Table of Contents
UNITED
STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT
TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT
NO. )
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AGILENT TECHNOLOGIES,
INC. |
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Charter) |
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Table of Contents
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Agilent Technologies, Inc. 5301 Stevens Creek Blvd. Santa Clara, California
95051
William P. Sullivan Chief Executive
Officer |
February 2015
To our
Stockholders:
I am pleased to invite you to
attend the annual meeting of stockholders of Agilent Technologies, Inc.
(Agilent) to be held on Wednesday, March 18, 2015 at 8:00 a.m., Pacific
Standard Time, at Agilents headquarters located at 5301 Stevens Creek Blvd.,
Building No. 5, Santa Clara, California (U.S.A.). Details regarding admission to
the annual meeting and the business to be conducted are more fully described in
the accompanying Notice of Annual Meeting and Proxy Statement.
If you are unable to attend
the annual meeting in person, you may listen through the Internet or by
telephone. To listen to the live webcast, log on at www.investor.agilent.com and
select the link for the webcast. To listen by telephone, please call (877)
312-5529 (international callers should dial (253) 237-1147). The meeting
identification number is 45043300. The webcast will begin at 8:00 a.m. and will
remain on Agilents website for one year. You cannot record your vote or ask
questions on this website or at this phone number.
We have elected to take
advantage of Securities and Exchange Commission rules that allow issuers to
furnish proxy materials to their stockholders on the Internet. We believe that
the rules will allow us to provide our stockholders with the information they
need, while lowering the costs of delivery and reducing the environmental impact
of the annual meeting.
Your vote is important.
Whether or not you plan to attend the annual meeting, I hope that you will vote
as soon as possible. Please review the instructions on each of your voting
options described in the Proxy Statement and the Notice of Internet Availability
of Proxy Materials you received in the mail.
Thank you for your ongoing
support of, and continued interest in, Agilent.
Sincerely,
Admission to the annual
meeting will be limited to stockholders. You are entitled to attend the annual
meeting only if you are a stockholder of record as of the close of business on
January 20, 2015, the record date, or hold a valid proxy for the meeting. In
order to be admitted to the annual meeting, you must present proof of ownership
of Agilent stock on the record date. This can be a brokerage statement or letter
from a bank or broker indicating ownership on January 20, 2015, the Notice of
Internet Availability of Proxy Materials, a proxy card, or legal proxy or voting
instruction card provided by your broker, bank or nominee. Any holder of a proxy
from a stockholder must present the proxy card, properly executed, and a copy of
the proof of ownership. Stockholders and proxyholders may also be asked to
present a form of photo identification such as a drivers license or passport.
Backpacks, cameras, cell phones with cameras, recording equipment and other
electronic recording devices will not be permitted at the annual meeting.
Agilent reserves the right to inspect any persons or proposals prior to their
admission to the annual meeting. Failure to follow the meeting rules or permit
inspection will be grounds for exclusion from the annual meeting.
Table of Contents
AGILENT TECHNOLOGIES,
INC.
5301 Stevens Creek Blvd.
Santa Clara, California 95051
(408) 553-2424
Notice of Annual Meeting
of Stockholders
TIME |
8:00
a.m., Pacific Standard Time, on Wednesday, March 18, 2015 |
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PLACE |
Agilents Headquarters 5301 Stevens Creek Boulevard,
Building No. 5 Santa Clara, California (U.S.A.) |
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ITEMS OF BUSINESS |
(1) To elect three directors to a 3-year term. At the annual
meeting, the Board of Directors intends to present the following nominees
for election as directors:
●Robert J. Herbold
●Koh
Boon Hwee; and
●Michael R. McMullen |
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(2)
To ratify the Audit and Finance Committees appointment of
PricewaterhouseCoopers LLP as Agilents independent registered public
accounting firm. |
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(3)
To re-approve and amend the Performance-Based Compensation Plan for
Covered Employees. |
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(4)
To approve amendments to our Amended and Restated Certificate of
Incorporation and Bylaws to declassify the Board. |
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(5)
To approve, on a non-binding advisory basis, the compensation of Agilents
named executive officers. |
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(6)
To consider such other business as may properly come before the annual
meeting. |
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RECORD DATE |
You
are entitled to vote at the annual meeting and at any adjournments or
postponements thereof if you were a stockholder at the close of business
on Tuesday, January 20, 2015. |
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ANNUAL MEETING
ADMISSION |
To
be admitted to the annual meeting, you must present proof of ownership of
Agilent stock as of the record date. This can be a brokerage statement or
letter from a bank or broker indicating ownership on January 20, 2015, the
Notice of Internet Availability of Proxy Materials, a proxy card, or legal
proxy or voting or voting instruction card provided by your broker, bank
or nominee. You may also be asked to present a form of photo
identification such as a drivers license or passport. The annual meeting
will begin promptly at 8:00 a.m. Limited seating is available on a first
come, first served basis. |
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VOTING |
For
instructions on voting, please refer to the instructions on the Notice of
Internet Availability of Proxy Materials you received in the mail or, if
you received a hard copy of the Proxy Statement, on your enclosed proxy
card. |
By
Order of the Board, |
|
MARIE OH HUBER |
Senior Vice President, General Counsel and |
Secretary |
This Proxy Statement and
the accompanying proxy card are being sent or made available
on or about
February 6, 2015.
1
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SUMMARY
INFORMATION |
PROXY SUMMARY
The following is a summary
which highlights information contained elsewhere in this Proxy Statement. This
summary does not contain all of the information you should consider, and you are
urged to read the entire Proxy Statement carefully before voting.
Voting Matters and Vote
Recommendations
There are five items of
business which Agilent currently expects to be considered at the Annual Meeting.
The following table lists those items of business and the Agilent Boards vote
recommendation.
PROPOSAL |
BOARD VOTE
RECOMMENDATION |
(1) |
Election of Directors |
For each
director nominee |
(2) |
Ratification of the Independent Registered
Public Accounting Firm |
For |
(3) |
Re-approval and amendment of the
Performance-Based Compensation Plan for Covered Employees |
For |
(4) |
Amendments to our
Amended and Restated Certificate of Incorporation and Bylaws to
declassify the Board |
For |
(5) |
Advisory vote to approve Named Executive
Officer compensation |
For |
Proposal 1 - Director
Nominees
Agilents Board is currently
divided into three classes serving staggered three-year terms. On September 17,
2014, Mr. Sullivan notified the Company that he would retire as Chief Executive
Officer and as a member of the Companys board of directors effective March 18,
2015. Mr. McMullen, Agilents current President and Chief Operating Officer, is
being nominated to fill the board vacancy left by Mr. Sullivans retirement and
will assume the title of Chief Executive Officer on March 18, 2015. The
following table provides summary information about each of the three director
nominees who are being voted on at the Annual Meeting.
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COMMITTEE |
OTHER |
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DIRECTOR |
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INDE- |
MEMBERSHIPS |
PUBLIC |
NAME |
AGE |
SINCE |
OCCUPATION |
PENDENT |
AC |
CC |
NCG |
EC |
BOARDS |
Robert J.
Herbold |
72 |
2000 |
Managing Director
of The Herbold Group, LLC |
Yes |
M |
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M |
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1 |
Koh Boon Hwee |
64 |
2003 |
Managing
Partner, Credence Capital Fund II (Cayman) Ltd. |
Yes |
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C |
M |
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4 |
Michael R.
McMullen |
53 |
-- |
President and Chief
Operating Officer of Agilent Technologies |
No |
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-- |
Key: |
AC:
Audit Committee; CC: Compensation Committee; NCG: Nominating/Corporate
Governance Committee; EC: Executive Committee; C: Chairperson; M:
Member |
2
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SUMMARY
INFORMATION |
Proposal 2 - Independent
Registered Public Accounting Firm
We ask that our stockholders
ratify the selection of PricewaterhouseCoopers LLP as Agilents independent
registered public accounting firm for fiscal year 2015. Below is summary
information about PricewaterhouseCoopers fees for services performed during
fiscal years 2014 and 2013:
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%
of |
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%
of |
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Fee
Category: |
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Fiscal
2014 |
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Total |
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Fiscal
2013 |
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Total |
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Audit Fees |
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$ |
7,791,000 |
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76.8 |
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$ |
4,984,000 |
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83.1 |
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Audit-Related Fees |
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1,695,000 |
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16.7 |
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762,000 |
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12.7 |
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Tax
Fees: |
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Tax
compliance/preparation |
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265,000 |
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2.6 |
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245,000 |
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4.1 |
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Other tax
services |
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0 |
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0 |
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0 |
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0 |
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Total
Tax Fees |
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265,000 |
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2.2 |
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245,000 |
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4.1 |
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All
Other Fees |
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392,000 |
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3.9 |
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4,000 |
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0.01 |
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Total Fees |
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$ |
10,143,000 |
|
100 |
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$ |
5,995,000 |
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100 |
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Proposal 3 - Re-approval
and Amendment of the Performance-Based Compensation Plan for Covered
Employees
At the Annual Meeting, Agilent
is requesting that stockholders approve the material terms of the Agilent
Technologies, Inc. Performance-Based Compensation Plan for Covered Employees
(the Performance Plan) and approve an amendment to the Performance Plan that
will provide the ability to pay awards under the Performance Plan in the form of
cash and/or Agilent common stock. Subject to stockholder approval, the
Performance Plan, as amended, will be effective commencing with fiscal year
2015. Section 162(m) of the Internal Revenue Code requires that the stockholders
approve the material terms of the Performance Plan at least every five years.
The Performance Plan was most recently approved by our stockholders at the 2010
annual meeting.
As proposed for approval,
and with the exception of the ability to pay awards under the Performance Plan
in the form of cash and/or Agilent common stock, the Performance Plan is
substantially the same as the version approved by the stockholders in
2010.
Proposal 4 - Amendments to
our Amended and Restated Certificate of Incorporation and Bylaws to Declassify
the Board
As part of the Company's
commitment to effective governance practices, management and the Board undertook
a review of current corporate governance trends and considered the view held by
many institutional stockholders that transitioning to an annually elected board
is preferable to maintaining a classified board. After careful consideration the
Board has determined that it is appropriate to propose for stockholder
consideration amendments to our Amended and Restated Certificate of
Incorporation and Bylaws that, if adopted, would eliminate the classified
structure of our Board over a three-year period.
If this proposal is approved
by the requisite percentage of stockholders, the Company will transition to a
declassified structure under which current directors will serve out their
remaining terms prior to standing for election and the entire Board will stand
for election annually beginning in 2018. As part of the transition, at the
Annual Meetings of Stockholders in 2016 and 2017, each of the Class I and Class
II directors, respectively, will begin standing for annual election. The
proposed amendments will not affect the unexpired term of any director elected
prior to the Annual Meeting of Stockholders in 2016.
3
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SUMMARY
INFORMATION |
Proposal 5 - Approve Named
Executive Officer Compensation
We are requesting your
non-binding vote to approve the compensation of the Companys named executive
officers as described in the Compensation Discussion and Analysis and Executive
Compensation sections of the proxy statement. The proxy statement contains
information about Agilents executive compensation programs. In particular, you
will find detailed information in the Compensation Discussion and Analysis and
the Executive Compensation tables.
We believe our programs are
well aligned with the interests of our shareholders and are instrumental to
achieving our business strategy. In determining executive compensation for
fiscal year 2014, the Compensation Committee considered the overwhelming
stockholder support (97% approval of votes cast) that the Say-on-Pay proposal
received at our March 20, 2013 annual meeting of stockholders. The Compensation
Committee believes that the shareholder vote confirms the philosophy and
objective of linking our executive compensation to our operating and strategic
objectives and the enhancement of shareholder value. We view this level of
shareholder support as an affirmation of our current pay practices for fiscal
year 2014. The Compensation Committee will continue to consider the outcome of
the Companys say-on-pay votes when making future compensation decisions for the
named executive officers.
4
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TABLE OF
CONTENTS |
2015 ANNUAL MEETING OF
STOCKHOLDERS
NOTICE OF
ANNUAL MEETING AND PROXY STATEMENT
TABLE OF CONTENTS
5
Table of Contents
|
TABLE OF
CONTENTS |
2015 ANNUAL MEETING OF
STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY
STATEMENT
TABLE OF
CONTENTS
6
Table of Contents
|
TABLE OF
CONTENTS |
2015 ANNUAL MEETING OF
STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY
STATEMENT
TABLE OF
CONTENTS
7
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ELECTION OF
DIRECTORS |
PROPOSAL 1 ELECTION OF
DIRECTORS
Director Nomination
Criteria: Qualifications and Experience
The
Nominating/Corporate Governance Committee (the Nominating Committee) performs
an assessment of the skills and the experience needed to properly oversee the
interests of the Company. Generally the Nominating Committee reviews both the
short and long term strategies of the Company to determine what current and
future skills and experience are required of the Board in exercising its
oversight function. The Nominating Committee then compares those skills to the
skills of the current directors and potential director candidates. The
Nominating Committee conducts targeted efforts to identify and recruit
individuals who have the qualifications identified through this process. The
Nominating Committee looks for its current and potential directors collectively
to have a mix of skills and qualifications, some of which are described
below:
|
● |
a reputation for personal and
professional integrity and ethics; |
|
● |
executive or similar policy-making
experience in relevant business or technology areas or national prominence
in an academic, government or other relevant field; |
|
● |
breadth of
experience; |
|
● |
soundness of
judgment; |
|
● |
the ability to make independent,
analytical inquiries; |
|
● |
the willingness and ability to
devote the time required to perform Board activities
adequately; |
|
● |
the ability to represent the total
corporate interests of Agilent; and |
|
● |
the ability to represent the
long-term interests of stockholders as a
whole. |
In addition to these minimum
requirements, the Nominating Committee will also consider whether the
candidates skills are complementary to the existing Board members skills; the
diversity of the Board in factors such as age, experience in technology,
manufacturing, finance and marketing, international experience and culture; and
the Boards needs for specific operational, management or other expertise. The
Nominating Committee from time to time reviews the appropriate skills and
characteristics required of board members, including factors that it seeks in
board members such as diversity of business experience, viewpoints and, personal
background, and diversity of skills in technology, finance, marketing,
international business, financial reporting and other areas that are expected to
contribute to an effective Board of Directors. In evaluating potential
candidates for the Board of Directors, the Nominating Committee considers these
factors in the light of the specific needs of the Board of Directors at that
time.
Current Director
Terms
Agilents Board is divided into three
classes serving staggered three-year terms. Directors for each class are elected
at the annual meeting of stockholders held in the year in which the term for
their class expires. Agilents Bylaws, as amended, allow the Board to fix the
number of directors by resolution. Our Board currently consists of nine
directors divided into three classes.
If Proposal 4 is approved by the
requisite percentage of stockholders at the Annual Meeting, the Company will
transition to a declassified structure under which the entire Board will stand
for election annually beginning in 2018. As part of the transition, at the
Annual Meetings of Stockholders in 2016 and 2017, each of the Class I and Class
II directors, respectively, will begin standing for annual election. The
proposed amendments will not affect the unexpired term of any director elected
prior to the Annual Meeting of Stockholders in 2016.
The terms of two current director
nominees will expire at this Annual Meeting. On September 17, 2014, Mr. Sullivan
notified the Company that he would retire as Chief Executive Officer and as a
member of the Companys board of directors effective March 18, 2015 and would
not stand for re-election at this Annual Meeting. Mr. McMullen, Agilents
current President and Chief Operating Officer is being nominated to fill the
vacancy left by Mr. Sullivans retirement and will assume the title of Chief
Executive Officer on March 18, 2015.
8
Table of Contents
|
ELECTION OF
DIRECTORS |
The
current composition of the Board and the term expiration dates for each director
is as follows:
Class |
Directors |
Term
Expires |
III |
Robert J. Herbold, Koh Boon Hwee
and William P. Sullivan |
2015 |
I |
Paul N. Clark, James G. Cullen and
Tadataka Yamada, M.D. |
2016 |
II |
Heidi Fields, A. Barry Rand and
George A. Scangos, Ph.D. |
2017 |
Directors elected at the 2015 annual
meeting will hold office for a three-year term expiring at the annual meeting in
2018 (or until their respective successors are elected and qualified, or until
their earlier death, resignation or removal). All nominees, except Mr. McMullen,
are currently directors of Agilent. Information regarding each nominee is
provided below as of December 31, 2014. There are no family relationships among
Agilents executive officers and directors.
Director Nominees for
Election to New Three-Year Terms That Will Expire in 2018
ROBERT J.
HERBOLD |
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|
Age: 72 |
Agilent
Committees: |
Public
Directorships: |
Director Since:
June 2000 |
● Audit and Finance |
● Neptune Orient Lines Limited |
|
● Nominating/Corporate Governance |
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Former Public
Directorships Held During the Past Five Years: |
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None |
Mr. Herbold has served as the Managing
Director of the consulting firm The Herbold Group, LLC since 2003. He served as
Executive Vice President and Chief Operating Officer of Microsoft Corporation
from 1994 to April 2001 and served as an Executive Vice President (part-time) of
Microsoft Corporation until June 2003. Prior to joining Microsoft, Mr. Herbold
was employed by The Procter & Gamble Company for twenty-six years, and
served as a Senior Vice President at The Procter & Gamble Company from 1990
to 1994.
Mr. Herbold possesses significant
leadership experience and business expertise from his executive leadership
positions with Microsoft Corporation and The Procter & Gamble Company.
Having been a member of the Agilent board for over 10 years, Mr. Herbold has a
strong knowledge of Agilents business. In addition, Mr. Herbold brings
considerable public and private company director experience and perspective on
public company management and governance issues and practices.
KOH BOON
HWEE |
|
|
|
Age: 64 |
Agilent
Committees: |
Public
Directorships: |
Director Since:
May 2003 |
●
Compensation (Chair) |
● AAC Technologies
Holdings, Inc. |
|
●
Nominating/Corporate Governance |
● Sunningdale
Tech, Ltd. |
|
|
● Yeo Hiap Seng
Ltd. |
|
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● Far East Orchard
Ltd. |
|
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|
Former Public
Directorships Held During the Past Five Years: |
|
|
● DBS Group
Holdings Ltd. |
|
|
● DBS Bank
Ltd. |
|
|
● Yeo Hiap Seng
(Malaysia) Bhd |
Mr. Koh is the managing partner of
Credence Capital Fund II (Cayman) Ltd., a private equity fund. Mr. Koh has
served as the non-Executive Chairman of Sunningdale Tech Ltd. since January 2009
and previously served as its Executive Chairman and Chief Executive Officer from
July 2005 to January 2009. He has served as the non-Executive Chairman of Yeo
Hiap Seng Ltd. since April 2010, the non-Executive Chairman of Rippledot Capital
Advisers Pte. Ltd. since February 2011 and the non-Executive Chairman of Far
East Orchard Ltd. since April 2013. He served as Executive Director of MediaRing
Limited from February 2002 to August 2009; Chairman of DBS Bank Ltd. from
January 2006 to April 2010; Chairman of Singapore Airlines from July 2001 to
December 2005 and Chairman of Singapore Telecom from April 1992 to August 2001.
Mr. Koh spent fourteen years with Hewlett-Packard Company in its Asia Pacific
region.
9
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|
ELECTION OF
DIRECTORS |
Mr.
Koh possesses a strong mix of leadership and operational experience from his
various senior positions with Sunningdale Tech, AAC Technologies, MediaRing
Limited, DBS Bank, Singapore Airlines and Singapore Telecom. In addition, Mr.
Koh has deep experience in the Asia Pacific region and brings that knowledge and
perspective to the Board. Mr. Koh has extensive experience with Agilent and its
predecessor, Hewlett-Packard, having served on the Agilent board for over 10
years and having spent 14 years with Hewlett-Packard.
MICHAEL R. MCMULLEN |
|
|
|
Age: 53 |
Agilent Committees: |
Public
Directorships: |
Director Since: New
Nominee |
● Slated to serve
on Executive Committee |
None |
|
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|
Former Public Directorships Held
During the Past Five Years: |
|
|
None |
Mr.
McMullen has served as President and Chief Operating Officer since September
2014 and will assume the title of Chief Executive Officer effective as of March
18, 2015. From September 2009 to September 2014 he served as Senior Vice
President, Agilent and President, Chemical Analysis Group. From January 2002 to
September 2009, he served as our Vice President and General Manager of the
Chemical Analysis Solutions Unit of the Life Sciences and Chemical Analysis
Group. Prior to assuming this position, from March 1999 to December 2001, Mr.
McMullen served as Country Manager for Agilents China, Japan and Korea Life
Sciences and Chemical Analysis Group. Prior to this position, Mr. McMullen
served as our Controller for the Hewlett-Packard Company and Yokogawa Electric
Joint Venture from July 1996 to March 1999.
Mr. McMullen has broad and deep
experience with Agilent and its businesses having been an employee of Agilent
and its predecessor, Hewlett-Packard, for over 20 years. During the course of
his career, he has developed considerable expertise in, and in-depth knowledge
of, Agilents businesses, having seen them as an individual contributor and at
numerous levels of management. This perspective gives valuable insight to the
Agilent board.
Agilents Board
recommends a vote FOR the election to the Board of each of the
foregoing
nominees.
10
Table of Contents
|
ELECTION OF
DIRECTORS |
Continuing Directors Not
Being Considered for Election at this Annual Meeting
The
Agilent directors whose terms are not expiring this year are listed below. They
will continue to serve as directors for the remainder of their terms or such
other date, in accordance with Agilents Bylaws. Information regarding each of
such directors is provided below.
Directors Whose Terms Will
Expire in 2016
PAUL N. CLARK |
|
|
|
Age: 67 |
Agilent Committees: |
Public
Directorships: |
Director Since: May
2006 |
● Audit and
Finance |
● Biolase,
Inc. |
|
● Nominating/Corporate
Governance |
● Keysight Technologies,
Inc. |
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Former Public Directorships Held
During the Past Five Years: |
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● Amylin Pharmaceuticals,
Inc. |
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● Talecris
Biotherapeutics Holdings Corp |
Mr. Clark has been a Strategic Advisory
Board member of Genstar Capital, LLC since August 2007 and was an Operating
Partner from August 2007 to January 2013. Genstar Capital LLC is a middle market
private equity firm that focuses on investments in selected segments of life
sciences and healthcare services, industrial technology, business services and
software. Prior to that, Mr. Clark was the Chief Executive Officer and President
of ICOS Corporation, a biotherapeutics company, from June 1999 to January 2007,
and the Chairman of the Board of Directors of ICOS from February 2000 to January
2007. From 1984 to December 1998, Mr. Clark worked in various capacities for
Abbott Laboratories, a health care products manufacturer, retiring from Abbott
Laboratories as Executive Vice President and a board member. His previous
experience included senior positions with Marion Laboratories, a pharmaceutical
company, and Sandoz Pharmaceuticals (now Novartis Corporation), a pharmaceutical
company.
Mr. Clark has significant experience in
the pharmaceutical and biotechnology industries, including his experience
serving in senior management positions with ICOS Corporation (where he served as
Chief Executive Officer and President), Abbott Laboratories, Marion Laboratories
and Sandoz Pharmaceuticals. In addition, Mr. Clark brings considerable public
company director experience and perspective on company management and governance
issues and practices.
JAMES G. CULLEN |
|
|
|
Age: 72 |
Agilent Committees: |
Public
Directorships: |
Director Since: April 2000 |
● Nominating/Corporate
Governance (Chair) |
● Johnson &
Johnson |
|
● Executive
(Chair) |
● Prudential Financial,
Inc. |
|
|
● Neustar,
Inc. |
|
|
● Keysight Technologies,
Inc. |
|
|
|
|
|
Former Public Directorships Held
During the Past Five Years: |
|
|
None |
Mr. Cullen has served as Non-Executive
Chairman of our Board since March 2005. Mr. Cullen was President and Chief
Operating Officer of Bell Atlantic Corporation (now known as Verizon) from 1997
to June 2000 and a member of the office of chairman from 1993 to June 2000.
Prior to this appointment, Mr. Cullen was the President and Chief Executive
Officer of the Telecom Group of Bell Atlantic from 1995 to 1997. Prior to the
creation of Bell Atlantic on January 1, 1984, Mr. Cullen held management
positions with New Jersey Bell from 1966 to 1981 and AT&T from 1981 to
1983.
Mr. Cullen has considerable managerial
and operational experience and expertise from his senior leadership position
with Bell Atlantic and its predecessors. In addition, Mr. Cullen brings
significant public company director experience and perspective on public company
management and governance. Mr. Cullen has a strong understanding of Agilent
having served on the board for over 10 years, including more than 5 years as the
non-executive chairman.
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|
ELECTION OF
DIRECTORS |
TADATAKA YAMADA,
M.D. |
|
|
|
Age: 69 |
Agilent Committees: |
Public
Directorships: |
Director Since: January 2011 |
● Compensation |
● Takeda Pharmaceutical
Co. Ltd. |
|
● Nominating/Corporate
Governance |
|
|
|
Former Public Directorships Held
During the Past Five Years: |
|
|
● Covidien
plc |
Dr.
Yamada currently serves as the Chief Medical and Scientific Officer of Takeda
Pharmaceuticals International, Inc., a research-based global pharmaceutical
company. Dr. Yamada previously served as President of the Global Health Program
of the Bill & Melinda Gates Foundation from June 2006 to June 2011. From
2000 to 2006, Dr. Yamada was Chairman of Research and Development for
GlaxoSmithKline Inc. and prior to that, he held research and development
positions at SmithKline Beecham. Prior to joining SmithKline Beecham, Dr. Yamada
was Chairman of the Department of Internal Medicine at the University of
Michigan Medical School and Physician-in-Chief of the University of Michigan
Medical Center.
Dr. Yamada brings to our Board a unique
perspective with his experience as the former President of the Global Health
Program of the Bill & Melinda Gates Foundation as well as his significant
research and development experience. Dr. Yamadas extensive pharmaceutical
industry knowledge gives him an insight into a number of issues facing Agilent
that other directors might not possess.
Directors Whose Terms Will
Expire in 2017
HEIDI FIELDS |
|
|
|
Age: 60 |
Agilent Committees: |
Public
Directorships: |
Director Since: |
● Audit and Finance
(Chair) |
● Financial Engines,
Inc. |
February 2000 |
● Nominating/Corporate
Governance |
● Halyard Health,
Inc. |
|
|
Former Public Directorships Held
During the Past Five Years: |
|
|
None |
Ms. Fields served as Executive Vice
President and Chief Financial Officer of Blue Shield of California from
September 2003 through December 2012. She served as Executive Vice President and
the Chief Financial Officer of Gap, Inc. from 1999 to January 2003. Prior to
assuming that position, Ms. Fields served as the Chief Financial Officer of ITT
Industries, Inc. from 1995 to 1999. From 1979 to 1995, she held senior financial
management positions at General Motors Corporation, including Vice President and
Treasurer.
Ms. Fields possesses significant
experience and experience in management and financial matters, having served as
the Chief Financial Officer of both public and private companies, including at
Blue Shield of California, Gap, Inc. and ITT Industries, Inc. Ms. Fields is the
chairperson of our Audit and Finance Committee and is qualified as a financial
expert under SEC guidelines. In addition, Ms. Fields has considerable experience
and expertise with Agilent having been a member of Agilents board of directors
for over 10 years.
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|
ELECTION OF
DIRECTORS |
A. BARRY RAND |
|
|
|
Age: 70 |
Agilent Committees: |
Public
Directorships: |
Director Since: |
● Compensation |
● Campbell Soup
Company |
November 2000 |
● Nominating/Corporate
Governance |
|
|
|
Former Public Directorships Held
During the Past Five Years: |
|
|
None |
Mr.
Rand served as the Chief Executive Officer of AARP from April 2009 to August
2014. He served as Chairman and Chief Executive Officer of Equitant from
February 2003 to April 2005 and as Non-Executive Chairman of Aspect
Communications from February 2003 to October 2005. Mr. Rand was the Chairman and
Chief Executive Officer of Avis Group Holdings, Inc. from November 1999 to April
2001. Prior to joining Avis Group, Mr. Rand was Executive Vice President,
Worldwide Operations, for Xerox Corporation from 1992 to 1999. Mr. Rand is
Chairman of the Board of Trustees of Howard University and holds a MBA from
Stanford University where he also was a Stanford Sloan Executive Fellow. Mr.
Rand also holds several honorary doctorate degrees.
Mr. Rand possesses a strong mix of
organizational and operational management skills having served as the chairman
and/or chief executive officer of numerous companies, including past roles with
Equitant, Avis Group Holdings, Aspect Communications and AARP. He brings public
company director experience and perspective from his membership on the Campbell
Soup board of directors and has considerable expertise with Agilent having
served as a director for over 10 years.
GEORGE A. SCANGOS,
Ph.D. |
|
|
|
Age: 66 |
Agilent Committees: |
Public
Directorships: |
Director Since: |
● Compensation |
● Biogen Idec,
Inc. |
September 2014 |
●
Nominating/Corporate
Governance |
● Exelixis,
Inc. |
|
|
Former Public Directorships Held
During the Past Five Years: |
|
|
● Anadys Pharmaceuticals,
Inc. |
Dr. Scangos has served as the Chief
Executive Officer and a director of Biogen Idec Inc. since July 2010. From 1996
to July 2010, Dr. Scangos served as the President and Chief Executive Officer of
Exelixis, Inc., a drug discovery and development company. From 1993 to 1996, Dr.
Scangos served as President of Bayer Biotechnology, where he was responsible for
research, business development, process development, manufacturing, engineering
and quality assurance of Bayers biological products. Before joining Bayer in
1987, Dr. Scangos was a Professor of Biology at Johns Hopkins University for six
years. Dr. Scangos served as non-executive Chairman of Anadys Pharmaceuticals,
Inc., a biopharmaceutical company, from 2005 to July 2010 and was a director of
the company from 2003 to July 2010. Dr. Scangos served as the Chair of the
California Healthcare Institute in 2010 and was a member of the Board of the
Global Alliance for TB Drug Development from 2006 until 2010. He is also a
member of the National Board of Visitors of the University of California, Davis
School of Medicine and is currently an Adjunct Professor of Biology at Johns
Hopkins University.
Dr. Scangos has extensive training as a
scientist, significant knowledge and experience with respect to the
biotechnology, healthcare and pharmaceutical industries, and a comprehensive
leadership background resulting from service on various boards of directors and
as an executive in the pharmaceutical industry.
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|
CORPORATE
GOVERNANCE |
Corporate Governance
Matters
Agilent has had formal corporate governance standards in place since the
Companys inception in 1999. We have reviewed internally and with the Board the
provisions of the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act), the rules
of the SEC and the NYSEs corporate governance listing standards regarding
corporate governance policies and processes and are in compliance with the rules
and listing standards.
We have adopted charters for our
Compensation Committee, Audit and Finance Committee, Nominating/Corporate
Governance Committee and Executive Committee consistent with the applicable
rules and standards. Our committee charters, Amended and Restated Corporate
Governance Standards and Standards of Business Conduct are located in the
Investor Relations section of our website and can be accessed by clicking on
Governance Policies in the Corporate Governance section of our web page at
www.investor.agilent.com.
Board Leadership
Structure
Agilent currently separates the positions
of chief executive officer and chairman of the Board. Since March 2005, Mr.
Cullen, one of our independent directors, has served as our chairman of the
Board. The responsibilities of the chairman of the Board include: setting the
agenda for each Board meeting, in consultation with the chief
executive
officer; chairing the meetings
of independent directors; and facilitating and conducting, with the
Nominating/Corporate Governance Committee, the annual self-assessments by the
Board and each standing committee of the Board, including periodic performance
reviews of individual directors.
Separating the positions of chief
executive officer and chairman of the Board allows our chief executive officer
to focus on our day-to-day business, while allowing the chairman of the Board to
lead the Board in its fundamental role of providing advice to and independent
oversight of management. The Board believes that having an independent director
serve as chairman of the Board is the appropriate leadership structure for
Agilent at this time.
However, our Corporate Governance
Standards permit the roles of the chairperson of the Board and the chief
executive officer to be filled by the same or different individuals. This
provides the Board with flexibility to determine whether the two roles should be
combined in the future based on Agilents needs and the Boards assessment of
Agilents leadership from time to time. Our Corporate Governance Standards
provide that, in the event that the chairperson of the Board is also the chief
executive officer, the Board may consider the election of an independent Board
member as a lead independent director.
In 2014, we amended the Corporate
Governance Standards to raise the mandatory retirement age for directors from 72
to 75. The Board made the change in recognition of the contribution that
experienced directors, with knowledge of the Company, bring to effective board
oversight.
Boards Role in Risk
Oversight
The Board executes its risk management
responsibility directly and through its committees. The Audit and Finance
Committee has primary responsibility for overseeing Agilents enterprise risk
management process. The Audit and Finance Committee receives updates and
discusses individual and overall risk areas during its meetings, including the
Companys financial risk assessments, risk management policies and major
financial risk exposures and the steps management has taken to monitor and
control such exposures. The Compensation Committee oversees risks associated
with our compensation policies and practices with respect to both executive
compensation and compensation generally.
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|
CORPORATE
GOVERNANCE |
The
Compensation Committee receives reports and discusses whether Agilents
compensation policies and practices create risks that are reasonably likely to
have a material adverse effect on the Company.
The full Board is kept abreast of its
committees risk oversight and other activities via reports of the committee
chairpersons to the full Board during Board meetings.
Majority Voting for
Directors
Our Bylaws provide for majority voting of
directors regarding director elections. In an uncontested election, any nominee
for director shall be elected by the vote of a majority of the votes cast with
respect to the director. A majority of the votes cast means that the number of
shares voted FOR a director must exceed 50% of the votes cast with respect to
that director. The votes cast shall include votes to withhold authority and
exclude votes to ABSTAIN with respect to that directors election. If a
director is not elected due to a failure to receive a majority of the votes cast
and his or her successor is not otherwise elected and qualified, the director
shall promptly tender his or her resignation following certification of the
stockholder vote.
The Nominating/Corporate Governance
Committee will consider the resignation offer and recommend to the Board whether
to accept or reject it, or whether other action should be taken. The Board will
act on the Nominating/Corporate Governance Committees recommendation within 90
days following certification of the stockholder vote. Thereafter, the Board will
promptly disclose their decision and the rationale behind it in a press release
to be disseminated in the same manner as Company press releases typically are
distributed. Any director who tenders his or her resignation pursuant to this
provision shall not participate in the Nominating/Corporate Governance Committee
recommendation or Board action regarding whether to accept the resignation
offer.
Board
Communications
Stockholders and other interested parties
may communicate with the Board and Agilents Non-Executive Chairperson of the
Board of
Directors by filling out the
form at Contact Chairman under Corporate Governance at
www.investor.agilent.com or by writing to James G. Cullen, c/o Agilent
Technologies, Inc., General Counsel, 5301 Stevens Creek Blvd., MS 1A-11, Santa
Clara, California 95051. The General Counsel will perform a legal review in the
normal discharge of her duties to ensure that communications forwarded to the
Non-Executive Chairperson preserve the integrity of the process. For example,
items that are unrelated to the duties and responsibilities of the Board such as
spam, junk mail and mass mailings, product complaints, personal employee
complaints, product inquiries, new product suggestions, resumes and other forms
of job inquiries, surveys, business solicitations or advertisements (the
Unrelated Items) will not be forwarded to the Non-Executive Chairperson. In
addition, material that is unduly hostile, threatening, illegal or similarly
unsuitable will not be forwarded to the Non-Executive Chairperson.
Any communication that is relevant to the
conduct of Agilents business and is not forwarded will be retained for one year
(other than Unrelated Items) and made available to the Non-Executive Chairperson
and any other independent director on request. The independent directors grant
the General Counsel discretion to decide what correspondence shall be shared
with Agilent management and specifically instruct that any personal employee
complaints be forwarded to Agilents Human Resources Department.
Director
Independence
Agilent adopted the following standards
for director independence in compliance with the NYSE corporate governance
listing standards:
1. No director qualifies as independent unless
the Board affirmatively determines that the director has no material
relationship with Agilent or any of its subsidiaries (either directly, or as a
partner, stockholder or officer of an organization that has a relationship with
Agilent). Agilent or any of its subsidiaries must identify which directors are
independent and disclose the basis for that determination.
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|
CORPORATE
GOVERNANCE |
In addition, a director is not
independent if:
2. The director is, or has
been within the last three years, an employee of Agilent or any of its
subsidiaries, or an immediate family member is, or has been within the last
three years, an executive officer of Agilent or any of its
subsidiaries.
3. The director has received,
or has an immediate family member who has received, during any twelvemonth
period within the last three years, more than $120,000 in direct compensation
from Agilent or any of its subsidiaries, other than director and committee fees
and pension or other forms of deferred compensation for prior service (provided
such compensation is not contingent in any way on continued
service).
4. (A) The director is a
current partner or employee of a firm that is Agilents internal or external
auditor; (B) the director has an immediate family member who is a current
partner of such a firm; (C) the director has an immediate family member who is a
current employee of such a firm and personally works on Agilents audit; or (D)
the director or an immediate family member was within the last three years a
partner or employee of such a firm and personally worked on Agilents or any of
its subsidiaries audit within that time.
5. The director or an
immediate family member is, or has been within the last three years, employed as
an executive officer of another company where any of Agilents or any of its
subsidiaries current executive officers at the same time serves or served on
that companys compensation committee.
6. The director is a current
employee, or an immediate family member is a current executive officer, of a
company that has made payments to, or received payments from, Agilent or any of
its subsidiaries for property or services in an amount which, in any of the last
three fiscal years, exceeds the greater of $1 million, or 2% of such other
companys consolidated gross revenues.
The
Board determined that Paul N. Clark, James G. Cullen, Heidi Fields, Robert J.
Herbold, Koh Boon Hwee, George A. Scangos, Ph.D., A. Barry Rand and Tadataka
Yamada, M.D. met the aforementioned independence standards. William P. Sullivan
did not meet the aforementioned independence standards because he is Agilents
current Chief Executive Officer and an employee of Agilent and Michael R.
McMullen, a board nominee at
the 2015 Annual Meeting also did not meet the aforementioned independence
standards as he is Agilents President and Chief Operating Officer and will
become Agilents Chief Executive Officer on March 18, 2015.
Agilents non-employee directors meet at regularly scheduled executive
sessions without management. As the Non-Executive Chairman of the Board, James
G. Cullen was chosen to preside at executive sessions of the non-management
directors.
Compensation Committee
Member
Independence
Agilent has adopted standards for compensation committee member
independence in compliance with the NYSE corporate governance listing standards.
In affirmatively determining the independence of any director who will serve on
the compensation committee, the board of directors must consider all factors
specifically relevant to determining whether such director has a relationship to
Agilent or any of its subsidiaries which is material to such directors ability
to be independent from management in connection with the duties of a
compensation committee member, including, but not limited to:
|
(A) |
the source of compensation of such director,
including any consulting, advisory or other compensatory fee paid by
Agilent to such director; and |
|
|
|
(B) |
whether such director is affiliated with
Agilent, a subsidiary of Agilent or an affiliate of a subsidiary of
Agilent. |
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|
CORPORATE
GOVERNANCE |
COMMITTEES OF THE BOARD OF
DIRECTORS
The
Board has four standing committees as set forth in the table below. Each
director attended at least 75% of the aggregate number of Board and applicable
committee meetings held when the director was serving on the Board.
|
|
|
|
Nominating/ |
|
|
|
Audit and |
|
Corporate |
|
Director |
Board |
Finance |
Compensation |
Governance |
Executive |
Paul
N. Clark |
✓ |
✓ |
|
✓ |
|
James G. Cullen |
CHAIR |
|
|
CHAIR |
CHAIR |
Heidi Fields |
✓ |
CHAIR |
|
✓ |
|
Robert J. Herbold |
✓ |
✓ |
|
✓ |
|
Koh
Boon Hwee |
✓ |
|
CHAIR |
✓ |
|
George A. Scangos, Ph.D.
(1) |
✓ |
|
✓ |
✓ |
|
A.
Barry Rand |
✓ |
|
✓ |
✓ |
|
Tadataka Yamada, M.D. |
✓ |
|
✓ |
✓ |
|
William P. Sullivan (2) |
✓ |
|
|
|
✓ |
No.
of Meetings in FY2014 |
6 |
12 |
5 |
6 |
0 |
____________________
(1) |
Dr. Scangos joined
our Board on September 17, 2014. |
(2) |
Mr. Sullivan will
retire from the Board effective March 18, 2015. |
Agilent encourages, but does not require, its Board members to attend the
annual meeting of stockholders. Last year, all of our directors who were serving
at such time, attended the annual meeting of stockholders.
Audit and Finance
Committee
The
Audit and Finance Committee is responsible for the oversight of the quality and
integrity of Agilents consolidated financial statements, its compliance with
legal and regulatory requirements, the qualifications and independence of its
independent registered public accounting firm, the performance of its internal
audit function and independent registered public accounting firm and other
significant financial matters. In discharging its duties, the Audit and Finance
Committee is expected to:
● |
have the sole authority
to appoint, retain, compensate, oversee, evaluate and replace the
independent registered public accounting firm; |
● |
review and approve the
scope of the annual internal and external audit; |
● |
review and pre-approve
the engagement of Agilents independent registered public accounting firm
to perform audit and non-audit services and the related
fees; |
● |
meet independently with
Agilents internal auditing staff, independent registered public
accounting firm and senior management; |
● |
review the adequacy and
effectiveness of the system of internal control over financial reporting
and any significant changes in internal control over financial
reporting; |
● |
review Agilents
consolidated financial statements and disclosures including Managements
Discussion and Analysis of Financial Condition and Results of Operations
in the Companys reports on Form 10-K or Form 10-Q; |
● |
establish and oversee
procedures for (a) the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal accounting controls
or auditing matters, and (b) the confidential anonymous submission by
employees of the Company of concerns regarding questionable accounting or
auditing matters; |
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|
CORPORATE
GOVERNANCE |
● |
review funding and investment policies, implementation of funding
policies and investment performance of Agilents benefit
plans; |
● |
monitor
compliance with Agilents Standards of Business Conduct;
and |
● |
review disclosures from
Agilents independent registered public accounting firm required by the
applicable requirements of the Public Company Accounting Oversight Board
regarding the independence of accountants communications with the audit
committee. |
Compensation
Committee
The
Compensation Committee reviews the performance of Agilents elected officers and
other key employees and determines, approves and reports to the Board on the
elements of their compensation, including total cash compensation and long-term
equity based incentives. In addition, the Compensation Committee:
● |
approves and monitors Agilents benefit plan
offerings; |
● |
supervises and oversees
the administration of Agilents incentive compensation, variable pay and
stock programs, including the impact of Agilents compensation programs
and arrangements on Company risk; |
● |
recommends to the Board
the annual retainer fee as well as other compensation for non-employee
directors; |
● |
establishes comparator
peer group and compensation targets based on this peer group for the
Companys named executive officers; and |
● |
has sole authority to
retain and terminate executive compensation consultants.
|
For
more information on the responsibilities and activities of the Compensation
Committee, including the committees processes for determining executive
compensation, see Compensation Discussion and Analysis, Compensation
Committee Report, Executive Compensation and the Compensation Committees
charter.
The
Compensation Committee also helps determine compensation for non-employee
directors. The process the Compensation Committee undertakes for setting
non-employee director compensation is similar to that of setting executive
officer compensation. The Compensation Committee is aided by an independent
consultant, currently Frederic W. Cook & Co., Inc. (F.W. Cook), who is
selected and retained by the Compensation Committee. The role of the independent
consultant is to measure and benchmark our non-employee director compensation
against a certain peer group of companies with respect to appropriate
compensation levels for positions comparable in the market. The independent
consultant recommends appropriate retainers, committee chair retainers, grant
values and stock ownership guidelines to the Compensation Committee. This
information is reviewed, discussed and finalized at a Compensation Committee
meeting and a recommendation is made to the full Board. The full Board makes the
final determination on non-employee director compensation.
Nominating/Corporate
Governance Committee
The
Nominating/Corporate Governance Committee proposes a slate of directors for
election by Agilents stockholders at each annual meeting and recommends to the
Board candidates to fill any vacancies on the Board. It is also responsible for
reviewing management succession plans, recommending to the Board the appropriate
Board size and committee structure and developing and reviewing corporate
governance principles applicable to Agilent.
The
Nominating/Corporate Governance Committee will consider director candidates
recommended for nomination by stockholders, provided that the recommendations
are made in accordance with the procedures described in the section entitled
General Information About the Meeting located at the end of this Proxy
Statement. Candidates recommended for nomination by stockholders that comply
with these procedures will receive the same consideration as other candidates
recommended by the Nominating/Corporate Governance Committee.
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|
CORPORATE
GOVERNANCE |
Agilent typically hires a third party search firm to help identify and
facilitate the screening and interview process of candidates for director. To be
considered by the Nominating/Corporate Governance Committee, a director nominee
must have:
● |
a reputation for personal and professional integrity and
ethics; |
● |
executive or similar
policy-making experience in relevant business or technology areas or
national prominence in an academic, government or other relevant
field; |
● |
breadth of
experience; |
● |
soundness of
judgment; |
● |
the ability to make
independent, analytical inquiries; |
● |
the willingness and
ability to devote the time required to perform Board activities
adequately; |
● |
the ability to represent
the total corporate interests of Agilent; and |
● |
the ability to represent
the long-term interests of stockholders as a whole.
|
In
addition to these minimum requirements, the Nominating/Corporate Governance
Committee will also consider whether the candidates skills are complementary to
the existing Board members skills; the diversity of the Board in factors such
as age, experience in technology, manufacturing, finance and marketing,
international experience and culture; and the Boards needs for specific
operational, management or other expertise. The Nominating/Corporate Governance
Committee from time to time reviews the appropriate skills and characteristics
required of board members, including factors that it seeks in board members such
as diversity of business experience, viewpoints and, personal background, and
diversity of skills in technology, finance, marketing, international business,
financial reporting and other areas that are expected to contribute to an
effective Board of Directors. In evaluating potential candidates for the Board
of Directors, the Nominating/Corporate Governance Committee considers these
factors in the light of the specific needs of the Board of Directors at that
time. The search firm screens the candidates, does reference checks, prepares a
biography for each candidate for the Nominating/Corporate Governance Committee
to review and helps set up interviews. The Nominating/Corporate Governance
Committee and Agilents Chief Executive Officer interview candidates that meet
the criteria, and the Nominating/Corporate Governance Committee selects
candidates that best suit the Boards needs. We do not use a third party to
evaluate current Board members.
The
Nominating/Corporate Governance Committee also administers Agilents Related
Person Transactions Policy and Procedures. See Related Person Transactions
Policy and Procedures for more information.
Executive
Committee
The
Executive Committee meets or takes written action when the Board is not
otherwise meeting. The Committee has full authority to act on behalf of the
Board, except that it cannot amend Agilents Bylaws, recommend any action that
requires the approval of the stockholders, fill vacancies on the Board or any
Board committee, fix director compensation, amend or repeal any non-amendable or
non-repealable resolution of the Board, declare a distribution to the
stockholders except at rates determined by the Board, appoint other committees
or take any action not permitted under Delaware law to be delegated to a
committee.
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The
members of the Compensation Committee are Koh Boon Hwee, A. Barry Rand, George
A. Scangos, Ph.D. and Tadataka Yamada, M.D. During the most recent fiscal year,
no Agilent executive officer served on the compensation committee (or
equivalent), or the board of directors, of another entity whose executive
officer(s) served on Agilents Compensation Committee.
The
members of the Compensation Committee are considered independent under the
Companys Board of Directors and Compensation Committee Independence Standards
as set forth in the Companys Amended and Restated Corporate Governance
Guidelines.
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|
CORPORATE
GOVERNANCE |
RELATED PERSON TRANSACTIONS
POLICY AND PROCEDURES
The
Companys Standards of Business Conduct and Director Code of Ethics require that
all employees and directors avoid conflicts of interests that interfere with the
performance of their duties or the best interests of the Company. In addition,
the Company has adopted a written Related Person Transactions Policy and
Procedures (the Related Person Transactions Policy) that prohibits any of the
Companys executive officers, directors or any of their immediate family members
from entering into a transaction with the Company, except in accordance with the
policy. For purposes of the policy, a related person transaction includes any
transaction (within the meaning of Item 404(a) of the Securities and Exchange
Commissions Regulation S-K) involving the Company and any related person that
would be required to be disclosed pursuant to Item 404(a) of the Securities and
Exchange Commissions Regulation S-K.
Under our Related Person Transactions Policy, the General Counsel must
advise the Nominating/Corporate Governance Committee of any related person
transaction of which she becomes aware. The Nominating/Corporate Governance
Committee must then either approve or reject the transaction in accordance with
the terms of the policy. In the course of making this determination, the
Nominating/Corporate Governance Committee shall consider all relevant
information available to it and, as appropriate, must take into consideration
the following:
● |
the size of the transaction and the amount payable to the related
person; |
● |
the nature of the
interest of the related person in the transaction; |
● |
whether the transaction
may involve a conflict of interest; and |
● |
whether the transaction
involved the provision of goods or services to the Company that are
available from unaffiliated third parties and, if so, whether the
transaction is on terms and made under circumstances that are at least as
favorable to the Company as would be available in comparable transactions
with or involving unaffiliated third
parties. |
Under the Related Person Transactions Policy, Company management screens
for any potential related person transactions, primarily through the annual
circulation of a Directors and Officers Questionnaire (D&O Questionnaire)
to each member of the Board of Directors and each officer of the Company that is
a reporting person under Section 16 of the Securities Exchange Act of 1934. The
D&O Questionnaire contains questions intended to identify related persons
and transactions between the Company and related persons. If a related person
transaction is identified, such transaction is brought to the attention of the
Nominating/Corporate Governance Committee for its approval, ratification,
revision, or rejection in consideration of all of the relevant facts and
circumstances.
The
Nominating/Corporate Governance Committee must approve or ratify each related
person transaction in accordance with the policy. Absent this approval or
ratification, no such transaction may be entered into by the Company with any
related person.
In
March 2008, the Nominating/Corporate Governance Committee amended the Related
Person Transactions Policy to provide for standing pre-approval of limited
transactions with related persons. Pre-approved transactions
include:
|
(a) |
|
Any
transaction with another company at which a related persons only
relationship is as an employee (other than an executive officer or an
equivalent), director or beneficial owner of less than 10% of that
companys shares, if the aggregate amount involved does not exceed the
greater of (i) $1,000,000, or (ii) 2 percent of that companys total
annual revenues. |
|
|
|
(b) |
|
Any
charitable contribution, grant or endowment by the Company to a charitable
organization, foundation or university at which a related persons only
relationship is as an employee (other than an executive officer or an
equivalent), a director or a trustee, if the aggregate amount involved
does not exceed the lesser of $500,000, or 2 percent of the charitable
organizations total annual receipts. |
Agilent will disclose the terms of related person transactions in its
filings with the SEC to the extent required.
20
Table of Contents
|
CORPORATE
GOVERNANCE |
Transactions with Related
Persons
We purchase services,
supplies, and equipment in the normal course of business from many suppliers and
sell or lease products and services to many customers. In some instances, these
transactions occur with companies with which members of our management or Board
of Directors have relationships as directors or executive officers. For
transactions entered into during fiscal year 2014, no related person had or will
have a direct or indirect material interest. None of the fiscal year 2014
transactions exceeded or fell outside of the pre-approved thresholds set forth
in our Related Party Transaction Policy except for the transactions with Biogen
Idec Inc. (Biogen). George A. Scangos, Ph.D. is the Chief Executive Officer of
Biogen and joined our board in September 2014. The Nominating/Corporate Governance Committee
reviewed, approved and ratified the transactions with Biogen in accordance with
the policy.
The following list identifies
which of these companies purchased from Agilent, or sold to Agilent, more than
$120,000 in products and/or services in fiscal 2014.
● |
AAC Technologies Holdings Inc.
(AAC). Mr. Koh Boon Hwee
is the Chairman of AAC. AAC, or its affiliates, purchased from Agilent an
aggregate of approximately $1.8 million of products and/or services.
|
● |
Avnet, Inc. (Avnet). Mr. William P. Sullivan served as a
director of Avnet until May 2014. Avnet, or its affiliates, purchased from
Agilent an aggregate of approximately $1.3 million of products and/or
services and Agilent purchased from Avnet an aggregate of approximately
$913,000 in products and/or services. |
● |
Biogen Idec Inc. (Biogen). Mr. George A. Scangos, Ph.D. is the
Chief Executive Officer and a director of Biogen. Biogen, or its affiliates, purchased
from Agilent an aggregate of approximately $2.7 million in products and/or
services. |
● |
Campbell Soup Company
(Campbell). Mr. A. Barry
Rand is a director of Campbell. Campbell, or its affiliates, purchased
from Agilent an aggregate of approximately $208,000 of products and/or
services. |
● |
Catalent Pharma Solutions
(Catalent). Mr. Paul N.
Clark served as a director of Catalent until September 2014. Catalent, or
its affiliates, purchased from Agilent an aggregate of approximately $2.7
million of products and/or services. |
● |
Harlan Laboratories, Inc.
(Harlan). Mr. Paul N.
Clark served as a director of Harlan until March 2014. Harlan, or its
affiliates, purchased from Agilent an aggregate of approximately $627,000
of products and/or services. |
● |
International Rectifier Corp.
(IRC). Mr. Didier Hirsch
is a director of IRC. IRC, or its affiliates, purchased from Agilent an
aggregate of approximately $124,000 of products and/or
services. |
● |
Johns Hopkins University
(JHU). Mr. George A.
Scangos, Ph.D. is an adjunct professor with the JHU Department of Biology.
JHU, or its affiliates, purchased from Agilent an aggregate of
approximately $5.9 million in products and/or services. |
● |
Johnson & Johnson
(J&J). Mr. James G.
Cullen is a director of J&J. J&J, or its affiliates, purchased
from Agilent an aggregate of approximately $12.4 million of products
and/or services. |
● |
Nanyang Technological University
(Nanyang). Mr. Koh Boon
Hwee is the Chair of the Board of Trustees of Nanyang. Nanyang, or its
affiliates, purchased from Agilent an aggregate of approximately $1.2
million of products and/or services. |
● |
Takeda Pharmaceutical Co. Ltd. and Takeda
Pharmaceuticals International, Inc. (collectively,
Takeda). Dr. Tadataka
Yamada is a director of Takeda Pharmaceutical Co. Ltd. and the Chief
Medical and Scientific Officer of Takeda Pharmaceuticals International,
Inc. Takeda or its affiliates, purchased from Agilent an aggregate of
approximately $2.0 million of products and/or services. |
● |
URS Corporation (URS). Mr. William P. Sullivan served as a
director of URS until May 2014. URS, or its affiliates, purchased from
Agilent an aggregate of approximately $184,000 of products and/or
services. |
21
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|
CORPORATE
GOVERNANCE |
Agreements with Keysight
On November 1,
2014, we completed the spin-off of Keysight Technologies, Inc. (Keysight), our
electronic measurement business (the Spin-off). Following the Spin-off,
Agilent and Keysight have operated as separate publicly-traded companies and
neither entity has any ownership interest in the other. However, two of our
directors, James G. Cullen and Paul N. Clark, serve on the board of directors of
Keysight. In connection with the Spin-off, Agilent and Keysight entered into
various agreements, as described below.
Effective as of
November 1, 2014, Agilent and Keysight each operate separately as independent
publicly-traded companies. Agilent has entered into a separation and
distribution agreement with Keysight, which is referred to in this proxy
statement as the "separation agreement" or the "separation and distribution
agreement." In connection with the Spin-off, Agilent also entered into various
other agreements to effect the Spin-off and provide a framework for its
relationship with Keysight after the Spin-off, including a services agreement, a
tax matters agreement, an employee matters agreement, an intellectual property
matters agreement, a trademark license agreement and a real estate matters
agreement (collectively, the Agreements).
These Agreements
provide for the allocation between Agilent and Keysight of Agilent's assets,
employees, liabilities and obligations (including its investments, property and
employee benefits and tax-related assets and liabilities) attributable to
periods prior to, at and after Keysight's separation from Agilent and govern
certain relationships between Keysight and Agilent after the Spin-off. The
summaries of the Agreements are qualified in their entirety by reference to the
full text of the applicable Agreements, which have been filed as exhibits to
Agilents Current Report on Form 8-K filed with the Securities Exchange
Commission on August 5, 2014.
22
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|
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
PROPOSAL 2 RATIFICATION OF THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit and
Finance Committee of the Board has appointed PricewaterhouseCoopers LLP as
Agilents independent registered public accounting firm to audit its
consolidated financial statements for the 2015 fiscal year. During the 2014
fiscal year, PricewaterhouseCoopers LLP served as Agilents independent
registered public accounting firm and also provided certain tax and other
non-audit services. Although Agilent is not required to seek stockholder
approval of this appointment, the Board believes it to be sound corporate
governance to do so. If the appointment is not ratified, the Audit and Finance
Committee will investigate the reasons for stockholder rejection and will
reconsider the appointment.
Representatives
of PricewaterhouseCoopers LLP are expected to attend the annual meeting where
they will be available to respond to questions and, if they desire, to make a
statement.
Agilents Board
recommends a vote FOR the ratification of the
Audit and Finance Committees
appointment of
PricewaterhouseCoopers LLP as Agilents Independent Registered Public
Accounting Firm.
Fees Paid to
PricewaterhouseCoopers LLP
The following
table sets forth the aggregate fees charged to Agilent by PricewaterhouseCoopers
LLP for audit services rendered in connection with the audited consolidated
financial statements and reports for the 2014 and 2013 fiscal years and for
other services rendered during the 2014 and 2013 fiscal years to Agilent and its
subsidiaries, as well as all out-of-pocket costs incurred in connection with
these services:
|
|
|
|
|
|
% of |
|
|
|
|
% of |
|
|
Fee
Category: |
|
Fiscal 2014 |
|
Total |
|
Fiscal 2013 |
|
Total |
|
|
Audit Fees |
|
$ |
7,791,000 |
|
76.8 |
|
$ |
4,984,000 |
|
83.1 |
|
|
Audit-Related Fees |
|
|
1,695,000 |
|
16.7 |
|
|
762,000 |
|
12.7 |
|
|
Tax Fees: |
|
|
|
|
|
|
|
|
|
|
|
|
Tax
compliance/preparation |
|
|
265,000 |
|
2.6 |
|
|
245,000 |
|
4.1 |
|
|
Other tax
services |
|
|
0 |
|
0 |
|
|
0 |
|
0 |
|
|
Total Tax Fees |
|
|
265,000 |
|
2.2 |
|
|
245,000 |
|
4.1 |
|
|
All Other
Fees |
|
|
392,000 |
|
3.9 |
|
|
4,000 |
|
0.01 |
|
|
Total Fees |
|
$ |
10,143,000 |
|
100 |
|
$ |
5,995,000 |
|
100 |
|
Audit Fees: Consists of
fees billed for professional services rendered for the integrated audit of
Agilents consolidated financial statements and its internal control over
financial reporting and review of the interim condensed consolidated financial
statements included in quarterly reports. Fiscal 2014 and 2013 fees also consist
of fees billed for services that are normally provided by PricewaterhouseCoopers
LLP in connection with statutory reporting and regulatory filings or
engagements, and attest services, except those not required by statute or
regulation. Fiscal 2014 audit fees reflect additional fees of $2,800,000 for
services performed by PricewaterhouseCoopers LLP in connection with the
separation and spin-off of Keysight.
Audit-Related Fees:
Consists of fees billed for assurance and related services that are reasonably
related to the performance of the audit or review of Agilents consolidated
financial statements and are not reported under Audit Fees. These services
include employee benefit plan audits, accounting consultations in connection
with acquisitions and divestitures, attest services that are not required by
statute or regulation, and consultations concerning financial accounting and
reporting standards. Fiscal 2014 audit related fees reflect additional fees of
$1,670,000 for services performed by PricewaterhouseCoopers LLP in connection
with the separation and spin-off of Keysight.
23
Table of Contents
|
RATIFICATION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM |
Tax Fees: Consists of fees billed for professional services
for tax compliance, tax advice and tax planning. These services include
assistance regarding federal, state and international tax compliance, tax audits
and appeals, customs and duties, mergers and acquisitions and international tax
planning.
All Other
Fees: Consists of fees for all
other services other than those reported above. These services include a license
for specialized accounting research software. Agilents intent is to minimize
services in this category. The increase in this category for fiscal 2014
reflects additional fees of $388,000 for marketing consulting work provided by
BGT Partners, an affiliate of PricewaterhouseCoopers LLP.
In making its recommendation
to ratify the appointment of PricewaterhouseCoopers LLP as Agilents independent
registered public accounting firm for the fiscal year ending October 31, 2015,
the Audit and Finance Committee has considered whether services other than audit
and audit-related services provided by PricewaterhouseCoopers LLP are compatible
with maintaining the independence of PricewaterhouseCoopers LLP.
Policy on Audit and
Finance Committee Preapproval of Audit and Permissible Non-Audit Services of
Independent Registered Public Accounting Firm
The Audit and Finance
Committees policy is to preapprove all audit and permissible non-audit services
provided by the independent registered public accounting firm. These services
may include audit services, audit-related services, tax services and other
services. Preapproval is generally provided for up to one year and any
preapproval is detailed as to the particular service or category of services and
is subject to a specific budget. The Audit and Finance Committee has delegated
its preapproval authority up to a specified maximum to the Chairperson of the
Audit and Finance Committee, Heidi Fields, who may preapprove all audit and
permissible non-audit services so long as her preapproval decisions are reported
to the Audit and Finance Committee at its next scheduled meeting.
24
Table of Contents
|
AUDIT AND FINANCE
COMMITTEE REPORT |
AUDIT AND FINANCE
COMMITTEE REPORT |
The Audit
Committee Report does not constitute soliciting material, and shall not be
deemed to be filed or incorporated by reference into any other Company
filing under the Securities Act of 1933, as amended, or the Exchange Act,
except to the extent that the Company specifically incorporates the Audit
Committee Report by reference therein.
AUDIT AND FINANCE
COMMITTEE REPORT
During fiscal year 2014,
the Audit and Finance Committee of the Board reviewed the quality and
integrity of Agilents consolidated financial statements, the
effectiveness of its system of internal control over financial reporting,
its compliance with legal and regulatory requirements, the qualifications
and independence of its independent registered public accounting firm, the
performance of its internal audit function and independent registered
public accounting firm and other significant financial matters. Each of
the Audit and Finance Committee members satisfies the definition of
independent director and is financially literate as established in the New
York Stock Exchange Listing Standards. In accordance with section 407 of
the Sarbanes-Oxley Act of 2002, the Board of Directors has identified
Heidi Fields as the Audit and Finance Committees Financial Expert.
Agilent operates with a November 1 to October 31 fiscal year. The Audit
and Finance Committee met twelve times, including telephone meetings,
during the 2014 fiscal year.
The Audit and Finance
Committees work is guided by a written charter that the Board has
approved. The Audit and Finance Committee regularly reviews its charter to
ensure that it is meeting all relevant audit committee policy requirements
of the U.S. Securities and Exchange Commission, the Public Company
Accounting Oversight Board and the New York Stock Exchange. You can access
the latest Audit and Finance Committee charter by clicking on Governance
Policies in the Corporate Governance section of the Web page at
www.investor.agilent.com or by writing to us at Agilent Technologies,
Inc., 5301 Stevens Creek Blvd., Santa Clara, California 95051, Attention:
Investor Relations.
The Audit and Finance
Committee has reviewed and discussed with management and
PricewaterhouseCoopers LLP, Agilents independent registered public
accounting firm, Agilents audited consolidated financial statements and
Agilents internal control over financial reporting. The Audit and Finance
Committee has discussed with PricewaterhouseCoopers LLP, during the 2014
fiscal year, the matters required to be discussed by Statement on Auditing
Standards No. 61, as amended (Communication with Audit Committees) as
adopted by the Public Company Accounting Oversight Board in Rule
3200T.
The Audit and Finance
Committee has received and reviewed the written disclosures and the letter
from PricewaterhouseCoopers LLP required by the applicable requirements of
the Public Company Accounting Oversight Board regarding the independent
accountants communications with the Audit and Finance Committee
concerning independence, and has discussed with PricewaterhouseCoopers LLP
its independence from Agilent. Based on the review and discussions noted
above, the Audit and Finance Committee recommended to the Board that
Agilents audited consolidated financial statements be included in
Agilents Annual Report on Form 10-K for the fiscal year ended October 31,
2014, and be filed with the U.S. Securities and Exchange
Commission.
Submitted
by:
Audit and Finance
Committee
Heidi Fields,
Chairperson
Paul N. Clark
Robert J.
Herbold
|
25
Table of Contents
|
RE-APPROVAL AND
AMENDMENT OF THE PERFORMANCE-BASED COMPENSATION PLAN FOR COVERED
EMPLOYEES |
PROPOSAL 3 |
RE-APPROVAL AND AMENDMENT OF
THE PERFORMANCE-BASED COMPENSATION PLAN FOR COVERED
EMPLOYEES |
At the 2015 annual meeting,
Agilent is requesting that stockholders approve the Agilent Technologies, Inc.
Performance-Based Compensation Plan for Covered Employees (the Performance
Plan) which was amended by the Compensation Committee of the Board on November
19, 2014, subject to stockholder approval and will be effective commencing with
fiscal 2015. Section 162(m) of the Internal Revenue Code requires that the
stockholders approve the material terms of the Performance Plan at least every
five years. The Performance Plan was most recently approved by our stockholders
at the 2010 annual meeting.
As proposed for approval,
and with the exception of the ability to pay awards under the Performance Plan
in the form of cash and/or Agilent common stock, the Performance Plan is
substantially the same as the version approved by the stockholders in
2010.
Purpose of the Request for
Approval
The Board believes that a
well-designed incentive compensation plan is a significant factor in improving
operating and financial performance of Agilent, thereby enhancing stockholder
value. Important elements of such a plan include:
● |
pre-established goals
and objectives for each performance period; |
|
|
● |
objective, measurable
factors bearing on reported financial results and other metrics as the
basis for any payments made under the plan; and |
|
|
● |
administrative oversight
of the plan by the Compensation
Committee. |
The Board also believes that
all amounts paid pursuant to such a plan should be deductible as a business
expense of Agilent. Code Section 162(m) limits the deductibility of bonuses paid
to Agilents CEO and certain other executive officers, unless the plan under
which they are paid meets specified criteria, including stockholder approval.
Code Section 162(m) generally does not allow a publicly-held corporation to
deduct from its U.S. federal taxable income compensation above $1,000,000 that
is paid in any taxable year to its chief executive officer or other named
executive officers (excluding its chief financial officer). Compensation above
$1,000,000 may be deducted if, among other things, it is payable upon the
attainment of performance goals whose material terms are approved by the
companys stockholders. If the companys compensation committee retains
discretion to select which performance goals will apply to a particular
performance period, Code Section 162(m) requires that the material terms of such
performance goals be reapproved by the companys stockholders every five years.
For purposes of Code Section 162(m), the material terms include (a) the
employees eligible to receive compensation, (b) a description of the business
criteria on which the performance goal may be based, and (c) the maximum amount
of compensation that can be paid to an employee under the performance goal. Each
of these terms is discussed below.
The Board believes the
amendment and continuation of the Performance Plan to be in the best interest of
stockholders and recommends its approval. If the Performance Plan is not
approved by Agilents stockholders, commencing with fiscal 2015, bonuses shall
no longer be paid officers and key employees of Agilent under the Performance
Plan.
The complete text of the
Performance Plan, marked to show the proposed amendment, is attached to this
proxy statement as Annex
A. The following description of
the proposed amended Performance Plan is a summary of certain provisions and is
qualified in its entirety by the reference to Annex A.
26
Table of
Contents
|
RE-APPROVAL AND
AMENDMENT OF THE PERFORMANCE-BASED COMPENSATION PLAN FOR COVERED
EMPLOYEES |
Summary of the
Performance-Based Compensation Plan, as amended
General
The purpose of the Performance Plan is to motivate
and reward eligible employees by making a portion of their cash compensation
dependent on the achievement of certain objective performance goals related to
the performance of Agilent and its affiliates. In accordance with Agilents
compensation policy that cash compensation should vary with company performance,
a substantial part of each executives total cash compensation may be tied to
Agilents performance by way of performance-based bonuses under the Performance
Plan.
Because of the fact-based nature of the
performance-based compensation exception under Code Section 162(m) and the
limited availability of binding guidance thereunder, Agilent cannot guarantee
that the awards under the Performance Plan to covered employees will qualify for
exemption under Code Section 162(m). However, the intention of Agilent and the
Compensation Committee is to administer the Performance Plan in compliance with
Code Section 162(m) with respect to covered employees or participants who may
become covered employees. If any provision of the Performance Plan does not
comply with the requirements of Code Section 162(m), then such provision will be
construed or deemed amended to the extent necessary to conform to such
requirements.
Administration
The
Performance Plan will be administered by the Compensation Committee, which will
have the authority to interpret the Performance Plan, to establish performance
targets and to establish the amounts of awards payable under the Performance
Plan.
Participation and Eligibility
Individuals eligible for Performance Plan awards are officers and key
employees of Agilent (as determined by the Compensation Committee), which
include Agilents covered employees (within the meaning of Code Section 162(m))
and executive officers. Each executive officer has an interest in Proposal No.
3. The number of key employees who will participate in the Performance Plan and
the amount of Performance Plan awards are not presently determinable.
Plan Operation
The
Performance Plan provides Agilent with a competitive bonus plan reflecting the
more prevalent customs and practices for bonus plans among its peer group. The
payment of awards to each participant is based on an individual bonus target for
the performance period set by the Compensation Committee in writing and related
to the satisfaction of the applicable performance goal(s) pre-established by the
Compensation Committee for such performance period. The performance goals
available under the Performance Plan are listed below:
|
Performance Goals under the Performance-Based Compensation
Plan |
|
I. |
|
Pre-tax income or
after-tax income |
|
|
|
|
|
II. |
|
Income or
earnings including operating income, earnings before or after taxes,
interest, depreciation and/or amortization |
|
|
|
|
|
III. |
|
Net income excluding
amortization of intangible assets, depreciation and impairment of goodwill
and intangible assets and/or excluding charges attributable to the
adoption of new accounting pronouncements |
|
|
|
|
|
IV. |
|
Earnings or book value
per share (basic or diluted) |
|
|
|
|
|
V. |
|
Return on assets (gross
or net), return on investment, return on invested capital, or return on
equity |
|
|
|
|
|
VI. |
|
Return on
revenues |
|
|
|
|
|
VII. |
|
Cash flow, free cash
flow, cash flow return on investment (discounted or otherwise), net cash
provided by operations, or cash flow in excess of cost of
capital |
|
|
|
|
|
VIII. |
|
Economic value
created |
|
|
|
|
|
IX. |
|
Operating margin or
profit margin |
|
|
|
|
|
X. |
|
Stock price or total
stockholder return |
|
|
|
|
|
XI. |
|
Income or earnings from
continuing operations |
|
|
|
|
|
XII. |
|
Capital expenditures,
cost targets, reductions and savings and expense management |
|
|
|
|
|
XIII. |
|
Strategic
business criteria, consisting of one or more objectives based on meeting
specified market penetration or market share, geographic business
expansion, objective customer satisfaction or information technology
goals, and objective goals relating to divestitures, joint ventures,
mergers, acquisitions and similar transactions |
27
Table of Contents
|
RE-APPROVAL AND
AMENDMENT OF THE PERFORMANCE-BASED COMPENSATION PLAN FOR COVERED
EMPLOYEES |
Under the Performance Plan, a
performance goal is an objective formula or standard utilizing one or more of
the factors in the table above and any objectively verifiable adjustment(s)
thereto permitted and pre-established by the Compensation Committee in
accordance with Code Section 162(m).
Under the Performance Plan,
the Compensation Committee has the flexibility to determine the duration of a
performance period as any period not exceeding 36 months. The performance
period(s) individual bonus target(s) and performance goal(s) will be adopted by
the Compensation Committee in its sole discretion with respect to each
performance period and must be adopted no later than the latest time permitted
by the Internal Revenue Code in order for bonus payments pursuant to the
Performance Plan to be deductible under Code Section 162(m). Additionally, the
Compensation Committee may establish different performance periods for different
participants, and the Committee may establish concurrent or overlapping
performance periods.
Payment of Awards
The Performance Plan will
allow the Compensation Committee to pay awards in either cash and/or Agilent
common stock issued from Agilents 2009 Stock Plan. The actual amount of future
bonus payments under the Performance Plan is not presently determinable.
However, the Performance Plan provides that the maximum amount of any awards
that can be paid under the Performance Plan to any participant with respect to
any 12-month performance cycle is $10,000,000. The $10,000,000 maximum award
with respect to any 12-month performance period is better aligned with current
competitive maximums of Agilents peer group and gives the Compensation
Committee greater flexibility to award incentives based on need pursuant to
prevalent practices by members of Agilents peer group and pursuant to potential
concurrent or overlapping performance periods. Further, the Compensation
Committee, in its sole discretion, may exercise negative discretion to reduce or
eliminate the amount of a participants bonus under the Performance Plan to an
amount below the amount otherwise payable pursuant to the Performance Plan
formula.
The payment of an award for a
given performance period generally requires the participant to be employed by
Agilent as of the last day of the performance period. Prior to the payment of
any award under the Performance Plan, the Compensation Committee must make a
determination, certified in writing, that the conditions to payment for the
applicable performance period have been satisfied. The payment of awards under
the Performance Plan must be made in cash or Agilent common stock and occur
within a reasonable period of time after the end of the applicable performance
period. Payment of an award under the Performance Plan may also be deferred for
payment at a future date under the terms of the 2005 Deferred Compensation Plan
(see the Non-Qualified Deferred Compensation in Last Fiscal Year table below).
Federal Income Tax
Considerations
All amounts paid pursuant to
the Performance Plan are taxable income to the employee when paid. Agilent will
be entitled to a federal income tax deduction for all amounts paid under the
Performance Plan if it is approved by stockholders and meets the other
requirements of Code Section 162(m). However, if the proposal is not approved by
stockholders and the Compensation Committee
implements alternative methods of paying bonuses in lieu of the Performance Plan
beginning in fiscal 2015, the future deductibility by Agilent of any such
bonuses may be limited by Code Section 162(m).
28
Table of Contents
|
RE-APPROVAL AND
AMENDMENT OF THE PERFORMANCE-BASED COMPENSATION PLAN FOR COVERED
EMPLOYEES |
Amendment and Term of
the Plan
The Performance Plan will
first become available for performance periods beginning in fiscal 2015. The
Performance Plan does not have a fixed termination date and may be terminated by
the Compensation Committee at any time, provided that such termination will not
affect the payment of any award accrued prior to the time of termination. The
Compensation Committee may amend or suspend, and reinstate, the Performance Plan
at any time, provided that any such amendment or reinstatement shall be subject
to shareholder approval if required by Code Section 162(m), or any other
applicable laws, rules or regulations.
Plan Benefits
All awards under the
Performance Plan to the Agilent officers named in the Summary Compensation Table
on page 53 and all current executive officer participants as a group during
fiscal 2015 will be based on Agilents actual performance during fiscal 2015 and
will be made at the discretion of the Compensation Committee. Therefore, the
benefits and amounts that will be received or allocated under the Performance
Plan to Agilents executive officers during fiscal 2015 are not determinable at
this time. Cash bonuses paid to our named executive officers during fiscal 2014
are shown in this Proxy Statement in the Summary Compensation Table included in
the section entitled Executive Compensation below and discussed in more detail
in the section entitled Compensation Discussion and AnalysisShort-Term Cash
Incentives below. Bonuses under the Performance Plan are subject to the
Executive Compensation Recoupment Policy, which is described in the section
entitled Compensation Discussion and AnalysisCompensation Philosophy below.
Vote Required
The affirmative vote of a
majority of the shares of Agilent common stock present or represented by proxy
and voting at the annual meeting, together with the affirmative vote of a
majority of the required quorum, is required for approval of this proposal. If
you own shares through a bank, broker or other holder of record, you must
instruct your bank, broker or other holder of record how to vote in order for
them to vote your shares so that your vote can be counted on this proposal.
Agilents Board recommends
a vote FOR the approval of the material terms of the performance goals and
related provisions under the Performance Plan for purposes of Code Section
162(m) and of the amendment to
the Performance Plan.
29
Table of Contents
|
APPROVAL OF AMENDMENTS
TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS TO
DECLASSIFY THE BOARD |
PROPOSAL 4 |
APPROVAL OF AMENDMENTS TO
OUR AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION AND BYLAWS TO DECLASSIFY THE
BOARD |
The Companys Amended and
Restated Certificate of Incorporation (Certificate) and Amended and Restated
Bylaws (the Bylaws) currently provide that the Board will be classified into
three classes, as nearly equal in number as possible, with one class to be
elected by the stockholders each year. As part of the Company's commitment to
effective governance practices, management and the Board undertook a review of
current corporate governance trends and considered the view held by many
institutional stockholders that transitioning to an annually elected board is
preferable to maintaining a classified board. After careful consideration the
Board has determined that it is appropriate to propose for stockholder
consideration amendments to our Certificate and Bylaws that, if adopted, would
eliminate the classified structure of our Board over a three-year period.
If this proposal is approved
by the requisite percentage of stockholders, the Company will transition to a
declassified structure under which current directors will serve out their
remaining terms prior to standing for election and the entire Board will stand
for election annually beginning in 2018. As part of the transition, at the
Annual Meetings of Stockholders in 2016 and 2017, each of the Class I and Class
II directors, respectively, will begin standing for annual election. The
proposed amendments will not affect the unexpired term of any director elected
prior to the Annual Meeting of Stockholders in 2016.
The proposed amendments to
Article VII of the Certificate and Article III of the Bylaws are attached hereto
as Annexes B and C,
respectively.
If the requisite percentage of
stockholders approve the amendments, the Company anticipates filing the amended
Certificate with the Delaware Secretary of State promptly following the Annual
Meeting. Additionally, the Bylaws will be amended and restated to reflect these
changes thereafter.
Vote Required
The affirmative vote of the
holders of at least eighty percent (80%) of the
outstanding voting stock of the Company is required for approval of this
proposal.
Agilents Board
recommends a vote FOR the approval of the proposed amendments to our Certificate
and Bylaws to declassify the Board.
30
Table of Contents
|
COMMON STOCK OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
COMMON STOCK OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth
information, as of December 31, 2014, concerning each person or group known by
Agilent, based on filings pursuant to Section 13(d) or (g) under the Securities
Exchange Act of 1934, as amended (the Exchange Act), to own beneficially more
than 5% of the outstanding shares of our Common Stock
|
Name and Address of
Beneficial Owner |
Amount and Nature |
Percent
of Class |
|
|
T. Rowe Price Associates, Inc. |
34,580,955 |
|
(1)
|
10.3% |
|
|
100 E. Pratt Street |
|
|
|
|
|
|
Baltimore, MD
21202 |
|
|
|
|
|
|
BlackRock, Inc. |
25,383,216 |
|
(2) |
7.6% |
|
|
40
East 52nd Street |
|
|
|
|
|
|
New York, NY
10022 |
|
|
|
|
|
(1) |
|
Based solely on
information contained in a Schedule 13G/A filed with the SEC on November
10, 2014 by T. Rowe Price Associates, Inc. The Schedule 13G/A indicates
that T. Rowe Price Associates, Inc. has sole voting power with respect to
8,551,483 shares and sole dispositive power with respect to 34,580,955
shares. These securities are owned by various individual and institutional
investors including T. Rowe Price International Ltd. and T. Rowe Price
Mutual Funds which T. Rowe Price Associates, Inc. serves as an investment
adviser with power to direct investments and/or sole power to vote the
securities. For purposes of the reporting requirements of the Securities
Exchange Act of 1934, T. Rowe Price Associates, Inc. is deemed to be a
beneficial owner of such securities; however, T. Rowe Price Associates,
Inc. expressly disclaims that it is, in fact, the beneficial owner of such
securities. |
|
|
|
(2) |
|
Based solely on
information contained in a Schedule 13G/A filed with the SEC on January
28, 2014 by BlackRock, Inc. The Schedule 13G/A indicates that BlackRock,
Inc. has sole voting power with respect to 20,772,768 shares and sole
dispositive power with respect to 25,383,216
shares. |
The following table sets forth
information, as of December 31, 2014, concerning:
● |
the beneficial ownership of Agilents common stock by each
director and each of the named executive officers included in the Summary
Compensation Table herein; and |
|
|
● |
the beneficial ownership of Agilents common stock by all
directors and executive officers as a group.
|
The number of shares
beneficially owned by each entity, person, director or executive officer is
determined under the rules of the SEC, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such rules,
beneficial ownership includes any shares as to which the individual has the sole
or shared voting power or investment power and also any shares that the
individual has the right to acquire as of March 1, 2015, 60 days after December
31, 2014, through the exercise of any stock option or other right. Unless
otherwise indicated, each person has sole investment and voting power, or shares
such powers with his or her spouse, with respect to the shares set forth in the
following table.
|
|
Number of |
|
|
|
|
Total Number |
|
Number of |
|
Total Shares |
|
|
|
Shares of |
|
|
|
|
of Shares |
|
Shares Subject |
|
Beneficially Owned |
|
|
|
Common |
Deferred |
|
Beneficially |
|
to Exercisable |
|
Plus Underlying |
|
|
Name of Beneficial Owner |
Stock |
Stock (1) |
|
Owned (2) |
|
Options
(3) |
|
Units |
|
|
William P. Sullivan |
|
239,825 |
|
|
|
|
218,342 |
|
|
458,167 |
|
720,836 |
|
|
|
1,179,003 |
|
|
Paul N. Clark |
|
764 |
|
|
|
|
77,836 |
|
|
78,600 |
|
37,973 |
|
(4) |
|
116,573 |
|
|
James G. Cullen |
|
16,767 |
|
(5) |
|
|
70,727 |
|
|
87,494 |
|
41,049 |
|
|
|
128,543 |
|
|
Heidi Fields |
|
17,861 |
|
|
|
|
50,889 |
|
|
68,750 |
|
41,049 |
|
|
|
109,799 |
|
|
Robert J. Herbold |
|
41,449 |
|
(6) |
|
|
-- |
|
|
41,449 |
|
41,049 |
|
|
|
82,498 |
|
|
Didier Hirsch |
|
4,620 |
|
(7) |
|
|
91,975 |
|
|
96,595 |
|
286,213 |
|
|
|
382,808 |
|
|
Marie Oh Huber |
|
38,506 |
|
|
|
|
-- |
|
|
38,506 |
|
169,667 |
|
|
|
208,173 |
|
|
Koh Boon Hwee |
|
40,633 |
|
|
|
|
12,231 |
|
|
52,864 |
|
41,049 |
|
|
|
93,913 |
|
|
Michael R. McMullen |
|
73,700 |
|
|
|
|
-- |
|
|
73,700 |
|
428,012 |
|
|
|
501,712 |
|
|
Ronald S. Nersesian |
|
3,083 |
|
|
|
|
-- |
|
|
3,083 |
|
-- |
|
|
|
3,083 |
|
|
A. Barry Rand |
|
19,388 |
|
|
|
|
53,316 |
|
|
72,704 |
|
41,049 |
|
|
|
113,753 |
|
|
George A. Scangos, Ph.D. |
|
2,353 |
|
|
|
|
-- |
|
|
2,353 |
|
-- |
|
|
|
2,353 |
|
|
Tadataka Yamada, M.D. |
|
8,175 |
|
|
|
|
15,405 |
|
|
23,580 |
|
-- |
|
|
|
23,580 |
|
|
All
directors and executive officers |
|
548,502 |
|
|
|
|
597,123 |
|
|
1,145,625 |
|
2,033,718 |
|
|
|
3,179,343 |
|
|
as a group
(19) persons (8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
Table of Contents
|
COMMON STOCK OF
CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT |
(1) |
|
Represents the number
of deferred shares or share equivalents held by Fidelity Management Trust
Company under the Deferred Compensation Plan as to which voting or
investment power exists. |
|
(2) |
|
Individual directors
and executive officers as well as all directors and executive officers as
a group beneficially own less than 1% of the 335,846,684 shares of Common
Stock outstanding, as of December 31, 2014. |
|
(3) |
|
Exercisable Options
means options that may be exercised as of March 1, 2015. |
|
(4) |
|
Consists of vested
options gifted to Mr. Clarks Family LLC. |
|
(5) |
|
Includes 3,000 shares
held by Mr. Cullens Family Limited Partnership. |
|
(6) |
|
Includes 38,949
shares held by Mr. Herbolds Revocable Trust. |
|
(7) |
|
Includes 100 shares
held by Mr. Hirschs spouse. |
|
(8) |
|
Includes 47,780
direct and indirect shares, and 185,772 exercisable options for a total of
233,552 shares held by executive officers not separately listed in this
table. |
Section 16(a) Beneficial
Ownership Reporting Compliance
Section 16(a) of the Exchange
Act, requires Agilents directors, executive officers and holders of more than
10% of Agilent common stock to file reports with the SEC regarding their
ownership and changes in ownership of Agilent stock. Agilent believes that
during the 2014 fiscal year, its executive officers, directors and holders of
10% or more of our common stock complied with all Section 16(a) filing
requirements.
In making these statements,
Agilent has relied upon examination of copies of Forms 3, 4 and 5 provided to
Agilent and the written representations of its directors and
officers.
32
Table of Contents
|
COMPENSATION OF
NON-EMPLOYEE DIRECTORS |
COMPENSATION OF
NON-EMPLOYEE DIRECTORS
Directors who are employed by
Agilent do not receive any compensation for their Board services. As a result,
Mr. Sullivan, an employee of Agilent, received no additional compensation for
his Board services. The general policy of the Board is that compensation for
non-employee directors should be a mix of cash and equity-based compensation
that is competitive with the compensation paid to non-employee directors within
Agilents peer group. The non-employee directors compensation plan year begins
on March 1 of each year (the Plan Year).
The table below sets forth the
annual retainer, equity grants and committee premiums for the non-employee
directors and the Non-Executive Chairman for the 2014 Plan Year:
Summary of Non-Employee
Director Annual Compensation for the 2014 Plan Year
|
|
|
|
|
Committee
Chair |
Audit
Committee |
|
Cash Retainer
(1) |
Equity Grant
(2) |
Premium
(3) |
Member Premium
(4) |
Non-employee director |
|
$90,000 |
|
$180,000 in value of a stock
grant |
$15,000 |
$10,000 |
Non-Executive |
|
|
|
|
|
|
Chairman |
|
$245,000 |
|
$180,000 in value of a stock grant |
Not eligible |
$10,000 |
(1) |
Each non-employee
director may elect to defer all or part of the cash compensation to the
2005 Deferred Compensation Plan for Non-Employee Directors. Any deferred
cash compensation is converted into shares of Agilent common
stock. |
|
(2) |
The stock will be
granted on the later of (i) March 1 or (ii) the first trading day after
each Annual Meeting of Stockholders. The number of shares underlying the
stock grant is determined by dividing $180,000 by the average fair market
value of Agilents common stock over 20 consecutive trading days up to and
including the day prior to the grant date. The stock grant vests
immediately upon grant. Voluntary deferral is available as an option for
the non-employee directors. |
|
(3) |
Non-employee
directors (excluding the Non-Executive Chairman) who serve as the
chairperson of a Board committee receive a committee chair premium of
$15,000 in cash, paid at the beginning of each Plan Year. |
|
(4) |
Non-employee
directors (including the Non-Executive Chairman) who serve as a member of
the Audit and Finance Committee receive an additional $10,000 in cash,
paid at the beginning of each Plan Year. |
A non-employee director who
joins the Board of Directors after the start of the Plan Year will have his or
her cash retainer, equity grant and committee chair premium pro-rated based upon
the remaining days in the Plan Year that the director will serve.
In September 2014, the
Compensation Committee and the Board, based on the recommendation of the
Compensation Committees independent compensation consultant, F.W. Cook,
concluded that the current non-employee director compensation is competitive
with Agilents peer group and would remain unchanged for the 2015 Plan
Year.
33
Table of Contents
|
COMPENSATION OF
NON-EMPLOYEE DIRECTORS |
Non-Employee Director
Compensation for Fiscal Year 2014
The table below sets forth
information regarding the compensation earned by each of Agilents non-employee
directors during the fiscal year ended October 31, 2014:
Non-Employee Director Compensation for Fiscal Year
2014 |
|
|
Cash |
Committee |
Stock |
|
|
|
|
Retainer |
Fees |
Awards |
Total |
Name |
($) (1) |
($) (1) |
($) (2) (3) |
($) |
Paul N. Clark |
$ |
90,000 |
|
$ |
10,000 |
|
(5) |
|
$ |
180,000 |
|
$ |
280,000 |
|
James G. Cullen
(4) |
$ |
245,000 |
|
$ |
-- |
|
|
|
$ |
180,000 |
|
$ |
425,000 |
|
Heidi Fields |
$ |
90,000 |
|
$ |
25,000 |
|
(5) (6) |
|
$ |
180,000 |
|
$ |
295,000 |
|
Robert J. Herbold |
$ |
90,000 |
|
$ |
10,000 |
|
(5) |
|
$ |
180,000 |
|
$ |
280,000 |
|
Koh Boon Hwee |
$ |
90,000 |
|
$ |
15,000 |
|
(7) |
|
$ |
180,000 |
|
$ |
285,000 |
|
George A. Scangos,
Ph.D. |
$ |
15,123 |
|
$ |
-- |
|
|
|
$ |
90,739 |
|
$ |
105,862 |
|
A. Barry Rand |
$ |
90,000 |
|
$ |
-- |
|
|
|
$ |
180,000 |
|
$ |
270,000 |
|
Tadataka
Yamada, M.D. |
$ |
90,000 |
|
$ |
-- |
|
|
|
$ |
180,000 |
|
$ |
270,000 |
|
____________________
(1) |
|
Reflects all cash
compensation earned during fiscal year 2014, whether or not any of the
cash compensation was deferred into Agilent common stock pursuant to the
2005 Deferred Compensation Plan for Non-Employee Directors. The number of
shares of Agilent common stock received in lieu of cash is determined by
dividing the dollar value of the deferred cash amount by the twenty (20)
day average fair market value for the applicable deferral date. The
aggregate number of shares of Agilent common stock deferred by each
non-employee director is set forth in the footnotes to the Beneficial
Ownership Table included in this proxy statement. |
|
(2) |
|
Reflects the
aggregate grant date fair value for stock awards granted in fiscal year
2014 calculated in accordance with FASB ASC Topic 718. The assumptions
used by the Company in calculating these amounts are included in Note 4
under the heading Valuation Assumptions of the Notes to the Consolidated
Financial Statements in the Companys 2014 Annual Report on Form
10-K. |
|
(3) |
|
A supplemental table
following these footnotes sets forth: (i) the aggregate number of stock
awards and option awards outstanding at fiscal year-end; (ii) the
aggregate number of stock awards granted during fiscal year 2014; and
(iii) the grant date fair market value of equity awards granted by Agilent
during fiscal year 2014 to each of our non-employee
directors. |
|
(4) |
|
Mr. Cullen has served
as the Non-Executive Chairman of the Board since March 1,
2005. |
|
(5) |
|
Ms. Fields and
Messrs. Clark and Herbold served as members of the Audit and Finance
Committee during fiscal year 2014. |
|
(6) |
|
Includes $15,000 paid
to Ms. Fields for chairing the Audit and Finance Committee during fiscal
year 2014. |
|
(7) |
|
Mr. Koh served as
chair of the Compensation Committee during fiscal year
2014. |
34
Table of Contents
|
COMPENSATION OF
NON-EMPLOYEE DIRECTORS |
Additional Information With
Respect to Director Equity Awards
The following table provides
additional information on the outstanding equity awards at fiscal year-end and
awards granted during fiscal year 2014 for non-employee directors.
|
|
|
|
|
Stock Awards |
Grant Date Fair |
|
|
|
|
|
Granted |
Value of |
|
Stock Awards |
Option Awards |
During |
Stock |
|
Outstanding at |
Outstanding at |
Fiscal Year |
Awards Granted
in |
|
Fiscal
Year-End |
Fiscal
Year-End |
2014 |
Fiscal Year 2014 |
Name |
(#) (1) |
(#) |
(#) |
($) (1) (2)
|
Paul N. Clark |
|
|
27,746 |
|
3,158 |
$ |
179,059 |
|
James G.
Cullen |
|
|
29,993 |
|
3,158 |
$ |
179,059 |
|
Heidi Fields |
|
|
29,993 |
|
3,158 |
$ |
179,059 |
|
Robert
J. Herbold |
|
|
29,993 |
|
3,158 |
$ |
179,059 |
|
Koh Boon Hwee |
|
|
29,993 |
|
3,158 |
$ |
179,059 |
|
George
A. Scangos, Ph.D. |
|
|
-- |
|
1,569 |
|
$93,988 |
|
A. Barry Rand |
|
|
29,993 |
|
3,158 |
$ |
179,059 |
|
Tadataka
Yamada, M.D. |
|
|
-- |
|
3,158 |
$ |
179,059 |
|
____________________
(1) |
Stock awards granted
to non-employee directors vest immediately upon grant. |
|
(2) |
Reflects the
aggregate grant date fair value of stock awards granted in fiscal year
2014, calculated in accordance with FASB ASC Topic
718. |
Non-Employee Director
Reimbursement Practice for Fiscal Year 2014
Non-employee directors are
reimbursed for travel and other out-of-pocket expenses connected to Board
travel.
Non-Employee Director Stock
Ownership Guidelines
In 2005, the company adopted a
policy that requires each non-employee director to own Agilent shares having a
value of at least three times the annual cash retainer. In May 2010, the
Compensation Committee, based on the recommendation of the Committees
independent compensation consultant, F.W. Cook, amended the guidelines to
increase the alignment of the non-employee directors interest with stockholder
interests by requiring each non-employee director to own Agilent shares having a
value of at least six times an amount equal to $90,000 (for the 2014 Plan Year).
The shares counted toward the ownership guidelines include shares owned outright
and the shares of Agilent stock in the non-employee directors deferred
compensation account. For recently appointed non-employee directors, these
ownership levels must be attained within five years from the date of their
initial election or appointment to the board of directors. As of September 2014,
all of our incumbent non-employee directors had achieved the recommended
ownership level except for Dr. Yamada who was appointed to the Board in January
2011 and has until January 2016 to meet the ownership requirements and Dr.
Scangos who was appointed to the Board in September 2014 and has until September
2019 to meet the ownership requirements.
35
Table of Contents
|
ADVISORY VOTE TO
APPROVE NAMED EXECUTIVE OFFICER
COMPENSATION |
PROPOSAL 5 |
NON-BINDING ADVISORY VOTE TO APPROVE THE COMPENSATION OF AGILENTS NAMED EXECUTIVE
OFFICERS |
The stockholders of Agilent
are entitled to cast an advisory vote at the Annual Meeting to approve the
compensation of the Companys named executive officers, as disclosed in this
proxy statement. The stockholder vote is an advisory vote only and is not
binding on Agilent or its Board of Directors. The Company currently intends to
submit the compensation of the Companys named executive officers annually,
consistent with the advisory vote of the stockholders at the Companys 2011
Annual Meeting.
Although the vote is
non-binding, the Compensation Committee and the Board of Directors value your
opinions and will consider the outcome of the vote in establishing compensation
philosophy and making future compensation decisions.
As described more fully in the
Compensation Discussion and Analysis and in Executive Compensation sections
of the proxy statement, the Companys named executive officers, as identified on
page 37 are compensated in a manner consistent with our business strategy,
competitive practice, sound compensation governance principles, and stockholder
interests and concerns. Our compensation policies and decisions are focused on
pay-for-performance.
2014 Highlights
● |
Successful completion of the strategy to separate the Company
to enhance shareholder value |
|
|
● |
Strong fiscal year 2014
financial performance |
|
|
● |
CEO pay increase aligned
with strategic and financial performance |
|
|
● |
Fiscal
year 2014 NEO annual compensation targeted at market
median |
|
|
● |
Commencement of CEO succession plan |
|
|
● |
Compensation governance and risk safeguards including waiver of the
CEOs grandfathered change of control excise tax gross-up benefit
|
Agilent also has several
compensation governance programs in place to manage compensation risk and align
Agilents executive compensation with long-term stockholder interests. These
programs include:
● |
a
compensation recoupment policy; |
|
|
● |
an independent
compensation committee and compensation consultant; |
|
|
● |
a hedging and insider
trading policy; |
|
|
● |
stock ownership
guidelines; and |
|
|
● |
an annual risk
assessment. |
We are requesting your
non-binding vote to approve the compensation of the Companys named executive
officers as described in the Compensation Discussion and Analysis and
Executive Compensation sections of the proxy statement.
Vote
Required
The affirmative vote of a
majority of the shares of Agilent common stock present or represented by proxy
and voting at the annual meeting, together with the affirmative vote of a
majority of the required quorum, is required for approval of this proposal. If
you own shares through a bank, broker or other holder of record, you must
instruct your bank, broker or other holder of record how to vote in order for
them to vote your shares so that your vote can be counted on this
proposal.
Agilents Board
recommends a vote FOR the approval of the compensation
of
Agilents named
executive officers for fiscal 2014.
36
Table of Contents
|
COMPENSATION
DISCUSSION AND ANALYSIS |
COMPENSATION DISCUSSION AND
ANALYSIS
Introduction
This section of the Proxy
Statement describes the compensation arrangements for our NEOs for fiscal year
2014, which were exclusively determined by our independent Compensation
Committee. For the fiscal year ended October 31, 2014, our NEOs and their titles
were as follows:
● |
William P. Sullivan, Chief Executive Officer
(CEO) |
|
|
● |
Michael R. McMullen,
President and Chief Operating Officer (COO)
(1) |
|
|
● |
Didier Hirsch, Senior
Vice President, Chief Financial Officer (CFO) |
|
|
● |
Marie Oh Huber, Senior
Vice President, General Counsel and Secretary |
|
|
● |
Ronald S. Nersesian,
Executive Vice President, Agilent, President and Chief Executive Officer,
Keysight Technologies, Inc. (Keysight)
(2) |
____________________
(1) |
Mr. McMullen was
appointed President and COO on September 17, 2014 and named to succeed Mr.
Sullivan as CEO as of March 18, 2015. |
|
(2) |
Mr. Nersesian was
appointed as Executive Vice President, Agilent, and President and Chief
Executive Officer, Keysight, effective September 18, 2013. Keysight became
an independent company on November 1, 2014. |
In this Compensation
Discussion and Analysis, we first provide an executive summary. We next discuss
the Compensation Committees philosophy and process for determining the
compensation of our NEOs. We then summarize and analyze the Compensation
Committees specific decisions regarding fiscal year 2014 compensation for the
NEOs.
Executive
Summary
2014 Highlights
● |
Successful completion of the
strategy to separate the Company to enhance shareholder value |
|
|
● |
Strong fiscal year 2014
financial performance |
|
|
● |
CEO pay increase aligned
with strategic and financial performance |
|
|
● |
Fiscal year 2014 NEO
annual total compensation targeted at market
median |
|
|
● |
Commencement of CEO
succession plan |
|
|
● |
Compensation governance
and risk safeguards including waiver of the CEOs grandfathered change of
control excise tax gross-up benefit |
Pay for
Performance-Agilents Fiscal Year 2014 Financial Performance and Executive
Compensation
The year over year increase in
our CEOs annual total direct compensation is consistent with our strong
financial results, our year over year increase in stock price and reflects our
strong commitment to pay for performance. The core of Agilents executive
compensation philosophy continues to be pay for performance, as discussed in
greater detail below.
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DISCUSSION AND ANALYSIS |
The chart below demonstrates
how the historical compensation of our CEO compares to our absolute TSR during
the same period.
Fiscal Year 2014, a Year of
Transition and the Effect of the Spin-Off of Keysight Technologies
Fiscal year 2014 was a year of
transition and continued building of shareholder value for Agilent. On September
19, 2013, Agilent announced its plans to spin-off its electronic measurement
business into an independent publicly traded company, Keysight Technologies,
Inc. Shortly after this announcement, two of our former named executive
officers, Nicolas Roelofs, former Senior Vice President and President of our
Life Sciences Group and Lars Holmkvist, former Senior Vice President of Agilent
and President of our Life Sciences Group, left the company. To provide the
stability and leadership required to assemble Agilents and Keysights
respective executive teams and make the spin-off a success, as well in
recognition of the value of his almost ten years experience as a seasoned CEO
and the extraordinary demand being made on his time as the company embarked on
its year-long separation work, Mr. Sullivan was granted a one-time grant of
40,000 restricted stock units. On November 1, 2014, we successfully completed
the spin-off of Keysight into a separate publicly-traded company, and Agilent is
now focused solely on the life sciences, diagnostics and applied markets.
In September 2014 following
the operational separation of Keysight from Agilent and as part of the Boards
CEO succession plan, the Board accepted Mr. Sullivans notice of his retirement
from the position as CEO effective March 18, 2015. Another part of this plan was
the Boards appointment of Michael R. McMullen as President and COO and the
announcement of the intention to appoint him as CEO upon Mr. Sullivans
retirement in March 2015. Mr. Sullivan also agreed to remain employed as a
senior advisor to the Board and Mr. McMullen for the remainder of fiscal year
2015. Concurrently with his appointment as President and COO, Mr. McMullen was
granted 18,444 performance stock units for his promotion and he received a
salary increase from $600,000 to $700,000.
Mr. McMullens Fiscal Year
2015 Compensation Approach
On November 19, 2014, the
Compensation Committee met to determine NEO annual compensation and Mr.
McMullens compensation for fiscal year 2015. No increase was made to either Mr.
McMullens base salary of $700,000 or his target award of 100% under the
Performance Based Compensation Plan. However, the Compensation Committee granted
to Mr. McMullen long-term incentive equity awards with a target value of
approximately $3,600,000, with approximately half of the target value in a stock
option award and half of the target value in performance stock units. The stock
option award vests 25% per year over four years, and the performance stock unit
award vests 100% at the conclusion of the three-year performance period.
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The Compensation Committee
anticipates that effective upon Mr. McMullens promotion to CEO on March 18,
2015, it will consider increasing Mr. McMullens total compensation to around
the 25th percentile of Agilents peer group.
Mr. McMullen has entered into
the Companys Tier II Change of Control Agreement and will enter into the
Companys CEO Change of Agreement, neither of which includes excise tax gross-up
or single trigger provisions.
Mr. Sullivans Fiscal Year
2015 Compensation Approach
On November 19, 2014, the
Compensation Committee also met to determine Mr. Sullivans compensation for
fiscal year 2015. For fiscal year 2015, Mr. Sullivan will receive a base salary
of $630,000, a forty percent decrease from Mr. Sullivans base salary of
$1,050,000 in fiscal year 2014. Mr. Sullivans target award of 150% of fiscal
year 2015 base salary under the Performance Based Compensation Plan was not
changed from the previous year. Mr. Sullivan was granted long-term incentive
equity awards with a target value of approximately $5,100,000, with
approximately 60% of the target value in performance stock units and 40% of the
target value in a stock option award. This represented a decrease of fifty-one
percent from Mr. Sullivans long-term incentive equity awards having a target
value of $10,500,000 in fiscal year 2014, which had approximately 50% of its
target value in a stock option award and 50% of the target value in performance
stock units. Mr. Sullivan has also entered into the Companys current CEO Change
of Control Agreement, which provides benefits if Mr. Sullivans termination as
an employee occurs in fiscal year 2015 in connection with a change in control .
Mr. Sullivans agreement no longer contains the grandfathered excise tax
gross-up provision and his severance benefits are based on his fiscal year 2015
base salary and target bonus.
Listening to Our
Shareholders and Say On Pay
Our programs are well aligned
with the interests of our shareholders and are instrumental to achieving our
business strategy. In determining executive compensation for fiscal year 2014,
the Compensation Committee considered the overwhelming stockholder support (97%
approval of votes cast) that the Say-on-Pay proposal received at our March 20,
2013 annual meeting of stockholders. The Compensation Committee believes that
the shareholder vote confirms the philosophy and objective of linking our
executive compensation to our operating and strategic objectives and the
enhancement of shareholder value. We view this level of shareholder support as
an affirmation of our current pay practices for fiscal year 2014. The
Compensation Committee will continue to consider the outcome of the Companys
say-on-pay votes when making future compensation decisions for the named
executive officers.
Compensation
Governance
As set forth above, the
primary focus of our compensation philosophy is to pay for performance. This
philosophy is executed with the following compensation governance
provisions:
● |
Stock
ownership guidelines for officers and directors; |
|
|
● |
An independent
Compensation Committee; |
|
|
● |
An independent
Compensation Committee compensation consultant, Frederic W. Cook &
Co., Inc. (F.W. Cook); |
|
|
● |
Prohibitions on
executive officers and directors engaging in hedging transactions or
pledging our securities as collateral for loans; |
|
|
● |
A compensation
recoupment or clawback policy that applies to executive officers as
described further below; |
|
|
● |
An annual review and
assessment of potential compensation-related risks, conducted
independently for the Committee by F.W. Cook, which for fiscal year 2014
concluded that our compensation program (including all incentive and
commission arrangements at all levels) does not encourage behaviors that
would create material risk for Agilent; |
|
|
● |
No single-trigger Change
of Control benefits; |
|
|
● |
Prohibition on
repricing; and |
|
|
● |
No dividends/dividend
equivalents on unearned performance awards.
|
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COMPENSATION
DISCUSSION AND ANALYSIS |
Compensation
Philosophy
The
main objectives of our executive compensation program are to pay for performance
while aligning executives interests with shareholder interests. Our pay levels
are reasonable and competitive to attract and retain the best talent and
structure pay to support our business objectives with appropriate rewards for
short-term operating results and long-term shareholder value creation.
Accordingly, we structure our executive compensation program with three basic
direct elements:
Base Salary. Base salaries have historically accounted for 20%
or less of total compensation for our NEOs. This element is intended to
establish the minimum or base-line competitive compensation level that sits
beneath the variable compensation components. The remaining 80% or more of our
total compensation is performance-based as described below.
Short-Term Cash
Incentives. We use financial
metrics such as revenue growth and operating profit percentage, as well as
strategic objectives, to determine our short-term cash performance incentives.
The short-term incentives are used to provide a competitive element of total
direct compensation and to focus the efforts of our executives on critical
operating and strategic goals that are best measured within annual periods,
where there is downside risk for underperforming and upside reward for
success.
Long-Term
Incentives. Our long-term
incentives consist of a combination of (1) stock options that vest over four
years and have a 10-year term and (2) performance shares that vest at the end of
a three-year period based on continued employment and our relative Total
Shareholder Return (TSR) versus peer companies. The purpose of the long-term
incentives is to provide a competitive element of total direct compensation,
enable employment retention, facilitate executive stock ownership, and reward
for multi-year shareholder value creation through the performance of our stock
as measured against (1) historical prices and (2) the shareholder return of our
peers.
Our total compensation for each NEO
varies based on (i) company performance measured against external metrics that
correlate to long-term stockholder value, (ii) performance of the business
organizations against specific targets, and (iii) individual performance. These
three factors are considered in positioning salaries, determining earned
short-term incentives and determining long-term incentive grant values. We also
have the following policies and compensation risk controls.
Compensation Risk
Controls
Recoupment Policy |
In July 2009, the
Compensation Committee adopted an Executive Compensation Recoupment Policy
that applies to all of our executive officers covered by Section 16 of the
Securities Exchange Act. Under this Policy, in the event of (A) a material
restatement of financial results (wherein results were incorrect at the
time published due to mistake, fraud or other misconduct), or (B) fraud or
misconduct by an executive officer, the Compensation Committee will, in
the case of a restatement, review all short and long-term incentive
compensation awards that were paid or awarded to executive officers for
performance periods beginning after July 14, 2009 that occurred, in whole
or in part, during the restatement period. In the case of fraud or
misconduct, the Committee will consider actions to remedy the misconduct,
prevent its recurrence, and impose discipline on the wrongdoers, in each
case, as the Committee deems appropriate.
These actions may
include without limitation, to the extent permitted by governing law,
requiring reimbursement of compensation, causing the cancellation of
outstanding restricted stock or deferred stock awards, stock options, and
other equity incentive awards, limiting future awards or compensation, and
requiring the disgorgement of profits realized from the sale of Agilent
stock to the extent such profit was, in part or in whole, resulting from
fraud or misconduct. The Compensation Committee will amend the policy, as
necessary, to comply with the final SEC rules regarding the recoupment
policies of the Dodd-Frank Wall Street Reform and Consumer Protection
Act. |
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DISCUSSION AND ANALYSIS |
Compensation Risk
Controls |
Hedging and Insider
Trading Policy |
In 2010, our insider trading policy was
updated to expressly bar ownership of financial instruments or
participation in investment strategies that hedge the economic risk of
owning Agilent stock. We also prohibit officers and directors from
pledging Agilent securities as collateral for loans. In addition, we
prohibit our officers, directors and employees from purchasing or selling
Agilent securities while in possession of material, non-public
information, or otherwise using such information for their personal
benefit. Our executives and directors are permitted to enter into trading
plans that are intended to comply with the requirements of Rule 10b5-1 of
the Securities Exchange Act of 1934 so that they can prudently diversify
their asset portfolios and exercise their stock options before their
scheduled expiration dates. |
A Culture
of Ownership |
Our stock ownership
guidelines are designed to encourage our NEOs and other executive officers
to achieve and maintain a significant equity stake in Agilent and more
closely align their interests with those of our stockholders. The
guidelines provide that the CEO should accumulate and hold, within five
years from election to his or her position, an investment level in our
stock equal to a multiple of six times his or her annual base salary. The
guidelines further provide that the COO, CFO and other executive officers
should accumulate and hold, within five years from appointment to their
executive officer positions, an investment level in our stock equal to the
lesser of either (1) a multiple of three times their annual base salary or
(2) direct ownership of a certain level of shares of Agilent stock.
The investment level as
a multiple of annual base salary or direct ownership guidelines is set
forth below: |
|
|
Investment Level = |
Direct Ownership
of |
|
|
Multiple of Annual |
Agilent
Stock |
|
Level |
Base Salary |
(#
of Shares) |
|
CEO |
6x |
N/A |
|
CFO/COO |
3x |
80,000 |
|
All other executive
officers |
3x |
40,000 |
|
|
|
|
|
An annual review is conducted to assess
compliance with the guidelines. By the end of fiscal year 2014, all of our
NEOs had either met or were on track to reach their stock ownership
guideline requirements within the applicable timeframe. |
Risk Assessment |
F.W. Cook conducts an annual review of
Agilents compensation related risks. The risk assessment conducted during
fiscal year 2014 confirmed that Agilents executive compensation program
is well designed to encourage behaviors aligned with the long-term
interests of shareholders. F.W. Cook also found an appropriate balance in
fixed versus variable pay, cash and equity, corporate, business unit, and
individual goals, financial and non-financial performance measures, and
formulas and discretion. Finally, it was determined that there are
appropriate policies in place to mitigate compensation-related risk,
including stock ownership guidelines, insider-trading prohibitions, the
Executive Compensation Recoupment Policy, and independent Compensation
Committee oversight. |
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DISCUSSION AND ANALYSIS |
Process for Determining
Compensation
For
fiscal year 2014, the Compensation Committee retained F.W. Cook as its
compensation consultant. F.W. Cook performs no other work for Agilent, does not
trade Agilent stock; has an Independence Policy that is reviewed annually by
F.W. Cooks Board of Directors; and proactively notifies the Compensation
Committee chair of any potential or perceived conflicts of interest. The
Compensation Committee found no conflict of interest with F.W. Cook during
fiscal year 2014.
To determine total compensation for the
upcoming fiscal year, the Compensation Committee considers 1) the performance of
each individual executive for the last fiscal year, 2) the most recent peer
group data from F.W. Cook, and 3) our business and strategic goals for the
coming fiscal year. F.W. Cook presents and analyzes market data, for
benchmarking each individual position, and provides insight to market practices
for the Compensation Committees actions, but it does not make any specific
compensation recommendations on the individual NEOs. The Compensation Committee determines the form and
amount of compensation for all executive officers after considering the market
data and company, business unit and individual performance. For fiscal year
2014, F.W. Cook advised the Compensation Committee on a number of compensation
matters, including but not limited to:
● |
Criteria used to identify peer
companies for executive compensation and performance metrics; |
● |
Evaluation of our total direct
compensation levels and mix for the NEOs and four other senior
officers; |
● |
Mix of long-term incentives, grant
types and allocation of stock options and full value shares; |
● |
Reviewing various other proposals
presented to the Compensation Committee by management; and |
● |
Guidance on CEO transition
planning. |
The Compensation Committee also reviews
detailed tally sheets for the CEO and other NEOs. Tally sheets used for 2014
included all elements of executive compensation listed in the section under
Fiscal Year 2014 Compensation, including potential compensation to our NEOs in
the event of a change of control.
The Compensation Committee, which is
composed solely of independent members of the Board, operates under a
Board-approved charter that spells out the Committees major duties and
responsibilities. This charter is available on Agilents website at http://www.investor.agilent.com/phoenix.zhtml?c=103274&p=irol-govhighlights.
Role of
Management
The CEO and the Senior Vice President,
Human Resources consider the responsibilities, performance and capabilities of
each of the Companys executive officers, including the NEOs, other than the
CEO, and what compensation package they believe will attract, retain and
motivate. The Senior Vice President, Human Resources does not provide input on
setting his own compensation. A comprehensive analysis is conducted using a
combination of the market data based on our peer group and survey data,
performance against targets, and overall performance assessment. This data and
analysis is used as the primary consideration to determine if an increase in
compensation is warranted and the amount and type of any increase for each of
the total compensation components for the then-current fiscal year. After
consulting with the Senior Vice President, Human Resources, the CEO makes
compensation recommendations, other than for his own compensation, to the
Compensation Committee at the first Compensation Committee meeting of the fiscal
year.
Benchmarking
NEO Compensation Peer
Group
At the beginning of each fiscal year, the
Compensation Committee meets with F.W. Cook to review and approve the peer group
companies that satisfy our selection criteria. F.W. Cook has been the
Compensation Committees consultant for a number of years. The peer group used
for setting fiscal year 2013 NEO target compensation consisted of 29 product,
capital market and labor market competitors with revenues between $1.8 billion
and $18 billion or between 0.25x and 2.5x times Agilents revenue of
approximately $7 billion for fiscal year 2013. Using the same criteria as noted
above, the peer group used for setting fiscal year 2014 NEO target compensation,
as noted below, consists of 28 companies. The range of annual revenues for peer
group members was determined so that Agilents size measured in annual revenue
would be at the median of the peer group.
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DISCUSSION AND ANALYSIS |
The 28 companies are all in the S&P
500 Information Technology, Health Care and Industrials Sector. A comparison
between the old and new comparator groups showed an insignificant statistical
impact on compensation levels between the two groups. F.W. Cook used the
compensation information reported in the public filings of our peer group
companies and survey data to make our comparisons and adjusted the data to
reflect the age of the reported information. We used this peer group data,
targeting the market median, to set each NEOs compensation for FY14.
FISCAL YEAR 2014 NEO COMPENSATION PEER GROUP (1) |
Bard
(C.R.) |
Harris Corporation |
PerkinElmer |
Stryker |
Baxter International Inc. |
JDS
Uniphase |
Precision Castparts |
Textron |
Becton Dickinson |
Juniper Networks, Inc. |
Qualcomm, Inc. |
Thermo Fischer Scientific, Inc. |
Boston Scientific Corporation |
L-3
Communications |
Rockwell Automation |
Tyco
International |
Carefusion |
Life
Technologies Corporation |
Rockwell Collins Inc. |
Varian Medical Systems |
Covidien PLC |
Medtronic |
Roper Industries |
Waters |
Danaher |
Motorola Solutions |
St
Jude Medical Inc. |
Zimmer Holdings,
Inc. |
____________________
(1) |
Cooper
Industries no longer existed as a standalone company and was removed from
the peer group in fiscal year 2014. |
In anticipation of the company separation
on November 1, 2014, the Compensation Committee and F.W. Cook reviewed and
approved the future peer group selection criteria for Agilent and Keysight. For
Agilent, the peer group to be used for setting fiscal year 2015 NEO compensation
will consist of product, capital market and labor market competitors in the
S&P 500 Health Care Sector with revenues between $1.8 billion and $10
billion or between 0.25x and 2.5x times Agilents projected revenue. Keysights
new peer group will consist of product, capital market and labor market
competitors in the following Russell 3000 GICS sub-industries; Communications
Equipment, Computer Storage & Peripherals, Electrical Components &
Equipment, Electronic Components, Electronic Equipment & Instruments,
Electronic Manufacturing Services and Semiconductor Equipment; with revenues
between $1 billion and $9 billion or between 0.33x and 3x Keysights projected
revenue.
The
new peer groups identified by each companys new selection criteria will take
effect for fiscal year 2015 when Agilent and Keysight are separate companies.
However, the Compensation Committee considered these future peer groups when
making NEO compensation decisions for fiscal year 2014. The Committee found that
the new peer groups for Agilent and Keysight had similar executive compensation
philosophies and programs, and that compensation for Agilents NEOs was in line
with the peer groups identified for each company following the separation on
November 1, 2014. For Agilent, this new peer group consisted of 30 companies in
the S&P 500 Health Care sector listed in the table below.
Actavis |
Celgene |
Intuitive Surgical |
St.
Jude Medical |
Alexion Pharma |
Cerner |
Lab
Corp of America |
Stryker |
Allergan |
DaVita HealthCare |
Life
Technologies |
Varian Medical Systems |
Bard
(C.R.) |
DENTSPLY Intl |
Mylan |
Waters |
Becton, Dickinson |
Edwards Lifesciences |
PerkinElmer |
Zimmer Holdings |
Biogen Idec |
Forest Labs |
Perrigo |
Zoetis |
Boston Scientific |
Gilead Sciences |
Quest Diagnostics |
|
CareFusion |
Hospira |
Regeneron Pharma |
|
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DISCUSSION AND ANALYSIS |
For
Keysight, the new peer group consisted of 27 companies in the Russell 3000
Information Technology sector listed below. This peer group was considered when
determining pay for Mr. Nersesian.
AMETEK |
F5
Networks |
Lam
Research |
Rockwell Automation |
Amphenol |
Harris |
Molex |
Roper Industries |
Applied Materials |
Hubbell |
Motorola Solutions |
SanDisk |
Benchmark Electronics |
Itron |
National Instruments |
Sanmina |
Brocade Comms Sys |
JDS
Uniphase |
NetApp |
Teradyne |
Ciena |
Juniper Networks |
Plexus |
Vishay Intertechnology |
Echostar |
KLA-Tencor |
Regal-Beloit |
|
Peer Group for the
Long-Term Performance Program
The Compensation Committee believes that
an expanded peer group is more appropriate for determining relative TSR under
the Companys Long-Term Performance (LTP) Program, as an expanded peer group
provides a broader index for comparison and better alignment with shareholder
investment choices. Therefore, the Compensation Committee uses the companies in
the S&P 500, Health Care, Materials and Industrials Sectors Indexes
(approximately 150 companies) for determining TSR under the LTP Program. Awards
issued in FY12 and FY13 were measured against the S&P 500 Health Care,
Industrials and Information Technologies Sectors. The S&P 500 constituent
list is maintained by the S&P Index Committee, which is available at
www.standardandpoors.com/indices/main/en/us. Any change in the expanded peer
group is due to Standard & Poors criteria for inclusion in the
index.
CEO
Compensation
The Compensation Committee establishes
the CEOs compensation based on a thorough review of the CEOs performance that
includes: (i) an objective assessment against agreed-to metrics set by the
Compensation Committee; (ii) tally sheets, (iii) market data from F.W. Cook,
(iv) a self-evaluation by the CEO that the Compensation Committee discusses with
the independent directors; and (v) a qualitative evaluation of the CEOs
performance that is developed by the independent directors, including each
member of the Compensation Committee, in executive session. The CEOs total
direct compensation package is reviewed annually by the Compensation Committee,
which then presents its recommendation to the other independent directors for
review and comment. The Compensation Committee then makes the final
determinations on compensation for the CEO.
Fiscal Year 2014
Compensation
For fiscal year 2014, we targeted our NEO
compensation in aggregate at the median of the peer group. Compensation was set
for each NEO based upon individual performance, experience and time in position.
The Compensation Committee believes the targeted compensation is appropriate to
attract, retain and motivate our executives as well as to provide competitive
rewards for job performance, skill set, prior experience, time in the position
and/or with Agilent, and superior achievement in current business
conditions.
Our executives total compensation
packages reflect Agilents philosophy of aligning pay with performance and
rewarding top talent. Accordingly, long-term incentive awards, which for fiscal
year 2014 consisted primarily of stock options that vest 25% per year for four
years and performance-based stock awards that vest 100% at the conclusion of a
three-year performance period, represent the largest element of pay for senior
executives in order to encourage creation of lasting value for our stockholders
by directly tying executive compensation to our success and our stockholders
interests.
For fiscal year 2014, approximately 81%
of our CEOs and 53% of our NEOs total direct compensation consisted of
long-term incentives and is at-risk which means that this component varies
year to year depending on Agilents stock price and TSR versus our
peers.
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DISCUSSION AND ANALYSIS |
Base Salary
Our
salaries reflect the responsibilities of each NEO, the competitive market for
comparable professionals in our industry, and are set to create an incentive for
executives to remain with Agilent. Base salaries and benefits packages are the
fixed components of our NEOs compensation and do not vary with company
performance. NEOs base salaries are set by considering benchmark market data as
well as the performance of each NEO.
Our NEOs base salaries for fiscal year
2014 were on average below the 50th percentile of our peer group. In
November 2013, the Compensation Committee increased the base salary for Mr.
McMullen from $575,000 to $600,000 to compensate him appropriately against his
respective peers. Mr. McMullen received another salary increase in September
2014 from $600,000 to $700,000 to reflect his promotion to President and Chief
Operating Officer. Mr. Nersesians salary increased from $750,000 to $800,000 to
reflect his role as CEO Designate for Keysight Technologies.
Short-Term Cash
Incentives
The Performance-Based Compensation Plan
applies to our NEOs and provides the opportunity for cash awards every six
months linked to specific six-month financial goals and annual strategic goals
for the overall company and the three major lines of business for fiscal year
2014, EMG, CAG and LDG. Annual cash incentives are paid to reward achievement of
critical shorter-term operating, financial and strategic measures and goals that
are expected to contribute to shareholder value creation over time. Financial
goals for each six-month period are pre-established by the Compensation
Committee at the beginning of the period, based on recommendations from
management. The financial goals are based on Agilents fiscal year 2014
financial plan established by the Board of Directors. After the Compensation
Committee certifies the calculations of performance against the goals for each
period, payouts, if any, are made in cash. Metrics and goals cannot be changed
after they have been approved by the Compensation Committee. The
Performance-Based Compensation Plan reflects our pay-for-performance philosophy
and directly ties short-term incentives to short-term business performance. Our
NEOs target bonus amounts were on average slightly above the 50th
percentile. For fiscal year 2014, the awards under the Performance-Based
Compensation Plan were calculated by multiplying the individuals base salary
for the performance period by the individuals target award percentage and the
performance, determined as follows:
H1 Financial |
Annual Salary / 2 |
X |
Individual Target Bonus (varies by
individual)
|
X |
Financial Portion of Target Bonus (50%
to 100%)
|
X |
Attainment % (based on
actual performance)
|
H2 Financial |
FY Strategic |
Annual Salary |
X |
Individual Target Bonus (varies by individual) |
X |
Strategic Portion of Target Bonus (0% to 50%) |
X |
Attainment % (based on
actual performance) |
The
payouts under the Performance-Based Compensation Plan for fiscal year 2014 are
provided in the table below and in the Non-Equity Incentive Plan Compensation
column in the Summary Compensation Table.
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DISCUSSION AND ANALYSIS |
|
|
|
|
|
|
|
|
|
|
Annual FY14 Strategic |
|
|
|
|
First Half
FY14 |
|
Second Half
FY14 |
|
Objectives |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual Short-Term |
|
|
Target |
|
Actual |
|
Target |
|
Actual |
|
Target |
|
Actual |
|
Incentives Paid for |
|
|
Incentive |
|
Award |
|
Incentive |
|
Award |
|
Incentive |
|
Award |
|
the Fiscal Year |
Name |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
William P. Sullivan |
|
$590,625 |
|
$484,194 |
|
$590,625 |
|
$359,395 |
|
$393,750 |
|
$787,500 |
|
$1,631,089 |
Didier Hirsch |
|
$120,000 |
|
$98,376 |
|
$120,000 |
|
$73,020 |
|
$240,000 |
|
$462,000 |
|
$633,396 |
Marie Oh Huber |
|
$98,438 |
|
$80,699 |
|
$98,438 |
|
$59,899 |
|
$196,875 |
|
$354,375 |
|
$494,973 |
Michael R. McMullen |
|
$240,000 |
|
$217,534 |
|
$291,830 |
|
$249,643 |
|
$0 |
|
$0 |
|
$467,177 |
Ronald S. Nersesian |
|
$375,000 |
|
$260,888 |
|
$375,000 |
|
$156,263 |
|
$250,000 |
|
$500,000 |
|
$917,151 |
Target Award
Percentages
Our
Compensation Committee set the monetary value of the fiscal year 2014 short-term
incentive targets based on a percent of base salary pre-established for each
NEO. The Compensation Committee also considered the relative responsibility of
each NEO. Each NEOs short-term incentive target for fiscal year 2014 was set
between 75% and 150% of base salary (depending on his/her position), as
follows:
Fiscal Year 2014 Short-Term
Incentive Payout Table*
|
|
Expressed as a % of base
salary |
|
|
|
|
|
|
|
|
|
|
Annual FY14 Strategic |
|
Total Target Short-Term |
|
|
First Half FY14 |
|
Second Half FY14 |
|
Objectives |
|
Incentives for FY14 |
|
|
Target |
|
Actual |
|
Target |
|
Actual |
|
Target |
|
Actual |
|
Target |
|
Actual |
Name |
|
Award |
|
Award |
|
Award |
|
Award |
|
Award |
|
Award |
|
Award |
|
Award |
William P. Sullivan |
|
56% |
|
46% |
|
56% |
|
34% |
|
38% |
|
75% |
|
150% |
|
155% |
Didier
Hirsch |
|
20% |
|
16% |
|
20% |
|
12% |
|
40% |
|
77% |
|
80% |
|
106% |
Marie
Oh Huber |
|
19% |
|
15% |
|
19% |
|
11% |
|
38% |
|
68% |
|
75% |
|
94% |
Michael R.
McMullen |
|
40% |
|
36% |
|
48% |
|
41% |
|
0% |
|
0% |
|
88% |
|
77% |
Ronald S. Nersesian |
|
47% |
|
33% |
|
47% |
|
20% |
|
31% |
|
63% |
|
125% |
|
115% |
____________________
* |
Financial
performance is measured and paid out each fiscal half; performance against
strategic objectives is measured and paid out
annually. |
Mr. Sullivans fiscal year 2014 bonus of
$1,631,089 reflects our below target fiscal year 2014 financial results and the
successful spin-off of Keysight resulting in above target performance for Mr.
Sullivans strategic objective for the fiscal year.
Financial Target Metrics
and Fiscal Year 2014 Operational Results
The Performance-Based Compensation Plan
financial target metrics were based on (1) Agilents Operating Profit Percentage
and Agilents revenue goals for Mr. Sullivan, Mr. Hirsch and Ms. Huber and (2)
the respective business units Operating Profit Percentage and revenue goals for
Mr. McMullen and Mr. Nersesian. In addition, 30% of Mr. McMullens target bonus
for each of the first half and second half of fiscal year 2014 was also subject
to financial metrics and targets of the combined Chemical Analysis and Life
Sciences groups (CAG/LDG) so as to facilitate co-operation between CAG and
LDG.
The Compensation Committee chose those
metrics because:
● |
Revenue places focus on our
continued growth; and |
● |
Operating Profit emphasizes
innovation, profitability and efficiency in our core business
operations. |
Operating Profit (segment level) is a
non-GAAP measure defined as revenue less the sum of cost of products and
services, research and development expense and selling, general and
administrative expenses.
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COMPENSATION
DISCUSSION AND ANALYSIS |
To determine earned awards, we use payout
matrices that link the metrics and reflect threshold-to-maximum opportunities
based on various achievement levels of the metrics. No awards are paid unless
the Operating Profit Percentage threshold is
achieved. The maximum award under the plan is capped at 200% of the target
award. The target metrics set for our short-term incentives and their
corresponding results were as follows:
First Half
FY14 |
|
|
Operating Profit
% |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Target |
|
Max |
|
Results |
|
|
|
|
Threshold |
|
Target |
|
Max |
|
Results |
|
Achievement |
|
(Mil) |
|
(Mil) |
|
(Mil) |
|
Achievement |
Agilent |
|
14% |
|
19% |
|
23% |
|
18% |
|
Below Target |
|
$3,511 |
|
$3,863 |
|
$3,410 |
|
Below Target |
EMG |
|
15% |
|
19% |
|
23% |
|
18% |
|
Below Target |
|
$1,485 |
|
$1,633 |
|
$1,414 |
|
Below Target |
LDA |
|
14% |
|
19% |
|
22% |
|
18% |
|
Below Target |
|
$2,027 |
|
$2,229 |
|
$1,996 |
|
Below Target |
CAG* |
|
18% |
|
22% |
|
26% |
|
22% |
|
At Target |
|
$1,173 |
|
$1,290 |
|
$1,170 |
|
Below Target |
LDG |
|
11% |
|
16% |
|
20% |
|
15% |
|
Below Target |
|
$1,194 |
|
$1,313 |
|
$1,168 |
|
Below Target |
|
|
Second Half
FY14 |
|
|
Operating Profit
% |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Target |
|
Max |
|
Results |
|
|
|
|
Threshold |
|
Target |
|
Max |
|
Results |
|
Achievement |
|
(Mil) |
|
(Mil) |
|
(Mil) |
|
Achievement |
Agilent |
|
18% |
|
22% |
|
25% |
|
20% |
|
Below Target |
|
$3,709 |
|
$4,080 |
|
$3,571 |
|
Below Target |
EMG |
|
19% |
|
23% |
|
26% |
|
20% |
|
Below Target |
|
$1,596 |
|
$1,755 |
|
$1,519 |
|
Below Target |
LDA |
|
16% |
|
21% |
|
24% |
|
20% |
|
Below Target |
|
$2,113 |
|
$2,324 |
|
$2,052 |
|
Below Target |
CAG* |
|
20% |
|
24% |
|
28% |
|
24% |
|
At Target |
|
$1,214 |
|
$1,335 |
|
$1,205 |
|
Below Target |
LDG |
|
14% |
|
18% |
|
22% |
|
17% |
|
Below Target |
|
$1,253 |
|
$1,378 |
|
$1,204 |
|
Below
Target |
Note: There are no thresholds
for Revenue metrics.
____________________
* |
CAG
targets and results are based on CAG Divisions plus all CAG/LDG
Consumables plus all CAG/LDG Services. |
Strategic Component and
Fiscal Year 2014 Results
For
fiscal year 2014, under the Performance-Based Compensation Plan, we continued to
utilize annual strategic goals to align each NEOs objectives with strategic
company priorities. In fiscal year 2014, each NEO except Mr. McMullen was
measured on the strategic objective of successfully completing the spin-off of
Keysight Technologies. Mr. McMullen was measured entirely on financial metrics
to focus his group on revenue growth and profit. Mr. Hirsch and Ms. Huber had
additional strategic objectives related to fiscal year 2014 expenses and fiscal
year 2015 forecast. The strategic component is established within the time
prescribed by Section 162(m) of the Internal Revenue Code and is determined on
an annual basis. The strategic component accounts for 25% to 50% of the total
target bonus for each NEO who was assigned strategic objectives. The maximum
payout per NEO for satisfaction of the strategic component is the lesser of (1)
up to 200% of strategic objective performance results or (2) 0.5% of non-GAAP
pre-tax earnings, and the Compensation Committee may exercise negative
discretion to the maximum payout to determine the strategic award
percentage.
Non-GAAP pre-tax earnings is defined
as earnings before income taxes that exclude primarily the impact of integration
costs, acquisition fair value adjustments, restructuring and asset impairment
charges, business acquisition and separation costs, non-cash intangibles
amortization as well as gains and losses from the sale of investments and
disposals of businesses.
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|
COMPENSATION
DISCUSSION AND ANALYSIS |
Long-Term Incentives
Stock Options and Performance Stock Units
For fiscal year
2014, the Compensation Committee granted long-term incentives with target values
for each NEO that were on average just above the 50th percentile of
our peer group. Stock grant values were delivered as follows:
● |
Approximately half the value was in
the form of stock options calculated using the Black-Scholes model and
20-day average closing price of our common stock prior to grant. The
exercise price of the option was the closing price of our common stock on
the date of grant. These stock option grants vest 25% each year over four
years. |
● |
The remaining value of the long-term
award is a performance stock unit award, delivered under the LTP Program,
and determined by dividing the remaining value by the Monte-Carlo
valuation factor. The resulting final stock payout award may range from 0
to 200% of the originally set target. These performance stock units vest
100% after the conclusion of the three-year performance
period. |
Targeting
approximately half of the long-term incentive value in a stock option and half
of the value in performance stock units keeps focus on improving Agilents stock
price and Agilents stock price performance relative to its peers.
The Compensation
Committee concluded that 2014 LTP Program awards were not appropriate for Mr.
Nersesian given the performance period would extend two years beyond the planned
November 2014 separation date for Keysight Technologies. As such, Mr. Nersesian
received restricted stock units in lieu of performance stock units in 2014.
These restricted stock units vest 25% each year over the next four
years.
The target value
of the long-term incentive awards is determined at the beginning of the
then-current fiscal year for each NEO and is partially derived from the peer
group data provided by F.W. Cook. The target value also reflects the
Compensation Committees judgment on the relative role of each NEOs position
within Agilent, as well as the performance of each NEO.
In addition to
their annual long-term incentive awards, the Compensation Committee awarded Mr.
Sullivan and Ms. Huber restricted stock units in the amounts of 40,000 shares
and 5,000 shares, respectively. Mr. Sullivans award which vests 33% in the
first year, 33% in the second year and 34% in the third year, was in recognition
of the value of his almost ten years experience as a seasoned CEO and the
extraordinary demand being made on his time as the company embarked on its
year-long separation work, as well as to provide the stability and leadership
required to assemble Agilents and Keysights respective executive teams and
make the spin-off a success. Ms. Hubers award, which vests 25% per year over 4
years, was in recognition of her significant current and anticipated
contributions for the separation of Keysight.
|
|
Number & Type of
Award(1) |
|
|
|
|
Stock Options (#) |
|
Performance Stock |
|
Restricted Stock |
|
Total Target Value of Long |
Name |
|
(1) |
|
Units
(#) |
|
Units (#) |
|
Term-Incentive Awards
($) |
William P. Sullivan |
|
244,112 |
|
67,848 |
|
|
40,000 |
|
$10,500,000 |
Didier Hirsch |
|
56,002 |
|
15,565 |
|
|
- |
|
$1,950,000 |
Marie Oh Huber |
|
40,206 |
|
11,174 |
|
|
5,000 |
|
$1,650,000 |
Michael R. McMullen |
|
53,130 |
|
33,210 |
(2) |
|
- |
|
$2,900,000 |
Ronald S. Nersesian |
|
120,620 |
|
- |
|
|
40,999 |
|
$4,200,000 |
____________________
(1) |
|
Regular
stock options, performance stock units and restricted stock units were
granted on November 20, 2013. |
|
(2) |
|
Mr.
McMullen received 14,766 performance stock units on November 20, 2013. He
was granted an additional 18,444 performance stock units on September 17,
2014 upon his promotion to President and COO. |
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COMPENSATION DISCUSSION AND ANALYSIS
|
Performance Stock Units
Granted in Fiscal Year 2014
The performance
stock units granted in fiscal year 2014 will be measured and paid out based on
relative TSR versus all companies in the S&P 500 Health Care, Industrials
and Materials Sectors Indexes for fiscal year 2014 through fiscal year 2016. The
company does not establish an absolute TSR target as we believe performance is
best measured on a relative basis against our selected peer group. The
performance schedule determined by the Compensation Committee in fiscal year
2014 was as follows:
|
|
Payout as a |
|
|
% of |
Performance |
|
|
Target |
Below 25th Percentile Rank
(threshold) |
|
|
0% |
|
25th Percentile Rank |
|
|
25% |
|
50th
Percentile Rank (target) |
|
|
100% |
|
75th Percentile Rank and
Above |
|
|
200% |
|
Performance
stock units are completely at-risk compensation because Agilents performance
must be at or above the 25th percentile in order for the individuals to receive
a payout.
The Compensation
Committee has established rolling three-year performance periods for determining
earned awards under our LTP Program and uses relative TSR as a single metric.
This metric aligns with shareholder interests as higher TSR results in higher
potential returns for shareholders as well as ensuring a correlation between
performance and payouts. As noted above, our short-term incentive program
focuses on Operating Profit Percent and Revenue and they drive internal business
strategies that in turn impact our TSR.
For purposes of
determining the awards, relative TSR reflects (i) the aggregate change in the
20-day average closing price of Agilents stock versus each of the companies in
Agilents LTP Program peer group, each as measured at the beginning and end of
the three-year performance period plus (ii) the value (if any) returned to
shareholders in the form of dividends or similar distributions, assumed to be
reinvested quarterly on a pre-tax basis.
Performance Stock Units
Earned in Fiscal Year 2014
The performance
stock units earned in fiscal year 2014 were based on relative TSR versus all
companies in the S&P 500 Information Technology, Health Care and Industrials
Sectors Indexes for fiscal year 2012 through fiscal year 2014. The performance
schedule determined by the Compensation Committee in fiscal year 2012 was as
follows:
|
|
Payout as a |
|
|
% of |
Performance |
|
|
Target |
Below 25th Percentile Rank
(threshold) |
|
|
0% |
|
25th
Percentile Rank |
|
|
25% |
|
50th Percentile Rank (target) |
|
|
100% |
|
75th
Percentile Rank and Above |
|
|
200% |
|
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Table of
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|
COMPENSATION
DISCUSSION AND ANALYSIS |
Agilents TSR
performance relative to peers and the payout percentages for the LTP Program for
the past 5 years are set forth in the following table:
|
Agilent TSR Relative |
|
Fiscal Year |
Rank to Peer Group |
Payout % |
2012
2014 |
39.7% |
69.0% |
2011
2013 |
45.8% |
87.0% |
2010
2012 |
46.9% |
91.0% |
2009
2011 |
54.9% |
120.0% |
2008
2010 |
59.6% |
138.0% |
The table below
sets forth the targeted number of units for the performance period covering
fiscal year 2012 through fiscal year 2014 and the shares earned at 69% of target
and the cash value of the shares based on the closing price of Agilents common
stock on November 19, 2014. On November 19, 2014, the Compensation Committee
certified the TSR results and approved the payout at 69% for the performance
period concluded on October 31, 2014. The payout of these awards was made in
November 2014.
Fiscal Year 2012 - 2014
LTP Program Payout Table
|
|
|
|
Target Award (Shares) |
|
|
|
Cash Value of |
|
|
Target Awards |
|
After Adjustment / |
|
Payout at 69% |
|
Payout at 69% |
|
|
(Shares) |
|
Conversion
(1) |
|
(Shares) |
|
($)
(2) |
William P. Sullivan |
|
77,828 |
|
106,520 |
|
73,498 |
|
$2,998,718 |
|
Didier Hirsch |
|
17,960 |
|
24,581 |
|
16,960 |
|
$691,968 |
|
Marie Oh Huber |
|
11,973 |
|
16,387 |
|
11,306 |
|
$461,285 |
|
Michael R. McMullen |
|
17,712 |
|
24,242 |
|
16,726 |
|
$682,421 |
|
Ronald S. Nersesian |
|
29,934 |
|
53,726 |
|
37,070 |
|
$1,149,170 |
(3) |
____________________
(1) |
|
The target
awards were adjusted following the spin-off of Keysight to retain the
original target value. Mr. Nersesians target shares were converted to
Keysight shares and his award was paid out by Keysight in November 2014.
Shares are rounded for display purposes but carried out to three decimal
places for final award calculation. |
|
(2) |
|
Reflects
the fair market value of the shares based on the closing stock price of
Agilents common stock on November 19, 2014. |
|
(3) |
|
Reflects
the fair market value of the shares based on the closing stock price of
Keysights common stock on November 18, 2014. |
Equity Grant
Practices
The Compensation
Committee generally makes grants of stock awards to our NEOs at the first
Compensation Committee meeting of our fiscal year. Awards are neither timed to
relate to the price of Agilents stock nor to correspond with the release of
material non-public information, although grants are generally made when
Agilents trading window is open. Grants to current employees are generally
effective on the date of the Compensation Committee meeting approving such
grants. Grants to new employees, including potential NEOs, are typically made at
the next regularly scheduled Compensation Committee meeting following the
employees start date. The standard vesting schedule for our Equity grants is
shown in the table below.
Equity Vehicle |
Standard Vesting Schedule |
Stock Options |
25%
each year over four years |
Performance Stock Units |
100%
after the third year |
Restricted Stock Units |
25%
each year over four years |
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|
COMPENSATION
DISCUSSION AND ANALYSIS |
If an NEO dies
or is fully disabled, his or her unvested stock options or stock awards fully
vest. In addition, when an NEO retires from Agilent, his or her stock options
and stock awards continue to vest and any performance stock units are earned
based on the satisfaction of performance metrics. Currently, only Mr. Sullivan
and Mr. Hirsch are entitled to retirement vesting. Finally, stock options and
stock awards vest on a double-trigger basis in connection with a change in
control as described below.
Benefits
Agilents global
benefits philosophy is to provide NEOs with protection and security through
health and welfare, retirement, disability insurance and life insurance
programs. During fiscal year 2014, the CEO and other NEOs were eligible to
receive the same benefits that are generally available to other Agilent
employees.
In addition to
the company-wide benefits, Agilents NEOs have company-paid financial counseling
through a third party service to assist with their personal finances. We believe
that providing this service gives our NEOs a better understanding of their pay
and benefits, allowing them to concentrate on Agilents future success. NEOs are
also provided executive physical examinations, for which we cover the costs that
are not otherwise covered under each NEOs chosen health plan. We believe that
the executive physical is a prudent measure to help ensure the health of our
executives. Both the financial counseling and the executive physicals are
benefits generally provided by our peer companies and are available at a
reasonable group cost to Agilent.
Generally, it is
our Compensation Committees philosophy to not provide perquisites to our NEOs
except in limited circumstances. For example, in fiscal year 2014, there were no
special perquisites for our NEOs except for financial counseling, the executive
physicals mentioned above, the occasional use by executive officers of company
drivers to transport them and their family members to the airport for personal
travel and some relocation expenses for Mr. McMullen.
Deferred
Compensation
Our NEOs are
eligible to voluntarily defer base salary, short-term incentives in the form of
awards under the Performance-Based Compensation Plan and long-term incentives in
the form of stock awards under the LTP Program. The deferrals are made through
our 2005 Deferred Compensation Plan. This is a common benefit arrangement
offered by our peer companies.
Payouts are
distributed to eligible participants in January of the year following
termination of employment, if termination occurs during the first six months of
the calendar year. Otherwise, payouts are distributed to eligible participants
in July of the year following termination. No early distributions or withdrawals
are allowed. If an election is made to defer performance shares earned under the
LTP Program, shares are deferred in the form of Agilent common stock only. At
the end of the deferral period, the LTP Program shares are simply released to
the executive.
These benefits
and an additional description of plan features are set forth in the section
entitled Non-Qualified Deferred Compensation in Last Fiscal Year below and the
narrative descriptions accompanying this section.
Pension
Plans
We provide a
pension plan, the Agilent Technologies, Inc. Retirement Plan (Retirement
Plan), to our current NEOs, as well as other eligible Agilent employees, who
were hired before November 1, 2014 for long-term employment retention and to
support our career-employment strategy, as well as to provide employee
retirement savings. In addition, we provide the Agilent Technologies, Inc.
Supplemental Benefit Retirement Plan (the Supplemental Benefit Retirement
Plan) to our NEOs and other eligible Agilent employees who were hired before
November 1, 2014. The Supplemental Benefit Retirement Plan is an unfunded,
non-qualified pension plan which pays amounts upon retirement that would be due
under the regular Retirement Plan benefit formula, but are limited under the
tax-qualified Retirement Plan by the Internal Revenue Code. Both the Retirement
Plan and the Supplemental Benefit Retirement Plan
were closed to new entrants effective November 1, 2014.
Additionally, we
provide the Agilent Technologies, Inc. Deferred Profit-Sharing Plan (the
Deferred Profit-Sharing Plan) that provides certain amounts to our NEOs and
other Agilent employees who provided services to our predecessor company, Hewlett-Packard
Company (Hewlett-Packard), prior to November 1, 1993. None of these plans
provide any credit of benefits prior to the date of hire or where there is a
break in service.
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COMPENSATION DISCUSSION AND ANALYSIS
|
Retirement
benefits are set forth in the table entitled Pension Benefits on page 58 and
the narrative descriptions accompanying this table.
Policy Regarding
Compensation in Excess of $1 Million a Year
Section 162(m)
of the Internal Revenue Code generally disallows a tax deduction for
compensation in excess of $1 million paid to our CEO, CFO and the three other
most highly compensated NEOs employed at the end of the year. Certain
compensation is specifically exempt from the deduction limit to the extent that
it is performance based as defined in Section 162(m) of the Code.
Our Compensation
Committee considers the impact of Section 162(m) in setting and determining
executive compensation because it is concerned with the net cost of executive
compensation to Agilent (i.e., taking into account the tax treatment of the
compensation), and its ability to effectively administer executive compensation
in the long-term interests of stockholders.
For fiscal year
2014, stock options, short-term cash incentives and long-term performance stock
units are intended to comply with the exception for performance-based
compensation under Section 162(m). Of course, in order to maintain flexibility
in rewarding individual performance and contributions, the Compensation
Committee will not limit all the amounts paid under all of Agilents
compensation programs to just those that qualify for tax deductibility. Agilent
cannot guarantee that compensation that is intended to comply with the
performance-based compensation exception under Section 162(m) of the Code will
in fact so qualify.
Termination and Change of
Control
Consistent with
the practice of many of our peers, the Compensation Committee adopted
change-of-control agreements designed to provide protection to the NEOs so they
are not distracted by their personal, professional and financial situations at a
time when Agilent needs them to remain focused on their responsibilities,
Agilents best interests and those of all its stockholders. These agreements
provide for a double-trigger payout only in the event of a change in control
and the executive officer is either terminated from his-or-her position or moved
into a position that represents a substantial change in responsibilities within
a limited period of time after the transaction (these agreements do not become
operative unless both events occur).
We have
eliminated excise tax gross-ups for officers entering into newly executed
change-of-control agreements after July 14, 2009. Only one officer that had such
protection under an ongoing agreement will continue to have this benefit as long
as the existing agreement remains in effect without material amendment.
Meanwhile, our current CEO, Mr. Sullivan, has relinquished the tax gross-up in
his new change-of-control agreement and Mr. McMullen, our future CEO, does not
have tax gross-up in his current change-of-control agreement, nor will he when
he becomes CEO. Potential payments to our NEOs in the event of a change of
control under our existing agreements are reported in the Termination and
Change of Control Table.
In addition, we
have a Workforce Management Program in place that is applicable to all Agilent
employees, including NEOs. Employment security is tied to competitive realities
as well as individual results and performance, but from time to time, business
circumstances could dictate the need for Agilent to reduce its workforce. The
Workforce Management Program is intended to assist employees affected by
restructuring by providing transition income in the form of severance benefits.
52
Table of
Contents
|
EXECUTIVE
COMPENSATION |
Summary Compensation
Table
Agilents NEOs for fiscal 2014 include Agilents (i) President and Chief
Executive Officer, (ii) Senior Vice President, Chief Financial Officer, and
(iii) the other three most highly compensated executive officers who were
serving as executive officers at the end of fiscal 2014.
Summary Compensation
Table |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified |
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
|
Non-Equity |
|
Deferred |
|
|
|
|
|
|
|
|
|
|
Bonus |
|
Awards |
|
Option |
|
Incentive Plan |
|
Compensation |
|
All other |
|
|
Name and |
|
|
|
Salary |
|
($) |
|
($) |
|
Awards ($) |
|
Compensation |
|
Earnings |
|
Compensation |
|
|
Principal
Position |
|
Year |
|
($) |
|
(1) |
|
(2)(3) |
|
(2)(3) |
|
($)(4) |
|
($)(5) |
|
($)(6) |
|
Total
($) |
William P. Sullivan |
|
2014 |
|
$1,050,000 |
|
$0 |
|
$6,632,830 |
|
$4,569,033 |
|
$1,631,089 |
|
$0 |
|
$31,781 |
|
$13,914,733 |
Chief Executive |
|
2013 |
|
$1,045,000 |
|
$0 |
|
$3,789,936 |
|
$4,141,200 |
|
$1,228,875 |
|
$0 |
|
$30,661 |
|
$10,235,672 |
Officer |
|
2012 |
|
$990,000 |
|
$0 |
|
$3,859,183 |
|
$4,007,791 |
|
$1,247,808 |
|
$0 |
|
$30,935 |
|
$10,135,717 |
|
Didier Hirsch |
|
2014 |
|
$600,000 |
|
$0 |
|
$1,044,826 |
|
$1,048,187 |
|
$633,396 |
|
$111,158 |
|
$16,275 |
|
$3,453,842 |
Senior Vice President, |
|
2013 |
|
$597,917 |
|
$0 |
|
$869,456 |
|
$950,040 |
|
$382,152 |
|
$110,862 |
|
$21,701 |
|
$2,932,127 |
Chief Financial Officer |
|
2012 |
|
$570,834 |
|
$0 |
|
$890,565 |
|
$924,873 |
|
$471,167 |
|
$105,788 |
|
$16,041 |
|
$2,979,268 |
|
Marie Oh Huber (7) |
|
2014 |
|
$525,000 |
|
$0 |
|
$1,007,380 |
|
$752,534 |
|
$494,973 |
|
$96,907 |
|
$28,914 |
|
$2,905,708 |
Senior Vice President, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Counsel and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael R. McMullen |
|
2014 |
|
$606,250 |
|
$0 |
|
$2,332,309 |
|
$994,432 |
|
$467,177 |
|
$91,716 |
|
$39,056 |
|
$4,530,940 |
President and Chief |
|
2013 |
|
$575,000 |
|
$0 |
|
$802,571 |
|
$876,960 |
|
$465,704 |
|
$106,498 |
|
$30,108 |
|
$2,856,840 |
Operating Officer |
|
2012 |
|
$570,834 |
|
$0 |
|
$1,771,329 |
|
$873,485 |
|
$443,812 |
|
$105,787 |
|
$31,030 |
|
$3,796,277 |
|
Ronald S. Nersesian |
|
2014 |
|
$795,833 |
|
$0 |
|
$2,109,864 |
|
$2,257,639 |
|
$917,151 |
|
$148,366 |
|
$30,998 |
|
$6,259,851 |
Executive Vice |
|
2013 |
|
$741,667 |
|
$0 |
|
$1,560,567 |
|
$1,705,200 |
|
$585,178 |
|
$138,164 |
|
$27,914 |
|
$4,758,690 |
President and Keysight |
|
2012 |
|
$641,667 |
|
$0 |
|
$1,484,309 |
|
$1,541,459 |
|
$518,870 |
|
$119,247 |
|
$26,917 |
|
$4,332,469 |
President and Chief |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
____________________
(1) |
|
None of
the executive officers received any service awards or cash bonuses for
fiscal years 2014, 2013 or 2012, other than provided in the Non-Equity
Incentive Compensation Plan. |
|
(2) |
|
Reflects
the aggregate grant date fair values, computed in accordance with
Financial Accounting Standards Board, Accounting Standards Codification,
Topic 718, Stock Compensation (FASB ASC Topic 718). The assumptions used
in calculating the expense are provided in additional detail in the tables
below. |
|
(3) |
|
The
expenses listed in these columns include expenses for stock awards and
options awarded in accordance with the LTP Program and 2009 Stock Plan, as
shown in the table below. The threshold and maximum amounts for
performance shares granted under the LTP program can be found in the
Grants of Plan-Based Awards in Fiscal Year 2014 below. |
|
(4) |
|
Amounts
consist of incentive awards earned by the NEOs during the fiscal year
under the Performance-Based Compensation Plan for Covered
Employees. |
|
(5) |
|
Amounts
represent the change in pension value for the following Agilent sponsored
pension plans: Agilent Technologies, Inc. Deferred Profit-Sharing Plan,
Agilent Technologies, Inc. Retirement Plan and Agilent Technologies, Inc.
Supplemental Benefit Retirement Plan. |
|
(6) |
|
Amounts
reflect (i) employer contributions of $10,400 to Messrs. Sullivan, Hirsch,
and Ms. Huber, $10,000 for Mr. McMullen and $12,667 for Mr. Nersesian for
the Agilent Technologies, Inc. 401(k) Plan in fiscal year 2014, and , (ii)
$20,305 for Mr. Sullivan, $16,455 for Ms. Huber, $15,010 for Mr. McMullen
and $17,099 for Mr. Nersesian for services incurred from The Ayco Company,
LP, the provider designated by Agilent to provide financial counseling
services to our NEOs, and $4,387 for Mr. Hirsch, and $5,117 for Mr.
McMullen for services incurred by KPMG, LLC, a tax provider designated by
Agilent to provide tax preparation services for certain NEOs, (iii) travel
expenses of $427 for Mr. Sullivan, $664 for Mr. Hirsch, $759 for Ms.
Huber, $1,043 for Mr. McMullen and $332 for Mr. Nersesian for use of
Agilent drivers and vehicles for personal travel, (iv) $649 for Mr.
Sullivan, $824 for Mr. Hirsch, $1,300 for Ms. Huber, $1,300 for Mr.
McMullen and $900 for Mr. Nersesian, for employer contribution to a health
savings account and (v) $6,586 for Mr. McMullen for relocation
expenses. |
|
(7) |
|
Ms. Huber
was not a named executive officer in the Companys 2013 and 2014 Proxy
Statements. Therefore, this table does not provide fiscal 2012 and fiscal
2013 compensation data for Ms. Huber. |
53
Table of Contents
|
EXECUTIVE COMPENSATION |
The
following table itemizes the full grant date fair value of equity grants made
during the 2012, 2013 and 2014 fiscal years in accordance with FASB ASC Topic
718 for the Stock Awards and Option Awards columns of the Summary
Compensation table.
Long-term Incentive
Awards |
|
|
|
|
Long Term Performance
Program |
|
|
Total Expense for FY14
Grants |
|
Total Expense for FY14
Grants |
|
Total Expense for FY14
Grants |
|
|
|
|
|
|
Restricted |
|
|
|
|
|
|
|
|
|
|
|
Restricted |
|
|
Stock |
|
Option |
|
Stock |
|
Stock |
|
Option |
|
Restricted Stock |
|
Stock |
|
Option |
|
Stock |
|
|
Awards |
|
Awards |
|
Unit
Awards |
|
Awards |
|
Awards |
|
Unit
Awards |
|
Awards |
|
Awards |
|
Unit
Awards |
William P. Sullivan |
|
$4,554,407 |
|
$4,569,033 |
|
$2,078,423 |
|
$3,789,936 |
|
$4,141,200 |
|
- |
|
$3,859,183 |
|
$4,007,791 |
|
- |
Didier Hirsch |
|
$1,044,826 |
|
$1,048,187 |
|
- |
|
$869,456 |
|
$950,040 |
|
- |
|
$890,565 |
|
$924,873 |
|
- |
Marie Oh Huber |
|
$750,073 |
|
$752,534 |
|
$257,307 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Michael R. McMullen |
|
$2,332,309 |
|
$994,432 |
|
- |
|
$802,571 |
|
$876,960 |
|
- |
|
$841,079 |
|
$873,485 |
|
$930,250 |
Ronald S. Nersesian |
|
- |
|
$2,257,639 |
|
$2,109,864 |
|
$1,560,567 |
|
$1,705,200 |
|
- |
|
$1,484,309 |
|
$1,541,459 |
|
- |
FASB ASC Topic 718
Assumptions
The
following table sets forth the weighted average FASB ASC Topic 718 assumptions
used in 2011 to 2014 in the calculation of the stock awards and option awards
presented in our Summary Compensation Table. For all periods presented, the
fair value of share-based awards for employee stock options awards was estimated
using the Black-Scholes option pricing model, while shares granted under the LTP
Program were valued using a Monte Carlo simulation. The estimated fair value of
restricted stock unit awards was determined based on the market price of
Agilents common stock on the date of grant, adjusted for expected dividend
yield. On January 17, 2012, the companys Board of Directors approved the
initiation of quarterly cash dividends to the companys shareholders. The fair
value of all the awards granted prior to the declaration of quarterly cash
dividends was measured based on an expected dividend yield of 1%.
|
|
Years Ended October
31, 2014 |
|
|
2014 |
|
2013 |
|
2012 |
|
2011 |
Stock Option Plans: |
|
|
|
|
|
|
|
|
Weighted
average risk-free interest rate |
|
1.69% |
|
0.86% |
|
0.88% |
|
1.49% |
Dividend
yield |
|
1% |
|
1% |
|
0% |
|
0% |
Weighted
average volatility |
|
39% |
|
39% |
|
38% |
|
35% |
Expected
life |
|
5.8
yrs |
|
5.8
yrs |
|
5.8
yrs |
|
5.8
yrs |
LTPP: |
|
|
|
|
|
|
|
|
Volatility
of Agilent shares |
|
36% |
|
37% |
|
41% |
|
40% |
Volatility
of selected peer-company shares |
|
13%-57% |
|
6%-64% |
|
17%-75% |
|
20-76% |
Price-wise
correlation with selected peers |
|
47% |
|
49% |
|
62% |
|
55% |
54
Table of Contents
|
EXECUTIVE COMPENSATION |
Grants of Plan-Based Awards
in Last Fiscal Year
The following table sets forth
certain information regarding grants of plan-based awards to each of our NEOs
during fiscal year 2014. For more information please refer to the Compensation
Discussion and Analysis.
Grants of Plan-Based Awards in Fiscal Year
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
|
Exercise |
|
Grant Date |
|
|
|
|
|
|
|
|
Number of |
|
All |
|
or
Base |
|
Fair Value |
|
|
|
|
Estimated Possible
Payouts Under |
|
Estimated Payouts
Under Equity |
|
Securities |
|
Other |
|
Price of |
|
of
Stock |
|
|
|
|
Non-Equity Incentive Plan Awards(1) |
|
Incentive Plan Awards
(2) |
|
Underlying |
|
Stock |
|
Option |
|
and Option |
|
|
Grant |
|
Threshold |
|
Target |
|
Maximum |
|
Threshold |
|
Target |
|
Maximum |
|
Options |
|
Awards |
|
Awards |
|
Awards |
Name |
|
Date |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
(#)(3) |
|
(#)(4) |
|
($/Sh) |
|
($) |
William
P. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sullivan |
|
11/20/2013 |
|
$255,938 |
|
$984,375 |
|
$1,968,750 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
5/20/2014 |
|
$59,063 |
|
$590,625 |
|
$1,181,250 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
$1,138,602 |
|
$4,554,407 |
|
$9,108,814 |
|
- |
|
- |
|
- |
|
$4,554,407 |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
244,112 |
|
- |
|
$53.53 |
|
$4,569,033 |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
|
40,000 |
|
- |
|
$2,078,423 |
Didier Hirsch |
|
11/20/2013 |
|
$132,000 |
|
$360,000 |
|
$720,000 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
5/20/2014 |
|
$12,000 |
|
$120,000 |
|
$240,000 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
$261,206 |
|
$1,044,826 |
|
$2,089,652 |
|
- |
|
- |
|
- |
|
$1,044,826 |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
56,002 |
|
- |
|
$53.53 |
|
$1,048,187 |
Marie Oh
Huber |
|
11/20/2013 |
|
$108,281 |
|
$295,313 |
|
$590,626 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
5/20/2014 |
|
$9,844 |
|
$98,438 |
|
$196,876 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
$187,518 |
|
$750,073 |
|
$1,500,146 |
|
- |
|
- |
|
- |
|
$750,073 |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
40,206 |
|
- |
|
$53.53 |
|
$752,534 |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
5,000 |
|
- |
|
$257,307 |
Michael R. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McMullen |
|
11/20/2013 |
|
$24,000 |
|
$240,000 |
|
$480,000 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
5/20/2014 |
|
$29,183 |
|
$291,830 |
|
$583,660 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
$247,798 |
|
$991,192 |
|
$1,982,383 |
|
- |
|
- |
|
- |
|
$991,192 |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
53,130 |
|
- |
|
$53.53 |
|
$994,432 |
|
|
9/17/2014 |
|
- |
|
- |
|
- |
|
$335,289 |
|
$1,341,159 |
|
$2,682,318 |
|
|
|
|
|
- |
|
$1,341,117 |
Ronald
S. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nersesian |
|
11/20/2013 |
|
$162,500 |
|
$625,000 |
|
$1,250,000 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
5/20/2014 |
|
$37,500 |
|
$375,000 |
|
$750,000 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
120,620 |
|
- |
|
$53.53 |
|
$2,257,639 |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
40,999 |
|
- |
|
$2,109,864 |
____________________
(1) |
|
Reflects the value of
the potential payout targets for fiscal year 2014 pursuant to the annual
award program under Agilents Performance-Based Compensation Plan. Actual
payout amounts under this plan are disclosed in the Summary Compensation
Table. Mr. McMullens target amount for May 20, 2014 includes his
increase in target bonus as a result of his promotion to President and COO
on September 17, 2014. |
|
(2) |
|
Reflects the value of
potential payout of the target number of performance shares granted in
fiscal year 2014 for the FY14 through FY16 performance period under
Agilents LTP Program. Actual payout of these awards, if any, will be
determined by the Compensation Committee after the end of the performance
period depending on whether the performance criteria set forth in
Agilents LTP Program were met. Payout, if any, will be in the form of
Agilent common stock. Please see section entitled Long-Term Incentives
for disclosure regarding material terms of the LTP Program. Mr. McMullens
target award shares under the LTP Program increased as a result of his
promotion to President and COO on September 17, 2014. |
|
(3) |
|
Reflects options
granted in fiscal year 2014 under the 2009 Stock Plan in accordance with
Agilents long-term incentive goals as described in the Compensation
Discussion and AnalysisLong-Term Incentives. Such options vest at 25%
per year over four years. |
|
(4) |
|
Reflects
restricted stock units granted in fiscal year 2014 under the 2009 Stock
Plan. Mr. Sullivans grants vests equally over three years. Mrs. Hubers
grant vests equally over four years. Mr. Nersesians grant vests equally
over four years. |
55
Table of Contents
|
EXECUTIVE
COMPENSATION |
Outstanding Equity Awards
at Fiscal Year-End
The following table provides
information on the current holdings of options, performance-based stock awards
and restricted stock units, by our NEOs as of October 31, 2014.
Outstanding Equity
Awards at Fiscal Year 2014 Year End |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Unit |
|
Performance Share |
|
|
|
|
Option
Awards |
|
Awards |
|
Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
|
Number |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Units |
|
|
|
of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Stock |
|
Market |
|
Unearned |
|
Market |
|
|
|
|
Number of Securities |
|
|
|
|
|
|
|
That |
|
Value of |
|
Shares |
|
Value of |
|
|
|
|
Underlying Unexercised |
|
|
|
|
|
|
|
Have |
|
Shares or |
|
That |
|
Shares |
|
|
|
|
Options (#) |
|
Option |
|
Option |
|
Option |
|
Not |
|
Units That |
|
Have Not |
|
That Have |
|
|
Grant |
|
Exercisable |
|
Unexercisable |
|
Exercise |
|
Vesting |
|
Expiration |
|
Vested |
|
Have Not |
|
Vested |
|
Not Vested |
Name |
|
Date |
|
(1) |
|
(1) |
|
Price ($) |
|
Date |
|
Date |
|
(#)(1)(2) |
|
Vested ($) |
|
(#)(1)(3) |
|
($) |
William P. |
|
11/17/2010 |
|
- |
|
75,889 |
|
$35.21 |
|
11/17/2011 |
|
11/16/2020 |
|
- |
|
- |
|
- |
|
- |
Sullivan |
|
11/17/2011 |
|
146,506 |
|
146,506 |
|
$37.21 |
|
11/17/2012 |
|
11/16/2021 |
|
- |
|
- |
|
- |
|
- |
|
|
11/21/2012 |
|
85,000 |
|
255,000 |
|
$35.84 |
|
11/21/2013 |
|
11/20/2022 |
|
- |
|
- |
|
- |
|
- |
|
|
11/20/2013 |
|
- |
|
244,112 |
|
$53.53 |
|
11/20/2014 |
|
11/19/2023 |
|
- |
|
- |
|
- |
|
- |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
39,060 |
|
$2,159,237 |
|
- |
|
- |
|
|
11/17/2011 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
77,828 |
|
$4,302,332 |
|
|
11/21/2012 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
86,469 |
|
$4,780,006 |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
67,848 |
|
$3,750,637 |
Total |
|
|
|
231,506 |
|
721,507 |
|
|
|
|
|
|
|
39,060 |
|
$2,159,237 |
|
232,145 |
|
$12,832,976 |
|
Didier |
|
8/18/2010 |
|
40,363 |
|
- |
|
$29.44 |
|
8/18/2011 |
|
8/17/2020 |
|
- |
|
- |
|
- |
|
- |
Hirsch |
|
11/17/2010 |
|
48,875 |
|
16,262 |
|
$35.21 |
|
11/17/2011 |
|
11/16/2020 |
|
- |
|
- |
|
- |
|
- |
|
|
11/17/2011 |
|
33,809 |
|
33,809 |
|
$37.21 |
|
11/17/2012 |
|
11/16/2021 |
|
- |
|
- |
|
- |
|
- |
|
|
11/21/2012 |
|
19,500 |
|
58,500 |
|
$35.84 |
|
11/21/2013 |
|
11/20/2022 |
|
- |
|
- |
|
- |
|
- |
|
|
11/20/2013 |
|
- |
|
56,002 |
|
$53.53 |
|
11/20/2014 |
|
11/19/2023 |
|
- |
|
- |
|
- |
|
- |
|
|
11/17/2010 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
1,848 |
|
$102,157 |
|
- |
|
- |
|
|
11/17/2011 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
17,960 |
|
$992,829 |
|
|
11/21/2012 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
19,837 |
|
$1,096,589 |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
15,565 |
|
$860,433 |
Total |
|
|
|
142,547 |
|
164,573 |
|
|
|
|
|
|
|
1,848 |
|
$102,157 |
|
53,362 |
|
$2,949,851 |
|
Marie Oh |
|
11/29/2007 |
|
17,250 |
|
- |
|
$37.47 |
|
11/29/2008 |
|
11/28/2017 |
|
- |
|
- |
|
- |
|
- |
Huber |
|
11/17/2010 |
|
27,645 |
|
9,215 |
|
$35.21 |
|
11/17/2011 |
|
11/16/2020 |
|
- |
|
- |
|
- |
|
- |
|
|
11/17/2011 |
|
22,539 |
|
22,539 |
|
$37.21 |
|
11/17/2012 |
|
11/16/2021 |
|
- |
|
- |
|
- |
|
- |
|
|
11/21/2012 |
|
13,000 |
|
39,000 |
|
$35.84 |
|
11/21/2013 |
|
11/20/2022 |
|
- |
|
- |
|
- |
|
- |
|
|
11/20/2013 |
|
- |
|
40,206 |
|
$53.53 |
|
11/20/2014 |
|
11/19/2023 |
|
- |
|
- |
|
- |
|
- |
|
|
11/17/2010 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
3,125 |
|
$172,750 |
|
- |
|
- |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
5,000 |
|
$276,400 |
|
- |
|
- |
|
|
11/17/2011 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
11,973 |
|
$661,867 |
|
|
11/21/2012 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
13,224 |
|
$731,023 |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
11,174 |
|
$617,699 |
Total |
|
|
|
80,434 |
|
110,960 |
|
|
|
|
|
|
|
8,125 |
|
$449,150 |
|
36,371 |
|
$2,010,589 |
56
Table of Contents
|
EXECUTIVE
COMPENSATION |
Outstanding Equity
Awards at Fiscal Year 2014 Year End |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Unit |
|
Performance Share |
|
|
|
|
Option
Awards |
|
Awards |
|
Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
|
Number |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or Units |
|
|
|
of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Stock |
|
Market |
|
Unearned |
|
Market |
|
|
|
|
Number of Securities |
|
|
|
|
|
|
|
That |
|
Value of |
|
Shares |
|
Value of |
|
|
|
|
Underlying Unexercised |
|
|
|
|
|
|
|
Have |
|
Shares or |
|
That |
|
Shares |
|
|
|
|
Options
(#) |
|
Option |
|
Option |
|
Option |
|
Not |
|
Units That |
|
Have Not |
|
That Have |
|
|
Grant |
|
Exercisable |
|
Unexercisable |
|
Exercise |
|
Vesting |
|
Expiration |
|
Vested |
|
Have Not |
|
Vested |
|
Not Vested |
Name |
|
Date |
|
(1) |
|
(1) |
|
Price ($) |
|
Date |
|
Date |
|
(#)(1)(2) |
|
Vested ($) |
|
(#)(1)(3) |
|
($) |
Michael R. |
|
11/19/2007 |
|
31,513 |
|
- |
|
$35.80 |
|
11/19/2008 |
|
11/18/2017 |
|
- |
|
- |
|
- |
|
- |
McMullen |
|
11/18/2008 |
|
19,644 |
|
- |
|
$19.00 |
|
11/18/2009 |
|
11/17/2018 |
|
- |
|
- |
|
- |
|
- |
|
|
11/18/2009 |
|
95,011 |
|
- |
|
$29.46 |
|
11/18/2010 |
|
11/17/2019 |
|
- |
|
- |
|
- |
|
- |
|
|
11/17/2010 |
|
52,038 |
|
17,346 |
|
$35.21 |
|
11/17/2011 |
|
11/16/2020 |
|
- |
|
- |
|
- |
|
- |
|
|
11/17/2011 |
|
31,930 |
|
31,931 |
|
$37.21 |
|
11/17/2012 |
|
11/16/2021 |
|
- |
|
- |
|
- |
|
- |
|
|
11/21/2012 |
|
18,000 |
|
54,000 |
|
$35.84 |
|
11/21/2013 |
|
11/20/2022 |
|
- |
|
- |
|
- |
|
- |
|
|
11/20/2013 |
|
- |
|
53,130 |
|
$53.53 |
|
11/20/2014 |
|
11/19/2023 |
|
- |
|
- |
|
- |
|
- |
|
|
11/17/2010 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
5,000 |
|
$276,400 |
|
- |
|
- |
|
|
11/17/2011 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
25,000 |
|
$1,382,000 |
|
- |
|
- |
|
|
11/17/2011 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
16,962 |
|
$937,659 |
|
|
11/21/2012 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
18,311 |
|
$1,012,232 |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
14,766 |
|
$816,264 |
|
|
9/17/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,444 |
|
$1,019,584 |
Total |
|
|
|
248,136 |
|
156,407 |
|
|
|
|
|
|
|
30,000 |
|
$1,658,400 |
|
68,483 |
|
$3,785,739 |
|
Ronald S. |
|
11/17/2010 |
|
- |
|
22,767 |
|
$35.21 |
|
11/17/2011 |
|
11/16/2020 |
|
- |
|
- |
|
- |
|
- |
Nersesian |
|
11/17/2011 |
|
- |
|
56,349 |
|
$37.21 |
|
11/17/2012 |
|
11/16/2021 |
|
- |
|
- |
|
- |
|
- |
|
|
11/21/2012 |
|
- |
|
105,000 |
|
$35.84 |
|
11/21/2013 |
|
11/20/2022 |
|
- |
|
- |
|
- |
|
- |
|
|
11/20/2013 |
|
- |
|
120,620 |
|
$53.53 |
|
11/20/2014 |
|
11/19/2023 |
|
- |
|
- |
|
- |
|
- |
|
|
11/17/2010 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
5,000 |
|
$276,400 |
|
- |
|
- |
|
|
11/20/2013 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
40,999 |
|
$2,266,425 |
|
- |
|
- |
|
|
11/17/2011 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
29,934 |
|
$1,654,752 |
|
|
11/21/2012 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
35,605 |
|
$1,968,244 |
Total |
|
|
|
- |
|
304,736 |
|
|
|
|
|
|
|
45,999 |
|
$2,542,825 |
|
65,539 |
|
$3,622,996 |
____________________
(1) |
|
All share amounts
reflect shares outstanding as of October 31, 2014. In November 2014, all
outstanding share amounts were adjusted due to the spin-off of Keysight
Technologies. |
|
(2) |
|
Amounts reflect
unvested restricted stock units. The remainder of Mr. Hirschs award
vested on November 17, 2014. The remainder of Mr. Nersesians 2010 award
vested on November 17, 2014. His 2013 award vested 25% on November 20,
2014 and will continue to vest 25% per year over the next three years. The
remainder of Mr. McMullens November 17, 2010 award vested on November 17,
2014. Mr. McMullens November 17, 2011 award vested 100% on the third
anniversary of the date of grant, which was November 17, 2014. The
remainder of Mr. Sullivans November 19, 2013 grant vested approximately
one-third on November 19, 2014 and will continue to vest one-third on
November 19, 2015 and one-third on November 19, 2016. The remainder of
Ms. Hubers 2010 award vested on November 17, 2014. Her 2013 award vested
25% on November 20, 2014 and will continue to vest 25% per year over the
next three years. |
|
(3) |
|
Amounts reflect
multiple unvested performance share awards that are outstanding
simultaneously as of the end of fiscal year 2014 for each NEO under the
LTP Program. The performance share awards granted on November 17, 2011
were vested and assessed on November 19, 2014. The performance share
awards granted on November 21, 2012 will vest and be assessed in November
2015. The performance share awards granted on November 20, 2013 will vest
and be assessed in November 2016. |
57
Table of Contents
|
EXECUTIVE
COMPENSATION |
Option Exercises and Stock
Vested at Fiscal Year-End
The following table sets forth
information on stock option exercises and stock vesting in fiscal year 2014 and
the value realized on the date of exercise, if any, by each of our
NEOs.
Option Exercises and
Stock Vested in Fiscal Year 2014 |
|
|
|
|
|
|
Restricted Stock & |
|
|
|
|
|
|
Option
Awards |
|
Restricted Stock
Units |
|
Performance
Awards |
|
|
Number |
|
|
|
|
|
|
|
|
|
|
|
|
of Shares |
|
|
|
|
|
|
|
Number of |
|
|
|
|
Acquired |
|
|
|
Number of |
|
|
|
Awards |
|
|
|
|
on |
|
Value Realized |
|
Awards Acquired |
|
Value Realized |
|
Acquired |
|
Value Realized |
|
|
Exercise |
|
on Exercise |
|
Upon Vesting |
|
on Vesting |
|
Upon Vesting |
|
on Vesting |
Name |
|
(#) |
|
($) |
|
(#) |
|
($) |
|
(#)
(1) |
|
($)
(2) |
William P. Sullivan |
|
725,979 |
|
$16,867,237 |
|
- |
|
$0 |
|
73,498 |
|
$2,998,718 |
Didier Hirsch |
|
83,645 |
|
$2,366,865 |
|
1,848 |
|
$101,511 |
|
16,960 |
|
$691,968 |
Marie Oh Huber |
|
60,567 |
|
$1,574,107 |
|
3,125 |
|
$171,656 |
|
11,306 |
|
$461,285 |
Michael R. McMullen |
|
64,779 |
|
$2,058,917 |
|
5,000 |
|
$274,650 |
|
16,726 |
|
$682,421 |
Ronald S. Nersesian |
|
114,147 |
|
$2,272,890 |
|
5,000 |
|
$274,650 |
|
37,070 |
|
$1,149,170 |
____________________
(1) |
|
Amounts
reflect the performance shares granted in fiscal year 2012 pursuant to the
LTP Program for the fiscal year 2012-2014 performance period and paid out
in calendar year 2014. Mr. Hirsch and Mr. Nersesian had elected to defer
16,112 and 35,216 shares respectively, into their Deferred Compensation
Accounts. |
|
(2) |
|
The market
value of these awards is based on the closing price of Agilents common
stock on November 19, 2014. For Mr. Nersesian, the value is based on the
closing price of Keysights common stock on November 18,
2014. |
Pension
Benefits
The following table shows the
estimated present value of accumulated benefits, including years of service,
payable at normal retirement age (65) to our NEOs under the Deferred
Profit-Sharing Plan (DPSP), the Retirement Plan and the Supplemental Benefit
Retirement Plan. To calculate an eligible employees years of service, the
pension plans will bridge each eligible employees service, if any, with
Hewlett-Packard Company prior to June 2, 2000 to that eligible employees
service with Agilent on or after June 2, 2000; the total years of service will
reflect employment service from both Hewlett-Packard and Agilent, capped at 30
years of service. The cost of all three plans is paid entirely by Agilent. The
present value of accumulated benefit is calculated using the assumptions under
Accounting Standards Codification Topic 715: Compensation Retirement Benefits
for the fiscal year end measurement (as of October 31, 2014). The present value
is based on a lump sum interest rate of 6.00%, DPSP rate of return of 7.5% and
the applicable mortality table described in section 417(e)(3) of the Internal
Revenue Code. See also Note 15 to Agilents consolidated financial statements in
its Annual Report on Form 10-K for the fiscal year ended October 31, 2014, as
filed with the SEC on December 22, 2014.
Pension
Benefits |
|
|
|
|
Agilent Technologies,
Inc. |
|
|
|
|
|
|
|
|
Eligible for |
|
|
|
|
|
|
|
Number |
|
|
|
Present Value |
|
|
Full |
|
Deferred |
|
|
|
Supplemental |
|
of
Years |
|
Payments |
|
of |
|
|
Retirement |
|
Profit-Sharing |
|
Retirement |
|
Benefit Plan |
|
of
Credited |
|
During Last |
|
Accumulated |
Name |
|
Benefits? |
|
Plan ($) |
|
Plan($) |
|
($) |
|
Service
(#) |
|
Fiscal Year
($) |
|
Benefit
($) |
William P. Sullivan |
|
Yes |
|
$647,028 |
|
$416,685 |
|
$3,424,084 |
|
30 |
|
$0 |
|
$4,487,798 |
Didier Hirsch |
|
Yes |
|
$0 |
|
$547,485 |
|
$462,845 |
|
15 |
|
$0 |
|
$1,010,330 |
Marie Oh Huber |
|
No |
|
$91,757 |
|
$707,112 |
|
$574,517 |
|
24 |
|
$0 |
|
$1,373,386 |
Michael R. McMullen |
|
No |
|
$207,179 |
|
$766,201 |
|
$715,956 |
|
30 |
|
$0 |
|
$1,689,336 |
Ronald S. Nersesian |
|
No |
|
$0 |
|
$437,164 |
|
$572,199 |
|
12 |
|
$0 |
|
$1,009,363 |
58
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|
EXECUTIVE
COMPENSATION |
Retirement
Plan
The Retirement Plan, which was
closed to new participants as of November 1, 2014, guarantees a minimum
retirement benefit payable at normal retirement age (the later of age 65 or
termination). Benefits are accrued on a monthly basis as a lump sum payable at
normal retirement age based on eligible pay and years of service up to a maximum
of 30 years as follows:
For participants who have
fewer than 15 years of service:
11% × target pay at the
end of the month
PLUS
5% × target pay at the end
of the month in excess of 50% of the Social Security Wage Base
For participants who have
15 or more years of service:
14% × target pay at the
end of the month
PLUS
5% × target pay at the end
of the month in excess of 50% of the Social Security Wage Base
Benefits under the Retirement
Plan are payable as either (a) a single life annuity for single participants or
as (b) a 50% joint and survivor annuity for married participants. Participants
may elect to receive payments at any time following termination or retirement
and in the above forms or as an actuarially equivalent 75% or 100% joint and
survivor annuity, or as a one-time lump sum. Payments made prior to normal
retirement age will be reduced in accordance with the plan
provisions.
All regular full-time or
regular part-time employees who were employees of Agilent prior to November 1,
2014 automatically become participants in the Retirement Plan on the May 1 or
November 1 following completion of two years of service.
Deferred Profit-Sharing
Plan
The Deferred Profit-Sharing
Plan is a closed, defined contribution plan. The Deferred Profit-Sharing Plan
was created by Hewlett-Packard and covers participants service with
Hewlett-Packard before November 1, 1993 and is used as a floor offset for the
Retirement Plan for service prior to November 1, 1993. There have been no
contributions into the plan since October 31, 1993.
For service prior to November
1, 1993 (if any), the benefit due is the greater of (i) the benefit defined by
the Retirement Plan formula, or (ii) the annuity value of the Deferred
Profit-Sharing Plan account balance. Therefore, for service prior to November 1,
1993, the Retirement Plan guarantees a minimum retirement benefit.
Benefits under the Deferred
Profit-Sharing Plan are payable at normal retirement age as either (i) a single
life annuity for single participants, or (ii) a 50% joint and survivor annuity
for married participants. Participants may elect to receive payments at any time
following termination or retirement and in the above forms or as 75% or 100%
joint and survivor annuity, or as a one-time lump sum.
Supplemental Benefit
Retirement Plan
The Supplemental Benefit
Retirement Plan, which was closed to new participants as of November 1, 2014, is
an unfunded, non-qualified deferred compensation plan. Benefits payable under
this plan are equal to the excess of the combined qualified Retirement Plan and
Deferred Profit-Sharing Plan amount that would be payable in accordance with the
terms of the Retirement Plan disregarding the benefit and compensation
limitations imposed pursuant to sections 415 and 401(a)(17) of the Internal
Revenue Code.
59
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|
EXECUTIVE
COMPENSATION |
Benefits under the
Supplemental Benefit Retirement Plan are payable upon termination or retirement
as follows:
●Accruals prior
to January 1, 2005 are paid in a single lump sum in the January following the
fiscal year in which the participant takes his qualified Retirement Plan
benefit.
●Accruals after December 31, 2004 are paid based on
the date the participant retires or terminates: in January immediately following
if retirement or termination occurs during the first six months of the year; or
in July if retirement or termination occurs during the second six months of the
year. Participants will receive a benefit in the form of either five annual
installments (if the lump sum value is at least $150,000); or in a single lump
sum (if the lump sum value is less than $150,000).
Non-Qualified Deferred
Compensation in Last Fiscal Year
For fiscal year 2014, the
non-qualified deferred compensation plan was available to all active employees
on the US payroll with total target cash salary, including the short-term
Performance-Based Compensation Plan, greater than or equal to
$260,000.
There are three types of
earnings that may be deferred under the program:
|
1. |
|
100% of
annual base pay earnings in excess of the IRS qualified plan limit of
$260,000 for 2014; |
|
|
|
2. |
|
95% of
bonus earnings, discretionary and cash compensation paid under the
Performance-Based Compensation Plan; and |
|
|
|
3. |
|
95% of
performance based compensation paid out in accordance with the terms of
Agilents LTP Program. Awards under this program are paid out in the form
of Agilent common stock. |
Deferral elections may be made
annually and are part of overall tax planning for many executives. There are
several investment options available under the Plan, most of which mirror the
investment choices under our tax-qualified 401(k) plan. All investment choices
are made by the participant. Based on market performance, dividends and interest
are credited to participants accounts from the funds that the participant has
elected.
At the time participation is
elected, employees must also elect payout in one of three forms, which can
commence upon termination or be delayed by an additional one, two or three years
following termination:
|
1. |
|
a single
lump sum payment; |
|
|
|
2. |
|
annual
installments over a five-to-fifteen year period; or |
|
|
|
3. |
|
a single
lump sum payment in January or July on or after
2016. |
Payouts are distributed to
eligible participants in January of the year following termination, if
termination occurs during the first six months of the calendar year. Otherwise,
payouts are distributed to eligible participants in July of the year following
termination where termination occurs during the second half of the calendar
year. No early distributions or withdrawals are allowed. When and if received, a
participant in the LTP Program may elect to defer his or her shares through our
2005 Deferred Compensation Plan. The LTP Program shares are deferred in the form
of Agilent common stock only. At the end of the deferral period, the LTP Program
shares are simply released to the executive.
We have established a rabbi
trust as a source of funds to make payments under the non-qualified deferred
compensation plan. As of October 31, 2014, the rabbi trust with Fidelity
Management Trust Company was fully funded, so there is no need for additional
funding.
60
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|
EXECUTIVE
COMPENSATION |
The table below provides
information on the non-qualified deferred compensation of the NEOs for fiscal
year 2014.
Non-Qualified
Deferred Compensation |
|
|
Executive |
|
Registrant |
|
Aggregate |
|
Aggregate |
|
Aggregate |
|
|
Contributions in |
|
Contributions in |
|
Earnings in Last |
|
Withdrawals/ |
|
Balance at Fiscal |
|
|
Last Fiscal Year |
|
Last Fiscal Year |
|
Fiscal Year |
|
Distributions |
|
Year-End |
Name |
|
($) (1) |
|
($) |
|
($) (2) |
|
($) |
|
($)
(3) |
William P. Sullivan |
|
$0 |
|
$0 |
|
$1,071,062 |
|
$0 |
|
$12,518,886 |
Didier Hirsch |
|
$809,158 |
|
$0 |
|
$496,856 |
|
$0 |
|
$5,360,835 |
Marie Oh Huber |
|
$0 |
|
$0 |
|
$83,628 |
|
$0 |
|
$1,033,616 |
Michael R. McMullen |
|
$0 |
|
$0 |
|
$1,484 |
|
$0 |
|
$10,085 |
Ronald S. Nersesian |
|
$935,062 |
|
$0 |
|
$244,788 |
|
$0 |
|
$3,608,400 |
____________________
(1) |
|
The salary
portion of the amounts reflected above is included in the amount reported
as salary in the Summary Compensation Table. |
|
(2) |
|
Amounts
reflected are not included in the Summary Compensation Table because the
earnings are not above-market. These amounts include dividends, interest
and change in market value. |
|
(3) |
|
Aggregate
Balance at Last Fiscal Year End for Mr. Hirsch includes $160,599
equivalent to the aggregate lump sum balance for the Agilent Technologies,
Inc. France Pension Plan (as described below). The present value is of
accumulated benefit based on an interest rate of 3.00% and rate of return
of 3.64% (as of January 1, 2014). The France Pension Plan is only valued
once a year, and the benefit value as of October 31, 2014 is the same as
that on January 1, 2014. |
Agilent Technologies, Inc.
France Pension Plan
The Agilent Technologies
France Pension Plan is a defined contribution plan created by Hewlett-Packard in
1982 and is open to all exempt employees in France. Since Mr. Hirsch was
originally employed by Hewlett-Packard France, he is the only NEO participating
in this plan. The French Pension Scheme is not a tax-qualified defined
contribution plan under the U.S. Internal Revenue Code.
Eligible employees must have
Pensionable Salary above eight times the French Social Security Ceiling
(Tranche C threshold) to be a participant of this plan. Agilent contributes 5%
of Pensionable Salary and eligible employees contribute 3% of Pensionable
Salary. Agilent no longer contributes to this plan on Mr. Hirschs behalf.
Benefits under this plan are payable at the plans normal retirement age (age
65) or from age 60 with a 5% reduction per annum as a lifetime annuity resulting
from the accumulated contributions and actual return on investments. Should the
participant die prior to receiving benefits, the surviving spouse would receive
60% of the annuity accrued at the time of the participants death (death in
service) or 60% of the actual annuity (death in retirement). In case of
employment termination the accrued benefit retirement annuity and, where
appropriate, contingent spouses pension is deferred to normal retirement
age.
The Agilent Technologies,
Inc. International Relocation Benefit Plan
The Agilent Technologies, Inc.
International Relocation Benefit Plan (IRBP) is an unfunded program that was
created by Hewlett-Packard in 1989 and was open to employees who transferred
from one country payroll to another at the Companys request prior to December
1, 2001. Mr. Hirsch transferred from France to the United States at the
Companys request in September 1999. Upon transfer to the US payroll, he became
eligible to participate in the Companys US retirement programs and was no
longer eligible to accrue benefits under the France Pension Plan. As he
transferred at the Companys request, he became eligible for the IRBP. The
objective of the IRBP is to mitigate the possible estimated retirement income
loss under country social security plans, governmental programs and Agilent
retirement schemes to an employee who has transferred internationally on a
permanent, company-sponsored basis. The plan was closed to new participants
effective November 30, 2001. Effective May 1, 2012, the IRBP benefit was frozen
for all participants. Mr. Hirschs benefit was $96,492 as of October 31, 2014.
The frozen IRBP benefit will accrue interest at 2% annum until his retirement.
Any loss of retirement income resulting from Mr. Hirschs no longer accruing
benefits under the foregoing French arrangements will be paid to Mr. Hirsch in a
single lump sum upon retirement from the Companys general assets as soon as
administratively feasible.
61
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|
EXECUTIVE
COMPENSATION |
Termination and Change of
Control Arrangements
Set forth below is a
description of the plans and agreements that could result in potential payments
to the NEOs in the case of their termination of employment and/or a change of
control of Agilent.
Change of Control
Agreements
Each NEO has signed a Change
of Control Agreement. Under these agreements, in the event that within 24 months
after a change of control of Agilent, Agilent or its successor terminates the
employment of such executive without cause or an event constituting good reason
occurs and the executive resigns within three months after such an event, the
executive will be entitled to: (i) two times, or solely with respect to the CEO,
three times, the sum of such executives base salary and target bonus, (ii)
payment of $80,000 for medical insurance premiums, (iii) full vesting of all
outstanding options and stock awards not subject to performance-based vesting,
and (iv) a prorated portion of any bonus. The Committee amended our forms of
Change of Control Agreement to remove tax gross-ups of parachute payments. These
amended forms of agreements are used with any newly executed agreements after
July 14, 2009. In September 2014, the Committee further amended these agreements
to expand the Change of Control definition, add anticipatory termination
language, more clearly define how the prorated bonus is calculated and clarify
treatment of LTPP awards.
For agreements entered into
before July 14, 2009 and to the extent that the payment of these benefits
triggers the excise tax under Section 4999 of the Code or any comparable
federal, state, local or foreign excise tax, Agilent will be responsible for
payment of any additional tax liability arising from the application of such
excise tax, subject to certain exceptions for all of the named executives
officers except the CEO. Only one officer has an agreement entered into prior to
July 14, 2009 that contains a tax gross-up. In exchange for such consideration,
each executive has agreed to execute a release of all of the executives rights
and claims relating to his or her employment.
Under the current agreements a
change of control means occurrence of any of the following events: (i) the
sale, exchange, lease or other disposition or transfer of all or substantially
all of the assets of Agilent to a third party; (ii) a merger or consolidation
involving Agilent in which the stockholders of Agilent immediately prior to such
merger or consolidation are not the owners of more than 75% of the total voting
power of the outstanding voting securities of Agilent after the transaction;
(iii) the acquisition of beneficial ownership of at least 25% of the total
voting power of the outstanding voting securities of Agilent by a third person;
or (iv) Individuals who, as of Effective Date, constitute the Board (the
Incumbent Board) cease for any reason to constitute at least a majority of the
Board.
Good reason means (i) the
reduction of the officers rate of pay, other than reductions that apply to
employees generally and variable and performance reductions; (ii) reduction in
benefits or failure to receive the same benefits as similarly situated
employees; (iii) a change in the officers duties, responsibilities, authority,
job title, or reporting relationships resulting in a significant diminution of
position, subject to certain exceptions; (iv) the relocation to a worksite that
is more than 35 miles from his prior worksite and which increases the distance
between such Executives home and principal office by more than 35 miles, unless
Executive accepts such relocation opportunity; (v) the failure or refusal of a
successor to Agilent to assume Agilents obligations under the agreement, or
(vi) a material breach by Agilent or any successor to Agilent of any of the
material provisions of the agreement.
Under these agreements,
cause means misconduct, including: (i) conviction of any felony or any crime
involving moral turpitude or dishonesty which has a material adverse effect on
Agilents business or reputation; (ii) repeated unexplained or unjustified
absences from Agilent; (iii) refusal or willful failure to act in accordance
with any specific directions, orders or policies of Agilent that has a material
adverse effect on Agilents business or reputation; (iv) a material and willful
violation of any state or federal law that would materially injure the business
or reputation of Agilent as reasonably determined by the Board; (v)
participation in a fraud or act of dishonesty against Agilent which has a
material adverse effect on Agilents business or reputation; (vi) conduct by the
officer which the Board determines demonstrates gross unfitness to serve; or
(vii) intentional, material violation by the officer of any contract between the
officer and Agilent or any statutory duty of the officer to Agilent that is not
corrected within thirty days after written notice to the officer.
62
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|
EXECUTIVE
COMPENSATION |
In addition, in the event of a
change of control:
|
1. |
|
Participants in the LTP Program would receive at the earlier of the
end of the performance period or termination of the program, an LTP
Program payout equivalent to the greater of the target award or the
accrued amount of the payout, and in the case of termination during the
first 12 months of the performance cycle, prorated for the amount of time
elapsed during the first twelve months of the performance period;
and |
|
|
|
2. |
|
Participants who receive restricted stock unit awards would vest in
full immediately prior to the closing of the transaction, unless the
awards are assumed, converted or replaced in full by the successor
corporation or a parent or subsidiary of the
successor. |
Termination and Change of
Control Table
For each of the NEOs, the
table below estimates the amount of compensation that would be paid in the event
that (i) a change of control of Agilent occurs and executive is terminated
without cause or voluntarily terminates at a time when an event constituting
good reason has occurred either within 24 months following the change of control
or within 3 months prior to such change of control, involuntary termination with
or without cause, voluntary termination, or death, disability or retirement
occurs. The amounts shown assume that each of the terminations was effective
October 31, 2014.
|
|
|
|
Involuntary |
|
Voluntary |
|
|
|
|
|
|
Termination or |
|
Termination or |
|
|
|
|
|
|
Resignation for |
|
Involuntary |
|
|
|
|
|
|
Good Cause in |
|
Termination |
|
Death / |
|
|
|
|
Connection with a |
|
with or without |
|
Disability / |
|
|
|
|
Change of Control |
|
Cause |
|
Retirement |
Name |
|
Type of
Benefit |
|
($)
(1) |
|
($) |
|
($)
(6) |
William P. Sullivan |
|
Cash
Severance Payments |
|
$7,875,000 |
|
$0 |
|
$0 |
|
|
Continuation of Benefits (2) |
|
$80,000 |
|
$0 |
|
$0 |
|
|
Stock Award Acceleration |
|
$15,044,177 |
|
$0 |
|
$15,044,177 |
|
|
Stock Option Acceleration (3) |
|
$9,554,847 |
|
$0 |
|
$9,554,847 |
|
|
Pension Benefits (4) |
|
$5,377,646 |
|
$5,377,646 |
|
$5,377,646 |
|
|
Excise Tax Gross-Up (5) |
|
$0 |
|
$0 |
|
$0 |
|
|
Total Termination Benefits: |
|
$37,931,670 |
|
$5,377,646 |
|
$29,976,670 |
|
Didier Hirsch |
|
Cash
Severance Payments |
|
$2,160,000 |
|
$0 |
|
$0 |
|
|
Continuation of Benefits (2) |
|
$80,000 |
|
$0 |
|
$0 |
|
|
Stock Award Acceleration |
|
$2,810,035 |
|
$0 |
|
$2,810,035 |
|
|
Stock
Option Acceleration (3) |
|
$2,172,545 |
|
$0 |
|
$2,172,545 |
|
|
Pension
Benefits (4) |
|
$1,066,955 |
|
$1,066,955 |
|
$1,066,955 |
|
|
Excise Tax
Gross-Up (5) |
|
$2,818,108 |
|
$0 |
|
$0 |
|
|
Total Termination Benefits: |
|
$11,107,643 |
|
$1,066,955 |
|
$6,049,535 |
|
Marie Oh Huber |
|
Cash
Severance Payments |
|
$1,837,500 |
|
$0 |
|
$0 |
|
|
Continuation of Benefits (2) |
|
$80,000 |
|
$0 |
|
$0 |
|
|
Stock Award Acceleration |
|
$2,459,739 |
|
$0 |
|
$2,459,739 |
|
|
Stock Option Acceleration (3) |
|
$1,420,745 |
|
$0 |
|
$1,420,745 |
|
|
Pension Benefits (4) |
|
$867,790 |
|
$867,790 |
|
$867,790 |
|
|
Excise Tax Gross-Up (5) |
|
$0 |
|
$0 |
|
$0 |
|
|
Total Termination Benefits: |
|
$6,665,774 |
|
$867,790 |
|
$4,748,274 |
63
Table of Contents
|
EXECUTIVE
COMPENSATION |
|
|
|
|
Involuntary |
|
Voluntary |
|
|
|
|
|
|
Termination or |
|
Termination or |
|
|
|
|
|
|
Resignation for |
|
Involuntary |
|
|
|
|
|
|
Good Cause in |
|
Termination |
|
Death / |
|
|
|
|
Connection with a |
|
with or without |
|
Disability / |
|
|
|
|
Change of Control |
|
Cause |
|
Retirement |
Name |
|
Type of Benefit |
|
($) (1) |
|
($) |
|
($)
(6) |
Michael R. McMullen |
|
Cash
Severance Payments |
|
$2,520,000 |
|
$0 |
|
$0 |
|
|
Continuation of Benefits (2) |
|
$80,000 |
|
$0 |
|
$0 |
|
|
Stock Award Acceleration |
|
$5,444,140 |
|
$0 |
|
$5,444,140 |
|
|
Stock Option Acceleration (3) |
|
$2,067,854 |
|
$0 |
|
$2,067,854 |
|
|
Pension Benefits (4) |
|
$1,113,691 |
|
$1,113,691 |
|
$1,113,691 |
|
|
Excise Tax Gross-Up (5) |
|
$0 |
|
$0 |
|
$0 |
|
|
Total Termination Benefits: |
|
$11,225,685 |
|
$1,113,691 |
|
$8,625,685 |
|
Ronald S. Nersesian |
|
Cash
Severance Payments |
|
$3,600,000 |
|
$0 |
|
$0 |
|
|
Continuation of Benefits (2) |
|
$80,000 |
|
$0 |
|
$0 |
|
|
Stock Award Acceleration |
|
$6,165,820 |
|
$0 |
|
$6,165,820 |
|
|
Stock
Option Acceleration (3) |
|
$3,727,426 |
|
$0 |
|
$3,727,426 |
|
|
Pension
Benefits (4) |
|
$674,035 |
|
$674,035 |
|
$674,035 |
|
|
Excise Tax
Gross-Up (5) |
|
$0 |
|
$0 |
|
$0 |
|
|
Total Termination Benefits: |
|
$14,247,281 |
|
$674,035 |
|
$10,567,281 |
____________________
(1) |
|
To the extent that the payment of the listed
benefits triggers the excise tax under Section 4999 of the Code or any
comparable federal, state, local or foreign excise tax, Agilent will be
responsible for payment of any additional tax liability arising from the
application of such excise tax. However, in the case of all of the NEOs,
other than Mr. Sullivan, the executive shall not be entitled to receive a
gross-up payment if (i) the payment of the listed benefits may be reduced
to an amount (the Reduced Amount) sufficient to result in no portion of
such payment being subject to an excise tax, and (ii) after reducing such
payment by the Reduced Amount, the executive would receive, on a pre-tax
basis, an amount not less than 90% of the value of the unreduced payment
on a pre-taxed basis. |
|
(2) |
|
Flat lump sum benefit for healthcare
expenses, including additional health plan premium payments that may
result from termination in the event of change of control. |
|
(3) |
|
Calculated using the in-the-money value of
unvested options as of October 31, 2014, the last business day of
Agilents last completed fiscal year. The closing price of Agilent common
stock as of October 31, 2014 was $55.28. |
|
(4) |
|
For information regarding potential payments
upon termination under the 2005 Deferred Compensation Plan and the
Retirement Plan, the Supplemental Benefit Retirement Plan and the Deferred
Profit-Sharing Plan, in which our NEOs participate, see Non-Qualified
Deferred Compensation in Last Fiscal Year and Pension Benefits
above. |
|
(5) |
|
We determined the amount of the excise tax
payment in accordance with the provisions of Section 280G of the Code. We
utilized the following key assumptions to determine the tax gross-up
payment: (i) the interest rate assumption was 120% of the applicable
federal rate effective for the month of October 2014, compounded
semiannually; (ii) a statutory federal income tax rate of 39.6%, Medical
tax rate of 2.35%, California income tax rate of 13.3% for all NEOs except
Mr. McMullen who resides in the state of New Jersey which has an income
tax rate of 8.97%; (iii) Section 280G base amount was determined based
on average W-2 compensation for the period from 2009-2013; and (iv) equity
grants made within one year of transaction were in the ordinary course of
business and were not in contemplation of a transaction. |
|
(6) |
|
Under the 1999 Stock Plan, 2009 Stock Plan
and the LTP Program, if a NEO dies or is fully disabled, his or her
unvested stock options and stock awards shall fully vest. Also, when an
employee retires from Agilent, all unvested restricted stock units and/or
stock options granted on or after November 17, 2010 continue to vest per
the original terms of the grant and grants prior to November 17, 2010 have
accelerated vesting upon retirement. As of October 31, 2014, only Mr.
Sullivan and Mr. Hirsch were eligible for such continued
vesting/accelerated vesting upon retirement. |
64
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|
EXECUTIVE
COMPENSATION |
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The
members of the Compensation Committee are set forth in Board Structure and
Compensation. During the most recent fiscal year, no Agilent executive officer
served on the compensation committee (or equivalent), or the board of directors,
of another entity whose executive officer(s) served on Agilents Compensation
Committee.
COMPENSATION COMMITTEE REPORT |
The information contained in this report shall not be deemed to be
soliciting material, to be filed with the SEC, or to be subject to
Regulation 14A or Regulation 14C (other than as provided in Item 407 of
Regulation S-K) or to the liabilities of Section 18 of the Securities
Exchange Act of 1934, and shall not be deemed to be incorporated by
reference in future filings with the SEC except to the extent that Agilent
specifically incorporates it by reference into a document filed under the
Securities Act of 1933 or the Securities Exchange Act of
1934.
Agilents executive compensation program is administered by the
Compensation Committee of the Board (the Compensation Committee). The
Compensation Committee, which is composed entirely of independent,
non-employee directors, is responsible for approving and reporting to the
Board on all elements of compensation for the executive officers. In this
regard, the Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis section of this Proxy Statement
with management. Based on this review and discussion, the Compensation
Committee recommended to the Board of Directors that the Compensation
Discussion and Analysis section be included in this Proxy Statement and
incorporated by reference into Agilents 2014 Annual Report on Form
10-K. Submitted by: |
|
Compensation
Committee |
|
Koh Boon Hwee,
Chairperson |
|
George A. Scangos,
Ph.D. |
|
A. Barry
Rand |
|
Tadataka Yamada, M.D. |
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|
GENERAL INFORMATION
ABOUT THE MEETING |
Q: |
Why did I
receive a one-page notice in the mail regarding the Internet availability
of proxy materials instead of a full set of proxy
materials? |
|
|
A: |
In accordance with
rules and regulations adopted by the Securities and Exchange Commission
(the SEC), instead of mailing a printed copy of our proxy materials to
each stockholder of record, we are furnishing proxy materials, including
this Proxy Statement and our 2014 Annual Report to Stockholders, by
providing access to such documents on the Internet. Stockholders will not
receive printed copies of the proxy materials unless they request them.
Instead, commencing on or about February 4, 2015, a Notice of Internet
Availability of Proxy Materials (the Notice) was sent to most of our
stockholders which will instruct you as to how to access and review the
proxy materials on the Internet. The Notice also instructs you to submit
your proxy via the Internet. If you would like to receive a paper or email
copy of our proxy materials, please follow the instructions for requesting
such materials in the Notice. |
|
Q: |
Why am I
receiving these materials? |
|
A: |
Agilents Board of
Directors (the Board) is providing these proxy materials to you on the
Internet or, upon your request, has delivered printed versions of these
materials to you by mail, in connection with Agilents 2015 annual meeting
of stockholders, which will take place on March 18, 2015. Stockholders are
invited to attend the annual meeting and are requested to vote on the
proposals described in this Proxy Statement. |
|
Q: |
Who is
soliciting my proxy? |
|
A: |
Agilents Board of
Directors is soliciting proxies to be used at the annual meeting of
stockholders on March 18, 2015, for the purposes set forth in the
foregoing notice. |
|
Q: |
What is
included in these materials? |
|
A: |
These materials
include: |
|
|
|
● |
our Proxy Statement for Agilents annual meeting; and |
|
● |
our 2014 Annual Report to Stockholders,
which includes our audited consolidated financial
statements. |
|
If you
requested printed versions of these materials by mail, these materials
also include the proxy card for the annual meeting. |
|
|
Q: |
What
information is contained in these materials? |
|
A: |
The
information included in this Proxy Statement relates to the proposals to
be voted on at the annual meeting, the voting process, the compensation of
directors and our most highly paid officers and certain other required
information. |
|
Q: |
What
proposals will be voted on at the annual meeting? |
|
A: |
There are
five proposals scheduled to be voted on at the annual
meeting: |
|
|
● |
the election of three
directors for a 3-year term; |
|
● |
the ratification of the
Audit and Finance Committees appointment of PricewaterhouseCoopers LLP as
Agilents independent registered public accounting firm; |
|
● |
the re-approval and
amendment of the Performance-Based Compensation Plan for Covered
Employees; |
|
● |
the amendment of the
Amended and Restated Certificate of Incorporation and Bylaws to declassify
the board; and |
|
● |
an advisory vote to
approve the compensation of Agilents named executive
officers. |
Q: |
What
is the Agilent Boards voting recommendation? |
|
A: |
Agilents
Board recommends that you vote your shares FOR each of the nominees to the Board, FOR the ratification of the Audit and Finance Committees appointment
of PricewaterhouseCoopers LLP as Agilents independent registered public
accounting firm, FOR re-approval and
amendment of the Performance-Based Compensation Plan for Covered
Employees, FOR amendment of
the Amended and Restated Certificate of Incorporation and Bylaws to
declassify the board, and FOR the approval of
the compensation of Agilents named executive
officers. |
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GENERAL INFORMATION
ABOUT THE MEETING |
Q: |
What
shares owned by me can be voted? |
|
|
A: |
All shares
owned by you as of the close of business on January 20, 2015 (the Record
Date) may be voted. You may cast one vote per share of common stock that
you held on the Record Date. These include shares that are: (1) held
directly in your name as the stockholder of record, including shares
received or purchased through the Agilent Technologies, Inc. 1999 Stock
Plan and 2009 Stock Plan and the Agilent Technologies, Inc. Employee Stock
Purchase Plan, and (2) held for you as the beneficial owner through a
stockbroker, bank or other nominee or held for your account by the Agilent
Technologies, Inc. 401(k) Plan or Deferred Compensation Plans. On the
Record Date, Agilent had approximately 335,901,953 shares of common stock
issued and outstanding. |
|
Q: |
What
is the difference between holding shares as a stockholder of record and as
a beneficial owner? |
|
A: |
Most
stockholders of Agilent hold their shares through a stockbroker, bank or
other nominee rather than directly in their own name. As summarized below,
there are some differences between shares held of record and those owned
beneficially. |
|
|
Stockholder of Record |
|
|
If your
shares are registered directly in your name with Agilents transfer agent,
Computershare Investor Services, you are considered, with respect to those
shares, the stockholder of record, and the Notice, or if requested, these
proxy materials are being sent directly to you. As the stockholder of
record, you have the right to grant your voting proxy directly to the
persons named as proxy holders, William P. Sullivan, Agilents Chief
Executive Officer and Marie Oh Huber, Agilents Senior Vice President,
General Counsel and Secretary, or to vote in person at the annual meeting.
If you requested printed copies of the proxy materials, Agilent has
enclosed a proxy card for you to use. You may also vote on the Internet or
by telephone, as described below under the heading How can I vote my
shares without attending the annual
meeting? |
|
Beneficial Owner |
|
|
|
If your shares are held
in a stock brokerage account or by a bank or other nominee, you are
considered the beneficial owner of shares held in street name, and these
proxy materials are being forwarded to you by your broker or nominee who
is considered, with respect to those shares, the stockholder of record. As
the beneficial owner, you are invited to attend the annual meeting. You
also have the right to direct your broker on how to vote these shares.
Your broker or nominee should have enclosed a voting instruction card for
you to direct your broker or nominee how to vote your shares. You may also
vote by Internet or by telephone, as described below under How can I vote
my shares without attending the annual meeting? However, shares held in
street name may be voted in person by you only if you obtain a signed
proxy from the record holder (stock brokerage, bank, or other nominee)
giving you the right to vote the shares. |
|
|
Q: |
How can I vote my
shares in person at the annual meeting? |
|
|
A: |
Shares
held directly in your name as the stockholder of record may be voted in
person at the annual meeting. If you choose to vote your shares in person
at the annual meeting, please bring proof of ownership of Agilent stock on
the record date, such as the Notice of Internet Availability of Proxy
Materials, legal proxy, voting instruction card provided by your broker,
bank or nominee, or a proxy card as well as proof of identification. Even
if you plan to attend the annual meeting, Agilent recommends that you vote
your shares in advance as described below so that your vote will be
counted if you later decide not to attend the annual
meeting. |
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GENERAL INFORMATION
ABOUT THE MEETING |
Q: |
How
can I vote my shares without attending the annual
meeting? |
|
|
A: |
Whether
you hold your shares directly as the stockholder of record or beneficially
in street name, you may direct your vote without attending the annual
meeting by proxy. You can vote by proxy over the Internet or by telephone.
Please follow the instructions provided in the Notice, or, if you request
printed copies of proxy materials, on the proxy card or voting instruction
card. |
|
Q: |
Can
I revoke my proxy or change my vote? |
|
A: |
You may
revoke your proxy or change your voting instructions prior to the vote at
the annual meeting. You may enter a new vote by using the Internet or the
telephone or by mailing a new proxy card or new voting instruction card
bearing a later date (which will automatically revoke your earlier voting
instructions) or by attending the annual meeting and voting in person.
Your attendance at the annual meeting in person will not cause your
previously granted proxy to be revoked unless you specifically so
request. |
|
Q: |
How
are votes counted? |
|
A: |
In the
election of directors, your vote may be cast FOR or AGAINST one or
more of the nominees, or you may ABSTAIN from voting with respect to one
or more of the nominees. Shares voting ABSTAIN have no effect on the
election of directors. |
|
|
For
proposals 2, 3, 4 and 5 your vote may be cast FOR or, AGAINST or you
may ABSTAIN. |
|
|
If you
ABSTAIN, it has the same effect as a vote AGAINST. If you sign your
proxy card or broker voting instruction card with no further instructions,
your shares will be voted as described below in Abstentions and Broker
Non-Votes. Any undirected shares that you hold in Agilents 401(k) Plan
will be voted in proportion to the way the other 401(k) Plan stockholders
vote their 401(k) Plan shares. |
|
Abstentions and Broker
Non-Votes |
|
|
|
Any shares represented
by proxies that are marked to ABSTAIN from voting on a proposal will be
counted as present in determining whether we have a quorum. They will also
be counted in determining the total number of shares entitled to vote on a
proposal. Abstentions and, if applicable, broker non-votes will not be
counted as votes FOR or AGAINST a director nominee. Accordingly,
abstentions are not counted for the purpose of determining the number of
votes cast in the election of directors. |
|
|
|
If your shares are held
in street name and you do not instruct your broker on how to vote your
shares, your broker, in its discretion, may either leave your shares
unvoted or vote your shares on routine matters. Only Proposal 2 (ratifying
the appointment of our independent registered public accounting firm) is
considered a routine matter. In accordance with federal legislation
adopted in 2010, the SEC has approved changes to NYSE Rule 452, the broker
vote rule, that make executive compensation matters, including say-on-pay,
non-routine matters. If your broker returns a proxy card but does not vote
your shares, this results in a broker non-vote. Broker non-votes will be
counted as present for the purpose of determining a
quorum. |
|
|
|
Proposals 1 (election of
directors) 3 (re-approval and amendment of the Performance-Based
Compensation Plan for Covered Employees) 4 (approval of amendments to the
Amended and Restated Certificate of Incorporation and Bylaws to declassify
the board) and 5 (approval of the compensation of Agilents named
executive officers) are not considered routine matters, and without your
instruction, your broker cannot vote your shares. Because brokers do not
have discretionary authority to vote on these proposals, broker non-votes
will not be counted for the purpose of determining the number of votes
cast on these proposals. |
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|
GENERAL INFORMATION
ABOUT THE MEETING |
Q: |
What
is the voting requirement to approve each of the
proposals? |
|
|
A: |
Proposal 1, Election of Directors: Under our majority voting standard, in
uncontested elections of directors, such as this election, each director
must be elected by the affirmative vote of a majority of the votes cast by
the shares present in person or represented by proxy and entitled to vote.
A majority of the votes cast means that the number of votes cast FOR a
director must exceed 50% of the votes cast with respect to that director.
Abstentions and broker non-votes will not count as a vote for or
against a nominees election and thus will have no effect in determining
whether a director nominee has received a majority of the votes
cast. |
|
|
Our board
has adopted a policy under which, in uncontested elections, an incumbent
director nominee who does not receive the required votes for re-election
is expected to tender his or her resignation to our Board. The
Nominating/Corporate Governance Committee, or another duly appointed
committee of the Board, will determine whether to accept or reject the
tendered resignation generally within 90 days after certification of the
election results. Agilent will publicly disclose the committees
determination regarding the tendered resignation and the rationale behind
the decision in a Current Report on Form 8-K filed with the
SEC. |
|
|
Proposal 2, Ratification of the Independent Registered Public
Accounting Firm: The
appointment of PricewaterhouseCoopers LLP as our independent registered
public accounting firm requires the affirmative vote of a majority of
shares present at the annual meeting, in person or by proxy, and entitled
to vote on the proposal. Abstentions will have the same effect as a vote
against Proposal 2. The approval of Proposal 2 is a routine proposal on
which a broker or other nominee is generally empowered to vote in the
absence of voting instructions from the beneficial owner, so broker
non-votes are unlikely to result from this
proposal. |
|
Proposal 3, Re-approval and amendment of the Performance-Based
Compensation Plan for Covered Employees: The vote regarding re-approval and
amendment of the Performance-Based Compensation Plan for Covered Employees
requires the affirmative vote of a majority of shares present at the
annual meeting, in person or by proxy, and entitled to vote on the
proposal. Abstentions will have the same effect as votes against this
proposal. Broker non-votes will have no effect on this proposal as brokers
are not entitled to vote on such proposal in the absence of voting
instructions from the beneficial owner. |
|
|
|
Proposal 4, Approval of amendments to the Amended and Restated
Certificate of Incorporation and Bylaws to declassify the
Board: The vote
regarding amendment of the Amended and Restated Certificate of
Incorporation and Bylaws to declassify the board requires the affirmative
vote of eighty percent (80%) of the outstanding voting stock. Abstentions
will have the same effect as votes against this proposal. Broker non-votes
will have no effect on this proposal as brokers are not entitled to vote
on such proposal in the absence of voting instructions from the beneficial
owner. |
|
|
Proposal 5, Approval of the Compensation of Agilents Named
Executive Officers: The
advisory vote regarding approval of the compensation of Agilents named
executive officers requires the affirmative vote of a majority of shares
present at the annual meeting, in person or by proxy, and entitled to vote
on the proposal. Abstentions will have the same effect as votes against
this proposal. Broker non-votes will have no effect on this proposal as
brokers are not entitled to vote on such proposal in the absence of voting
instructions from the beneficial owner. |
|
Q: |
What
does it mean if I receive more than one Notice, proxy or voting
instruction card? |
|
A: |
It means
your shares are registered differently or are in more than one account.
For each Notice you receive, please enter your vote on the Internet for
each control number you have been assigned. If you receive paper copies of
proxy materials, please provide voting instructions for all proxy and
voting instruction cards you receive. |
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|
GENERAL INFORMATION
ABOUT THE MEETING |
Q: |
Where can I find the voting results of the annual
meeting? |
|
|
A: |
Agilent
will announce preliminary voting results at the annual meeting and publish
preliminary, or final results if available, in a Current Report on Form
8-K within four business days of the annual meeting. |
|
Q: |
What
happens if additional proposals are presented at the annual
meeting? |
|
A: |
Other than
the five proposals described in this Proxy Statement, Agilent does not
expect any matters to be presented for a vote at the annual meeting. If
you grant a proxy, the persons named as proxy holders, William P.
Sullivan, Agilents Chief Executive Officer, and Marie Oh Huber, Agilents
Senior Vice President, General Counsel and Secretary, will have the
discretion to vote your shares on any additional matters properly
presented for a vote at the annual meeting. If for any unforeseen reason,
any one or more of Agilents nominees is not available as a candidate for
director, the persons named as proxy holders will vote your proxy for such
other candidate or candidates as may be nominated by the
Board. |
|
Q: |
What
is the quorum requirement for the annual meeting? |
|
A: |
The quorum
requirement for holding the annual meeting and transacting business is a
majority of the outstanding shares entitled to be voted. The shares may be
present in person or represented by proxy at the annual meeting. Both
abstentions and broker non-votes are counted as present for the purpose of
determining the presence of a quorum. Broker non-votes, however, are not
counted as shares present and entitled to be voted with respect to the
matter on which the broker has expressly not voted. Thus, broker non-votes
will not affect the outcome of any of the matters being voted on at the
annual meeting. Generally, broker non-votes occur when shares held by a
broker for a beneficial owner are not voted with respect to a particular
proposal because (1) the broker has not received voting instructions from
the beneficial owner and (2) the broker lacks discretionary voting power
to vote such shares. |
Q: |
Who
will count the vote? |
|
|
A: |
A
representative of Computershare Investor Services will tabulate the votes
and act as the inspector of election. |
|
Q: |
Is
my vote confidential? |
|
A: |
Proxy
instructions, ballots and voting tabulations that identify individual
stockholders are handled in a manner that protects your voting privacy.
Your vote will not be disclosed either within Agilent or to third parties
except (1) as necessary to meet applicable legal requirements, (2) to
allow for the tabulation of votes and certification of the vote and (3) to
facilitate a successful proxy solicitation by the Board. Occasionally,
stockholders provide written comments on their proxy card, which are then
forwarded to Agilents management. |
|
Q: |
Who
will bear the cost of soliciting votes for the annual
meeting? |
|
A: |
Agilent
will pay the entire cost of preparing, assembling, printing, mailing and
distributing these proxy materials. Agilent has retained the services of
Georgeson, Inc. (Georgeson) to aid in the solicitation of proxies from
banks, brokers, nominees and intermediaries. Agilent estimates that it
will pay Georgeson a fee of $13,000 for its services. In addition to the
mailing of these proxy materials, the solicitation of proxies or votes may
be made in person, by telephone or by electronic communication by
Agilents directors, officers and employees, who will not receive any
additional compensation for such solicitation activities. In addition,
Agilent may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
material to such beneficial owners. |
|
Q: |
May
I propose actions for consideration at next years annual meeting of
stockholders or nominate individuals to serve as
directors? |
|
A: |
You may
submit proposals for consideration at future annual stockholder meetings,
including director nominations. |
|
|
Stockholder Proposals: In order for a stockholder proposal to be considered for inclusion
in Agilents proxy statement for next years annual meeting, the written
proposal must be received by Agilent no later than October 7, 2015 and
should contain such information as is required under Agilents Bylaws.
Such proposals will need to comply with the SECs regulations regarding
the inclusion of stockholder proposals in Agilent sponsored proxy
materials. In order for a stockholder proposal to be raised from the floor
during next years annual meeting, written notice must be received by
Agilent no later than October 7, 2015 and should contain such information
as required under Agilents Bylaws. |
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|
GENERAL INFORMATION
ABOUT THE MEETING |
|
Nomination of Director Candidates: Agilents
Bylaws permit stockholders to nominate directors at a stockholder meeting.
In order to make a director nomination at an annual stockholder meeting,
it is necessary that you notify Agilent not less than 120 days before the
first anniversary of the date that the proxy statement for the preceding
years annual meeting was first sent to stockholders. Agilents 2015 Proxy
Statement was first sent to stockholders on February 4, 2015. Thus, in
order for any such nomination notice to be timely for next years annual
meeting, it must be received by Agilent not later than October 7, 2015. In
addition, the notice must meet all other requirements contained in
Agilents Bylaws and include any other information required pursuant to
Regulation 14A under the Exchange Act. |
|
|
Copy of
Bylaw Provisions: You may
contact the Agilent Corporate Secretary at Agilents corporate
headquarters for a copy of the relevant Bylaw provisions regarding the
requirements for making stockholder proposals and nominating director
candidates. Additionally, a copy of Agilents Bylaws can be accessed on
the Agilent Investor Relations Web site at
http://www.investor.agilent.com. Click Corporate Governance and then
Governance Policies on the left hand side of the screen. |
Q: |
How
do I obtain a separate set of proxy materials if I share an address with
other stockholders? |
|
|
A: |
To reduce
expenses, in some cases, we are delivering one set of the proxy materials
or, where applicable, one Notice to certain stockholders who share an
address, unless otherwise requested by one or more of the stockholders.
For stockholders receiving hard copies of the proxy materials, a separate
proxy card is included with the proxy materials for each stockholder. For
stockholders receiving a Notice, the Notice will instruct you as to how
you may access and review all of the proxy materials on the Internet. The
Notice also instructs you as to how you may submit your proxy on the
Internet. If you have only received one set of the proxy materials or one
Notice, you may request separate copies at no additional cost to you by
calling us at (408) 553-2424 or by writing to us at Agilent Technologies,
Inc., 5301 Stevens Creek Blvd., Santa Clara, California 95051, Attn:
Shareholder Records. If you received a Notice and you would like to
receive a paper or email copy of our proxy materials, you should follow
the instructions for requesting such materials in the
Notice. |
|
|
|
You may
also request separate paper proxy materials or a separate Notice for
future annual meetings by following the instructions for requesting such
materials in the Notice, or by contacting us by calling or
writing. |
|
Q: |
If I
share an address with other stockholders of Agilent, how can we get only
one set of voting materials for future meetings? |
|
A: |
You may
request that we send you and the other stockholders who share an address
with you only one Notice or one set of proxy materials by calling us at
(408) 553-2424 or by writing to us at: Agilent Technologies, Inc., 5301
Stevens Creek Blvd., Santa Clara, California 95051, Attn: Shareholder
Records. |
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|
GENERAL INFORMATION
ABOUT THE MEETING |
You
may receive a copy of Agilents Annual Report on Form 10-K for the fiscal year
ended October 31, 2014 without charge by sending a written request to Agilent
Technologies, Inc., 5301 Stevens Creek Blvd., Santa Clara, California 95051,
Attn: Investor Relations.
By Order of the Board,
MARIE OH
HUBER
Senior Vice President, General Counsel
and
Secretary
Dated: February 6, 2015
72
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|
GENERAL INFORMATION
ABOUT THE MEETING |
|
|
© |
Agilent Technologies,
Inc. 2015 |
|
Printed in U.S.A.
February, 2015 |
|
|
|
Printed on recycled
paper with 30% post-consumer waste |
DIRECTIONS TO AGILENTS
HEADQUARTERS
From the South (San
Jose)
Take Highway 280 North towards
San Francisco. Take the Stevens Creek/Lawrence Expressway exit and turn left
onto Stevens Creek Blvd. for approximately 0.1 miles and then turn right into
Agilents parking lot at the second stop light.
From the North (San
Francisco)
Take Highway 280 South towards
San Jose. Take the Stevens Creek Blvd/Lawrence Expressway exit. Turn left on
Stevens Creek Blvd. for approximately 0.2 miles and turn left into Agilents
parking lot at the first stop light.
Parking
Parking will be designated as
you enter the parking lot.
Admission to the annual meeting will be limited to stockholders. You are
entitled to attend the annual meeting only if you are a stockholder of record as
of the close of business on January 20, 2015, the record date, or hold a valid
proxy for the meeting. In order to be admitted to the annual meeting, you must
present proof of ownership of Agilent stock on the record date. This can be a
brokerage statement or letter from a bank or broker indicating ownership on
January 20, 2015, the Notice of Internet Availability of Proxy Materials, a
proxy card, or legal proxy or voting instruction card provided by your broker,
bank or nominee. Any holder of a proxy from a stockholder must present the proxy
card, properly executed, and a copy of the proof of ownership. Stockholders and
proxyholders may also be asked to present a form of photo identification such as
a drivers license or passport. Backpacks, cameras, cell phones with cameras,
recording equipment and other electronic recording devices will not be permitted
at the annual meeting. Agilent reserves the right to inspect any persons or
items prior to their admission to the annual meeting. Failure to follow the
meeting rules or permit inspection will be grounds for exclusion from the annual
meeting.
Table of Contents
|
ANNEXES |
Annex A
AGILENT
TECHNOLOGIES, INC.
2010
PERFORMANCE-BASED COMPENSATION PLAN
FOR COVERED EMPLOYEES
(As Adopted on
November198,
201409)
1. PURPOSE
The
purpose of the Agilent Technologies, Inc. Performance-Based Compensation Plan
for Covered Employees (as amended from time to time, the Plan) is to reward
and recognize eligible employees for their contributions towards the achievement
by Agilent Technologies, Inc. (the Company) of certain Performance Goals (as
defined below). The Plan is designed with the intention that the incentives paid
hereunder to certain executive officers of the Company are deductible under
Section 162(m) of the Internal Revenue Code of 1986, as amended, and the
regulations and interpretations promulgated thereunder (the Code). However,
the Company can not guarantee that awards under the Plan will qualify for
exemption under Code Section 162(m) and circumstances may present themselves
under which awards under the Plan do not comply with Code Section 162(m). The
adoption of the Plan is subject to the approval of the Companys
shareholders.
2. DEFINITIONS
The following definitions shall be
applicable throughout the Plan:
(a) Affiliate shall mean (i) any entity
that, directly or indirectly, is controlled by the Company and (ii) any entity
in which the Company has a significant equity interest, in either case, as
determined by the Committee.
(b) Award means the amount of a cash
incentive payable under the Plan to a Participant with respect to a Performance
Period.
(c) Board means the Board of Directors
of the Company, as constituted from time to time.
(d) Committee means the Compensation
Committee of the Board or another Committee designated by the Board which is
comprised of two or more outside directors as defined in Code Section 162(m).
(e) Participant means any employee of
the Company or its Affiliates who is designated as a Participant (either by name
or by position) by the Committee.
(f) Performance Goal means an objective
formula or standard determined by the Committee with respect to each Performance
Period based on one or more of the following criteria and any objectively
verifiable adjustment(s) thereto permitted and pre-established by the Committee
in accordance with Code Section 162(m): (i) pre-tax income or after-tax income;
(ii) income or earnings including operating income, earnings before or after
taxes, interest, depreciation and/or amortization; (iii) net income excluding
amortization of intangible assets, depreciation and impairment of goodwill and
intangible assets and/or excluding charges attributable to the adoption of new
accounting pronouncements; (iv) earnings or book value per share (basic or
diluted); (v) return on assets (gross or net), return on investment, return on
invested capital, or return on equity; (vi) return on revenues; (vii) cash flow,
free cash flow, cash flow return on investment (discounted or otherwise), net
cash provided by operations, or cash flow in excess of cost of capital; (viii)
economic value created; (ix) operating margin or profit margin; (x) stock price
or total stockholder return; (xi) income or earnings from continuing operations;
(xii) capital expenditures, cost targets, reductions and savings and expense
management; and (xiii) strategic business criteria, consisting of one or more
objectives based on meeting specified market penetration or market share,
geographic business expansion, objective customer satisfaction or information
technology goals, and objective goals relating to divestitures, joint ventures,
mergers, acquisitions and similar transactions, each with respect to the Company
and/or one or more of its Affiliates or operating units.
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(g)
Performance Period means any period not exceeding 36 months as determined by
the Committee, in its sole discretion. The Committee may establish different
Performance Periods for different Participants, and the Committee may establish
concurrent or overlapping Performance Periods.
3. ADMINISTRATION
The Plan shall be administered by the
Committee, which shall have the discretionary authority to interpret the
provisions of the Plan, including all decisions on eligibility to participate,
the establishment of Performance Goals, the amount of Awards payable under the
Plan, and the payment of Awards. The Committee shall also have the discretionary
authority to establish rules under the Plan so long as such rules do not
explicitly conflict with the terms of the Plan and any such rules shall
constitute part of the Plan. The decisions of the Committee shall be final and
binding on all parties making claims under the Plan.
4. ELIGIBILITY
Employees of the Company shall be
eligible to participate in the Plan as determined at the sole discretion of the
Committee.
5. AMOUNT OF AWARDS
(a) With respect to each Participant, the
Committee will establish one or more Performance Periods, an individual
Participant incentive target for each Performance Period and the Performance
Goal(s) to be met during such Performance Period(s). In order to qualify as
performance-based compensation, the establishment of the Performance Period(s),
the applicable Performance Goals and the targets must occur in compliance with
and to the extent required by the rules and regulations of Code Section 162(m).
(b) The maximum amount of any Awards that
can be paid under the Plan to any Participant with respect to any 12-month
performance cycle is $10,000,000.
(c) The Committee reserves the right, in
its sole discretion, to reduce or eliminate the amount of an Award otherwise
payable to a Participant with respect to any Performance Period. The reduction
of an Award otherwise payable to a Participant with respect to a Performance
Period shall have no effect on the Award payable to any other Participant for
such Performance Period.
6. PAYMENT OF AWARDS
Any distribution made under the Plan
shall be made in cash and/or stock
awards (as defined in the Companys 2009 Stock Plan, as amended) and occur within a reasonable period of time after the
end of the Performance Period in
which the Participant has earned the Award; provided that no Award shall become payable to a Participant with respect to any
Performance Period until the Committee has certified in writing that the terms
and conditions underlying the payment of such Award have been satisfied.
Notwithstanding the foregoing, in order to comply with the short-term deferral
exception under Section 409A of the Code, payment shall occur no later than the
15th day of the third month following the end of the Companys
taxable year in which the payment was earned.
7. CHANGES IN STATUS
(a) Except as may be otherwise determined
by the Committee in its sole discretion, the payment of an Award with respect to
all or a portion of a specific Performance Period, as applicable, requires that
the employee be on the Companys payroll in active service as of the end of such
Performance Period unless the Participant is not in active service on the last
day of the Performance Period due to retirement, workforce management, total and
permanent disability or death, in which case the Participant will be eligible to
receive a prorated Award for days worked with respect to the Performance Period
to the extent that the relevant Performance Goals have been met. A Participant
who becomes ineligible for this Plan after the start of the Performance Period
is eligible to receive a prorated Award for days worked, except as provided in
Section 7(b).
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(b) A
Participant will forfeit any Award for a Performance Period during which a
Participant is involuntarily terminated for cause or voluntarily terminates his
employment with the Company for reasons other than death, total and permanent
disability, workforce management or retirement, at the age and service-year
level set by the Company or the local law requirements where the Participant is
employed.
8. RECOUPMENT
Any Award paid under the Plan is subject
to the terms of the Agilent Technologies Executive Compensation Recoupment
Policy, or any successor policy thereto, in the form approved by the Committee
as the date of grant (the Policy), if and to the extent that the Policy by its
terms applies to the Award and the Participant.
9. GENERAL
(a) TAX WITHHOLDING. The Company shall
have the right to deduct from all Awards any federal, state or local income
and/or payroll taxes required by law to be withheld with respect to such
payments. The Company also may withhold from any other amount payable by the
Company or any affiliate to the Participant an amount equal to the taxes
required to be withheld from any Award.
(b) CLAIM TO AWARDS AND EMPLOYMENT
RIGHTS. Nothing in the Plan shall confer on any Participant the right to
continued employment with the Company or any of its affiliates, or affect in any
way the right of the Company or any affiliate to terminate the Participants
employment at any time, and for any reason, or change the Participants
responsibilities. Awards represent unfunded and unsecured obligations of the
Company and a holder of any right hereunder in respect of any Award shall have
no rights other than those of a general unsecured creditor to the Company.
(c) BENEFICIARIES. To the extent the
Committee permits beneficiary designations, any payment of Awards under the Plan
to a deceased Participant shall be paid to the beneficiary duly designated by
the Participant in accordance with the Companys practices. If no such
beneficiary has been designated or survives the Participant, payment shall be
made to the Participants legal representative. A beneficiary designation may be
changed or revoked by a Participant at any time, provided the change or
revocation is filed with the Committee prior to the Participants death.
(d) NONTRANSFERABILITY. A persons rights
and interests under the Plan, including any Award previously made to such person
or any amounts payable under the Plan, may not be sold, assigned, pledged,
transferred or otherwise alienated or hypothecated except, in the event of a
Participants death, to a designated beneficiary as provided in the Plan, or in
the absence of such designation, by will or the laws of descent and
distribution.
(e) INDEMNIFICATION. Each person who is
or shall have been a member of the Committee and each employee of the Company or
an affiliate who is delegated a duty under the Plan shall be indemnified and
held harmless by the Company from and against any loss, cost, liability or
expense that may be imposed upon or reasonably incurred by him in connection
with or resulting from any claim, action, suit or proceeding to which he may be
a party or in which he may be involved by reason of any action or failure to act
under the Plan and against and from any and all amounts paid by him in
satisfaction of judgment in any such action, suit or proceeding against him,
provided such loss, cost, liability or expense is not attributable to such
persons willful misconduct. Any person seeking indemnification under this
provision shall give the Company prompt notice of any claim and shall give the
Company an opportunity, at its own expense, to handle and defend the same before
the person undertakes to handle and defend such claim on his or her own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled, including under
the Companys Articles of Incorporation or By-Laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
(f) EXPENSES. The expenses of
administering the Plan shall be borne by the Company.
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(g)
TITLES AND HEADINGS. The titles and headings of the sections in the Plan are for
convenience of reference only, and in the event of any conflict, the text of the
Plan, rather than such titles or headings, shall control.
(h) INTENT. The intention of the Company
and the Committee is to administer the Plan in compliance with Code Section
162(m) so that the Awards paid under the Plan to Participants who are or may
become subject to Code Section 162(m) will be treated as performance-based
compensation under Code Section 162(m)(4)(C). If any provision of the Plan does
not comply with the requirements of Code Section 162(m), then such provision
shall be construed or deemed amended to the extent necessary to conform to such
requirements.
(i) GOVERNING LAW. The validity,
construction, and effect of the Plan, any rules and regulations relating to the
Plan, and any Award shall be determined in accordance with the laws of the State
of California (without giving effect to principles of conflicts of laws thereof)
and applicable federal law. No Award made under the Plan shall be intended to be
deferred compensation under Code Section 409A and will be interpreted
accordingly.
(j) AMENDMENTS AND TERMINATION. The
Committee may terminate the Plan at any time, provided such termination shall
not affect the payment of any Awards accrued under the Plan prior to the date of
the termination. The Committee may, at any time, or from time to time, amend or
suspend and, if suspended, reinstate, the Plan in whole or in part; provided,
however, that any amendment of the Plan shall be subject to the approval of the
Companys shareholders to the extent required to comply with the requirements of
Code Section 162(m), or any other applicable laws, regulations or
rules.
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Annex B
PROPOSED AMENDMENTS
TO
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
AGILENT TECHNOLOGIES, INC.
(Additions are underlined,
deletions are struck-out)
Article VII of the Amended and
Restated Certificate of Incorporation shall be amended and restated to read as
follows:
ARTICLE VII
For
the management of the business and for the conduct of affairs of the
Corporation, and in further definition, limitation and regulation of powers of
the Corporation, of its directors and of its stockholder or any class thereof,
as the case may be, it is further provided that:
A. The management of the business and the
conduct of the affairs of the Corporation shall be vested in its Board of
Directors. The number of directors of this Corporation shall be fixed and may be
changed from time to time by resolution of the Board of Directors.
B. Until the election of directors at the 2018 annual meeting of
stockholders, tThe Directors, other
than those who may be elected by the holders of any class or series of stock
having a preference over the Common Stock as to dividends or upon liquidation,
shall be classified, with respect to the time for which they severally hold
office, into three classes, as nearly equal in number as possible, one class to
be originally elected for a term expiring at the annual meeting of stockholders
to be held in 2000, another class to be originally elected for a term expiring
at the annual meeting of stockholders to be held in 2001, and another class to
be originally elected for a term expiring at the annual meeting of stockholders
to be held in 2002, with each class to hold office until its successor is duly
elected and qualified. At each succeeding annual meeting of stockholders
prior to the 2016 annual meeting
of stockholders, directors
elected to succeed those directors whose terms then expire shall be elected for
a term of office to expire at the third succeeding annual meeting of
stockholders after their election., with each
director to hold office until such persons successor shall have been elected and qualified. Commencing at
the 2016 annual meeting of stockholders, directors, other than those who may be elected by
the holders of any class or series of stock having a preference over
the Common Stock as to
dividends or upon liquidation, shall be elected to hold office for a term
expiring at the next annual
meeting of stockholders following their election and until their successors are
duly elected and qualified. Accordingly, at the 2016 annual meeting of
stockholders, directors in the class whose terms expire at that meeting
shall be elected to hold
office for a term expiring at the 2017 annual meeting of stockholders and until
their successors are duly
elected and qualified; at the 2017 annual meeting of stockholders, directors in
the class whose terms expire
at that meeting shall be elected to hold office for a term expiring at the 2018
annual meeting of stockholders
and until their successors are duly elected and qualified; and at the 2018
annual meeting of stockholders and at each annual meeting of stockholders thereafter, all directors
shall be elected to hold office for a term expiring at the next annual meeting of stockholders
following their election and until their successors are duly elected and
qualified. All directors,
subject to such director's earlier death, resignation, retirement,
disqualification or removal
from office, shall hold office
until the expiration of the term for which he or she was elected, and until his
or her successor is duly
elected and qualified. From and after the election of directors at the 2018
annual meeting of stockholders, any director or the entire board of directors may be
removed from office for cause or without cause by the holders of a majority of the shares then
entitled to vote at an election of directors.
C. Notwithstanding the foregoing
provisions of this Article VII, each director shall serve until his or her
successor is duly elected and qualified or until his or her death, resignation
or removal. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
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D.
Any vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal, or other causes unless the Board of Directors
determines by resolution that any such vacancies or newly created directorships
shall be filled by stockholders, except as otherwise provided by law, shall be
filled only by the affirmative vote of a majority of the remaining directors
then in office, even though less than a quorum of the Board of Directors and not
by the stockholders.
E. In furtherance and not in limitation
of the powers conferred by the laws of the State of Delaware, the Board of
Directors is expressly authorized to make, alter, amend or repeal the Bylaws of
the Corporation.
F. The directors of the Corporation need
not be elected by written ballot unless the Bylaws of the Corporation so
provide.
G. Advance notice of stockholder
nomination for the election of directors and of any other business to be brought
by stockholders before any meeting of the stockholders of the Corporation shall
be given in the manner provided in the Bylaws of the Corporation.
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Annex C
PROPOSED AMENDMENTS
TO
AMENDED AND RESTATED BYLAWS
OF AGILENT TECHNOLOGIES,
INC.
(Additions are underlined, deletions are
struck-out)
Sections 3.3, 3.4 and 3.5 of
Article III of the Amended and Restated Bylaws shall be amended and restated as
follows:
3.3 Election and Term of Office of
Directors. Except as provided
in the Certificate of Incorporation or Section 3.4 of these Bylaws,
until the election of directors at
the 2018 annual meeting of stockholders, directors shall be
classified, with respect to the time for which they severally hold office, into
three classes, as nearly equal in number as possible, one class to be originally
elected for a term expiring at the annual meeting of stockholders to be held in
2000, another class to be originally elected for a term expiring at the annual
meeting of stockholders to be held in 2001, and another class to be originally
elected for a term expiring at the annual meeting of stockholders to be held in
2002, with each class to hold office until its successor is duly elected and
qualified. At each succeeding annual meeting of stockholders prior to the 2016 annual meeting of
stockholders, directors elected
to succeed those directors whose terms then expire shall be elected for a term
of office to expire at the third succeeding annual meeting of stockholders after
their election, with each director to hold office until such persons successor
shall have been elected and qualified or until such persons earlier resignation
or removal. Each director, including a director elected or appointed to fill a
vacancy, shall hold office until his successor is elected and qualified or until
his earlier resignation or removal. Commencing at the 2016 annual meeting of stockholders, directors, other
than those who may be elected by the holders of any class or
series of stock having a preference over the Common Stock as to dividends or upon liquidation, shall be elected to hold office for a term
expiring at the next annual meeting of stockholders following their election and until
their successors are duly elected and qualified. Accordingly, at the
2016 annual meeting of
stockholders, directors in the class whose terms expire at that meeting shall be
elected to hold office for a
term expiring at the 2017 annual meeting of stockholders and until their
successors are duly elected and qualified; at the 2017 annual meeting of stockholders, directors in the
class whose terms expire at that meeting shall be elected to hold office for a term expiring at
the 2018 annual meeting of stockholders and until their successors are
duly elected and qualified;
and at the 2018 annual meeting of stockholders and at each annual meeting of
stockholders thereafter, all
directors shall be elected to hold office for a term expiring at the next annual
meeting of stockholders
following their election and until their successors are duly elected and
qualified. All directors, subject to such director's earlier
death, resignation, retirement, disqualification or removal from office, shall
hold office until the
expiration of the term for which he or she was elected, and until his or her
successor is duly elected and qualified.
Except as provided in Section 3.4 of these Bylaws, each director shall be
elected by the vote of a majority of the votes cast with respect to the director
at any meeting for the election of directors at which a quorum is present,
provided that if the number of nominees exceeds the number of directors to be
elected, the directors shall be elected by the vote of a plurality of the shares
represented in person or by proxy at any such meeting and entitled to vote on
the election of directors. For purposes of this paragraph, a majority of the
votes cast means that the number of shares voted for a director must exceed
50% of the votes cast with respect to that director. The votes cast shall
include votes to withhold authority in each case and exclude abstentions with
respect to that directors election. If an incumbent director is not elected due
to a failure to receive a majority of the votes cast as described above and his
or her successor is not otherwise elected and qualified, the director shall
offer to tender his or her resignation to the Board of Directors promptly
following the certification of the stockholder vote. The Nominating/Corporate
Governance Committee will consider
the offer to resign and make a recommendation to the Board of Directors on
whether to accept or reject the resignation, or whether other action should be
taken. The Board of Directors will act on the Committees recommendation and
publicly disclose its decision and the rationale behind it within 90 days from
the date of the certification of the election results. Any director who tenders
his or her offer to resign shall not participate in either the
Nominating/Corporate Governance Committees or Board of Directors consideration
or other actions regarding whether to accept the resignation offer. However, if
each member of the Nominating/Corporate
Governance Committee failed to receive a majority of the votes cast at the same
election, then the independent directors who did receive a majority of the votes
cast shall appoint a committee amongst themselves to consider the resignation
offers and recommend to the Board of Directors whether to accept them. However,
if the only directors who received a majority of the votes cast in the same
election constitute three or fewer directors, all directors may participate in
the action regarding whether to accept the resignation offers.
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If an
incumbent director offers to resign pursuant to the foregoing paragraph and the
resignation offer is not accepted by the Board of Directors, such director shall
continue to serve until the next annual meeting and until his or her successor
is duly elected, or his or her earlier resignation or removal. If a directors
resignation is accepted by the Board of Directors, or if a nominee for director
is not elected and the nominee is not an incumbent director, then the Board of
Directors, in its sole discretion, may fill any resulting vacancy pursuant to
the provisions of Section 3.4 hereof or may decrease the size of the Board of
Directors pursuant to the provisions of Section 3.2 hereof.
Except as otherwise provided in the
foregoing two paragraphs, each director, including a director elected or
appointed to fill a vacancy, shall hold office until his successor is elected
and qualified or until his earlier resignation or removal.
Directors need not be stockholders unless
so required by the Certificate of Incorporation or by these Bylaws; wherein
other qualifications for directors may be prescribed. Election of directors need
not be by written ballot unless so required by the Certificate of Incorporation
or by these Bylaws; wherein other qualifications for directors may be
prescribed.
3.4 Resignation and Vacancies. Any director may resign effective on giving
written notice to the chairman of the board, the chief executive officer, the
secretary or the board of directors, unless the notice specifies a later time
for that resignation to become effective. If the resignation of a director is
effective at a future time, the board of directors may elect a successor to take
office when the resignation becomes effective.
Unless otherwise provided in the
Certificate of Incorporation or these Bylaws:
|
(i) |
Vacancies
and newly created directorships resulting from any increase in the
authorized number of directors elected by all of the stockholders having
the right to vote as a single class may be filled by a majority of the
directors then in office, even if less than a quorum, or by a sole
remaining director. Each director so elected shall hold office for the
remainder of the full term of the class of directors in which the new
directorship was created or the vacancy occurred and until a successor has
been elected and qualified. |
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(ii) |
Whenever
the holders of any class or classes of stock or series thereof are
entitled to elect one or more directors by the provisions of the
Certificate of Incorporation, vacancies and newly created directorships of
such class or classes or series may be filled by a majority of the
directors elected by such class or classes or series thereof then in
office, or by a sole remaining director so
elected. |
If at any time, by reason of death or
resignation or other cause, the corporation should have no directors in office,
then any officer or any stockholder or an executor, administrator, trustee or
guardian of a stockholder, or other fiduciary entrusted with like responsibility
for the person or estate of a stockholder, may call a special meeting of
stockholders solely for the purpose of electing directors in accordance with the
provisions of the Certificate of Incorporation or these Bylaws, or may apply to
the Court of Chancery for a decree summarily ordering an election as provided in
Section 211 of the General Corporation Law of Delaware.
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If,
at the time of filling any vacancy or any newly created directorship, the
directors then in office constitute less than a majority of the whole board (as
constituted immediately prior to any such increase), then the Court of Chancery
may, upon application of any stockholder or stockholders holding at least ten
percent (10%) of the total number of the then outstanding shares having the
right to vote for such directors, summarily order an election to be held to fill
any such vacancies or newly created directorships, or to replace the directors
chosen by the directors then in office as aforesaid, which election shall be
governed by the provisions of Section 211 of the General Corporation Law of
Delaware as far as applicable.
3.5 Removal. Unless otherwise restricted by statute, by the
Certificate of Incorporation or by these Bylaws, prior to the election of directors at the 2018
annual meeting of stockholders, any director or the entire board of directors may be removed from office
only for cause by the holders of a majority of the shares then entitled to vote
at an election of directors. From
and after the election of directors at the 2018 annual meeting of stockholders,
any director or the entire
board of directors may be removed from office for cause or without cause by the
holders of a majority of the shares then entitled to vote at an
election of directors.
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Electronic Voting
Instructions
Available 24
hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the voting methods
outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the
Internet or telephone must be received by 1:00 a.m., Central Time, on March 18,
2015.
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Vote by Internet |
●Go to www.envisionreports.com/agilent
●Or scan the QR code with your
smartphone
●Follow the steps outlined on the secure
website |
|
Vote by
telephone |
●Call toll free 1-800-652-VOTE (8683) within
the USA, US territories & Canada on a touch tone
telephone
●Follow the instructions provided by the
recorded message |
Annual Meeting Proxy
Card |
|
▼ |
IF YOU HAVE NOT VOTED VIA THE
INTERNET OR TELEPHONE,
FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE
ENCLOSED ENVELOPE. |
▼ |
A |
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Proposals The Board
recommends a vote FOR all nominees and FOR Proposals 2, 3, 4,
and 5. |
1. |
Election of Directors: To elect
three directors to a 3-year term. At the annual meeting, the Board of
Directors intends to present the following nominees for election as
directors: |
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For |
Against |
Abstain |
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For |
Against |
Abstain |
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For |
Against |
Abstain |
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01 - Robert J.
Herbold |
☐ |
☐ |
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02 - Koh Boon Hwee |
☐ |
☐ |
☐ |
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03 -
Michael R. McMullen |
☐ |
☐ |
☐ |
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For |
Against |
Abstain |
2. |
To ratify the Audit and Finance Committees appointment of
PricewaterhouseCoopers LLP as Agilents independent registered public
accounting firm. |
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☐ |
☐ |
☐ |
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4. |
To approve amendments to our Amended and Restated Certificate of
Incorporation and Bylaws to declassify the Board. |
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☐ |
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6. |
To consider such other business as may properly come before the
annual meeting. |
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For |
Against |
Abstain |
3. |
To re-approve and amend the Performance-Based Compensation Plan for
Covered Employees. |
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☐ |
☐ |
☐ |
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5. |
To approve, on a non-binding advisory basis, the compensation of
Agilents named executive officers. |
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☐ |
☐ |
☐ |
Change of Address
Please print your new address below. |
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Comments Please print
your comments below. |
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Meeting
Attendance
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Mark the
box to the right if you plan to attend the Annual
Meeting. |
☐ |
C |
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Authorized Signatures
This section must be completed for your vote to be counted. Date and
Sign Below |
Please sign exactly as
name(s) appears hereon. Joint owners should each sign. When signing as attorney,
executor, administrator, corporate officer, trustee, guardian, or custodian,
please give full title.
Date
(mm/dd/yyyy) Please print date below. |
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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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▼ |
IF YOU HAVE NOT VOTED VIA THE
INTERNET OR TELEPHONE,
FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE
ENCLOSED ENVELOPE. |
▼ |
Proxy AGILENT TECHNOLOGIES,
INC. |
Annual Meeting of
StockholdersMarch 18, 2015
This Proxy is solicited on behalf
of the Board of Directors.
The undersigned hereby
appoints William P. Sullivan and Marie Oh Huber, and each of them, as proxies
for the undersigned, with full power of substitution, to act and to vote all the
shares of Common Stock of Agilent Technologies, Inc. held of record by the
undersigned on January 20, 2015, at the Annual Meeting of Stockholders to be
held on Wednesday, March 18, 2015, or any postponement or adjournment
thereof.
IMPORTANTThis Proxy must be
signed and dated on the reverse side.
THIS PROXY, WHEN PROPERLY
EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2,
3, 4 AND 5.
In their discretion, the
Proxies are authorized to vote upon such other business as may properly come
before the Annual Meeting.
THIS PROXY CARD IS VALID
ONLY WHEN SIGNED AND DATED
If you vote by telephone or
the Internet, please DO NOT mail back this proxy card.
(Continued and to be voted on
reverse side.)
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