stock Units:
Provide an opportunity to earn restricted stock units based on our
average emerging markets sales growth performance against goals over a
two-year
performance period (2017-2018). Absolute achievement of the goal is required for restricted stock units to be earned (i.e. none
of the units will vest unless 100% of the goal is achieved). If the Company achieves the performance goal, the award vests 50% at the end of the
two-year
performance period following certification of
achievement by the Compensation Committee, and in 25% increments on the next two anniversaries of the Compensation Committee’s certification.
Stock Options:
Provide the opportunity to buy a specified number of common shares underlying the options at a
pre-determined
price equal to the fair market value on the grant date for a set period of time, so long as the executive meets the required service period. Options vest in 25% increments over four years from the
grant date, with the value of the options linked to the performance of our stock price.
43
Equity Award Targets
To determine the target value of the equity awards for each of the named executive officers to be granted for 2016, the
Compensation Committee took into account the consultant’s recommended range of target values and analysis of market trends (including total cash and equity compensation), the individual’s performance and potential and the market position
of each of the named executive officers. In December 2016, the Committee approved a total equity award value between the 50
th
and 75
th
percentiles of the market for Messrs. Ring, Beasley and Collins, and above the 75
th
percentile of the market for Messrs. Weiland and Holland. The total equity award value approved for each
named executive officer in December 2016 was divided such that 2/3 of the approved total value was granted in December 2016, and 1/3 of such value was granted in February 2017. Due to our approach of dividing and delivering a single year’s
annual equity award value in two different fiscal years, the 2016 equity grant values shown in the Summary Compensation Table for the named executives reflect a portion of the Committee’s decisions made in 2016 (reflective of 2016 market trends
and performance) and a portion of the Committee decisions made in 2015 (reflective of 2015 market trends and performance).
Performance-contingent restricted stock unit grants and stock option grants representing 2/3 of the long-term incentive value
approved by the Compensation Committee in December 2016 and the performance units granted in February 2016 that represented 1/3 of the long-term incentive values approved in December 2015, are set forth below in the Grants of Plan-Based Awards in
2016 Table and described in more detail under “Stock Awards” in the narrative preceding the table.
Vesting
The three-year performance units granted in February 2016 will vest in full in the amount earned pursuant to the
Committee’s determination and certification of performance achievement following the end of the three-year performance period, subject to continued employment.
The performance-contingent restricted stock unit awards granted in December 2016 are subject to both
“performance-based” vesting and “time-based” vesting, as discussed in more detail in the narrative following the Summary Compensation Table below. Performance-based vesting must occur before the time-based vesting begins. For the
grants made in December 2016, the Compensation Committee determined that performance-based vesting will occur upon the achievement of an emerging markets sales growth goal over the
two-year
performance period
from January 2017 through December 2018. Fifty percent (50%) of the award vests immediately upon the Committee’s determination and certification of performance goal achievement at the end of the
two-year
performance period, and the award continues to vest in 25% annual increments on the next two anniversaries of the Committee’s certification, subject to continued employment.
The stock options granted in December 2016 will vest in 25% annual increments on the first four anniversaries of the grant
date, subject to continued employment.
The Compensation Committee designed the vesting schedules of the 2016 awards to be
deductible under Internal Revenue Code Section 162(m), as discussed in more detail below, to be competitive with peer group practices and to deliver compensation over a period of years, which assists us with our goal of executive retention.
See “Potential Payments Upon Termination or Change of Control” for a description of vesting of equity awards
upon termination of employment by reason of death, disability or retirement, or upon a change of control.
2013 Performance-Contingent
Restricted Stock Units Achieved and Certified
In December 2013, the Committee approved the grant of
performance-contingent restricted stock units to certain officers of the Company, including our named executive officers. The performance-contingent restricted stock units were granted contingent upon achievement of both performance vesting and time
vesting conditions. The
pre-established
performance vesting goal, measured over a
two-year
performance period from January 1, 2014 through December 31, 2015,
was the Company’s absolute achievement of average emerging markets sales growth of 9% for the
two-year
period.
44
In February 2016, the Committee reviewed the Company’s achievement against
the
pre-established
performance criteria for the
two-year
performance period (2014-2015) and the supporting calculations, and certified that the performance condition
applicable to the 2013 grant of performance-contingent restricted stock units had been satisfied based on the Company’s achievement of average emerging markets sales growth of 20.6% for the period from January 1, 2014 through
December 31, 2015. As a result of the Committee’s certification of performance achievement, 50% of each named executive officer’s 2013 grant of restricted stock units vested immediately, and the remaining units because eligible to
vest in equal parts on the next two anniversaries of the Committee’s certification (subject to continued employment).
2013
Performance Units Achieved and Certified
In February 2013, the Committee approved the grant of performance units to
certain officers of the Company, including our named executive officers. The 2013 performance units featured a three-year performance period (2013-2015) and the ability to earn a maximum of 240% of target number of performance units based upon the
degree of the Company’s achievement of a
pre-established
average adjusted sales growth goal, as further adjusted up or down by the Company’s total shareholder return ranking relative to companies in
the S&P Healthcare Index (excluding services, facilities and managed care companies) as follows:
|
|
|
|
|
|
|
|
Average Adjusted Sales Growth/Achievement Scale
|
|
TSR Ranking/Modifier to Sales Achievement
|
|
• <3.0% growth = 0%
|
|
• 25th percentile =
-20%
(threshold)
|
|
• 3.0% growth = 25% of target (threshold)
|
|
• 50th
percentile = 0% (target)
|
|
• 5.0% growth = 100% of target (target)
|
|
• 75th percentile = +20%
(maximum)
|
|
• 7.0% growth = 200% of target (stretch)
|
|
|
Early in 2013, the Company introduced a strategic investment plan to investors based on
projects that it believed at the time could accelerate the Company’s revenue growth and profitability for years to come. In 2014, early results from the investment plan, specifically in emerging markets, combined with the receipt of Gore
royalty revenue, contributed to high growth in our earnings per share. In 2015, the Company returned to the top tier of the medical device sector in revenue growth. The results in 2016 were even stronger than the previous year, exceeding the
expectations of both the Company and investors with above-average revenue growth across our businesses and geographies. The balanced nature of the performance across our portfolio demonstrated that the execution of our strategic investment plan
drove these results, and the stock valuation has responded accordingly.
45
In February 2016, the Committee reviewed the Company’s average sales growth
and relative TSR over the three-year performance period (2013-2015) and the supporting calculations, and determined that the applicable targets were achieved as follows:
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|
2013 Performance Unit Target Achievement
|
|
Performance
Period
2013 – 2015
|
|
Sales Growth
Achievement
by Year
(1)
|
|
3-Year
Average Sales
Growth
Achievement
|
|
Sales Growth
Payout
Achievement
(per scale)
|
|
BCR TSR
(%) & TSR
Percentile
Rank
|
|
Relative TSR
Modifier
Achievement
(per scale)
|
|
Final
Unit
Payout
Percentage
(200.0% x
116%)
|
|
2013
|
|
3.5% Sales
growth
|
|
7.3%
|
|
200.0%
|
|
TSR: 95.9%
TSR Percentile
Rank: 70
th
(Target = 50
th
)
|
|
116%
|
|
232.0%
|
|
2014
|
|
12.5% Sales
growth
|
|
|
|
|
|
|
2015
|
|
6.1% Sales
growth
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|
|
|
|
|
(1)
|
Reflects sales growth on a GAAP basis adjusted in accordance with
pre-established
adjustment criteria approved by the Committee at the time of grant.
|
On February 10, 2016, the Committee certified the results set forth above and determined that the total payout percentage
for the 2013 performance units was 232.0% of the target, resulting in the following payouts for our named executive officers:
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|
|
Name
|
|
Target
Opportunity
(in units)
|
|
|
|
Final Unit
Payout
Percentage
|
|
Total
Payout
(in shares)
|
|
Timothy M. Ring
|
|
15,742
|
|
x
|
|
232.0%
|
|
36,522
|
|
John H. Weiland
|
|
9,515
|
|
x
|
|
232.0%
|
|
22,075
|
|
Christopher S. Holland
|
|
5,083
|
|
x
|
|
232.0%
|
|
11,793
|
|
Jim C. Beasley
|
|
5,083
|
|
x
|
|
232.0%
|
|
11,793
|
|
Timothy P.
Collins
|
|
5,083
|
|
x
|
|
232.0%
|
|
11,793
|
Management Stock Purchase Program
We maintain the MSPP because we believe ownership of our common stock aligns an executive’s interests with those of our
shareholders and promotes retention, consistent with our objectives. We consider MSPP to be a strong performance-based incentive because the value to our executives of contributions to the MSPP is directly linked to the level of achievement against
our annual bonus performance goals, as well the potential increase in the value of our common stock over the period in which MSPP awards are subject to vesting requirements.
Under the MSPP, executives and other eligible employees are required to contribute a portion of their annual bonus to purchase
restricted stock units until they meet certain minimum ownership requirements described below under “Stock Ownership Guidelines.” In addition, each executive and eligible employee has the option to defer additional bonus amounts up to 100%
of the bonus award achieved for the year. In fact, substantially all eligible employees defer at least a portion of their bonuses into Company stock:
|
|
•
|
|
301 out of 316 eligible employees (95%) participated in the MSPP program in 2016; and
|
|
|
•
|
|
With the exception of a retiring executive, all of the corporate officers participated in the MSPP program in
2016, with over 78% deferring nearly 100% of their annual bonuses into common stock.
|
The amounts
contributed by the named executive officers in 2016 are set forth below in the Nonqualified Deferred Compensation Table.
Each restricted stock unit acquired by the executive under the MSPP represents the right to receive one share of our common
stock. In order to encourage participation, promote retention and offset the risk of holding
46
the units for a required minimum of four years, we give the executive a 30% discount from the lower of the fair market value of our common stock on the first business day in July of the previous
year or the date the annual bonus is approved in February. In 2016 for MSPP grants based on annual bonuses earned for 2015, the price used was $172.18, the fair market value of our common stock on July 1, 2015. The grant date value of each
executive’s MSPP units (as included in the
“Non-Equity
Incentive Plan Compensation” column and the “All Other Compensation” column of the Summary Compensation Table) is determined
based on our level of achievement against performance goals under our Executive Bonus Plan for 2016, the percentage of annual bonus the executive has elected to defer for 2016 and the fair market value of our common stock on the date MSPP units are
granted.
Out of the total number of units purchased, a number of units with a value equal to the amount of the 30%
discount are considered “premium units.” The premium units fully vest four years from the purchase date. A participant is always 100% vested in his or her
non-premium
units. Under the terms of the
MSPP, an executive forfeits all premium units if his or her employment terminates during this four-year period, except that the executive receives a prorated number of premium units if his or her employment terminates because of death, disability or
retirement. In addition, all premium units become fully vested upon a change of control of the Company. We provide prorated vesting upon death, disability and retirement and full vesting upon a change of control because, in each of these
circumstances, we believe that the executive has satisfied his or her obligations to us. The Committee also has discretion to approve full vesting. In determining whether to exercise this discretion, the Committee considers on a
case-by-case
basis the relevant circumstances, our past practices and then-current market practices.
We describe the MSPP in more detail below in the narrative following the Nonqualified Deferred Compensation Table.
Stock Ownership Guidelines
To further align the interests of management and shareholders, we maintain formal stock ownership guidelines for the named
executive officers and others holding senior executive positions at the corporate and business unit levels. The ownership guidelines are expressed in terms of the value of the common stock (including restricted stock), stock units and stock options,
including shares in our 401(k) plan, held by the executive as a multiple of that executive’s base salary. The guidelines require each named executive officer to own common stock having a value equal to the multiple of base salary applicable to
his position as shown in the table below, as of February 27, 2017.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Stock Ownership Requirement
(multiple of base salary)
|
|
Status
|
|
Timothy M. Ring
|
|
5x
|
|
Exceeds guideline
|
|
John H. Weiland
|
|
4x
|
|
Exceeds guideline
|
|
Christopher S.
Holland
|
|
3x
|
|
Exceeds guideline
|
|
Jim C. Beasley
|
|
3x
|
|
Exceeds guideline
|
|
Timothy P. Collins
|
|
3x
|
|
Exceeds guideline
|
Executives subject to the stock ownership guidelines are required to contribute a minimum of
25% of their annual cash bonuses to purchase restricted stock units under the MSPP until they reach the applicable ownership guidelines. Executives who are subject to ownership guidelines have five years to meet the applicable guidelines. After the
executive has reached the applicable ownership guidelines, contribution to the MSPP is voluntary.
While the executive
officers are given five years to meet the applicable stock ownership guidelines, the Compensation Committee monitors participation and expects that incremental progress will be made each year by each executive officer who has not met the applicable
guidelines.
Clawback Policy
The policy, which was last updated in February 2015, relates to the recoupment of any annual or long-term incentive or equity
compensation awarded to certain executive officers. It allows the Board to recover annual or
47
long-term incentive compensation if the Board determines that such compensation was awarded to an executive officer based on later restated published financials or the executive officer engaged
in misconduct (or failed to manage or monitor conduct or risk in a manner) that results in a material violation of law, rules or regulations that causes significant financial harm to the Company. The Board may seek to recover the part of any such
compensation that was awarded based upon the financial performance in the published financial statements that were subsequently restated or, in the case of misconduct, the value of the financial harm to the Company.
Other Benefits and Arrangements
Pension and Supplemental Executive Retirement Plan
We maintain a
tax-qualified
Employees’ Retirement Plan to provide traditional
pension benefits for certain of our U.S.-based employees, including the named executive officers other than Mr. Holland. In addition, we maintain a Supplemental Executive Retirement Plan, or “SERP,” to provide benefits to our highly
paid employees above the strict limits imposed on the Employees’ Retirement Plan benefits under the Internal Revenue Code. We describe this plan in detail below under the Pension Benefits Table. Effective January 1, 2011, both the
Employees’ Retirement Plan and the SERP were amended to close the plans to employees hired on or after that date. All employees participating in the Employees’ Retirement Plan and the SERP prior to January 1, 2011, including the named
executive officers other than Mr. Holland, will continue to participate in these plans. Executives hired on or after January 1, 2011 are eligible for an annual retirement contribution made by the Company in the Company’s qualified
401(k) plan of between 3% and 8% of pay depending on their length of service. This contribution is made for those employees active on the last day of the calendar year and based on total pay received while participating during the calendar year.
Employees become eligible for the annual retirement contribution on the one year anniversary of employment. Mr. Holland, who was hired in 2012, became eligible for this annual retirement contribution in 2013. In addition, he is eligible to
receive an enhanced benefit under our Defined Contribution Excess Plan, which provides benefits to highly paid employees hired on or after January 1, 2011 above the strict limits imposed on the benefits provided under the Company’s
qualified 401(k) plan.
We consider retirement programs and other benefits to be essential in the context of total
compensation and important for us to remain competitive as an employer. Although there is no direct link to performance for pension benefits, there is a correlation because benefits depend on a participant’s cash pay, which is directly linked
to performance, as described above. In general, we believe that these programs are competitive with programs offered by our peer group of companies. These benefits also help us to reward long-term service. We believe that it is essential to offer
programs that provide a balanced approach to attracting and retaining key executives, and the pension program, along with other benefits, helps meet that objective.
Supplemental Insurance/Retirement Plan
We believe that our Supplemental Insurance/Retirement Plan, or “SIRP,” provides a competitive advantage by offering a
program that is particularly attractive to
mid-career
hires and executives who are promoted to key positions from within the Company. The SIRP provides supplemental death and retirement benefits to selected
key employees, including the named executive officers. The SIRP is a
non-qualified
deferred compensation plan under which annual accruals generally escalate in value as the executive officer progresses in his
or her career. Upon retirement, which is defined under the SIRP as age 55 with five years of service to us, a participant is entitled to payment of his or her benefits. While there is no direct link to performance once an executive officer becomes a
participant, the annual accrual is based on the executive officer’s position as well as the current year’s base salary and bonus payments, which are directly linked to performance, as discussed above. In addition, the SIRP serves as a
valuable retention tool, since service for an extended period is generally required for benefits to vest and accruals increase as the participant reaches certain age ranges. Benefits under the SIRP that the executive officer would have otherwise
received if he or she remained with us through age 65 are also payable, with respect to officers, following a termination of employment within three years after a change of control. The SIRP also provides a disability benefit for a participant who
becomes disabled before receipt of retirement benefits. Benefits are paid under the SIRP upon death, disability, retirement or change of control because, in each of these circumstances, we believe that the executive officer has satisfied his or her
obligations to us. A participant will forfeit all benefits owed under the SIRP upon violation of a restrictive covenant with us that
48
generally provides that the participant will not engage in business activities that are competitive with our businesses. We describe the SIRP in more detail below under the Nonqualified Deferred
Compensation Table.
Change of Control and Other Arrangements
We have entered into change of control agreements with each of our executive officers, as described below under the heading
entitled “Potential Payments Upon Termination or Change of Control.” Given our relative size in our industry and the trend toward consolidation in our industry, we believe that we need strong, market competitive change of control benefits
to attract and retain key executives. We believe this to be particularly important during and beyond an acquisition to ensure the ongoing success of our business and to maximize value for our shareholders.
In connection with reviewing the objectives of specific provisions of the change of control agreements and to better align our
practices with current compensation governance practices, for new agreements entered into as of January 1, 2010, the Committee eliminated payment of change of control benefits upon termination for any reason in the
six-month
period following the first anniversary of a change of control (i.e., a “walk-away” right), and tax
gross-up
payments to an executive in connection with any
excise taxes payable by such executive under Section 4999 of the Internal Revenue Code. These modifications to the Company’s change of control agreements do not impact the contractual commitments previously made to the named executive
officers under their change of control agreements.
Each of the Company’s change of control agreements contains a
“double trigger,” which requires termination of the executive without cause or by the executive for good reason in connection with a change of control, before payment of any change of control benefit to the executive. This structure
essentially places the decision of whether or not to trigger change of control benefits largely in the hands of the acquiring company, since a change of control alone would not trigger the benefit. We believe that these agreements encourage
retention by providing an incentive for the executive to remain with us until the completion of a pending change of control and by providing security to the executive, either in the form of continued employment or severance benefits, following a
change of control. For executives with agreements with us dated prior to January 1, 2010, termination of employment for any reason in the
six-month
period following the first anniversary of a change of
control will trigger payment of change of control benefits.
In addition, as a result of negotiations at the time of hire,
we entered into an agreement in 1995 with Mr. Weiland that requires us to pay him one year of base salary and bonus if he is terminated without cause. None of our other named executive officers has such an agreement.
Perquisites and Other Benefits
We historically provided certain perquisites to senior executives in order to provide security, convenience and support
services that allow them to more fully focus attention on carrying out their responsibilities to us. We describe the perquisites and other benefits available to the named executive officers in 2016 in the narrative following the Summary Compensation
Table below.
Under our Executive Choice Plan, the named executive officers receive an annual cash allowance of $65,000 for
the Chief Executive Officer, $55,000 for the Chief Operating Officer, and $40,000 for the Chief Financial Officer and Group Presidents. Executives may use the allowance to offset costs related to Company-administered automobiles and financial
planning, and/or to pay for other personal benefits of his or her choice. The annual allowance is not considered compensation under any of the Company’s employee benefit plans.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for compensation over
$1,000,000 paid to the Chief Executive Officer and the three other most highly compensated executive officers, other than the Chief Financial Officer, employed on the last day of any fiscal year. Qualifying performance-based compensation is not
subject to the deduction limit if certain requirements are met. We consider deductibility as one factor when we make a decision regarding executive compensation. In order to maximize the deductibility of our executives’ pay, we structured our
Executive Bonus Plan and 2012 Long Term Incentive Plan such that performance-based annual incentive bonuses and long-term equity-based compensation
49
paid under those plans for our most senior executives should constitute qualifying performance-based compensation under Section 162(m). However, in some cases, we determine that it is
appropriate to provide compensation that may exceed deductibility limits in order to meet market demands and retain key executives. In 2016, all of the compensation paid to our executive officers was intended to be deductible under
Section 162(m), except for a limited portion of Mr. Ring’s total compensation.
Equity Grant
Practices
Annual grants of equity compensation are generally made on one occasion during the year to all eligible
employees, except performance units which are granted within the first 90 days of the start of the related performance period. For all stock option grants, the exercise price is determined on the date of grant and is equal to the fair market value
of our common stock on that date, which is defined under our 2012 Long Term Incentive Plan as the average of the high and low prices of the common stock on the New York Stock Exchange on the grant date. Grants of equity compensation to new hires and
eligible employees (other than corporate officers or division heads) made outside of the annual equity grant cycle are either approved by the Compensation Committee directly, or by management pursuant to a delegation of authority within
pre-determined
value targets approved by the Compensation Committee each year. There were no
off-cycle
grants made to the named executive officers in 2016.
Compensation Risk Assessment
Management works with an outside consultant to conduct a comprehensive risk assessment of the Company’s compensation
policies, practices and programs. The annual review process includes the following:
|
|
•
|
|
Completing a compensation plan inventory that catalogues executive compensation and broad-based incentive
plans worldwide and covers key terms and features, and plan administration and approval processes for each plan;
|
|
|
•
|
|
For each plan determined to be material based on total payout and/or payment per participant, applying a
scorecard to assess the potential of creating excessive risk based on plan design, governance and operation; and
|
|
|
•
|
|
Detailing any concerns arising from the results in a report to management, which would include suggestions to
further mitigate risk if appropriate.
|
Management reviewed and considered the assessment process and the summary report,
and agreed with the consultant’s conclusion that the Company’s policies, practices and programs do not create risks that are reasonably likely to have a material adverse effect on the Company.
Compensation Committee Report
The following report is not deemed to be “soliciting material” or to be “filed” with the SEC or subject
to the SEC’s proxy rules or the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the report shall not be deemed to be incorporated by reference into any prior or subsequent
filing by us under the Securities Act of 1933, as amended, or the Exchange Act.
To the Board of Directors of C. R. Bard, Inc.:
We have reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement.
Based on the review and discussion referred to above, we recommend to the Board of Directors that the Compensation Discussion
and Analysis referred to above be included in this proxy statement and in the Company’s Annual Report on Form
10-K
for the year ended December 31, 2016.
THE COMPENSATION COMMITTEE
Herbert L. Henkel, Chair
David F. Melcher
Anthony Welters
Tony L. White
50
Summary Compensation Table
The table below sets forth information concerning compensation earned by our Chief Executive Officer, Chief Financial Officer
and our three other most highly compensated executive officers for 2016. These individuals are collectively referred to as the “named executive officers” throughout this proxy statement. The narrative below the table provides additional
information about the data in the table, identified by column heading, and about the data in the Grants of Plan-Based Awards in 2016 table below.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
Name and
Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
(1)
|
|
|
Option
Awards
($)
(2)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
(3)
|
|
|
All Other
Compensation
($)
(4)
|
|
|
Total
($)
|
|
|
Timothy M. Ring
|
|
|
2016
|
|
|
|
1,092,000
|
|
|
|
N/A
|
|
|
|
5,246,728
|
|
|
|
2,871,377
|
|
|
|
1,634,942
|
(5)
|
|
|
741,773
|
|
|
|
1,039,680
|
|
|
|
12,626,500
|
|
|
Chairman and Chief
|
|
|
2015
|
|
|
|
1,092,000
|
|
|
|
N/A
|
|
|
|
4,635,117
|
|
|
|
2,707,381
|
|
|
|
1,761,724
|
(6)
|
|
|
573,355
|
|
|
|
975,261
|
|
|
|
11,744,838
|
|
|
Executive Officer
|
|
|
2014
|
|
|
|
1,092,000
|
|
|
|
N/A
|
|
|
|
4,027,300
|
|
|
|
2,198,986
|
|
|
|
1,754,298
|
(7)
|
|
|
744,675
|
|
|
|
1,023,676
|
|
|
|
10,840,935
|
|
|
John H. Weiland
|
|
|
2016
|
|
|
|
913,610
|
|
|
|
N/A
|
|
|
|
2,378,491
|
|
|
|
1,301,701
|
|
|
|
1,013,193
|
(5)
|
|
|
554,468
|
|
|
|
959,542
|
|
|
|
7,121,005
|
|
|
Vice Chairman, President
|
|
|
2015
|
|
|
|
909,175
|
|
|
|
N/A
|
|
|
|
2,252,172
|
|
|
|
1,227,339
|
|
|
|
1,091,764
|
(6)
|
|
|
461,589
|
|
|
|
978,635
|
|
|
|
6,920,674
|
|
|
and Chief Operating Officer
|
|
|
2014
|
|
|
|
887,000
|
|
|
|
N/A
|
|
|
|
2,398,137
|
|
|
|
1,150,230
|
|
|
|
1,055,530
|
(7)
|
|
|
527,287
|
|
|
|
1,011,689
|
|
|
|
7,029,873
|
|
|
Christopher S. Holland
|
|
|
2016
|
|
|
|
629,138
|
|
|
|
N/A
|
|
|
|
1,483,763
|
|
|
|
861,430
|
|
|
|
560,888
|
(5)
|
|
|
–
|
|
|
|
414,133
|
|
|
|
3,949,352
|
|
|
Senior Vice President and
|
|
|
2015
|
|
|
|
611,091
|
|
|
|
N/A
|
|
|
|
1,324,813
|
|
|
|
721,974
|
|
|
|
585,593
|
(6)
|
|
|
–
|
|
|
|
409,070
|
|
|
|
3,652,541
|
|
|
Chief Financial Officer
|
|
|
2014
|
|
|
|
594,500
|
|
|
|
N/A
|
|
|
|
1,341,966
|
|
|
|
676,625
|
|
|
|
593,218
|
(7)
|
|
|
–
|
|
|
|
436,359
|
|
|
|
3,642,668
|
|
|
Jim C. Beasley
|
|
|
2016
|
|
|
|
629,644
|
|
|
|
N/A
|
|
|
|
1,399,015
|
|
|
|
765,697
|
|
|
|
737,627
|
(5)
|
|
|
253,403
|
|
|
|
505,572
|
|
|
|
4,290,958
|
|
|
Group President
|
|
|
2015
|
|
|
|
606,886
|
|
|
|
N/A
|
|
|
|
1,324,813
|
|
|
|
721,974
|
|
|
|
574,629
|
(6)
|
|
|
156,684
|
|
|
|
442,993
|
|
|
|
3,827,979
|
|
|
|
|
|
2014
|
|
|
|
592,083
|
|
|
|
N/A
|
|
|
|
1,341,966
|
|
|
|
676,625
|
|
|
|
622,442
|
(7)
|
|
|
266,900
|
|
|
|
463,900
|
|
|
|
3,963,916
|
|
|
Timothy P. Collins
|
|
|
2016
|
|
|
|
667,600
|
|
|
|
N/A
|
|
|
|
1,399,015
|
|
|
|
765,697
|
|
|
|
636,961
|
(5)
|
|
|
256,562
|
|
|
|
584,108
|
|
|
|
4,309,943
|
|
|
Group President
|
|
|
2015
|
|
|
|
627,724
|
|
|
|
N/A
|
|
|
|
1,324,813
|
|
|
|
721,974
|
|
|
|
579,018
|
(6)
|
|
|
191,624
|
|
|
|
463,913
|
|
|
|
3,909,066
|
|
|
|
|
|
2014
|
|
|
|
594,500
|
|
|
|
N/A
|
|
|
|
1,341,966
|
|
|
|
676,625
|
|
|
|
655,945
|
(7)
|
|
|
275,033
|
|
|
|
528,981
|
|
|
|
4,073,050
|
|
|
(1)
|
Amounts represent: (i) the aggregate grant date fair value of annual grants of performance-contingent
restricted stock units calculated using a price per share as follows: $219.555 for 2016, $186.425 for 2015 and $168.865 for 2014; and (ii) performance units for the performance periods of January 1, 2016 to December 31, 2018 granted
on February 10, 2016 using a price per share of $205.543, January 1, 2015 to December 31, 2017 granted on March 23, 2015 using a price per share of $171.25 and January 1, 2014 to December 31, 2016 granted on
February 12, 2014 using a price per share of $136.43 for each named executive officer, in each case in accordance with FASB ASC Topic 718. The maximum aggregate grant date fair value of the performance units for 2016, 2015 and 2014 for
Mr. Ring were $6,491,870, $5,192,833 and $4,406,252; for Mr. Weiland were $2,943,047, $2,716,220 and $3,004,516; for Mr. Holland were $1,731,001, $1,597,921 and $1,602,452; for Mr. Beasley were $1,731,001, $1,597,921 and
$1,602,452; and for Mr. Collins were $1,731,001, $1,597,921 and $1,602,452, respectively.
|
|
(2)
|
Amounts represent the aggregate grant date fair value of stock options in 2016, 2015 and 2014 awarded to the
named executive officers in accordance with FASB ASC Topic 718. For a description of the assumptions used to arrive at these amounts, see Note 11 to Consolidated Financial Statements contained in our Form
10-K
for the year ended December 31, 2016.
|
|
(3)
|
A description of the amounts included in this column is set forth below under the heading “Change in
Pension Value and Nonqualified Deferred Compensation Earnings.” The change in pension value is the change in the present value of the pension benefits. The present value changes from one year to the next due to additional benefits earned, one
less year until retirement and changes in the interest rate used to discount the lump sum value of the age 62 pension benefit to the current date (this interest rate is the “discount rate”). When the discount rate increases, the present
value declines and when the discount rate decreases, the present value increases. The discount rate had decreased from December 31, 2013 to December 31, 2014 and from December 31, 2015 to December 31, 2016, which increased the
2014 and 2016 changes in pension value. However, from December 31, 2014 to December 31, 2015, the discount rate increased and this reduced the change in pension value shown for 2015 relative to the 2014 and 2016 increases in pension value.
|
|
(4)
|
A description of the items included in this column, including information regarding perquisites, grant date
fair value related to premium units acquired under the MSPP and other benefits, is set forth below under the heading “All Other Compensation.”
|
|
(5)
|
Amounts represent annual bonus awards paid to the named executive officers in February 2017 relating to our
2016 fiscal year under our Executive Bonus Plan. Messrs. Ring, Weiland, Holland, Beasley and Collins deferred all or a portion of their annual bonuses paid in February 2017 in the amounts of $572,230, $1,013,193, $560,888, $700,746 and $636,961,
respectively, to purchase 3,472, 6,147, 3,403, 4,251 and 3,865 restricted stock units, respectively, under the MSPP. These unit amounts include unvested elective and premium units acquired under the MSPP. We describe the MSPP under the Nonqualified
Deferred Compensation Table below. The dollar value of the premium units is included in “All Other Compensation”.
|
|
(6)
|
Amounts represent annual bonus awards paid to the named executive officers in February 2016 relating to our
2015 fiscal year under our Executive Bonus Plan. Messrs. Ring, Weiland, Holland, Beasley and Collins deferred all or a portion of their annual bonuses paid in February 2016 in the amounts of $616,603, $1,091,764, $585,593, $574,629 and $579,018,
respectively, to purchase 5,116, 9,059, 4,859, 4,768 and 4,805 restricted stock units, respectively, under the MSPP. These unit amounts include unvested elective and premium units acquired under the MSPP. We describe the MSPP under the Nonqualified
Deferred Compensation Table below.
|
51
|
(7)
|
Amounts represent annual bonus awards paid to the named executive officers in February 2015 relating to our
2014 fiscal year under our Executive Bonus Plan. Messrs. Ring, Weiland, Holland, Beasley and Collins deferred all or a portion of their annual bonuses paid in February 2015 in the amounts of $614,004, $1,055,530, $593,218, $560,198 and $655,945,
respectively, to purchase 6,062, 10,420, 5,856, 5,530 and 6,476 restricted stock units, respectively, under the MSPP. These unit amounts include unvested elective and premium units acquired under the MSPP. We describe the MSPP under the Nonqualified
Deferred Compensation Table below.
|
|
|
|
It is important to note that the
Committee approves target equity award values for named executive officers in December,
granting 2/3 of such value in the current year and 1/3 of such value in the following year
. Therefore, the 2016 equity grant values shown in the
Summary Compensation Table reflect 2/3 of the grant value approved in 2016 and granted in 2016 and 1/3 of the grant value approved in 2015 and granted in 2016.
|
Stock Awards
In February 2016, three-year performance units were granted to the named executive officers under our 2012 Long Term Incentive
Plan reflecting 1/3 of the total equity award value approved by the Compensation Committee in December 2015. Due to our approach of dividing and delivering a single year’s annual equity award value in two different fiscal years, the 2016 grant
values shown in the Stock Award column reflect a portion of the Committee’s decisions made in 2016, and a portion of the Committee’s decisions made in 2015. The performance units, described in detail above under “Executive Officer
Compensation – Compensation Discussion and Analysis – Long-Term Equity-Based Compensation”, are payable from 0% to 200% depending upon the level of achievement of a
pre-established
average sales growth goal and increased or decreased by up to 20% based on our total shareholder return rank relative to a broad industry group, in each case over the three-year performance
period. The earned performance units vest in full upon the Committee’s determination and certification of performance achievement following the end of the three-year period, subject to continued employment.
The performance-contingent restricted stock units granted to our named executive officers are subject to both
“performance-based” vesting and “time-based” vesting. Performance-based vesting must occur before the time-based vesting begins. The performance-based vesting criteria are met upon achievement of certain targeted increases in
emerging markets sales. The performance-based vesting criteria for these grants is measured over a
two-year
performance period. If we do not achieve 100% of the emerging markets sales target in this period,
the entire award will forfeit. If we achieve the performance-based vesting criteria and the Committee certifies such achievement, 50% of the restricted stock units vest immediately and 25% of the units will vest on each of the first and second
anniversaries of the date the Committee certifies performance goal achievement, subject to continued employment. The number of units of performance-contingent restricted stock granted in 2016 to each of the named executive officers is set forth
below in the Grants of Plan-Based Awards in 2016 Table. For 2016 grants made to named executive officers and certain other executive officers, dividend equivalents are accrued on all unvested restricted stock units in the same amount as the
dividends paid on shares of our common stock (and paid only if and when the underlying RSUs vest).
Option Awards
We grant stock options with an exercise price equal to the fair market value of our common stock on the date of grant.
“Fair market value” is defined under our 2012 Long Term Incentive Plan as the average of the high and low prices of our common stock as reported on the NYSE on the date of grant. The option price is payable in cash, by surrender of shares
of our common stock or through cashless exercise. Stock options granted in 2016 will vest in 25% annual increments on the first four anniversaries of the grant date, subject to continued employment.
Non-Equity
Incentive Plan Compensation
Our executive officers are eligible for annual incentive awards, which we refer to as the executive’s annual bonus, under
the provisions of our Executive Bonus Plan. Each year at the February Compensation Committee
52
meeting, the Committee typically approves corporate financial targets that are used to determine the eligibility for, and amounts of, awards for the year. Based on our performance against these
financial targets, we apply a formula to each executive’s target annual bonus award amount as set by the Compensation Committee. Further information about our annual bonus process is set forth in the CD&A under “Elements of Executive
Compensation”. As described in the CD&A under “Annual Bonus Awards for 2016”, the following depicts the calculation of the portion of the 2016 annual bonus awards for the named executive officers that was based on the achievement
of corporate performance measures. As shown below, 100% of the payout for 2016 for Messrs. Ring, Weiland and Holland was based on corporate performance and 50% of the payout for Messrs. Beasley and Collins was based on corporate performance. The
remaining portions of Messrs. Beasley’s and Collins’s payout were based on business unit performance measures shown below.
Annual Bonus
Awards Based on Corporate Performance Achievement for 2016 (110.9%):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A
|
|
B
|
|
C
|
|
D
|
|
|
|
E
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Target
Bonus
%
|
|
Percentage of
Target Bonus based
on Corporate
Performance
Achievement
|
|
Corporate
Allocation
%
|
|
Corporate Payout
Achieved
(% of Base
Salary)
|
|
|
|
Base
Salary
(for bonus purposes)
|
|
|
|
Annual Bonus
Award
Payout Based on
2016 Corporate
Performance
Achievement
|
|
|
|
|
|
|
|
[A x B]
|
|
[110.9% x C]
|
|
|
|
|
|
|
|
[D x E]
|
|
Timothy M. Ring
|
|
|
|
135
|
%
|
|
100%
|
|
135%
|
|
149.72%
|
|
x
|
|
|
|
$1,092,000
|
|
|
=
|
|
|
|
$1,634,942
|
|
|
John H. Weiland
|
|
|
|
100
|
%
|
|
100%
|
|
100%
|
|
110.90%
|
|
x
|
|
|
|
$913,610
|
|
|
=
|
|
|
|
$1,013,193
|
|
|
Christopher S. Holland
|
|
|
|
80
|
%
|
|
100%
|
|
80%
|
|
88.72%
|
|
x
|
|
|
|
$632,200
|
|
|
=
|
|
|
|
$560,888
|
|
|
Jim C. Beasley
|
|
|
|
80
|
%
|
|
50%
|
|
40%
|
|
44.40%
|
|
x
|
|
|
|
$633,700
|
|
|
=
|
|
|
|
$281,363
|
|
|
Timothy P. Collins
|
|
|
|
80
|
%
|
|
50%
|
|
40%
|
|
44.40%
|
|
x
|
|
|
|
$671,900
|
|
|
=
|
|
|
|
$298,324
|
|
Note: Percentages in the above chart are displayed as rounded numbers, and as such, numbers may not total.
The following depicts the calculation of the remaining portion of the annual bonus awards for Messrs. Beasley and Collins that
is based on achievement of each executive’s business unit performance measures. As discussed in the CD&A under “Annual Bonus Awards for 2016”, business unit performance for these executives was determined based on achievement of
primary revenue and net income division goals, along with an operations variance goal for Mr. Collins’s global operations responsibility. Business unit secondary goals (based on achievement of goals for actual gross profit, quality and new
product sales) may increase or decrease the business unit portion of the executive’s bonus target up to 5% for each goal based on the degree of achievement of the goal. The 2016 annual bonus award for each of these executives was determined by
adding the portion of each executive’s annual bonus award payout based on corporate performance (above) to the portion of annual bonus award payout based on his or her business unit performance (below).
Mr. Beasley’s Annual Bonus Award Based on Business Unit Performance Achievement:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Target
Bonus
(80%)
x 50%
|
|
+
|
|
Bonus Target Adjustment
Based on Secondary Goal
Achievement
|
|
=
|
|
Adjusted Target Bonus (%)
|
|
Step 1
|
|
40%
|
|
+
|
|
5.7
|
|
=
|
|
45.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Target
Bonus (%)
|
|
x
|
|
Average
Business Unit
Primary Goal Achievement
(%)
|
|
=
|
|
Business Unit Award
Payout (%)
|
|
Step 2
|
|
45.7%
|
|
x
|
|
157.7%
|
|
=
|
|
72.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Unit Award
Payout (%)
|
|
x
|
|
Applicable Base
Salary
($)
|
|
=
|
|
Annual Bonus Award
Payout Based on 2016
Business Unit Performance
Achievement ($)
|
|
Step 3
|
|
72.0%
|
|
x
|
|
$633,700
|
|
=
|
|
$456,264
|
Note: Percentages in the above chart are displayed as rounded numbers, and as such, numbers may not total.
53
Mr. Collins’s Annual Bonus Award Based on Business Unit Performance Achievement (50% linked to
operations achievement and 50% linked to division achievement):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Individual
Target
Bonus (80%)
x 50%)
x
50%
|
|
x
|
|
|
Operations
Variance
Achievement (%)
|
|
=
|
|
|
Operations Bonus Award
Payout (%)
(“Operations %”)
|
|
Step 1
|
|
20%
|
|
|
x
|
|
|
79.1%
|
|
|
=
|
|
|
15.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Individual
Target
Bonus (80%)
x 50%)
x 50%
|
|
+
|
|
|
Bonus
Target
Adjustment based on
Secondary Goal
Achievement
|
|
=
|
|
|
Adjusted Division
Target
Bonus (%)
|
|
Step 2
|
|
20%
|
|
|
+
|
|
|
0.4
|
|
|
=
|
|
|
20.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Division Target
Bonus (%)
|
|
x
|
|
|
Average
Business Unit
Primary Goal
Achievement (%)
|
|
=
|
|
|
Division Bonus Award
Payout (%)
(“Division %”)
|
|
Step 3
|
|
20.4%
|
|
|
x
|
|
|
169.7%
|
|
|
=
|
|
|
34.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business
Unit Award
Payout (%)
|
|
x
|
|
|
Applicable
Base Salary
($)
|
|
=
|
|
|
Annual Bonus Award
Payout Based on 2016
Division
Performance
($)
|
|
Step 4
|
|
34.6%
|
|
|
x
|
|
|
$671,900
|
|
|
=
|
|
|
$232,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations
%
x Applicable Base
Salary ($)
|
|
+
|
|
|
Annual Bonus
Award
Payout Based on Division
Performance
($)
|
|
=
|
|
|
Annual Bonus Award Payout
Based on 2016
Business
Unit Performance
Achievement ($)
|
|
Step 5
|
|
$106,160
|
|
|
+
|
|
|
$232,477
|
|
|
=
|
|
|
$338,637
|
Note: Percentages in the above chart are displayed as rounded numbers, and as such, numbers may not total.
Payment of annual bonuses is made promptly after approval by our Compensation Committee in the February immediately following
the performance year. The executive officer is generally required to be employed at the end of the fiscal year to be entitled to an annual bonus payment, except in certain cases described below under “Potential Payments Upon Termination or
Change of Control.”
Change in Pension Value and Nonqualified Deferred Compensation Earnings
Amounts in this column include changes in the present value of the benefits available to the named executive officers under our
qualified pension plan, known as the Employees’ Retirement Plan, and our SERP. We describe these plans and the assumptions used to calculate the present value of the benefits in more detail below under the Pension Benefits Table. The amounts
shown in the Summary Compensation Table for 2016, 2015 and 2014 reflect the changes in the present value of the benefits over 2015, 2014 and 2013, respectively, which was calculated using the same assumptions described under the Pension Benefits
Table below.
Our pension plan allows for accruals based on compensation up to the maximum federal limit, which was
$265,000 in 2016 and 2015 and $260,000 in 2014. The SERP provides for accruals based on compensation above
54
the federal limit. The changes in 2016, 2015 and 2014 in the present value of accrued benefits under the Employees’ Retirement Plan and SERP for the named executive officers were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees’ Retirement Plan
(1)
|
|
|
SERP
(1)
|
|
|
Named Executive Officer
|
|
2016
(2)
|
|
|
2015
(3)
|
|
|
2014
(4)
|
|
|
2016
(2)
|
|
|
2015
(3)
|
|
|
2014
(4)
|
|
|
Timothy M. Ring
|
|
$
|
73,137
|
|
|
$
|
52,679
|
|
|
$
|
81,220
|
|
|
$
|
668,636
|
|
|
$
|
520,676
|
|
|
$
|
663,455
|
|
|
John H. Weiland
|
|
$
|
78,470
|
|
|
$
|
63,594
|
|
|
$
|
81,247
|
|
|
$
|
475,998
|
|
|
$
|
397,995
|
|
|
$
|
446,040
|
|
|
Christopher S. Holland
(5)
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
Jim C. Beasley
|
|
$
|
67,667
|
|
|
$
|
28,360
|
|
|
$
|
94,138
|
|
|
$
|
185,736
|
|
|
$
|
128,324
|
|
|
$
|
172,762
|
|
|
Timothy P. Collins
(6)
|
|
$
|
60,692
|
|
|
$
|
37,788
|
|
|
$
|
71,127
|
|
|
$
|
195,870
|
|
|
$
|
153,836
|
|
|
$
|
203,906
|
|
|
(1)
|
The change in pension value is the change in the present value of the pension benefits. The present value
changes from one year to the next due to additional benefits earned, one less year until retirement and changes in the interest rate used to discount the lump sum value of the age 62 pension benefit to the current date (this interest rate is the
“discount rate”). When the discount rate increases, the present value declines and when the discount rate decreases, the present value increases. The discount rate had decreased from December 31, 2013 to December 31, 2014 and
from December 31, 2015 to December 31, 2016, which increased the 2014 and 2016 changes in pension value. However, from December 31, 2014 to December 31, 2015, the discount rate increased and this reduced the change in pension
value shown for 2015 relative to the 2014 and 2016 increases in pension value.
|
|
(2)
|
These amounts were determined by comparing the present value of each named executive officer’s accrued
benefit under the Employees’ Retirement Plan and the SERP in 2015 with the present value of the accrued benefit under these plans in 2016.
|
|
(3)
|
These amounts were determined by comparing the present value of each named executive officer’s accrued
benefit under the Employees’ Retirement Plan and the SERP in 2014 with the present value of the accrued benefit under these plans in 2015.
|
|
(4)
|
These amounts were determined by comparing the present value of each named executive officer’s accrued
benefit under the Employees’ Retirement Plan and the SERP in 2013 with the present value of the accrued benefit under these plans in 2014.
|
|
(5)
|
Mr. Holland was hired in 2012, after the date on which we closed the Employees’ Retirement Plan and
SERP to new hires and does not participate in either plan. Mr. Holland became eligible for an annual retirement contribution in the 401(k) plan and the DCEP in 2013.
|
|
(6)
|
A correction was made to Mr. Collins’s accrued benefit under the SERP for periods prior to 2013.
This correction was only reflected in the calculation of his December 31, 2014 accrued benefit so the increase is included in his 2014 change in pension value in the SERP. This correction added $30,477.
|
All Other Compensation
Amounts in this column include the values of the following: perquisites; Company-provided life insurance; tax
gross-up
payments; 2016 accruals to named executive officers’ SIRP accounts; the grant date fair value of unvested premium shares acquired under the MSPP; 401(k) matching contributions; and Executive Choice
Plan allowances.
Perquisites
We make available certain limited perquisites to the named executive officers consisting of relocation benefits and personal
use of the Company’s aircraft.
Our relocation program requires an employee who receives relocation benefits to enter
into a relocation agreement and provides that if the employee voluntarily terminates employment with the Company within 24 months of the effective date of relocation, the employee: (i) forfeits any remaining payments that may be due under the
relocation program; and (ii) will be required to repay in full all relocation expenses paid to the employee or incurred by the Company on the employee’s behalf. In certain cases, the Company has increased this period to 36 months,
emphasizing the long-term commitment associated with the relocation.
Our security policy as approved by the Board of
Directors, requires that the Chief Executive Officer and the Chief Operating Officer use Company-provided aircraft for business and personal travel whenever possible. Personal use of our aircraft by other employees requires approval by the Chief
Executive Officer. In addition to reducing security risks, use of our aircraft for personal travel maximizes the executives’ availability for Company business.
55
The Company maintains a policy with respect to personal use of aircraft for our
Chief Executive Officer, Chief Operating Officer and Chief Financial Officer. In connection with the policy, each of these executives entered into a time-sharing agreement with us under which each reimburses us based on incremental operating costs
for personal use of Company aircraft above certain limits set by the Committee. For 2016, the Chief Executive Officer was required to reimburse us for personal use above $125,000, the Chief Operating Officer was required to reimburse us for personal
use above $60,000 and the Chief Financial Officer was required to reimburse us for all personal use. The limits will remain at these levels for 2017 and have not increased since the policy was adopted.
For purposes of the value disclosed in this proxy statement, we calculate the amounts for personal use of our aircraft based on
the incremental cost to us of operating the aircraft in each instance of personal use, less any reimbursement received from the executive under the time-sharing arrangement. Our methodology for calculating incremental cost for 2016 was based on
average incremental cost per hour or portion thereof taking into account return flights without passengers. These costs include fuel, the travel expenses of the crew,
on-board
catering, supplies, and landing
and parking fees. Since our aircraft are used primarily for business travel, we do not include the fixed costs that do not change based on personal usage, such as pilot salaries, the purchase or leasing costs of our aircraft and the cost of
maintenance. For 2016, the amounts included in the “All Other Compensation” column of the Summary Compensation Table for personal use of our aircraft for Messrs. Ring, Weiland and Holland were $125,000, $42,997 and $0, respectively.
Life Insurance
In 2016, we provided life insurance for Mr. Ring pursuant to our Key Executive Insurance Plan, which we describe below
under the heading “Potential Payments Upon Termination or Change of Control.” The amount of the premiums paid in 2016 from the accumulated balance of the policy are included in the “All Other Compensation” column of the Summary
Compensation Table above.
Tax
Gross-up
Payments
Beginning in 2011 and for subsequent years, Mr. Ring waived his right to receive a tax
gross-up
payment with respect to the value of life insurance under the Key Executive Insurance Plan. Other than with respect to any applicable
change-of-control
agreement entered into before the Company changed its policy for such agreements in 2010, none of our other named executive officers are entitled to
any tax
gross-up
payments.
2016 Accruals to SIRP Accounts
We provide supplemental retirement benefits to selected key employees, including the named executive officers, pursuant to our
SIRP. The SIRP is discussed in more detail below under the Nonqualified Deferred Compensation Table. For 2016, the accruals to accounts under the SIRP for Messrs. Ring, Weiland, Holland, Beasley and Collins were $591,760, $415,832, $86,766, $154,530
and $260,284, respectively.
MSPP
Under our MSPP the named executive officers and other employees at a specified level and above are required to defer a portion
of their annual bonus to purchase restricted stock units at a discount until they meet certain minimum ownership requirements. In addition, each participant has the option to defer additional amounts up to 100% of their annual bonus. The grant date
fair value related to premium units acquired under the MSPP in respect of 2016 for Messrs. Ring, Weiland, Holland, Beasley and Collins was $246,621, $436,438, $241,650, $301,767 and $274,549, respectively. We describe the MSPP in more detail below
under the Nonqualified Deferred Compensation Table.
401(k) Company Match
Under the Bard Employees’ Savings Trust 401(k) Plan, we match 100% on the first 3% of pay contributed to the plan and 50%
on the next 1% of pay contributed to the plan. In 2016, participants could contribute up to
56
50% of their pay into the plan, subject to an annual dollar limit imposed by the Internal Revenue Code, which was $18,000 for 2016. Participants over age 50 could also make
“catch-up”
contributions of up to an additional $6,000 per year for 2016.
Annual
Retirement Contribution
Executives hired on or after January 1, 2011 are eligible for an annual retirement
contribution made by the Company in the Company’s 401(k) plan and an enhanced benefit under our Defined Contribution Excess Plan (“DCEP”). Mr. Holland, who was hired in 2012, became eligible for this annual retirement
contribution in 2013. For more detailed information, see “Nonqualified Deferred Compensation – Annual Retirement Contribution and DCEP” below.
Executive Choice Plan
In 2016, the named executive officers participated in the Executive Choice Plan, which provides an annual cash allowance of
$65,000 for the Chief Executive Officer, $55,000 for the Chief Operating Officer, and $40,000 for the Chief Financial Officer and Group Presidents, which amounts have remained at these levels since the plan was implemented on January 1, 2011.
Executives may use the allowance to offset costs related to Company-administered automobiles and financial planning, and/or to pay for other personal benefits of his or her choice. The annual allowance is not considered compensation under any of the
Company’s employee benefit plans.
57
Grants of Plan-Based Awards in 2016
The following table sets forth information about awards granted to the named executive officers under our 2012 Long Term
Incentive Plan in 2016 and our Executive Bonus Plan for the 2016 fiscal year. We describe these awards in more detail above under the headings “Stock Awards,” “Option Awards” and
“Non-Equity
Incentive Plan Compensation.”
|
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|
|
|
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|
|
|
Name
|
|
Grant
Date
|
|
Estimated Future Payouts
Under
Non-Equity
Incentive
Plan Awards
(1)
|
|
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards
|
|
|
All
Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)
(7)
|
|
|
Closing
Market
Price
on
Date of
Grant
($/Sh)
(7)
|
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|
Grant
Date
Fair
Value of
Stock
and
Option
Awards
($)
|
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
|
|
|
|
Timothy M. Ring
|
|
N/A
|
|
|
737,100
|
|
|
|
1,474,200
|
|
|
|
2,211,300
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
12/14/2016
(2)
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,929
|
|
|
|
219.555
|
|
|
|
217.920
|
|
|
|
2,871,377
|
(8)
|
|
|
|
12/14/2016
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,577
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,541,788
|
(9)
|
|
|
|
2/10/2016
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,632
|
|
|
|
13,160
|
|
|
|
31,584
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,704,939
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John H. Weiland
|
|
N/A
|
|
|
456,805
|
|
|
|
913,610
|
|
|
|
1,370,415
(5)
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2016
(2)
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,088
|
|
|
|
219.555
|
|
|
|
217.920
|
|
|
|
1,301,701
|
(8)
|
|
|
|
12/14/2016
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,152,225
|
(9)
|
|
|
|
2/10/2016
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,193
|
|
|
|
5,966
|
|
|
|
14,318
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,226,267
|
(10)
|
|
Christopher S. Holland
|
|
N/A
|
|
|
252,880
|
|
|
|
505,760
|
|
|
|
758,640
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2016
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,279
|
|
|
|
219.555
|
|
|
|
217.920
|
|
|
|
861,430
|
(8)
|
|
|
|
12/14/2016
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
762,515
|
(9)
|
|
|
|
2/10/2016
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
702
|
|
|
|
3,509
|
|
|
|
8,422
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
721,249
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jim C. Beasley
|
|
N/A
|
|
|
126,740
|
|
|
|
253,480
|
|
|
|
380,220
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
|
|
|
253,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2016
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,581
|
|
|
|
219.555
|
|
|
|
217.920
|
|
|
|
765,697
|
(8)
|
|
|
|
12/14/2016
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
677,766
|
(9)
|
|
|
|
2/10/2016
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
702
|
|
|
|
3,509
|
|
|
|
8,422
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
721,249
|
(10)
|
|
Timothy P. Collins
|
|
N/A
|
|
|
134,380
|
|
|
|
268,760
|
|
|
|
403,140
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/A
|
|
|
|
|
|
|
268,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/14/2016
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,581
|
|
|
|
219.555
|
|
|
|
217.920
|
|
|
|
765,697
|
(8)
|
|
|
|
12/14/2016
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
677,766
|
(9)
|
|
|
|
2/10/2016
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
702
|
|
|
|
3,509
|
|
|
|
8,442
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
721,249
|
(10)
|
|
(1)
|
Reflects the potential amounts payable as annual bonus awards under our Executive Bonus Plan. As described
above in the narrative following the Summary Compensation Table under the heading
“Non-Equity
Incentive Plan Compensation,” annual bonuses for Messrs. Ring, Weiland and Holland are determined based
on achievement of corporate financial targets. A portion of the annual bonus for Messrs. Beasley and Collins is based on the achievement of corporate financial targets and the remaining portion is based on the achievement of certain financial
targets for their respective business units. The amount in the first row for Messrs. Beasley and Collins reflects the portion of their annual bonus based on achievement of corporate financial targets and the amount in the second row reflects the
portion of their annual bonus based on achievement of their respective business unit targets, which have no minimum or maximum amounts.
|
|
(2)
|
Stock options granted under our 2012 Long Term Incentive Plan.
|
|
(3)
|
Performance-contingent restricted stock units granted under our 2012 Long Term Incentive Plan.
|
|
(4)
|
Performance units granted under our 2012 Long Term Incentive Plan.
|
|
(5)
|
Reflects the maximum bonus amount upon 115% achievement of the combined primary corporate performance
targets. As noted above in the narrative following the Summary Compensation Table under the heading
“Non-Equity
Incentive Plan Compensation,” however, this amount may be increased based on the
Company’s average percentage achievement above the secondary corporate target, which percentage is multiplied by the bonus percentage based on the level of achievement of the combined primary performance targets to determine the total bonus
amount, and, if applicable, may also be increased by the level of achievement of the executive’s business unit performance targets. No bonus payout for 2016 can exceed $3,000,000 pursuant to the terms of the Executive Bonus Plan.
|
|
(6)
|
Reflects the maximum potential number of units received upon achievement of three-year average adjusted sales
growth target plus the maximum potential total shareholder return modifier.
|
58
|
(7)
|
Stock options granted with an exercise price equal to the fair market value of our common stock on the date
of grant, which is the average of the high and low prices of our common stock as reported on the NYSE on the date of grant.
|
|
(8)
|
Amount represents the value of stock options granted in 2016, calculated using a grant date fair value per
share of $56.38, determined as of December 14, 2016. The grant date fair value was determined using a binomial-lattice valuation model that takes into account variables such as volatility, dividend yield rate and risk-free interest rate. For a
description of the assumptions used to arrive at the grant date fair value, see Note 11 to Consolidated Financial Statements contained in our Form
10-K
for the year ended December 31, 2016.
|
|
(9)
|
Amount represents the value of performance-contingent restricted stock units granted in 2016, calculated
using a grant date fair value per share of $219.555, computed in accordance with FASB ASC Topic 718.
|
|
(10)
|
Amount represents the value of performance units granted in 2016, calculated using a grant date fair value
per share of $205.543, computed using a monte carlo simulation model for the total shareholder return component.
|
Outstanding and Exercised Equity Awards
Outstanding Equity Awards at 2016 Fiscal
Year-End
The following table sets forth information regarding the outstanding
equity awards held by our named executive officers at December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number
of Shares
or Units
of
Stock that
have not
Vested
(#)
(5)
|
|
Market
Value of
Shares or
Units of
Stock that
have
not
Vested
($)
(6)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights that
have
not
Vested
(#)
(7)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
that
have
not
Vested
($)
(6)
|
|
Timothy M. Ring
|
|
|
74,055
|
|
|
|
–
|
|
|
97.685
|
|
12/12/2022
|
|
28,180
|
|
|
6,330,919
|
|
|
77,063
|
|
|
17,312,974
|
|
|
|
|
|
49,038
|
|
|
|
16,347
|
(1)
|
|
136.370
|
|
12/11/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,609
|
|
|
|
30,610
|
(2)
|
|
168.865
|
|
12/10/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,464
|
|
|
|
49,393
|
(3)
|
|
186.425
|
|
12/9/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
50,929
|
(4)
|
|
219.555
|
|
12/14/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John H. Weiland
|
|
|
33,435
|
|
|
|
11,145
|
(1)
|
|
136.370
|
|
12/11/2023
|
|
18,655
|
|
|
4,191,032
|
|
|
39,797
|
|
|
8,940,794
|
|
|
|
|
|
16,011
|
|
|
|
16,011
|
(2)
|
|
168.865
|
|
12/10/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,463
|
|
|
|
22,392
|
(3)
|
|
186.425
|
|
12/9/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
23,088
|
(4)
|
|
219.555
|
|
12/14/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher S. Holland
|
|
|
20,410
|
|
|
|
–
|
|
|
97.685
|
|
12/12/2022
|
|
3,749
|
|
|
842,250
|
|
|
23,292
|
|
|
5,232,781
|
|
|
|
|
|
17,832
|
|
|
|
5,944
|
(1)
|
|
136.370
|
|
12/11/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,418
|
|
|
|
9,419
|
(2)
|
|
168.865
|
|
12/10/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,390
|
|
|
|
13,172
|
(3)
|
|
186.425
|
|
12/9/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
15,279
|
(4)
|
|
219.555
|
|
12/14/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jim C. Beasley
|
|
|
–
|
|
|
|
5,944
|
(1)
|
|
136.370
|
|
12/11/2023
|
|
3,749
|
|
|
842,250
|
|
|
22,906
|
|
|
5,146,062
|
|
|
|
|
|
–
|
|
|
|
9,419
|
(2)
|
|
168.865
|
|
12/10/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,390
|
|
|
|
13,172
|
(3)
|
|
186.425
|
|
12/9/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
13,581
|
(4)
|
|
219.555
|
|
12/14/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy P. Collins
|
|
|
8,656
|
|
|
|
–
|
|
|
84.575
|
|
12/14/2021
|
|
3,749
|
|
|
842,250
|
|
|
22,906
|
|
|
5,146,062
|
|
|
|
|
|
23,910
|
|
|
|
–
|
|
|
97.685
|
|
12/12/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,832
|
|
|
|
5,944
|
(1)
|
|
136.370
|
|
12/11/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,418
|
|
|
|
9,419
|
(2)
|
|
168.865
|
|
12/10/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,390
|
|
|
|
13,172
|
(3)
|
|
186.425
|
|
12/9/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
–
|
|
|
|
13,581
|
(4)
|
|
219.555
|
|
12/14/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Reflects stock options granted on December 11, 2013 that vest in 25% annual increments on the first four
anniversaries of the grant date.
|
|
(2)
|
Reflects stock options granted on December 10, 2014 that vest in 25% annual increments on the first four
anniversaries of the grant date.
|
|
(3)
|
Reflects stock options granted on December 9, 2015 that vest in 25% annual increments on the first four
anniversaries of the grant date.
|
|
(4)
|
Reflects stock options granted on December 14, 2016 that will vest in 25% annual increments on the first
four anniversaries of the grant date.
|
59
|
(5)
|
The restricted stock in this column was granted subject to both performance-based and time-based vesting
criteria. Performance-based vesting must occur before the time-based vesting begins. The performance-based vesting criteria are met upon our achievement of certain
pre-determined
targets. The performance-based
vesting criteria have been met for the shares of restricted stock reflected in this column. Amounts presented in this column do not reflect grants for which performance-based vesting criteria have not been certified (which are presented in the
column headed “Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have not Vested”). The following chart shows the time-based vesting dates for the unvested shares of restricted stock reflected in this
column held by each named executive officer as of December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Restricted Shares/
Units Unvested
|
|
Grant Date
|
|
|
Performance Vest Date
|
|
|
Beginning of Time
Vesting
|
|
Full Vest Date
|
|
|
Timothy M. Ring
|
|
17,450
|
|
|
December 14, 2011
|
|
|
|
February 13, 2013
|
|
|
|
|
|
February 13, 2017
|
|
|
|
|
3,771
|
|
|
December 12, 2012
|
|
|
|
February 11, 2015
|
|
|
February 11, 2015
|
|
|
February 11, 2017
|
|
|
|
|
6,959
|
|
|
December 11, 2013
|
|
|
|
February 10, 2016
|
|
|
February 10, 2016
|
|
|
February 10, 2018
|
|
|
|
|
|
|
|
|
|
John H. Weiland
|
|
11,630
|
|
|
December 14, 2011
|
|
|
|
February 13, 2013
|
|
|
|
|
|
February 13, 2017
|
|
|
|
|
2,280
|
|
|
December 12, 2012
|
|
|
|
February 11, 2015
|
|
|
February 11, 2015
|
|
|
February 11, 2017
|
|
|
|
|
4,745
|
|
|
December 11, 2013
|
|
|
|
February 10, 2016
|
|
|
February 10, 2016
|
|
|
February 10, 2018
|
|
|
|
|
|
|
|
|
|
Christopher S. Holland
|
|
1,218
|
|
|
December 12, 2012
|
|
|
|
February 11, 2015
|
|
|
February 11, 2015
|
|
|
February 11, 2017
|
|
|
|
|
2,531
|
|
|
December 11, 2013
|
|
|
|
February 10, 2016
|
|
|
February 10, 2016
|
|
|
February 10, 2018
|
|
|
|
|
|
|
|
|
|
Jim C. Beasley
|
|
1,218
|
|
|
December 12, 2012
|
|
|
|
February 11, 2015
|
|
|
February 11, 2015
|
|
|
February 11, 2017
|
|
|
|
|
2,531
|
|
|
December 11, 2013
|
|
|
|
February 10, 2016
|
|
|
February 10, 2016
|
|
|
February 10, 2018
|
|
|
|
|
|
|
|
|
|
Timothy P. Collins
|
|
1,218
|
|
|
December 12, 2012
|
|
|
|
February 11, 2015
|
|
|
February 11, 2015
|
|
|
February 11, 2017
|
|
|
|
|
2,531
|
|
|
December 11, 2013
|
|
|
|
February 10, 2016
|
|
|
February 10, 2016
|
|
|
February 10, 2018
|
|
|
(6)
|
Amounts in this column are calculated using a price of $224.66 per share, the closing price of our common
stock on December 31, 2016.
|
|
(7)
|
All amounts in this column represent performance-contingent restricted stock units granted on
December 10, 2014, December 9, 2015 and December 14, 2016 and performance units granted February 12, 2014, March 23, 2015 and February 10, 2016, with vesting provisions as described above under the heading “Summary
Compensation Table – Stock Awards.” Neither the performance-based nor time-based vesting criteria have been met for the shares of restricted stock units and performance units reflected in this column.
|
Option Exercises and Stock Vested in 2016
The following table sets forth information regarding options exercised by the named executive officers during 2016 and shares
of performance-contingent restricted stock held by the named executive officers that vested in 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Name
|
|
Number
of
Shares
Acquired
on Exercise
(#)
|
|
Value
Realized on
Exercise
($)
(1)
|
|
|
Number
of Shares
Acquired
on Vesting
(#)
|
|
|
Value
Realized
on Vesting
($)
(2)
|
|
|
Timothy M. Ring
|
|
202,293
|
|
|
28,920,614
|
|
|
|
54,398
|
|
|
|
10,100,264
|
|
|
John H. Weiland
|
|
11,190
|
|
|
1,364,963
|
|
|
|
36,410
|
|
|
|
6,743,336
|
|
|
Christopher S. Holland
|
|
7,941
|
|
|
949,034
|
|
|
|
18,992
|
|
|
|
3,643,692
|
|
|
Jim C. Beasley
|
|
21,340
|
|
|
1,705,608
|
|
|
|
19,201
|
|
|
|
3,559,903
|
|
|
Timothy P. Collins
|
|
–
|
|
|
–
|
|
|
|
19,389
|
|
|
|
3,593,677
|
|
|
(1)
|
Represents the difference between the exercise price of the stock options and the sale price of the common
stock on exercise.
|
|
(2)
|
Based on the closing price of our common stock on the vesting date.
|
60
Pension Benefits
The following table sets forth information regarding the defined benefit pension plans in which our named executive officers
participated in 2016. Mr. Holland does not participate in these plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number of
Years of Credited
Service (#)
(1)
|
|
Present
Value of
Accumulated
Benefit ($)
|
|
|
Payments
During
Last
Fiscal
Year ($)
|
|
Timothy M. Ring
|
|
Employees’ Retirement Plan
SERP
|
|
24
24
|
|
|
689,999
5,451,622
|
|
|
–
–
|
|
John H. Weiland
|
|
Employees’ Retirement Plan
SERP
|
|
20
20
|
|
|
774,749
4,125,442
|
|
|
–
–
|
|
Jim C. Beasley
|
|
Employees’ Retirement Plan
SERP
|
|
26
14
|
|
|
654,841
1,109,927
|
|
|
–
–
|
|
Timothy P. Collins
|
|
Employees’ Retirement Plan
SERP
|
|
14
14
|
|
|
484,441
1,066,629
|
|
|
–
–
|
|
(1)
|
Since employees are not eligible to participate in the Employees’ Retirement Plan and SERP until they
have completed one year of service, the number of years of credited service for each of the named executive officers is one year less than the number of years of actual service to the Company. Years of credited service shown are rounded to the
nearest full year.
|
Pension and Supplemental Executive Retirement Plan
We maintain the
tax-qualified
Employees’ Retirement Plan to provide traditional
pension benefits for certain of our U.S.-based employees, including the named executive officers. In addition, we maintain a SERP to provide benefits to certain of our highly paid employees above the limits imposed on the Employees’ Retirement
Plan benefits under the Internal Revenue Code. Effective January 1, 2011, the Employees’ Retirement Plan and the SERP were closed to employees hired on or after that date. New hires who are not participants in the Employees’
Retirement Plan and the SERP are provided with an annual retirement contribution made by us in our qualified 401(k) plan of between 3% and 8% of pay depending on their length of service. This contribution is made for those employees active on the
last day of the calendar year and based on total pay received while a participant during the calendar year. Employees become participants on the one year anniversary of employment. Mr. Holland, who was hired in 2012, became eligible for this
annual retirement contribution in 2013. In addition, he is eligible to receive an enhanced benefit under our DCEP, which provides benefits to highly paid employees hired on or after January 1, 2011 above the strict limits imposed on the
benefits provided under the Company’s qualified 401(k) plan. All employees participating in the Employees’ Retirement Plan and the SERP prior to January 1, 2011, including the named executive officers, will continue to participate in
such plans as structured prior to January 1, 2011.
The Employees’ Retirement Plan provides monthly benefits at
normal retirement (age 65) under a formula based on the participant’s compensation and years of service. The formula is 0.75% of compensation up to $6,600, plus 1.5% of compensation over $6,600, divided by 12, for each year of service. Pension
eligible compensation for the named executive officers consists of regular salary and annual incentive awards under the Executive Bonus Plan, including any portion of the executive’s annual bonus contributed to our MSPP. However, as described
above, the Employees’ Retirement Plan is subject to a limit on the amount of each executive’s annual compensation that can be applied to the formula each year. For 2016, that limit was $265,000. In addition, there is a limit on the maximum
annual benefit at normal retirement that can be provided under the
tax-qualified
Employees’ Retirement Plan, although no Employees’ Retirement Plan benefits have reached or are expected to reach this
limit for any participants.
The SERP is a
non-tax-qualified
plan that provides accruals for certain executives, including our named executive officers, equal to the difference between the benefits actually
accrued under the
tax-qualified
Employees’ Retirement Plan, and the benefits that would accrue under the
tax-qualified
Employees’ Retirement Plan without the
Internal Revenue Code limit on compensation that may be considered for purposes of
61
calculating a participant’s benefit or the Internal Revenue Code limit on the annual amount of a participant’s benefits. Together, the Employees’ Retirement Plan and the SERP
provide the retirement benefit that would apply under the Employees’ Retirement Plan formula without the Internal Revenue Code limitations.
Participants in the Employees’ Retirement Plan generally vest in their plan benefits after they complete five years of
service. In addition to the normal retirement benefit, the Employees’ Retirement Plan provides reduced benefits upon early retirement (age 55) and unreduced benefits as early as age 62. The Employees’ Retirement Plan also provides limited
death benefits and limited benefits upon termination due to disability. Eligibility for payment of SERP benefits is dependent on eligibility under the Employees’ Retirement Plan, and reductions for early payment are calculated in the same way
as they would be under the Employees’ Retirement Plan; however, SERP benefits become fully vested upon a change of control of the Company.
In 2008, all participants in the SERP were given the opportunity to elect the timing and form of payment of the future
distributions of the SERP benefit. New participants hired between 2008 and December 31, 2010 were required to make a similar election within 30 days of becoming notified of their eligibility to participate in the SERP. Payment options include a lump
sum and various annuities.
Messrs. Ring, Weiland and Collins are the named executive officers currently eligible for early
retirement under the Employees’ Retirement Plan and SERP. Participants are eligible for early retirement benefits after completing five years of service and reaching age 55. The monthly amount of early retirement benefits is the age 65 benefit
under the formula described above (based on the accruals as of early retirement), but reduced by 0.5% per month for each full calendar month, if any, that early retirement benefits begin before the participant would reach age 62.
The present value of accumulated benefits shown in the table above is calculated as of December 31, 2016. The present
value is calculated assuming benefits would be paid in the form of a lump sum at the earliest age at which a participant could retire and receive unreduced benefits, which is age 62. The age 62 lump sum was calculated using the mortality table
specified in the Employees’ Retirement Plan (mortality improvements were projected after 2017, the last year of IRS published tables), using a 5.50% lump sum interest rate as of December 31, 2016, December 31, 2015 and
December 31, 2014 measurements, respectively. The limitations applicable to the Employees’ Retirement Plan under the Internal Revenue Code as of December 31, 2016 were used to determine the benefits under each plan. This benefit at
retirement age was discounted to a present value using discount rates of 4.20% for the Employees’ Retirement Plan and 3.96% for the SERP as of December 31, 2016, 4.34% for the Employees’ Retirement Plan and 4.19% for the SERP as of
December 31, 2015 and 3.82% for both plans as of December 31, 2014. These present values assume no preretirement mortality, turnover or disability. For additional information about the assumptions used to calculate the present value of the
accumulated benefits, see Note 12 to Consolidated Financial Statements contained in our Form
10-K
for the year ended December 31, 2016.
62
Nonqualified Deferred Compensation
The following table sets forth information regarding our nonqualified deferred compensation arrangements in which our named
executive officers participated in 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan
|
|
|
Executive
Contributions
in Last
Fiscal Year
(1)
($)
|
|
|
|
|
|
Registrant
Contributions
in Last
Fiscal Year
($)
|
|
|
|
|
Aggregate
Earnings
in Last
Fiscal Year
($)
|
|
|
|
|
Aggregate
Withdrawals /
Distributions
($)
|
|
|
|
|
Aggregate
Balance at
Last Fiscal
Year End
($)
|
|
|
Timothy M. Ring
|
|
|
MSPP
|
|
|
|
616,603
|
|
|
|
|
|
|
283,614
(2)
|
|
|
|
|
|
2,111,870
(4)
|
|
|
|
|
|
1,387,915
(6)
|
|
|
|
|
|
|
13,706,507
|
(7)
|
|
|
|
|
SIRP
|
|
|
|
–
|
|
|
|
|
|
|
591,760
(3)
|
|
|
|
|
|
419,321
(5)
|
|
|
|
|
|
–
|
|
|
|
|
|
|
6,688,927
|
(8)
|
|
John H. Weiland
|
|
|
MSPP
|
|
|
|
1,091,764
|
|
|
|
|
|
|
502,517
(2)
|
|
|
|
|
|
1,472,085
(4)
|
|
|
|
|
|
2,576,785
(6)
|
|
|
|
|
|
|
9,645,777
|
(7)
|
|
|
|
|
SIRP
|
|
|
|
–
|
|
|
|
|
|
|
415,832
(3)
|
|
|
|
|
|
367,061
(5)
|
|
|
|
|
|
–
|
|
|
|
|
|
|
5,807,084
|
(8)
|
|
Christopher S. Holland
|
|
|
MSPP
|
|
|
|
585,593
|
|
|
|
|
|
|
269,377
(2)
|
|
|
|
|
|
740,096
(4)
|
|
|
|
|
|
–
|
|
|
|
|
|
|
4,348,744
|
(7)
|
|
|
|
|
SIRP
|
|
|
|
–
|
|
|
|
|
|
|
86,766
(3)
|
|
|
|
|
|
15,063
(5)
|
|
|
|
|
|
–
|
|
|
|
|
|
|
280,222
|
(8)
|
|
|
|
|
DCEP
|
|
|
|
–
|
|
|
|
|
|
|
28,492
(8)
|
|
|
|
|
|
5,708
|
|
|
|
|
|
–
|
|
|
|
|
|
|
91,352
|
(9)
|
|
Jim C. Beasley
|
|
|
MSPP
|
|
|
|
574,629
|
|
|
|
|
|
|
264,386
(2)
|
|
|
|
|
|
664,768
(4)
|
|
|
|
|
|
1,044,128
(6)
|
|
|
|
|
|
|
4,250,567
|
(7)
|
|
|
|
|
SIRP
|
|
|
|
–
|
|
|
|
|
|
|
154,530
(3)
|
|
|
|
|
|
59,970
(5)
|
|
|
|
|
|
–
|
|
|
|
|
|
|
990,498
|
(8)
|
|
Timothy P. Collins
|
|
|
MSPP
|
|
|
|
579,018
|
|
|
|
|
|
|
266,604
(2)
|
|
|
|
|
|
888,244
(4)
|
|
|
|
|
|
1,157,225
(6)
|
|
|
|
|
|
|
5,734,896
|
(7)
|
|
|
|
|
SIRP
|
|
|
|
–
|
|
|
|
|
|
|
260,284
(3)
|
|
|
|
|
|
83,694
(5)
|
|
|
|
|
|
–
|
|
|
|
|
|
|
1,401,759
|
(8)
|
|
(1)
|
Amounts represent the portion of the named executive officer’s annual bonus contributed into the MSPP in
2016. This amount was reported as compensation in 2015 and is included in the Summary Compensation Table above in the amount in the
“Non-Equity
Incentive Plan Compensation” column for 2015.
|
|
(2)
|
Amount represents the grant date fair value of the premium units acquired under the MSPP in 2016. This amount
was reported as compensation in 2015 and is included in the Summary Compensation Table above in the amount in the “All Other Compensation” column for 2015.
|
|
(3)
|
Amount represents accruals under the SIRP in 2016 and is included in the Summary Compensation Table above in
the amount in the “All Other Compensation” column for 2016.
|
|
(4)
|
Amount represents the increase or decrease in value of all shares in the Management Stock Purchase Plan and
units in the MSPP on December 31, 2016 as compared to the value on December 31, 2015, calculated using prices of $224.66 and $189.44, respectively, less the aggregate amount of contributions made by the named executive officer and by the
Company in 2016. The Management Stock Purchase Plan provided for the purchase by participants of shares of common stock and was replaced in 2004 by the MSPP. Other than the purchase of common stock rather than units, the material features of the
Management Stock Purchase Plan mirror the material features of the MSPP, which is described below. Certain of the shares and units remain subject to the restrictions and forfeiture provisions described below.
|
|
(5)
|
Amount represents interest that is compounded monthly at an annual effective rate of 7.0% on the existing
account balance.
|
|
(6)
|
Amount represents the value of units in the MSPP that vested in 2016 and were distributed in 2016 to the
named executive officer.
|
|
(7)
|
Amount represents the value of all shares in the Management Stock Purchase Plan and units in the MSPP,
calculated using a price of $224.66 per share, the closing price of our common stock on December 31, 2016. This amount includes the value of shares and units purchased by the named executive officers through contributions of all or a portion of
their annual bonuses. The value of the shares and units purchased by Messrs. Ring, Weiland, Holland, Beasley and Collins are $9,741,932, $6,751,932, $3,044,368, $2,975,397 and $4,014,225, respectively, calculated using a price of $224.66 per share.
|
|
(8)
|
Includes the following amounts that were included above in the Summary Compensation Table under the “All
Other Compensation” column for the named executive officers in the years indicated:
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
2015
|
|
|
2014
|
|
|
Timothy M. Ring
|
|
$
|
537,000
|
|
|
$
|
535,598
|
|
|
John H. Weiland
|
|
$
|
376,356
|
|
|
$
|
370,832
|
|
|
Christopher S. Holland
|
|
$
|
54,288
|
|
|
$
|
51,708
|
|
|
Jim C. Beasley
|
|
$
|
129,332
|
|
|
$
|
126,458
|
|
|
Timothy P. Collins
|
|
$
|
148,034
|
|
|
$
|
142,178
|
|
|
(9)
|
Mr. Holland’s balance in the DCEP includes the notional employer contribution for fiscal 2016 that
was credited to his account in early 2017.
|
63
MSPP
Under our MSPP the named executive officers and other employees at a specified level and above are required to defer a portion
of their annual bonus to purchase restricted stock units at a discount until they meet certain minimum ownership requirements. In addition, each participant has the option to defer additional bonus amounts up to 100% of the award. Each restricted
stock unit represents the right to receive one share of common stock. In order to encourage participation, promote retention and offset the risk of holding the units for a required minimum of four years, the participant purchases restricted stock
units at a discount of 30% from the lower of the fair market value of our common stock on the first business day in July of the previous year or on the date that the bonus is approved in February. In 2016, the price used was $235.49, the fair market
value of our common stock on July 1, 2016. We refer to the restricted stock units with a value equal to the amount of the 30% discount as the “premium units.” The value of the premium units for 2016 is reflected above in the column
entitled “Registrant Contributions in Last Fiscal Year.” The premium units are restricted from sale for a period of four years from the grant date and are forfeited, on a pro rata basis, if a participant’s employment is terminated
because of death, disability or retirement within the four-year restricted period. A participant forfeits all of his or her premium units if the participant’s employment is otherwise terminated during the four-year restricted period unless the
Compensation Committee exercises its discretion to vest all or a portion of any unvested units. A participant is always 100% vested in his or her
non-premium
units. We pay dividend equivalents in cash on all
units purchased under the MSPP in the same amount as the dividend paid on shares of common stock. In the event of a change of control of the Company, each participant would receive an immediate distribution of shares of our common stock equal to the
number of restricted stock units in his or her account. Except as described above, each participant receives shares of our common stock equal to the number of units in his or her account four years from the date of purchase of the units.
Participants may also elect, pursuant to the terms of the MSPP, to defer the receipt of all shares until a later date or retirement.
We adopted the MSPP in 2004 to replace the predecessor Management Stock Purchase Plan, which provided for the purchase by
participants of shares of our common stock. Other than the purchase of common stock rather than units, the material features of the Management Stock Purchase Plan mirror the material features of the MSPP described above.
SIRP
We
provide supplemental retirement benefits to selected key employees, including our named executive officers, pursuant to our SIRP. Under the SIRP, each participant has an individual notional account balance consisting of employer-funded accruals and
interest credits. Participants are not allowed to make contributions to the SIRP.
Each month, we credit an amount to each
named executive officer’s SIRP account equal to 1/12 of the executive’s annual salary and annual bonus award, multiplied by 1.1, and then multiplied by a percentage based on the executive’s age. The percentage is 2.4% for participants
between the ages of 25 and 44, 4.8% for participants between the ages of 45 and 49, 12% for participants between the ages of 50 and 54 and 19.2% for participants between the ages of 55 and 61. Based on this provision, as of December 31, 2016,
the rate for Messrs. Ring, Weiland and Collins was 19.2% and the rate for Messrs. Beasley and Holland was 12%. We also credit each account with interest that is compounded monthly at an annual effective rate of 7.0%.
Under the SIRP, an executive is eligible to retire upon reaching age 55 and completing five years of service (early retirement
under our
tax-qualified
Employees’ Retirement Plan). Upon retirement, a SIRP participant is entitled to payment of his or her account balance in monthly installments over a
15-year
period, generally beginning six months after termination of employment. Interest continues to be credited each month on the remaining account balance until the account is fully distributed. If an
executive dies after SIRP retirement payments have started, his or her beneficiary will receive payments according to the same schedule applicable to the executive, unless the remaining payments are less than a total of $20,000, in which case a lump
sum payment is made to the beneficiary. All of our named executive officers with the exception of Mr. Holland have completed five years of service, but only Messrs. Ring, Weiland and Collins have reached early retirement age.
64
In general, if a participant in the SIRP terminates employment before reaching
retirement eligibility, he or she will not receive any SIRP benefits. However, the SIRP provides a death benefit and a disability benefit for a participant who dies or becomes disabled before retiring. Benefits under the SIRP are also payable to the
named executive officers following a termination of employment within three years after a change of control of the Company. These benefits are described below under the heading “Potential Payments Upon Termination or Change of Control.” An
executive will forfeit all benefits owed under the SIRP upon violation of a restrictive covenant with us that generally provides that the participant will not engage in business activities that are competitive with our businesses.
Annual Retirement Contribution and DCEP
The annual retirement accrual made by the Company is between 3% and 8% of pay depending on the participant’s length of
service. This credit is made as soon as practicable following the last day of the calendar year and is based on total pay received while participating during the calendar year in excess of the strict qualified plan compensation limit which was
$265,000 for 2016.
We provide supplemental retirement benefits to selected key employees who were hired after 2010 and who
completed one year of service, pursuant to our DCEP. Under the DCEP, each participant has an individual notional account balance consisting of employer-funded accruals and interest credits. Participants are not allowed to make contributions to the
DCEP. Mr. Holland became eligible for an annual retirement contribution in the 401(k) plan and the DCEP in 2013.
Potential Payments Upon Termination or Change of Control
We have entered into certain agreements and maintain various plans that will require us to provide compensation to the named
executive officers in the event of a termination of employment or a termination following a change of control of the Company.
Payments
Upon Termination Other Than Following a Change of Control
Set forth below are descriptions of the various agreements,
plans and programs under which benefits may be payable to our named executive officers following termination of employment other than in connection with a change of control, followed by a table that quantifies, to the extent possible, benefits under
these agreements, plans and programs assuming that the named executive officer’s employment terminated on December 31, 2016.
Stock Options
Stock options granted to our named executive officers that are not vested become fully vested and exercisable if the officer
terminates employment by reason of death, disability or retirement. For stock options granted prior to December 2011 “retirement” is defined as termination after reaching age 55 with five years of service, and for stock options granted in
December 2011 or later “retirement” is defined as termination after reaching age 55 with ten years of service or age 65 with five years of service. “Disability” as defined in our 2012 Long Term Incentive Plan generally means an
inability of the executive to perform his or her duties to us in all material respects by reason of a physical or mental disability that is reasonably expected to be permanent and has continued for at least six consecutive months or such shorter
period as the Compensation Committee may reasonably determine in good faith. If termination is by reason of death or disability, the option remains exercisable for a period of one year from the date of termination. For stock options granted prior to
December 12, 2012, if termination is by reason of retirement, the executive can exercise the option for the remaining life of the option, which cannot exceed ten years from the grant date. For stock options granted on or after December 12,
2012 (and at least six months before their termination date), executives have the lesser of five years or the remaining life of the option to exercise options that remain outstanding upon retirement. If termination is for any reason other than
death, disability or retirement, unvested stock options expire immediately unless the Compensation Committee exercises its discretion to accelerate the vesting of the stock options.
65
Performance-Contingent Restricted Stock Units and Restricted Stock
Performance-contingent restricted stock units and performance-contingent restricted stock, including the retention grants,
granted to our named executive officers that are not vested will automatically vest if the officer terminates employment by reason of death or disability and commencing with the restricted stock unit grants made in December 2011, by reason of
retirement. “Disability” is defined in the 2012 Long Term Incentive Plan as described above under “Stock Options”. For grants that do not automatically vest on retirement, if termination is for any reason other than death or
disability (including retirement) all performance-contingent restricted stock is forfeited unless the Compensation Committee exercises its discretion to vest any unvested shares. The Committee’s practice is to consider, on a
case-by-case
basis, the circumstances surrounding the termination, our past practices and then-current market practices in deciding whether to exercise its discretion to
accelerate vesting.
Performance Units
Named executive officers who have received performance units must generally remain employed through the end of the three-year
performance period to be eligible for payout of the award. However, target performance units will fully vest if the officer’s employment terminates during the performance period due to death or disability (as defined above under “Stock
Options”). In addition, an officer who retires during the performance period is eligible to receive an award payout that is prorated for the period of employment during the performance period and is based on the Compensation Committee’s
certification of the Company’s performance against the
pre-established
goals.
MSPP
Premium Units
Premium units purchased under our MSPP are subject to a four-year holding period from the date of
purchase. A description of the premium units is set forth above under the Nonqualified Deferred Compensation Table. Under the MSPP, unvested premium units are forfeited upon termination of employment other than by reason of death, disability or
retirement. If employment terminates by reason of death, disability or retirement, the MSPP provides that unvested premium units will vest, on a pro rata basis in 25% increments for each full year of employment since the date of purchase.
“Retirement” is defined as retirement under our
tax-qualified
Employees’ Retirement Plan, and includes early retirement, which for stock units granted prior to February 2013 is termination after
reaching age 55 with five years of service and for stock units granted in February 2013 or later is termination after reaching age 55 with ten years of service or age 65 with five years of service. “Disability” is defined in the 2012 Long
Term Incentive Plan as described above under “Stock Options”. In addition, the Compensation Committee has the discretion to vest all or a portion of any unvested premium units upon termination of employment. Upon termination of an
executive by reason of retirement, the Compensation Committee generally considers on a
case-by-case
basis the circumstances surrounding the termination, our past
practices and then-current market practices in deciding whether to exercise its discretion to accelerate vesting of premium units.
Annual Bonus Award
If an executive were to terminate employment before the end of a fiscal year for reasons other than death, disability or
retirement, he or she would generally not receive an annual bonus award for that year. However, if an executive were to terminate employment due to death, disability or retirement, he or she would receive a prorated annual bonus award for the year
of termination based upon the attainment of the actual performance goals for that year. For this purpose, “disability” is defined as a total and permanent disability as determined by a physician, after 26 weeks from the beginning of a
physical or mental condition. Retirement means normal or early retirement under our
tax-qualified
Employees’ Retirement Plan as described above under “Stock Options”. Early retirement is
termination after reaching age 55 with five years of service.
Pension and Supplemental Executive Retirement Plan Benefits
Our named executive officers, with the exception of Mr. Holland, participate in our
tax-qualified
Employees’ Retirement Plan and our nonqualified SERP, which are described in detail above in the narrative
66
following the Pension Benefits Table. Mr. Holland, who was hired in 2012, does not participate in the Employees’ Retirement Plan and the SERP, as both plans were amended to close
participation to employees hired on or after January 1, 2011.
If an employee terminates employment with us and has a
vested benefit under the Employees’ Retirement Plan and the SERP at that time, then he or she is eligible for benefits. Benefits under the plans are vested after five years of service with us. Each of our eligible named executive officers has
completed the service required for vesting and is fully vested under both of these plans.
The plans together provide for
monthly benefits upon normal retirement (age 65) equal to 0.75% of compensation up to $6,600, plus 1.5% of compensation over $6,600, divided by 12, for each year of service. In addition to the normal retirement benefit that would be payable under
the standard formula at age 65 or as early as age 62, in certain cases, the Employees’ Retirement Plan and SERP provide reduced benefits upon early retirement (age 55), or, to a lesser extent, upon termination of employment. The plans also
provide limited death benefits and limited benefits upon termination due to disability.
The monthly amount of benefits
available upon termination of employment before early retirement other than due to death or disability is equal to the age 65 benefit under the standard formula based on accruals as of termination of employment, but reduced by 0.5% per month
for each full calendar month between ages 55 and 62, and further reduced actuarially to the date payments begin prior to age 55. Messrs. Ring, Weiland and Collins are currently eligible for early retirement. Mr. Beasley would be eligible for
benefits under this provision upon termination of employment. Under the plans, a participant is eligible for disability benefits if he or she is unable to engage in any substantial gainful activity (employment) by reason of any medically determined
physical or mental condition that can be expected to result in death or to last for at least 12 months. The monthly amount of benefits available upon disability is equal to the age 65 benefit under the standard formula based on accruals as of the
date employment terminates due to disability, reduced by 0.5% per month for each full calendar month that disability benefits begin before the participant would reach age 62, but not below the amount of the benefit that would be payable upon
termination for reasons other than disability.
The general
pre-retirement
death
benefit under the plans is equal to the survivor benefit that would be paid assuming the participant’s accrued benefit at the time of death was paid beginning at early retirement age under a joint and 50% spousal survivor annuity form of
benefit.
Pre-retirement
death benefits are also payable after age 55 to the participant’s surviving spouse or, if there is no surviving spouse, surviving children under age 21. Under such circumstances,
the monthly death benefit would be equal to the amount of monthly retirement payment that would apply if the participant had retired at the time of death and elected a joint and 100% survivor annuity option.
In 2008, all current participants in the SERP were given the opportunity to elect the timing and form of payment of the future
distributions of the SERP benefit. New participants hired between 2008 and December 31, 2010 were required to make a similar election within 30 days of becoming notified of their eligibility to participate in the SERP. Payment options include a
lump sum and various annuities. Payments under the Employees’ Retirement Plan would be paid from that plan’s trust, which is funded solely through annual employer contributions and any earnings on those contributions. We would pay benefits
under the SERP directly from our general assets.
Annual Retirement Contribution and DCEP
Mr. Holland, and each other employee hired on or after January 1, 2011 who completes one year of service, is eligible
for an annual retirement contribution made by the Company in the Company’s qualified 401(k) plan of between 3% and 8% of pay depending on length of service. This contribution is made as soon as practicable following the last day of the calendar
year and is based on total pay received while participating during the calendar year. Mr. Holland became eligible for this annual retirement contribution in the 401(k) plan in 2013. He will also be eligible to receive an enhanced benefit under
our DCEP, which provides benefits to highly paid employees hired on or after January 1, 2011 above the strict limits imposed on the benefits provided under the Company’s qualified 401(k) plan.
67
Supplemental Insurance/Retirement Plan and Key Executive Insurance Plan
We provide supplemental retirement, death and disability benefits to selected key employees, including the named executive
officers, pursuant to our SIRP, as described above in the narrative under the Nonqualified Deferred Compensation Table. A participant forfeits all benefits owed under the SIRP upon violation of certain restrictive covenants with us, or upon
termination of employment before age 55, other than termination due to death or disability or within three years after a change of control. The restrictive covenants generally provide that the executive officer will not engage in business activities
that are competitive with our businesses and will maintain the confidentiality of our confidential information. We pay SIRP benefits from our general assets. Mr. Ring is age 59, Mr. Weiland is age 61, and Mr. Collins is age 56 and all
three would have been eligible for benefits under the SIRP if their employment had terminated on December 31, 2016. Since Messrs. Holland and Beasley have not reached age 55, they would not have been eligible for any benefits under the SIRP if
their employment had terminated on December 31, 2016 for any reason other than due to death or disability.
If a
participant dies while employed with us, the SIRP provides a death benefit instead of retirement benefits. Under the SIRP, a portion of the death benefit equal to 50% of the executive’s annual base salary is payable in a lump sum upon the
executive’s death, and the remainder is payable in equal installments over 60 months. The death benefit for Messrs. Weiland, Holland, Beasley and Collins equals the greater of (i) 5.5 times the executive’s annual base salary and
(ii) three times the executive’s annual base salary, plus the balance of the participant’s SIRP account at the time of death. The death benefit under the SIRP for Mr. Ring equals three times his annual base salary, due to his
participation in the Key Executive Insurance Plan, or “KEIP.” The SIRP and KEIP death benefits together provide Mr. Ring with a death benefit equal to 5.5 times annual base salary. The KEIP is a split-dollar life insurance arrangement
that we previously established for certain employees, including Mr. Ring. Under the KEIP, we initially paid a portion of the premiums on a whole life insurance policy for Mr. Ring, and Mr. Ring paid a portion of the premiums. Neither
Mr. Ring nor the Company currently pay premiums on Mr. Ring’s policy, but the policy remains in effect with premiums paid from the accumulated value of the policy. Upon Mr. Ring’s death, his beneficiary is entitled to a
portion of the benefits payable under the policy equal to 2.5 times his then-current annual base salary, payable in installments over 60 months. We are entitled to the remainder of the benefits payable under the life insurance policy after
satisfaction of Mr. Ring’s benefits.
If an executive becomes disabled before retirement and remains disabled
through age 65, the SIRP pays benefits beginning at age 65. This benefit would be calculated as if the executive had remained employed through age 65. If the disability ceases after age 55 but prior to age 65, and the executive does not return to
active employment, the executive receives benefits as if he or she had retired on the date the disability ceased. If an executive becomes disabled and dies before age 65 while remaining disabled, no retirement benefits are payable, but we pay the
death benefit described above.
Severance
We do not have a separate formal severance program for executive officers who have change of control agreements. As a result, a
decision to make a severance payment to an executive officer is in the discretion of the Compensation Committee. In determining the amount of severance, if any, for executive officers whose employment is terminated by us, the Compensation
Committee’s practice is to consider on a
case-by-case
basis the circumstances surrounding the departure, our past practices and then-current market practices. We
entered into an agreement with Mr. Weiland, however, in 1996 at the start of his employment that requires us to pay him one year of base salary and bonus if he is terminated without cause. The term “cause” is not defined in the
agreement.
68
Potential Termination Benefits Other Than Following a Change of Control
The following table sets forth the potential benefits payable pursuant to the arrangements described above for our named
executive officers, assuming termination of employment on December 31, 2016 other than in connection with a change of control and a price of $224.66 per share of our common stock, the closing price on December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit/Plan/Program
|
|
Timothy M.
Ring
|
|
|
John H.
Weiland
|
|
|
Christopher S.
Holland
|
|
|
Jim C.
Beasley
|
|
|
Timothy P.
Collins
|
|
|
Stock Options
(1)
|
|
$
|
5,299,695
|
|
|
$
|
2,851,348
|
|
|
|
|
|
|
$
|
1,631,960
|
|
|
$
|
1,623,291
|
|
|
$
|
1,623,291
|
|
|
Restricted Stock Units/Restricted
Stock
(2)
|
|
$
|
14,825,538
|
|
|
$
|
8,245,247
|
|
|
|
|
|
|
$
|
3,313,735
|
|
|
$
|
3,227,016
|
|
|
$
|
3,227,016
|
|
|
MSPP Premium Units
(3)
|
|
$
|
679,147
|
|
|
$
|
1,167,783
|
|
|
|
|
|
|
$
|
443,030
|
|
|
$
|
454,712
|
|
|
$
|
632,418
|
|
|
Performance Units
(4)
|
|
$
|
8,818,354
|
|
|
$
|
4,886,580
|
|
|
|
|
|
|
$
|
2,761,296
|
|
|
$
|
2,761,296
|
|
|
$
|
2,761,296
|
|
|
Annual Bonus Plan
(5)
|
|
$
|
1,634,942
|
|
|
$
|
1,013,193
|
|
|
|
|
|
|
$
|
560,888
|
|
|
$
|
737,627
|
|
|
$
|
636,961
|
|
|
Employees’ Retirement Plan and
SERP
(6)
|
|
$
|
7,346,097
|
|
|
$
|
5,993,154
|
|
|
|
|
|
|
|
–
|
|
|
$
|
1,642,691
|
|
|
$
|
1,726,457
|
|
|
Annual Retirement Contribution in 401(k) Plan and DCEP
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
|
$
|
75,164
|
|
|
|
–
|
|
|
|
–
|
|
|
SIRP/KEIP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination other than for Death or Disability– SIRP
(7)
|
|
$
|
11,656,545
|
|
|
$
|
10,119,799
|
|
|
|
|
|
|
|
–
|
|
|
|
–
|
|
|
$
|
2,442,799
|
|
|
Death–SIRP
(8)
|
|
$
|
3,276,000
|
|
|
$
|
8,547,918
|
|
|
|
|
|
|
$
|
3,477,100
|
|
|
$
|
3,485,350
|
|
|
$
|
3,695,450
|
|
|
Death–KEIP
(9)
|
|
$
|
2,730,000
|
|
|
|
–
|
|
|
|
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
Severance
|
|
|
–
|
|
|
$
|
1,827,220
|
(10)
|
|
|
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
(1)
|
Amounts represent the value of unvested stock options that would have vested upon termination of employment
by reason of death or disability or, in the case of Messrs. Ring, Weiland and Collins, the only named executive officers who have satisfied retirement eligibility, by reason of retirement.
|
|
(2)
|
Amounts represent the value of unvested performance-contingent restricted stock units and unvested
performance-contingent restricted stock (including the retention grants made to Messrs. Ring and Weiland prior to 2012) that would have vested upon termination of employment by reason of death, disability, or, by reason of retirement (i) with
respect to the grants of restricted stock units made in December 2013, 2014 and 2015 or (ii) with respect to other grants, if vesting were to be accelerated by the Compensation Committee.
|
|
(3)
|
Amounts represent the value of unvested premium units that would have vested upon termination of employment
by reason of death or disability or, in the case of Messrs. Ring, Weiland and Collins, the only named executive officers who have satisfied retirement eligibility, by reason of retirement. Assuming acceleration by the Compensation Committee of all
unvested premium units for the named executive officers upon termination of employment on December 31, 2016, the potential value of these units for Messrs. Ring, Weiland, Holland, Beasley and Collins would be $1,672,594 $2,893,845, $1,304,376,
$1,275,170 and $1,604,072, respectively.
|
|
(4)
|
Amounts represent the value of unvested performance units that would have vested upon termination of
employment by reason of death or disability. Upon termination of employment by reason of retirement, Messrs. Ring, Weiland and Collins, who have satisfied retirement eligibility, would have received $5,901,144, $3,498,181 and $1,944,657,
respectively.
|
|
(5)
|
Amounts represent the amount of the bonus that would have been payable upon termination by reason of death or
disability or, in the case of Messrs. Ring, Weiland and Collins, the only named executive officers who have reached retirement age, by reason of retirement.
|
|
(6)
|
Represents the combined benefits under the plans, assuming each named executive officer elected a lump sum
distribution, payable to Mr. Beasley upon termination of employment before early retirement for reason other than death or disability and payable to Messrs. Ring, Weiland and Collins upon termination of employment upon early retirement.
Assuming termination due to death and commencement of survivor benefits on December 31, 2016, the survivor benefit payable with respect to Mr. Beasley would be approximately 35% to 40% of the lump sum payable upon termination of employment
as set forth in the table. With respect to Messrs. Ring, Weiland and Collins, since they are currently retirement eligible, a higher survivor benefit would apply and would provide for approximately 85% to 100% of the lump sum payable at termination
of employment.
|
|
(7)
|
This amount is the aggregate of payments to be made in monthly installments over 15 years (beginning six
months after termination of employment) for any reason other than death or disability. Messrs. Ring, Weiland and Collins have reached retirement age as of December 31, 2016 and were therefore eligible for benefits under the SIRP. Messrs.
Beasley and Holland had not reached retirement age as of December 31, 2016 and therefore were not eligible for benefits under the SIRP.
|
69
|
(8)
|
Amounts represent the death benefit payable to each of the named executive officers, with 50% of the
executive’s annual base salary payable in a lump sum upon death and the remainder payable in equal installments over 60 months. This amount does not reflect interest that would be payable pursuant to the plan as a result of the
six-month
delay in payment required under Section 409A of the Internal Revenue Code.
|
|
(9)
|
The amounts payable under the KEIP would have been paid by the insurer pursuant to the whole life insurance
policies subject to the KEIP.
|
|
(10)
|
Represents one year of base salary and bonus, calculated based on Mr. Weiland’s 2016 base salary
plus a bonus component valued at 100% of his target bonus for 2016 pursuant to the agreement described above under the heading “Severance.” This amount would only be payable if termination on December 31, 2016 was without cause.
|
Payments Upon Termination Following a Change of Control
The potential payments to our named executive officers upon termination of employment following a change of control of the
Company are described below under the headings “Change of Control Agreements,” “Long Term Incentive Plan” and “SIRP.” All amounts are calculated assuming termination on December 31, 2016.
Change of Control Agreements
We have entered into change of control agreements with each of our executive officers. The change of control agreements provide
for benefits upon:
|
|
(A)
|
termination of employment by the executive for “good reason,” or by us or the successor company
without “cause,” in either case within three years after a change of control, or before a change of control if the executive is terminated in connection with a proposed change of control; or
|
|
|
(B)
|
the executive’s termination for any reason during the
six-month
period following the first anniversary of a change of control.
|
The benefits are as follows:
|
|
•
|
|
accrued base salary and a prorated bonus through the date of termination, based on an average of the annual
incentive bonus for the prior three years;
|
|
|
•
|
|
severance pay equal to three times the sum of the executive officer’s highest base salary and average
annual incentive bonus during the prior three years;
|
|
|
•
|
|
all compensation previously deferred by the executive officer and not yet paid to him or her;
|
|
|
•
|
|
an amount equal to the additional accruals under our pension plan and SERP that would apply if the executive
had an additional three years of age and service and a 6% annual increase in compensation;
|
|
|
•
|
|
continued participation in our benefit plans for three years, or, if such participation is not possible,
provision of substantially similar benefits; and
|
|
|
•
|
|
outplacement services and financial counseling services for three years.
|
We or the successor company must pay the cash amounts in a lump sum within ten days after termination of the executive’s
employment, unless the executive elected to receive installments. Payments to certain employees, including our named executive officers, are required by Section 409A of the Internal Revenue Code to be delayed for six months after termination of
employment. The agreements also provide for a
gross-up
payment if the executive officer is subject to excise taxes under Section 4999 of the Internal Revenue Code. This payment would be calculated by a
national accounting firm so that the amount remaining, after all taxes have been paid from the
gross-up
payment, is equal to the amount of the executive’s excise tax. Effective for all new change of
control agreements entered into in 2010 and thereafter, the Committee removed the tax
gross-up
payments and the “walk-away” rights referred to in clause (B) above.
“Change of control” is defined in the agreements as any change of control that has to be reported on Form
8-K.
A change of control is also deemed to occur upon the acquisition by a person or a group of 20% or more of the voting power of our stock or a change in the members of our Board of Directors such that the
continuing directors cease to constitute a majority of the Board of Directors.
70
The executive could terminate for “good reason” upon us or our
successor company: (i) taking any action that results in a reduction in the executive’s position, authority, duties or responsibilities, other than a minor action that is remedied promptly after the executive notifies us of the action;
(ii) failing to provide the compensation specified under the agreements and a minimum level of benefits, as well as expense reimbursement and support staff, based on the level provided prior to the change of control; (iii) requiring the
executive to relocate to an office more than 35 miles from the current location; (iv) attempting to terminate the executive in a manner not permitted by the agreements (for example, terminating the executive for cause without providing the
required notice of termination); or (v) failing to require a successor to assume the agreements. “Cause” is defined as: (a) any act of dishonesty intended to result in substantial personal enrichment of the executive at our (or
our successor company’s) expense; (b) repeated willful and deliberate violations of the executive’s job responsibilities under the agreement that are not corrected after notice from us (or our successor company); or (c) the
executive’s conviction of a felony.
In addition, upon the executive’s termination due to death or disability
after a change of control, the agreements require death or disability benefits, as applicable, to be provided to the executive and his or her family at least as favorable as those in effect prior to the change of control.
The agreements expire three years after any change of control or, if earlier, upon the executive’s reaching the normal
retirement date under our retirement plan, which is age 65. Under certain circumstances, the Board of Directors may also terminate the agreements prior to any change of control. The agreements also will expire upon the executive officer’s
death, permanent disability or termination of employment for cause. The agreements require the executive officers to maintain the confidentiality of our information.
Potential Termination Benefits Following a Change of Control
The following table describes the potential payments that would be made pursuant to the change of control agreements presently
in effect between us and each of the named executive officers upon termination of employment following a change of control of the Company as of December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit/Payment
|
|
Timothy M.
Ring
|
|
|
John H.
Weiland
|
|
|
Christopher S.
Holland
|
|
|
Jim C.
Beasley
|
|
|
Timothy P.
Collins
|
|
|
Severance Payment
(1)(4)
|
|
$
|
8,242,635
|
|
|
$
|
5,760,932
|
|
|
$
|
3,492,539
|
|
|
$
|
3,471,080
|
|
|
$
|
3,744,425
|
|
|
Bonus–Year of Termination
(2)(4)
|
|
$
|
1,646,474
|
|
|
$
|
1,001,184
|
|
|
$
|
529,065
|
|
|
$
|
520,459
|
|
|
$
|
573,084
|
|
|
Additional Pension
Payment
(3)(4)
|
|
$
|
3,069,959
|
|
|
$
|
1,339,991
|
|
|
$
|
36,541
|
|
|
$
|
1,083,367
|
|
|
$
|
1,203,746
|
|
|
Financial Counseling Services
(5)
|
|
$
|
18,000
|
|
|
$
|
18,000
|
|
|
$
|
18,000
|
|
|
$
|
18,000
|
|
|
$
|
18,000
|
|
|
Welfare Benefit Continuation
(6)
|
|
$
|
84,539
|
|
|
$
|
84,539
|
|
|
$
|
84,539
|
|
|
$
|
84,539
|
|
|
$
|
84,539
|
|
|
Outplacement Services
(7)
|
|
$
|
60,000
|
|
|
$
|
60,000
|
|
|
$
|
60,000
|
|
|
$
|
60,000
|
|
|
$
|
60,000
|
|
|
Excise Tax &
Gross-Up
(8)
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
(1)
|
Amounts represent three times the sum of the highest base salary and average annual incentive bonus during
the prior three years.
|
|
(2)
|
Amounts represent the annual incentive bonus for the year in which the termination of employment occurs,
based on an average of the annual incentive bonus for the prior three years, on a pro rata basis through the date of termination.
|
|
(3)
|
Amounts represent the present value of additional accruals under our Employees’ Retirement Plan and SERP
that would apply if the executive had an additional three years of age and service and a 6% annual increase in compensation. Amounts are based on the plans’ calculation of lump sum payments, which, for terminations on December 31, 2016
that would result in payments in 2017 is based upon the present value of a lifetime annuity using the minimum assumptions permissible under law for 2017 lump sum payments, which include discount rates of 1.39%, 3.27% and 4.18% over the lifetime of
the individual under IRS published mortality tables. The lump sum is the present value of the benefit provided at the earliest retirement age. For Mr. Holland, the amount shown in this table represents the unvested portion of the amount in the
Nonqualified Deferred Compensation Table above in the “DCEP” row, which would fully vest upon a change of control.
|
|
(4)
|
These amounts do not reflect interest that would be payable as a result of the
six-month
delay in payment required under Section 409A of the Internal Revenue Code.
|
|
(5)
|
Amounts represent estimated cost of financial planning services for a period of three years, assuming a cost
of $6,000 per year.
|
|
(6)
|
Amounts represent the present value of the estimated cost for continuation of welfare benefits, which are
life, health and disability benefits, for a period of three years, assuming an average cost of $28,556 per year. For purposes of the present value calculation, we used 120% of the short-term applicable federal interest rate of 0.89%, compounded
semi-annually.
|
|
(7)
|
Amounts represent estimated cost for outplacement services for a period of three years, assuming a
one-time
cost of $60,000.
|
71
|
(8)
|
In determining whether any excise tax and
gross-up
amount would be
due to the NEOs, we allocated a portion of the value of the payments to be made to the executive to a
one-year
non-compete
agreement with the executive. We have been
advised that such an allocation is customary in the event of an actual change of control and would result in a reduction of the amount of the applicable excise tax. For purposes of this table, the value allocated to the
non-compete
agreements with the named executive officers is the aggregate value of the executive’s total compensation for 2016 as reflected in the Summary Compensation Table above. In the event of an actual
change of control, an alternative approach to determine the value to allocate to the
non-compete
agreement may be used, which could include an independent market value analysis of these
non-compete
agreements. In addition, amounts representing any pro rata bonuses payable to the named executive officers in the year of termination have not been included in determining the estimated excise tax
because we have been advised that it is customary for such regular and recurring bonus payments to be excluded from the calculation of excise tax under Section 280G and Section 4999 of the Internal Revenue Code. Applying these adjustments, the
payments do not exceed three times the base amounts for any of the NEOs with change of control agreements that include a payment for any excise tax amounts. As a result, no excise tax with
gross-up
would have
been payable to these NEOs upon a change of control on December 31, 2016. Mr. Holland’s change of control agreement does not include a payment for any excise tax amounts. However, the after tax proceeds of any amounts paid upon a change of
control would be compared with the amounts payable in event that these payments were limited to no more than three times the base amount, and the higher after tax amount would be paid.
|
Long Term Incentive Plan
Our named executive officers currently hold equity grants awarded under our 2012 Long Term Incentive Plan (formerly our 2003
Long Term Incentive Plan). The 2012 LTIP was amended effective February 12, 2014 to provide that, except to the extent the Compensation Committee determines otherwise, grants made on or after such date (other than the MSPP grants made on such
date) would vest if the executive experiences a qualifying termination of employment in connection with a change of control (a “qualifying termination”). Prior to this amendment, the plans provided for all participants that any securities
that are not vested become immediately vested upon a change of control, with the exception of (i) grants made on or after December 11, 2013 which, pursuant to the terms of the grants, would vest only if the executive experiences a
qualifying termination, and (ii) a retention grant made to Messrs. Ring and Weiland in 2011, which do not automatically vest and which remained subject to any vesting and transferability restrictions until February 2017, except to the extent
that the Compensation Committee determines otherwise. “Change of control” is defined substantially in the same manner as in our change of control agreements described above. The following table describes the potential aggregate value to
the named executive officers associated with the accelerated vesting of unexercisable stock options, unvested restricted stock units, unvested restricted stock (other than the retention grants), unvested performance units (at target) and unvested
MSPP premium units assuming a change of control of the Company as of December 31, 2016 and a price of $224.66 per share of common stock, which was the closing price on December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit/Payment
|
|
Timothy M.
Ring
|
|
|
John H.
Weiland
|
|
|
Christopher S.
Holland
|
|
|
Jim C.
Beasley
|
|
|
Timothy P.
Collins
|
|
|
Unexercisable Stock Options
(1)
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
Unvested Restricted Stock Units and Restricted
Stock
(2)
|
|
$
|
847,193
|
|
|
$
|
512,225
|
|
|
$
|
273,636
|
|
|
$
|
273,636
|
|
|
$
|
273,636
|
|
|
Performance Units
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
Unvested MSPP Premium Units
|
|
$
|
919,309
|
|
|
$
|
1,580,932
|
|
|
$
|
582,543
|
|
|
$
|
581,195
|
|
|
$
|
960,197
|
|
|
(1)
|
As described above under “Potential Payments Upon Termination Other Than Following a Change of Control
– Stock Options,” stock options granted to our named executive officers before December 12, 2012 that are not vested become fully vested and exercisable if the officer terminates employment after having met the retirement criteria.
Stock options granted on or after December 12, 2012 that are not vested become fully vested if the officer has met the retirement criteria and terminates employment not earlier than six months following the grant date. Messrs. Ring, Weiland and
Collins have met the retirement criteria and, as a result, their unvested stock options (including unvested stock options granted on December 12, 2012 that were granted at least six months before their termination date) would vest upon their
termination, with or without a change of control. Excludes grants made on or after December 11, 2013 which, pursuant to the terms of the grant, do not vest upon a change of control unless the executive experiences a qualifying termination or
the Compensation Committee determines otherwise.
|
|
(2)
|
Restricted stock units granted to our named executive officers before December 12, 2012 that are not
vested become fully vested if the officer terminates employment after having met the retirement criteria. Restricted stock units granted on or after December 12, 2012 that are not vested become fully vested if the officer has met the retirement
criteria and terminates employment not earlier than six months following the grant date. Messrs. Ring, Weiland and Collins have met the retirement criteria and, as a result, their unvested restricted stock units (including unvested restricted stock
units granted on December 12, 2012 that were granted at least six months before their termination date) would vest upon their termination, with or without a change of control. Excludes grants made on or after December 11, 2013 which,
pursuant to the terms of the grants, do not vest upon a change of control unless the executive experiences a qualifying termination or the Compensation Committee determines otherwise.
|
72
SIRP
We provide supplemental retirement benefits to the named executive officers pursuant to our SIRP. Retirement benefits under our
SIRP are payable to the named executive officers following a termination of employment for any reason within three years after a change of control of the Company. The amount payable upon termination within three years after a change of control is
the usual retirement benefit under the SIRP, but with the account balance calculated as if the executive had remained employed and continued to receive annual accruals to his or her account, and retired upon reaching age 65. The age 65 account
balance is determined by assuming a 6% increase in salary and annual bonus each year after termination. The projected age 65 benefit payable over 15 years is then converted to a lump sum payable six months after termination. The lump sum is
calculated by discounting back the projected age 65 benefit to the executive’s actual age, using a 4.29% interest rate. The executive may also elect to defer payment of the lump sum to a fixed future date, subject to certain restrictions.
“Change of Control” is defined under the SIRP as the beneficial ownership by a person of 25% or more of the voting power of our stock or a change in a majority of our Board of Directors during any period of two years or less. Assuming a
termination on December 31, 2016 following a change of control, the amount of the payment under the SIRP to each of Messrs. Ring, Weiland, Holland, Beasley and Collins would equal $11,556,505, $8,271,653, $4,515,985, $4,573,842, and $4,449,018,
respectively.
73
DIRECTOR COMPENSATION
Compensation Earned in 2016
The table below sets forth compensation received by each
non-employee
director during
2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Earned
or Paid
in Cash
($)
(1)
|
|
Stock
Awards
($)
(2)
|
|
All Other
Compensation
($)
(3)
|
|
Total
($)
|
|
David M. Barrett
|
|
|
|
103,750
|
|
|
|
|
102,752
|
|
|
|
|
82,300
|
|
|
|
|
288,802
|
|
|
Marc C. Breslawsky*
|
|
|
|
89,490
|
|
|
|
|
–
|
|
|
|
|
3,000
|
|
|
|
|
92,490
|
|
|
Robert M. Davis
|
|
|
|
103,750
|
|
|
|
|
102,752
|
|
|
|
|
82,300
|
|
|
|
|
288,802
|
|
|
Herbert L. Henkel
|
|
|
|
101,850
|
|
|
|
|
102,752
|
|
|
|
|
97,300
|
|
|
|
|
301,902
|
|
|
John C. Kelly
|
|
|
|
132,100
|
|
|
|
|
102,752
|
|
|
|
|
97,300
|
|
|
|
|
332,152
|
|
|
David F. Melcher
|
|
|
|
103,750
|
|
|
|
|
102,752
|
|
|
|
|
97,300
|
|
|
|
|
303,802
|
|
|
Gail K. Naughton
|
|
|
|
103,500
|
|
|
|
|
102,752
|
|
|
|
|
87,300
|
|
|
|
|
293,552
|
|
|
Tommy G. Thompson
|
|
|
|
93,850
|
|
|
|
|
102,752
|
|
|
|
|
87,300
|
|
|
|
|
283,902
|
|
|
Anthony Welters
|
|
|
|
101,850
|
|
|
|
|
102,752
|
|
|
|
|
82,300
|
|
|
|
|
286,902
|
|
|
Tony L. White
|
|
|
|
117,250
|
|
|
|
|
102,752
|
|
|
|
|
97,300
|
|
|
|
|
317,302
|
|
|
*
|
Mr. Breslawsky retired from the Board effective October 31, 2016.
|
|
(1)
|
Dr. Barrett and Messrs. Henkel, Kelly and Welters deferred all of their cash fees earned in 2016 into
522, 495, 627 and 515 shares of phantom stock, respectively. Mr. Thompson deferred 50% of his cash fees earned in 2016 into 233 shares of phantom stock. Messrs. Breslawsky and White did not defer their cash fees in 2016; however, a deferral
account for fees deferred in previous years is maintained on each director’s behalf. Messrs. Davis and Melcher and Dr. Naughton did not defer their cash fees earned in 2016. For a description of the fees paid to
non-employee
directors and the deferral of such fees, see “Director Compensation Summary – Deferred Compensation Contract” below.
|
|
(2)
|
Amounts in this column represent the aggregate grant date fair value of stock awards in 2016 under our 2005
Directors’ Stock Award Plan. The grant date fair value for annual awards made to all
non-employee
directors on December 14, 2016 was $219.555. For a description of the stock awards granted to
non-employee
directors, see “Director Compensation Summary – Stock Awards and Option Awards – Stock Awards” below.
|
|
(3)
|
Amounts in this column include the value of share equivalent units granted to
non-employee
directors on December 14, 2016 under our Stock Equivalent Plan. For a description of the method for calculating the number of share equivalent units granted under the Stock Equivalent Plan,
see “Stock Equivalent Plan for Outside Directors” below. The amount in this column also includes contributions in the amount of $15,000 for Messrs. Henkel, Kelly, Melcher and White, $5,000 for Mr. Thompson and Dr. Naughton and
$3,000 for Mr. Breslawsky, made by our charitable foundation for 2016 on their behalf under the foundation’s matching gift program. The amounts for Mr. Thompson and Dr. Naughton applied to contributions they made in 2015. For a
description of the matching gift program, see “Matching Gift Program” below.
|
74
Outstanding Equity
The table below sets forth the aggregate number of outstanding stock awards, option awards, phantom stock shares under the
Deferred Compensation Contract and share equivalent units under the Stock Equivalent Plan held by each director as of December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Stock
Awards
(#)
|
|
Option
Awards
(#)
|
|
Deferred
Compensation
Contract –
Phantom
Stock Shares
(#)
|
|
Stock
Equivalent
Plan –
Share
Equivalent
Units
(#)
|
|
David M. Barrett
|
|
|
|
1,609
|
|
|
|
|
–
|
|
|
|
|
3,342
|
|
|
|
|
4,929
|
|
|
Marc C. Breslawsky
|
|
|
|
–
|
|
|
|
|
–
|
|
|
|
|
–
(1)
|
|
|
|
|
24,382
|
(2)
|
|
Robert M. Davis
|
|
|
|
1,004
|
|
|
|
|
–
|
|
|
|
|
–
|
|
|
|
|
817
|
|
|
Herbert L. Henkel
|
|
|
|
1,209
|
|
|
|
|
–
|
|
|
|
|
17,572
|
|
|
|
|
12,421
|
|
|
John C. Kelly
|
|
|
|
1,609
|
|
|
|
|
1,200
|
|
|
|
|
4,673
|
|
|
|
|
4,929
|
|
|
David F. Melcher
|
|
|
|
1,609
|
|
|
|
|
–
|
|
|
|
|
–
|
|
|
|
|
1,230
|
|
|
Gail K. Naughton
|
|
|
|
1,609
|
|
|
|
|
–
|
|
|
|
|
–
|
|
|
|
|
9,271
|
|
|
Tommy G. Thompson
|
|
|
|
1,209
|
|
|
|
|
3,100
|
|
|
|
|
7,786
|
|
|
|
|
8,296
|
|
|
Anthony Welters
|
|
|
|
1,609
|
|
|
|
|
3,600
|
|
|
|
|
20,045
|
|
|
|
|
17,563
|
|
|
Tony L. White
|
|
|
|
1,609
|
|
|
|
|
3,600
|
|
|
|
|
19,944
|
|
|
|
|
24,757
|
|
|
(1)
|
In connection with Mr. Breslawsky’s retirement from the Board, the Company paid the value of his
Deferred Compensation account in 2016, pursuant to the terms of the Deferred Compensation Contract. See “Director Compensation Summary – Deferred Compensation Contract” below.
|
|
(2)
|
In connection with Mr. Breslawsky’s retirement from the Board, the Company paid the value of his
Stock Equivalent Plan account in 2017, pursuant to the terms of the Stock Equivalent Plan for Outside Directors. See “Director Compensation Summary – Stock Equivalent Plan for Outside Directors” below.
|
Director Compensation Summary
Directors who are not Bard employees are compensated for their service as a Director as shown in the chart below.
|
|
|
|
|
Compensation
|
|
Method of Payment
|
|
Annual
Cash Retainer
(1)
|
|
• $62,500 for each Director
• $20,000 for the Lead Director for 2016
|
|
2005 Directors’ Stock Award Plan
(2)
|
|
• $100,000 in common restricted stock under the 2005 Directors’ Stock Award Plan
|
|
Stock
Equivalent Plan
(2)
|
|
• Stock equivalent units are granted in accordance with a formula
• Valued at approximately
$82,300
|
|
Meeting
Fees
|
|
• $1,650 for each Board and Committee meeting attended
• $3,650 for each Committee Chair
for each Committee meeting
• $1,650 fee equivalent to a meeting fee for directors on the Science and Technology Committee who
participate in technology reviews with management for proposed business development projects
|
|
(1)
|
Paid semi-annually and may be deferred
|
|
(2)
|
Granted/credited annually in December
|
75
Deferred Compensation Contract
Our directors may defer all or a portion of their cash fees under our Deferred Compensation Contract, Deferral of
Directors’ Fees. Under this arrangement, the director’s deferred amounts are credited to a bookkeeping account for the director. The director may elect (i) to have the account credited with interest, or (ii) to have the account
deemed invested in shares of our common stock, referred to as “phantom” stock, with the value of the account determined by the price of our common stock and the number of phantom stock shares in the account. Each of our directors who
currently defers fees has elected to place his or her deferrals in a deferred stock account. The deferred stock accounts are credited with a number of phantom stock shares equal to the dollar amount of the fees deferred, divided by the value of a
share of our common stock on the date the fees would otherwise have been paid. Upon termination of service as a director, we convert the phantom stock in the director’s deferred stock account back to a cash value by multiplying the total number
of shares of phantom stock by the value of a share of our common stock at that time. No shares of our common stock are purchased or issued in connection with this arrangement, and all deferred stock accounts are paid in cash. Dividend equivalents
are credited on phantom stock in the same amount as paid on our common stock and are automatically deemed reinvested into additional shares of phantom stock. A deferred interest account is credited quarterly, until the account has been distributed,
with (i) simple interest equal to the average percentage of interest earned on our marketable securities portfolio during the preceding three months, or (ii) if we do not have a marketable securities portfolio, the prime rate as of the end
of the quarter as published in the Wall Street Journal. We pay the value of an account, as elected by the director, in up to ten annual installments or as a lump sum following the termination of a director’s term, as elected by the director.
Stock Awards and Option Awards
Stock Awards
As part of the director compensation program, the Company provides directors with an annual value-based equity award. These
awards are considered discretionary stock awards under the Stock Award Plan. For 2016, the Governance Committee set a target value of equity awards at $100,000. On December 14, 2016, each
non-employee
director received a stock award of 468 shares that vests in full at the end of three years.
We may grant our
non-employee
directors additional discretionary stock or stock-based awards under the Stock Award Plan subject to a maximum value not to exceed $150,000 annually in aggregate, and the Governance Committee has the
authority to grant these shares and set any conditions or restrictions. Subject to the discretion of the Governance Committee, unvested shares of a discretionary stock award are forfeited in the event a person ceases to serve as a director, except
as a result of death or retirement, in which case all such shares will vest. The Stock Award Plan provides that the Governance Committee has the discretion to accelerate vesting or waive any vesting conditions with respect to stock awards granted
under this plan.
Option Awards
In December 2010, the Governance Committee eliminated the grant of formula-based option awards in favor of full value stock
awards, and the Stock Award Plan was amended accordingly. Previous grants of formula-based option awards were made at the same time that option grants were made to the Company’s officers. The options have an exercise price equal to the fair
market value of our common stock on the date of grant and vest in 400 share increments on each of the first three anniversaries of the grant date. The Governance Committee may grant
non-employee
directors
option awards under the Stock Award Plan, and determines any conditions or restrictions on the grants. No option awards have been granted to directors since 2009. If a person ceases to serve as a director for any reason other than death or
retirement, any unvested options will expire immediately. If a person ceases to serve as a director as a result of his or her death, his or her personal representative may exercise all vested and unvested options for a period of one year but in no
event beyond the term of the option. If a person ceases to serve as a director as a result of his or her retirement, he or she may exercise all vested options through the term of the option, and all unvested options will expire immediately. The
Stock Award Plan provides that the Governance Committee has the discretion to accelerate vesting or waive any vesting conditions with respect to option awards under this plan.
76
Stock Equivalent Plan for Outside Directors
We also maintain the Stock Equivalent Plan for Outside Directors of C. R. Bard, Inc., or the “Stock Equivalent Plan.”
Under the Stock Equivalent Plan, we maintain a bookkeeping account for each
non-employee
director to which we credit an amount each year. The account is deemed invested in shares of our common stock, referred
to as “share equivalent units,” with the value of the account determined by the price of our common stock and the number of share equivalent units in the account. No shares of our common stock are actually purchased or issued in connection
with this arrangement. The annual grant of share equivalent units under the Stock Equivalent Plan is made on the same date as awards granted under the Directors’ Stock Award Plan and is determined according to a formula, which provides that a
director receives a number of share equivalent units equal to (i) the sum of (A) the annual retainer then in effect for
non-employee
directors and (B) 12 times the
per-meeting
fee for
non-employee
directors then in effect, divided by (ii) the fair market value of a share of our common stock on the date of the grant. The fair
market value is defined as the average of the high and low selling prices of our common stock on the NYSE. Based on the formula described above, the value of the share equivalent units granted to each
non-employee
director effective December 14, 2016 was approximately $82,300, and included 375 share equivalent units based on a price of $219.555 per share, the fair market value of our common stock on
December 14, 2016.
Each director’s account in the Stock Equivalent Plan becomes vested after five years of
service on our Board of Directors, or immediately upon a change of control, which is defined in the same manner as under our executive change of control agreements described above. If the account is not vested at the time the director terminates
service, all benefits are forfeited. In addition, if we terminate a director for “cause,” then his or her entire account, whether vested or unvested, will be forfeited. “Cause” is defined as a breach of a director’s duty of
loyalty to us or our shareholders, any act not in good faith or involving a knowing violation of law, or any act resulting in the director’s receipt of an improper personal benefit. Other than following a change of control or after the
director’s death, a director will also forfeit any remaining unpaid benefits if he or she fails to remain available to provide advice and counsel to us or engages in activities the Board of Directors determines to be competitive with our
interests following termination of service.
Payment of benefits generally may not begin before the director reaches age
55. The value of the director’s account is equal to the total number of share equivalent units credited to the account, multiplied by the average of the closing prices of our common stock on the NYSE during the
six-month
period immediately preceding the director’s date of termination. We pay benefits under the Stock Equivalent Plan in cash, either in a lump sum or in quarterly installments over a number of years
equal to the number of full or partial years the director served on our Board of Directors, at the director’s election. If the director elects to receive a lump sum, the amount of the lump sum is equal to the present value of the installment
payments, discounted using the
30-year
treasury rate in effect on the date the director terminates service. If our directors’ annual retainer or meeting fees are increased after a participant terminates
service as a director, the Governance Committee may, in its discretion, prospectively increase the benefit payments to be paid or being paid to any retired
non-employee
directors.
In the event of a participant’s death on or after payment has begun, his or her beneficiary will receive the
participant’s remaining interest. If a participant dies before payment has begun, the participant’s beneficiary will receive the payments, if any, that the participant would have received if the participant had terminated service as a
director on the date of the participant’s death. Since benefits under the Stock Equivalent Plan are generally payable to
non-employee
directors only after a director has served on the Board of Directors
for at least five years, the beneficiary of a director who terminates service due to death before completing five years of service would typically not receive any benefits under the Stock Equivalent Plan. To offset this, we pay an additional death
benefit for
non-employee
directors equal to $25,000 per year for each year of service on the Board of Directors, up to five years. After the director completes five years of service, we no longer provide the
additional death benefit, and any benefits payable to the director’s beneficiary would be determined by the terms of the Stock Equivalent Plan. We have not purchased insurance relating to the additional death benefit, and therefore any benefits
would be paid out of our general assets.
77
Matching Gift Program
Directors are eligible to participate in the C. R. Bard Foundation, Inc. Matching Gift Program, under which our foundation
matches gifts made by employees and directors to eligible
non-profit
organizations. The maximum gift total for a
non-employee
director participant in this program is
$15,000 in respect of any calendar year.
RELATED PERSON TRANSACTIONS
We have had no related person transactions since the beginning of the 2016 fiscal year, or any currently proposed transactions,
requiring disclosure under applicable SEC rules and regulations.
Policies and Procedures for Transactions with Related
Persons
We attempt to analyze all transactions in which C. R. Bard participates and in which a related person may have
a direct or indirect material interest, both due to the potential for a conflict of interest and to determine whether disclosure of the transaction is required under applicable SEC rules and regulations. Related persons include any of our directors
or executive officers, certain of our shareholders and their respective immediate family members. A conflict of interest occurs when an individual’s private interest interferes, or appears to interfere, in any way with our interests. Our
Business Ethics Policy requires all directors, officers and employees who may have a potential or apparent conflict of interest to disclose all the relevant facts to his or her manager. The manager will then consult with the Company’s Human
Resources Department and the Law Department, and a determination will be made as to whether the activity is permissible.
In addition to the reporting requirements under the Business Ethics Policy, to identify related person transactions, each year
we submit and require our directors and officers to complete Director and/or Officer Questionnaires identifying any transactions with us in which the director or officer or their family members have an interest. A list is then maintained by the Law
Department of all companies known to the Law Department that are affiliated with a related person. Any potential transactions with such companies or any potential related person transactions are reviewed by the Law Department and brought to the
attention of the Governance Committee as appropriate. Our Governance Committee is responsible for reviewing and approving all material transactions with any related person, including any charitable contributions to an affiliated entity above
$25,000.
EQUITY COMPENSATION PLAN INFORMATION
The table below sets forth information with respect to shares of common stock that may be issued under our equity compensation
plans as of December 31, 2016:
|
|
|
|
|
|
|
|
|
Plan Category
|
|
Number of Securities to be
Issued Upon Exercise of
Outstanding Options,
Warrants and Rights
|
|
Weighted-Average Exercise
Price of Outstanding Options,
Warrants and Rights
(1)
|
|
Number of Securities
Remaining Available for
Future Issuance Under Equity
Compensation
Plans
(Excluding Securities Reflected
in Column (a))
|
|
|
|
(a)
|
|
(b)
|
|
(c)
|
|
Equity compensation plans approved by security holders
|
|
4,985,516
(2)
|
|
$103.14
|
|
3,887,307
(3)
|
|
Equity compensation plans not approved by security holders
|
|
–
|
|
–
|
|
–
|
|
|
|
|
|
|
|
|
|
Total
|
|
4,985,516
|
|
$103.14
|
|
3,887,307
|
|
(1)
|
The weighted average exercise price is $137.76 for stock options and stock appreciation rights only.
|
|
(2)
|
Includes 3,295,879 options (which do not carry dividend equivalent rights) and 1,689,637 awards of restricted
stock units and restricted stock (including 462,625 restricted stock units purchased by participants under the MSPP from a portion of their bonus).
|
|
(3)
|
Includes 21,890 shares under the 2005 Directors’ Stock Award Plan, 3,639,647 shares under the 2012 Long
Term Incentive Plan, as amended and restated, and 225,770 shares under the Employee Stock Purchase Plan, as amended and restated.
|
78
AUDIT COMMITTEE REPORT
To the Board of Directors of C. R. Bard, Inc.:
We have reviewed and discussed with management the Company’s audited consolidated financial statements as of and for the
year ended December 31, 2016.
We have discussed with the independent registered public accounting firm the matters
required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 1301,
Communications with Audit Committees.
We have received and reviewed the written disclosures and the communications from the independent
registered public accounting firm required by Public Company Accounting Oversight Board Rule 3526,
Communication with Audit Committees Concerning Independence
, and have discussed with the independent registered public accounting firm its
independence. We have considered whether the provision of
non-audit
services performed by the Company’s independent registered public accounting firm is compatible with maintaining auditor independence.
Based on the reviews and discussions referred to above, we recommend to the Board of Directors that the audited
consolidated financial statements referred to above be included in the Company’s Annual Report on Form
10-K
for the year ended December 31, 2016.
THE AUDIT COMMITTEE
John C.
Kelly, Chair
David M. Barrett, M.D.
Robert M. Davis
David F.
Melcher
79
|
|
|
THE AUDIT COMMITTEE AND THE BOARD OF
DIRECTORS RECOMMEND A VOTE “FOR”
PROPOSAL NO. 2 – THE RATIFICATION OF APPOINTMENT OF KPMG
|
PROPOSAL NO. 2 – RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS
OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2017
The Audit Committee of the Board of Directors has selected KPMG LLP to audit our accounts for the fiscal year ending
December 31, 2017. The Audit Committee is directly responsible for the appointment, compensation (approval of all fees), retention, and oversight of the company’s independent registered public accounting firm retained to perform the audit
of our financial statements and our internal control over financial reporting. KPMG LLP has been the Company’s independent registered public accounting firm since 2002.
In accordance with SEC rules and KPMG LLP policy, audit partners are subject to rotation requirements to limit the number of
consecutive years an individual partner may provide service to the company. For lead and concurring audit partners, the maximum number of consecutive years of service in that capacity is five years. The process for selection of the Company’s
lead audit partner pursuant to this rotation policy involves a meeting between the Chair of the Audit Committee and the candidate for the role, as well as discussion by the full Audit Committee and with management. The Audit Committee annually
reviews KPMG LLP’s independence and performance in connection with the Audit Committee’s determination of whether to retain KPMG LLP or consider engaging another firm as our independent registered public accounting firm. Based on this
evaluation, the Audit Committee believes that KPMG LLP is independent and that it is in the best interests of the Company and our shareholders to retain KPMG LLP to serve as our independent registered public accounting firm for 2017.
Because KPMG LLP’s report will be addressed to the shareholders as well as the Board of Directors, the holders of our
common stock are asked to ratify this selection. We have been advised that representatives of KPMG LLP will be present at the Annual Meeting with the opportunity to make a statement if the representatives desire to do so. We expect that the
representatives will be available to respond to appropriate questions.
Fiscal 2016 and 2015 Independent Registered Public Accounting Firm Fee Summary
The following table presents the aggregate fees billed and accrued for professional services rendered by our
independent registered public accounting firm in the “audit fees” category and fees billed in the fiscal years for the “audit-related fees,” “tax fees” and “all other fees” categories, in each case as such
terms are defined by the SEC, for the fiscal years ended December 31, 2016 and December 31, 2015.
|
|
|
|
|
|
|
|
|
|
|
Type of Fees
|
|
2016
|
|
|
2015
|
|
|
Audit Fees
|
|
$
|
5,739,000
|
|
|
$
|
5,063,000
|
|
|
Audit-Related Fees
(1)
|
|
$
|
378,000
|
|
|
$
|
414,500
|
|
|
Tax Fees
(2)
|
|
$
|
1,756,000
|
|
|
$
|
1,916,000
|
|
|
All Other Fees
(3)
|
|
$
|
250,000
|
|
|
$
|
450,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
8,123,000
|
|
|
$
|
7,843,500
|
|
|
(1)
|
Audit-related professional services included audits of benefits plans and agreed upon procedures covering
Extensible Business Reporting Language (XBRL) filings.
|
|
(2)
|
The fees billed by KPMG LLP related to tax compliance, tax advice and tax planning for 2016 were $484,000,
$1,077,000 and $195,000, respectively. The fees billed by KPMG LLP related to tax compliance, tax advice and tax planning for 2015 were $506,000, $1,245,000 and $165,000, respectively.
|
|
(3)
|
All Other Fees represent KPMG’s services related to the Company’s decision to outsource significant
Information Technology functions. KPMG’s services included assessment and review of the outsourcing agreement with a third party service provider and assessment of the transition to the third party service provider.
|
Audit Committee
Pre-Approval
Policies and Procedures
It is the Audit Committee’s policy and procedure to review, consider and ultimately
pre-approve
all audit and
non-audit
services to be performed by our independent registered public accounting firm. The Audit
80
Committee
pre-approved
all of the services for the fiscal year ended December 31, 2016, described under “Audit Fees,” “Audit-Related
Fees,” “Tax Fees” and “All Other Fees.” The Audit Committee has adopted a
pre-approval
policy that provides guidelines for the audit, audit-related, tax and other
non-audit
services that may be provided to us by the independent registered public accounting firm. The policy: (i) identifies the guiding principles that must be considered by the Audit Committee in approving
services to ensure that the independence of the independent registered public accounting firm is not impaired; (ii) describes in detail the audit, audit-related, tax and other services that may be provided, including the range of fees for such
services, and the
non-audit
services that may not be performed; and (iii) sets forth procedures for the
pre-approval
of all permitted services. The Audit Committee
must separately
pre-approve
any service not specifically included in the policy, including the fee level for that service.
Any excess in fees for a service over the previously approved level, whether included in the policy or specifically approved by
the Audit Committee, requires specific
pre-approval
by the Audit Committee. The term of any
pre-approval
is 12 months unless the Audit Committee specifically provides
for a different period. In accordance with the policy, the Chair of the Audit Committee has been delegated the authority to provide any necessary specific
pre-approval
in the event that the full Audit
Committee is not available, provided that any
pre-approval
decision made by the Chair for permissible tax services is limited to $50,000. The Chair must report such approval to the Audit Committee at its next
meeting.
|
|
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL NO. 2
|
81
|
|
|
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE “FOR”
PROPOSAL NO. 3 – APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE
OFFICERS ON AN ADVISORY BASIS
|
PROPOSAL NO. 3 – APPROVAL OF THE COMPENSATION OF OUR NAMED
EXECUTIVE
OFFICERS ON AN ADVISORY BASIS
The primary objective of our overall executive compensation program is to provide balanced, comprehensive and competitive
rewards for the short- and long-term in a cost-effective manner to the Company. We have designed our executive compensation program to incentivize achievement of earnings, sales and other financial metrics that we believe deliver value to our
shareholders, drive operational results and promote high levels of individual performance. Our compensation program provides a combination of fixed and variable pay with an emphasis on
at-risk
compensation
linked to performance goals. We believe that compensation levels in the medical device industry are dynamic and very competitive as a result of the need to attract and retain qualified executives with the necessary skills and experience to keep up
with the complex regulatory environment in which we operate and to understand the rapidly changing medical technology in our industry. We believe that our current executive compensation program achieves our objectives effectively.
Shareholders are urged to read the Compensation Discussion and Analysis set forth in this proxy statement, which discusses how
our compensation policies and procedures reflect our compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narrative disclosure that describe the compensation of our five most highly-compensated
executive officers in fiscal year 2016.
In accordance with Section 14A of the Securities Exchange Act of 1934, as
amended, and as a matter of good corporate governance, shareholders will be asked at the 2017 Annual Meeting of Shareholders to approve the following advisory resolution:
Adoption of Proposal No. 3
RESOLVED, that the shareholders approve, on an advisory basis, the compensation of the named executive officers as disclosed
pursuant to Item 402 of Regulation
S-K,
included in the Compensation Discussion and Analysis, the Summary Compensation Table and related compensation tables, and the related disclosure contained in this
proxy statement.
This advisory vote is not binding. Although
non-binding,
the
Compensation Committee will consider the outcome of the advisory vote when making future decisions regarding our executive compensation programs.
|
|
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL NO. 3
|
82
|
|
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR 1
YEAR” UNDER
PROPOSAL NO.
4 – “SAY-ON-PAY
FREQUENCY” VOTE FOR
THE APPROVAL OF THE FREQUENCY OF SHAREHOLDER VOTES
ON COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS ON AN ADVISORY BASIS
|
PROPOSAL NO. 4 – APPROVAL OF
“SAY-ON-PAY
FREQUENCY” VOTE ON THE
FREQUENCY OF SHAREHOLDER VOTES ON COMPENSATION
OF OUR NAMED EXECUTIVE
OFFICERS ON AN ADVISORY BASIS
The following proposal gives you, as a shareholder, the opportunity to inform us as to how frequently you wish the Company to
include a proposal (i.e., a
“Say-on-Pay”
proposal) to permit shareholders to cast an advisory vote on the compensation of our named executive officers in our
future annual proxy statements (i.e., a proposal similar to Proposal No. 3 of this proxy statement). In accordance with the changes to Section 14A of the Securities Exchange Act, as amended, which were made pursuant to the Dodd-Frank Wall
Street Reform and Consumer Protection Act, public companies are required to submit a proposal to their shareholders regarding the frequency of
“Say-on-Pay”
votes at least every six years. We last held this vote at our 2011 Annual Meeting.
In accordance with the rules, this
proposal provides shareholders with the opportunity to cast a
non-binding
advisory vote on the frequency of
“Say-on-Pay”
votes. As indicated on your proxy card, you have four choices with respect to the frequency of
“Say-on-Pay”
votes during the next six years: (i) every year; (ii) every two years; (iii) every three years; or (iv) abstain.
The Board of Directors believes that it is in the best interest of the Company and its shareholders that a
“Say-on-Pay”
vote be held annually. While the Company’s executive compensation programs are designed to promote a long-term connection between pay and
performance, the Board of Directors recognizes that executive compensation disclosures are made annually. By conducting annual advisory votes on executive compensation, shareholders are able to express their views on our executive compensation
program and provide us with more direct and immediate feedback on our compensation disclosures. The Board believes it is best to give shareholders the opportunity to react promptly to emerging trends in compensation, provide feedback before those
trends become pronounced over time, and give the Board and the Compensation Committee the opportunity to evaluate individual compensation decisions each year in light of ongoing feedback from shareholders. Shareholders should note that because the
advisory vote on executive compensation occurs well after the beginning of the compensation year, and because the different elements of our executive compensation programs are designed to operate in an integrated manner and to complement one
another, in many cases it may not be appropriate or feasible to change our executive compensation programs in consideration of any one year’s advisory vote on executive compensation by the time of the following year’s annual meeting of
shareholders. If the shareholders agree with the Board of Directors recommendation regarding the frequency of
“Say-on-Pay”
proposals, the next
“Say-on-Pay”
proposal (after the proposal contained in this proxy statement as Proposal No. 3) would be included in the proxy statement relating to our 2018
Annual Meeting of Shareholders.
Because your vote is advisory, it will not be binding on the Board. However, the
Compensation Committee will take into account the outcome of the vote when considering the frequency of
“Say-on-Pay”
proposals in our proxy statement.
|
|
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR 1 YEAR” UNDER PROPOSAL NO. 4
|
MISCELLANEOUS
We do not know of any business other than that described above to be presented for action to the shareholders at the Annual
Meeting, but we expect that the proxies will be exercised upon any other matters and proposals that may legally come before the meeting and any adjournments of the meeting in accordance with the discretion of the persons named therein.
83
PROPOSALS OF SHAREHOLDERS AND NOMINATION OF DIRECTORS
Our
by-laws
set forth procedures to be followed by shareholders who wish to bring
business before an annual meeting of shareholders or nominate candidates for election to the Board of Directors at an annual meeting of shareholders, other than proposals to be included in a proxy statement pursuant to Rule
14a-8
under the Exchange Act, or nominees to be included in a proxy statement pursuant to proxy access (as described below). These procedures require, among other things, that the shareholder give timely written
notice to our Secretary. To be timely, such notice must be delivered to or mailed and received at our principal executive offices at 730 Central Avenue, Murray Hill, New Jersey 07974 not less than 90 days (no later than January 19, 2018 for the
2018 Annual Meeting of Shareholders) nor more than 120 days (no earlier than December 20, 2017 for the 2018 Annual Meeting of Shareholders) prior to the first anniversary of the preceding year’s annual meeting of shareholders.
Our
by-laws
provide a proxy access right, which includes shareholder eligibility
requirements and other procedures that must be followed, and information that must be provided, in order for an eligible shareholder to have nominees for election to the Board of Directors included in our proxy statement. To be timely, such notice
must be delivered to or mailed and received at our principal executive offices not less than 120 days (no later than December 20, 2017 for the 2018 Annual Meeting of Shareholders) nor more than 150 days (no earlier than November 20, 2017
for the 2018 Annual Meeting of Shareholders) prior to first anniversary of the preceding year’s annual meeting of shareholders.
Pursuant to our
by-laws,
in the event that the date of the annual meeting of
shareholders is more than 30 days before or more than 60 days after that anniversary date, to be timely, we must receive notice of business to be brought before the annual meeting or notice of nomination of candidates for election to the Board of
Directors, including by proxy access, not later than the close of business on the 10th day following the day on which we first make a public announcement of the date of the annual meeting of shareholders.
We must receive any proposal of a shareholder intended to be presented at the next annual meeting of shareholders and to be
included in our proxy statement at our principal executive offices on or before November 15, 2017, pursuant to the requirements of Rule
14a-8
under the Exchange Act.
HOUSEHOLDING
Securities and Exchange Commission rules permit a single set of annual reports and proxy statements to be sent to any household
at which two or more shareholders reside if they appear to be members of the same family. Each shareholder continues to receive a separate proxy card. This procedure is referred to as householding. While we do not household in mailings to our
shareholders of record, a number of brokerage firms with account holders who are our shareholders have instituted householding. In these cases, a single proxy statement and annual report will be delivered to multiple shareholders sharing an address
unless contrary instructions have been received from the affected shareholders. Once a shareholder has received notice from his, her or its broker that the broker will be householding communications to the shareholder’s address, householding
will continue until the shareholder is notified otherwise or until the shareholder revokes his, her or its consent. If at any time a shareholder no longer wishes to participate in householding and would prefer to receive a separate proxy statement
and annual report, he or she should notify his, her or its broker. Any shareholder can receive a copy of our proxy statement and annual report, free of charge, by contacting us at C. R. Bard, Inc., 730 Central Avenue, Murray Hill, New Jersey 07974,
Attention: Secretary, by calling our Secretary at
908-277-8000
or by accessing the Investor Relations page of our website at
www.crbard.com
.
Shareholders who hold their shares through a broker or other nominee who currently receive multiple copies of the proxy
statement and annual report at their address and would like to request householding of their communications should contact their broker.
84
Appendix A
INFORMATION REGARDING
NON-GAAP
FINANCIAL MEASURES
This proxy statement contains certain financial measures that are not calculated in accordance with United States
generally accepted accounting principles (“GAAP”). These
non-GAAP
measures are reconciled to their most directly comparable GAAP measures in the tables below. Management uses these
non-GAAP
measures: (a) to establish financial and operational goals; (b) to monitor the Company’s actual performance in relation to its business plan and operating budgets; (c) to evaluate the
Company’s core operating performance and understand key trends within the business; and (d) as part of several components it considers in determining incentive compensation.
Net sales “on a constant currency basis” is a
non-GAAP
measure
.
The Company analyzes net sales on a constant currency basis to better measure the comparability of results between periods. Because changes in foreign currency exchange rates have a
non-operating
impact on net
sales, the Company believes that evaluating growth in net sales on a constant currency basis provides an additional and meaningful assessment of net sales to both management and the Company’s investors. Constant currency growth rates are
calculated by translating the prior year’s local currency sales by the current period’s exchange rate. Constant currency growth rates are not indicative of changes in corresponding cash flows.
Adjusted Diluted EPS is a
non-GAAP
measure. Adjusted Diluted EPS for the twelve
months ended December 31, 2016 excludes the following items from reported diluted earnings per share available to common shareholders: (1) amortization of intangible assets; (2) net charges for acquisition-related items; (3) a
charge related to an asset impairment; (4) charges related to estimated costs for product liability matters, net of recoveries; (5) charges for restructuring and productivity initiatives; and (6) a decrease in the income tax provision as a
result of the completion of certain IRS examinations. Adjusted Diluted EPS for the twelve months ended December 31, 2015 excludes the following items from reported diluted earnings per share available to common shareholders:
(1) amortization of intangible assets; (2) net charges for acquisition-related items; (3) a charge related to an asset impairment; (4) charges related to estimated costs for product liability matters, net of recoveries, certain
other litigation-related defense costs and other litigation-related charges; (5) a gain related to a patent infringement litigation against Gore; and (6) charges for restructuring and productivity initiatives.
The Company believes that these
non-GAAP
measures provide an additional and
meaningful assessment of the Company’s ongoing operating performance. Because the Company has historically reported these
non-GAAP
results to the investment community, management also believes that the
inclusion of these
non-GAAP
measures provides consistency in its financial reporting and facilitates investors’ understanding of the Company’s historic operating trends by providing an additional
basis for comparisons to prior periods.
Management recognizes that the use of these
non-GAAP
measures has limitations, including the fact that they may not be comparable with similar
non-GAAP
measures used by other companies and that management must exercise
judgment in determining which types of charges or other items should be excluded from the
non-GAAP
information. Management compensates for these limitations by providing full disclosure of each
non-GAAP
measure and a reconciliation to the most directly comparable GAAP measure. All
non-GAAP
measures are intended to supplement the applicable GAAP disclosures and should
not be considered in isolation from, or as a replacement for, financial information prepared in accordance with GAAP.
Summary of Net Sales
(dollars in thousands, unaudited)
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Twelve Months Ended December 31,
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2016
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2015
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Change
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Constant
Currency
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Net sales
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$
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3,714,000
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$
|
3,416,000
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9%
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Foreign exchange impact
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(34,700)
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Constant Currency
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$
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3,714,000
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$
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3,381,300
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10%
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A-1
Reconciliation of Earnings
(dollars in millions except per share amounts, unaudited)
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Twelve Months Ended December 31, 2016
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Net
Income
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Diluted Earnings per
Share
Available
to Common
Shareholders
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GAAP Basis
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$
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531.4
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$
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7.03
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Amortization of intangible assets
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86.1
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Items that affect comparability of results between periods:
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Acquisition-related items
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2.0
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Asset impairment
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1.2
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Litigation charges, net
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139.0
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Restructuring and productivity initiative costs
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20.2
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Tax Item
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(2.6)
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Total
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245.9
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3.26
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Adjusted Basis
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$
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777.3
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$
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10.29
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Twelve Months Ended December 31, 2015
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Net
Income
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Diluted Earnings per
Share
Available
to Common
Shareholders
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GAAP Basis
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$
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135.4
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$
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1.77
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Amortization of intangible assets
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$
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79.3
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|
|
Items that affect comparability of results between periods:
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|
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|
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|
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Acquisition-related items
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11.1
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Asset impairment
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2.8
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Litigation charges, net
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568.8
|
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|
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Gore Proceeds
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|
(131.7)
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Restructuring and productivity initiative costs
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29.4
|
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Total
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559.7
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7.31
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Adjusted Basis
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$
|
695.1
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$
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9.08
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A-2
Directions to the Wyndham Hamilton Park Hotel and Conference Center
175 Park Avenue
Florham Park, NJ 07932
973-377-2424
From Newark Airport
Follow signs to
I-78
West. Take
I-78
West for approximately 9 miles to NJ 24 West. Follow directions from NJ 24 West below.
From NJ 24 West:
Follow NJ
24 West to exit
2-A
for Morristown Rt. 510 West (Columbia Turnpike). Make a left at the first light onto Park Avenue. At the fourth light make a right into Hamilton Park.
From
I-287
North:
Follow
I-287
South to Exit 37 (24 East, Springfield). Take exit
2-A
for Morristown/Rt. 510 West. At the first light make a
left onto Park Avenue. At the fourth light make a right into Hamilton Park.
From
I-287
South:
Follow
I-287
North to Exit 37 (24 East, Springfield). Take exit
2-A
for Morristown/Rt. 510 West. At the first light make a left onto Park Avenue. At the fourth light make a right into Hamilton Park.
From NJ Turnpike (Exit 14):
Follow signs to
I-78
West. Take
I-78
West for approximately 9 miles to NJ 24 West. Follow directions from 24 West.
From
Garden State Parkway South:
Take Garden State Parkway South to exit 142. Follow signs for
I-78
West. Take
I-78
West to NJ 24 West. Follow directions from 24 West.
From Garden State Parkway
North:
Take Garden State Parkway North to exit 142. Follow signs for
I-78
West. Take
I-78
West to NJ 24 West. Follow directions from 24 West.
From George Washington Bridge:
Take George Washington Bridge to 80 West to exit 43 and
I-287
South (Morristown). Follow directions from
I-287
North to South.
From Tappan Zee Bridge:
Take NY Thruway
(I-87)
North to Garden State Parkway South to
I-80
West to
I-287
South. Follow directions from
I-287
North to South.
From New York City:
From Holland Tunnel
take NJ Turnpike
(I-95)
South to
I-78
West (exit 14). Take
I-78
West to NJ 24 West. Follow directions from 24 West. From Lincoln
Tunnel take NJ Turnpike
(I-95)
South to
I-78
West (exit 14). Take
I-78
West to NJ 24 West. Follow directions from 24 West.
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Electronic Voting
Instructions
You can vote by Internet or telephone!
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the two 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 6:00 p.m., New York Time, on April 18, 2017. For 401(k) plan participants your
vote must be received by 9:00 a.m., New York Time, on April 17, 2017.
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Vote by Internet
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• Go to
www.envisionreports.com/bcr
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• Or scan the QR code with your smartphone
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• Follow the steps outlined on the secure website
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Vote by telephone
•
Within USA, US territories & Canada, call toll free
1-800-652-VOTE
(8683) on a touch tone
telephone. There is
NO CHARGE
to you for the call.
•
Outside USA, US territories & Canada, call
1-781-575-2300 on a touch tone telephone. Standard rates will apply.
•
Follow the instructions provided by the recorded
message.
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Using a
black ink
pen, mark your votes with an
X
as shown in
this example. Please do not write outside the designated areas.
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☒
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q
IF YOU HAVE NOT VOTED VIA THE
INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
----------------------------------------------------------------------------------------------------------------------------------------------------------------
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A
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Proposals — The Board of Directors recommends a vote
FOR
the election of each of the nominees listed.
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1. Election of Director Nominees for a term of one year:
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For
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Against
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Abstain
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For
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Against
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Abstain
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For
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Against
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Abstain
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+
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01 - David M. Barrett
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☐
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☐
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☐
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02 - Robert M. Davis
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☐
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☐
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☐
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03 - Herbert L. Henkel
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☐
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☐
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☐
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04 - John C. Kelly
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☐
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☐
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☐
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05 - David F. Melcher
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☐
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☐
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☐
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06 - Gail K. Naughton
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☐
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☐
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☐
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07 - Timothy M. Ring
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☐
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☐
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☐
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08 - Tommy G. Thompson
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☐
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☐
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☐
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09 - John H. Weiland
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☐
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☐
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☐
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10 - Anthony Welters
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☐
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☐
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☐
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11 - Tony L. White
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☐
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☐
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☐
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The Board of Directors recommends a vote
FOR
Proposals 2 and 3.
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For
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Against
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Abstain
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For
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Against
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Abstain
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2. To ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year
2017.
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☐
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☐
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☐
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3. To approve the compensation of our named executive officers on an advisory basis.
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☐
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☐
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☐
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The Board of Directors recommends a vote for
1 Year
.
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1 Year
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2 Years
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3 Years
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Abstain
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4. To approve “Say-On-Pay Frequency” of shareholder votes on compensation of our named executive
officers on an advisory basis.
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☐
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☐
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☐
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☐
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B
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Authorized Signatures — This section must be completed for your vote to be counted — Date and Sign Below
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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.
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Date (mm/dd/yyyy) — Please print date below.
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Signature 1 — Please keep signature within the box.
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Signature 2 — Please keep signature within the box.
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/ /
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2017 Annual Meeting of C. R. Bard, Inc. Shareholders
April 19, 2017
Wyndham Hamilton Park Hotel and Conference Center
at 10:00 a.m.
175 Park Avenue
Florham Park, New Jersey 07932
This portion of your proxy card will serve as an
ADMISSION TICKET
to the Annual Meeting of Shareholders of C. R. Bard, Inc. should you plan to attend.
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Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Shareholders to Be Held on April 19, 2017.
The Proxy Statement, the 2016 Annual Report to Shareholders and the
Form 10-K of C. R. Bard, Inc. for 2016 are available at www.envisionreports.com/bcr.
|
q
IF YOU HAVE NOT VOTED VIA THE
INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
----------------------------------------------------------------------------------------------------------------------------------------------------------------
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Proxy — C. R. Bard, Inc.
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+
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|
Proxy Solicited On Behalf Of The Board Of Directors
The undersigned hereby constitutes and appoints Christopher S. Holland and Samrat S. Khichi, and each of them, as attorneys and proxies, with power of substitution, to represent the undersigned and to
vote all of the shares of stock of C. R. Bard, Inc. that the undersigned is entitled to vote at the Annual Meeting of Shareholders of C. R. Bard, Inc. to be held at the Wyndham Hamilton Park Hotel and Conference Center, 175 Park Avenue, Florham
Park, New Jersey on Wednesday, April 19, 2017 at 10:00 a.m. and at any adjournments thereof (a) as specified on the items listed on the reverse hereof, and (b) in accordance with their discretion on any other business which may properly come before
said meeting.
This proxy covers all shares for which the undersigned has the right to give voting instructions to Vanguard Fiduciary Trust
Company, Trustee of the B.E.S.T. 401(k) Plan (the “Plan”). This proxy, when properly executed, will be voted as directed. If no direction is given to the Trustee by 9:00 a.m. New York Time on April 17, 2017, the Trustee will vote your
shares held in the Plan in the same proportion as votes received from other participants in the Plan.
This proxy when properly executed will
be voted in the manner directed hereon by the undersigned shareholder.
If no direction is made, this proxy will be voted “FOR” the election of each of the nominees in Proposal No. 1, “FOR” Proposals 2 and 3 and “in favor
of 1 year” for Proposal 4.
TO VOTE OVER THE INTERNET OR BY TELEPHONE, PLEASE SEE THE INSTRUCTIONS ON THE REVERSE SIDE. TO VOTE BY
MAIL, PLEASE MARK, SIGN AND DATE ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE POSTAGE-PAID ENVELOPE.
(Items to be voted on appear on
reverse side)
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Change of Address —
Please print new address below.
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Meeting Attendance
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Mark box to the right if
you plan to attend the
Annual Meeting.
|
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☐
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∎
|
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IF VOTING BY MAIL, YOU
MUST
COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD.
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+
|
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