DEF 14A 1 ddef14a.htm DEFINITIVE PROXY STATEMENT Definitive Proxy Statement

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  ¨

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¨   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 (S) 240.14a-11(c) or (S) 240.14a-12

WHIRLPOOL CORPORATION

(Name of Registrant as Specified In Its Charter)

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

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Notes:

Reg. (S) 240.14a-101

SEC 1913 (3–99)


LOGO

WHIRLPOOL CORPORATION

Administrative Center            

2000 North M-63                

Benton Harbor, Michigan 49022-2692

To Our Stockholders:

It is my pleasure to invite you to attend the 2011 Whirlpool Corporation annual meeting of stockholders to be held on Tuesday, April 19, 2011 at 8:00 a.m., Chicago time, at 120 East Delaware Place, 8th Floor, Chicago, Illinois.

At the meeting, stockholders will vote on the matters set forth in the formal notice of the meeting that follows on the next page. In addition, we will discuss Whirlpool’s 2010 performance and the outlook for this year, and answer your questions.

A financial supplement containing important financial information about Whirlpool is contained in Part II of this booklet. We have also included with this booklet an annual report that includes summary financial and other important information.

We are pleased to once again furnish proxy materials to our stockholders on the Internet. We believe this approach provides our stockholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of our annual meeting.

Your vote is important. We urge you to please vote your shares now whether or not you plan to attend the meeting. You may revoke your proxy at any time prior to the proxy being voted by following the procedures described in Part I of this booklet.

Your vote is important and much appreciated!

LOGO

 

JEFF M. FETTIG

Chairman of the Board

and Chief Executive Officer

 

February 28, 2011


NOTICE OF 2011 ANNUAL MEETING OF STOCKHOLDERS

The 2011 annual meeting of stockholders of WHIRLPOOL CORPORATION will be held at 120 East Delaware Place, 8th Floor, Chicago, Illinois, on Tuesday, April 19, 2011, at 8:00 a.m., Chicago time, for the following purposes:

 

  1. to elect eight persons to Whirlpool’s Board of Directors;

 

  2. to hold an advisory vote on executive compensation;

 

  3. to hold an advisory vote on the frequency of holding an advisory vote on executive compensation;

 

  4. to ratify the appointment of Ernst & Young LLP as Whirlpool’s independent registered public accounting firm for 2011;

 

  5. to vote on a stockholder proposal, if properly presented at the meeting, to allow stockholder action by written consent;

 

  6. to vote on a stockholder proposal, if properly presented at the meeting, to require stockholder approval of certain future severance agreements with senior executives; and

 

  7. to transact such other business as may properly come before the meeting.

A list of stockholders entitled to vote at the meeting will be available for examination by any stockholder for any purpose relevant to the meeting during ordinary business hours for at least ten days prior to April 19, 2011 at Whirlpool’s Administrative Center, 2000 North M-63, Benton Harbor, Michigan 49022-2692.

By Order of the Board of Directors

LOGO

 

ROBERT J. LAFOREST

Corporate Secretary and

Group Counsel

  February 28, 2011


TABLE OF CONTENTS

 

    Page  

Part I – Proxy Statement

 

Information about Whirlpool Corporation

    1   

Information about the Annual Meeting and Voting

    1   

Stockholder Proposals and Director Nominations for 2012 Meeting

    6   

Directors and Nominees for Election as Directors (Item 1)

    6   

Board of Directors and Corporate Governance

    12   

Nonemployee Director Compensation

    21   

Security Ownership

    26   

Beneficial Ownership

    27   

Section 16(a) Beneficial Ownership Reporting Compliance

    28   

Compensation Discussion and Analysis

    29   

Human Resources Committee Report

    45   

Executive Compensation Tables

    46   

Summary Compensation Table

    46   

Grants of Plan-Based Awards

    48   

Outstanding Equity Awards at Fiscal Year-End

    51   

Option Exercises and Stock Vested

    53   

Pension Benefits

    54   

Non-Qualified Deferred Compensation

    57   

Potential Post-Termination Payments

    59   

Advisory Vote on Executive Compensation (Item 2)

    64   

Advisory Vote on Frequency of an Advisory Vote on Executive Compensation
(Item 3)

    66   

Related Person Transactions

    68   

Human Resources Committee Interlocks and Insider Participation

    68   

Equity Compensation Plan Information

    68   

Matters Relating to Independent Registered Public Accounting Firm

    69   

Audit Committee Report

    70   

Ratification of the Appointment of Ernst  & Young LLP as Whirlpool’s Independent Registered Public Accounting Firm (Item 4)

    71   

Stockholder Proposals (Items 5 and 6)

    72   

 

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Part II – Financial Supplement

  

Table of Contents

     F-1   

Five-Year Selected Financial Data

     F-2   

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     F-3   

Consolidated Statements of Income

     F-23   

Consolidated Balance Sheets

     F-24   

Consolidated Statements of Cash Flows

     F-25   

Consolidated Statements of Changes in Stockholders’ Equity

     F-26   

Notes to the Consolidated Financial Statements

     F-27   

Report by Management on the Consolidated Financial Statements

     F-59   

Management’s Report on Internal Control Over Financial Reporting

     F-60   

Report of Independent Registered Public Accounting Firm

     F-61   

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting

     F-62   

Schedule II – Valuation and Qualifying Accounts

     F-63   

 

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PROXY STATEMENT

Important Notice Regarding the Availability of Proxy Materials

for the Annual Meeting of Stockholders to be Held on April 19, 2011:

This Proxy Statement and the Accompanying Annual Report are Available at:

www.whirlpoolcorp.com/annualreportandproxy

Among other things, this proxy statement contains information regarding the date, time and location of the meeting, the matters being submitted to the stockholders, and how to vote in person. To obtain directions to attend the annual meeting and vote in person, please contact Investor Relations at (269) 923-2641 or via e-mail at investor_relations@whirlpool.com.

 

INFORMATION ABOUT WHIRLPOOL CORPORATION

Whirlpool Corporation is the world’s leading manufacturer and marketer of major home appliances. We manufacture in 12 countries and market products in nearly every country around the world under brand names such as Whirlpool, Maytag, KitchenAid, Jenn-Air, Roper, Estate, Admiral, Amana, Bauknecht, Ignis, Brastemp, Consul, and Acros. We have approximately 71,000 employees worldwide. Our headquarters are located in Benton Harbor, Michigan, and our address is 2000 North M-63, Benton Harbor, Michigan 49022-2692. Our telephone number is (269) 923-5000.

 

INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

Our 2011 annual meeting of stockholders will be held on Tuesday, April 19, 2011, at 8:00 a.m., Chicago time, at 120 East Delaware Place, 8th Floor, Chicago, Illinois. All stockholders as of the record date, or their duly appointed proxies, may attend the meeting. If you attend, please note that you may be asked to present valid picture identification. Please also note that if you hold your shares in “street name” (that is, through a broker or other nominee), you will need to bring a copy of your voting instruction card or brokerage statement reflecting your stock ownership as of the record date and check in at the registration desk at the meeting. Cameras, recording devices, cell phones, and other electronic devices will not be permitted at the meeting other than those operated by Whirlpool or its designees.

Information about this proxy statement

Why you received this proxy statement. You have received these proxy materials because our Board is soliciting your proxy to vote your shares at the annual meeting. This proxy statement includes information we are required to provide to you under the rules of the Securities and Exchange Commission and which is designed to assist you in voting your shares. On or about March 9, 2011, we intend to mail to our stockholders of record as of the close of business on February 21, 2011, a notice containing instructions on how to access this proxy statement and our annual report online. To serve you more efficiently and reduce costs, we encourage you to have all your accounts registered in the same name and address by

 

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contacting our transfer agent, Computershare Trust Company, N.A., Shareholder Services, at P.O. Box 43069, Providence, Rhode Island 02940-3069; phone number: 877-453-1504; TDD/TTY for hearing impaired: 800-952-9245.

Notice of Electronic Availability of Proxy Statement and Annual Report. As permitted by Securities and Exchange Commission rules, we are making this proxy statement and our annual report available to our stockholders electronically via the Internet. On or about March 9, 2011, we intend to mail to our stockholders a notice containing instructions on how to access this proxy statement and our annual report and vote online. If you receive a notice by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the notice instructs you on how to access and review all of the important information contained in the proxy statement and annual report. The notice also instructs you on how you may submit your proxy over the Internet. If you receive a notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained on the notice.

Householding. The Securities and Exchange Commission’s rules permit us to deliver a single notice or set of annual meeting materials to one address shared by two or more of our stockholders. This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered only one notice or set of annual meeting materials to multiple stockholders who share an address, unless we received contrary instructions from the impacted stockholders prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the notice or annual meeting materials, as requested, to any stockholders at the shared address to which a single copy of those documents was delivered. If you prefer to receive separate copies of the notice or annual meeting materials, contact Broadridge Investor Communication Solutions, Inc. at 800-542-1061 or in writing at Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. If you are currently a stockholder sharing an address with another stockholder and wish to receive only one copy of future notices or annual meeting materials for your household, please contact Broadridge at the above phone number or address.

Who can vote

The record date for determining stockholders entitled to vote at the annual meeting is February 21, 2011. Each of the approximately 76,047,063 shares of Whirlpool common stock issued and outstanding on that date is entitled to one vote at the annual meeting.

Information about voting and revocation of proxies

A notice containing instructions on how to access this proxy statement electronically cannot be used to vote your shares. The notice does, however, provide instructions on how to vote by Internet, or by requesting and returning a paper proxy card or voting instruction card.

If your shares are held in your name, you have the right to vote in person at the meeting. If your shares are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in street name. As the beneficial owner, you

 

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are also invited to attend the meeting. Since a beneficial owner is not the stockholder of record, you may not vote these shares in person at the meeting unless you obtain a “legal proxy” from your broker or nominee that holds your shares, giving you the right to vote the shares at the meeting.

Whether you hold shares directly as a stockholder of record or beneficially in street name, you may vote without attending the meeting. You may vote by granting a proxy or, for shares held beneficially in street name, by submitting voting instructions to your broker or nominee. In most cases, you will be able to do this by using the Internet, by telephone, or by mail if you received a printed set of the proxy materials.

By Internet - If you have Internet access, you may submit your proxy by following the instructions provided in the notice of electronic availability, or if you received a printed version of the proxy materials by mail, by following the instructions provided with your proxy materials and on your proxy card or voting instruction card.

By Telephone - If you have Internet access, you may obtain instructions on voting by telephone by following the Internet access instructions provided in the notice of electronic availability. If you received printed proxy materials, your proxy card or voting instruction card will provide instructions on voting by telephone.

By Mail - If you received printed proxy materials, you may submit your proxy by mail by signing your proxy card if your shares are registered or, for shares held beneficially in street name, by following the voting instructions provided by your broker, nominee or trustee, and mailing it in the enclosed envelope.

If you do not specify how you want to vote your shares on your proxy card or voting instruction card, or by voting over the Internet or telephone, we will vote them FOR the nominees named for director, FOR the approval of the compensation of Whirlpool’s named executive officers (“NEOs”), for 1 Year representing the option of once every year as the frequency with which stockholders are provided an advisory vote on executive compensation, FOR ratification of the appointment of Ernst & Young, and AGAINST the two stockholder proposals.

If you are a stockholder of record, you may revoke your proxy at any time before it is exercised in any of three ways: (1) by submitting written notice of revocation to Whirlpool’s Corporate Secretary, Robert J. LaForest; (2) by submitting another proxy via the Internet, by telephone, or by mail that is later dated and, if by mail, that is properly signed; or (3) by voting in person at the meeting. If your shares are held in street name, you must contact your broker or nominee to revoke your proxy.

If you participate in the Whirlpool 401(k) Retirement Plan and hold shares of Whirlpool stock in your plan account as of the record date, you will receive a request for voting instructions from the plan trustee (Vanguard) with respect to your plan shares. If you hold Whirlpool shares outside of the plan, you will vote those shares separately. You are

 

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entitled to direct Vanguard how to vote your plan shares. If you do not provide voting instructions to Vanguard by 11:59 p.m. Eastern time on April 14, 2011, the Whirlpool shares in your plan account will be voted by Vanguard in the same proportion as the shares held by Vanguard for which voting instructions have been received from other participants in the Plan. You may revoke your previously provided voting instructions by filing with Vanguard either a written notice of revocation or a properly executed proxy bearing a later date prior to the deadline for voting plan shares.

Broadridge Investor Communication Solutions, Inc. will act as the independent inspector of election and will certify the results.

Confidentiality of votes

Whirlpool’s Board has adopted a policy requiring all stockholder votes to be kept confidential from management except when disclosure is required by law and in other limited circumstances.

Quorum

Stockholders representing at least 50% of the common stock issued and outstanding as of the record date must be present at the annual meeting, either in person or by proxy, for there to be a quorum at the annual meeting. Abstentions and broker non-votes are counted as present for establishing a quorum. A broker non-vote occurs when a broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the broker or nominee does not have discretionary voting power and has not received instructions from the beneficial owner.

Required vote

Item 1 (Election of Directors). For more information on director elections, see “Board of Directors and Corporate Governance – Majority Voting for Directors; Director Resignation Policy” later in this proxy statement. For the election of directors (provided the number of nominees does not exceed the number of directors to be elected), each director must receive the majority of the votes cast with respect to that director (number of shares voted “for” a director must exceed the number of votes cast “against” that director).

Item 2 (Advisory Vote on Executive Compensation). The affirmative vote of a majority of the outstanding common stock present in person or represented by proxy at the annual meeting and entitled to vote is required to approve Whirlpool’s executive compensation.

Item 3 (Advisory Vote on Frequency of Advisory Vote on Executive Compensation). The option of one year, two years or three years that receives a majority of votes cast by stockholders will be the frequency for the advisory vote on executive compensation that has been selected by stockholders.

 

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Item 4 (Ratification of Ernst & Young LLP). The affirmative vote of a majority of the outstanding common stock present in person or represented by proxy at the annual meeting and entitled to vote is required to approve the ratification of Ernst & Young as Whirlpool’s independent registered public accounting firm.

Items 5 and 6 (Stockholder Proposals). The affirmative vote of a majority of the outstanding common stock present in person or represented by proxy at the annual meeting and entitled to vote is required to approve the stockholder proposals, if properly presented at the meeting.

Other Business. The affirmative vote of a majority of the outstanding common stock present in person or represented by proxy at the annual meeting and entitled to vote is required to approve any other matter that may properly come before the meeting.

Abstentions and broker non-votes

Abstentions will have no effect on Items 1 and 3. Abstentions will be treated as being present and entitled to vote on Items 2 and 4, and on Items 5 and 6 if properly presented at the annual meeting, and therefore, will have the effect of votes against such proposals. If you do not provide your broker or other nominee with instructions on how to vote your street name shares, your broker or nominee will not be permitted to vote them on non-routine matters (a broker non-vote) such as Items 1, 2, 3, 5 and 6. Shares subject to a broker non-vote will not be considered entitled to vote with respect to Items 1, 2, 3, 5 and 6, and will not affect the outcome on those Items. Please note that brokers may no longer vote your shares on the election of directors in the absence of your specific instructions as to how to vote. We encourage you to provide instructions to your broker regarding the voting of your shares.

Other business

If any nominee named herein for election as a director is not available to serve, the accompanying proxy will be voted in favor of the remainder of those nominated and may be voted for a substitute person. Whirlpool expects all nominees to be available and knows of no matter to be brought before the annual meeting other than those covered in this proxy statement. If, however, any other matter properly comes before the annual meeting, we intend that the accompanying proxy will be voted thereon in accordance with the judgment of the persons voting such proxy.

Solicitation costs

Whirlpool will pay the expenses of the solicitation of proxies. We expect to pay fees of approximately $12,500 plus certain expenses for assistance by D.F. King & Co., Inc. in the solicitation of proxies. Proxies may be solicited by directors, officers, and Whirlpool employees and by D.F. King & Co., Inc. personally and by mail, telephone, or other electronic means.

 

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STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS

FOR 2012 MEETING

Our annual meeting of stockholders is generally held the third Tuesday in April. Any stockholder proposal that you intend to have us include in our proxy statement for the annual meeting of stockholders in 2012 must be received by us by November 10, 2011, and must otherwise comply with the Securities and Exchange Commission’s rules in order to be eligible for inclusion in the proxy statement and proxy form relating to this meeting. Other proposals or a nomination for director to be submitted from the floor of the annual meeting of stockholders in 2012 must be received by the Corporate Secretary of Whirlpool personally or by registered or certified mail by January 18, 2012 and satisfy the procedures set forth in Whirlpool’s By-laws.

 

ITEM 1 – DIRECTORS AND NOMINEES FOR ELECTION AS DIRECTORS

As the world’s leading manufacturer and marketer of major home appliances with revenues of over $18 billion and global operations, we believe our Board should be composed of individuals with sophistication and experience in many substantive areas that impact our business. We believe experience, qualifications, or skills in one or more of the following areas are most important: international operations; marketing/branded consumer products; manufacturing; sales and distribution; legal/regulatory and government affairs; accounting, finance, and capital structure; strategic planning and leadership of complex organizations; human resources and development practices; design, innovation, and engineering; and board practices of other major corporations. These areas are in addition to the personal qualifications described in the section entitled “Director Nominations to be Considered by the Board” later in this proxy statement. We believe that all our current Board members possess the professional and personal qualifications necessary for board service, and have highlighted certain particularly noteworthy attributes for each Board member in the individual biographies below. In addition, length of service on our Board has provided several directors with significant exposure to both our business and the industry in which we compete.

 

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We currently have 14 directors on the Board, three of whom are not nominees for reelection (Ms. Stoney and Dr. Stern have reached the Board’s mandatory retirement age under Whirlpool’s Corporate Governance Guidelines, and Mr. Cain is making a bid for political office). The directors were formerly divided into three classes, with each class serving for a three-year period. Beginning with the 2010 annual meeting, directors who are elected will serve until our next annual meeting of stockholders and will need to stand for reelection annually. The Board recommends a vote FOR the election of each of the directors nominated below.

 

Nominees for a term to expire in 2012   
SAMUEL R. ALLEN, 57, has served as a director since 2010. Mr. Allen has been Chairman and Chief Executive Officer of Deere & Co., a farm machinery and equipment company, since February 2010, and a director since June 2009. Mr. Allen joined Deere & Co. in 1975 and since that time has held positions of increasing responsibility. As a result of these and other professional experiences, Mr. Allen possesses particular knowledge and experience in international operations and strategic planning and leadership of complex organizations that strengthen the Board’s collective qualifications, skills, and experience. A third party search firm recommended Mr. Allen to Whirlpool’s Corporate Governance and Nominating Committee and Board, after being brought to the search firm’s attention by Whirlpool’s Chief Executive Officer.    LOGO

 

  
JEFF M. FETTIG, 54, has served as a director since 1999. Mr. Fettig has been Chairman of the Board and Chief Executive Officer of Whirlpool since 2004 after holding other positions of increasing responsibility since 1981. Mr. Fettig is also a director of The Dow Chemical Company (since 2003). As a result of these and other professional experiences, Mr. Fettig possesses particular knowledge and experience in marketing/branded consumer products and sales and distribution that strengthen the Board’s collective qualifications, skills, and experience.    LOGO

 

  

 

MICHAEL F. JOHNSTON, 63, has served as a director since 2003. Mr. Johnston retired from Visteon Corporation, an automotive components supplier, in 2008. At Visteon, he served as Chairman of the Board, Chief Executive Officer, President, and Chief Operating Officer at various times since 2000. In May 2009, Visteon filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code. Before joining Visteon, Mr. Johnston held various positions in the automotive and building services industry. Mr. Johnston is also a director of Flowserve Corporation (since 1997) and Armstrong World Industries, Inc. (since 2010). As a result of these and other professional experiences, Mr. Johnston possesses particular knowledge and experience in manufacturing and design, innovation, and engineering that strengthen the Board’s collective qualifications, skills, and experience.

 

   LOGO

 

  

 

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WILLIAM T. KERR, 69, has served as a director since 2006 after serving eight years on the board of Maytag Corporation. Mr. Kerr has been President and Chief Executive Officer of Arbitron, Inc., a media and marketing services company, since January 2010 and a director of Arbitron since May 2007. From January 1998 to January 2010, Mr. Kerr was Chairman of the Board of Directors of Meredith Corporation, a diversified media company, and since 1991 held various other positions at Meredith, including Chief Executive Officer, President, and Chief Operating Officer, and was a director of Meredith from 1994 to February 2010. Mr. Kerr is also a director of Interpublic Group of Companies, Inc. (since 2006), and previously served as a director of The Principal Financial Group (2001 to 2010), and Storage Technology Corporation (1998 to 2005). As a result of these and other professional experiences, Mr. Kerr possesses particular knowledge and experience in marketing/branded consumer products and board practices of other major corporations that strengthen the Board’s collective qualifications, skills, and experience.    LOGO

 

  

 

JOHN D. LIU, 42, has served as a director since 2010. Mr. Liu has been the Chief Executive Officer of Essex Equity Capital Management, an investment management firm, since March 2008. Prior to that time, Mr. Liu was employed for 12 years by Greenhill & Co., Inc., a global investment banking firm, in positions of increasing responsibility including Chief Financial Officer. As a result of these and other professional experiences, Mr. Liu possesses particular knowledge and experience in accounting, finance, and capital structure, and strategic planning and leadership of complex organizations that strengthen the Board’s collective qualifications, skills, and experience. A third party search firm recommended Mr. Liu to Whirlpool’s Corporate Governance and Nominating Committee and Board, after being brought to the search firm’s attention by Whirlpool’s Chief Executive Officer.    LOGO

 

  
MILES L. MARSH, 63, has served as a director since 1990. Mr. Marsh retired from Fort James Corporation, a manufacturer and marketer of consumer paper products, in 2000. At Fort James Corporation, he served as Chairman of the Board, Chief Executive Officer, and President at various times beginning in 1995. Before joining Fort James Corporation, Mr. Marsh held various positions in the food products industry. He previously served as a director of GATX Corporation (1995 to 2006) and Morgan Stanley (1996 to 2005). As a result of these and other professional experiences, Mr. Marsh possesses particular knowledge and experience in international operations and accounting, finance, and capital structure that strengthen the Board’s collective qualifications, skills, and experience.    LOGO

 

  

 

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WILLIAM D. PEREZ, 63, has served as a director since 2009. Mr. Perez has been a Senior Advisor to Greenhill & Co., Inc., a global investment banking firm, since January 2010. Prior to joining Greenhill & Co., Inc., Mr. Perez was President and Chief Executive Officer of the Wm. Wrigley Jr. Company from 2006 to 2008, and President, Chief Executive Officer, and a member of the Board of Nike, Inc. from 2004 to 2006, after spending 34 years at S.C. Johnson at various positions, including Chief Executive Officer and President. Mr. Perez is also a director of Johnson & Johnson (since 2007) and Campbell Soup Company (since 2009) and previously served as a director of Kellogg Company (2000 to 2006). As a result of these and other professional experiences, Mr. Perez possesses particular knowledge and experience in sales and distribution and strategic planning and leadership of complex organizations that strengthen the Board’s collective qualifications, skills, and experience.    LOGO

 

  
  
MICHAEL D. WHITE, 59, has served as a director since 2004. Mr. White has been President and Chief Executive Officer of The DIRECTV Group, Inc., a leading provider of digital television entertainment services, since January 2010, Chairman of the Board since June 2010, and a director since November 2009. From February 2003 until December 2009, Mr. White was Chief Executive Officer of PepsiCo International and Vice Chairman, PepsiCo, Inc. after holding positions of increasing importance with PepsiCo since 1990. As a result of these and other professional experiences, Mr. White possesses particular knowledge and experience in marketing/branded consumer products and accounting, finance, and capital structure that strengthen the Board’s collective qualifications, skills, and experience.    LOGO

 

  

Directors whose terms expire in 2012

 

  
GARY T. DICAMILLO, 60, has served as a director since 1997. Mr. DiCamillo has been a Partner at Eaglepoint Advisors, LLC, a turnaround, restructuring, and crisis management firm, since January 2010. Prior to joining Eaglepoint Advisors, LLC, Mr. DiCamillo was President and Chief Executive Officer of RADIA International, a professional and commercial staffing company, from 2005 until August 2009. Prior to holding that position, Mr. DiCamillo was President and Chief Executive Officer of TAC Worldwide Companies, a technical and professional staffing company, from 2002 to 2005. From 1995 to 2002, Mr. DiCamillo served as Chairman and Chief Executive Officer of Polaroid Corporation, which filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code in October 2001 and emerged from Chapter 11 protection in June 2002. Mr. DiCamillo is a director of Pella Corporation (1993 to 2007, and 2010 to present), The Sheridan Group, Inc. (since 1989), and previously served as a director of 3Com Corporation (2000 to 2010). As a result of these and other professional experiences, Mr. DiCamillo possesses particular knowledge and experience in marketing/branded consumer products and strategic planning and leadership of complex organizations that strengthen the Board’s collective qualifications, skills, and experience.    LOGO

 

  

 

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KATHLEEN J. HEMPEL, 60, has served as a director since 1994. Ms. Hempel retired from Fort Howard Corporation, a manufacturer of paper and paper products, in 1997. At Fort Howard Corporation, she served as Vice Chairman and Chief Financial Officer, among other positions, beginning in 1973. Ms. Hempel is also a director of Oshkosh Corporation (since 1997) and previously served as a director of Actuant Corporation (2000 to 2008). As a result of these and other professional experiences, Ms. Hempel possesses particular knowledge and experience in accounting, finance, and capital structure and board practices of other major corporations that strengthen the Board’s collective qualifications, skills, and experience.    LOGO

 

  
MICHAEL A. TODMAN, 53, has served as a director since 2006. Mr. Todman has been President, Whirlpool International since January 2010 after holding other positions of increasing responsibility since 1993. Mr. Todman is also a director of Newell Rubbermaid Inc. (since 2007). As a result of these and other professional experiences, Mr. Todman possesses particular knowledge and experience in international operations and sales and distribution that strengthen the Board’s collective qualifications, skills, and experience.    LOGO

 

  

 

Directors whose terms expire in 2011 who are not nominees for reelection

 

  
HERMAN CAIN, 65, has served as a director since 1992 (except from December 2003 to April 2005 during a bid for political office). Mr. Cain has been Chief Executive Officer and President of THE New Voice, Inc., a business and leadership consulting company, since 2004. Before founding THE New Voice, Inc., Mr. Cain held various positions in the banking and food services industries. He is also a director of AGCO Corporation (since 2004) and previously served as a director of Aquila, Inc. (1992 to 2008) and The Reader’s Digest Association, Inc. (2001 to 2007). As a result of these and other professional experiences, Mr. Cain possesses particular knowledge and experience in human resources and development practices and legal/regulatory and government affairs that strengthen the Board’s collective qualifications, skills, and experience.    LOGO

 

  

 

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PAUL G. STERN, 72, has served as a director since 1990. Dr. Stern has been a Partner of the private investment companies Thayer Capital Partners, L.L.P. and Arlington Capital Partners, L.L.P. since 1995 and 1999, respectively, and Chairman of Claris Capital Partners, a private investment banking firm, since 2004. Dr. Stern is also a director of The Dow Chemical Company (since 1992) and previously served as a director of ManTech International Corporation (2004 to 2007). As a result of these and other professional experiences, Dr. Stern possesses particular knowledge and experience in international operations and design, innovation, and engineering that strengthen the Board’s collective qualifications, skills, and experience.    LOGO

 

  
JANICE D. STONEY, 70, has served as a director since 1987 (except for part of 1994 during a bid for political office). Ms. Stoney retired from U S West Communications Group, Inc., a telephone communications company, in 1993. At U S West, she served as Executive Vice President and prior to that President, Communications Consumer Division. Ms. Stoney is also a director of The Williams Companies, Inc. (since 1999) and previously served as a director of Bridges Investment Fund (1999 to 2006). As a result of these and other professional experiences, Ms. Stoney possesses particular knowledge and experience in human resources and development practices and legal/regulatory and government affairs that strengthen the Board’s collective qualifications, skills, and experience.    LOGO

 

  

 

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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

During 2010, our Board met seven times and had four committees. The committees consisted of an Audit Committee, a Human Resources Committee, a Corporate Governance and Nominating Committee, and a Finance Committee. Each director attended at least 75% of the total number of meetings of the Board and the Board committees on which he or she served.

All directors properly nominated for election are expected to attend the annual meeting of stockholders. In 2010, all of our directors attended the annual meeting of stockholders.

The table below breaks down 2010 committee membership for each committee and each director.

 

Name    Audit   

Human

Resources

  

Corporate

Governance &
Nominating

   Finance

Mr. Allen

      X    X     

Mr. Cain

      X    X     

Mr. DiCamillo

   Chair          X

Mr. Fettig

             

Ms. Hempel

   X          Chair

Mr. Johnston

   X       Chair     

Mr. Kerr

      X    X     

Mr. Liu

   X          X

Mr. Marsh

   X    X        

Mr. Perez

      X       X

Dr. Stern

      X    X     

Ms. Stoney

         X    X

Mr. Todman

             

Mr. White

        Chair    X     

2010 Meetings

   7    4    3    2

Audit Committee

The members of the Audit Committee are Mr. DiCamillo (Chair), Ms. Hempel, Mr. Johnston, Mr. Liu, and Mr. Marsh. Pursuant to a written charter, the Committee provides independent and objective oversight of our accounting functions and internal controls and monitors the objectivity of our financial statements. The Committee assists Board oversight of:

 

  1. the integrity of our financial statements;

 

  2. our compliance with legal and regulatory requirements;

 

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  3. the independent registered public accounting firm’s qualifications and independence; and

 

  4. the performance of our internal audit function and independent registered public accounting firm.

In performing these functions, the Committee is responsible for the review and discussion of the annual audited financial statements, quarterly financial statements and related reports with management, and the independent registered public accounting firm. These related reports include our disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The Committee also monitors policies and guidelines with respect to risk assessment and risk management, the adequacy of financial disclosure, retains and/or terminates our independent registered public accounting firm and exercises sole authority to review and approve all audit engagement fees and terms. The Committee approves in advance the nature, extent, and cost of all internal control-related and permissible non-audit services provided by the independent registered public accounting firm; and reviews annual reports from the independent registered public accounting firm regarding its internal quality control procedures.

Under its charter, the Committee is comprised solely of three or more independent directors who meet the enhanced independence standards for audit committee members set forth in the New York Stock Exchange (“NYSE”) listing standards (which incorporates the standards set forth in the rules of the Securities and Exchange Commission). The Board has determined that each member of this Committee satisfies the financial literacy qualifications of the NYSE listing standards and that Mr. DiCamillo satisfies the “audit committee financial expert” criteria established by the Securities and Exchange Commission and has accounting and financial management expertise as required under the NYSE listing rules.

Human Resources Committee

The members of the Human Resources Committee are Mr. White (Chair), Mr. Allen, Mr. Cain, Mr. Kerr, Mr. Marsh, Mr. Perez, and Dr. Stern. Pursuant to a written charter, the Committee assures the adequacy of the compensation and benefits of Whirlpool’s officers and top management and compliance with any executive compensation disclosure requirements. In performing these functions, the Committee has sole authority and responsibility to retain and terminate any consulting firm assisting in the evaluation of CEO or senior executive compensation. The Committee has the following duties and responsibilities, among others:

 

  1. reviews and approves corporate goals and objectives relevant to CEO compensation, evaluates the CEO’s performance in light of these goals and objectives, and sets the CEO’s compensation level based on this evaluation and other relevant business information;

 

  2. determines and approves the compensation and other employment arrangements for Whirlpool’s elected officers;

 

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  3. makes recommendations to the Board with respect to incentive compensation and equity-based plans; and

 

  4. determines and approves grants for each individual participant under the stock option plans and administers the stock option plans.

The Committee has the authority to form subcommittees and delegate to those subcommittees certain actions. Under its charter, the Committee is comprised solely of three or more independent directors who meet the independence standards under the NYSE listing standards. For information about the Committee’s processes for establishing and overseeing executive compensation, refer to “Compensation Discussion and Analysis – Role of the Human Resources Committee.”

Corporate Governance and Nominating Committee

The members of the Corporate Governance and Nominating Committee are Mr. Johnston (Chair), Mr. Allen, Mr. Cain, Mr. Kerr, Dr. Stern, Ms. Stoney, and Mr. White. Pursuant to a written charter, the Committee provides oversight on the broad range of issues surrounding the composition and operation of the Board, including:

 

  1. identifying individuals qualified to become Board members;

 

  2. recommending to the Board director nominees for the next annual meeting of stockholders;

 

  3. recommending to the Board a set of corporate governance principles applicable to Whirlpool; and

 

  4. recommending to the Board changes relating to director compensation.

The Committee also provides recommendations to the Board in the areas of committee selection and rotation practices, evaluation of the overall effectiveness of the Board and management, and review and consideration of developments in corporate governance practices. The Committee retains the sole authority to retain and terminate any search firm to be used to identify director candidates, including sole authority to approve the search firm’s fees and other retention terms. To assist the Committee in identifying potential director nominees who meet the criteria and priorities established from time to time and facilitate the screening and nomination process for such nominees, the Committee has retained a third party search firm. During 2010, we engaged RSR Partners to assist the Committee in identifying and soliciting potential candidates to join our Board. On an annual basis, the Committee solicits input from the full Board and conducts a review of the effectiveness of the operation of the Board and Board committees, including reviewing governance and operating practices and the Corporate Governance Guidelines for Operation of the Board of Directors. Under its charter, the Committee is comprised solely of three or more independent directors who meet the independence standards under the NYSE listing standards.

 

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Finance Committee

The members of the Finance Committee are Ms. Hempel (Chair), Mr. DiCamillo, Mr. Liu, Mr. Perez, and Ms. Stoney. Pursuant to a written charter, the Committee considers issues impacting our financial structure and makes recommendations to the Board. The Committee develops capital policies and strategies to set an acceptable capital structure, regularly reviews dividend action, liquidity management, adequacy of insurance coverage, the annual business plan as it relates to funds flow, capital expenditure and financing requirements, capital investment projects, major financial transactions, and tax and planning strategy and initiatives. The Committee also provides oversight of the Pension Fund Committee with respect to pension plan investment policies and plan funding requirements.

Director Independence

The Corporate Governance and Nominating Committee conducts an annual review of the independence of the members of the Board and its committees and reports its findings to the full Board. Twelve of our 14 directors are nonemployee directors (all except Messrs. Fettig and Todman). Although the Board has not adopted categorical standards of materiality for independence purposes (other than those set forth in the NYSE listing standards), information provided by the directors and Whirlpool did not indicate any relationships (e.g., commercial, industrial, banking, consulting, legal, accounting, charitable, or familial), which would impair the independence of any of the nonemployee directors. Based on the report and recommendation of the Corporate Governance and Nominating Committee, the Board has determined that each of its nonemployee directors satisfies the independence standards set forth in the listing standards of the NYSE.

Board Leadership Structure

As noted above, our Board is currently comprised of twelve independent and two employee directors. Mr. Fettig has served as Chairman of the Board and Chief Executive Officer since July 2004, and has been a member of our Board since June 1999. Since 2003 the Board has designated one of the independent directors as Presiding Director. We believe that the number of independent, experienced directors that make up our Board, along with the independent oversight of our Presiding Director, benefits Whirlpool and its stockholders.

We recognize that different board leadership structures may be appropriate for companies in different situations and believe that no one structure is suitable for all companies. We believe our current Board leadership structure is optimal for us because it demonstrates to our employees, suppliers, customers, and other stakeholders that Whirlpool is under strong leadership, with a single person setting the tone and having primary responsibility for managing our operations. Having a single leader for both the company and the Board eliminates the potential for confusion or duplication of efforts, and provides clear leadership for Whirlpool. We believe Whirlpool, like many U.S. companies, has been well-served by this leadership structure.

 

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Because the positions of Chairman of the Board and Chief Executive Officer are held by the same person, the Board believes it is appropriate for the independent Directors to elect one independent Director to serve as a Presiding Director. In addition to presiding at executive sessions of nonemployee directors, the Presiding Director has the responsibility to: (1) coordinate with the Chairman of the Board and Chief Executive Officer in establishing the annual agenda and topic items for Board meetings; (2) retain independent advisors on behalf of the Board as the Board may determine is necessary or appropriate; (3) assist the Human Resources Committee with the annual evaluation of the performance of the Chairman of the Board and Chief Executive Officer, and in conjunction with the Chair of the Human Resources Committee, meet with the Chairman of the Board and Chief Executive Officer to discuss the results of such evaluation; and (4) perform such other functions as the independent directors may designate from time to time. Mr. Johnston is currently serving as the Presiding Director.

Our Board conducts an annual evaluation in order to determine whether it and its committees are functioning effectively. As part of this annual self-evaluation, the Board evaluates whether the current leadership structure continues to be optimal for Whirlpool and its stockholders. Our Corporate Governance Guidelines provide the flexibility for our Board to modify or continue our leadership structure in the future, as it deems appropriate.

Risk Oversight

Our Board is responsible for overseeing Whirlpool’s risk management process. The Board focuses on Whirlpool’s general risk management strategy, the most significant risks facing Whirlpool, and ensures that appropriate risk mitigation strategies are implemented by management. The Board is also apprised of particular risk management matters in connection with its general oversight and approval of corporate matters.

The Board has delegated to the Audit Committee oversight of Whirlpool’s risk management process. Among its duties, the Audit Committee reviews with management (a) Whirlpool policies with respect to risk assessment and management of risks that may be material to Whirlpool, (b) Whirlpool’s system of disclosure controls and system of internal controls over financial reporting, and (c) Whirlpool’s compliance with legal and regulatory requirements. The Audit Committee is also responsible for reviewing major legislative and regulatory developments that could materially impact Whirlpool’s contingent liabilities and risks. Our other Board committees also consider and address risk as they perform their respective committee responsibilities. All committees report to the full Board as appropriate, including when a matter rises to the level of a material or enterprise level risk.

Whirlpool’s management is responsible for day-to-day risk management. Our treasury, risk management, and internal audit areas serve as the primary monitoring and testing function for company-wide policies and procedures, and manage the day-to-day oversight of the risk management strategy for the ongoing business of Whirlpool. This oversight includes identifying, evaluating, and addressing potential risks that may exist at the enterprise, strategic, financial, operational, and compliance and reporting levels.

 

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We believe the division of risk management responsibilities described above is an effective approach for addressing the risks facing Whirlpool and that our Board leadership structure supports this approach.

Compensation Risk Assessment

Whirlpool regularly reviews its employee compensation programs based on several criteria, including the extent to which they may result in risk to the company. Our compensation function, with assistance from the risk management and internal audit functions, annually assesses whether our compensation programs create incentives or disincentives that materially affect risk taking or are reasonably likely to have a material adverse effect on the company. The Human Resources Committee, with the assistance of Frederic W. Cook & Co., evaluates the results of this assessment. As part of this assessment, management and the Committee considered the following features of our compensation programs: (i) annual and long-term performance metrics used in our global compensation programs are multiple, balanced and more heavily weighted toward corporate-wide, audited metrics, (ii) the metrics used in the executive compensation programs are approved by the Committee which is composed solely of independent directors, (iii) the Committee retains an independent advisor that is involved with an ongoing review of the executive compensation program, (iv) long-term incentive compensation represents a significant portion of our compensation mix, (v) significant stock ownership guidelines for executives, (vi) claw-back provisions have been added to some compensation programs to deal with misconduct, and (vii) commission incentive programs are designed to pay out based on profitability and are subject to multiple layers of management review including an annual review of plan design and results by regional senior management. Based on this assessment, the Committee has concluded that our compensation programs do not create risks that would be reasonably likely to have a material adverse effect on the company.

Executive Sessions of Nonemployee Directors

The Board holds executive sessions of its nonemployee directors generally at each regularly scheduled meeting. The Presiding Director serves as the chairperson for these executive sessions.

Communications Between Stockholders and the Board

Interested parties, including stockholders, may communicate directly with the Chairman of the Audit Committee or the nonemployee directors as a group by writing to those individuals or the group at the following address: Whirlpool Corporation, 27 North Wacker Drive, Suite 615, Chicago, Illinois 60606-2800. This address is administered by an independent maildrop business. If correspondence is received by the Corporate Secretary, it will be forwarded to the appropriate person or persons in accordance with the procedures adopted by a majority of the independent directors of the Board with a copy to the Presiding Director. When reporting a concern, please supply sufficient information so that the matter may be addressed properly. Although you are encouraged to identify yourself to assist

 

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Whirlpool in effectively addressing your concern, you may choose to remain anonymous, and Whirlpool will use reasonable efforts to protect your identity to the extent appropriate or permitted by law.

Corporate Governance Guidelines for Operation of the Board of Directors

Whirlpool is committed to the highest standards of corporate governance. On the recommendation of the Corporate Governance and Nominating Committee, the Board adopted a set of Corporate Governance Guidelines for Operation of the Board of Directors. The desired personal and experience qualifications for director nominees are described in more detail below under the caption “Director Nominations to be Considered by the Board.”

Majority Voting for Directors; Director Resignation Policy

Whirlpool’s By-laws require directors to be elected by the majority of the votes cast with respect to such director in uncontested elections (number of shares voted “for” a director must exceed the number of votes cast “against” that director). In a contested election (a situation in which the number of nominees exceeds the number of directors to be elected), directors will be elected by a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. If a nominee who is serving as a director is not elected at the annual meeting, under Delaware law the director would continue to serve on the Board as a “holdover director.” However, under our Board’s policy, any director who fails to be elected must offer to tender his or her resignation to the Board. The Board shall nominate for election or reelection as director only candidates who agree to tender, promptly following the annual meeting at which they are elected or reelected as director, irrevocable resignations that will be effective upon (1) the failure to receive the required vote at the next annual meeting at which they face reelection and (2) Board acceptance of such resignation. In addition, the Board shall fill director vacancies and new directorships only with candidates who agree to tender, promptly following their appointment to the Board, the same form of resignation tendered by other directors in accordance with this Board policy.

If an incumbent director fails to receive the required vote for reelection, the Corporate Governance and Nominating Committee will act on an expedited basis to determine whether to accept the director’s resignation and will submit such recommendation for prompt consideration by the Board. The Board expects the director whose resignation is under consideration to abstain from participating in any decision regarding that resignation. The Corporate Governance and Nominating Committee and the Board may consider any factors they deem relevant in deciding whether to accept a director’s resignation.

Code of Ethics

All of Whirlpool’s directors and employees, including its Chief Executive Officer, Chief Financial Officer, and other senior financial officers, are required to abide by our long-standing Code of Ethics, augmented to comply with the requirements of the NYSE and Securities and Exchange Commission, to ensure that Whirlpool’s business is conducted in a

 

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consistently legal and ethical manner. The Code of Ethics covers all areas of professional conduct, including employment policies, conflicts of interest, fair dealing, and the protection of confidential information, as well as strict adherence to all laws and regulations applicable to the conduct of our business. We intend to disclose future amendments to, or waivers from, certain provisions of the Code of Ethics for executive officers and directors on the Whirlpool website within four business days following the date of any such amendment or waiver.

Director Nominations to be Considered by the Board

Stockholders entitled to vote in the election of directors of the Board may nominate director candidates at times other than at the annual meeting. For a nomination to be properly made by any stockholder and be considered for recommendation by the Board to the stockholders and included in our proxy statement for the 2012 annual meeting, written notice of such stockholder’s nomination must be given, either by personal delivery or by registered or certified United States mail, postage prepaid, to the Corporate Secretary of Whirlpool (and must be received by the Corporate Secretary) by November 10, 2011. Such notice shall set forth all of the information required by Article II, Section 11 of our By-laws. Our By-laws are posted for your convenience on the Whirlpool website: www.whirlpoolcorp.com. Whirlpool believes that all nominees must, at a minimum, meet the selection criteria established by the Corporate Governance and Nominating Committee. The Board evaluates director nominees recommended by stockholders in the same manner in which it evaluates other director nominees. Whirlpool has established through its Corporate Governance and Nominating Committee selection criteria that identify desirable skills and experience for prospective Board members, including those properly nominated by stockholders.

The Board, with the assistance of the Corporate Governance and Nominating Committee, selects potential new Board members using criteria and priorities established from time to time. Desired personal qualifications for director nominees include: intelligence, integrity, strength of character, and commitment. Nominees should also have the sense of timing required to assess and challenge the way things are done and recommend alternative solutions to problems; the independence necessary to make an unbiased evaluation of management performance and effectively carry out responsibilities of oversight; an awareness of both the business and social environment in which today’s corporation operates; and a sense of urgency and spirit of cooperation that will enable them to interact with other Board members in directing the future, profitable growth of Whirlpool. Desired experience for director nominees include: at least ten years of experience in a senior executive role with a major business organization, preferably, as either Chief Executive Officer or Chairman (equivalent relevant experience from other backgrounds such as academics or government may also be considered); a proven record of accomplishment and line operating (or equivalent) experience; first-hand experience with international operations; a working knowledge of corporate governance issues and the changing role of the Board; and exposure to corporate programs designed to create stockholder value, while balancing the needs of all stakeholders. Director nominees should not be employed by or affiliated with any organization that has competitive lines of business or that may otherwise present a conflict of interest. The composition, skills, and needs of the Board change over time and will be considered in

 

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establishing the profile of desirable candidates for any specific opening on the Board. The Corporate Governance and Nominating Committee has determined that it is desirable for the Board to have a variety of differences in viewpoints, professional experiences, educational background, skills, race, gender, age, and national origin, and considers issues of diversity and background in its selection process.

Available Information

Whirlpool’s current Corporate Governance Guidelines, Code of Ethics, and written charters for its Audit, Finance, Human Resources, and Corporate Governance and Nominating committees are posted on the Whirlpool website: www.whirlpoolcorp.com – scroll over the “Responsibility” dropdown menu, then “Governance,” then click on “Board of Directors.” Stockholders may also request a free copy of these documents from: Greg Fritz, Director, Investor Relations, Whirlpool Corporation, 2000 North M-63, Mail Drop 2800, Benton Harbor, Michigan 49022-2692; (269) 923-2641.

 

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NONEMPLOYEE DIRECTOR COMPENSATION

The elements of our 2010 director compensation are reflected in the table below. Only nonemployee directors receive compensation for their services as a director. We believe that it is important to attract and retain outstanding nonemployee directors. One way we achieve this goal is through a competitive compensation program. To that end, in 2010, management worked with Frederic W. Cook & Co. to evaluate the competitiveness of our compensation program for our directors who are not employees of Whirlpool. After evaluating competitive market data on nonemployee director compensation, a modest increase in both the annual cash and equity retainers was recommended to our Corporate Governance and Nominating Committee, which is responsible for making director compensation recommendations to the Board. These recommendations were made so that Whirlpool’s nonemployee director compensation remains competitive with other large publicly-held companies. After evaluating management’s and the consultant’s report, in December 2010 the Committee recommended and the Board approved, effective January 1, 2011, an increase in the annual cash retainer from $100,000 to $110,000, an increase in annual equity compensation, to be paid in Whirlpool common stock, from $100,000 to $110,000, and the elimination of all income tax reimbursement aspects of the program. The Board also increased the equity ownership guideline for nonemployee directors under which these directors are encouraged to own Whirlpool stock equal in value to five times the basic annual cash retainer, with a five-year timetable to obtain this objective. As of the end of 2010, all of the nonemployee directors met or were on track to meet this requirement.

2010 Nonemployee Director Compensation

 

Type of Compensation    Amount

Annual Cash Retainer

   $100,000

Annual Stock Options Retainer*

   1,357 options

Annual Stock Awards Retainer*

   520 shares

Annual Retainer for Committee Chair (in addition to other retainers):

    

Audit Committee

   $20,000

All Other Committees

   $10,000

Annual Retainer for Presiding Director (in addition to other retainers)

   $20,000
  * See “Nonemployee Director Equity” below for explanation of how the number of options and shares were calculated for 2010.  

Nonemployee Director Equity

In 2010, our nonemployee director compensation program included the following equity payments from Whirlpool’s omnibus stock and incentive plan: (1) a one-time grant of 1,000 shares of common stock made at the time a director first joins the Board; (2) a grant of stock options on the date of the annual meeting of stockholders, with the number of options

 

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determined by dividing $50,000 by the fair value of the stock option granted, as calculated using the Black Scholes valuation model, with the purchase price for the option being the closing price of Whirlpool common stock on the day of Whirlpool’s annual meeting of stockholders ($96.09); and (3) a grant of stock on the date of the annual meeting of stockholders, with the number of shares to be issued determined by dividing $50,000 by the closing price of Whirlpool common stock on the day of the annual meeting of stockholders.

Options granted in 2010 are exercisable for the earlier of ten years after grant or five years after a nonemployee director ceases to serve on our Board, or one year in the case of the nonemployee director’s death. However, no option is exercisable within the first six months of its term, unless death or disability of the director occurs.

Deferral of Annual Retainer and Stock Grants

A nonemployee director may elect to defer any portion of the annual cash retainer and annual stock awards retainer until he or she ceases to be a director. Under this policy, when the director’s term ends, any deferred annual retainer will be made in a lump sum or in monthly or quarterly installments. In addition, payment of any deferred annual stock grant will be made as soon as is administratively feasible. Annual cash retainers deferred on or before December 31, 2004 accrue interest quarterly at a rate equal to the prime rate in effect from time to time. Annual cash retainers deferred after December 31, 2004 may be allocated to notional investments that mirror those available to participants in our U.S. 401(k) plan, with the exception of the Whirlpool stock fund.

Charitable Program

Through 2007, each nonemployee director, upon election or reelection to the Board, could choose to relinquish all or a portion of the annual cash retainer, in which case Whirlpool may, at its sole discretion, then make an award to a charitable organization upon the director’s death. Under the program, the election to relinquish compensation is irreversible, and Whirlpool may choose to make contributions in the director’s name to as many as three charities. The Board of Directors eliminated this program, prospectively, as of January 1, 2008. Mr. White is the only active director with an outstanding benefit under this program.

Term Life and Travel Accident Insurance

Whirlpool pays the premiums to provide each nonemployee director who does not choose to opt out of coverage, with term life insurance while serving as a director, and also makes a related income tax reimbursement payment (the tax reimbursement aspect of this benefit was eliminated effective January 1, 2011). The coverage amount is equal to one-tenth of the director’s basic annual cash retainer times the director’s months of service (not to exceed 120). The Board of Directors eliminated the life insurance benefit as of January 1, 2011 for all directors who join the Board after that date. In addition, Whirlpool also provides each nonemployee director with travel accident insurance of $1 million when traveling on Whirlpool business.

 

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Whirlpool Appliances

For evaluative purposes, Whirlpool permits nonemployee directors to test Whirlpool products for home use, and reimburses the directors for any income taxes they incur as a result of this policy (the tax reimbursement aspect of this benefit was eliminated effective January 1, 2011). The cost to Whirlpool of this arrangement in 2010 (based on distributor price of products and delivery, installation, and service charges) did not exceed $20,000 for any one nonemployee director or $29,000 for all nonemployee directors as a group.

Business Expenses

Whirlpool reimburses nonemployee directors for business expenses related to their attendance at Whirlpool meetings, including room, meals and transportation to and from Board and committee meetings (e.g., commercial or private flights, cars and parking). On rare occasions, a director’s spouse may accompany a director when traveling on Whirlpool business. Directors are also reimbursed for attendance at qualified third-party director education programs.

Nonemployee Director Compensation Table

 

Name   Fees Earned or
Paid in  Cash(1)
($)
    Stock
Awards(2)
($)
    Option
Awards(3)
($)
    Non-equity
Incentive Plan
Compensation(4)
($)
    Change in
Pension Value
and
Non-qualified
Deferred
Compensation
Earnings(5)
($)
    All Other
Compensation(6)
($)
    Total
($)
 

Samuel R. Allen(7)

    54,121        102,800                             351        157,272   

Herman Cain

    97,500        49,967        49,978                      12,973        210,418   

Gary T. DiCamillo

    115,000        49,967        49,978                      7,969        222,914   

Kathleen J. Hempel

    105,000        49,967        49,978                      13,023        217,968   

Michael F. Johnston

    122,500        49,967        49,978                      11,406        233,851   

William T. Kerr

    97,500        49,967        49,978                      5,295        202,740   

John D. Liu(7)

    54,121        102,800                             294        157,215   

Miles L. Marsh

    102,500        49,967        49,978                      7,619        210,064   

William D. Perez

    97,500        49,967        49,978                      604        198,049   

Paul G. Stern

    100,000        49,967        49,978                      4,566        204,511   

Janice D. Stoney

    97,500        49,967        49,978                      48,639        246,084   

Michael D. White(8)

    110,000        49,967        49,978                      39,571        249,516   

 

(1) The aggregate dollar amount of all fees earned or paid in cash for services as a director, including all annual retainer fees, before deferrals and relinquishments.

 

(2) Reflects the fair value of shares of common stock, before deferrals, awarded in 2010 on the award date. Messrs. Allen and Liu each received an award of 1,000 shares of common stock at the time they were appointed to the Whirlpool Board of Directors in June 2010, while all other awards relate to the annual grant of 520 shares of common stock in April 2010. The fair value of the stock awards for financial reporting purposes will likely vary from the amount the director actually receives based on a number of factors, including stock price fluctuations and timing of sale. See Note 9 to the Consolidated Financial Statements contained in the Financial Supplement to this proxy statement for a discussion of the relevant assumptions used to account for these awards. As of December 31, 2010, none of our nonemployee directors was deemed to have outstanding stock awards because all stock awards vest immediately.

 

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(3) Reflects the fair value of the annual grant of stock options on the award date (1,357 in 2010) which generally become exercisable six months after grant and expire on the earlier of ten years from the award date or on the fifth anniversary of the date that the director ceases to be a director. See Note 9 to the Consolidated Financial Statements contained in the Financial Supplement to this proxy statement for a discussion of the relevant assumptions used to account for these awards. The fair value of the stock option awards for financial reporting purposes will likely vary from the amount the director actually receives based on a number of factors, including stock price fluctuations, timing of exercise, and differences between the valuation assumptions and actual experience. As of December 31, 2010, the number of stock options held by each nonemployee director (all of which have fully vested) were:

 

Samuel R. Allen

       

Herman Cain

       7,748   

Gary T. DiCamillo

     12,337   

Kathleen J. Hempel

     12,937   

Michael F. Johnston

     9,937   

William T. Kerr

     9,485   

John D. Liu

       

Miles L. Marsh

     14,137   

William D. Perez

       1,357   

Paul G. Stern

     14,137   

Janice D. Stoney

     14,137   

Michael D. White

       9,337   

 

(4) Whirlpool does not have a non-equity incentive plan for nonemployee directors.

 

(5) Whirlpool does not have a pension plan for nonemployee directors and does not pay above-market or preferential rates on non-qualified deferred compensation for nonemployee directors.

 

(6) The table below presents an itemized account of “All Other Compensation” provided in 2010 to the nonemployee directors.

 

Name  

Tax

Reimbursements(a) 

($)

   

Life Insurance 

Premiums

($)

   

Charitable

Program(b) 

($)

   

Whirlpool

Appliances and
Other Benefits 

($)

   

Total

($)

 

Samuel R. Allen

    167         34         –         150         351    

Herman Cain

    11,138         1,685         –         150         12,973    

Gary T. DiCamillo

    5,948         1,685         –         336         7,969    

Kathleen J. Hempel

    7,881         1,685         –         3,457         13,023    

Michael F. Johnston

    6,287         1,118         –         4,001         11,406    

William T. Kerr

    4,476         669         –         150         5,295    

John D. Liu

    110         34         –         150         294    

Miles L. Marsh

    5,814         1,685         –         120         7,619    

William D. Perez

    391         93         –         120         604    

Paul G. Stern

    2,637         144         –         1,785         4,566    

Janice D. Stoney

    27,599         1,685         –         19,355         48,639    

Michael D. White

    2,325         1,005         36,091         150         39,571    

 

  (a)

Tax reimbursements on income imputed to the director for Whirlpool appliances and other benefits received, and life insurance premiums paid on behalf of the director by Whirlpool. The Board of

 

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Directors eliminated all income tax reimbursement aspects of Whirlpool’s nonemployee director compensation program effective January 1, 2011.

 

  (b) Includes 2010 interest cost and service cost related to the Charitable Program, less 2010 relinquishments. The maximum amount payable under the Charitable Program upon Mr. White’s death is $1.5 million.

 

(7) Messrs. Allen and Liu were appointed to the Whirlpool Board of Directors in June 2010.

 

(8) Mr. White relinquished $2,910 of fees earned to the Charitable Program.

 

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SECURITY OWNERSHIP

The following table presents the ownership on December 31, 2010 of the only persons known by us as of February 15, 2011 to beneficially own more than 5% of our common stock based upon statements on Schedule 13G filed by such persons with the SEC.

 

Schedule 13G

Filed On

   Name and Address of Beneficial Owner    Shares
Beneficially
Owned
     Percent
of
Class
 

2/14/2011

  

PRIMECAP Management Company(1)

225 South Lake Avenue, #400

Pasadena, CA 91101

     11,152,510         14.67

2/10/2011

  

Vanguard Chester Funds – Vanguard Primecap Fund(2)

100 Vanguard Blvd.

Malvern, PA 19355

     5,900,000         7.76

2/9/2011

  

BlackRock, Inc.(3)

40 East 52nd Street

New York, NY 10022

     4,776,952         6.28

2/9/2011

  

T. Rowe Price Associates, Inc.(4)

100 E. Pratt Street

Baltimore, MD 21202

     4,012,029         5.28

2/9/2011

  

The Vanguard Group Inc.(5)

100 Vanguard Blvd.

Malvern, PA 19355

     4,004,373         5.27

 

(1) Based solely on a Schedule 13G/A filed with the SEC by PRIMECAP Management Company (“PRIMECAP”), a registered investment advisor. PRIMECAP has sole voting power with respect to 2,791,810 shares and sole dispositive power with respect to 11,152,510 shares.

 

(2) Based solely on a Schedule 13G/A filed with the SEC by Vanguard Chester Funds – Vanguard Primecap Fund (“Vanguard Funds”), a registered investment advisor. Vanguard Funds has sole voting power with respect to all shares.

 

(3) Based solely on a Schedule 13G/A filed with the SEC by BlackRock, Inc. (“BlackRock”). BlackRock has sole voting and dispositive power with respect to all shares.

 

(4) Based solely on a Schedule 13G filed with the SEC by T. Rowe Price Associates, Inc. (“T. Rowe Price”), a registered investment advisor. T. Rowe Price has sole voting power with respect to 945,143 shares and sole dispositive power with respect to 4,012,029 shares.

 

(5) Based solely on a Schedule 13G/A filed with the SEC by The Vanguard Group Inc. (“Vanguard Group”), a registered investment advisor. Vanguard Group has sole voting power with respect to 95,632 shares, sole dispositive power with respect to 3,908,741 shares, and shared dispositive power with respect to 95,632 shares.

 

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BENEFICIAL OWNERSHIP

The following table reports beneficial ownership of common stock by each director, nominee for director, the Chief Executive Officer, Chief Financial Officer, and the three other most highly compensated executive officers, and all directors and executive officers of Whirlpool as a group, as of February 16, 2011. Beneficial ownership includes, unless otherwise indicated, all shares with respect to which each director or executive officer, directly or indirectly, has or shares the power to vote or to direct the voting of such shares or to dispose or direct the disposition of such shares. The address of all directors and executive officers named below is c/o Whirlpool Corporation, 2000 North M-63, Benton Harbor, Michigan 49022-2692.

 

     Shares
Beneficially
Owned(1) 
    Deferred
Stock
Units(2) 
    Shares
Under
Exercisable
Options(3) 
    Total(4)      Percentage  

Samuel R. Allen

    1,000         –         –         1,000         *   

Marc R. Bitzer

    32,747         20,715         44,336         97,798         *   

Herman Cain

    10,237         –         7,748         17,985         *   

Gary T. DiCamillo

    5,840         8,452         12,337         26,629         *   

Jose Drummond

    19,556         –         2,219         21,775         *   

Jeff M. Fettig

    176,609         193,924         740,900         1,111,433         1.44

Kathleen J. Hempel

    10,474         4,424         12,937         27,835         *   

Michael F. Johnston

    3,000         5,539         9,937         18,476         *   

William T. Kerr

    5,267         –         9,485         14,752         *   

John D. Liu

    1,000         –         –         1,000         *   

Miles L. Marsh

    14,270         5,997         14,137         34,404         *   

William D. Perez

    3,520         –         1,357         4,877         *   

Paul G. Stern

    12,074         7,218         14,137         33,429         *   

Janice D. Stoney

    9,947         8,710         14,137         32,794         *   

Roy W. Templin

    34,237         2,673         72,634         109,544         *   

Michael A. Todman

    29,889         32,018         136,434         198,341         *   

Michael D. White

    2,700         5,066         9,337         17,103         *   

All directors and executive officers as a group (19 persons)

    373,940         294,736         1,152,949         1,821,625         2.35
* Less than 1%.

 

(1) Does not include 1,947,769 shares held by the Whirlpool 401(k) Trust (but does include 5,182 shares held for the accounts of executive officers). Includes restricted stock units that become payable within 60 days of February 16, 2011, before deferrals and tax liabilities.

 

(2) Represents the number of shares of common stock, based on deferrals made into the Deferred Compensation Plan II for Nonemployee Directors, one of the executive deferred savings plans, or the terms of deferred stock awards, that we are required to pay to a nonemployee director when the director leaves the Board or to an executive officer when the executive officer is no longer an employee. None of these deferred stock units have voting rights.

 

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(3) Includes shares subject to options that will become exercisable within 60 days of February 16, 2011.

 

(4) No shares of Whirlpool stock have been pledged as security by any of these individuals, except that Mr. Bitzer pledged 28,566 shares, and Mr. Todman pledged 21,760 shares, each in connection with a transaction with a third party.

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires Whirlpool’s directors and executive officers and persons who own more than 10% of Whirlpool’s common stock (each a reporting person) to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of Whirlpool’s common stock. Based solely on its review of the copies of such reports furnished to or prepared by Whirlpool and written representations that no other reports were required, Whirlpool believes that all Section 16(a) filing requirements applicable to reporting persons were complied with during the fiscal year ended December 31, 2010, except that due to an administrative calculation error, the Form 4s originally filed to report stock option grants to ten nonemployee directors in April 2010 did not correctly reflect the number of shares underlying the option. Amended Form 4s were filed with the SEC in February 2011 indicating that the number of shares underlying the options was 277 shares more than previously reported.

 

28


COMPENSATION DISCUSSION AND ANALYSIS

Executive Overview

We are the world’s leading manufacturer and marketer of major home appliances. Our global branded consumer products strategy is to introduce innovative new products, increase brand customer loyalty, expand our presence in emerging markets, enhance our trade management platform, improve total cost and quality by expanding and leveraging our global operating platform and where appropriate, make strategic acquisitions and investments. As such, we are dedicated to global leadership and to delivering superior stockholder value. Our executive compensation philosophy supports these objectives by attracting and retaining the best management talent and by motivating these employees to achieve business and financial goals that create value for stockholders in a manner consistent with Whirlpool’s focus on its enduring values: respect, integrity, diversity and inclusion, teamwork, and the spirit of winning.

To achieve our objectives, we implement a “pay-for-performance” philosophy using the following guiding principles:

 

   

compensation should be incentive-driven with both a short- and long-term focus;

 

   

a significant portion of pay should be performance-based, with the proportion varying with an executive’s level of responsibility;

 

   

components of compensation should be linked to increasing stockholder value; and

 

   

components of compensation should be tied to an evaluation of business and individual performance measured against financial, customer, quality and employee related objectives – a “balanced scorecard” approach.

The 2010 fiscal year demonstrated our commitment to these principles and illustrated how our program responds to business challenges and the marketplace.

 

   

Performance-based compensation in the form of annual and long-term incentives constituted over 75% of 2010 total target compensation for our CEO and other Named Executive Officers (NEOs).

LOGO

 

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Whirlpool’s consolidated net sales grew to $18.4 billion, supporting achievement of revenue growth and earnings per share objectives under the Global Balanced Scorecard.

 

   

Responding to a Cost Take-Out objective which served as a component of the short-term incentive compensation Global Balanced Scorecard in 2010, as discussed below, Whirlpool’s leadership exceeded the target objective and delivered significant net cost take-out results.

 

   

Whirlpool’s leadership focused on innovation, another 2010 Global Balanced Scorecard objective, yielding a significant number of new product launches and supporting branded share growth.

 

   

While other financial targets were exceeded, a highly competitive pricing environment negatively impacted price margin realization, a key component of the Global Balanced Scorecard. As a result, short-term incentive awards were slightly below target levels, despite positive results on cost take-out, innovation and revenue growth.

 

   

Achieving cost take-out goals drove strong performance on operating profit and free cash flow objectives under the long-term incentive compensation program, resulting in slightly above target long-term incentive compensation.

 

   

Overall, short-term and long-term incentive compensation payouts versus targets were lower for NEOs in 2010 than 2009.

 

   

Equity compensation awards, which comprised either two thirds or 100% of NEO long-term compensation, continued to play an important role in rewarding NEOs for the achievement of long-term business objectives and providing incentives for the creation of stockholder value.

In keeping with current best practices, existing change in control severance agreements were replaced with new agreements that raise the stock acquisition threshold for a change in control, narrow the circumstances under which benefits are triggered, remove age and service credits that previously provided enhanced pension benefits, limit the severance multiplier to 2 times salary and bonus for executives other than the CEO and Presidents, and eliminate excise tax gross-ups. Other governance highlights of our compensation program include:

 

   

Significant stock ownership guideline levels to reinforce the link between the interests of our NEOs and those of stockholders.

 

   

Claw-back provisions in both our Performance Excellence Plan (PEP) and omnibus stock incentive plans under which the repayment of awards may be required in certain circumstances.

 

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A fully independent Human Resources Committee of the Board of Directors advised by an independent compensation consultant that only provides services to the Human Resources Committee.

Compensation Elements

The Human Resources Committee of the Board of Directors (“the Committee”) sets compensation using a market-based approach, with differentiation based on individual and company performance. The elements of our compensation program reflect our “pay-for- performance” philosophy. The Committee creates a compensation package for each NEO that contains a mix of compensation elements that it believes best addresses the NEO’s responsibilities and that will best achieve our overall compensation objectives. In establishing target compensation, the Committee considers factors discussed below such as market value and job responsibility.

Taken as a whole, our compensation program is designed so that the individual’s target compensation level rises as job responsibility increases, with the portion of performance-based compensation rising as a percentage of total target compensation. This ensures that the senior-most executives who are responsible for development and execution of our strategic plan are held most accountable for operational performance results and changes in stockholder value over time. As a result, actual total compensation of an executive in relation to the total compensation of his or her subordinates is more dependent on performance, resulting in larger increases and decreases in periods of above-target and below-target performance. In addition, the Committee makes distinctions in the mix of cash and equity components based on job responsibility in shaping each executive officer’s compensation package. Generally, the proportion of equity compensation rises with increasing job responsibility to ensure strong alignment between executive and long-term stockholder interest.

 

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Element  

Characteristics

Base Salary  

•   Fixed component based on responsibility, experience and performance

 

•   Target is the median level for similar positions in the comparator group and is influenced by performance and experience

Short-term Incentives  

•   Performance-based variable cash incentives based on annual performance

 

•   Target is the median level for similar positions in the comparator group

Long-term Incentives  

•   Performance-based variable equity and cash incentives in the form of stock options, restricted stock units and performance cash units for certain positions

 

•   Target is the median level for similar positions in the comparator group

Other Benefits  

•   Health and welfare benefits available to substantially all salaried employees

 

•   Very limited perquisites designed to support a market-competitive compensation package

Retirement Benefits  

•   U.S.-based NEOs participate in qualified and non-qualified defined benefit and defined contribution plans

 

•   Target is the median income replacement ratio for a broad-based group of companies

 

•   NEOs outside the U.S. participate in retirement savings plans designed to be competitive within their regions

Compensation Process and Methodology

Role of the Human Resources Committee

The Committee has overall responsibility for Whirlpool’s executive compensation programs. Typically, the Committee adopts the compensation goals and objectives for awards under our short-term and long-term incentive plans at its meeting in February of each year. The Committee considers and makes decisions on the principal elements of each executive officer’s compensation package at this meeting. The Committee also performs its evaluation of CEO performance for the most recently completed year and establishes target CEO compensation for the current year at this meeting. Throughout the year, the Committee evaluates the overall effectiveness of our compensation philosophy and programs. In addition,

 

32


the Committee reviews management’s recommendations regarding hiring, promotion, retention, severance and individual executive compensation packages related to those events.

In making its determinations, the Committee reviews and considers various factors and assigns different weightings to these factors depending on the type of determination and the circumstances related to each specific action. For example, in determining base salary, the Committee may rely more heavily on market data and the guidance of its independent compensation consultant. In determining the payout of incentive awards, the Committee’s consideration of company performance and management’s assessment of individual performance may predominate. In setting long-term compensation, the Committee may give more weight to the complexity of the individual’s position and impact on overall company results. While the Committee solicits and reviews recommendations from its independent compensation consultant, and in some circumstances management, ultimately the Committee makes decisions regarding these matters in the exercise of its sole discretion.

Role of Consultants

The Committee establishes target compensation levels using a market-based approach. Each year, the Committee engages an independent compensation consultant to advise the Committee on Whirlpool’s executive compensation program. The Committee has the sole authority to approve the independent compensation consultant’s fees and terms of engagement. In 2009, the Committee selected Frederic W. Cook & Co. as its independent compensation consultant because of its extensive expertise and its independence due to the lack of an existing business relationship with Whirlpool.

Frederic W. Cook & Co. performed no services for Whirlpool in 2010 other than those related to executive and nonemployee director compensation as discussed below. In 2010, Frederic W. Cook & Co. advised the Committee on the design of the 2010 Omnibus Stock and Incentive Plan and the executive compensation provisions of the Dodd-Frank Act. Frederic W. Cook & Co. also performed a comprehensive analysis of the company’s change in control severance agreements and assisted in the preparation of revised agreements as discussed below under “Post-termination Payments.” Frederic W. Cook & Co. also assisted the Committee with a variety of other ongoing items, including review of materials prepared by management in advance of Committee meetings, the design of the variable incentive plans and selection of performance metrics and the review of public disclosures including this CD&A and the accompanying tables and narrative footnotes.

As part of its ongoing role in supporting the Committee, Frederic W. Cook & Co. assists the Committee in (1) reviewing the group of companies against whom Whirlpool’s senior executive pay levels are compared (our “comparator group”); (2) reviewing executive compensation market practices and trends in general; and (3) designing and recommending the compensation packages provided to the NEOs and other senior executives based on a marketplace assessment of the compensation for the NEOs and other senior executives in comparison to the compensation for comparable positions within the comparator group. With respect to the CEO, Frederic W. Cook & Co. provides a recommendation, without the CEO’s input, to the Committee regarding the CEO’s compensation package (base salary, target incentive award levels and mix of pay components).

 

33


In addition to the work described above, Frederic W. Cook & Co. also prepared a competitive assessment and report on the design of the company’s nonemployee director compensation program. Because decisions related to potential changes to nonemployee director compensation are made by the full Board of Directors, Frederic W. Cook & Co. provided its analysis to the Corporate Governance and Nominating Committee who then made a recommendation to the full Board.

Role of Management

Each year, the CEO and Chief Human Resources Officer make recommendations to the Committee regarding the compensation and benefit programs for all executive officers. In addition, the CEO makes recommendations with respect to base salary, annual cash incentives, equity compensation, and the total compensation levels for executive officers other than himself based on his assessment of personal performance and contribution to Whirlpool. The CEO and Chief Human Resources Officer recommend the performance metrics to be used in establishing performance goals for the annual cash incentive and long-term equity and cash incentive programs for adoption by the Committee. The Committee has authority to adopt or modify these metrics in its sole discretion. In addition, the CEO assesses the individual performance of the executive officers to assist the Committee in making determinations regarding awards to be paid out under incentive programs.

Benchmarking

For 2010, the Committee utilized the comparator group listed below which was used to benchmark executive compensation in prior years. These companies were selected because they have national and international business operations and are similar to Whirlpool in sales volumes, market capitalizations, employment levels, lines of business, organizational structure, and required management skills. Companies in the comparator group are recognized for their excellence in the areas of consumer focus and trade partner relations, and for possessing highly complex global supply chains and manufacturing footprints. We use publicly disclosed compensation data contained in proxy statements, as well as proprietary surveys purchased from third-party consulting firms to acquire market compensation data for companies in the comparator group.

 

3M Company

   Honeywell International Inc.

The Black & Decker Corporation

   Illinois Tool Works, Inc.

Caterpillar Inc.

   Ingersoll-Rand Company Ltd.

Cummins Inc.

   Kellogg Company

Colgate-Palmolive Company

   Motorola, Inc.

Deere & Company

   PPG Industries, Inc.

Eastman Kodak Company

   Raytheon Company

Eaton Corporation

   Sara Lee Corporation

Emerson Electric Co.

   Textron, Inc.

The Goodyear Tire & Rubber Company

   United Technologies Corp.

H. J. Heinz Company

   Xerox Corporation

 

34


Base Salary

In reviewing base salary levels for 2010, the Committee considered the comparative market data and recommendations provided by Frederic W. Cook & Co. and, with respect to other NEOs, the CEO’s recommendations. Effective in March 2010, the Committee increased Mr. Fettig’s salary to $1,335,000 and Mr. Templin’s salary to $700,000 from levels previously established in 2008. Effective in March 2010, the Committee increased Mr. Drummond’s salary to 1,500,000 Brazilian reais (approximately US $853,000) from levels previously established in 2009. The Committee maintained the $825,000 salary established for Mr. Todman and the $750,000 salary established for Mr. Bitzer in conjunction with their respective promotions effective January 1, 2010.

Short-Term Incentives

Consistent with Whirlpool’s pay-for-performance philosophy, substantially all salaried employees, including each NEO, are eligible to participate in the stockholder-approved Performance Excellence Plan (“PEP”), our annual cash incentive program. PEP is designed to focus attention on stockholder value creation, drive performance in support of this goal and other business goals, and reflect individual performance as measured against financial, customer, quality and employee-related objectives. PEP ensures that a significant portion of our NEOs’ annual cash compensation is directly tied to key performance measurements and therefore variable.

To maximize tax-deductibility, awards granted to NEOs under the terms of PEP are designed to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code. The Committee established a 2010 Return on Equity (ROE) target of 8% as the objective performance measure for PEP, which was met. As in prior years, achievement of the ROE target established the maximum award level for each NEO with actual payouts based on consideration of other performance metrics and the exercise of negative discretion by the Committee. At the beginning of fiscal 2010, the Committee established annual incentive opportunities as a percentage of an executive’s base salary for each NEO. The Committee established PEP target award levels for the NEOs taking into account comparative market data as follows:

 

NEO    PEP Target Award 
(as % of salary)

Jeff M. Fettig

   150% 

Roy W. Templin

   100% 

Michael A. Todman

   100% 

Marc R. Bitzer

   100% 

Jose A. Drummond

   80% 

 

35


Illustration of Whirlpool’s 2010 Short-Term Incentive Award

LOGO

In exercising negative discretion, the Committee reviewed performance under previously established, equally weighted Company Performance and Individual Performance Factors for each executive officer, each with a range of 0 to 200%. In defining the Company Performance Factor for 2010, the Committee determined that company performance in-line with expected performance would result in a Performance Factor of 100%. Company performance substantially above expected performance could result in a Performance Factor of up to 200%, and performance below expected performance could result in a Performance Factor as low as 0%, with no award being paid out under PEP.

2010 Company Performance

The Committee recognized the importance of ensuring that the incentive program design would focus executives on Whirlpool’s priorities and drive attainment of critical objectives for 2010. The Committee finalized these formulas and metrics at its February 2010 meeting after reviewing the 2010 business challenges and program design alternatives with management. As a result, the performance metrics selected by the Committee, including the use of the Cost Take-Out objective discussed below, reflect Whirlpool’s priorities and critical objectives for 2010.

As the basis for determining the Company Performance Factor, the Committee set objectives to establish the Global Balanced Scorecard multiplier. The Committee adopted a Cost Take-Out objective and Balanced Scorecard measures, consisting of Financial, Customer, Quality and Employee measures, for purposes of determining the Global Balanced Scorecard multiplier. The Cost Take-Out objective, based on a global project to drive costs out of every facet of the business, required significant reductions in the cost of materials, conversion, quality, and logistics, as well as Selling, General and Administrative expenses, across the company. The Cost Take-Out objective provided participants (including the NEOs) with the opportunity to establish a threshold minimum 50% Global Balanced Scorecard multiplier if the objective was achieved. Upon review of the 2010 financial results, the Committee determined that the Cost Take-Out objective was exceeded.

With respect to the Global Balanced Scorecard objectives, the Committee determined that company-level objectives based on Quality Measures, consisting of improvements in total

 

36


cost of quality and market call rate; and Employee Measures, consisting of talent development and employee engagement, were achieved on an overall basis. The Committee determined that among Customer Measures, the market share and innovation pipeline objectives were achieved, but the price margin realization objective was not achieved.

With respect to the Financial Measures under the Global Balanced Scorecard, the Committee determined levels of achievement based on the company’s financial results as follows:

 

   

Net Earnings per share of $7.97 per share exceeded the established target of $6.50 to $7.00 per share;

 

   

Revenue Growth of 7.4% exceeded the established target of 5.3%;

 

   

Operating Profit Margin of 5.5% at the high end of the established target of 5.0% to 5.5%; and

 

   

Free Cash Flow of $502 million exceeded the established target of $400 to $500 million.

Based on these performance results, the Committee assigned a Global Balanced Scorecard multiplier of 90%.

The 2010 Regional Balanced Scorecards consisted of operating profit, free cash flow, market share and total cost of quality objectives with a possible multiplier score of 0-200%. The North America Region’s focus on quality initiatives resulted in achievement of its total cost of quality objective. Delivery of consumer relevant innovation through a significant number of new product launches resulted in strong branded share gains and achievement of the market share objective. Slowing sales growth in the second half of 2010, however, combined with higher costs and aggressive competitive pricing pressure, negatively impacted regional operating profit which totaled $461 million. The operating profit objective of a 15 to 20% improvement was not achieved. The same factors negatively impacted free cash flow and the free cash flow objective established for the region was not achieved. Considering these results, the Committee approved a North America Regional Balanced Scorecard multiplier of 40%. The Latin America Region outperformed expectations with substantial sales growth and strong operating margins. Regional operating profit of $668 million exceeded the 15 to 20% operating profit improvement objective. Free cash flow and market share objectives for the region were also exceeded. In addition, the region met its total cost of quality objective. The Committee considered these results in approving a Latin America Regional Balanced Scorecard of 165%.

The 2010 Company Performance Factor for Messrs. Fettig, Todman and Templin was determined by reference to the Global Balanced Scorecard, resulting in a 90% Company Performance Factor. For each NEO with specific regional responsibilities, the Company Performance Factor is based on an average of the Global Balanced Scorecard multiplier and the applicable Regional Balanced Scorecard multiplier. For 2010, Mr. Bitzer’s responsibilities

 

37


included North America and as a result, the Company Performance Factor used in calculating his PEP award was 65%. For 2010, Mr. Drummond’s responsibilities included Latin America and as a result, the Company Performance Factor used in calculating his PEP award was 127.5%.

2010 Individual Performance Assessment

The Committee annually reviews each executive officer’s individual performance based on a rigorous review of individual achievements during the performance period relative to established goals. With respect to NEOs other than the CEO, the Committee may rely on the assessment of individual performance provided by the CEO. Executive officers are reviewed based on established criteria for results, leadership, talent and demonstration of Whirlpool values.

As a result of this process, each NEO receives one of the following performance ratings:

LOGO

The Committee retains the discretion to reduce Individual Performance Factors within the ranges set forth above. In determining the individual performance rating, the CEO and Committee consider each NEO’s absolute performance, performance relative to internal peers, any unforeseen factors that influenced the results of each NEO, and the extent to which the leadership of each NEO has contributed to Whirlpool’s success during the performance period based on qualitative measures. For 2010, each NEO received a performance rating of “Strong Results” or higher.

Based on this review, the Committee determined the actual PEP payout to each NEO by multiplying the NEO’s Target Award by the applicable Company Performance Factor and Individual Performance Factor. For Messrs. Fettig, Todman and Templin, the Company Performance Factor, comprised solely of the 90% Global Balanced Scorecard multiplier resulted in PEP payouts slightly below target. Mr. Bitzer’s PEP payout was lower than target due not only to the impact of the Global Balanced Scorecard multiplier, but also a significantly lower Regional Balanced Scorecard multiplier. Mr. Drummond’s PEP payout was slightly above target due to the impact of a higher Regional Balanced Scorecard Multiplier which mitigated the impact of the lower Global Balanced Scorecard multiplier on the Company Performance Factor.

 

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Long-Term Incentives

Long-term incentive opportunities are tied directly to Whirlpool’s financial and strategic performance over a preset period beginning each January 1 and continuing for one year or longer. Each set of performance measures rewards the achievement of specific long-term strategic goals designed to deliver long-term stockholder value. The length of the performance period varies depending on the performance measures established by the Committee.

Long-term awards typically consist of a combination of stock options and stock equivalents in the form of performance-based restricted stock units, which are distributed in stock, and performance units payable in cash, depending on the NEO’s job responsibilities. We have generally followed a practice of making all equity awards to employees, including NEOs, on a single date every year. Generally, the Committee grants these equity awards at its regularly scheduled meeting in February. This meeting usually occurs after we release our final earnings for the prior fiscal year, which permits material information regarding our performance for the prior fiscal year to be disclosed to the public before equity-based grants are made. The Committee determines equity award values based on the closing stock price on the date of grant. Because the Committee determines the number of any stock options to be granted, and the target number of any restricted stock units, based on the closing stock price on the date of grant, these numbers may vary significantly from year to year as a result of changes in the stock price.

Due to the limited number of shares remaining available under the 2007 Omnibus Stock and Incentive Plan, the Committee elected in February 2010 to grant only awards of performance-based restricted stock units and performance cash units under the 2010 long-term incentive program. Performance-based restricted stock units, which have a higher value per share at grant, required fewer shares than stock options to convey the target award values intended by the Committee. Following the adoption of the 2010 Omnibus Stock and Incentive Plan by stockholders at their annual meeting, the Committee resumed the practice of granting a significant portion of the long-term incentive award in the form of stock options in 2011.

Illustration of Whirlpool’s 2010 Long-Term Incentive Award

LOGO

 

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Establishing Award Levels and Equity Values

Long-term incentive awards granted to NEOs are designed to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code. As with PEP, the Committee established a 2010 ROE target of 8% as the objective performance measure for long-term incentives, which was met. As in prior years, achievement of the ROE target established the maximum award level for each NEO with actual payouts based on consideration of other performance metrics and the exercise of negative discretion by the Committee.

At the beginning of 2010, the Committee established long-term incentive opportunities as a percentage of an executive’s base salary for each NEO. The Committee established 2010 long-term incentive target award levels for the NEOs taking into account comparative market data as follows:

 

NEO

   Long-Term
Incentive Target
Award
(as % of salary)

Jeff M. Fettig

   575%

Roy W. Templin

   225%

Michael A. Todman

   250%

Marc R. Bitzer

   250%

Jose A. Drummond

   125%

For 2010, the Committee determined that performance in-line with long-term incentive performance expectations would result in a payout equal to 100% of the target award, while performance substantially above expected performance could result in a maximum payout of up to 200% of the target award. Performance below expected performance could result in no long-term incentive award payout.

 

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The Committee determined the allocation of each NEO’s 2010 long-term incentive target award between performance-based restricted stock units and performance cash units based on the officer’s position and ability to impact components of company performance and stock value over the longer term. The 2010 long-term incentive target award allocations for each NEO are as follows:

 

NEO    Performance-
Based
Restricted
Stock Units
as % of
Target
Award
    Performance
Cash Units
as % of
Target
Award
 

Jeff M. Fettig

     100     0

Roy W. Templin

     66.7     33.3

Michael A. Todman

     100     0

Marc R. Bitzer

     100     0

Jose A. Drummond

     66.7     33.3

The Committee determined the target number of performance-based restricted stock units granted to each NEO based on the Fair Market Value of Whirlpool stock on the date in February 2010 when the long-term incentive target award was established under the terms of the 2007 Omnibus Stock and Incentive Plan.

For 2010, the Committee selected a one-year performance period for the achievement of performance goals, with the number of performance-based restricted stock units and performance cash units to be earned determined in 2011 based on 2010 performance. The Committee further selected a two-year vesting period tied to continued employment following the end of the performance period for any earned awards. The additional vesting requirement was intended to support our overall retention objectives and to ensure that final payouts reflected changes in stockholder value over the entire three-year period.

Establishing Performance Measures and Reviewing Outcomes

In exercising negative discretion, the Committee reviewed performance under previously established objective performance goals to determine actual awards. For 2010, the Committee established equally weighted goals based on critical profitability and liquidity measures, Operating Profit and Free Cash Flow, and a one-year performance period. The Committee established ranges from 0 to 200% for performance against each of these measures. The ranges provided a 100% midpoint of $950 million for Operating Profit and a 100% midpoint of $450 million for Free Cash Flow, with results above and below the midpoints to be proportionally calibrated within the established ranges.

Based on achievement of $1.008 billion Operating Profit, up 46.5% from 2009, and $502 million in Free Cash Flow, the Committee determined an Operating Profit Performance Factor of 113.8% and a Free Cash Flow Performance Factor of 113%. As a result of these

 

41


performance outcomes, the Committee determined that 113.4% of the target number of restricted stock units and performance cash units would be awarded to the NEOs. The 2010 performance-based restricted stock units and performance cash units are subject to a two-year vesting period and will be distributed in February 2013. By combining the features of a performance period and a vesting period, these awards reward contributions to long-term objectives and discourage taking excessive risks for short-term gain.

Special Recognition and Retention Awards

While most of our equity awards have historically been made pursuant to our annual grant practice, the Committee retains the discretion to make additional “off-cycle” awards to senior officers, including NEOs, in connection with promotions, recruitment efforts, succession planning or significant accomplishments. In recognition of their achievements and for purposes of retention, in June 2010, the Committee granted Messrs. Bitzer and Drummond restricted stock unit awards. Under these awards, 50% of the restricted stock units will vest and be distributed on the fifth anniversary of the grant date and the remaining 50% will vest and be distributed on the tenth anniversary of the grant date, provided that the recipient remains in the continued service of the company.

Perquisites

We provide limited perquisites to executives, including financial planning services, limited use of Whirlpool owned and leased property, product discounts, home security, relocation assistance, and comprehensive health evaluations. These perquisites are designed to support a market-based competitive total compensation package, which serves our overall attraction and retention objectives, enhances the efficiency of our management team by enabling them to focus their efforts on Whirlpool business and ensures that Whirlpool derives the most value from our overall compensation and benefits expenditures. For purposes of personal security, Mr. Fettig and Mr. Todman may use company aircraft for personal use, and other executives may be granted limited use of the aircraft with the permission of the CEO. Mr. Drummond is eligible to receive the use of a company car and driver for security reasons and as part of a competitive total compensation package, consistent with prevailing practice in Latin America.

Post-Termination Payments

Our U.S.-based NEOs are eligible to receive benefits under a severance policy generally available to U.S. salaried employees. In addition, the Human Resources Committee may agree to provide additional severance benefits upon the termination of an executive officer.

We have entered into Compensation Benefits and Assurance Agreements with each executive officer, including each NEO, to provide benefits in the event of a qualifying termination following a change in control of Whirlpool. These agreements are intended to ensure that our NEOs are not deterred from exploring opportunities that will result in

 

42


maximum value for stockholders, including actions that may result in a change in their position or standing within Whirlpool and to promote orderly succession of talent and support our overall attraction and retention objectives.

During 2010, the Committee reviewed the existing Compensation and Benefits Assurance Agreements with the assistance of Frederic W. Cook & Co. Based on the Committee’s recommendation, the Board authorized a new form of agreement intended to better align the company’s change in control severance program with current best practices in this area. The new agreements revise the definition of change in control by raising the stock acquisition threshold level of Whirlpool stock that must be acquired by an outside entity and requiring consummation of a merger or consolidation transaction to trigger the protections afforded under the program. In addition, the new agreements impose a “double trigger” requirement under which benefits are triggered only upon the occurrence of both a change in control event and the termination of the employment relationship by the company or by the executive for good reason. The new agreements also reduced the level of benefits provided by removing additional age and service credits under pension plan calculations, limiting the severance multiplier to two times salary and bonus for executives other than the CEO and Presidents, and eliminating excise tax gross-ups.

Retirement Benefits

NEOs are eligible for retirement benefits designed to provide, in total, a market-competitive level of income replacement upon achieving retirement eligibility by using a combination of qualified and non-qualified plans. We assess retirement benefits for NEOs against data provided to the Towers Watson Employee Benefits Information Center by other U.S. companies that provide survey data on executive benefits. Specifically, in 2009 we reviewed comparisons with Towers Watson data obtained from over 300 companies, approximately one-half of which were companies with revenues of $10 billion or more. Accordingly, this survey tool includes data on a much broader base of companies than those included in the executive compensation comparator group.

This review is an important factor used in determining the median retirement income replacement ratio among similarly situated executives at such companies as the targeted amount of total retirement benefits for our NEOs. Total retirement benefits are provided through a combination of qualified and non-qualified defined contribution plans and qualified and non-qualified defined benefit plans. As a result of the current mix of our retirement plans, we believe that total retirement benefits for the NEOs are currently at a competitive level when compared to the other companies in the survey. Executive officers in locations outside the United States receive retirement benefits designed to be competitive with benefits provided to executives in comparable positions within their regions. Whirlpool continues to strive to provide retirement benefits that are market-competitive.

 

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Stock Ownership Guidelines

Stock ownership guidelines, which are approved by the Committee, support the objective of increasing the amount of Whirlpool stock owned by senior Whirlpool leaders. Ensuring that our NEOs and other senior Whirlpool leaders have a significant stake in Whirlpool’s long-term success aligns the interests of executives with those of our stockholders. These ownership guidelines are based on a review of competitive market practice conducted by Frederic W. Cook & Co. The guidelines for stock ownership are expressed as multiples of base salary and vary based on an individual’s level in the organization. Ownership guidelines for the NEOs are listed below:

 

CEO:

   7 times base salary

President:

   5 times base salary

Executive Vice Presidents:

   4 times base salary

The guidelines state that each executive should achieve the respective level of stock ownership within five years. For these guidelines, ownership includes shares purchased on the open market, shares owned jointly with spouses and children, shares held in the Whirlpool 401(k) Retirement Plan, shares obtained through stock option exercises (but not including unexercised stock options), stock award distributions, and vested stock units (including those on which the executive has deferred distribution).

The Committee, as well as Whirlpool’s senior leadership, annually reviews each executive officer’s progress on achieving the applicable level of ownership. During the Committee’s most recent review of ownership levels, it was determined that each NEO currently meets or is on track to meet the applicable stock ownership guideline during the stated timeframe.

Recovery of Previously Paid Executive Compensation

The PEP and omnibus stock incentive plans include “claw-back” provisions under which the repayment of awards may be required under certain circumstances. Under these plans, the Committee may require repayment of an award if the participant is terminated or otherwise leaves employment with the company within two years following the vesting date of the award and such termination of employment is in any way connected with any misconduct or violation of company policy. Moreover, these plans provide that the Committee may require repayment of awards if a participant becomes employed with a competitor within the two-year period following termination of employment, or for any other reason considered by the Committee in its sole discretion to be detrimental to the company or its interests.

 

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Deductibility of Executive Compensation

The Committee intends to preserve the tax deductibility of executive compensation under Section 162(m) of the Internal Revenue Code to the extent practicable while focusing on consistency with its compensation philosophy, the needs of Whirlpool, and stockholder interests. Whirlpool’s stockholders have approved PEP and our omnibus stock and incentive plans that award our short-term cash and long-term incentives to executives. Many of the types of awards authorized in these stockholder-approved plans would be considered qualifying “performance-based” compensation for purposes of Section 162(m). As a result, such performance-based awards are excluded in the determination of the $1 million deduction limit under Section 162(m). However, the Committee retains the ability to make payments in one or more of the programs as previously discussed that may not qualify for tax deductibility under Section 162(m).

 

HUMAN RESOURCES COMMITTEE REPORT

The Human Resources Committee of Whirlpool’s Board of Directors reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement.

Based upon this review and discussion, the Human Resources Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in Whirlpool’s Annual Report on Form 10-K for the year ended December 31, 2010, as incorporated by reference from this proxy statement.

HUMAN RESOURCES COMMITTEE

Michael D. White, Chair

Samuel R. Allen

Herman Cain

William T. Kerr

Miles L. Marsh

William D. Perez

Paul G. Stern

 

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EXECUTIVE COMPENSATION TABLES

Summary Compensation Table

The following table sets forth compensation information for our NEOs during the 2010, 2009, and 2008 fiscal years; however, 2009 and 2008 information is not provided for Mr. Drummond because he was not an NEO during those fiscal years. The table may not reflect the actual compensation received by our NEOs for those periods. For example, amounts recorded in the stock awards and options columns reflect the fair market value of the awards at the award date and the targeted compensation for certain performance-based equity awards. The actual value of compensation realized by the NEO will likely vary from any targeted equity award amount due to company performance relative to established incentive award criteria, the stock price on award distribution dates, and differences between the original stock option valuation assumptions and the level of compensation realized on exercise.

 

Name and
Principal Position
  Year     Salary
($)
    Bonus
($)
    Stock
Awards
(1) ($)
    Option
Awards
(2) ($)
    Non-Equity
Incentive Plan
Compensation
(3) ($)
    Change in
Pension Value
and
Non-Qualified
Deferred
Compensation
Earnings
(4) ($)
    All Other
Compensation
(5) ($)
    Total ($)  
      2010        1,325,000               7,676,247               1,802,250        3,424,664        212,536        14,440,697   
Jeff M. Fettig
Chairman of the
Board and Chief
Executive Officer
    2009        1,275,000               3,990,133        1,914,000        3,500,000        1,704,872        122,811 (6)      12,506,816   
      2008        1,262,500               3,738,703        2,544,356        420,000        683,122        133,207        8,781,888   
      2010        691,667               1,049,934               1,217,850        240,842        62,291        3,262,584   
Roy W. Templin
Executive Vice President and Chief Financial Officer
    2009        650,000               433,325        248,239        1,409,958        130,835        54,348 (6)      2,926,705   
      2008        641,667               433,601        295,120        312,869        60,254        56,781        1,800,292   
      2010        825,000               2,062,449               742,500        727,967        113,401        4,471,317   
Michael A.
Todman

President,
Whirlpool
International
    2009        760,000               949,986        544,220        1,254,000        411,121        119,686 (6)      4,039,013   
      2008        753,333               951,268        647,156        188,333        192,160        125,613        2,857,863   
      2010        750,000               3,924,546               487,500        44,754        207,675        5,414,475   
Marc R. Bitzer
President, Whirlpool North America(7)
    2009        648,013               433,325        248,239        1,409,958 (6)      9,348        80,689        2,829,572   
      2008        713,378               359,181        244,444        234,052        –(8)         105,222        1,656,277   

Jose A. Drummond

Executive Vice President and

President Whirlpool Latin America(7)

    2010        837,403               2,721,038               1,707,258               280,198        5,545,897   

 

(1)

Reflects fair value of target performance-based restricted stock unit awards and time-based restricted stock unit awards on the award date. See our “Stock Options and Incentive Plans” Note to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the applicable fiscal year for a

 

46


 

discussion of the relevant assumptions used to account for these awards. Performance-based restricted stock units have a potential payout of 0% to 200% of the target amount. The fair values of the maximum possible performance-based restricted stock unit awards as of the award dates are as follows:

 

Name    2008 ($)      2009 ($)      2010 ($)  

Jeff M. Fettig

     7,477,406         7,331,201         15,352,494   

Roy W. Templin

     867,202         866,650         2,099,868   

Michael A. Todman

     1,902,536         1,899,972         4,124,898   

Marc R. Bitzer

     718,362         866,650         3,749,892   

Jose A. Drummond

                     1,342,876   

For the actual number of performance-based restricted stock units earned for the 2008, 2009 and 2010 performance periods, see the “Outstanding Equity Awards at Fiscal Year-End” table.

 

(2) Reflects the fair value of stock option awards on the award date. See our “Stock Options and Incentive Plans” Note to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the applicable fiscal year for a discussion of the relevant assumptions used in calculating these values.

 

(3) Represents the sum of cash incentive awards earned in 2010 under PEP. For Messrs. Templin and Drummond this amount also includes earned 2010 performance cash units. The 2010 performance cash unit awards are subject to time-based vesting and will not be paid out until February 2013. The individual PEP and performance cash unit awards that comprise the total value in the “Non-Equity Incentive Plan Compensation” column above for our NEOs were:

 

Name    2010 PEP Award ($)     2010 Performance Cash Award
(earned, but unvested) ($)
     Total ($)  

Jeff M. Fettig

     1,802,250                1,802,250   

Roy W. Templin

     622,500        595,350         1,217,850   

Michael A. Todman

     742,500                742,500   

Marc R. Bitzer

     487,500                487,500   

Jose A. Drummond

     1,304,422        402,836         1,707,258   

 

(4) Reflects the change in actuarial present value of these benefits from December 31, 2009 to December 31, 2010. See the Pension Benefits table for the actuarial present value of these benefits. None of our NEOs received above-market earnings on their non-qualified deferred compensation accounts.

 

(5) The following table presents an itemized account of the amounts shown in the “All Other Compensation” column for each NEO in 2010:

 

Name   Personal Use
of Whirlpool
Aircraft(a)
($)
   

Car &

Driver(b)
($)

   

Other

Perquisites(c)
($)

    Insurance
Premiums(d)
($)
   

Defined Contribution

Plan

Contributions(e)

($)

   

Relocation(f)

($)

    Total
($)
 

Jeff M. Fettig

    88,306               39,980               84,250               212,536   

Roy W. Templin

                  17,708               44,583               62,291   

Michael A. Todman

    52,317               8,495               52,589               113,401   

Marc R. Bitzer

                  15,026               48,167        144,482        207,675   

Jose A. Drummond

           107,165        2,839        56,218        113,976               280,198   

 

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  (a) Our incremental cost for personal use of Whirlpool aircraft is calculated by multiplying the aircraft’s hourly variable operating cost by a trip’s flight time, which includes any flight time of an empty return flight. Variable operating costs are based on industry standard rates of variable operating costs, including fuel costs, trip-related maintenance, landing/ramp fees and other miscellaneous variable costs. On certain occasions, a spouse or other family member may accompany one of our NEOs on a flight. No additional operating cost is incurred in such situations under the foregoing methodology. We do not pay our NEOs any amounts in connection with taxes on income imputed to them for personal use of our aircraft.

 

  (b) For Mr. Drummond, this amount includes $34,068 for the incremental cost to Whirlpool of providing a car and $73,097 for the incremental cost to Whirlpool of providing a driver. We calculated the incremental cost of the driver by using the actual employment cost to Whirlpool during 2010 and of the car by using the total lease payments.

 

  (c) Represents the incremental cost to Whirlpool of: Whirlpool products offered at discounted prices; financial planning and tax services; personal use of property that we own or lease primarily for business purposes; comprehensive health evaluations and home security. Individually, none of these categories of perquisites or personal benefits exceeded $25,000 for any single NEO.

 

  (d) Represents Whirlpool’s payments to provide life, medical and dental insurance programs to Mr. Drummond, consistent with those programs provided for individuals at his position level in Brazil.

 

  (e) Represents Whirlpool’s contributions to the 401(k) Retirement Plan and the 401(k) Restoration Plan for Messrs. Fettig, Templin, Todman, and Bitzer. The amount for Mr. Drummond includes Whirlpool’s contributions to a defined contribution plan account maintained in Brazil.

 

  (f) For Mr. Bitzer, includes a net payment of $143,973 under our tax equalization program, which neutralizes the tax effect of an international transfer where the executive’s income would be subject to tax in two countries.

 

(6) Amounts in the All Other Compensation and Total columns have been adjusted to reflect that, due to an administrative error, the Defined Contribution Plan contributions previously reported in 2009 were overstated by $4,100 for Mr. Fettig, $6,136 for Mr. Templin, and $5,400 for Mr. Todman. In the Non-Equity Incentive Plan Compensation column, the amount of Mr. Bitzer’s 2009 PEP award has been adjusted to reflect that the award paid was $2,787 higher than previously reported, because the actual award was calculated using base salary level, rather than salary paid, to neutralize the impact of currency conversion.

 

(7) Compensation values shown for Mr. Bitzer for 2008 and a portion of 2009 have been converted from Euros to U.S. dollars using the average currency conversion rate for each respective period. Compensation values shown for Mr. Drummond have been converted from Brazilian reais to U.S. dollars using the average currency conversion rate for 2010.

 

(8) No change in actuarial value is reflected as Mr. Bitzer became eligible to participate in the Whirlpool Supplemental Executive Retirement Plan (“SERP”) in 2009.

Grants of Plan-Based Awards

The following table provides additional information about plan-based compensation disclosed in the Summary Compensation Table. In February 2010, we granted short-term cash incentives to our NEOs under the Performance Excellence Plan (“PEP”) and long-term incentives using performance-based restricted stock units and performance cash units under the Whirlpool Corporation 2007 Omnibus Stock and Incentive Plan.

The Committee established both target and maximum award levels of performance-based restricted stock units and performance cash units with actual awards to be determined based on the achievement of specified objectives during the 2010 fiscal year (the “performance period”). Upon completion of the performance period, the Committee approved award amounts in 2011, basing the number of restricted stock units and performance cash units awarded on the level of achievement of 2010 objectives. These awards, once determined, are subject to a two-year vesting period.

 

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Generally, an executive must be employed by Whirlpool on the last day of the performance period in order to obtain PEP, performance-based restricted stock unit, or performance cash unit awards. However, if an executive dies, becomes disabled, or retires after a minimum of six months of the performance period has been completed, but prior to the end of the performance period, and at the end of the performance period the Committee determines that the performance objectives have been met, the Committee may determine to award the executive or his beneficiaries, if applicable, a portion of the award.

With respect to performance-based restricted stock unit and performance cash unit awards, if an executive dies, becomes disabled, or retires after the completion of the performance period, but prior to the vesting date of the award, vesting and distribution are accelerated.

The Committee also granted time-based restricted stock unit awards to Messrs. Bitzer and Drummond. These grants were made in June 2010 under the Whirlpool Corporation 2010 Omnibus Stock and Incentive Plan. Under these awards, 50% of the restricted stock units will vest and be distributed on the fifth anniversary of the grant date in June 2015 and the remaining 50% will vest and be distributed on the tenth anniversary of the grant date in 2020. Upon vesting, time-based restricted stock units convert on a one-for-one basis to shares of common stock. There are no dividend amounts credited to the restricted stock units during the vesting period. If the executive dies or becomes disabled prior to the vesting date of the award, vesting and distribution are accelerated. Any unvested award amounts are otherwise forfeited upon termination of employment.

 

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Name  

Grant
Date

    Estimated Possible
Payouts Under
Non-Equity
Incentive
Plan Awards ($)
    Estimated Future
Payouts Under
Equity Incentive
Plan Awards (#)
   

All
Other
Stock
Awards:
Number
of
Shares
of Stock
or Units

(#)

    Grant
Date Fair
Value of
Stock and
Option
Awards(5)
($)
 
    Threshold   Target     Maximum     Threshold   Target     Maximum      
Jeff M. Fettig                    
PEP – Cash(1)     –       0     2,002,500        5,000,000                                 
Performance RSUs(2)     2/15/2010                      0     94,570        189,140               7,676,247   
Roy W. Templin                                                                
PEP – Cash(1)     –       0     700,000        2,800,000                                 
Performance RSUs(2)     2/15/2010                      0     12,935        25,870               1,049,934   
Performance Cash Units(3)     –       0     525,000        1,050,000                                    
Michael A. Todman                    
PEP – Cash(1)     –       0     825,000        3,300,000                                 
Performance RSUs(2)     2/15/2010                      0     25,409        50,818               2,062,449   
Marc R. Bitzer                                                                
PEP – Cash(1)          0     750,000        3,000,000                                 
Performance RSUs(2)     2/15/2010                      0     23,099        46,198               1,874,946   
Restricted Stock Units(4)     6/15/2010                                        20,000        2,049,600   
Jose A. Drummond                    
PEP – Cash(1)     –       0     638,298        2,553,191                                 
Performance RSUs(2)     2/15/2010                      0     8,272        16,544               671,438   
Performance Cash Units(3)     –       0     332,447        664,894                                 
Restricted Stock Units(4)     6/15/2010                                        20,000        2,049,600   

 

(1) Represents estimated possible payouts of short-term incentive awards for 2010 under PEP. See the column captioned “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table for the actual payout amounts for 2010.

 

(2) Represents estimated possible restricted stock unit awards for 2010 performance. See the column captioned “Stock Awards – Number of Shares or Units of Stock That Have Not Vested” in the Outstanding Equity Awards at Fiscal Year-End Table for actual awards.

 

(3) Represents estimated possible performance cash unit awards for 2010 performance for Messrs. Templin and Drummond. See the column captioned “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table for actual awards for 2010. In 2010, Messrs. Fettig, Todman and Bitzer did not receive performance cash unit awards as part of their long-term incentives.

 

(4) Represents the fair value on the award date for the restricted stock unit awards granted by the Committee on June 15, 2010.

 

(5) Represents the fair value at the award date for the performance-based restricted stock units for each NEO based upon the probable outcome of the performance conditions.

 

50


Outstanding Equity Awards at Fiscal Year-End

The table below lists outstanding equity grants for each NEO as of December 31, 2010. The table includes outstanding equity grants from past years as well as the current year.

 

     Option Awards     Stock Awards  
Name   Number of
Securities
Underlying
Unexercised
Options
(Exercisable)
(#)
    Number of
Securities
Underlying
Unexercised
Options
(Unexercisable)
(#) (1)
    Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
    Option
Exercise
Price
($)
    Option
Expiration
Date
    Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#)
    Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($) (3)
    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
($)
 

Jeff M. Fettig

Stock Options

                   

2001

    70,000                 54.07        2/19/2011             

2002

    70,000                 67.29        2/18/2012             

2003

    70,000                 49.60        2/17/2013             

2004

    40,000                 72.94        2/16/2014             

2006

    83,200                 89.16        2/20/2016             

2007

    91,000                 94.47        2/19/2017             

2008

    80,869        39,831          88.49        2/18/2018             

2009

    102,000        198,000          31.82        2/16/2019             

Performance RSUs

                   

2008

              11,000 (2)      977,130 (4)       

2009

              144,206 (5)      12,809,819         

2010

              107,242 (6)      9,526,307         

RSUs

                                            37,140 (7)      3,299,146                   

Roy W. Templin

Stock Options

                     

2003

    10,000                 62.98        7/01/2013             

2004

    2,664                 72.94        2/16/2014             

2006

    9,300                 89.16        2/20/2016             

2007

    10,600                 94.47        2/19/2017             

2008

    9,380        4,620          88.49        2/18/2018             

2009

    13,231        25,678          31.82        2/16/2019             

Performance RSUs

                     

2008

                1,224 (2)      108,728 (4)       

2009

                15,660 (5)      1,391,078         

2010

                14,668 (6)      1,302,958         

RSUs

                                            17,500 (8)      1,554,525                   

 

51


     Option Awards     Stock Awards  
Name   Number of
Securities
Underlying
Unexercised
Options
(Exercisable)
(#)
    Number of
Securities
Underlying
Unexercised
Options
(Unexercisable)
(#) (1)
    Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
    Option
Exercise
Price
($)
    Option
Expiration
Date
    Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#)
    Market
Value of
Shares
or Units
of Stock
That
Have
Not
Vested
($) (3)
    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
($)
 

Michael A. Todman

Stock Options

                   

2004

    10,282                 72.94        2/16/2014             

2006

    19,200                 89.16        2/20/2016             

2007

    19,100                 94.47        2/19/2017             

2008

    20,569        10,131          88.49        2/18/2018             

2009

    29,003        56,298          31.82        2/16/2019             

Performance RSUs

                   

2008

              2,687 (2)      238,686 (4)       

2009

              34,333 (5)      3,049,800         

2010

              28,813 (6)      2,559,459         

RSUs

                                            65,601 (9)      5,827,337                   

Marc R. Bitzer

Stock Options

                   

2004

    3,563                 75.32        2/16/2014             

2006

    6,932                 89.16        2/20/2016             

2007

    9,145                 94.47        2/19/2017             

2008

    7,770        3,826          88.49        2/18/2018             

2009

    261        25,678          31.82        2/16/2019             

Performance RSUs

                   

2008

              1,014 (2)      90,074 (4)       

2009

              15,660 (5)      1,391,078         

2010

              26,194 (6)      2,326,813         

RSUs

                                            68,212 (10)      6,059,272                   

Jose A. Drummond

Stock Options

                                   

2008

           2,219            88.49        2/18/2018                   

2009

           14,550            31.82        2/16/2019                   

Performance RSUs

                                   

2008

                        588 (2)      52,232 (4)         

2009

                        8,873 (5)      788,189           

2010

                        9,380 (6)      833,225           

RSUs

                                            46,000 (11)      4,086,180                   

 

(1) As shown in the table above, each NEO has two awards with remaining unvested stock options listed in this column. These awards represent grants from 2008 and 2009. Stock options generally vest and become exercisable in equal installments on the first, second, and third anniversary of the grant date. As of the last day of our 2010 fiscal year, the awards made in 2008 have one remaining vesting date, February 18, 2011; the awards made in 2009 have two vesting dates remaining, February 16, 2011, and February 16, 2012. There were no stock option awards made in 2010 to NEOs.

 

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(2) Represents restricted stock units earned for 2008 performance, but subject to time-based vesting and unvested as of December 31, 2010. Shares of common stock were distributed on February 18, 2011.

 

(3) Represents earned, but unvested restricted stock units multiplied by the closing price, $88.83, of our common stock on December 31, 2010. The ultimate value of the awards will depend on the value of our common stock on the actual vesting date.

 

(4) The value of the awards as of the February 18, 2011 vesting date was as follows: Mr. Fettig, $917,840; Mr. Templin, $102,131; Mr. Todman, $224,203; Mr. Bitzer, $84,608; Mr. Drummond, $49,063.

 

(5) Represents earned, but unvested restricted stock units granted for 2009 performance. Although earned in 2009, these restricted stock units are subject to time-based vesting and shares will not be distributed until February 16, 2012.

 

(6) Represents earned, but unvested restricted stock units granted for 2010 performance. Although earned in 2010, these restricted stock units are subject to time-based vesting and shares will not be distributed until February 15, 2013.

 

(7) Represents unvested time-based restricted stock units which will vest and be distributed in shares of common stock as follows: 22,500 on July 1, 2011; 14,640 upon retirement. Units vesting upon retirement are credited with dividend equivalents until distribution.

 

(8) Represents unvested time-based restricted stock units which will vest and be distributed in shares of common stock as follows: 10,000 on September 1, 2011; 7,500 on June 18, 2014.

 

(9) Represents unvested time-based restricted stock units which will vest and be distributed in shares of common stock as follows: 15,000 on July 1, 2011; 50,601 upon retirement. Units vesting upon retirement are credited with dividend equivalents until distribution.

 

(10) Represents unvested time-based restricted stock units which will vest and be distributed in shares of common stock as follows: 10,000 on July 1, 2011; 10,000 on June 15, 2015; 10,000 on June 15, 2020; 38,212 upon retirement. Units vesting upon retirement are credited with dividend equivalents until distribution.

 

(11) Represents unvested time-based restricted stock units which will vest and be distributed in shares of common stock as follows: 10,000 on October 1, 2011; 1,000 on January 1, 2012; 5,000 on June 18, 2014; 10,000 on June 15, 2015; 10,000 on October 1, 2018; 10,000 on June 15, 2020.

Option Exercises and Stock Vested

The table below summarizes the value received from stock option exercises and stock grants vested in 2010.

 

Name    Option Awards      Stock Awards  
   Number of Shares
Acquired on Exercise(1) (#)
     Value Realized
on Exercise(2) ($)
     Number of Shares
Acquired on Vesting(3) (#)
    

Value Realized

on Vesting(4) ($)

 

Jeff M. Fettig

                     32,000         2,709,440   

Roy W. Templin

                     11,250         1,077,713   

Michael A. Todman

     27,000         1,007,008         6,700         567,289   

Marc R. Bitzer

     12,970         973,277         11,201         872,549   

Jose A. Drummond

     18,305         716,424         8,873         814,924   

 

53


(1) Option awards exercised by Mr. Todman were granted on February 18, 2002. Option awards exercised by Mr. Bitzer were granted on February 16, 2009. Option awards exercised by Mr. Drummond were granted on February 20, 2006 (2,471), February 19, 2007 (3,832), February 18, 2008 (4,506) and February 16, 2009 (7,496).

 

(2) The dollar value realized on the exercise of stock options represents the pre-tax difference (fair market value of Whirlpool common stock on the exercise date minus the exercise price of the option) multiplied by the number of shares of common stock covered by the stock options held by the respective NEO.

 

(3) Reflects shares distributed as a result of the vesting of restricted stock unit awards: Mr. Fettig – 32,000 performance-based restricted stock units; Mr. Templin – 7,500 time-based restricted stock units, 3,750 performance-based restricted stock units; Mr. Todman – 6,700 performance-based restricted stock units; Mr. Bitzer – 8,000 time-based restricted stock units which were automatically deferred for distribution until retirement; 3,201 performance-based restricted stock units; and Mr. Drummond – 7,300 time-based restricted stock units; 1,573 performance-based stock units.

 

(4) The dollar value realized represents the pre-tax value received by each NEO upon the vesting of the stock unit awards. The value realized is based on the closing stock price of Whirlpool stock on the New York Stock Exchange on the vesting date.

Pension Benefits

Messrs. Fettig, Templin and Todman accrued benefits under the Whirlpool Employees Pension Plan (“WEPP”) and the associated Whirlpool Retirement Restoration Plan (the “Pension Restoration Plan”) through December 31, 2006, when plan benefits were frozen. Messrs. Fettig, Templin, Todman and Bitzer currently participate in the Supplemental Executive Retirement Plan (“SERP”). These plans provide a defined benefit upon retirement relative to salary and annual cash incentives earned during the employment period. The following table describes the estimated actuarial present value of accrued pension benefits through the end of our 2010 fiscal year for each of our NEOs listed in the table. None of our U.S.-based NEOs are retirement-eligible as of the last day of our 2010 fiscal year. The number of years of service credited to each NEO equals the NEO’s length of eligible service with Whirlpool. Whirlpool currently has a policy against crediting additional years of service under its pension plans.

WEPP is a qualified plan that provided all eligible employees, which included most Whirlpool salaried employees in the United States, with a defined pension benefit upon reaching retirement eligibility. For benefits under WEPP, the formula is:

 

2% x years of credited service x average base salary

In this formula:

 

   

“years of credited service” for salaried employees is generally based on hours worked as a salaried employee and also includes hours paid but not worked (such as vacations and holidays), hours of military service required to be recognized under federal law, and hours for up to 24 months of long-term disability;

 

54


   

“average base salary” generally means the average of base salary in effect during the 60 sequential (but not necessarily consecutive) full calendar months of a participant’s last 120 or fewer consecutive full calendar months of service before retirement or other termination of service that will produce the largest average monthly amount; and

 

   

the maximum number of years of service credited under the plan is 30 years.

Retirement benefits under this formula are limited by the Internal Revenue Code. Benefits can be paid to plan participants in a variety of annuity forms or as a lump sum amount. The benefits payable to our NEOs from this plan were frozen as of December 31, 2006.

After reaching age 55 and completing five years of service with Whirlpool, salaried participants in this plan are eligible for early retirement benefits under the plan. Benefits paid prior to age 65 are reduced. The factors used to determine this reduction vary with the participant’s age. For example, for salaried participants whose benefits have vested and who retire from active service at age 55, their retirement benefits are reduced to 55% of the full retirement benefit payable at age 65. None of our NEOs who participate in this plan were eligible for early retirement as of the last day of our 2010 fiscal year.

Under the Pension Restoration Plan, the retirement eligibility and benefit formula are the same as under WEPP, except that in this plan statutory benefit limitations are not applied in calculating benefits under the formula. With respect to our NEOs who participate in this plan, payments under this plan are made in accordance with their distribution elections. Participants in this plan may select among the following payment distribution options: lump sum seven months following termination; lump sum in the year following the year of termination; or ten annual installments commencing in the year following termination. Participants may not make withdrawals during their employment. The benefits payable to our NEOs from this plan were frozen as of December 31, 2006.

SERP is a non-qualified plan that provides benefits in excess of Internal Revenue Code limitations under WEPP. SERP provides a benefit based on annual cash incentive compensation which supplements the benefit calculated on base salary under WEPP. With respect to benefits under SERP, the formula is:

 

2% x years of credited service x average of the highest 5 PEP awards received over the last ten years

In this formula:

 

   

“years of credited service” has the same meaning as it does under WEPP described above; and

 

   

the maximum number of years of service credited under the plan is 30 years.

 

55


Mr. Bitzer became eligible to participate in SERP in 2009, but will not be vested until December 31, 2013 as he must complete five years of credited U.S. service in the plan. After completing five years of service, our NEOs are eligible for benefits under SERP upon termination of employment for any reason except a termination for cause, provided they have received one or more PEP awards within the last ten calendar years preceding their termination of employment. Participants in this plan may select among the following payment distribution options: lump sum seven months following termination; lump sum in the year following the year of termination; or ten annual installments commencing in the year following termination.

The actuarial present values of benefits under these plans are calculated in accordance with the following assumptions: (1) discount rate: 2010 – 5.6% and 2009 – 5.85%; (2) assumed retirement age: 65; (3) no pre-retirement decrements; (4) assumed form of payment: lump sum, determined as equal to the present value of the life annuity provided by the plans’ formulas and calculated based on the plans’ provisions, including an interest rate based on high-quality corporate bond yields (assumed to be 5.6%) and mortality assumption that is based on the RP-2000 Table. The actuarial increase during our 2010 fiscal year of the projected retirement benefits can be found in the Summary Compensation Table in the “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” column (all amounts reported under that heading represent actuarial increases in our plans).

 

Name   Plan Name   Number of Years
Credited Service
(#)
  Present Value of
Accumulated
Benefit ($)
    Payments During
Last Fiscal Year
($)
 

Jeff M. Fettig

  WEPP   26     668,958          
     
    DB Restoration   26     2,098,437          
     
    SERP   30     9,115,876          
                   
     
              Total        11,883,271           

Roy W. Templin

  WEPP   4     75,066          
     
    DB Restoration   4     67,797          
     
    SERP   8    
548,261
  
      
                   
     
              Total             691,124           

Michael A. Todman

  WEPP   14     345,440          
     
    DB Restoration   14     550,148          
     
    SERP   18    
1,943,049
  
      
                   
     
              Total          2,838,637           
     

Marc R. Bitzer

  WEPP                
     
    DB Restoration                
     
    SERP   2            54,102          
                   
     
              Total                54,102           

 

56


Defined Contribution Plans

The Whirlpool 401(k) Retirement Plan provides a defined contribution retirement benefit qualified under Section 401(k) of the Internal Revenue Code. This plan offers participants a pre-tax retirement savings vehicle plus employer contributions that encourage participant retirement savings and provide additional assets for employees’ retirement. Most U.S.-based employees of Whirlpool, including the NEOs, are eligible to participate in this plan, although different levels of employer contributions apply to different groups. This plan provides an automatic employer contribution of 3% of pay. The 401(k) plan provides for an employer match of up to 4% of pay, provided that participants contributed at least 5% of pay on a pre-tax basis to the plan and subject to contribution and benefit limitations under the Internal Revenue Code.

Mr. Drummond participates in a defined contribution pension plan in Brazil. The plan offers participants a retirement savings vehicle plus employer contributions to encourage participant savings and provide additional assets for retirement, as well as certain death and disability benefits. Under the plan, a participant may elect, on an annual basis, to contribute up to a maximum of 5.5% of monthly salary into the plan. Based on the age of the employee, Whirlpool makes an employer contribution within a range of 50% to 200% of the employee’s contribution level, but in no case less than 1% of the employee’s salary. The plan benefit upon retirement is based on the level of contributions over the participant’s period of participation in the plan. As the participant’s account is comprised of both individual and employer contributions, restrictions apply to the respective balances for any in-service withdrawals and distributions commencing upon resignation.

Whirlpool contributions to these plans are reported in the Summary Compensation Table and its accompanying footnotes.

Non-Qualified Deferred Compensation

The table below provides information about the non-qualified defined contribution deferred compensation plans in which our NEOs participate. Some of our U.S.-based NEOs participate in the Whirlpool Corporation Executive Deferred Savings Plan (“EDSP I”) and the Whirlpool Corporation Executive Deferred Savings Plan II (“EDSP II”). EDSP I was designed to provide executives with pre-tax deferral opportunities beyond those offered by the Whirlpool 401(k) Retirement Plan. Participants may no longer make deferrals to EDSP I. EDSP II became effective January 1, 2005 to comply with the requirements of Code Section 409A.

EDSP II includes two components: the traditional component is known as EDSP II and the added component is known as the Whirlpool Executive Restoration Plan (the “401(k) Restoration Plan”). The traditional EDSP II is designed to provide executives with pre-tax deferral opportunities beyond those offered by the Whirlpool 401(k) Retirement Plan and the 401(k) Restoration Plan. Eligible executives may elect to contribute up to 75% of their short-term incentives and long-term incentives under this component. For our NEOs, the 401(k) Restoration Plan treats base salary as the only form of compensation eligible for deferral under the plan.

 

57


An EDSP I participant may elect distribution following termination of employment in the form of a lump sum or in a number of monthly installments designated by the participant. A participant in EDSP II may select among the following post-termination distribution options: lump sum seven months following termination, lump sum in the year following the year of termination, or ten annual installments commencing in the year following termination.

EDSP I and EDSP II (including both the traditional component and the 401(k) Restoration Plan component) are unfunded non-qualified plans that are secured by our general assets. Amounts deferred are credited to recordkeeping accounts for participants, and the recordkeeping balances are credited with earnings and losses measured by investments generally similar to those selected by executives and available in the Whirlpool 401(k) Retirement Plan. Participants may not make withdrawals during their employment, except in the event of hardship, as approved by the Human Resources Committee.

 

Name   Executive
Contributions
in Last FY(1) ($)
    Registrant
Contributions
in Last FY(2)  ($)
    Aggregate
Earnings
in Last FY(3) ($)
    Aggregate
Withdrawals/
Distributions ($)
    Aggregate
Balance
at Last FYE(4) ($)
 

Jeff M. Fettig

                   

EDSP I

                  228,440                1,949,378    

EDSP II

    1,334,736               948,477               9,200,640   

401(k) Restoration

    44,250        75,600        107,171               658,785   
                                         

Total

    1,378,986        75,600        1,284,088                    –        11,808,803   

Roy W. Templin

                   

EDSP I

                                  

EDSP II

    31,283               47,220               444,000   

401(k) Restoration

    13,083        31,967        35,049               325,132   
                                         

Total

    44,366        31,967        82,269               769,132   

Michael A. Todman

                   

EDSP I

                  79,888               695,178   

EDSP II

                  20,117               173,421   

401(k) Restoration

    19,492        40,939        25,696               223,583   
                                         

Total

    19,492        40,939        125,701               1,092,182   

Marc R. Bitzer

                   

EDSP I

                                  

EDSP II

                                  

401(k) Restoration

    43,500        36,150        9,420               89,070   
                                         

Total

    43,500        36,150        9,420               89,070   
                                         

 

(1) The amount of the contributions made by each NEO, as reported above, is also included in each NEO’s compensation reported under the Summary Compensation Table, either as “Salary,” “Non-Equity Incentive Plan Compensation” or “Stock Awards.”

 

(2) Represents the amount of the contributions made by Whirlpool to each NEO under the 401(k) Restoration Plan. These amounts are also reflected in the “All Other Compensation” column of the Summary Compensation Table.

 

(3) The aggregate earnings are not reported in the Summary Compensation Table.

 

58


(4) The aggregate balance at December 31, 2010, as reported above, reflects amounts that either are currently reported or were previously reported as compensation in the Summary Compensation Table for 2010 or prior years, except for the aggregate earnings on deferred compensation.

Potential Post-Termination Payments

The tables below describe compensation and benefits payable to each of our NEOs, in each of the following circumstances: involuntary termination by Whirlpool for cause, involuntary termination by Whirlpool without cause, resignation, retirement, death, disability, and change in control (with and without a qualifying termination). The amounts shown in the table below assume that termination of employment or a change in control occurred as of December 31, 2010, and estimate certain amounts which would be paid to our NEOs upon the specified event. Due to the number of factors that affect the nature and amounts of compensation and benefits provided upon the events discussed below, the actual amounts paid or distributed may be different. Factors that could greatly affect these amounts include the timing during the year of any such event, Whirlpool’s stock price, and the NEO’s age.

The tables quantify and the accompanying narrative disclosure describes the compensation and benefits that are paid in addition to compensation and benefits generally available to salaried employees. Examples of compensation and benefits generally available to salaried employees, and thus not included below, are distributions under the Whirlpool 401(k) Retirement Plan, accrued vacation pay, and, in certain circumstances, vested equity.

Involuntary Terminations and Resignation

We provide no additional benefits to any of our NEOs in the event that the NEO resigns from Whirlpool. Also, we do not have employment agreements with any of our U.S.-based NEOs that would provide benefits in the event that we terminate the NEO’s employment involuntarily for cause. As is customary for executives in Brazil, Mr. Drummond would be entitled to a special severance payment equal to 12 months of his base salary upon contract termination by Whirlpool or his retirement, under the terms of his employment agreement. Upon resignation and involuntary termination for cause, and in accordance with the terms of the long-term incentive awards granted under our incentive programs, our NEOs forfeit all unvested performance-based restricted stock units and performance cash units, as well as all unvested, and vested, but unexercised options. Certain time-based restricted stock units accelerate upon an involuntary termination without cause. Generally, in the event we terminate the employment of an NEO involuntarily without cause, the payment of the value of these unvested time-based restricted stock units is the only benefit to which the NEO is entitled. The amounts reflected in the table below do not include amounts payable under the severance policy generally applicable to all U.S. salaried employees. The Committee may, in its discretion, approve additional severance benefits designed to mitigate economic injury to the NEO as a direct result of the termination.

Retirement

None of the NEOs was retirement-eligible as of the last day of our 2010 fiscal year. If these NEOs chose to “retire” as of the last day of our 2010 fiscal year, the effect of that

 

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“retirement” would be the same as if the NEO had resigned, as described immediately above. The following quantification of estimated compensation and benefits payable at retirement, as well as the accompanying narrative disclosure, assumes that each of our NEOs was retirement-eligible as of the end of our 2010 fiscal year.

In the event of retirement, our NEOs would be entitled to a mix of short- and long-term incentives. The possible short-term incentive payout would consist of a prorated cash payout under PEP for the fiscal year in which the NEO retires, provided that the objective performance goal for that year is met. Proration is based on the ratio of the number of days worked during the performance period to the total number of days in the performance period. The Committee met on February 14, 2011 and determined the PEP awards earned for 2010. An NEO who retired during 2010 would receive a payout based on the amounts approved by the Committee.

For the purposes of the table below and consistent with our assumption that each of our NEOs is retirement-eligible, we include a value showing the full vesting of certain unvested long-term incentive awards for the completed 2008 and 2009 performance periods. Vesting of performance cash units is accelerated at retirement. With respect to restricted stock unit awards, the benefit a retirement-eligible NEO would actually receive upon retirement would depend on whether the initial award is performance-based or time-based. For awards which are initially performance-based, but subject to vesting requirements, vesting accelerates upon retirement provided that the performance period is completed. For awards subject only to time-based vesting, the NEO forfeits any unvested restricted stock units upon retirement. Certain time-based awards fully vest upon retirement and attainment of age 60.

With respect to performance-based awards, a retirement-eligible NEO receives a prorated award if the NEO retires at least six months into the performance period, provided that the objective performance goal is met. The 2010 performance-based restricted stock unit and performance cash unit awards were granted for a one-year performance period. Proration is based on the ratio of the number of days worked during the performance period to the total number of days in the performance period. In the case of the 2010 awards, as of the last day of our 2010 fiscal year, each NEO had completed the full one-year performance period. The Committee met on February 14, 2011 and determined that our NEOs earned 113.4% of these 2010 awards. An NEO who retired during 2010 would receive a prorated payout based on this level of achievement.

A retirement-eligible NEO would receive accelerated vesting of all applicable unvested stock option awards upon retirement. Unvested stock options that are accelerated upon the retirement of a retirement-eligible NEO must be exercised within five years or the unexercised stock options will be cancelled.

Death and Disability

Upon the death or disability of one of our NEOs, with respect to the accelerated vesting of unvested, or partially unvested, performance cash unit awards, performance-based

 

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restricted stock unit awards, and stock options, the same analysis applies under these two scenarios as would apply in the case of the retirement of a retirement-eligible NEO, as described immediately above.

Certain time-based restricted stock units which provide for full vesting and distribution upon retirement accelerate upon death or disability. Other time-based units are forfeited in the event of death or disability prior to vesting.

The following table shows the possible payouts to each of our NEOs for the specified type of employment termination. As detailed above, the values for the retirement portion of the table assume that our NEOs were retirement-eligible as of the last day of the 2010 fiscal year and also assume that our NEOs were eligible for the full vesting of any restricted stock unit awards that provide for accelerated vesting upon either retirement, disability or death. As a result of these assumptions, the benefit conferred to Messrs. Fettig, Templin and Todman upon retirement is identical to the benefit conferred in the event of a disability or death. For Messrs. Bitzer and Drummond, certain restricted stock unit awards fully vest upon disability and death, but not upon retirement, and the incremental benefit of such awards are reflected in the amounts shown under “Disability” and “Death.” The designated beneficiaries of our NEOs would receive the same life insurance benefits generally available to all salaried employees and, thus, there is no additional incremental benefit paid out in the event that they die.

 

     INVOLUNTARY
TERMINATION
    RETIREMENT     DISABILITY     DEATH  
Name   With
Cause
($)
   

Without
Cause

(1) ($)

    Short-
Term
Incentives
    Long-Term Incentives                    
     

2010

PEP ($)

   

2008

Performance

RSUs

($)

   

2009

Perfor-

mance

RSUs

($)

   

2010

Perfor-

mance

RSUs

($)

   

2008

Perfor-

mance

Cash

($)

   

2009

Perfor-

mance

Cash

($)

   

2010

Perfor-

mance

Cash

($)

   

Stock

Options

($)

   

RSUs

($)

   

TOTAL

($)

   

TOTAL(2)

($)

   

TOTAL(2)

($)

 

Jeff M. Fettig

           1,300,471        1,802,250        977,130        12,809,819        9,526,307                             11,301,523        1,300,471        37,717,500        37,717,500         37,717,500   

Roy W. Templin

                  622,500        108,728        1,391,078        1,302,958        108,338        498,333        595,350        1,465,474               6,092,759        6,092,759        6,092,759   

Michael A. Todman

           4,494,886        742,500        238,686        3,049,800        2,559,459                             3,212,994        4,494,886        14,298,325        14,298,325        14,298,325   

Marc R. Bitzer

           3,394,372        487,500        90,074        1,391,078        2,326,813        90,020        498,333               1,465,204        3,394,372        9,743,394        11,519,994        11,519,994   

Jose A. Drummond

    852,563        852,563        1,304,422        52,232        788,189        833,225                      402,836        830,250               4,211,154        5,987,754        5,987,754   

 

(1) Represents the benefit of accelerated vesting of certain unvested time-based restricted stock units for Messrs. Fettig, Todman, and Bitzer and contractual severance payment for Mr. Drummond.

 

(2) Represents the incremental benefit of certain time-based restricted stock units for Messrs. Bitzer and Drummond that provided for accelerated vesting in the event of disability or death.

Change in Control

Upon the occurrence of a change in control, our NEOs may receive accelerated vesting of previously unvested, performance cash units, restricted stock units, and stock options under the terms of those awards. Certain time-based restricted stock unit awards will be accelerated and paid out upon a change in control. In addition, we have agreements with each of the NEOs that take effect only in the event of a “change in control.” A “change in control” in accordance with these agreements is generally defined to include the acquisition by any person or group of 30% or more of Whirlpool’s voting securities, a change in the composition of the Board such that the existing Board or persons who were approved by a majority of directors or their successors on the existing Board no longer constitute a majority, and consummation of a merger or consolidation of Whirlpool.

 

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These agreements contain a “best net” approach to address the potential for any excise tax to be imposed for severance payments and benefits that would constitute an “excess parachute payment” under Section 4999 of the Internal Revenue Code. We will not provide a gross-up payment and will instead reduce payments to the NEO such that the aggregate amount equals the maximum amount that can be paid without triggering imposition of the excise tax, if the net amount received by the NEO on an after-tax basis would be greater than it would be absent such a reduction.

The following table shows the possible payouts to our NEOs triggered solely upon the occurrence of a change in control as of December 31, 2010.

 

     CHANGE IN CONTROL
ONLY
 
Name   Long-Term Incentives             
 

Stock

Options

($)

   

2008

Performance

RSUs

($)

   

2009

Performance

RSUs

($)

   

2010

Performance

RSUs (1)

($)

   

2008

Performance

Cash

($)

   

2009

Performance

Cash

($)

   

2010

Performance

Cash (1)

($)

   

RSUs

($)

   

Excise

Tax

Gross-Up

($)

 

TOTAL

($)

 

Jeff M. Fettig

    11,301,523        977,130        12,809,819        8,400,653                             3,299,146          36,788,271   

Roy W. Templin

    1,465,474        108,728        1,391,078        1,149,016        108,338        498,333        525,000        1,554,525          6,800,492   

Michael A. Todman

    3,212,994        238,686        3,049,800        2,257,081                             5,827,337          14,585,898   

Marc R. Bitzer

    1,465,204        90,074        1,391,078        2,051,884        90,020        498,333               6,059,272          11,645,865   

Jose A. Drummond

    830,250        52,232        788,189        734,802                      355,235        4,086,180          6,846,888   

 

(1) Values shown represent target awards.

Additional benefits are payable to our NEOs after a change in control, but only after a qualifying termination occurs. Qualifying terminations include: involuntary termination of the NEO by Whirlpool; voluntary termination by the NEO for good reason, as defined in the agreement; or a material breach of the change in control agreement by Whirlpool.

Cash severance arising from these change in control agreements is paid out in a lump sum payment equal to: