DEF 14A 1 d269639ddef14a.htm DEF 14A DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.      )

 

 

Filed by the Registrant x   Filed by a Party other than the Registrant ¨

 

Check the appropriate box:

 

¨  Preliminary Proxy Statement

 

¨  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

x  Definitive Proxy Statement

 

¨  Definitive Additional Materials

 

¨  Soliciting Material Pursuant to §240.14a-12

 

 

 

CHIQUITA BRANDS INTERNATIONAL

(Name of Registrant as Specified In Its Charter)

 

 

 

  


(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

 

Payment of Filing Fee (Check the appropriate box):

 

x  No fee required.

 

¨  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

 

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¨  Fee paid previously with preliminary materials.

 

¨  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

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CHIQUITA BRANDS INTERNATIONAL, INC.

Chiquita Center

250 East Fifth Street

Cincinnati, Ohio 45202

 

 

ANNUAL MEETING OF SHAREHOLDERS

To Be Held May 22, 2012

 

 

Dear Shareholder:

It is my pleasure to invite you to attend the 2012 Annual Meeting of Shareholders of Chiquita Brands International, Inc. The meeting will be held at the Chiquita Center, 250 East Fifth Street, 28th Floor, Cincinnati, Ohio at 10:00 a.m. on May 22, 2012. At the meeting you will be asked to:

 

  (1) Elect the eight director nominees named in the proxy statement;

 

  (2) Approve, by a non-binding advisory vote, the compensation paid by the company to its Named Executive Officers;

 

  (3) Ratify the appointment of our independent registered public accounting firm; and

 

  (4) Consider any other matters that may properly be brought before the meeting.

Only shareholders of record at the close of business on the record date, March 26, 2012, are entitled to notice of and to vote at the Annual Meeting and any adjournment thereof.

The proxy statement following this letter tells you more about the agenda for the meeting and procedures for voting.

We are pleased to take advantage of Securities and Exchange Commission rules that allow us to furnish our proxy materials over the Internet. As a result, we are sending our shareholders a Notice of Internet Availability of Proxy Materials instead of a paper copy of this proxy statement and our 2011 Annual Report. The Notice contains instructions on how to access and review those documents over the Internet. The Notice also instructs you on how to submit your proxy over the Internet or by phone. If you would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting them included in the Notice.

Your vote is important. We want your shares to be represented at the meeting and we urge you to vote as soon as possible. Thank you for participating in this important process and voting your proxy promptly.

 

Sincerely,
/s/ Fernando Aguirre
Fernando Aguirre
Chairman, President and
Chief Executive Officer

Cincinnati, Ohio

April 10, 2012


 

TABLE OF CONTENTS

        
   
  Proxy Summary      i   
  Information About the Meeting, Voting and Attendance      1   
  Security Ownership of Chiquita’s Principal Shareholders      5   
  Security Ownership of Directors and Executive Officers      6   
  Discussion of Proposals to Be Voted On      7   

  Proposal 1: Election of Directors

     7   

   Proposal 2: Advisory Vote Named Executive Officer Compensation

     13   

   Proposal 3: Ratification of Independent Registered Public Accounting Firm

     14   
  Information About the Board of Directors and Its Committees      15   
  Compensation of Directors      25   
  Compensation of Executive Officers      28   

  Compensation Discussion and Analysis

     28   

  Compensation Tables

     48   
  Equity Compensation Plan Information      64   
  Other Information      65   

   Chiquita’s Independent Registered Public Accounting Firm

     65   

  Related Person Transactions Policy

     66   

   Shareholder Nominations and Proposals at the 2013 Annual Meeting

     66   

   Requests for Certain Documents

     67   


Proxy Summary

Below is a quick overview of the information explained in more detail elsewhere in this proxy statement. This summary does not contain all of the information that you should consider in your voting decision and you should read the entire proxy statement carefully before voting.

Annual Meeting of Shareholders

 

    Date and Time:    May 22, 2012, 10:00 a.m.
    Place:    250 East Fifth Street, 28th Floor, Cincinnati, OH 45202
    Record Date:    March 26, 2012
    Voting:    Shareholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and once vote for each of the proposals on the agenda.
    Admission:    Limited to shareholders and their proxies, and employees of Chiquita (see further instructions on page 4)

Meeting Agenda

Ÿ Election of 8 directors

Ÿ Advisory vote on Named Executive Officer compensation

Ÿ Ratification of Independent Auditors

Ÿ Consider any other matters that may properly come before the meeting

 

    Voting Matters

  Board Vote Recommendation      Page

    Election of Directors

        FOR Each Nominee      7

    Advisory Vote on Named Executive Officer Compensation

        FOR      13

    Ratification of Independent Auditors

        FOR      14

Director Nominees

 

    Name

   Age    Director
Since
   Occupation    Qualifications
    Fernando Aguirre    54    2004    Chairman, CEO & President,
Chiquita Brands International
   Executive Leadership
Consumer and Food Products
Global Business
    Kerrii B. Anderson    54    2009    Former CEO, President & CFO,
Wendy’s International
   Executive Leadership
Finance and Accounting
    Howard W. Barker, Jr.    65    2007    Former partner, KPMG LLP    Finance and Accounting
Global Business
    William H. Camp    63    2008    Former Executive Vice President,
Archer Daniels Midland
   Global Business
Agriculture
    Clare M. Hasler-Lewis    54    2005    Executive Director, Robert Mondavi
Institute for Wine and Food Science
   Food Safety & Nutrition
Environmental
    Jaime Serra    61    2003    Senior Partner, Serra Associates    Government Relations
Trade Regulation
    Jeffrey N. Simmons    44    2011    Senior Vice President, Eli Lilly & Co.
President, Elanco Animal Health
   Agriculture
Food Safety & Technology
    Steven P. Stanbrook    54    2002    Chief Operating Officer–International
S.C. Johnson & Son, Inc.
   Consumer and Packaged Goods
Global Business

 

i


Executive Compensation Advisory Vote

The Board recommends that shareholders vote FOR the approval of the compensation for our named executive officers.

At the 2011 annual meeting, over 85% of the votes cast voted in favor of the compensation paid to the Company’s Named Executive Officers.

As described in detail under “Compensation Discussion and Analysis” beginning on page 28 and in the Summary Compensation Table on page 48, our compensation programs are reviewed by our Compensation Committee, with advice from an independent consultant, benchmarked annually against peer companies and industry surveys, and designed to foster alignment of executive management with the interests of shareholders by rewarding executives for personal and company performance that benefits shareholders and not rewarding them when company performance is not as strong.

Executive Compensation Elements 2011 Summary

 

    Type

 

Form

 

Terms

    Cash

 

Salary

MIP

  Fixed; increases based upon annual performance reviews
Annual achievement dependent upon personal performance and
company net income and total revenue

    Equity

 

Annual RSUs

 

LTIP

  Discretionary; upon hire and annually thereafter;
time-based vesting
3-year performance periods with up to 3 objective measures

    Retirement

 

401(k)

CAP

 

Company match up to $22,050

Company match up to $50,000

    Other

  Perquisites   Executive health exam, spousal travel expenses, financial planning, tax reimbursements and relocation up to approved
limits

2011 Incentive Compensation Results

During 2011, Chiquita delivered our third consecutive year of profitability. Annual sales decreased 3% year-on-year to $3.1 billion, on lower sales in Salads & Healthy Snacks and Other Produce, partially offset by 4% higher Banana sales. We reduced debt by $62 million during the year and refinanced other debt to reduce the total annual interest expense by approximately $14 million at current rates and extended the maturity of our secured credit facility, including $150 million of revolving credit. No MIP payments were made to executive officers under our MIP program, as we did not achieve the threshold for payment. Our long-term incentive program for the 2009-2011 period was earned at 55% of target, based on 110% achievement for cumulative earnings per share and 0% on relative shareholder return.

 

ii


2011 Compensation Summary

We believe our executive compensation program achieves pay for performance objectives. The tables below provide the percentage and dollar value of the elements that comprised the target total direct compensation opportunity (other than benefits) available to our Named Executive Officers who were employed by us at the end of 2011, as compared to actual compensation paid for the trailing one- and three-year periods ended December 31, 2011.

 

    One-Year (2011)
       

Named Executive Officer  

   
 
Performance Pay
Opportunity(1)
  
  
    Realized Pay(2)      Realized as % of  
Opportunity

Fernando Aguirre

  $ 2,363,238      $ 1,024,239      43%

Kevin Holland

    727,528        438,278      60%

Brian Kocher

    819,544        476,544      58%

Michael Sims

    772,392        450,392      58%

Waheed Zaman

    742,234        434,234      59%

 

(1) Performance Pay Opportunity includes base salary and target annual cash bonus (MIP) for 2011.
(2) Realized Pay includes base salary and actual MIP for 2011.

 

    Three-Year (2009-2011)
       

Named Executive Officer  

   
 
Performance  Pay
Opportunity(1)
  
  
    Realized Pay (2)      Realized as % of  
Opportunity

Fernando Aguirre

  $ 14,551,295      $ 9,260,101      64%

Kevin Holland

    3,534,077        2,495,556      71%

Brian Kocher

    3,861,350        2,623,248      68%

Michael Sims

    3,194,976        2,265,300      71%

Waheed Zaman

    3,505,556        2,402,932      69%

 

(1) Performance Pay Opportunity includes:
        • base salary for 2011, 2010 and 2009
        • target annual MIP for 2011, 2010 and 2009
        • grant date value of RSU awards in 2011, 2010 and 2009
        • grant date value of LTIP target for the 2009-2011 performance cycle

(2) Realized Pay includes:

        • base salary for 2011, 2010 and 2009

        • actual MIP for 2011, 2010 and 2009

        • value of RSU awards granted in 2011, 2010 and 2009 at $8.34 (closing price on 12/31/2011)

        • actual value of shares earned under the LTIP award for the 2009-2011 performance cycle at $10.32 (the closing price on the date of issuance)

See “Summary Compensation Table” on page 48 for the calculation of compensation under SEC rules.

2013 Annual Meeting

 

    Deadline for Shareholder Proposals

   December 12, 2012

    Deadline for Shareholder Director Nominations

   March 23, 2013

 

iii


 

PROXY STATEMENT

CHIQUITA BRANDS INTERNATIONAL, INC.

Annual Meeting of Shareholders

May 22, 2012

 

 

INFORMATION ABOUT THE MEETING, VOTING AND ATTENDANCE

We are providing you with this proxy statement and the related form of proxy because our Board of Directors is soliciting your proxy to vote your shares at the 2012 Annual Meeting. At the meeting, shareholders will be asked to elect the eight nominees for director named in this proxy statement, approve by advisory vote the compensation paid to our Named Executive Officers, ratify the appointment of our independent registered public accounting firm and consider any other matters that may properly be brought before the meeting. You are invited to attend the meeting where you may have the ability to vote your shares directly. However, whether or not you attend the meeting, you may vote by proxy as described below.

We expect to begin mailing the Notice of Annual Meeting of Shareholders and to make these proxy materials available on or about April 10, 2012 to shareholders of record at the close of business on March 26, 2012 (the Record Date).

Who Can Vote

Only holders of record of common stock at the close of business on the Record Date may vote at the meeting. On the Record Date, there were 45,932,034 shares of common stock outstanding and entitled to vote. Each share of common stock that you owned as of the Record Date entitles you to one vote on each matter to be voted on at the meeting.

How to Vote Your Shares Held of Record or by a Nominee

Most Chiquita shareholders hold their shares through a broker, bank or other nominee rather than directly in their own name as the shareholder of record. As summarized below, there are some distinctions between shares held of record and those owned beneficially.

In accordance with the rules of the Securities and Exchange Commission (SEC), instead of mailing a printed copy of our proxy materials to each shareholder of record, we may furnish our proxy materials, including this Proxy Statement and our Annual Report to Shareholders, by providing access to these documents on the Internet. Generally, shareholders will not receive printed copies of the proxy materials unless they request them.

We have mailed a Notice of Annual Meeting of Shareholders and Internet Availability of Proxy Materials (Notice) to registered shareholders. The Notice provides instructions to registered shareholders for accessing our proxy materials, and for voting their shares of common stock, on the Internet. If you are a registered shareholder and prefer to receive a paper or email copy of our proxy materials, you should follow the instructions provided in the Notice for requesting those materials.

Shareholders of record can vote before or at the Annual Meeting in any one of the four ways described below. When you vote on the Internet or by telephone or proxy card, you are authorizing the persons named on the proxy form (the management proxies) to vote your shares in the manner you direct.

 

1


   

By Internet – You may vote on the Internet at www.proxyvote.com. The Notice or voting card sent to you describes how to do this.

 

   

By Telephone – You can only vote by telephone if you request and receive a paper copy of the proxy materials and proxy card. The Notice describes how to do this; you must make your request for materials by May 8, 2012.

 

   

By MailYou can only vote by mail if you request and receive a paper copy of the proxy materials and proxy card. The Notice provides instructions on how to do this; you must make your request for materials by May 8, 2012. You then vote by completing, signing, dating, and returning a proxy card.

 

   

In Person – You may come to the Annual Meeting and cast your vote there.

For beneficial shareholders (with shares held in street name) the Notice, which has been forwarded to you by your broker, bank or other holder of record (nominee), directs you to the Internet site where you will find our proxy materials. Your nominee has also provided instructions on how you may request a paper or email copy of our proxy materials and how to provide voting instructions to your nominee.

Effect of Not Casting Your Vote

If you are a shareholder of record no votes will be cast on your behalf on any of the items of business at the Annual Meeting unless you submit a proxy or vote at the meeting.

If you hold shares in street name, you must give instructions to your nominee on how you would like your shares to be voted. If you do not provide any instructions, your nominee can vote your shares only on “routine” items, such as the ratification of the appointment of our independent registered public accounting firm. The election of directors is not considered a “routine” item. Thus, if a nominee holds your shares and you do not instruct the nominee how to vote in the election of directors, no votes will be cast on your behalf. Your nominee also has no discretion to vote your shares on the proposals related to advisory votes on executive compensation without instructions from you.

YOUR VOTE IS VERY IMPORTANT. WE URGE YOU TO VOTE AND/OR PROVIDE YOUR NOMINEE WITH VOTING INSTRUCTIONS PROMPTLY.

Election to Receive Electronic Delivery

Registered and beneficial shareholders can enroll in the electronic delivery service for future shareholder meetings by using your Notice to register online at www.proxyvote.com by indicating that you agree to receive or access shareholder communications electronically in future years.

Quorum Requirement

A quorum of shareholders is necessary to hold a valid meeting. A quorum will exist if holders of a majority of the shares entitled to vote at the meeting (22,966,018 shares) are present in person or by proxy. Abstentions, broker non-votes (when the shareholder provides no instructions and the item is non-routine) and votes withheld from director nominees count as shares present at the meeting for purposes of establishing a quorum.

 

2


Voting Authority of Management Proxies

Whether you hold your shares of record or in street name, your proxy vote authorizes the management proxies to vote as directed by you. If you are a shareholder of record and you sign, date and return your proxy without specifying voting instructions, your shares represented by the proxy will be voted as recommended by the Board of Directors, namely:

 

   

FOR the election of all eight nominees for director;

 

   

FOR the advisory vote to approve the compensation of our Named Executive Officers; and

 

   

FOR the ratification of our independent registered public accounting firm.

Other Business – We are not aware of any other matter to be acted upon at the meeting, but if any other matter is properly brought before the Annual Meeting, it is intended that discretionary authority to vote proxies will be exercised in accordance with the best judgment of the management proxies.

How to Change or Revoke Your Proxy Vote

If you are a shareholder of record and you give Internet or telephone voting instructions or send in a proxy card and later want to change or revoke your vote, you may do so at any time, provided that your instructions are received before voting closes for the method you select. You may change or revoke your vote by:

 

   

giving new voting instructions on the Internet or by telephone or by mailing a proxy card with a later date;

 

   

notifying our Corporate Secretary in writing at the address listed at the end of this proxy statement that you have revoked your proxy; or

 

   

voting in person at the Annual Meeting.

You may use any method to change your vote, regardless of the method first used to submit it. The proxy tabulator will count only the most recent vote received.

If you are a beneficial shareholder, follow the instructions provided by your nominee on how to change or revoke your proxy.

How to Vote Shares Held in Our Employee Benefit Plans

If you hold common stock in one of our employee benefit plans, you cannot vote your shares directly. The Trustee for each plan must vote the shares held in the plan.

In the case of the Chiquita Savings and Investment Plan (401(k) Plan) and the Chiquita Employee Stock Purchase Plan (ESPP), you will receive a voting instruction card, which will provide instructions to vote online, by telephone or by mail. If you provide voting instructions, the Trustee will vote the shares as you direct. If you do not provide voting instructions by any of these methods, the terms of the plans require the Trustees to vote as described below:

 

   

Shares in the 401(k) Plan for which no instructions are received will be voted in the same proportion as the shares in the 401(k) Plan for which voting instructions are received; and

 

   

Shares in the ESPP for which no instructions are received will not be voted.

 

3


Holders of stock options or restricted stock units (RSUs) issued under the Chiquita Stock and Incentive Plan cannot vote the shares issuable upon exercise or vesting until those shares are issued.

Method and Cost of Soliciting Proxies

We have asked banks, brokers and other financial institutions, nominees and fiduciaries to forward the Notice and/or proxy materials to beneficial owners and obtain authority to execute proxies on their behalf, and we will reimburse them for their expenses in doing so. We have also retained Alliance Advisors L.L.C., a proxy solicitation firm, to assist us in the distribution of proxy material and solicitation of proxies. We have agreed to pay them a fee of $6,500 plus out-of-pocket expenses. Proxies may be solicited by our management, without additional compensation, through the mail, in person, or by telephone or electronic means.

Admission to the Meeting

Admission to the meeting will be limited to our shareholders of record, persons holding proxies from our shareholders, beneficial owners of our common stock and employees of Chiquita. If your shares are registered in your name, we will verify your ownership at the meeting in our list of shareholders as of the Record Date. If your shares are held through a broker, bank or other nominee, you must bring proof of your ownership of the shares. This could consist of, for example, a bank or brokerage firm account statement or a letter from your bank or broker confirming your ownership as of the Record Date. You also may send proof of ownership to our Corporate Secretary, Chiquita Center, 250 East Fifth Street, Cincinnati, Ohio 45202 before the meeting and we will send you an admission card.

Business to be Brought Before the Meeting

Under our Certificate of Incorporation, a shareholder may propose a matter for consideration at the Annual Meeting only if the shareholder properly notified us of the matter by March 27, 2012. We received one shareholder proposal, which was omitted pursuant to a no-action letter from the SEC. Because we did not receive any other notices by that date, no matters proposed by shareholders may be considered at the meeting.

 

4


SECURITY OWNERSHIP OF CHIQUITA’S PRINCIPAL SHAREHOLDERS

The following table lists all the persons who on the Record Date were known to be beneficial owners of five percent or more of our common stock, our only voting security, based upon 45,932,034 shares outstanding on that date. This information is based generally on reports filed with the SEC reflecting shares held as of December 31, 2011.

 

Name and Address of

Beneficial Owner

 

 

Amount and Nature of Beneficial

Ownership

 

 

 

Common Stock

 

 

 

                Shares(1)    

 

 

                Percent of Class             

 

 

FMR LLC

82 Devonshire Street

Boston, MA 02109

 

               5,015,671(2)           10.9%

Dimensional Fund Advisors LP

Palisades West, Building One

6300 Bee Cave Road

Austin, TX 78746

 

               3,512,093(3)           7.6%

Goldman Sachs Asset Management

200 West Street

New York, NY 10282

 

               2,554,072(4)           5.6%

BlackRock Inc.

40 East 52nd Street

New York, NY 10022

 

               2,520,278(5)           5.5%

 

(1) 

Under SEC rules, for purposes of preparing this table, shares are beneficially owned if a person has or shares the power (i) to vote them or direct their vote (voting power) or (ii) to sell them or direct their sale (dispositive power), even if the person has no financial interest in the shares. In addition, shares that a person has the right to acquire within 60 days are considered to be beneficially owned.

 

(2)

This information is based on a Schedule 13G amendment on behalf of FMR LLC (FMR) and its named subsidiaries and affiliates, filed with the SEC on February 14, 2012, that reported sole voting power over 557,580 shares and sole dispositive power over 5,015,671 shares. According to the filing, FMR and Edward C. Johnson 3d, Chairman of FMR, through their control of Fidelity Management & Research Company (Fidelity), a wholly-owned subsidiary of FMR and an investment advisor, each has sole dispositive power over 4,458,091 shares owned by the funds and specifically (i) Fidelity, which acts as investment adviser to various investment companies, beneficially owns 4,458,091 shares of the funds, (ii) Pyramis Global Advisors, LLC (Pyramis) an indirect wholly owned subsidiary of FMR and an investment advisor which serves as investment manager of various institutional accounts, beneficially owns 46,130 shares and (iii) Pyramis Global Advisors Trust Company (Pyramis Trust), an indirect bank subsidiary of FMR, which serves as investment manager of various institutional accounts, beneficially owns 511,450 shares. Mr. Johnson and FMR, through their control of Pyramis and Pyramis Trust, each has sole voting and dispositive power over 46,130 shares and 511,450 shares, respectively.

 

(3) 

This information is based on a Schedule 13G amendment filed with the SEC on February 13, 2012 in which Dimensional Fund Advisors LP, an investment adviser to four registered investment companies and investment manager to certain other commingled group trusts and separate accounts, reported that it has sole voting power over 3,443,164 shares and sole dispositive power over 3,512,093 shares, and that it disclaims beneficial ownership of such shares, all of which were reported as owned by the foregoing investment companies, group trusts and separate accounts.

 

5


(4) 

This information is based on a Schedule 13G filed with the SEC on February 10, 2012 in which Goldman Sachs Asset Management, L.P. together with GS Investment Strategies, LLC, registered investment advisors, reported that they have shared voting and dispositive power over 2,554,072 shares.

 

(5) 

This information is based on a Schedule 13G amendment filed with the SEC on February 13, 2012 in which BlackRock Inc. reported that it beneficially owns and has sole voting and dispositive power over 2,520,278 shares through certain subsidiaries.

SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The following table shows the number of shares of common stock beneficially owned as of the Record Date (except as noted) by each director, each nominee for director, each executive officer named in the Summary Compensation Table and all current directors and executive officers as a group.

 

     

Amount and Nature of Beneficial

Ownership

  

 

Common Stock

 

Name of Beneficial Owner    Shares(1)        Percent of     
Class

Fernando Aguirre

   1,140,473    (2) (3)(4)    2.5%

Kerrii B. Anderson

   40,451         *

Howard W. Barker, Jr.

   58,247    (5)    *

William H. Camp

   49,867    (4) (5)    *

Clare M. Hasler-Lewis

   51,826    (5)    *

Kevin R. Holland

   71,228    (3) (10)    *

Brian W. Kocher

   47,404    (3)    *

Jaime Serra

   106,613    (2) (5)    *

Jeffrey N. Simmons

   5,724    (6)    *

Michael B. Sims

   72,763    (2) (7)    *

Steven P. Stanbrook

   139,369    (2) (5)    *

Tanios Viviani

   106,674    (8)    *

Waheed Zaman

   64,878    (3) (9)    *

All current directors and executive officers as a group (15 persons)

   1,925,656    (2) (3)(4)(5)(10)    4.2%

*Less than 1% of outstanding shares.

 

(1) 

Unless otherwise noted, each person has full voting and dispositive power over the shares listed except for shares issuable upon the exercise of stock options or upon the vesting of restricted stock units (RSUs) as described in the footnotes below.

 

(2) 

Includes shares that may be acquired through the exercise of stock options within 60 days of the Record Date in the following amounts: Mr. Aguirre, 325,000 shares; Mr. Serra, 50,000 shares; Mr. Sims, 17,500 shares; Mr. Stanbrook, 50,000 shares; and all current directors and executive officers as a group, 497,500 shares. Since none of these shares were issued and outstanding on the Record Date, they cannot be voted at the Annual Meeting.

 

(3) 

Does not include shares issuable upon the vesting of RSUs that will vest more than 60 days after the Record Date in the following amounts: Mr. Aguirre, 482,007 shares; Mr. Holland, 104,821 shares; Mr. Kocher, 122,386 shares; Mr. Zaman, 66,178; and all current directors and executive officers as a group, 953,259.

 

(4) 

Includes shares beneficially owned in the following amounts: Mr. Aguirre, 768,995 shares held in various family trusts of which Mr. Aguirre or his spouse is trustee and in custodial accounts for his children, and 1,000 shares held in an IRA; and Mr. Camp, 9,500 held in a family trust and a custodial account.

 

6


(5) 

Includes RSUs for the following numbers of shares that are deliverable when the recipient ceases to be a non-employee director: Mr. Barker, 10,051 shares; Messrs. Serra and Stanbrook, 10,000 shares each; Mr. Camp, 7,185 shares; and Dr. Hasler-Lewis, 2,500 shares. Also includes the following numbers of whole shares held as of the Record Date under the Directors Deferred Compensation Program (DDCP); these shares will be issued when the recipient ceases to be a non-employee director: Dr. Hasler-Lewis, 43,730 shares, including shares for first quarter 2012 director fees; Mr. Barker, 38,196 shares; and Mr. Camp, 33,182 shares. Since none of these shares were issued and outstanding on the Record Date, they cannot be voted at the Annual Meeting.

 

(6) 

Mr. Simmons joined the Board in May 2011.

 

(7) 

Represents the number of shares owned by Mr. Sims, including shares that may be acquired through the exercise of stock options within 60 days of the Record Date, at the time of his resignation from the Company in February 2012.

 

(8) 

Represents the number of shares owned by Mr. Viviani at the time of his separation from the Company in October 2011 plus shares that vested following his termination of employment.

 

(9) 

Represents shares owned by Mr. Zaman as of February 18, 2012, the date he ceased to be an executive officer.

 

(10) 

This total does not include shares owned by Messrs. Sims, Viviani or Zaman. Includes 2,609 shares held in the Employee Stock Purchase Plan by all current executive officers as a group. Also includes the following share equivalents as of December 31, 2012 held in the Common Stock Fund of the 401(k) Plan, which are expressed as units and represent a participant’s proportionate interest in the Common Stock Fund: Mr. Holland, 1,820 share equivalents; and all current executive officers as a group, 3,954 share equivalents.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors and certain persons who own more than 10% of our equity securities to file forms with the SEC and the New York Stock Exchange to report their ownership and any changes in their ownership of our equity securities. These persons must also provide us with copies of these reports when filed. Based on a review of copies of those forms, our records and written representations from our directors and executive officers that no other reports were required, we believe that all Section 16(a) filing requirements were complied with during and for 2011.

DISCUSSION OF PROPOSALS TO BE VOTED ON

PROPOSAL 1: ELECTION OF DIRECTORS

The Board of Directors currently consists of eight members. All existing directors have been nominated by the Board of Directors for election at the Annual Meeting.

In selecting director nominees we seek highly qualified individuals having backgrounds and expertise that are relevant to our international business. Upon recommendation of the Nominating & Governance Committee, the Board approved the nomination of each nominee due, in part, to their respective business experience, qualifications, skills and attributes described below.

All of our directors serve for one-year terms. If you elect them, they will hold office until the next annual meeting or until their successors have been elected and have qualified. No shareholder may vote for more than eight nominees. Each of the nominees listed below has consented to being named in this proxy statement and has agreed to serve if elected. We are not aware of any reason why any nominee would be unable to serve as a director if elected. However, if any nominee should become unable to

 

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serve as a director, the management proxies may vote for another nominee proposed by the Board or the Board may reduce the number of directors to be elected.

Under our Certificate of Incorporation, a shareholder may nominate a director at the Annual Meeting only if the shareholder properly notified us of the proposed nomination by March 27, 2012. Because we did not receive notice of any nominations by that date, no nominations by shareholders may be considered at the Annual Meeting.

Information About Nominees For Director

The eight nominees for election as directors are as follows:

 

Name, Age, and

Tenure As Director

  

Current

Committee

Memberships

  

Current Occupation and Employment Background;

Qualifications and Skills

Fernando Aguirre

Age 54

Director since

January 2004

     

Mr. Aguirre has been our President and Chief Executive Officer since January 2004 and our Chairman since May 2004. Prior to joining us, Mr. Aguirre had served The Procter & Gamble Company (P&G), a manufacturer and distributor of consumer products, in various capacities for more than 20 years including in an executive capacity with P&G’s Global Snacks and U.S. Food Products business units. Mr. Aguirre is currently a director of Levi Strauss & Co. and Aetna Inc. He served as a director of Coca-Cola Enterprises Inc. from 2005 until November 2010.

 

Under Mr. Aguirre’s leadership, we have executed a disciplined strategy to diversify the business, strengthen profitability, develop innovative products, pay down debt and reduce costs. His value as our Chairman and CEO is enhanced by his extensive consumer and food products experience, global business and executive leadership, including service with Chiquita as well as his broader experience in his current and prior service on other public company boards. His eight years as our CEO provide significant seniority and continuity, which are valuable to our company.

 

8


Name, Age, and

Tenure As Director

  

Current

Committee

Memberships

  

Current Occupation and Employment Background;

Qualifications and Skills

Kerrii B. Anderson

Age 54

Director since

April 2009

   Nominating & Governance (Chair); Compensation & Organization Development   

Ms. Anderson has been a private investor since September 2008. She was employed as Chief Executive Officer and President of Wendy’s International, Inc. (Wendy’s), a quick service hamburger company, from November 2006 to September 2008, when it merged with Triarc Companies, Inc. to form Wendy’s/Arby’s Group Inc. From April to November 2006 she served as Wendy’s interim Chief Executive Officer and President, and from 2000 to April 2006, she served as its Executive Vice President and Chief Financial Officer. Prior to that, she had more than 20 years of experience in accounting and as controller and chief financial officer of other companies. She is a Certified Public Accountant. Ms. Anderson is currently a director of Laboratory Corporation of America Holdings, Worthington Industries, Inc. and P.F. Chang China Bistro Inc.

 

Ms. Anderson brings to the Board her broad understanding of executive and financial considerations in a food-related business. Her extensive accounting and financial reporting and analysis expertise and prior experience as a chief executive officer and chief financial officer of a public company, in addition to other public company board service, make Ms. Anderson particularly well-suited to serve as a director and our lead independent director.

Howard W. Barker, Jr.

Age 65

Director since

September 2007

   Audit (Chair)   

Mr. Barker was employed by KPMG LLP, a global accounting firm, from 1972 including serving as a partner of KPMG LLP from 1982, until he retired in 2002. He is a member of the American Institute of Certified Public Accountants and the Florida Institute of Public Accountants. Mr. Barker is currently a director of priceline.com Incorporated and Medco Health Solutions, Inc.

 

Mr. Barker has an extensive financial background, and financial reporting expertise, including his service as an audit partner at a multinational professional service and accounting firm. His continuing membership in the American Institute of Certified Public Accountants, as well as his financial leadership roles on other public company boards on which he serves, enable him to maintain expertise in current accounting, financial reporting and related issues that are important to our company. In addition, he has served on numerous public company board committees involved with financing and acquisition transactions.

 

9


Name, Age, and

Tenure As Director

  

Current

Committee

Memberships

  

Current Occupation and Employment Background;

Qualifications and Skills

William H. Camp

Age 63

Director since

April 2008

   Compensation & Organization Development (Chair); Audit   

Mr. Camp spent more than 20 years at Archer Daniels Midland Company (ADM), an agricultural processing company and manufacturer of value-added food and feed ingredients, in a variety of management positions until he retired in December 2007 from his position as an Executive Vice President. He served as Executive Vice President and Vice President, Asia Strategy from August to December 2007 and as Executive Vice President, Processing from 2004 to August 2007. Mr. Camp has significant experience in logistics and supply chain management and experience with foreign public companies, including as a director of Wilmar International, Ltd. from 2005 to 2007, and as a director of Tate & Lyle PLC since 2010.

 

With his years of experience at a global agricultural processing company and broad international experience in senior operational management, Mr. Camp brings to the Board insights into the issues facing an international food company, such as issues arising in the transportation of agricultural products and food ingredients His broad experience with a corporation with substantial international operations and his other public company board service provide an understanding of agricultural, food safety, operational and management issues which enhance his oversight.

Clare M. Hasler-Lewis

Age 54

Director since

October 2005

   Food Innovation, Safety & Technology (Chair) Nominating & Governance   

Dr. Hasler-Lewis has been Executive Director of the Robert Mondavi Institute for Wine and Food Science at the University of California, Davis since February 2004. From 1997 to January 2004, she was assistant professor in the Department of Food Science and Human Nutrition at the University of Illinois at Urbana-Champaign. Dr. Hasler-Lewis holds a dual doctoral degree in environmental toxicology and human nutrition.

 

Dr. Hasler-Lewis’s education and expertise in nutrition and environmental toxicology, combined with business management training, provide important insight in achieving our objectives in food safety and environmental responsibility. In addition, her extensive experience in food regulation and consumer health trends offers valuable knowledge to the Board.

 

10


Name, Age, and

Tenure As Director

  

Current

Committee

Memberships

  

Current Occupation and Employment Background;

Qualifications and Skills

Jaime Serra

Age 61

Director since

January 2003

   Compensation & Organization Development; Nominating & Governance   

Mr. Serra has been senior partner of Serra Associates International, a consulting firm in law and economics based in Mexico City, since 1996. He also is a principal of The NAFTA Fund, a private equity fund focused on investing in medium-sized Mexican companies. Before forming Serra Associates, Mr. Serra served as Mexico’s Undersecretary of Finance during 1994 and Secretary of Trade and Industry from 1986 to 1994, during which time he was Mexico’s principal negotiator of the North American Free Trade Agreement. He also has been a professor of Economics at El Colegio de Mexico, Stanford University, Princeton University and New York University. Mr. Serra is currently a director of the following public companies: The Mexico Fund, Inc. and Tenaris S.A.

 

Through his past service as a high-ranking government official with the Mexican Government and his expertise in economic and trade matters, Mr. Serra brings critical perspectives and experience on international trade negotiations and the impact of government policies on the operations of a global company. His strong academic background, expertise in international macro-economics issues as well as his service on boards of U.S. and foreign companies and other organizations enable him to provide added perspective on international and political strategic issues.

 

11


Name, Age, and

Tenure As Director

  

Current

Committee

Memberships

  

Current Occupation and Employment Background;

Qualifications and Skills

Jeffrey N. Simmons

Age 44

Director since 2011

   Audit; Food Innovation, Safety & Technology   

Mr. Simmons has been Senior Vice President of Eli Lilly and Company (Lilly) since January 2010 and President, Elanco Animal Health, Lilly’s animal health division, since January 2008. From 2006 to December 2007 he served as Elanco’s executive director of U.S. operations and global research and development. Mr. Simmons joined Lilly in 1989 and has held a variety of other international executive and leadership roles in Elanco, including area director, Western Europe; and country director for Brazil. He is an international spokesperson on the role technology will play in expanding the global food supply.

 

Mr. Simmons offers valuable perspective and significant knowledge to the Board on the execution of business strategy, particularly in Europe and North America, and business growth through innovation. In particular, his experience with the use of technology in agricultural operations and food safety provide important insight to the Board.

Steven P. Stanbrook

Age 54

Director since

December 2002

   Compensation & Organization Development; Nominating & Governance   

Mr. Stanbrook has been Chief Operating Officer -International of S.C. Johnson & Son, Inc., a manufacturer of consumer products, since July 2010. Prior to that he was President, Developing Markets from 2006 to July 2010, President - Asia and Americas from 2002 until 2006 and President of S.C. Johnson’s business in Europe, Africa and Near East from 1996 through 2002. Prior to joining S.C. Johnson in 1996, Mr. Stanbrook was President – International of CompuServe. Prior to that, he held various international management positions at Sara Lee Corporation, including serving as President and Chief Executive Officer of Sara Lee Bakery. Mr. Stanbrook was a director of Hewitt Associates, Inc. from 2003 until its merger with Aon Corp. in October 2010.

 

Mr. Stanbrook provides extensive experience in the consumer and packaged goods industries, with experience in different companies and a variety of roles, including at a senior executive level. His international experience includes executive assignments on every continent of the world served by these industries. His prior service on another public company board brings additional governance and oversight experience.

 

12


Vote Required to Elect Directors

The eight nominees who receive the highest number of votes cast (a plurality) will be elected as directors, subject to our majority vote policy described below. Under Chiquita’s governing documents, there is no provision for cumulative voting in the election of directors.

The Board of Directors recommends a vote “FOR” all nominees.

Majority Vote Policy

Our Board’s Governance Standards and Policies include a “majority vote policy.” Under this policy, any nominee for director in an uncontested election who receives a greater number of votes “withheld” from his or her election than votes “for” such election (a Majority Withheld Vote), is required to tender his or her resignation following certification of the shareholder vote.

The Nominating & Governance Committee will promptly consider the resignation and a range of possible responses based on the circumstances that led to the Majority Withheld Vote, if known, and make a recommendation to the Board. The Board will act on the Nominating & Governance Committee’s recommendation within 90 days following certification of the shareholder vote. Thereafter, the Board will promptly disclose its decision-making process and decision regarding whether to accept the director’s resignation offer (including the reason(s) for accepting or rejecting the resignation offer) in a report on Form 8-K furnished to the SEC.

Any director who tenders his or her resignation under this provision will not participate in the Nominating & Governance Committee recommendation or Board action regarding whether to accept the resignation offer, except as described in the last sentence of this paragraph. If all of the members of the Nominating & Governance Committee receive a Majority Withheld Vote at the same election, then the independent directors who do not receive a Majority Withheld Vote will appoint a committee from among themselves to consider the resignation offers and recommend to the Board whether to accept them. If three or fewer directors do not receive a Majority Withheld Vote in the same election, then all directors may participate in the action regarding whether to accept the resignation offers.

PROPOSAL 2: ADVISORY VOTE NAMED EXECUTIVE OFFICER COMPENSATION

We are providing our shareholders with the opportunity to vote to approve, on a nonbinding, advisory basis, the compensation of our Named Executive Officers as disclosed in this proxy statement in accordance with the compensation disclosure rules of the Securities and Exchange Commission. At the 2011 annual meeting, in a similar vote, over 85% of the votes cast voted in favor of the compensation paid to the Company’s Named Executive Officers.

As described in detail under Compensation Discussion and Analysis beginning on page 28 and in the Summary Compensation Table on page 48, our compensation programs are (a) reviewed by our Compensation Committee, with advice from its independent consultant, (b) benchmarked annually against peer companies and industry surveys, and (c) designed to foster alignment of executive management with the interests of shareholders by rewarding executives for company performance that benefits shareholders and not rewarding them when company performance is not as strong.

During 2011, Chiquita delivered our third consecutive year of profitability. Annual sales decreased 3% year-on-year to $3.1 billion, on lower sales in Salads & Healthy Snacks and Other Produce, partially offset by 4% higher Banana sales. We reduced debt by $62 million during the year, refinanced other debt to reduce the total annual interest expense by approximately $14 million at current rates and extended the maturity of our secured credit facility, including $150 million of revolving credit.

 

13


Nonetheless, we did not achieve the financial performance objectives for our annual cash incentive payments under the Management Incentive Program (MIP) and, as a result, no MIP payments were made to any executive officers for 2011. Under the Long-Term Incentive Program (LTIP), our Named Executive Officers received a 55% award for the 2009-2011 performance cycle. The LTIP program for 2009-2011 was based on two measures, cumulative earnings per share and total shareholder return (TSR) relative to our Peer Group. For the three-year LTIP period, we achieved 110% of the goal for cumulative earnings per share; however, our TSR was below the minimum threshold for an award. As a result, no award was made based on the TSR component.

We have implemented many compensation “best practices” over the past several years including eliminating the tax gross-up in severance agreements for new executive officers and in those replacing expired agreements, adopting a clawback policy for performance based compensation, implementing stock ownership guidelines for executive officers and limiting the amount of perquisites. In addition, the Compensation Committee has conducted and monitored a comprehensive review of our compensation program structure with a particular focus on incentive-based pay, and concluded it does not encourage executive officers or other employees to take excessive risks that could adversely affect our company’s financial or operational results.

The vote on this resolution relates to the compensation of our Named Executive Officers as a whole. The vote is advisory, which means that the vote is not binding on us, our Board or the Compensation Committee of the Board. To the extent there is any significant vote against the Named Executive Officer compensation, the Compensation Committee will evaluate whether any actions are necessary to address the concerns of shareholders.

Accordingly, shareholders are being asked to approve the following resolution at the Annual Meeting:

RESOLVED, that the shareholders approve, on an advisory basis, the compensation paid to the Company’s Named Executive Officers as set forth in the Company’s proxy statement for its 2012 Annual Meeting of Shareholders pursuant to SEC compensation disclosure rules (including the Compensation Discussion and Analysis, the executive compensation tables and the narrative disclosures that accompany the compensation tables).

Vote Required to Approve the Advisory Vote on Executive Compensation

The affirmative vote of the holders of a majority of the shares of the votes cast at the Annual Meeting by those holders of common stock entitled to vote at the meeting is required for the approval of this advisory proposal.

The Board of Directors recommends a vote “FOR” the approval of named executive officer compensation.

PROPOSAL 3: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

In accordance with its charter, the Audit Committee has selected PricewaterhouseCoopers LLP (PWC), independent registered public accounting firm, to audit our consolidated financial statements for the year 2012. In furtherance of corporate governance objectives, we have chosen to submit the appointment of PWC for shareholder ratification.

 

14


In the event shareholders fail to ratify the appointment of PWC, the Audit Committee will reconsider it.

One or more representatives of PWC will be present at the Annual Meeting, will have an opportunity to make a statement if they desire and will be available to respond to appropriate questions.

Vote Required to Ratify the Appointment of PricewaterhouseCoopers LLP

The affirmative vote of the holders of a majority of the shares of common stock represented in person or by proxy and entitled to vote at the meeting is required to ratify the appointment of PWC.

The Board of Directors recommends a vote “FOR” this proposal.

INFORMATION ABOUT THE BOARD OF DIRECTORS AND ITS COMMITTEES

Board Governance, Meetings, and Attendance at Meetings

The Board has adopted governance standards and policies which, together with the charters of its committees, provide the framework for our corporate governance. We also have a Code of Conduct that applies to all employees, including executive officers, as well as to directors to the extent relevant to their service as directors. Our Board currently has four standing committees: Audit; Compensation & Organization Development; Nominating & Governance; and Food Innovation, Safety & Technology. In addition to the foregoing standing committees, the Board may form, from time to time, additional non-standing committees to assist the Board in its consideration of particular matters. The information about nominees for director lists memberships on standing committees only.

Each standing committee is comprised solely of directors who are “independent” as defined by New York Stock Exchange (NYSE) rules, and the Board has adopted a charter for each standing committee. The Board governance policies, Code of Conduct and committee charters are available on our website at www.chiquita.com by clicking on “Investor Relations,” “Corporate Governance” and “Documents.” You may request a copy of any of these documents to be mailed to you as described on page 67 of this proxy statement. Any amendments to, or waivers from, the Code of Conduct that apply to our principal executive and financial officers will be posted on our website. At the date of this proxy statement, no such waivers have been requested or granted.

NYSE rules require a majority of the board of directors of a listed company to be “independent.” The Board has determined that each of the company’s directors, other than Mr. Aguirre, is “independent” as defined by the NYSE and SEC for board and applicable committee service. This includes: Ms. Anderson, Mr. Barker, Mr. Camp, Dr. Hasler-Lewis, Mr. Serra, Mr. Simmons and Mr. Stanbrook. This determination was based on standards adopted by the Board, available on our website at the address above, that are consistent with the definition of “independent” contained in the NYSE rules. In addition, the Board determined that each of these directors is independent because no relationship was identified that would automatically bar him or her from being characterized as independent based on a consideration of relationships, whether material or immaterial, between the company and the directors and between directors and management, including in each case, the directors’ family members and the companies or organizations with which the directors are affiliated.

Robert W. Fisher served as an independent director of the Board and as a member of the Audit and Food Innovation, Safety & Technology Committees until his retirement at the annual meeting in 2011.

 

15


Under the Board’s governance standards and policies, directors are expected to attend all scheduled Board and committee meetings. During 2011, the Board held 11 meetings. Each current director attended at least 75% of the meetings of the Board and of each committee on which he or she served during 2011. Directors are also expected to attend the Annual Meeting of Shareholders. Last year, all of the directors then serving on the Board attended the Annual Meeting.

Leadership Structure

Mr. Aguirre has served in the dual capacities of Chairman of the Board and Chief Executive Officer (CEO) since May 2004. The Board believes this structure is appropriate given Mr. Aguirre’s designated responsibility for driving strategic decision-making so as to achieve our long-term goals of improving world nutrition by being the innovative global leader in branded, nutritious foods and delivering sustainable and profitable growth for the benefit of our shareholders. In addition, Mr. Aguirre is able to carry out these dual roles due to the relatively small size of the Board and Mr. Aguirre’s extensive experience dealing with the Board. The Board does not believe a separate Chairman and CEO is necessary at this time to safeguard the independent governance of the Board or sustain effective oversight by the Board.

Our non-management directors (who are the same as our independent directors) generally meet in conjunction with each regularly scheduled Board meeting in a separate “executive session” without the Chairman or any other company representatives present. Absent specific action by the Board, the Chair of the Nominating & Governance Committee, currently Ms. Anderson, presides at all of these sessions as Lead Independent Director. Ms. Anderson has extensive experience as an independent director and is able to ensure that, in her role as Lead Independent Director, effective independent oversight is exercised by the Board. The Lead Independent Director sets the agenda for all executive sessions and has the authority to call meetings of the non-management directors outside of the normal course. The Lead Independent Director has the additional responsibilities of consulting with the Chairman and CEO on Board meeting agendas, meeting individually with members of management, serving as the principal liaison between management and the non-management directors, coordinating the activities of non-management and independent directors, and ensuring optimal communication between management and the Board and its committees. She also ensures that questions by individual members of the Board are addressed and assists board members in fulfilling their duties; this may include discussions with the Chairman and CEO concerning the efficiency of the board meetings and facilitating teamwork and communication among directors and between the non-management directors and management.

Board’s Role in Risk Oversight

Our Board has an active role in overseeing the management of the company’s areas of risk. It receives regular reports on business, operational, financial and strategic initiatives and the related risks, and how they are being addressed. In addition, the full Board or one of its committees oversees specific risk areas. For example, the Board maintains control over significant transactions or decisions through a governance policy that requires Board approval for all corporate actions above specified levels (including material acquisitions or divestitures). The Audit Committee oversees (1) financial risks relating to financial reporting and decision making, which is reviewed at every meeting, (2) the enterprise risk management (ERM) process, which identifies, prioritizes and assigns risk owners at senior management levels to manage and mitigate financial, strategic and business risks that could have a material impact on the achievement of Chiquita’s global strategic and financial objectives, for which formal updates are discussed with the Committee at least twice a year, and (3) compliance and legal risk, which is discussed at every meeting. The Nominating & Governance Committee is responsible for risks associated with corporate responsibility and corporate governance and reviews these at least once a year. The Compensation & Organizational Development Committee oversees risk related to organizational talent management and executive compensation. The Food Innovation, Safety & Technology Committee

 

16


regularly discusses risks in the areas of food safety and innovation. All of these committees report their activities and findings to the full Board.

Audit Committee

The current members of the Audit Committee are Mr. Barker (Chair), Mr. Camp and Mr. Simmons. The Board has determined that Mr. Barker is an “audit committee financial expert” as defined by SEC rules. During 2011, the Audit Committee held 10 meetings. Ms. Anderson served on the Audit Committee until September 2011.

The principal functions of the Audit Committee include:

 

   

appointing and replacing our independent registered public accounting firm;

 

   

approving all fees and all audit and non-audit services of the independent registered public accounting firm;

 

   

annually reviewing the independence of the independent registered public accounting firm;

 

   

assessing our annual audit results;

 

   

periodically reassessing the effectiveness of the independent registered public accounting firm;

 

   

reviewing our financial and accounting policies and our annual and quarterly financial statements;

 

   

reviewing the adequacy and effectiveness of our internal accounting controls and the internal audit function, including responsibility for the appointment, evaluation, compensation, retention and oversight of our Vice President of Internal Audit;

 

   

overseeing the status and implementation of our programs for compliance with laws, regulations and our policies, including responsibility for the appointment, evaluation, compensation, retention and oversight of our Vice President and Chief Compliance Officer;

 

   

reviewing our risk assessments and risk management policies and programs, which also is subject to Board review;

 

   

if and when they occur, overseeing investigations involving allegations of fraud, accounting irregularities or other legal and compliance violations;

 

   

reviewing for approval or ratification all proposed transactions, arrangements or relationships that may be required to be disclosed as related party transactions;

 

   

considering any requests for waivers from the Code of Conduct for executive officers and directors (any such waivers being subject to Board approval);

 

   

overseeing and approving any revisions or updates to the Code of Conduct;

 

17


   

overseeing the education and training of employees in the areas of compliance and ethics to ensure “control consciousness”; and

 

   

in connection with all of the foregoing, meeting with the independent registered public accounting firm, our internal auditors, legal, compliance and risk professionals and our financial management.

The Audit Committee has furnished the following report for inclusion in this proxy statement.

Audit Committee Report for 2011

The Audit Committee has the responsibility to oversee and review the preparation of the company’s consolidated financial statements, including the system of internal controls and accounting policies. As provided in the charter adopted by the Board of Directors, the Audit Committee assists the Board in its oversight of the integrity of the consolidated financial statements of the company, the qualifications and independence of the independent registered public accounting firm, the performance of the internal and independent auditors, and the company’s programs for compliance with laws, regulations and company policies. The Audit Committee has the sole authority and responsibility to select, compensate, evaluate and, when appropriate, replace the company’s independent registered public accounting firm. The Board has determined that each member of the Audit Committee is independent under the standards of independence established under our corporate governance policies and the NYSE listing requirements and also is independent for purposes of Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended.

Management is responsible for the financial reporting process, including the system of internal controls, and for the preparation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States. The company’s independent registered public accounting firm performs an audit of the company’s consolidated financial statements and internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB) and issues a report thereon. The Audit Committee’s responsibility is to oversee and review these processes. It is not, however, professionally engaged in the practice of accounting or auditing and does not provide any expert or other special assurance or professional opinion as to the sufficiency of the external or internal audits, whether the company’s consolidated financial statements are complete and accurate and are in accordance with accounting principles generally accepted in the United States, or on the effectiveness of the system of internal control.

The Audit Committee has reviewed and discussed with management the company’s audited consolidated financial statements and its internal control over financial reporting as of and for the fiscal year ended December 31, 2011. The Audit Committee has discussed with PricewaterhouseCoopers LLP, the company’s independent registered public accounting firm, the matters required to be discussed by PCAOB AU Section 380 (Communication with Audit Committees).

The Audit Committee has also received the written disclosures and a letter from PricewaterhouseCoopers LLP regarding its communications with the Audit Committee concerning independence as required by the PCAOB, and the Audit Committee has discussed the independence of PricewaterhouseCoopers LLP with representatives of that firm. The Audit Committee also reviewed, among other things, the audit and non-audit services performed by PricewaterhouseCoopers LLP in 2011 and the amount of fees paid for such services, and periodically received updates on the amount of fees and scope of audit-related and non-audit related services provided. All services were provided consistent with applicable rules, policies and procedures and were approved in advance of the service being rendered. The Audit Committee’s meetings include, whenever appropriate, separate executive sessions

 

18


with the company’s independent registered public accounting firm and with the company’s internal auditors, in each case without the presence of the company’s management.

Based on the Audit Committee’s review and the discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board approved, that the company’s audited consolidated financial statements and management’s assessment of internal control over financial reporting be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

March 26, 2012

 

Howard W. Barker, Jr., Chair

William H. Camp

Jeffrey N. Simmons

Compensation & Organization Development Committee

The current members of the Compensation & Organization Development Committee (the Compensation Committee) are Mr. Camp (Chair), Ms. Anderson, Mr. Serra and Mr. Stanbrook. The principal functions of the Compensation Committee include:

 

   

approving the relevant company goals and objectives for incentive compensation plans and evaluating the performance against those goals and objectives;

 

   

reviewing and approving all compensation of Chiquita’s executive officers including those executive officers named in the Summary Compensation Table (the Named Executive Officers), with the exception of the CEO, for whom the Compensation Committee makes recommendations for review and approval by the independent members of the Board;

 

   

annually reviewing both the total compensation package and the individual components of compensation, including salary, annual incentives, equity awards and potential severance or change in control payments, of each Named Executive Officer;

 

   

reviewing the Nominating & Governance Committee’s annual evaluation of the Chief Executive Officer;

 

   

overseeing management’s plan and procedures for development and succession of executive officers, other than the Chief Executive Officer, and reporting at least annually to the Board’s non-management directors;

 

   

annually reviewing executives’ performance against stock ownership guidelines;

 

   

reviewing the company’s executive compensation strategies and principles;

 

   

annually reviewing and making recommendations to the Board with respect to incentive compensation and equity-based compensation plans;

 

   

overseeing regulatory compliance with respect to compensation practices and making recommendations, as appropriate, to the Board regarding submission of certain compensation matters to the vote of shareholders;

 

19


   

evaluating and monitoring Chiquita’s policies, strategies, plans and achievements relating to executive development, attraction and retention; and

 

   

administering and interpreting the Chiquita Stock and Incentive Plan.

The Compensation Committee normally meets in person at least four times a year and also meets telephonically and acts by unanimous written consent, as necessary and appropriate, in between its regularly scheduled meetings. Historically, the Compensation Committee had not adopted a specific meeting calendar for compensation actions even though most actions have been taken at similar times each year. In early 2011, the Compensation Committee adopted a schedule for compensation actions as part of its intended annual calendar of activities. According to this schedule, the Compensation Committee will approve incentives earned for the most recently completed year, set salaries and annual incentive targets for the existing year and set targets for the upcoming Long Term Incentive Program (LTIP) performance period in February of each year while approving restricted stock unit awards in the third calendar quarter of each year. In February 2012, the Compensation Committee amended this schedule so that it would grant restricted stock unit awards at the same time as other compensation actions in order to enable the Compensation Committee to see the effect on target total direct compensation of all compensation actions for the full year.

During 2011, the Compensation Committee held six meetings and acted by unanimous written consent once. Mr. Aguirre and representatives from the company’s Human Resources and Legal Departments participate in Compensation Committee meetings upon invitation from the Committee; however, when the Committee discusses and approves Mr. Aguirre’s and other executive officers’ compensation, any executive officer whose compensation is being discussed is excused from the meeting. To maintain records of the Committee’s discussions and approvals, a member of the company’s Human Resources Department who is not an executive officer serves as secretary for the meetings and, in that capacity, generally is present for deliberations.

As CEO, Mr. Aguirre reviews all components of executive officer compensation; proposes overall target pay levels and short- and long-term incentive plan targets; and makes individual compensation recommendations to the Committee for each executive officer other than himself. The Committee considers Mr. Aguirre’s recommendations when approving the compensation for each executive officer. However, the Committee approves all compensation granted to our executive officers.

The Compensation Committee has the sole authority to retain and terminate its compensation consultant to assist in the evaluation of the CEO and other executive officer compensation. As part of its normal diligence, the Committee reviewed the compensation consultant relationship during 2009 and, effective in April 2010 the Committee engaged Towers Watson as its new independent compensation consultant for an open-ended duration. The overall services provided by Towers Watson during its engagement have been based on the following principles:

 

   

offering independent and objective advice on all aspects of executive compensation and benefits; and

 

   

helping the Compensation Committee and our senior management make effective decisions supporting the goals for the company’s executive compensation program, namely that it is competitive, meets good corporate governance standards and is aligned with shareholder interests, our overall business strategies and market leading practices.

Although, as appropriate for its terms of service, Towers Watson worked closely with company management to identify issues and develop alternative solutions, the firm reported directly to the Compensation Committee. Upon invitation from the Compensation Committee, representatives of

 

20


Towers Watson attended Committee meetings to present their firm’s findings and recommendations. In 2011, at least one representative of Towers Watson attended each of the six meetings of the Compensation Committee.

During its term of service in 2010, 2011 and early 2012, Towers Watson reviewed trends and emerging issues in executive compensation with the Compensation Committee and assisted it with evaluations of and recommendations regarding: (1) the compensation of the CEO; (2) management’s recommendations regarding proposed pay levels for other executive officers; (3) the content of the Committee’s charter; (4) the design of the annual and long-term incentive programs; (5) executive perquisites; (6) our peer group of companies; (7) share utilization practices; and (8) stock ownership guidelines. Towers Watson also reviewed the proposed Compensation Discussion and Analysis for the 2011 and 2012 proxy statements, and assisted with the calculation of potential payment amounts under various termination scenarios. Towers Watson has met with the Committee in executive sessions and worked closely with the Chair of the Committee in preparation for each meeting during its term of service. At the request of the Nominating & Governance Committee, Towers Watson also reviewed board of directors pay levels.

Certain Towers Watson affiliates are also engaged by Chiquita to provide services other than executive compensation consulting. During 2011, Towers Watson received approximately $204,000 for executive compensation services to or on behalf of the Committee, approximately $27,000 to evaluate the market competitiveness of the company’s 401(k) and Capital Accumulation Plan, and affiliates of Towers Watson provided actuarial and compensation market survey data services to Chiquita totaling approximately $21,000. In early 2012, the Compensation Committee reviewed the payments made to the Towers Watson affiliates during 2011, as well as the services the Towers Watson affiliates performed for Chiquita, and discussed them with Towers Watson. Based on its review, the Compensation Committee believes that each of these relationships is separate and independent and does not impair Towers Watson’s ability to provide independent compensation advice to the Committee.

Our management retained its own compensation consultant, Frederic W. Cook & Co., Inc. (Frederic Cook) in March 2007 to assist it from time to time in the preparation and review of compensation program recommendations for consideration and review by the Compensation Committee and its independent consultant. Under the terms of management’s engagement letter with Frederic Cook, the firm is responsible for:

 

   

reviewing our existing incentive programs; and

 

   

assisting management with the design of our long-term incentive and other programs, as requested.

Frederic Cook advises members of our company’s management who, in turn, address issues with the Compensation Committee. Frederic Cook provided services to company management during 2011 regarding the evaluation of the market competitiveness of the company’s 401(k) and Capital Accumulation Plan, as well as the level of benefits to be provided in conjunction with the relocation and consolidation of the company’s headquarters operation in Charlotte, NC, but did not attend any meeting of the Compensation Committee during 2011.

The Compensation Committee has furnished the following report for inclusion in this proxy statement.

 

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Compensation Committee Report for 2011

The undersigned comprise the members of the Compensation & Organization Development Committee of Chiquita’s Board of Directors. The Committee was responsible for reviewing the performance and establishing the individual compensation of the company’s executive officers for 2011, including those named in the Summary Compensation Table.

The Committee has reviewed and discussed the Compensation Discussion and Analysis presented below with the company’s management. Based upon that review and those discussions, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement for Chiquita’s 2012 Annual Meeting of Shareholders.

March 16, 2012

 

William H. Camp (Chair)

Kerrii B. Anderson

Jaime Serra

Steven P. Stanbrook

Nominating & Governance Committee

The current members of the Nominating & Governance Committee are Ms. Anderson (Chair), Dr. Hasler-Lewis, Mr. Serra and Mr. Stanbrook. The principal functions of the Nominating & Governance Committee include:

 

   

identifying and recommending to the Board qualified candidates to fill vacancies on the Board;

 

   

recommending to the Board candidates to be nominated for election as directors at annual meetings of shareholders;

 

   

overseeing management’s plan and procedures for Chief Executive Officer development and succession, including identifying, if requested by the Board, potential candidates for the position of Chief Executive Officer, and reporting at least annually to the Board’s non-management directors;

 

   

recommending to the Board the members of each committee of the Board;

 

   

developing and recommending to the Board the governance standards, policies and practices applicable to the Board;

 

   

overseeing, as requested by the Board, the Board’s corporate governance activities;

 

   

reviewing and making recommendations to the Board regarding director compensation;

 

   

reviewing public policy matters of importance to our stakeholders, including oversight of our corporate responsibility program;

 

   

considering shareholder suggestions for director nominees; and

 

   

reviewing the performance of the CEO and providing the details of the review to the Compensation Committee and the Board.

 

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During 2011, the Nominating & Governance Committee held five meetings.

As required by its charter, the Nominating & Governance Committee reviews and makes recommendations to the Board regarding director compensation. The full Board approves all director compensation and changes in director compensation. At the request of the Nominating & Governance Committee, in 2011 Towers Watson prepared a survey of current broad industry director compensation practices. Based on the data reviewed and current best practices, the Nominating & Governance Committee did not recommend any change in director compensation.

Shareholder Nomination Procedure

The Nominating & Governance Committee will consider shareholder suggestions and recommendations of nominees for director. Recommendations may be submitted to the Nominating & Governance Committee, c/o Corporate Secretary of Chiquita Brands International, Inc., 250 East Fifth Street, Cincinnati, Ohio 45202. To have a candidate considered by the Nominating & Governance Committee, a shareholder must submit the recommendation in writing and must include the following information:

 

   

the name of the shareholder and evidence of his or her ownership of common stock, including the number of shares owned and the length of time of ownership; and

 

   

the name of the candidate, the candidate’s resume or a listing of his or her qualifications to be one of our directors, and the candidate’s consent to be named as a director if selected by the Nominating & Governance Committee and nominated by the Board.

Recommendations received by the Corporate Secretary’s office by December 31 of any year will be considered by the Committee at a regular meeting in the following year, preceding the mailing of proxy materials to shareholders for that year’s annual meeting. We did not receive any recommendations for director nominees from shareholders during 2011. In considering candidates submitted by shareholders, the Nominating & Governance Committee will take into consideration the needs of the Board and the qualifications of the candidate.

Nominee Qualifications

The Board and the Nominating & Governance Committee believe that, at a minimum, any nominee for director (whether recommended by a shareholder, management or the Board) to serve as one of our directors must:

 

   

demonstrate, by significant accomplishment in his or her field, an ability to make a meaningful contribution to the Board’s oversight of our business and affairs; and

 

   

have an impeccable record and reputation for honest and ethical conduct in both his or her professional and personal activities.

Whenever a specific need or opportunity to add an additional director arises, the Board will approve any additional criteria for the Committee to use in evaluating potential candidates.

Although the Nominating & Governance Committee does not have a formal policy with respect to diversity, it seeks to have a Board of Directors that represents a diversity of backgrounds, skills and experience. The Nominating & Governance Committee annually reviews the skills and qualities of Board members as part of the Board’s annual self-assessment process. This assessment may include

 

23


considerations such as financial skills, management expertise, brand management understanding, knowledge of the global food industry, diversity, age and international background and experience.

Other Procedures

In addition to considering candidates recommended by shareholders, the Nominating & Governance Committee may identify potential nominees by asking current directors to notify the committee if they become aware of persons meeting the criteria described above who might be available to serve on the Board. The Nominating & Governance Committee also engages firms that specialize in identifying director candidates. Once an individual has been identified by the Nominating & Governance Committee as a potential candidate, the Committee may collect and review publicly available information regarding the individual. If, after review of the individual’s qualifications and suitability under the Board’s governance policies, the Committee determines that the candidate warrants further consideration, it may contact the individual to ascertain his or her interest in potential service on the Board. Generally, if the individual expresses a willingness to be considered and to serve on the Board, the Nominating & Governance Committee requests information from the candidate, reviews the individual qualifications, particularly in light of other candidates the Committee may be considering, and conducts one or more interviews with the candidate. In certain instances, Nominating & Governance Committee members may contact one or more references provided by the candidate or other persons who may have first-hand knowledge of the candidate’s accomplishments.

Food Innovation, Safety & Technology Committee

The current members of the Committee are Dr. Hasler-Lewis (Chair) and Mr. Simmons. The principal functions of the Committee include:

 

   

reviewing, evaluating and advising the Board regarding the long-term strategic goals and objectives of our food innovation and food safety programs;

 

   

assisting us in making well-informed choices in directing investment into areas related to food innovation and food safety programs; and

 

   

monitoring and evaluating trends in research and development related to food innovation and food safety.

During 2011, the Food Innovation, Safety & Technology Committee held two meetings.

Communicating with the Board of Directors or with Individual Directors

The Board has established a process to receive communications from security holders and other interested parties. You may contact the Board or any management or non-management director, including the Chairman of the Nominating & Governance Committee (currently Ms. Anderson), who serves as our Lead Independent Director. Correspondence should be addressed to the Board of Directors or any individual director(s) or group or committee of directors either by name or title. All such correspondence should be sent “c/o General Counsel” by mail to Chiquita Brands International, Inc., 250 East Fifth Street, Cincinnati, Ohio 45202 or by fax at (513) 564-2857. You may also send an e-mail to boardofdirectors@chiquita.com and, if applicable, specify in the text of the e-mail whether it should be directed only to certain directors (such as independent directors) or members of certain committees.

All communications received as set forth in the preceding paragraph will be opened by the office of the General Counsel for the sole purpose of determining whether the contents represent a message to the

 

24


directors. Any contents that are not in the nature of advertising, promotion of a product or service or patently offensive will be forwarded promptly to the addressee(s). Any communication also will be available to any non-management director who requests it.

COMPENSATION OF DIRECTORS

Annual Compensation of Non-Employee Directors. For Board service in 2011, non-employee directors received annual compensation comprised of a cash fee of $80,000, payable quarterly in arrears, and a number of shares of common stock having an aggregate fair market value of $98,000, payable annually in arrears on the third business day following the day on which financial results for 2011 were released. In addition, the Chairs of the Audit Committee, the Compensation Committee, and the Nominating & Governance Committee each received an annual fee of $20,000 in cash, and the Chair of the Food Innovation, Safety & Technology Committee received an annual fee of $7,500 in cash. Fees for membership on any other non-standing committee(s) established from time to time are established in connection with the formation of any such committee.

Directors who are employees receive no additional compensation for serving on the Board or its committees.

Directors Deferred Compensation Program (DDCP). Under the DDCP, directors may defer the receipt of all or any portion of their Board compensation (whether cash or shares) until (i) the date their service on the Board terminates (whether upon death, disability, retirement or otherwise) or (ii) the first anniversary of that date (other than upon death or disability). Stock compensation may be deferred only in stock units, each of which is equivalent to one share of our common stock. Cash compensation may be deferred in stock units or cash. Cash amounts deferred under this plan earn interest at the three-month London Inter-Bank Offer Rate (LIBOR), adjusted quarterly. During 2011, no directors deferred cash compensation. When dividends are paid, cash dividend equivalents are paid on the stock units in a director’s account on the same payment date as dividend payments to all shareholders. The DDCP account amounts are unfunded and unsecured obligations of ours and are subject to the same treatment and risks as other general obligations.

Other Benefits. Once a year the Board meets at one of our operating locations, and directors are encouraged to bring their spouses to the meeting site at our expense.

Stock Ownership Guidelines for Directors. In 2006, the Nominating & Governance Committee approved stock ownership guidelines for non-employee members of the Board of Directors. The guidelines provide that each director is expected, within five years after adoption of the guidelines or commencement of Board service, whichever is later, to hold shares of common stock with a value equal to $400,000 (five times the annual cash retainer for service on the Board of Directors, excluding committee chair and other committee fees). Progress toward the goal is expected to be approximately 20% per year and, if the guidelines are not met, subsequent director fees will be paid entirely in shares until the guidelines are met. Shares that count toward these guidelines include unvested RSUs, exercisable stock options to the extent they are “in-the-money,” stock units deferred in the DDCP, and any other shares held by the director. Until the guidelines are met, Board members are not permitted to sell any shares without Board approval (other than selling a portion of stock upon vesting of RSUs or shares received upon exercise of stock options to pay taxes or the options’ exercise price). For purposes of measuring compliance with these guidelines, the value of the shares owned (as defined above) is the greater of the acquisition price or the closing price on the last trading day of the year prior to the measurement date. As of December 31, 2011 all directors had made the expected progress toward their ownership goals.

 

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In 2011, we provided the following annual compensation to our non-employee directors.

2011 Director Compensation

 

Name  

Fees

Earned or

Paid in

Cash

($)

 

Stock

Awards(1) (2) (3)

($)

 

All Other

Compensation(4)

($)

 

Total

($)

         
(a)   (b)   (c)   (g)   (h)

 

Kerrii B. Anderson

 

 

 

145,500(5)     

 

 

 

98,000    

 

 

 

520    

 

 

 

244,020

 

 

Howard W. Barker, Jr.

 

 

 

126,000(5)     

 

 

 

98,000    

 

 

 

1,854    

 

 

 

225,854

 

 

William H. Camp

 

 

 

126,000(5)     

 

 

 

98,000    

 

 

 

-0-    

 

 

 

224,000

 

 

Robert W. Fisher(6)

 

 

 

32,308    

 

 

 

39,577    

 

 

 

174,125    

 

 

 

246,010

 

 

Clare M. Hasler-Lewis  

 

 

 

88,000(5)     

 

 

 

98,000    

 

 

 

3,868    

 

 

 

189,868

 

 

Jaime Serra

 

 

 

105,500(5)     

 

 

 

98,000    

 

 

 

2,203    

 

 

 

205,703

 

 

Jeffrey N. Simmons

 

 

 

47,912    

 

 

 

58,692    

 

 

 

-0-    

 

 

 

106,604

 

 

Steven P. Stanbrook

 

 

80,000    

 

 

 

98,000    

 

 

 

520    

 

 

 

178,520

 

 

  (1) 

Represents the aggregate grant date fair value computed consistent with FASB ASC Topic 718 (See Note 1 to the Consolidated Financial Statements). Each director who served for all of 2011 (Ms. Anderson, Dr. Hasler-Lewis and Messrs. Barker, Camp, Serra and Stanbrook) received $98,000 in unrestricted stock compensation. Each director who served less than the full year (Messrs. Fisher and Simmons) received a pro rata amount. The number of shares received by each director was calculated by dividing the applicable cash value amount by $10.32, the closing price of our common stock on February 24, 2012, the date of payment. The following numbers of shares were granted: Ms. Anderson, Dr. Hasler-Lewis and Messrs. Barker, Camp, Serra and Stanbrook, 9,496 shares each; Mr. Fisher 3,798 shares; and Mr. Simmons 5,724 shares.

 

  (2) 

At December 31, 2011, the aggregate numbers of outstanding stock options and restricted stock unit awards issued as part of prior director compensation for each director were as follows:

 

Name

  

Stock Options (#)

  

Restricted Stock Units (#)

Ms. Anderson

         --          --

Mr. Barker

         --    10,051

Mr. Camp

         --      7,185

Dr. Hasler-Lewis

         --      2,500

Mr. Serra

   50,000    10,000

Mr. Simmons

         --          --

Mr. Stanbrook

   50,000    10,000

All stock options are fully vested and have been fully expensed; exercise prices range from $13.31 to $15.05. All RSUs vest on the day the director’s service as a non-employee director ceases. Stock options and RSUs are no longer part of the director compensation program.

 

  (3) 

Dr. Hasler-Lewis and Messrs. Barker and Camp deferred the full $98,000 of their stock compensation for 2011 (9,496 common stock units each) into their DDCP accounts.

 

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  (4) 

Except for Mr. Fisher, these amounts represent spousal travel and tax gross-ups thereon. The amount for Mr. Fisher represents the fair value of 12,500 shares of common stock issued upon vesting of his RSUs when his service as a non-employee director ceased on May 26, 2011. The fair value of the shares for Mr. Fisher was calculated using the closing price of the company’s common stock on that date ($13.93).

 

  (5) 

Includes director fees for service on a non-standing committee for part of 2011.

 

  (6) 

Mr. Fisher retired from the Board in May 2011.

 

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COMPENSATION OF EXECUTIVE OFFICERS

The following Compensation Discussion and Analysis should be read in conjunction with the compensation tables beginning on page 48.

Compensation Discussion and Analysis

Summary of 2011 Results and Compensation Actions

During 2011, Chiquita delivered our third consecutive year of profitability. Annual sales decreased 3% year-on-year to $3.1 billion, on lower sales in Salads & Healthy Snacks and Other Produce, partially offset by 4% higher Banana sales. We reduced debt by $62 million during the year, refinanced other debt to reduce the total annual interest expense by approximately $14 million at current rates and extended the maturity of our secured credit facility, including $150 million of revolving credit. Despite these achievements, we did not achieve our financial performance objectives related to our short-term performance-based compensation, which affected the compensation paid to executives. Specifically, as reported in the Summary Compensation Table on page 48, none of our executive officers, including the Named Executive Officers, received any payment for 2011 under our annual Management Incentive Program (MIP), which provides the potential for annual incentive-based cash compensation. In addition, as described more fully on page 43, awards for the Long-Term Incentive Program (LTIP) for the 2009-2011 performance cycle were earned at 55% of target. Further, the base salary of our CEO, Mr. Aguirre, will remain unchanged for 2012.

A major goal of our executive compensation program is to award pay for company and individual performance. As described in “Establishing Executive Compensation” beginning on page 33, the Compensation Committee (Committee) establishes the performance pay opportunity at the beginning of a performance cycle and the final realized pay is determined after completion of the cycle. Consequently, the increase shown in the Summary Compensation Table on page 48 for Mr. Aguirre from 2010 to 2011 resulted from a nominal increase in his base salary and an increase from the prior period in his pay opportunity for the LTIP; the realized pay from this opportunity will not be determined until early 2014. As an illustration of how the executive compensation program achieves our pay-for-performance objectives, the tables below provide the percentage and dollar value of the elements that comprised the target total direct compensation opportunity (other than benefits) available to our Named Executive Officers who were employed by us at the end of 2011, as compared to actual realized pay for the trailing one and three-year periods ended December 31, 2011. For the trailing one-year period, the average realized pay was approximately 56% of the pay opportunity and for the trailing three-year period, the average realized pay was approximately 69% of the pay opportunity.

 

    One-Year (2011)  
Named Executive Officer    Performance Pay
Opportunity(1)
     Realized Pay(2)      Realized as % of
Opportunity
 

Fernando Aguirre

   $ 2,363,238       $ 1,024,239         43

Kevin Holland

     727,528         438,278         60

Brian Kocher

     819,544         476,544         58

Michael Sims

     772,392         450,392         58

Waheed Zaman

     742,234         434,234         59

 

(1)    Performance Pay Opportunity includes base salary and target annual cash bonus (MIP) for 2011.
(2)    Realized Pay includes base salary and actual MIP for 2011.

 

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      Three-Year (2009-2011)          
Named Executive Officer    Performance Pay
Opportunity(1)
     Realized Pay(2)      Realized as % of
Opportunity
 

Fernando Aguirre

   $ 14,551,295       $ 9,260,101         64

Kevin Holland

     3,534,077         2,495,556         71

Brian Kocher

     3,861,350         2,623,248         68

Michael Sims

     3,194,976         2,265,300         71

Waheed Zaman

     3,505,556         2,402,932         69

 

  (1) Performance Pay Opportunity includes:

 

   

base salary for 2011, 2010 and 2009

 

   

target annual MIP for 2011, 2010 and 2009

 

   

grant date value of RSU awards in 2011, 2010 and 2009

 

   

grant date value of LTIP target for the 2009-2011 performance cycle

 

  (2) Realized Pay includes:

 

   

base salary for 2011, 2010 and 2009

 

   

actual MIP for 2011, 2010 and 2009

 

   

value of RSU awards granted in 2011, 2010 and 2009 at $8.34 (closing price on 12/31/2011)

 

   

actual value of shares earned under the LTIP award for the 2009-2011 performance cycle at $10.32 (the closing price on the date of issuance)

Results of 2011 Say-on-Pay Vote

In 2011, we provided our shareholders with the opportunity to provide a non-binding vote on executive compensation. Although this vote is non-binding, the Committee has considered, and will continue to consider, the results of this vote each year when making compensation decisions for our executive officers. At our 2011 Annual Meeting, approximately 85% of the shareholders who voted on the “say-on-pay” proposal approved the compensation of our Named Executive Officers. The Committee believes that this shareholder vote endorses our Compensation Philosophy and practices. The Board also considered the shareholder vote regarding the frequency of shareholder advisory votes on named executive officer compensation and determined that it will hold an advisory vote on its named executive officer compensation every year until the next vote on frequency, which is expected to occur at the 2017 Annual Meeting of Shareholders.

Overview of Executive Compensation Program Objectives

The primary focus of the Compensation Committee is the compensation of our executive officers. Chiquita’s compensation program for executive officers is intended to:

 

   

encourage and reward current business outcomes through cash salaries and performance-based annual incentives;

 

   

reward sustained performance at specified levels and encourage retention through annual restricted stock unit (RSU) awards and other one-time equity awards under the company’s Stock Plan;

 

   

reward achievement of the company’s longer-term business goals through performance-based three-year LTIP awards; and

 

29


   

foster alignment of executive management with the interests of shareholders through equity incentive awards and stock ownership, in accordance with stock ownership guidelines.

The compensation program seeks to provide the proper incentive and reward for our executives’ achievements in both managing our day-to-day business and achieving short-term objectives while addressing shorter-term challenges facing us, and achieving our long-term goals of improving world nutrition by being the innovative global leader in branded, nutritious foods and delivering leading food industry shareholder returns.

Current compensation decisions are guided by the Committee’s formal Compensation Philosophy described below, by Equity Guidelines described on page 46 and by Stock Ownership Guidelines for Executive Officers described beginning on page 47.

Compensation Philosophy

The Compensation Committee has adopted a formal Compensation Philosophy for executive officers and reviews it periodically, most recently in September 2011. The Committee’s philosophy is that, on average, overall target pay for executives, including each major component of pay, should approximate the 50th percentile of market and industry-specific data, with executives who are consistently high-performing being paid at a higher percentile (up to and in rare cases exceeding the 75th percentile), consistent performance that meets expectations being paid at the median and lower-performing executives being paid at a lower percentile. Long-term compensation award opportunities for an executive officer are based upon consistent performance at a specified level, as well as an assessment of the officer’s potential for future contributions. The emphasis on short- and long-term incentive compensation and on cash and equity incentive compensation varies depending on the level of an individual’s responsibilities, with an increased weighting on longer-term and equity incentives for more senior executives. There is no pre-established allocation between cash and equity compensation for executive officers. Limited perquisites of executive officers are targeted to be conservatively below the median of the peer group.

On average, the target “total direct compensation” (the sum of base salary, target annual incentives and target long-term incentives) for the Named Executive Officers (based on 2011 compensation) is approximately 4% above the company’s Peer Group data median and approximately 11% above the published survey data median (in each case based on the most recent available information, i.e., from 2010 or 2009). Actual cash compensation for the 2011 performance year, however, was significantly below target for each of the Named Executive Officers since they received no awards under the MIP. The use of published survey and peer group data is discussed in detail in the section entitled “Establishing Executive Compensation; Use of Peer Groups.” Each officer’s actual compensation is based upon individual and company performance and the company’s stock price, as well as individual potential and tenure. Each element of pay is influenced by an individual’s performance rating.

Compensation Risk Assessment

The Committee has reviewed and discussed the structure of our compensation program from the point of view of assessing whether any aspect of the program could potentially be expected to provide an incentive to our executive officers or other employees to take any unnecessary or inappropriate risks that could threaten our operating results, financial condition or affect long-term shareholder value. To assist the Committee in its review, in early 2010 it engaged its independent compensation consultant to conduct a risk assessment of the company’s incentive-based compensation plans and the company’s compensation practices.

 

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Based on this review, the Committee believes our compensation programs represent an appropriate balance of short-and long-term compensation and do not encourage executive officers or other employees to take unnecessary or excessive risks that are reasonably likely to have a material adverse effect on the company. The Committee’s review also considered our internal controls, policies and risk-mitigating components in our incentive arrangements currently in place and which have not changed in any material respect since the assessment, as well as the Committee’s formal review and discussion.

We have designed our MIP and LTIP incentive compensation programs to reward eligible employees for the achievement of financial results that reduce the volatility of operating results, which we expect to cause adequate returns to shareholders. These goals are intended to be challenging yet provide a reasonable opportunity to reach the threshold amounts, while requiring meaningful growth to reach the target levels and substantial growth to reach the maximum levels. The amount of growth required to reach the maximum level of compensation is developed within the context of the normal business planning cycle and, while difficult to achieve, is not viewed to be at such an aggressive level that it would induce eligible employees to take inappropriate risks that could threaten our financial or operating stability. In addition, the MIP and LTIP contain caps on the maximum payout to employees.

Our executive compensation program includes the following features to guard against excessive risk:

 

Feature    Component    Purpose
   

Compensation Mix

  

•   fixed and contingent

•   annual cash incentive

•   long-term equity

•       time-based equity

•       performance-based equity

   Helps ensure that executives do not focus on achieving short-term results at the expense of long-term growth and sustainability of the company
   

Limit on Maximum Incentive Payout

  

•   225% of target in MIP

•   200% of target in LTIP

   Helps ensure incentive opportunities are meaningful, but not unduly large
   

Stock Ownership Guidelines

  

An executive officer generally cannot sell stock until s/he satisfies the guideline

•   5 times salary for the CEO

•   3 times salary for all other executive officers

  

•   align interests to long-term growth

•   limits capture of short-term fluctuation in stock price

   

Recoupment Policy

  

•   recovery of annual or long-term incentive compensation in event of a material revision of the financial results or metrics upon which the awards were based due to malfeasance

  

•   helps ensure results are sustainable

•   discourages malfeasance

   

Board Approval of Transactions

  

•   full Board approval of significant transactions

•   Compensation Committee may exercise downward discretion to adjust awards

   Helps ensure financial goals are met by executing operating plans instead of simply by financial or other transactions

Use of Peer Groups

In making compensation recommendations and decisions for all of the executive officers, including the Named Executive Officers, the independent members of the Board (in the case of the CEO) and the Compensation Committee (for all other executive officers) review individual executive officer job profiles and compensation compared to publicly available information in proxy statements, to summarized data reported in purchased survey reports, and to data from our Peer Group described below.

 

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The Committee is responsible for selecting and periodically reviewing our Peer Group of companies used for executive officer compensation benchmarking. In choosing peer companies, the Committee believes that the following principles are appropriate:

 

   

Objectively selected – Companies should be selected based on pre-determined criteria to ensure objectivity in the process.

 

   

Representative sample – A sufficient number of companies should be included such that adequate data are provided with which to reach valid conclusions, but that the sample size should not be so large that it becomes unmanageable.

 

   

Regular review – Because markets are dynamic and the structure and ownership of companies change, the peer group should be revisited annually; however, frequent, major adjustments in the composition of the peer group should be avoided unless required due to corporate transactions or other events that may impact the peer companies, or dramatic shifts in the company’s business or strategy.

 

   

Relevance – Selected peers should be reasonably related in terms of industry and global scope, as well as companies with which the company competes for executive talent, customers or investors. Particular emphasis will be placed on the food and beverage, and the consumer packaged goods industries.

 

   

Comparability – The following metrics should be considered: revenue, net income, market capitalization, assets, number of employees and total shareholder return. Ideally, we should rank near the median of the peer group on each of these metrics, with a heavier weighting on revenue since, due to the nature of our business and operations, our relative ranking in that metric should be less volatile than in the other metrics.

 

   

Methodology—The initial screen should include companies in our Standard Industrial Classification (SIC) code that are between 50% and 200% of the company on each of the metrics independently (with the range expanded as necessary to ensure appropriate industry representation); the Peer Group then should be constructed from this universe based on the best fit (industry, financial and global scope).

In September 2011, as part of its regular periodic review and consistent with the advice of its independent consultant, the Committee reviewed the current Peer Group and made no changes to its makeup other than the elimination of one company due to its acquisition by a private company.

The table below identifies our Peer Group companies for 2009, 2010, 2011 and 2012. Companies in the left column (in italics) were included in the Peer Group for 2009 compensation actions, but not included in the Peer Group in 2010, 2011 and 2012, except that they were used as available as described below to determine the relative total shareholder return (TSR) the component of LTIP awards for the 2009-2011 performance cycle. Companies in the right column were added to the Peer Group for 2010 compensation actions, and will be used to determine relative TSR for the LTIP awards for the 2010-2012, 2011-2013 and 2012-2014 performance cycles. Companies in the center column (in bold) have been and continue to be included for all four years with the exception of Del Monte Foods Company which will not be used after 2011.

 

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            PepsiAmericas, Inc.*   Brown-Forman Corporation   Dole Food Company, Inc.
            Spectrum Brands, Inc.*   Campbell Soup Company   Fresh Del Monte Produce, Inc.
  Central Garden & Pet Company   Sanderson Farms, Inc.
  Church & Dwight Co. Inc.   Treehouse Foods, Inc.
  The Clorox Company  
  Constellation Brands, Inc.  
  Corn Products International, Inc.  
  Dean Foods Company  
  Del Monte Foods Company*  
  Energizer Holdings, Inc.  
  Flowers Foods, Inc.  
  H. J. Heinz Company  
  The Hershey Company  
  Hormel Foods Corporation  
  McCormick & Company, Incorporated  
  Molson Coors Brewing Company  
  Ralcorp Holdings, Inc.  
  The J. M. Smucker Company  

 

* PepsiAmericas, Inc. was acquired by PepsiCo in February 2010, Del Monte Foods Company was acquired by a private investor group in March 2011 and Spectrum Brands filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in February 2009. Since public financial results are no longer available for PepsiAmericas and Del Monte Foods, and Spectrum Brands is no longer a comparable company, only their available data are included in the calculation of the applicable Peer Group results once they are no longer available.

In addition to the use of Peer Group data, to the extent available, the Committee places significant emphasis on data which it reviews, analyzes and aggregates from purchased surveys by major consulting firms such as Towers Watson, Mercer and Aon Hewitt. When available, the Committee utilizes data from these surveys that are limited in scope, such as only those companies with comparable revenue and/or industry, so that they most accurately reflect the scope of responsibility for each respective executive officer. The Committee uses this same process for reviewing, analyzing and aggregating data for other executives who are not executive officers.

Establishing Executive Compensation

The Committee’s starting point for determining target total direct compensation, and the allocation of this amount among salary, annual cash incentive, RSUs and long-term equity incentives, is market information derived from the published survey data and provided in public filings with the SEC by the Peer Group companies. A summary of each of the elements of total direct compensation for each executive officer, along with the market information for these same elements for executives with similar roles, is reviewed by the Committee. Tally sheets setting forth all elements of an individual’s earned compensation for the immediately preceding two years, including the value of qualified and nonqualified benefit programs and the value of other non-cash compensation, also are reviewed annually for the Named Executive Officers. For 2011 and 2012, no adjustments were made to the compensation program as a result of the tally sheet review because the amounts were considered reasonable and appropriate. Further, in February 2012 the Committee reviewed a wealth accumulation analysis for each of the then-current executive officers to understand how an executive’s realized wealth could build over time by reviewing, using various stock price scenarios, both equity awards already granted and future awards, assuming grants of similar value in future years. Further, the Committee reviewed the currently unvested RSU and LTIP opportunities for incomplete performance cycles in order to evaluate the retention value associated with current outstanding awards. The Committee found that the desired level of retention value, approximately 1.5-2.0 times the sum of an executive officer’s base salary and target annual MIP

 

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award, is not achieved for most of our executive officers under most potential payout scenarios. The Committee determined that the results of this analysis generally demonstrated proper leverage on the upside but that the retentive value of currently-outstanding awards is insufficient, particularly in light of the upcoming relocation of the corporate headquarters to Charlotte, North Carolina. As a result, for the 2012 equity grant in particular, a portion of the total equity awarded to certain Named Executive Officers other than Mr. Aguirre will have a different performance-conditioned vesting schedule; the details of these awards are described in “Relocation Benefits” beginning on page 45. The Committee expects to conduct a similar wealth accumulation analysis periodically to assess the results over time.

The Committee places emphasis on developing a compensation package that is competitive with that detailed in the survey data, as well as that offered by Peer Group companies, so that we are able to attract and retain qualified executives. Although the Committee reviews internal pay variations among executive officers, sometimes referred to as “internal pay equity,” it is not a significant factor used in making compensation decisions for the executive group. There is significant variation in the nature of the positions in the executive group and sufficient market data available for each executive officer’s position to support individual pay decisions based upon that data.

Elements of Executive Compensation

The principal elements of our executive officer compensation are base salary, annual incentive awards, annual grants of RSUs, LTIP awards and other compensation consisting of qualified and nonqualified deferred compensation plans and limited perquisites. Each element is described briefly below and additional details are included in the tables beginning on page 48.

Base Salaries.

Base salaries are established according to published market surveys and Peer Group data as appropriate to each executive officer’s position, responsibilities and performance. Base salaries are not necessarily adjusted annually, but are generally adjusted when the Compensation Committee judges that a change is warranted by a change in relevant market data or an executive officer’s responsibilities or demonstrated performance. Generally, for all employees, including the Named Executive Officers, a consistently high performing employee whose base salary is below the 50th percentile for employees holding similar positions at other companies will receive a greater increase at more frequent intervals, while an employee whose performance meets expectations and whose base salary is at or above the 50th percentile will receive a lower increase at less frequent intervals. Individual performance is reviewed and rated for executive officers annually.

The salaries paid to the Named Executive Officers in 2011 are shown in column (c) of the Summary Compensation Table on page 48.

In February 2011, the Committee (and in the case of Mr. Aguirre, the independent members of the Board) reviewed the base salary of each of the Named Executive Officers for possible adjustment. In each case, the principles and market data discussed above were considered. After that review, the following adjustments to base salaries were made effective February 28, 2011:

 

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Executive Officer   

Amount of 2011

Increase

  

2011 Annual

Salary

   % Increase  

Relative to Survey

Data

  

Relative to Peer

Group

Fernando Aguirre

   $   30,000    $   1,030,000    3.0%   At Median    5% Above Median

Kevin R. Holland

        35,000            445,000    8.5%   2% Above Median    6% Above 75th Percentile

Brian W. Kocher

        70,000            490,000    16.7%   5% Above Median    Between Median and 75th Percentile

Michael B. Sims

        50,000            460,000    12.2%   7% Below Median    6% Below Median

Tanios Viviani

        15,000            475,000    3.3%   2% Above Median    Between Median and 75th Percentile

Waheed Zaman

        30,000            440,000    7.3%   5% Below Median    5% Above Median

The adjustment to Mr. Aguirre’s base salary was made in recognition of the continued turnaround in operating performance and achievement of strategic objectives during 2010. The adjustments to Messrs. Holland’s, Sims’ and Kocher’s base salaries were made in recognition of their strong performance during 2010 and to enhance the competitive positioning of each of their compensation considering Mr. Holland’s responsibilities for multiple staff functions and Messrs. Sims’ and Kocher’s successful transitions and growth into their respective new roles.

The base salaries of Messrs. Aguirre, Sims and Zaman remained unchanged for 2012. Effective February 27, 2012, the base salaries were increased for Messrs. Holland (3.4%) and Kocher (2.0%) in a manner consistent with the principles and process described above.

Annual Management Incentive Program (MIP) Awards.

Manager-level employees and above (approximately 465 individuals in 2011) are eligible to participate in the MIP. MIP awards are paid in cash except as described below under “Stock Ownership Guidelines for Executive Officers.” The MIP payment to an individual is equal to the individual’s incentive opportunity target, multiplied by a company achievement factor, which can range from 0% to 150%, multiplied by an individual performance factor, which can range from 0% to 150%, subject to reduction in the Compensation Committee’s discretion. After application of the maximum company achievement factor of 150% and the maximum individual performance factor of 150%, an individual’s maximum annual incentive is 225% of his or her incentive opportunity target.

1. Alignment with Shareholder Interests. We believe that the following attributes of the MIP further our long-term business plan and help to ensure that the interests of our executives remain aligned with the interests of our shareholders:

 

   

The MIP pool is funded solely based on our achievement of our financial results. Thus, there is no incentive pool for executive officers if we do not achieve a threshold level of profitability.

 

   

MIP payouts require the recipient to meet or exceed one or more individual performance objectives.

 

   

The individual performance factor acts as a multiplier to achievement based on corporate financial results. Lower-performing executives are not unduly enriched by virtue of strong financial performance in other parts of the business.

 

35


   

The maximum MIP payout for any executive is capped at 225% of his or her target award. The maximum MIP payout can be realized only if both the company’s financial results and the executive’s individual performance factor are achieved at the maximum level possible. Even when we have reached the maximum achievement level for our financial goals, none of the Named Executive Officers has achieved the maximum MIP payout under this formula since 2005.

 

   

MIP awards are calculated on a self-funding basis, meaning they are payable only after taking into consideration the impact on net income of the accrual for the awards themselves.

 

   

Amounts paid or payable are subject to recovery pursuant to our recoupment policy.

2. MIP Award Methodology. Based on our business plan and no later than March 31 of each year, the Committee approves the financial performance goals to be used to determine the company achievement factor for the coming year. The company achievement factor applies to all MIP-eligible employees and is expressed in terms of minimum (threshold), target and maximum performance as follows, with achievement between the levels determined by interpolation:

 

Performance Goals

  

Company Achievement Factor

    

Threshold

  

At or below threshold, 0% achievement factor

  

Target

  

At target, 100% achievement factor

  

Maximum

  

At or above maximum, 150% achievement factor

  

The individual performance factor for all executive officers is fixed at the maximum 150% at the beginning of the year. The Committee (and in the case of Mr. Aguirre, the independent members of the Board) then exercises its negative discretion to reduce this individual performance factor based on the individual’s actual performance during the year against personal objectives and objectives applicable to his or her business or functional unit set at the beginning of the year.

The Committee approves a cash incentive opportunity target for each executive officer, which is expressed as a percentage of the executive’s base salary. The annual incentive target percentage is determined principally according to published survey and Peer Group market data, as well as the responsibilities of the executive officer’s position and his or her potential impact on financial results. Typically, those with greater responsibilities or with greater potential to impact financial results receive higher MIP targets. The percentage assigned to any given position tends to remain constant from year to year. For 2011, the target percentages were 130% for Mr. Aguirre, 70% for Messrs. Kocher, Sims, Viviani and Zaman, and 65% for Mr. Holland. The incentive opportunity targets for other MIP-eligible employees, including the other executive officers, range from 10% to 70% of their base salaries.

In determining the performance goals for 2011, the Committee considered the volatile nature of the industry in which we operate, as well as our performance and the incentive payment percentages achieved in recent years (150% for each of 2005 and 2009, 0% for each of 2006, 2007 and 2010 and 92.75% for 2008). The Committee noted that the incentive payment percentage based on our financial achievement has been highly volatile which could have a negative effect on our ability to attract and retain talented employees in the future.

After careful consideration of our operating results in 2010, our declining revenue for the two years prior, the improving but still uncertain economic environment and the long-term growth plans for our business, the Committee concurred with management’s recommendation to structure the 2011 MIP

 

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similarly to the 2010 MIP, but to add a target for total revenue. The relative weighting was 80% for net income and 20% for total revenue. Further, we were required to achieve at least the threshold level of net income before any award would be paid based on total revenue achievement. This decision reflects the significant focus that the Committee believed management should continue to place on achieving net income while increasing top line growth in 2011.

For 2011, the MIP payment was structured to equal the individual’s incentive opportunity target, multiplied by the company’s weighted achievement factors, multiplied by the individual’s maximum performance factor of 150%, reduced in the Committee’s discretion to reflect the company’s and the individual’s performance for 2011.

When the Committee established the terms of the MIP for 2011, it also determined that certain factors affecting our financial performance might be outside of management’s control and not be directly reflective of current operational performance, and, therefore, management should not be unduly rewarded or penalized for these factors. Accordingly, the Committee provided for the exclusion of certain factors affecting net income and revenue, such as certain gains or losses on asset sales, the impact of certain currency exchange rates to the extent they exceed specified parameters; certain weather-related impacts; certain effects of impairment charges; the impact of unbudgeted governmental investigations or proceedings, including fees and penalties to the extent they arose under prior management; certain items classified in our consolidated financial statements as items of “Other Income and Expense”; the impact of new accounting standards; losses on debt extinguishment; and other unpredictable and uncontrollable events. The Committee retained the discretion to reduce payments to executive officers under the MIP if the Committee determined that the effect of the adjustments described above did not appropriately reflect management’s performance.

In summary, for 2011, the payments were to be calculated as follows:

Salary x Target % = Target Award Opportunity

Target Award Opportunity x Company Achievement Factors = Preliminary MIP Award

Preliminary MIP Award x Individual Performance Factor = Anticipated Final MIP Award

The Committee determined at the beginning of the year that on an aggregate basis, the weighted average individual performance factor for all employees could not exceed 100%.

3. Calculation of 2011 MIP Awards. Annual incentive payments are determined as soon as practicable after the end of each year.

For 2011, the performance objectives were set in early 2011 at the levels shown in the table below. Consistent with the MIP methodology described above, the Committee made certain adjustments to net income and total revenues for purposes of determining the company achievement factor. In the calculation of net income, the adjustments had the effect of reducing the final achievement to 0% because the negative adjustments exceeded the positive adjustments. In the calculation of total revenue, the adjustments had no effect on the final achievement of 0%, both because the negative adjustments exceeded the positive adjustments and because the threshold achievement level was not reached on an unadjusted basis. Nonetheless, the Committee applied the exclusions to maintain a consistent process for each year. For 2011, unadjusted and adjusted net income was achieved at the levels shown in the table below.

 

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      Performance                  
($ in millions)    Objectives      Performance Achievement  
              Unadjusted      Adjusted  

Net Income

                

Threshold

   $ 39.0           

Target

     65.0       $ 56.8       $ 35.4   

Maximum

     100.0           

Total Revenue

                

Threshold

   $ 3,140.0           

Target

     3,263.0       $ 3,139.3       $ 3,132.3   

Maximum

     3,386.0                     

The determination of individual performance factors of executive officers, including the Named Executive Officers, is made by the Compensation Committee with input, in the case of all executive officers other than the CEO, from the CEO. The independent members of the Board of Directors approve the individual performance factor and MIP award of the CEO. For 2011, after the exercise of Committee discretion, the final individual performance factors for the Named Executive Officers ranged from 87% to 107%. Each of the current Named Executive Officers met, and in some cases exceeded, their individual objectives for 2011 with the exception of those directly related to the achievement of our short term financial plan.

 

Executive Officer

  

Objective/Basis for Evaluation

Fernando Aguirre    Overall 2011 company financial performance
   Sustainable long term growth
   Organizational development
Kevin R. Holland    Support leadership structure and top initiatives
   Efficient IT infrastructure
   Organizational development
Brian W. Kocher    Improvements in European banana business
   Sustainable long term growth
   Organizational development
Michael B. Sims    Improved forecasting
   Refinance portions of existing corporate debt
   Establish new sourcing and shipping strategy
   Restructure certain grower advances
Waheed Zaman    Supply Chain Cost and Quality
   Sustainable long term growth
   Organizational development

The MIP methodology described above led to the Final MIP Award, shown below and in column (g) of the Summary Compensation Table on page 48 for each of the Named Executive Officers.

 

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Target Award Target Award Target Award

Executive Officer

   Target Award
Opportunity
     Final MIP
Award
      

Fernando Aguirre

   $ 1,339,000       $ 0      

Kevin R. Holland

   $ 289,250       $ 0      

Brian W. Kocher

   $ 343,000       $ 0      

Michael B. Sims

   $ 322,000       $ 0      

Tanios Viviani

   $ 332,500       $ 0      

Waheed Zaman

   $ 308,000       $ 0      

4. 2012 MIP Program. After careful consideration of our operating results in 2011, the Committee concurred with management’s recommendation to structure the 2012 MIP similarly to the 2011 MIP. The relative weighting was changed to 70% for net income and 30% for total revenue. This decision reflects the significant focus that the Committee believes management should continue to place on achieving net income while increasing top line growth in 2012.

Consistent with the program’s approach in 2011, for 2012 the MIP payment will equal the individual’s incentive opportunity target, multiplied by the company’s weighted achievement factors, multiplied by the individual’s maximum performance factor of 150%, reduced in the Committee’s discretion to reflect the company’s and the individual’s performance for 2012.

Equity-Based Compensation.

We provide equity compensation to our executive officers and other key employees through awards under the Stock Plan. In 2011, these awards took the form of (1) grants of RSUs to director level executives and above (approximately 120 individuals) on a discretionary basis upon hire and annually thereafter, and (2) an LTIP opportunity for executive officers (ten individuals). Award agreements for the RSUs contain unlimited confidentiality, two-year non-competition and one-year non-solicitation provisions.

Each executive officer’s total target equity compensation opportunity is based upon comparisons to published market surveys and Peer Group data at the 50th percentile level, adjusted to take into consideration the individual’s responsibilities as well as the Committee’s assessment of his or her performance and potential to contribute to our long-term success. For 2011, each of the Named Executive Officers’ total target equity compensation opportunity ranged between the 25th and 75th percentiles of the relevant published market survey and Peer Group data, except for Mr. Holland, whose opportunity exceeded the 75th percentile of the Peer Group data. Due to the limited size of and availability of data for the Peer Group, Mr. Holland’s compensation is benchmarked against only top Human Resources executives, whereas his compensation is benchmarked against top Administration executives in the survey data. The Committee takes into account that his role as Chief People Officer encompasses more areas, including responsibility for IT and other staff functions, which are not typically included in the responsibilities of an HR executive.

For those executives who are eligible to participate in the LTIP, which includes each of the Named Executive Officers, the target equity compensation is divided between a time-vested RSU grant and a performance-vested LTIP opportunity. In order to place more emphasis on long-term performance, 60% of target equity compensation is allocated typically to the performance-vested LTIP and the remaining 40% is allocated typically to the time-vested RSUs. New executive officers are generally eligible for an RSU award and an LTIP opportunity at commencement of employment, unless the beginning date is close in time to that for the annual grant of RSUs. Promotions may result in additional off-cycle grants under both the annual RSU award program and the LTIP.

 

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In considering equity incentive awards to executive officers, the Committee takes into account the dilutive effect of the awards on our shareholders, including both the annual rate of share usage and the dollar magnitude of the share value transfer from the shareholders to executives due to the grants. For each of these considerations, data are compared to that of companies in the Peer Group. Although the share value transfer of our equity awards is higher, as a percentage of total market capitalization, than the average for our peers, the Committee has concluded that this is due to our lower market capitalization rather than the dollar magnitude of the grants to executive officers.

We have not granted any stock options since early 2004 because we believe that RSU and LTIP awards are generally more efficient and less dilutive forms of equity compensation, particularly due to the underlying volatility of the stock of companies with industry dynamics such as Chiquita’s. However, while the Committee has no current intention to issue stock options, it could consider grants of stock options if deemed appropriate in the future.

1. Alignment with Shareholder Interests. We believe that the following attributes of the equity-based compensation program further our long-term business plan and help to ensure that the interests of our executives remain aligned with the interests of our shareholders:

 

   

The target RSU and LTIP award for each Named Executive Officer is adjusted upward or downward from the competitive market data at the beginning of each year or performance cycle, as applicable, based on the Committee’s assessment of each Named Executive Officer’s performance and potential.

 

   

The LTIP performance objectives (cumulative EPS, cumulative free cash flow and relative TSR measured over a three-year period) are designed to provide focus on steadily improving shareholder value through earnings, cash flow and, in the case of TSR, outperformance of our peers.

 

   

To mitigate the effect of any short term price volatility, the calculation of relative TSR for the LTIP for each year in a cycle and for the full cycle is based on Chiquita’s and each Peer Group company’s stock price averaged over the last twenty trading days of the preceding calendar year.

 

   

The maximum payout of the LTIP for any executive is capped at 200% of his or her target award, regardless of actual performance results.

 

   

The portion of each LTIP award that is based on cumulative EPS performance against target is calculated on a self-funding basis, meaning that awards are payable only after giving effect to the impact on EPS of the awards themselves.

 

   

The shares acquired upon vesting, net of a limited number of shares permitted to be used to pay all or a portion of the executive’s withholding and employment taxes, are subject to our Stock Ownership Guidelines.

 

   

LTIP awards are payable in a combination of shares and cash in substantially equal portions with all required taxes withheld from the cash portion of the payment in order to minimize the dilutive effect of the awards on our shareholders.

 

   

The four-year vesting schedule for RSUs and the three-year performance period for LTIP provide proper incentives for long-term decision-making and growth and assist in the retention of valuable executives.

 

   

Amounts paid or payable are subject to recovery pursuant to our recoupment policy.

 

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2. Annual RSU Grants. When granting RSUs to executive officers, the Committee determines a dollar value to be awarded to each recipient based on competitive market data, CEO recommendations (for Named Executive Officers other than the CEO), the performance of the executive and an assessment of the executive’s potential. The dollar values then are converted into RSUs based on the fair market value of the common stock on the grant date. These awards generally vest in four equal annual installments beginning on the first anniversary of the grant date. We and the Committee believe that RSU awards provide a valuable retention tool for key executives when our performance may be adversely affected by circumstances beyond their control.

The 2011 grants to the Named Executive Officers were made effective on August 23, 2011 and are reflected in column (i) of the Grants of Plan-Based Awards Table on page 51.

In February 2012, the Committee determined that it would grant RSUs annually in February, at the same time as other compensation actions rather than the August date previously used, to enable the Committee to see the effect on target total direct compensation of all compensation actions for the full year.

3. LTIP Awards and Methodology. Eligibility to participate in the LTIP is limited to executive officers (including the Named Executive Officers) and other senior executives if determined by the Committee who have the most influence on the development and execution of our strategy, as well as on our results.

Each LTIP award is granted for a three-year performance cycle. A new cycle is established effective January 1 of each year so that, at any time, three overlapping performance cycles exist. The goal or goals for each cycle are set within the first 90 days of the cycle.

For the 2009-2011 and 2010-2012 performance cycles, half of each LTIP award opportunity was or is based on cumulative EPS and the other half on relative TSR as measured against the Peer Group. These factors were selected, respectively, to tie performance to our strategic plan to achieve profitable growth and to align most directly the interests of executives and shareholders.

The 2011-2013 performance cycle also includes a free cash flow (FCF) target. The FCF target was added because it aligns with our strategy and with shareholder interests to generate cash flow to support investment and/or debt reduction and enhances the line of sight for actions which are controllable by management. The relative weighting of the metrics is 40% for cumulative EPS, 40% for cumulative FCF and 20% for relative TSR. Individual target award opportunities for the 2011-2013 performance cycle were established in the same manner as those for previous performance cycles relative to the median of the published market survey and Peer Group data for target total equity compensation with the resulting equity awards adjusted up or down based on the Committee’s assessment of each participant’s individual performance and potential.

For the 2009-2011 performance cycle, results were measured annually, with awards earned for each year banked, subject to (1) an executive’s continued employment until such time as any earned award is paid, and (2) forfeiture at the end of the performance cycle. Banked shares could be forfeited for either the EPS or relative TSR portion of the awards if the respective performance was below the threshold level for the full performance cycle.

For the 2010-2012 and 2011-2013 performance cycles, achievement of results will be measured solely by the full three-year performance. In early 2010, the Committee determined to discontinue annual measurement and banking of awards because (1) this better focuses the award on achievement of our longer-term (full three year) performance goals and (2) the banking feature was not fully aligned with the

 

41


Committee’s intent for this program to be straightforward and easily communicated to both participants and investors.

The threshold, target and maximum EPS performance objectives were set at levels intended to result in an approximate probability of payout at 80% for threshold, 50% for target and 10% for maximum as determined qualitatively by the Committee. The relative TSR performance objectives at the threshold, target and maximum levels are the 25th, 50th and 75th percentile, respectively, with amounts interpolated for performance between these levels.

Consistent with the MIP, when the Committee established the terms of each performance cycle, it determined that certain factors affecting our financial performance might be outside of management’s control and not be directly reflective of operational performance, and that management should not be unduly rewarded or penalized for these factors. Accordingly, the Committee provided for the exclusion of the same factors as those described above under “MIP Award Methodology,” as well as (i) the exclusion of shares issued as a result of the exercise of any of our warrants outstanding at the beginning of a performance cycle and earnings resulting from receipt of proceeds of warrant exercises (these warrants expired in March 2009) and (ii) the exclusion of shares issued upon conversion of the company’s 4.25% Convertible Senior Notes due 2016 and the effects of any share purchases. The Committee also retains negative discretion to reduce awards consistent with the terms of the LTIP. When establishing cumulative EPS goals, the Committee reviewed our most recent performance and then-current business plan and included earnings growth targets with consideration of estimates by the Institutional Brokers Estimate System (IBES), and considered its own assessment of a reasonable level of improved profitability.

For each LTIP participant for the 2011-2013 performance cycle, the target LTIP award opportunity is a number of shares calculated by dividing the target amount, denominated in dollars, by the average fair market value of a share of common stock over the last 20 trading days immediately preceding the beginning of the LTIP performance period. This approach was recommended by the Committee’s consultant to minimize the potential volatility inherent in using only a year-end stock price and, since the award is payable in shares, so that the ultimate value realized by executives would reflect changes in stock price during the three-year performance cycle. The 20-day average price in December 2010 was $13.5055. The threshold, target and maximum opportunities for the 2011-2013 performance cycle for the Named Executive Officers are reported in columns (f), (g) and (h) of the Grants of Plan-Based Awards Table on page 51. Achievement is based on the pre-set cumulative EPS and FCF, and relative TSR for the performance cycle, as described above. The participant will receive none of the target number of shares if the threshold level is not achieved, 100% if the target level is achieved and 200% if the maximum level is achieved, subject to the adjustments described above, with amounts interpolated for performance between these levels.

4. LTIP Program for 2012-2014 Performance Cycle. The Committee has decided that the overall design of the LTIP for the 2012-2014 performance cycle will continue as that used in the 2011-2013 performance cycle. Individual target award opportunities for the 2012-2014 performance cycle were established in the same manner as those for the 2011-2013 performance cycle relative to the median of the published market survey and Peer Group data for target total equity compensation, with the resulting equity awards adjusted up or down based on the Committee’s assessment of each participant’s individual performance and potential.

5. Status of Prior LTIP Performance Cycles. LTIP awards are determined as soon as practicable after the end of each performance cycle.

For the 2009-2011 performance cycle, the threshold (minimum), target and maximum performance objectives for cumulative EPS were set in early 2009 at $1.77, $3.54 and $7.07, respectively.

 

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Consistent with the methodology described above, the Committee included certain adjustments to EPS for purposes of determining the company achievement factor. For the 2009-2011 performance cycle, adjusted cumulative EPS equaled $3.89 which resulted in an achievement factor of 110%. Unadjusted cumulative EPS was $4.64.

No award for the portion of the LTIP based on relative TSR was earned as the actual result for the performance cycle was below the threshold level of the 25th percentile of the Peer Group.

Overall, LTIP awards for the 2009-2011 performance cycle were earned at 55% of target. The LTIP awards to the Named Executive Officers are shown below:

 

Executive Officer

   Target
Award
Shares
     EPS
Achievement
(50%)
  TSR
Achievement
(50%)
  Final
Total

Shares
Awarded
   Final Award
as % of
Target

Fernando Aguirre

     165,374       110%   0%   90,956    55%

Kevin R. Holland

     29,925       110%   0%   16,459    55%

Brian W. Kocher

     34,650       110%   0%   19,057    55%

Michael B. Sims

     22,444       110%   0%   12,344    55%

Waheed Zaman

     29,925       110%   0%   16,459    55%

Consistent with the methodology described above, each of these awards was paid in a combination of shares and cash in substantially equal portions.

Results for the 2010-2012 and 2011-2013 performance cycles will be disclosed after the end of each completed performance cycles.

6. Performance Award Opportunity for Mr. Aguirre. In February 2012, the independent members of the Board approved an award opportunity of 68,360 shares which had a value of $700,000 on the grant date and payable upon the first annual anniversary of the grant date contingent upon (i) his successful completion by December 31, 2012 of certain key strategic growth initiatives as specified by the Board and (ii) our net income being at least at the threshold level in the MIP for 2012. The intent of this award is to motivate the achievement of specific financial and strategic objectives the Board believes will contribute to long-term shareholder value creation.

All Other Compensation.

Deferred Compensation Plans. The Committee believes that maintaining deferred compensation plans furthers our philosophy of providing benefit programs that are market competitive with those generally offered by similarly sized companies and that encourage retention through long-term savings on a tax-efficient basis. Thus, executive officers who participate in our 401(k) Plan and Capital Accumulation Plan (CAP) are eligible for company contributions. As discussed under “Establishing Executive Compensation,” periodically the Committee reviews the extent to which wealth has been accumulated under these plans. However, the primary focus of the Committee with respect to this element of our compensation is on establishing a program that is competitive so as to enable the company to attract and retain qualified employees. We do not have any defined benefit or supplemental retirement plans.

We provide matching contributions in our 401(k) Plan to substantially all non-union U.S. employees, including the Named Executive Officers. During 2011, the matching contribution was comprised of two components, the first equal to 100% (basic match) and the second equal to 50%

 

43


(discretionary match) of employee contributions of up to 6% of eligible compensation, subject to annual legal maximums. The basic match vests immediately in order to qualify as a safe harbor match under the terms of the Internal Revenue Code. The discretionary match vests at 20% per year of employment and will be fully vested after five years. For 2011, the maximum annual company match was $22,050 per eligible employee.

Further information on the contributions to and terms of the CAP is included under “Deferred Compensation” beginning on page 57.

Perquisites and Other Personal Benefits. The Named Executive Officers are entitled to participate in benefit programs generally made available to all employees, such as medical, dental and life insurance coverage. Otherwise, we provide very limited perquisites to our executive officers, including the Named Executive Officers. Based on discussions with the Committee’s independent compensation consultant and comparisons to published survey data, we believe that we offer fewer types and lower levels of perquisites to our executive officers than other similarly sized companies, including those in our Peer Group.

Perquisites currently include eligibility for an executive health program that includes a comprehensive annual health exam, with counseling available for certain health and well-being related needs. We reimburse spousal travel expenses to allow spouses to accompany executive officers on up to two business trips per year; for Mr. Aguirre a third business trip is permitted per year in his role as Chairman of the Board We own one corporate aircraft in connection with our Fresh Express operations in North America. In connection with the business use of this aircraft or any aircraft chartered for a particular business need, on rare occasions there may be personal use for a particular segment of a flight or to accommodate an accompanying family member. To the extent any of these perquisites constituted taxable compensation in 2011 we reimbursed the executive for the taxes incurred as a result, since each of the perquisites was related to a business need. For 2011, the treatment of perquisites was clarified, namely to limit spousal travel expenses related to an executive’s service as an executive officer to $15,000 annually with no change in the frequency, and to limit the reimbursement of taxes for personal benefits only to those related to the executive physical program, spousal travel and relocation expenses unless specifically approved in advance by the Committee (or the independent members of the Board, in the case of the CEO). In February 2012, the independent members of the Board approved an allowance of up to $10,000 annually beginning in 2011 for Mr. Aguirre for personal security services for his travel to certain locations outside the United States.

Beginning in 2010, the Committee approved the addition of a financial planning reimbursement program for executive officers. This program reimburses each executive officer for actual expenses, up to a maximum of $10,000 annually, for comprehensive financial planning and income tax preparation services. Any reimbursement under this program is considered taxable income to the executive officer, and he or she is fully responsible for any income tax liability. The Committee considered the benefit to us of knowing that executive officers are receiving expert advice and management of their personal tax compliance, as well as enabling them to remain focused on running the business instead of their personal affairs. Further, the executive officers receive expert advice and counsel on the proper utilization of our compensation and benefit programs, which can help to ensure the maximum value is received from our existing investment in these programs.

For 2011, our incremental costs for personal benefits provided to the Named Executive Officers only exceeded $10,000 for Messrs. Aguirre and Viviani. The incremental costs of personal benefits for the Named Executive Officers are included in column (i) of the Summary Compensation Table along with other reportable amounts. We calculate the value of the above personal benefits on a dollar cost basis per person.

 

44


Employment and Severance Agreements

We have change-in-control severance arrangements with each of the Named Executive Officers other than Mr. Aguirre and we have an employment agreement with Mr. Aguirre that, among other things, covers change-in-control and termination of employment scenarios. We also have an employment agreement with Mr. Kocher entered into in August 2010 in connection with his move to Europe. As a result of Mr. Kocher’s appointment as Senior Vice President and Chief Financial Officer in February 2012, this agreement will be terminated upon his relocation to the United States expected to be in June 2012. The Committee established these arrangements to provide for an orderly succession and stability in the executive ranks during times of potential uncertainty, as well as to help secure covenants for non-competition and non-solicitation. Please see “Employment Agreements and Other Arrangements” beginning on page 58 for a description of these agreements.

Relocation Benefits

In conjunction with the relocation and consolidation of the company’s headquarters and other staff, each current executive officer was offered a package of relocation benefits. The executive officers who accepted the relocation offer and complete the relocation will be eligible for the benefits outlined below. Eligible executive officers who declined the relocation offer are eligible, assuming continued satisfactory employment during the transition, for benefits under the Executive Officer Severance Pay Plan described in “Employment Agreements and Other Arrangements” beginning on page 58.

The Group Move Relocation Benefits that were approved for executive officers who move to Charlotte, North Carolina are summarized below:

Home Sale Assistance

One of the following payments:

 

  a. If the sale price is less than the original purchase price of the executive’s home, the company will contribute 100% of the difference between the original purchase price and the sale price, up to a maximum of $125,000.

 

  b. If the primary residence is sold prior to September 30, 2012 at or above its original purchase price, the company will pay an incentive (for selling quickly) of 2.5% of the contracted sales price.

New Home Purchase

Professional assistance for purchasing a home in Charlotte and up to 2% of the new mortgage amount will be covered to help defray certain closing costs.

Movement of Household Goods

Professional packing and moving of household goods.

Shipment of Vehicles

Shipment of two vehicles or reimbursement for mileage if driven to Charlotte.

Final Move Expenses

In connection with the final move, reimbursement for lodging and meals for one night at the location of the prior primary residence and for one night of lodging upon arrival in Charlotte; reasonable expenses for actual travel days, by the most direct route.

 

45


Lump Sum Payment

Additional payment to cover the following elements:

 

  a. Home search trip 5 days and 4 nights

 

  b. Temporary housing for 90 days

 

  c. Miscellaneous expense allowance of $35,000 ($75,000 in the case of the CEO)

All relocation payments are subject to gross-up for tax purposes to the extent they are included in the executive officer’s income. This gross-up is consistent with the company’s standard relocation policy and is offered to all employees relocating to Charlotte. We believe it is consistent with current relocation packages for other companies.

All relocation benefits are subject to a repayment obligation for any executive officer who leaves the company voluntarily or as a result of a violation of the Chiquita Code of Conduct within twelve months after the first day of his assignment in Charlotte.

As discussed above in “Establishing Executive Compensation” beginning on page 33, a third component was added to the total equity award opportunity in 2012 for eligible executive officers, other than Mr. Aguirre, who accepted the relocation offer. This component is intended to provide an additional retention incentive in order to stabilize the leadership of the company after the relocation. Subject to achievement of a financial performance requirement, the award will be payable to any eligible executive officer who remains employed by the company through February 24, 2015. The amount of the award opportunity for eligible officers who are Named Executive Officers is shown below:

 

Executive Officer

   Target Award
Opportunity
 

Kevin R. Holland

   $ 150,000   

Brian W. Kocher

   $ 150,000   

Michael B. Sims

   $ 0   

Waheed Zaman

   $ 0   

Mr. Sims did not receive this award due to his resignation and Mr. Zaman did not receive this award due to his election not to accept the offer to relocate.

Timing of Equity Awards and Equity Guidelines

We have not timed, and do not intend to time, our public release of material information for the purpose of affecting the value of executive compensation. Our Equity Guidelines include formal practices for pricing LTIP awards and grants of RSUs. Annual grants of RSUs for all eligible employees are approved during, or pre-approved with an effective grant date during, a trading “window period,” which we define as a period beginning on the third day following release of our financial results for the prior fiscal quarter and ending 15 days before the end of the current quarter. Grants of RSUs to newly appointed or newly promoted executive officers are effective on the date approved by the Compensation Committee (or, if later, the first day of employment); grants of RSUs to other new hires or in connection with promotions in any month are effective on the last trading day of the month in which employment commences or the promotion becomes effective. If we are in possession of material non-public information at the time of any proposed grant, action may be deferred until the information has been made public. In addition, the Board has adopted guidelines to permit corporate insiders (directors, officers, and other key employees and insiders) to develop prearranged trading plans under Rule 10b5-1 of the Securities Act of 1934 that enable them to buy or sell company securities at specified times in the future; these plans minimize the risks of insider trading violations.

 

46


Stock Ownership Guidelines for Executive Officers

The Committee established a stock ownership guideline for Mr. Aguirre in his January 2004 employment agreement that requires him to own five times his annual base salary in Chiquita common stock. Ownership guidelines were established for other executive officers, and the guideline for the CEO was reaffirmed, in March 2006. Each executive officer other than Mr. Aguirre is required to own three times his or her annual salary in Chiquita common stock by the later of March 2011 or five years from the date of hire (or, if applicable, promotion) before any shares may be sold. Progress toward the goal is expected to be approximately 20% per year, and is reviewed annually. If a person’s guideline amount is not met by the end of five years, 50% of the person’s future awards under the MIP will be made in shares until such time as the guideline is met. In addition, until the full guideline is satisfied, a person subject to the guideline may not, without Board approval, sell stock, including shares received upon the vesting of RSUs or the exercise of stock options, other than to pay (1) the exercise price of options or (2) withholding and any additional taxes resulting from the vesting or exercise of the awards. Shares held in our 401(k) Plan and Employee Stock Purchase Plan; unvested RSUs; the value of exercisable “in-the-money” employee stock options (fair market value less exercise price); and any other shares of common stock beneficially owned by the participant count toward the ownership guidelines.

Since they are performance-based, LTIP shares are not counted towards meeting the ownership guideline until the awards vest and the shares are issued. For purposes of measuring compliance with these guidelines, the value of the shares owned (as defined above) is the greater of the acquisition price or the closing price on the last trading day of the year prior to the measurement date.

As of December 31, 2011, Messrs. Aguirre, Holland, Kocher and Sims had met their respective stock ownership guidelines. Mr. Zaman met the guideline on February 24, 2012 after payment of the 2009-2011 LTIP performance cycle shares.

Tax Considerations

Section 162(m) of the Internal Revenue Code prohibits us from taking an income tax deduction for any compensation in excess of $1 million per year paid to our chief executive officer or any of our other four most-highly compensated executive officers, unless the compensation qualifies as “performance-based” pay under a plan approved by shareholders. To the extent practicable, the Committee grants performance-based compensation intended to be deductible. However, the Committee believes that we must be able to attract, retain and reward the executive leadership necessary to execute our business strategy. Therefore, the Committee authorizes compensation that is not deductible when it believes this is in our best interests.

 

47


Compensation Tables

The table below summarizes, for the years indicated, the compensation of our principal executive officer, principal financial officer and the other executive officers required to be included under SEC rules (collectively referred to as the Named Executive Officers). Michael B. Sims, who resigned from the Company in February 2012, served as the Company’s Senior Vice President and Chief Financial Officer throughout 2011. Tanios Viviani separated from the Company in October 2011.

Summary Compensation Table

 

Name and

Principal

Position

   Year     

Salary(1)

($)

    

Stock

Awards(2)

($)

    

Non-Equity

Incentive Plan

Compensation(1)(3)

($)

    

All Other

Compensation(4)

($)

    

Total

($)

 
(a)    (b)      (c)      (e)      (g)      (i)      (j)  

Fernando Aguirre

 

Chairman of the

Board, President and

Chief Executive

Officer

 

    

 

 

2011  

2010  

2009  

  

  

  

    

 

 

1,024,239  

998,269  

931,731  

  

  

  

    

 

 

4,814,879  

4,471,113  

4,423,042  

  

  

  

    

 

 

-0-  

-0-  

2,223,000  

  

  

  

    

 

 

115,423  

129,039  

76,221  

  

  

  

    

 

 

5,954,541  

5,598,421  

7,653,994  

  

  

  

Brian W. Kocher(5) (6)

 

Current Senior Vice

President and Chief

Financial Officer,

Former President,

Europe and Middle

East

 

    

 

2011  

2010  

  

  

    

 

476,544  

416,539  

  

  

    

 

1,180,303  

1,041,169  

  

  

    

 

-0-  

-0-  

  

  

    

 

36,118  

77,201  

  

  

    

 

1,692,965  

1,534,909  

  

  

Kevin R. Holland

 

Senior Vice President

and Chief People

Officer

 

    

 

 

2011  

2010  

2009  

  

  

  

    

 

 

438,278  

408,615  

362,885  

  

  

  

    

 

 

973,891  

878,576  

867,034  

  

  

  

    

 

 

-0-  

-0-  

432,900  

  

  

  

    

 

 

63,288  

53,125  

83,172  

  

  

  

    

 

 

1,475,457  

1,340,316  

1,745,991  

  

  

  

Waheed Zaman(5) (6)

 

Senior Vice President,

Special Assignments

Former Senior Vice

President Product

Supply Organization

 

     2011           434,234           953,896           -0-           1,031           1,389,161     

Michael B. Sims(6)

 

Former Senior Vice

President and Chief

Financial Officer

 

    

 

 

2011  

2010  

2009  

  

  

  

    

 

 

450,392  

408,615  

309,711  

  

  

  

    

 

 

1,004,813  

838,573  

607,826  

  

  

  

    

 

 

-0-  

-0-  

390,813  

  

  

  

    

 

 

73,362  

99,980  

43,931  

  

  

  

    

 

 

1,528,567  

1,347,168  

1,352,281  

  

  

  

 

48


Name and

Principal

Position

   Year     

Salary(1)

($)

    

Stock

Awards(2)

($)

    

Non-Equity

Incentive Plan

Compensation(1)(3)

($)

    

All Other

Compensation(4)

($)

    

Total

($)

 
(a)    (b)      (c)      (e)      (g)      (i)      (j)  

Tanios Viviani(6)

 

Former President,

Global Innovation and Emerging

Markets and Chief

Marketing Officer

 

    

 

 

2011  

2010  

2009  

  

  

  

    

 

 

389,910  

460,000  

461,453  

  

  

  

    

 

 

545,682  

782,936  

845,827  

  

  

  

    

 

 

-0-  

-0-  

458,850  

  

  

  

    

 

 

988,127  

114,686  

175,960  

  

  

  

    

 

 

1,923,719  

1,357,622  

1,942,090  

  

  

  

 

  (1)

Includes amounts deferred under our Capital Accumulation Plan. See “Deferred Compensation.”

 

  (2) 

In accordance with SEC regulations for the Summary Compensation Table, the “Stock Awards” column for 2011 includes:

 

  (i) the aggregate grant date fair market value of time-vested restricted stock unit awards during each year, disregarding the risk of forfeiture; and

 

  (ii) the aggregate grant date fair value of target 2011-2013 LTIP awards, based on the grant-date expectation of the number of performance shares that ultimately will be issued for each award. LTIP performance shares are earned based in part on our achievement of cumulative earnings per share and cumulative free cash flow targets over a three-year performance period and in part on total shareholder return relative to a group of peer companies over the same period. The aggregate grant date fair value is consistent with our grant date estimate of aggregate compensation expense expected to be recognized for the Named Executive Officers over the three-year performance period, excluding the effect of forfeitures. However, the number of shares ultimately issued under the LTIP award is not determined until the end of the performance period, could range from 0-200% of the original expectation depending on our performance during the period and are expected to be settled partially in cash. See further discussion about the terms of the 2011-2013 LTIP awards in “Compensation Discussion and Analysis” above.

The amounts included in the Stock Awards column and in this footnote are not the same as the expense we record in our Consolidated Income Statements in accordance with FASB ASC Topic 718, where expense is generally recorded over the vesting or performance period and varies based on updated expectations of the number of shares that will ultimately be issued as well as the value of those shares on the reporting date. For further discussion of our accounting policies for stock-based compensation and assumptions used in calculating the grant date fair value of stock-based compensation awards, see Notes 1 and 16 to the Consolidated Financial Statements in our 2011 Annual Report.

Whether, and to what extent, the Named Executive Officers ultimately realize value from their stock awards will depend on many factors, including our actual performance, the price of our common stock when and if shares are actually issued and the Named Executive Officers’ continued employment. For more details on RSU and LTIP awards granted in 2011, see the 2011 Grants of Plan-Based Awards table below. Additional information regarding outstanding awards can be found in the table Outstanding Equity Awards at 2011 Fiscal Year End table below.

If the maximum performance goals were met, the value of the LTIP awards included in the table for each year above based on the grant date fair value would be:

 

Maximum LTIP Value at Grant Date  
      2009-2011      2010-2012      2011-2013  

Mr. Aguirre

   $ 4,248,458       $ 3,953,716       $ 5,688,053   

Mr. Kocher

     *         898,584         1,343,892   

Mr. Holland

     768,773         754,786         1,099,560   

Mr. Zaman

     *         *         1,099,560   

Mr. Sims

     576,586         **         **   

Mr. Viviani

     809,235         **         **   

 

49


* Mr. Kocher was not a Named Executive Officer in 2009 and Mr. Zaman was not a named executive officer in 2009 or 2010; therefore, no information is presented for these performance cycles.

** Not eligible for payment due to departure from the Company.

Due to changes in the LTIP performance measures, the calculations of grant date fair value are not comparable for all periods.

 

  (3) 

No MIP payments were earned for 2011 performance.

 

  (4) 

The following table describes each component of the All Other Compensation column in the Summary Compensation Table:

All Other Compensation – 2011

 

     

Employer
Contributions  
to Chiquita
401(k)

($)

  

Employer
Contributions
to Chiquita
Deferred
Compensation  
Plans
(a)

($)

  

Reimbursement  
of Taxes
(b)

($)

  

Retirement,

Resignation,
Termination  
and
Severance
Benefits

($)(c)

  

Perquisites(d)   

($)

 

Total All Other
Compensation  

($)

Name                                   

Fernando Aguirre

   22,050      50,000      18,962                --      24,411(e)     115,423  

Brian W. Kocher

   22,050      14,027              41                --              --         36,118  

Kevin R. Holland

   22,050      38,411      2,827              --              --         63,288  

Waheed Zaman

           --              --      1,031              --              --           1,031  

Michael B. Sims

   22,050      50,000      1,312              --              --         73,362  

Tanios Viviani

   22,050      33,090      1,269      911,286      20,432 (f)     988,127  

 

  (a) 

Amounts reflect our matching contributions on salaries deferred during 2011. See “Deferred Compensation” for further information on these employer contributions.

 

  (b) 

Represents reimbursement of taxes resulting from payments by us of certain personal benefits.

 

  (c) 

Represents amounts payable to Mr. Viviani in accordance with company policies and a separation agreement between him and us as follows: $807,500 cash benefit equal to the sum of his annual base salary and annual bonus target, $58,463 for unused vacation, $10,000 in legal fees in connection with the negotiation of the separation agreement, $16,823 in COBRA premiums paid by us, $18,500 in outplacement services paid by us, and accelerated vesting of 13,737 shares of stock which will vest and be valued on April 16, 2012.

 

  (d) 

Except for Messrs. Aguirre and Viviani, perquisites paid to each of the Named Executive Officers were less than $10,000. We calculate the value of personal benefits on a dollar cost basis per person.

 

  (e) 

Includes $20,513 related to spousal travel and $3,898 for security services during certain international travel.

 

  (f) 

Includes a mortgage subsidy of $9,770 paid to Mr. Viviani in connection with his 2006 relocation to California (due to differences in market housing prices), $9,860 in financial planning and/or tax preparation services and $802 related to spousal travel.

 

  (5)

Mr. Zaman was not a Named Executive Officer in 2009 or 2010 and Mr. Kocher was not a Named Executive Officer in 2009, therefore, no information is presented for those years.

 

  (6)

Mr. Kocher was President, Europe and Middle East through 2011 until he became Senior Vice President and Chief Financial Officer upon Mr. Sims’ resignation from the same position on February 27, 2012. Mr. Zaman ceased being an executive officer on February 18, 2012. Mr. Viviani ceased being an executive officer on June 20, 2011; his employment with us ended on October 15, 2011.

 

50


Equity Compensation

The following table provides information on each cash or equity award and award opportunity granted to the Named Executive Officers during 2011.

2011 Grants of Plan-Based Awards

 

Name   Grant Date(1)  

Estimated Future Payouts

Under Non-Equity Incentive

Plan Awards(2)

 

Estimated Future Payouts

Under Equity Incentive

Plan Awards(3)

 

All Other
Stock
Awards:
Number
of Shares
of Stock
or Units(4)

(#)

 

Grant Date
Fair Value
of Stock
and Option
Awards(5)

($)

   

Threshold

($)

 

Target

($)

 

Maximum

($)

 

Threshold

(#)

  Target
(#)
 

Maximum

(#)

   
(a)   (b)   (c)   (d)   (e)   (f)   (g)   (h)   (i)   (j)
Fernando Aguirre             562,380         1,339,000         3,012,750                                
        2/17/2011                           9,877         170,301         340,602               3,164,874  
       

 

8/23/2011

 

 

 

                                                                 

 

170,985

 

 

 

     

 

1,650,005

 

 

 

Brian W. Kocher             144,060         343,000         771,750                                
        2/14/2011                           2,362         40,724         81,448               750,299  
       

 

8/23/2011

 

 

 

                                                                 

 

44,560

 

 

 

     

 

430,004

 

 

 

Kevin R. Holland               121,485         289,250         650,813                                
        2/14/2011                           1,933         33,320         66,640               613,888  
       

 

8/23/2011

 

 

 

                                                                 

 

37,306

 

 

 

     

 

360,003

 

 

 

Waheed Zaman             129,360         308,000         693,000                                
        2/14/2011                           1,933         33,320         66,640               613,888  
       

 

8/23/2011

 

 

 

                                                                 

 

35,234

 

 

 

     

 

340,008

 

 

 

Michael B. Sims             135,240         322,000         724,500                                
        2/14/2011 (6)                         2,061         35,541         71,082               654,807  
       

 

8/23/2011

 

(6)

 

                                                                 

 

36,270

 

 

 

     

 

350,006

 

 

 

Tanios Viviani             139,650         332,500         748,125                                
       

 

2/14/2011

 

(7)

 

                                   

 

1,718

 

 

 

     

 

29,618

 

 

 

     

 

59,236

 

 

 

               

 

545,682

 

 

 

 

  (1)

The Compensation Committee typically makes decisions on RSU and LTIP awards on a dollar basis at its regularly scheduled meetings, with the RSU grants valued and effective using the closing price of the common stock on the grant date or other future date designated by the Committee, and LTIP opportunities valued on the first business day of the first fiscal year of the performance period using the average closing price of the common stock over the last 20 trading days immediately preceding that date. The values listed in column (j) are calculated as described in footnote 5 below.

 

  (2)

These columns reflect the MIP potential payout values for each Named Executive Officer under the following assumptions: the threshold amounts assume achievement of a 100% individual performance factor (although the actual range may be between 0% and 150%) and the minimum level of financial performance which yields a Company Achievement Factor of 40%; the target amounts assume achievement of a 100% individual performance factor and the target level of financial performance which yields a Company Achievement Factor of 100%; and the maximum amounts assume achievement of a 150% individual performance factor and the level of performance sufficient to yield the maximum Company Achievement Factor of 150% resulting in a total multiplier of 225%. MIP awards are subject to negative discretion adjustments in accordance with Section 162(m) of the Internal Revenue Code. See “Compensation Discussion and Analysis – Elements of Executive

 

51


 

Compensation – Annual Management Incentive Program Awards” for further information on this program. Based on 2011 performance, no payments were earned for this award.

 

  (3) 

These columns reflect the 2011-2013 LTIP opportunities approved in the first quarter of 2011. For illustration purposes, the threshold amounts shown assume achievement of the minimum level of performance under all performance goals of the LTIP which would yield a payment of 5.8% of the target shares; the target amounts shown assume achievement of the target level of performance under all performance goals of the LTIP which would yield a payment of 100% of the target shares; the maximum amounts shown assume achievement of the level of performance under all performance goals of the LTIP which would yield the maximum payment of 200% of the target shares. The awards are subject to negative discretion adjustments in accordance with Section 162(m) of the Internal Revenue Code. To the extent earned, awards would be made in early 2014. See “Compensation Discussion and Analysis – Elements of Executive Compensation – Equity-Based Compensation – LTIP Awards and Methodology” for further information on this program.

 

  (4) 

This column reflects RSU awards granted in 2011. Each award vests in four annual installments beginning on the first anniversary of the grant date. Unvested RSUs do not confer dividend or voting rights.

 

  (5) 

The Grant Date Fair Values of the 2011-2013 LTIP opportunities represent the probable outcome measured at the grant date in accordance with ASC Topic 718. The calculation is measured for the portion of the LTIP performance criteria based on cumulative EPS and cumulative free cash flow (performance-based awards) and for LTIP opportunities based on relative TSR (market-based award). 80% of the maximum shares were multiplied by $16.50, the closing share price on the grant date, which represents the grant date fair value for the LTIP opportunity based on cumulative EPS. The remaining 20% of the shares were multiplied by $26.12, which represents the estimated grant date fair value of the LTIP opportunity based on relative TSR using a Monte Carlo simulation (a calculation based on a probability weighting of a series of statistically possible potential outcomes). The Grant Date Fair Values of the RSU awards were determined by multiplying the number of shares by $9.65, the closing price of our common stock on the grant date.

 

  (6) 

These awards terminated with no potential payout on February 27, 2012.

 

  (7) 

This award terminated with no potential payout on October 15, 2011.

All awards are subject to the grantee being an employee of ours on the vesting date, except under certain circumstances such as a change in control, death, disability or retirement, as defined. See “Employment Agreements and Other Arrangements.”

 

52


Outstanding Equity Awards at 2011 Fiscal Year-End

The following table reports, on an award-by-award basis, each outstanding equity award held by the Named Executive Officers on December 31, 2011. We generally do not permit executive officers to transfer awards prior to the vesting date, and no transfers were made during 2011.

 

      

 

Option Awards

 

  

 

     Stock Awards   
Name   

Number

of

Securities
Underlying
Unexercised
Options

(#)

Exercisable

    

Number of
Securities
Underlying
Unexercised
Options

(#)

Unexercisable  

  

Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised  
Unearned
Options

(#)

  

Option
Exercise
Price

($)

     Option
Expiration
Date
    

Number
of
Shares
or Units
of Stock
That
Have
Not
Vested(1)

(#)

   

Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(1)

($)

    

Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested

(#)

   

Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested(1)

($)

 
(a)    (b)      (c)    (d)    (e)      (f)      (g)     (h)      (i)     (j)  

Fernando Aguirre

     325,000                       23.16             1/11/2014                                         
                                            20,370 (2)           169,886                        
                                            47,490 (3)           396,067                        
                                            83,278 (4)           694,539                        
                                            170,985 (5)           1,426,015                        
                                                             22,325 (6)           186,191       
                                                             15,952 (7)           133,040       
                                                             9,877 (8)           82,374       

Brian W. Kocher

                                          4,775 (2)          39,824                        
                                            11,195 (3)          93,366                        
                                            20,189 (4)          168,376                        
                                            44,560 (5)          371,630                        
                                                             4,678 (6)          39,015       
                                                             3,626 (7)          30,241       
                                                             2,362 (8)          19,699       

 

53


     

Option Awards

 

            

Stock Awards

 

 

Name

(a)

  

Number

of

Securities
Underlying
Unexercised
Options

(#)

Exercisable

    

Number of
Securities
Underlying
Unexercised
Options

(#)

Unexercisable  

  

Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised  
Unearned
Options

(#)

  

Option
Exercise
Price

($)

     Option
Expiration
Date
    

Number
of
Shares
or Units
of Stock
That
Have
Not
Vested

(#)

   

Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(1)

($)

    

Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested

(#)

   

Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested(1)

($)

 
(a)    (b)      (c )    (d)    (e)      (f)      (g)     (h)      (i)     (j)  

Kevin R. Holland

                                          4,615 (2)           38,489                    
                                            10,855 3)           90,531                    
                                            17,161 (4)           143,123                    
                                            37,306 (5)           311,132                    
                                                             4,040 (6)       33,694   
                                                             3,045 (7)       25,395   
                                                             1,933 8)       16,121   

Waheed Zaman

                                          4,615 (2)          38,489                    
                                            10,177 (3)          84,876                    
                                            16,152 (4)          134,708                    
                                            35,234 (5)          293,852                    
                                                             4,040 (6)      33,694   
                                                             3,045 (7)      25,395   
                                                             1,933 (8)      16,121   

Michael B. Sims

     8,750                   16.97         5/9/2012                                     
       8,750                   16.92         5/30/2012                                     
                                            2,626 (2)           21,901                    
                                            6,446 (3)           53,760                    
                                            15,142 (4)           126,284                    
                                            36,270 (5)           302,492                    
                                                             3,030 (6)       25,270   
                                                             3,045 (7)       25,395   
                                                             2,061 (8)       17,189   

Tanios Viviani

                                          4,615 (9)          38,489                    
                                            4,579 (9)          38,189                    
                                            4,543 (9)          37,889                    

 

  (1)

Represents RSU awards; market value is based on the $8.34 per share closing price of our common stock on December 31, 2011. Future vesting is generally conditioned upon employment on the vesting date.

 

  (2)

Award vests in one remaining installment on August 5, 2012.

 

54


  (3)

Award vests in two remaining equal installments on August 11, 2012 and 2013.

 

  (4)

Award vests in three remaining equal installments on August 3, 2012, 2013 and 2014.

 

  (5)

Award vests in four equal installments on August 23, 2012, 2013, 2014 and 2015.

 

  (6)

Threshold (minimum) 2009-2011 LTIP award opportunity. See “Compensation Discussion and Analysis – Elements of Executive Compensation – LTIP Awards and Methodology” for a description of the LTIP payout for this period.

 

  (7)

Threshold (minimum) 2010-2012 LTIP award opportunity.

 

  (8)

Threshold (minimum) 2011-2013 LTIP award opportunity. See “Compensation Discussion and Analysis – Elements of Executive Compensation – Equity-Based Compensation – LTIP Awards and Methodology” for a description of LTIP terms and 2011 Grants of Plan-Based Awards Table for threshold, target and maximum award opportunities.

 

  (9)

Awards vest on April 16, 2012.

 

55


2011 Option Exercises and Stock Vested

The following table sets forth certain information regarding options exercised and restricted stock units that vested during 2011 for the Named Executive Officers.

 

   

 

 

 

 

Option Awards

 

 

  

 

 

 

 

 

 

Stock Awards

 

 

  

 

Name  

Number of      
Shares      

Acquired      

on Exercise      

(#)      

 

   

Value Realized    

on Exercise    

($)    

   

Number of    

Shares    

Acquired    

on Vesting    

(#)    

   

Value Realized

on Vesting(1)

($)

 
(a)   (b)     (c)         (d)         (e)  

Fernando Aguirre

    --            --           

 

 

 

 

20,845

20,369

23,745

27,759

45,478

(2) 

(3) 

(4) 

(5) 

(6) 

   

 

 

 

 

186,146

181,895

230,564

315,065

469,333

  

  

  

  

  

Brian W. Kocher

    --            --           

 

 

 

 

1,706

4,774

5,597

6,729

9,529

(2) 

(3) 

(4) 

(5) 

(6) 

   

 

 

 

 

15,235

42,632

54,347

76,374

98,339

  

  

  

  

  

Kevin R. Holland

    --            --           

 

 

 

 

2,729

4,615

5,428

5,720

8,230

(2) 

(3) 

(4) 

(5) 

(6) 

   

 

 

 

 

24,370

41,212

52,706

64,922

84,934

  

  

  

  

  

Waheed Zaman

    --            --           

 

 

 

 

4,775

4,615

5,088

5,383

8,230

(2) 

(3) 

(4) 

(5) 

(6) 

   

 

 

 

 

42,641

41,212

49,404

61,097

84,934

  

  

  

  

  

Michael B. Sims

    --            --           

 

 

 

 

2,729

2,626

3,223

5,047

6,172

(2) 

(3) 

(4) 

(5) 

(6) 

   

 

 

 

 

24,370