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

Filed by a Party other than the Registrant ¨

Check the appropriate box:

 

¨       Preliminary Proxy Statement

 

þ      Definitive Proxy Statement

 

¨       Definitive Additional Materials

 

¨       Soliciting Material Pursuant to §240.14a-12

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

Wm. WRIGLEY Jr. Company

 


(Name of Registrant as Specified In Its Charter)


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

Payment of Filing Fee (Check the appropriate box):

 

þ 

No fee required.

 

¨ 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

  1) 

Title of each class of securities to which transaction applies:

 
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Aggregate number of securities to which transaction applies:

 
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 
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Total fee paid:

 

 

¨ 

Fee paid previously with preliminary materials.

 

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

 

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Amount Previously Paid:

 
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Date Filed:

 

 

SEC 1913 (03-04)

  

Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.


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Wm. WRIGLEY Jr. Company

Wrigley Building    •    410 North Michigan Avenue    •    Chicago, Illinois 60611

February 13, 2007

Dear Stockholder:

You are cordially invited to attend the 104th Annual Meeting of Stockholders of Wm. Wrigley Jr. Company. The meeting will be held at 9:00 a.m. Chicago time on Wednesday, March 14, 2007, at the Chase Auditorium, Chase Tower located at 10 South Dearborn Street in the Chicago loop and bounded by Madison, Clark, Monroe and Dearborn streets. For your reference, a map of the area is provided inside the back cover of this Proxy Statement.

The accompanying Notice of Annual Meeting of Stockholders and Proxy Statement describe the items to be considered and acted upon by the stockholders.

Please note, we are requiring admission tickets to attend the Annual Meeting. For more information, please refer to the Notice of Meeting.

If you own shares of record, you will find enclosed a proxy card or cards and an envelope in which to return the card(s). Whether or not you plan to attend this meeting, please sign, date and return your enclosed proxy card(s), or vote over the phone or Internet, as soon as possible so that your shares can be voted at the meeting in accordance with your instructions. You can revoke your proxy anytime before the Annual Meeting and issue a new proxy as you deem appropriate. You will find the procedures to follow if you wish to revoke your proxy on page 3 of this Proxy Statement. Your vote is very important. I look forward to seeing you at the meeting.

Sincerely,

LOGO

WILLIAM WRIGLEY, JR.

Executive Chairman

and Chairman of the Board


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Wm. WRIGLEY Jr. Company

Wrigley Building     •     410 North Michigan Avenue     •     Chicago, Illinois 60611

Notice of the 104th Annual Meeting of Stockholders

of Wm. Wrigley Jr. Company

 

Date:

 

Wednesday, March 14, 2007

Time:

 

9:00 a.m., Central Standard Time

Place:

 

Chase Auditorium

Chase Tower

10 South Dearborn Street

Chicago, Illinois 60603

Purposes:

 

1.      To elect four Class II Directors to serve on the Board of Directors until the Annual Meeting in 2010;

 

2.      To amend the Second Restated Certificate of Incorporation to permit amendment of the Bylaws of the Company to adopt majority voting for the election of directors;

 

3.      To ratify the appointment of the Company’s independent registered public accounting firm (independent auditors) for the year ending December 31, 2007; and

 

4.      To transact such other business that may properly come before the Annual Meeting and any adjournments thereof.

Who Can Vote:

 

Stockholders at the close of business on January 12, 2007

How You Can Vote:

 

You may vote your proxy by marking, signing and dating the enclosed proxy card and returning it as soon as possible using the enclosed envelope. Or, you can vote over the telephone or the Internet as described on the enclosed proxy card.

Who May Attend:

 

Only persons with an admission ticket, evidence of stock ownership or who are guests of the Company may attend and be admitted to the Annual Meeting. Photo identification will be required (a valid drivers license or passport is preferred).

 

•        If your shares are registered in your name, you must bring the admission ticket attached to your proxy card. If you would like to pre-register for the meeting, or if you have elected to receive your proxy materials electronically, please contact the Company’s Stockholder Relations Department at 1-800-874-0474 and request an admission ticket.


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•        If your shares are registered in the name of a broker, trust, bank or other nominee, you will need to bring a proxy or a letter from that broker, trust, bank or other nominee or your most recent brokerage account statement, that confirms that you are the beneficial owner of those shares. If you do not have either an admission ticket or proof that you own shares, you will not be admitted to the meeting.

By Authorization of the Board of Directors,

LOGO

HOWARD MALOVANY

Vice President, Secretary and General Counsel

Chicago, February 13, 2007

 

 

Your Vote Is Important. Whether You Own One Share Or Many, Your Prompt Cooperation In Voting Your Proxy Is Greatly Appreciated.

 

 


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Proxy Statement for the

Annual Meeting of Stockholders of

WM. WRIGLEY JR. COMPANY

To Be Held on Wednesday, March 14, 2007

TABLE OF CONTENTS

 

     Page

Proxy Statement

   1

Solicitation

   1

Voting Information

   1

Proposal 1 — Election of Class II Directors

   4

Corporate Governance

   8

Meetings and Committees of the Board

   11

Executive Compensation

   14

Compensation Committee Report

   23

Summary Compensation Table

   24

Grants of Plan Based Awards

   28

Outstanding Equity Awards at Fiscal Year-End

   29

Option Exercises and Stock Vested

   30

Pension Benefits

   31

Nonqualified Deferred Compensation

   32

Potential Payments Upon Termination or Change of Control

   33

Director Compensation

   40

Security Ownership

   43

Proposal 2 — Proposal to Amend the Company’s Second Restated Certificate of Incorporation to Permit Amendment of the Bylaws to Adopt Majority Voting for the Election of Directors

   46

Proposal 3 — The Ratification of Appointment of Ernst & Young LLP as the Company’s Independent Registered Public Accounting Firm (Independent Auditors)

   46

Audit Committee Disclosure

   47

Section 16(a) Beneficial Ownership Reporting Compliance

   49

Stockholder Proposals for the 2008 Annual Meeting of Stockholders

   49

Other Business

   49

Appendix A — Director Independence Standards

   A-1

Appendix B — Audit Committee Charter

   B-1

Appendix C — Certificate of Amendment of Second Restated Certificate of Incorporation

   C-1

Appendix D — Bylaw Provision Regarding Election and Resignation of Directors

   D-1

Appendix E — Audit and Non-Audit Services Pre-Approval Policy

   E-1

Map/Directions to Chase Auditorium (Annual Meeting) Inside Back Cover

 


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PROXY STATEMENT

FOR THE

104th ANNUAL MEETING OF STOCKHOLDERS OF

WM. WRIGLEY JR. COMPANY

TO BE HELD ON WEDNESDAY, MARCH 14, 2007

Solicitation

This Proxy Statement, the accompanying proxy card and the Annual Report to Stockholders of Wm. Wrigley Jr. Company (the “Company” or “Wrigley”) are being mailed on or about February 13, 2007. The Board of Directors (the “Board”) of the Company is soliciting your proxy to vote your shares at the 104th Annual Meeting of Stockholders (the “Meeting”). The Board is soliciting your proxy to give all stockholders of record the opportunity to vote on matters that will be presented at the Meeting. This Proxy Statement provides you with information on these matters to assist you in voting your shares.

Who is the Proxy Committee?

The Proxy Committee was appointed by the Board of Directors at their meeting held on February 6, 2007, and is comprised of William Wrigley, Jr., William D. Perez, Richard K. Smucker and Howard Malovany.

What is a proxy?

A proxy is your legal designation of another person (the “proxy”) to vote on your behalf. By completing and returning the enclosed proxy card, you are giving the Proxy Committee appointed by the Board the authority to vote your shares in the manner you indicate on your proxy card.

Why did I receive more than one proxy card?

You will receive multiple proxy cards if you hold your shares in different ways (e.g., joint tenancy, trusts, custodial accounts) or in multiple accounts. If your shares are held by a broker (i.e., in “street name”), you will receive your proxy card or other voting information from your broker, and you will return your proxy card or cards to your broker. You should vote on and sign each proxy card you receive.

Voting Information

Who is qualified to vote?

You are qualified to receive notice of and to vote at the Meeting if you own shares of Common Stock or Class B Common Stock of the Company at the close of business on our record date of Friday, January 12, 2007.

How many shares of Common Stock and Class B Common Stock may vote at the Meeting?

As of January 12, 2007, there were 217,088,710 shares of Common Stock and 59,049,235 shares of Class B Common Stock outstanding and entitled to vote. Each share of Common Stock is entitled to one vote on each matter presented. Each share of Class B Common Stock is entitled to ten votes on each matter presented.

What is the difference between a “shareholder of record” and a “street name” holder?

These terms describe how your shares are held. If your shares are registered directly in your name with Computershare, the Company’s transfer agent, you are a “shareholder of record.” If your shares are held in the name of a brokerage, bank, trust or other nominee as a custodian, you are a “street name” holder.

 

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How do I vote my shares?

If you are a “shareholder of record”, you have several choices. You can vote your proxy:

 

   

by mailing in the enclosed proxy card;

 

   

over the telephone; or

 

   

via the Internet.

Please refer to the specific instructions set forth on the enclosed proxy card. For security reasons, our electronic voting system has been designed to authenticate your identity as a stockholder.

If you hold your shares in “street name”, your broker/bank/trustee/nominee will provide you with materials and instructions for voting your shares.

Can I vote my shares in person at the Meeting?

If you are a “shareholder of record”, you may vote your shares in person at the Meeting. If you hold your shares in “street name,” you must obtain a proxy from your broker, banker, trustee or nominee, giving you the right to vote the shares at the Meeting.

What are the Board’s recommendations on how I should vote my shares?

The Board recommends that you vote your shares as follows:

 

  Proposal 1 —  

FOR the election of all four nominees for Class II Directors with terms expiring at the 2010 Annual Meeting of Stockholders.

 

  Proposal 2 —  

FOR the amendment of the Second Restated Certificate of Incorporation to permit the amendment of the Bylaws of the Company to adopt majority voting for the election of directors.

 

  Proposal 3 —  

FOR the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm (independent auditors) for the fiscal year ending December 31, 2007.

What are my choices when voting?

Proposal 1 — You may cast your vote in favor of electing the nominees as Directors or withhold your vote on one or more nominees.

Proposals 2 and 3 — You may cast your vote in favor of or against each proposal, or you may elect to abstain from voting your shares.

How would my shares be voted if I do not specify how they should be voted?

If you sign and return your proxy card without indicating how you want your shares to be voted, the Proxy Committee appointed by the Board will vote your shares as follows:

 

  Proposal 1 —  

FOR the election of all four nominees for Class II Directors with terms expiring at the 2010 Annual Meeting of Stockholders.

 

  Proposal 2 —  

FOR the amendment of the Second Restated Certificate of Incorporation to permit the amendment of the Bylaws of the Company to adopt majority voting for the election of directors.

 

  Proposal 3 —  

FOR the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm (independent auditors) for the fiscal year ending December 31, 2007.

How are votes withheld, abstentions and broker non-votes treated?

Votes withheld and abstentions are deemed as “present” at the Meeting, are counted for quorum purposes, and other than for Proposal 1, will have the same effect as a vote against the matter. Broker

 

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nonvotes, if any, while counted for general quorum purposes, are not deemed to be “present” with respect to any matter for which a broker does not have authority to vote.

Can I change my vote after I have mailed in my proxy card?

You may revoke your proxy by doing one of the following:

 

   

by sending a written notice of revocation to the Secretary of the Company that is received prior to the Meeting, stating that you revoke your proxy;

 

   

by signing a later-dated proxy card and submitting it so that it is received prior to the Meeting in accordance with the instructions included in the proxy card(s); or

 

   

by attending the Meeting and voting your shares in person.

What vote is required to approve each proposal?

Proposal 1 requires a plurality of the votes cast to elect a director.

Proposal 2 requires the affirmative vote of at least 66 2/3 of the outstanding shares of the Common Stock and Class B Common Stock entitled to vote, with both classes voting together as a single class.

Proposal 3 requires the affirmative vote of a majority of those shares present in person or represented by proxy and entitled to vote thereon at the Meeting, with both Common Stock and Class B Common Stock voting together as a single class.

Who will count the votes?

Representatives from Computershare Trust Company, N.A., our transfer agent, will count the votes and serve as our Inspectors of Election. The Inspectors of Election will be present at the Meeting.

Who pays the cost of this proxy solicitation?

The Company pays the costs of soliciting proxies. Upon request, the Company will reimburse brokers, dealers, banks and trustees, or their nominees, for reasonable expenses incurred by them in forwarding proxy materials to beneficial owners of shares of the Company’s Common Stock and Class B Common Stock. In addition, the Company has retained Innisfree M&A, Incorporated, 501 Madison Avenue, 20th Floor, New York, NY, 10022, to aid in the solicitation of proxies by mail, telephone, facsimile, e-mail and personal solicitation and will request brokerage houses and other nominees, fiduciaries and custodians to forward soliciting materials to beneficial owners of the Company’s Common Stock and Class B Common Stock. For these services, the Company will pay Innisfree M&A, Incorporated a fee of $15,000, plus expenses.

Is this Proxy Statement the only way that proxies are being solicited?

No. As stated above, the Company has retained Innisfree M&A, Incorporated to aid in the solicitation of proxy materials. In addition to mailing these proxy materials, certain Directors, officers or employees of the Company may solicit proxies by telephone, facsimile, e-mail or personal contact. They will not be specifically compensated for doing so.

If you have any further questions about voting your shares or attending the Meeting, please call our Stockholder Relations Department at 1-800-874-0474.

 

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PROPOSAL 1

Election Of Class II Directors

Composition of the Board

The full Board consists of ten Directors. The Board is divided into three classes, with Class I and III each having three Directors and Class II having four Directors. The Directors in each class serve a three-year term. The terms of each class expire at successive annual meetings so that the stockholders elect one class of Directors at each annual meeting.

The current composition of the Board is:

 

Class I Directors (serving until the 2009 Meeting)

 

John F. Bard

Howard B. Bernick

Melinda R. Rich

Class II Directors (term expiring at this Meeting)

 

Thomas A. Knowlton

William D. Perez

Steven B. Sample

Alex Shumate

Class III Directors (serving until the 2008 Meeting)

 

John Rau

Richard K. Smucker William Wrigley, Jr.

The election of four Class II Directors will take place at the Meeting. At its meeting of February 6, 2007, the Board approved the recommendation of the Corporate Governance Committee that the full Board remain comprised of ten Directors and that four Class II Directors be elected for a three-year term.

If elected, each of the four Class II Director nominees will serve on the Board until the Annual Meeting in 2010, or until their successors are duly elected and qualified in accordance with the Company’s Bylaws. If any of the four nominees should become unable to accept election, the persons named on the proxy card as proxies may vote for other person(s) selected by the Board or the named proxies. Management has no reason to believe that any of the four nominees for election named below will be unable to serve.

 

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Your Board Recommends That Stockholders

Vote FOR All Four Nominees Listed Below.

 

Nominees For Election as Class II Directors With Terms Expiring at the 2010 Annual Meeting:

 

Thomas A. Knowlton

  

LOGO

    

Age:

Director Since:

Committees:

Principal Occupation:

Other Directorships:

  

60

1996

Chairman of the Compensation Committee

Dean of the Faculty of Business at Ryerson University, Toronto, Canada from 2000 until retirement in 2005. Executive Vice President of the Kellogg Company from 1992 until 1998. President of Kellogg North America from 1994 until 1998.

Sun-Rype Products Ltd.

William D. Perez

  

LOGO

    

Age:

Director Since:

Committees:

Principal Occupation:

  

59

2006

None

President and Chief Executive Officer of the Company since October 2006. President and Chief Executive Officer of Nike, Inc. from 2004 until 2006. President and Chief Executive Officer of S.C. Johnson & Son, Inc. from 1997 to 2004.

Steven B. Sample

  

LOGO

    

Age:

Director Since:

Committees:

Principal Occupation:

Other Directorships:

  

66

1997

Compensation Committee and Corporate Governance Committee

President of the University of Southern California since 1991.

Intermec, Inc., AMCAP Fund Inc. and American Mutual Fund, Inc.

Alex Shumate

  

LOGO

    

Age:

Director Since:

Committees:

Principal Occupation:

Other Directorships:

  

56

1998

Audit Committee and Corporate Governance Committee

Partner of the law firm Squire, Sanders & Dempsey, L.L.P., resident in Columbus, Ohio, since 1988, and its Managing Partner since 1991.

Nationwide Financial Services, Inc. and Cincinnati Bell Inc.

 

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Continuing Class I Directors With Terms Expiring at the 2009 Annual Meeting:

John F. Bard

  

LOGO

    

Age:

Director Since:

Committees:

Principal Occupation:

Other Directorships:

  

65

1999

Audit Committee and Corporate Governance Committee

Senior Vice President from 1991 until 1999 and Executive Vice President from 1999 until 2000, when he retired from the Company.

Weight Watchers International, Inc. and Sun-Times Media Group, Inc.

Howard B. Bernick

  

LOGO

    

Age:

Director Since:

Committees:

Principal Occupation:

  

54

2001

Audit Committee and Compensation Committee

President of Bernick Holdings, Inc., since November 2006. President and Chief Executive Officer from 1994 to 2006, and a member of the Board of Directors from 1986 to 2006, of Alberto-Culver Company, a global manufacturer, marketer and distributor of beauty and hair care products.

Melinda R. Rich

  

LOGO

    

Age:

Director Since:

Committees:

Principal Occupation:

Other Directorships:

  

49

1999

Chairman of the Corporate Governance Committee

President of Rich Entertainment Group since 1994. Vice Chairman since 2006, and a Director and Managing Shareholder since 1998, of Rich Products Corporation, Buffalo, New York, a multinational, privately-held, family-owned manufacturer and distributor of food products.

M&T Bank Corporation, Buffalo, New York

 

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Continuing Class III Directors With Terms Expiring at the 2008 Annual Meeting:

 

John Rau

  

LOGO

    

Age:

Director Since:

Committees:

Principal Occupation:

Other Directorships:

  

58

2005

Compensation Committee and Corporate Governance Committee

President and Chief Executive Officer since 2002, and Director since 2003, of Miami Corporation, a private holding company founded in 1917. Formerly, Mr. Rau was President and Chief Executive Officer of Chicago Title Corporation and Chicago Title and Trust Company from 1997-2000 and Dean, The School of Business, Indiana University from 1993-1996.

Nicor Inc. and First Industrial Realty Trust, Inc.

Richard K. Smucker

  

LOGO

    

Age:

Director Since:

Committees:

Principal Occupation:

Other Directorships:

  

58

1988

Chairman of the Audit Committee

Co-Chief Executive Officer since 2001, President since 1987, a Director since 1975, and Chief Financial Officer from 2003 through 2004, of The J.M. Smucker Company, a manufacturer of food spreads, juices and beverages, shortening and oils, and other food-related products.

The Sherwin-Williams Company

William Wrigley, Jr.

  

LOGO

    

Age:

Director Since:

Committees:

Principal Occupation:

  

43

1988

None

Executive Chairman of the Company since 2006, Chairman of the Board since 2004, President and Chief Executive Officer of the Company from 1999 to 2006, Vice President of the Company from 1991 to 1999 and Assistant to the President from 1985 to 1992.

 

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CORPORATE GOVERNANCE

Corporate Governance Guidelines

The Company has adopted corporate governance guidelines titled “Principles of Corporate Governance” which are available at www.wrigley.com by first clicking “INVESTORS” and then “Corporate Governance”. The “Principles of Corporate Governance” is also available in print to any stockholder who requests it. These principles were adopted by the Board to best ensure that the Board is independent from management, that the Board adequately performs its function as the overseer of management and to help ensure that the interests of the Board and management align with the interests of the stockholders.

On an annual basis, each Director and executive officer is obligated to complete a Director and Officer Questionnaire which requires disclosure of any transactions with the Company in which the Director or executive officer, or any member of his or her immediate family, have a direct or indirect material interest. Pursuant to the “Principles of Corporate Governance”, the Board is charged with resolving any conflict of interest involving the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the Vice President – Finance, the Controller, the Treasurer, the General Counsel or any executive vice president or senior vice president. The Executive Chairman and Chief Executive Officer are charged with resolving any conflict of interest involving any other elected officer of the Company.

Director Independence

In accordance with New York Stock Exchange rules, the Board affirmatively determines the independence of each Director and nominee for election as a Director in accordance with guidelines it has adopted, which include all elements of independence set forth in the New York Stock Exchange listing standards. The Company’s Director Independence Standards are attached to this proxy statement as Appendix A and are also appended to the Company’s “Principles of Corporate Governance” available at the website noted above.

Based on these standards, at its meeting held on February 6, 2007, the Board determined that each of the following non-employee Directors is independent and has no relationship with the Company, except as a Director and stockholder of the Company:

 

(1) John F. Bard

  

(5) Melinda R. Rich

(2) Howard B. Bernick

  

(6) Steven B. Sample

(3) Thomas A. Knowlton

  

(7) Alex Shumate

(4) John Rau

  

(8) Richard K. Smucker

In addition, based on such standards, the Board determined that: (a) William Wrigley, Jr. is not independent because he is the Executive Chairman of the Company and holds more than 5% of the outstanding shares of the Class B Common Stock of the Company; and (b) William D. Perez is not independent because he is the President and Chief Executive Officer of the Company.

Nominations for Directors

Identifying Candidates

The Corporate Governance Committee is responsible for screening potential Director candidates and recommending qualified candidates to the Board for nomination. The Committee considers recommendations of potential candidates from current Directors, management and stockholders. Stockholders’ nominations for Directors must be made in writing and include the nominee’s written consent to the nomination and sufficient background information on the candidate to enable the Committee to assess his or her qualifications. Nominations must be addressed to the Chairman of the Corporate Governance Committee in care of the Secretary of the

 

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Company at the Company’s headquarters address listed below, and must be received no later than October 16, 2007, in order to be included in the proxy statement for the next annual election of Directors.

Chairman of the Corporate Governance Committee

Wm. Wrigley Jr. Company

c/o Secretary

The Wrigley Building

410 North Michigan Avenue

Chicago, Illinois 60611

Qualifications

The Corporate Governance Committee has not established specific minimum age, education, years of business experience or specific types of skills for potential Director candidates, but, in general, expects qualified candidates will have ample experience and a proven record of business success and leadership.

The Board has developed a group of criteria which are designed to describe what qualities and characteristics are desired for the Board as a whole. The full Board conducts an annual self-evaluation of its membership with respect to the criteria. The purpose of this evaluation is to help ensure the Board remains comprised of members fulfilling the desired complement of talents and expertise for the Board as a whole. No single Director is expected to have each criterion. The Board applies these same criteria in evaluating candidates nominated by stockholders as well as in evaluating those recommended by other sources.

The criteria are reviewed annually by the Corporate Governance Committee and the Board to ensure they remain pertinent and robust. In general, they require that each Director:

 

   

have the highest personal and professional ethics, integrity and values;

 

   

consistently exercise sound and objective business judgment; and

 

   

have a comfort with diversity in its broadest sense.

In addition, it is anticipated that the Board as a whole will have individuals with:

 

   

significant appropriate senior management and leadership experience;

 

   

a comfort with technology;

 

   

a long-term and strategic perspective; and

 

   

the ability to advance constructive debate and a global perspective.

Further, it is important for the Board as a whole to operate in an atmosphere where the chemistry between and among the members is a key element.

A complete statement of the criteria is annexed to the Company’s “Principles of Corporate Governance” available at the website noted on page 8.

Candidate Selection Process

Upon receipt of a stockholder-proposed Director candidate, the Secretary assesses the Board’s needs, primarily whether or not there is a current or pending vacancy or a possible need to be filled by adding or replacing a Director. The Corporate Secretary then develops a Director profile by comparing the current list of criteria with the desired state and with the candidate’s qualifications. The profile and the candidate’s submitted information are provided to the Chairman of the Corporate Governance Committee and the Chairman of the Board for discussion. Following this discussion, the profile and the candidate’s materials are forwarded to all Committee members and consideration of the candidate is added as an agenda item for the next Corporate Governance Committee meeting.

 

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Similarly, if at any time the Corporate Governance Committee or the Board determines there may be a need to add or replace a Director, the Corporate Secretary, the Corporate Governance Committee Chairman and the Chairman of the Board develop a Director profile by comparing the current list of criteria with the desired state. If no candidates are apparent from any source, the Corporate Governance Committee will determine the appropriate method to conduct a search.

Regardless of how a candidate is brought to the Corporate Governance Committee’s attention, qualified candidates are asked to conduct one or more personal interviews with appropriate members of the Board. Chosen candidates are extended invitations to join the Board. If a candidate accepts, he or she is formally nominated.

Communications with the Board

Stockholders and other interested parties may communicate with one or more members of the Board or the non-management directors as a group in writing by regular mail or via e-mail. The following address may be used by those who wish to send such communications by regular mail:

[Board of Directors] or [Name of Individual Director(s)]

Wm. Wrigley Jr. Company

c/o Secretary

The Wrigley Building

410 North Michigan Avenue

Chicago, IL 60611

Stockholders who wish to send such communications via e-mail can do so at www.compliance-helpline.com. By entering the username WWJC and the password DIRECTORS (both are case sensitive), you are connected to a Company-branded home page. You may then leave a written message to any one or a combination of Directors. You will also be given the option of entering information on how you can receive a return message.

The Board has instructed the Secretary to review all communications so received (via regular mail or e-mail), and to exercise his discretion not to forward to the Board correspondence that is inappropriate such as business solicitations, frivolous communications and advertising, routine business matters (i.e. business inquiries, complaints, or suggestions) and personal grievances. However, any Director may at any time request the Secretary to forward any and all communications received by the Secretary but not forwarded to the Directors.

Code of Ethics

The Company’s Code of Business Conduct, which is the Company’s code of ethics applicable to all Directors, managers and employees worldwide, embodies the Company’s global principles and practices relating to the ethical conduct of the Company’s business and its long-standing commitment to honesty, fair dealing and full compliance with all laws affecting the Company’s business. The Code of Business Conduct is available at www.wrigley.com by first clicking on “INVESTORS” and then “Corporate Governance”. The Code of Business Conduct is also available in print to any stockholder who requests it.

The Board has established a means for employees, customers, suppliers, stockholders and other interested parties to submit confidential and anonymous reports of suspected or actual violations of the Company’s Code of Business Conduct relating, among other things, to:

 

   

accounting practices, internal accounting controls, or auditing matters and procedures;

 

   

theft or fraud of any amount;

 

   

insider trading;

 

   

performance and execution of contracts;

 

   

conflicts of interest;

 

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violations of securities and antitrust laws; and

 

   

violations of the Foreign Corrupt Practices Act.

Any employee, stockholder or other interested party can call the following toll-free number to submit a report. This number is operational 24 hours a day, seven days a week:

1-800-210-1458

MEETINGS AND COMMITTEES OF THE BOARD

The Board

Each Director is expected to devote sufficient time, energy and attention to ensure diligent performance of his or her duties and to attend all Board, committee and stockholders’ meetings. The Board met nine times during 2006, of which five were regularly scheduled meetings and four were unscheduled meetings. All Directors attended at least 75% of the meetings of the Board and of the Committees on which they served during the fiscal year ended December 31, 2006. All of the Directors attended the 2006 Annual Meeting of Stockholders on April 4, 2006.

Committees of the Board

The Board has three standing committees to facilitate and assist the Board in the execution of its responsibilities. The committees are currently the Audit Committee, the Compensation Committee and the Corporate Governance Committee. In accordance with New York Stock Exchange listing standards, all the committees are comprised solely of non-employee, independent Directors. Charters for each committee are available on the Company’s website at www.wrigley.com by first clicking on “INVESTORS” and then “Corporate Governance”. The charter of each committee is also available in print to any stockholder who requests it. The table below shows current membership for each of the standing Board committees.

 

Audit

Committee

  

Corporate Governance
Committee

  

Compensation

Committee

John F. Bard

Howard B. Bernick

Alex Shumate

Richard K. Smucker*

  

John Bard

John Rau

Melinda R. Rich*

Steven B. Sample

Alex Shumate

  

Howard B. Bernick

Thomas A. Knowlton*

John Rau

Steven B. Sample

* Committee Chairman

     

 

 

In addition to the three standing committees mentioned above, the Board convened special committees to consider various other matters including extending the life of the Company’s dual-class capital structure in connection with the 2006 Annual Meeting of Stockholders and the hiring of Mr. Perez as the Company’s President and Chief Executive Officer. These special committees met a total of five times during fiscal 2006.

Audit Committee

The Audit Committee has four members and met six times in 2006. The Audit Committee is comprised solely of non-employee Directors, all of whom the Board has determined are independent pursuant to the New York Stock Exchange rules. The Board has determined that all the members of the Audit Committee are financially literate pursuant to the New York Stock Exchange rules. The Board also has determined that Mr. Smucker, Chairman of the Audit Committee, is an Audit Committee Financial Expert within the meaning stipulated by the Securities and Exchange Commission. The Board has adopted a charter for the Audit Committee, which was revised by the Audit Committee at its meeting on February 5, 2007, and approved by

 

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the full Board at its meeting on February 6, 2007. As revised, the charter specifically authorizes the Audit Committee to review the appointment and replacement of the senior internal audit executive and to review, at least annually, the organization structure and staffing of the internal audit function. The revised charter is attached to this Proxy Statement as Appendix B and is available on the Company’s website at www.wrigley.com by first clicking on “INVESTORS” and then “Corporate Governance”. The charter is also available in print to any stockholder who requests it.

The Audit Committee’s responsibilities, discussed in detail in the charter include, among other duties, the responsibility to:

 

   

establish policies and procedures for, review and approve the appointment, compensation and termination of, the independent registered public accounting firm;

 

   

review with the independent registered public accounting firm and financial management of the Company and approve the scope of the audit;

 

   

pre-approve all audit and permissible non-audit fees;

 

   

hold meetings periodically with the independent registered public accounting firm and internal auditors, the Board and management to review and monitor the adequacy and effectiveness of reporting, internal controls, risk assessment and compliance with Company policies;

 

   

review consolidated financial statements and disclosures;

 

   

review with management and the registered independent public accounting firm and approve disclosure controls and procedures and accounting principles and practices; and

 

   

perform other functions or duties deemed appropriate by the Board.

Corporate Governance Committee

The Corporate Governance Committee has five members and met six times in fiscal 2006. The Committee is comprised solely of non-employee Directors, all of whom the Board has determined are independent pursuant to the New York Stock Exchange rules. The Board has adopted a charter for the Corporate Governance Committee, which is available on the Company’s website at www.wrigley.com by first clicking on “INVESTORS” and then “Corporate Governance”. The charter is also available in print to any stockholder who requests it.

The Corporate Governance Committee’s responsibilities, discussed in detail in the charter include, among other duties, the responsibility to:

 

   

develop qualifications/criteria for selecting and evaluating Director nominees and evaluating current Directors;

 

   

consider and propose Director nominees for election at the Annual Meeting of Stockholders;

 

   

select candidates to fill Board vacancies as they may occur;

 

   

make recommendations to the Board regarding Board committee memberships;

 

   

monitor developments in corporate governance principles and standards, assess the adequacy of the Company’s governance system and develop the Company’s corporate governance guidelines and procedures;

 

   

facilitate an annual assessment of the performance of the Board and each of its standing Committees;

 

   

consider the independence of each Director and nominee for Director; and

 

   

perform other functions or duties deemed appropriate by the Board.

Compensation Committee

The Compensation Committee has four members and met seven times in fiscal 2006. The Compensation Committee is comprised solely of non-employee Directors, all of whom the Board has

 

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determined are independent pursuant to the New York Stock Exchange rules. The Board has adopted a charter for the Compensation Committee, which is available on the Company’s website at www.wrigley.com by first clicking on “INVESTORS” and then “Corporate Governance.” The charter is also available in print to any stockholder who requests it.

The Compensation Committee’s responsibilities, which are discussed in detail in its charter, include, among other duties, the responsibility to:

 

   

establish the base salary, incentive compensation and any other compensation for the Company’s Executive Chairman and Chief Executive Officer and review and approve the Chief Executive Officer’s recommendations for the compensation of certain executive officers reporting to him;

 

   

monitor the Company’s management incentive and stock based compensation plans, retirement and welfare plans and discharge the duties imposed on the Committee by the terms of those plans; and

 

   

perform other functions or duties deemed appropriate by the Board.

Compensation decisions for the eight members of the Executive Leadership Team (the “ELT”), which includes the Executive Chairman, the Chief Executive Officer and other executive officers of the Company, and the Company’s Directors are made by the Compensation Committee. Decisions regarding non-equity compensation of the other executive officers are made by the Company’s Executive Chairman and the Company’s Chief Executive Officer. The Committee has engaged Hewitt Associates, an outside global human resources consulting firm, to conduct an annual review of its total compensation program for executive officers.

The agenda for meetings of the Compensation Committee is determined by its Chairman with the assistance of the Company’s Secretary and the head of the Company’s Global Rewards department. Compensation Committee meetings are regularly attended by the Executive Chairman and Chairman of the Board, the Chief Executive Officer and the Chief Administrative Officer. At each meeting, the Compensation Committee also meets in executive session. The Compensation Committee’s Chairman reports the committee’s recommendations on executive compensation to the Board. Independent advisors and the Company’s People, Learning & Development department (human resources department) support the Compensation Committee in its duties and, along with the Executive Chairman and Chief Executive Officer, may be delegated authority to fulfill certain administrative duties regarding the compensation programs. The Compensation Committee has authority under its charter to retain, approve fees for and terminate advisors, consultants and agents as it deems necessary to assist in the fulfillment of its responsibilities. The Compensation Committee reviews the total fees paid to outside consultants by the Company to ensure that the consultant maintains its objectivity and independence when rendering advice to the committee.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee is comprised entirely of independent directors.

 

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview of Compensation Program

The Compensation Committee (for purposes of this analysis, the “Committee”) of the Board has responsibility for establishing, implementing and continually monitoring adherence with the Company’s compensation philosophy. The Committee ensures that the total compensation paid to the ELT is fair, reasonable and competitive. Generally, the types of compensation and benefits provided to members of the ELT, including the actively-employed named executive officers, are similar to those provided to other executive officers.

Throughout this proxy statement, the individuals who served as the Company’s Chief Executive Officer and Chief Financial Officer during fiscal 2006, as well as the other individuals included in the Summary Compensation Table on page 24, are referred to as the “named executive officers”.

Compensation Philosophy and Objectives

The Committee believes that the most effective executive compensation program is one that is designed to reward the achievement of specific annual, long-term and strategic goals by the Company, and which aligns executives’ interests with those of the stockholders by rewarding performance above established goals, with the ultimate objective of improving stockholder value. The Committee evaluates both performance and compensation to ensure that the Company maintains its ability to attract and retain superior employees in key positions and that compensation provided to key employees remains competitive relative to the compensation paid to similarly situated executives of our peer companies. To that end, the Committee believes executive compensation packages provided by the Company to its executives, including the named executive officers, should include both cash and stock-based compensation that reward performance as measured against established goals.

Role of Executive Officers in Compensation Decisions

The Committee makes all compensation decisions for the ELT (which includes the actively-employed named executive officers) and approves recommendations regarding equity awards to all elected officers of the Company. Decisions regarding the non-equity compensation of other executive officers are made by the Executive Chairman and the Chief Executive Officer.

The Executive Chairman, the Chief Executive Officer and the Chief Administrative Officer annually review the performance of each member of the ELT (other than the Chief Executive Officer and the Executive Chairman whose performance is reviewed by the Committee). The conclusions reached and recommendations based on these reviews, including with respect to salary adjustments and annual award amounts, are presented to the Committee. The Committee can exercise its discretion in modifying any recommended adjustments or awards to executives.

Setting Executive Compensation

Based on the foregoing objectives, the Committee has structured the Company’s annual and long-term incentive-based cash and non-cash executive compensation to motivate executives to achieve the business goals set by the Company and reward the executives for achieving such goals. In furtherance of this, the Committee has engaged Hewitt Associates, an outside global human resources consulting firm, to conduct an annual review of its total compensation program for the Executive Chairman and the Chief Executive Officer as well as for other key executives. Hewitt Associates provides the Committee with relevant market data and alternatives to consider when making compensation decisions for the Executive Chairman and the Chief Executive Officer and on the recommendations being made by the Company’s management for executives other than the Executive Chairman and the Chief Executive Officer.

 

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In making compensation decisions, the Committee compares each element of total compensation against a peer group of publicly-traded and privately-held food and consumer products companies (collectively, the “Compensation Peer Group”). The Compensation Peer Group, which is periodically reviewed and updated by the Committee, consists of companies against which the Committee believes Wrigley competes for talent and for stockholder investment. The companies comprising the Compensation Peer Group are:

 

•   Alberto-Culver USA, Inc.,

 

•   Dial Corporation,

  •   Molson Coors Brewing Company,

•   Bausch & Lomb Incorporated,

 

•   Dole Food Company, Inc.,

  •   Newell Rubbermaid Inc.,

•   Campbell Soup Company,

 

•   Fortune Brands, Inc.,

  •   Mars Incorporated,

•   Church & Dwight Company, Inc.,

 

•   General Mills, Inc.,

  •   Revlon Inc.,

•   The Clorox Company,

 

•   Hallmark Cards, Inc.,

  •   Sara Lee Corporation,

•   The Coca-Cola Company,

 

•   H.J. Heinz Company,

  •   S.C. Johnson & Son, Inc.,

•   Colgate-Palmolive Company,

 

•   Kellogg Company,

  •   Tupperware Corporation,

•   Del Monte Foods Company, Inc.,

 

•   Hershey Foods Corporation,

  •   Unilever U.S., Inc., and
 

•   Kimberly-Clark Corporation,

  •   UST Inc.

For comparison purposes, Wrigley’s annual revenues are slightly below the median revenues of the Compensation Peer Group. Because of the large variance in size among the companies comprising the Compensation Peer Group, regression analysis is used to adjust the compensation data for differences in company revenues. This adjusted value is used as the basis of comparison of compensation between Wrigley and the companies in the Compensation Peer Group.

The Company competes with many larger companies for top executive-level talent. As such, the Committee generally sets compensation for ELT members at the 75th percentile of compensation paid to similarly situated executives of the companies comprising the Compensation Peer Group. Variations to this objective may occur as dictated by the experience level of the individual and market factors. These objectives recognize the Committee’s expectation that, over the long term, Wrigley will continue to generate stockholder returns in excess of the average of its peer group.

A significant percentage of total compensation is allocated to incentives as a result of the philosophy mentioned above. There is no pre-established policy or target for the allocation between either cash and non-cash or short-term and long-term incentive compensation. Rather, the Committee reviews information provided by Hewitt Associates to determine the appropriate level and mix of incentive compensation. Income from such incentive compensation is realized as a result of the performance of the Company or the individual, depending on the type of award, compared to established goals. Historically, and in fiscal 2006, the Committee granted a majority of total compensation to Wrigley executive officers in the form of non-cash incentive compensation.

2006 Executive Compensation Components

For the fiscal year ended December 31, 2006, the principal components of compensation for named executive officers were:

 

   

base salary;

 

   

performance-based incentive compensation;

 

   

long-term equity incentive compensation;

 

   

retirement and other benefits; and

 

   

perquisites and other personal benefits.

 

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Base Salary

The Company provides named executive officers and other employees with base salary to compensate them for services rendered during the fiscal year. Base salary ranges for named executive officers are determined for each executive based on his or her position and responsibility by using market data. Base salary ranges are designed so that salary opportunities for a given position will be between 80% and 125% of the midpoint of the base salary established for each range.

During its review of base salaries for executives, the Committee primarily considers:

 

   

market data provided by our outside consultants;

 

   

internal review of the executive’s compensation, both individually and relative to other executive officers; and

 

   

individual performance of the executive.

Salary levels are typically considered annually as part of the Company’s performance review process as well as upon a promotion or other change in job responsibility. Merit based increases to salaries of members of the ELT are based on the Committee’s assessment of the individual’s performance.

Performance-Based Incentive Compensation

The 2007 Management Incentive Plan (the “2007 MIP”) was approved by the Company’s stockholders at the 2006 Annual Meeting of Stockholders and is the successor plan to the 1997 Management Incentive Plan (the “1997 MIP”), which expired on December 31, 2006. The management incentive plans give the Committee the latitude to design cash and stock-based incentive compensation programs to promote high performance and achievement of corporate goals by Directors and key employees, encourage the growth of stockholder value and allow key employees to participate in the long-term growth and profitability of the Company. The 1997 MIP will continue to govern all awards granted for performance through December 31, 2006, even if not paid until 2007 or thereafter. Worldwide, the Company currently has approximately 760 key employees (including the named executive officers) and non-employee directors who are eligible to receive awards under one or more of the programs.

For stock-based programs under the 2007 MIP, the Committee may grant participants shares of the Company’s Common Stock, restricted stock, share units, stock options, stock appreciation rights, performance units and/or performance bonuses. In granting these awards, the Committee may establish any conditions or restrictions it deems appropriate. In addition, pursuant to the Restricted Stock Program, the Chief Executive Officer has discretionary authority to grant restricted shares or share units to certain high-performing executives. Awards of restricted stock or units vest between two and five years after the date of the grant. Awards of restricted stock or units to insiders subject to Section 16(b) of the Securities Act of 1933 require the approval of the Committee. Currently, no named executive officer owns any shares or units of restricted stock granted under the Restricted Stock Program.

All awards of stock options under the aforementioned programs are made at or above the market price at the time of the award. Annual awards of stock options to executives are made at the Committee’s regularly scheduled meeting in May while annual awards of stock pursuant to the Long-Term Stock Grant Program and the Stock Award Program are made at the Committee’s regularly scheduled meeting in February. Newly hired or promoted executives, other than executive officers, receive their award of stock options on the first business day of the month following their hire or promotion. Grants of stock options to newly hired executive officers who are eligible to receive them are made at the next regularly scheduled Committee meeting on or following their hire date.

 

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Ownership Guidelines

To directly align the interests of executive officers with the interests of the stockholders, the Committee requires that each named executive officer maintain a minimum ownership interest in the Company. The amount required to be retained varies depending upon the executive’s position. The Executive Chairman and the Chief Executive Officer are each required to own and retain a minimum number of shares or share units totaling in value five times his base salary while all other actively employed named executive officers are required to own and retain a minimum number of shares or share units totaling in value no less than three times his base salary. If these minimum ownership guidelines are not acquired and maintained within five years, the named executive officer will be precluded from subsequent sales and transfers of shares and options awarded to the executive pursuant to the Long Term Stock Grant Program and the Stock Option Program.

Executive Incentive Compensation Program

The Executive Incentive Compensation Program (the “EICP”) is an annual cash incentive program under the management incentive plans. The EICP provides guidelines for the calculation of annual non-equity incentive based compensation, subject to Committee oversight and modification. At its October meeting each year, the Committee considers whether an EICP should be established for the succeeding year and, if so, approves the group of employees eligible to participate in the EICP for that year. The EICP includes various incentive levels based on the participant’s accountability and impact on Company operations, with target award opportunities that are established as a percentage of base salary. These targets range from 60% of base salary to 110% of base salary for the Company’s named executive officers.

For fiscal 2006, 75% of a named executive officer’s EICP award was based upon achievement of corporate financial objectives relating to earnings per share, unit volume and a combined measure of return on invested capital and sales growth, with each component accounting for 50%, 25% and 25%, respectively, of the total corporate financial objective portion of the EICP award. The remaining 25% of an executive’s EICP award was based upon individual performance as measured by the Company’s Leadership Behavior Assessment. The Leadership Behavior Assessment reviews how well the individual has displayed the Company’s four “High Performance Principals” which are:

 

   

a sense of urgency;

 

   

measured risk taking;

 

   

effective communication; and

 

   

a spirit of innovation.

In February of each year, the Committee sets minimum, target and maximum levels for each component of the corporate financial objective portion of the EICP. Payment of awards under the EICP are based upon the achievement of such objectives for the current year. Named executive officers participating in the EICP receive:

 

   

no payment for the corporate financial objective portion of the EICP award unless the Company achieves the minimum performance level (as computed for the total corporate financial objective portion);

 

   

a payment of at least 50% but less than 100% of the target award opportunity for the corporate financial objective portion of the EICP award if the Company achieves or exceeds the minimum performance level but does not achieve the target performance level;

 

   

a payment of at least 100% but less than 200% of the target award opportunity for the corporate financial objective portion of the EICP award if the Company achieves or

 

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exceeds the target performance level but does not attain the maximum performance level; and

 

   

a payment of 200% of the target award opportunity for the corporate financial objective portion of the EICP award if the Company achieves or exceeds the maximum performance level.

Upon completion of the fiscal year, the Committee assesses the performance of the Company for each corporate financial objective of the EICP comparing the actual fiscal year results to the pre-determined minimum, target and maximum levels for each objective and an overall percentage amount for the corporate financial objectives is calculated.

Generally, the Committee sets the target level for earnings per share at or slightly below the Company’s long-term earnings objective of between 9% and 11% as the Committee believes the long-term objective reflects strong performance. Minimum and maximum earnings per share objectives are set somewhat below or above the target level – generally three to five percentage points – as applicable. In making the annual determination of the minimum, target and maximum levels, the Committee may consider the specific circumstances facing the Company during the coming year. Volume, sales and return on invested capital targets are set in alignment with the Company’s strategic plan and expectations regarding earnings per share and Company performance.

Over the past five years, the Company has achieved performance in excess of the target level five times but has not achieved the maximum performance level. The payout percentage over the past five years has been between approximately 120% and 150% of the participant’s target award opportunity with an average approximate payout percentage over the past five years of 135% of the target award opportunity. Generally, the Committee sets the minimum, target and maximum levels such that the relative difficulty of achieving the target level is consistent from year to year.

Each of the named executive officers for the fiscal year ended December 31, 2005, received the following payments in February 2006 under the EICP for fiscal 2005 performance.

 

   

Name

        2005 EICP
Bonus Award
    
 

William Wrigley, Jr.

     $2,239,720   
 

Ronald V. Waters, III

     $   921,575   
 

Peter R. Hempstead

     $   625,059   
 

Dushan Petrovich

     $   504,612   
 

Darrell Splithoff

     $   379,421   

Awards made to named executive officers under the EICP for performance in 2006 are reflected in column (g) of the Summary Compensation Table on page 24.

Long-Term Incentive Compensation

Long-Term Stock Grant Program

The Long-Term Stock Grant Program encourages participants to focus on long-term Company performance and provides an opportunity for executive officers and certain designated key employees to increase their stake in the Company through grants of the Company’s Common Stock based on a five-year performance cycle. When allocating long-term incentives, the Committee currently targets 70% of the total value to be comprised of stock options with the remaining 30% in the form of long-term stock grants. By using a mix of stock options and long-term stock grants, the Company is able to compensate executives for sustained increases in the Company’s stock performance, through the stock option program, as well as long-term growth in excess of its peer group for the relevant cycle, through the Long-Term Stock Grant Program. Both programs, however, deliver value only when the value of the Company’s stock increases.

The Long-Term Stock Grant Program was redesigned beginning with the 2005-2009 performance cycle to focus more closely on the Company’s performance relative to the performance

 

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of the Compensation Peer Group companies which are publicly-traded on a U.S. stock exchange and to better correlate the program with actual stockholder value created during each performance cycle. For awards prior to the 2005-2009 cycle:

 

   

performance is measured by the ratio of the Company’s total stockholder return to the total stockholder return for the S&P 500 Packaged Food and Meats Group Index for the applicable five-year performance period;

 

   

actual awards, if earned, range from 50% to 150% of target, depending on Company performance; and

 

   

awards are earned at the target level if the Company’s total stockholder return equals the S&P 500 Packaged Food and Meats Group Index total stockholder return for such period.

Performance for the 2005-2009 grant cycle and subsequent cycles, is measured against the performance of the Compensation Peer Group companies that are publicly-traded on a U.S. stock exchange as opposed to the S&P 500 Packaged Food and Meats Group Index, with actual awards ranging from between 25% and 200% of the target number of shares allocated to each individual, depending upon Company performance. Under the redesigned system, awards are earned at the target level if the Company’s total stockholder return is at the 60th percentile of the Compensation Peer Group. In addition, annualized total stockholder return must be positive and at least at the 40th percentile of the Compensation Peer Group to generate a threshold payout of 25% of the target number of shares allocated to each individual. If the annualized total stockholder return is below the 40th percentile of the Compensation Peer Group or is negative, regardless of the percentile rank, then no participant will receive an award under the Long-Term Stock Grant Program for that period.

Payouts under the Long-Term Stock Grant and Stock Award Programs are determined for the most recently completed year at the Committee’s regularly scheduled February meeting and are reflected in the Summary Compensation Table on page 24 and the Grants of Plan Based Awards Table on page 28.

Stock Option Program

The Stock Option Program assists the Company to:

 

   

enhance the link between the creation of stockholder value and long-term executive incentive compensation;

 

   

provide an opportunity for increased equity ownership by executives; and

 

   

maintain competitive levels of total compensation.

Stock option award levels are determined based on market data, vary among participants based on their positions within the Company and are granted at the Committee’s regularly scheduled May meeting. Newly hired or promoted executives, other than executive officers, receive their award of stock options on the first business day of the month following their hire or promotion. Newly hired executive officers who are eligible to receive options are awarded such options at the next regularly scheduled Committee meeting on or following their hire date.

Options are awarded at the New York Stock Exchange’s closing price of the Company’s Common Stock on the date of the grant. In certain limited circumstances, the Committee may grant options to an executive at an exercise price in excess of the closing price of the Company’s Common Stock on the grant date. The Committee has never granted options with an exercise price that is less than the closing price of the Company’s Common Stock on the grant date, nor has it granted options which are priced on a date other than the grant date. In 2006, upon Mr. Perez’s hire as the Company’s President and Chief Executive Officer, the Committee awarded options to purchase 250,000 shares of the Company’s Common Stock to Mr. Perez with an exercise price in excess of the fair market value on the date of the grant. These premium-priced options were awarded in lieu of participation in certain prior long-term stock grant cycles.

 

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The majority of the options granted by the Committee vest at a rate of 25% per year over the first four years of the ten-year option term. Vesting and exercise rights cease upon termination of employment, except in the case of death (subject to a one year limitation), disability or retirement. Prior to the exercise of an option, the holder has no rights as a stockholder with respect to the shares subject to such option, including voting rights and the right to receive dividends or dividend equivalents.

Retirement and Other Benefits

All employees in the United States are eligible to participate in the Retirement Plan and the Savings Plan. In addition, named executive officers are entitled to participate in the Stock Award Program.

Retirement Plans

Under the Retirement Plan, full or part-time associates working for the Company in the United States or Puerto Rico who have completed five continuous years of employment with the Company, including the named executive officers, earn the right to receive certain benefits upon retirement at the normal retirement age of 65 or upon early retirement on or after age 55. Retirement benefits are calculated as the product of 1.5% times the years of service multiplied by the final average eligible pay for the three highest consecutive years in the last ten years before retirement (“eligible remuneration”), less the product of 1% of the annual primary Social Security benefit multiplied by the years of credited service since January 1, 1976. The formula below provides an illustration as to how the retirement benefits are calculated.

 

[

  1.5%  

×

  Years of Service  

×

  Eligible Remuneration  

]

 

 

[

  1%  

×

  Annual Primary SS Benefit  

×

  Years of Service since 1976  

]

If the associate retires between the ages of 55 and 64, the amount of benefits is reduced such that if the associate retires at age 55, he or she will be entitled to 59% of the accrued benefits. Except as noted under the heading “Potential Payments Upon Termination or Change-of-Control” on page 33, it is not possible for a participant’s credited years of service under the Retirement Plan to exceed the participant’s actual years of service with the Company. Of the named executive officers, Mr. Hempstead and Dr. Kumar are eligible for early retirement benefits under the Retirement Plan and Mr. Splithoff was eligible for early retirement at the time of his retirement.

To the extent that an executive officer’s, including any named executive officer’s, annual retirement income benefit under the plan exceeds the limitations imposed by the Internal Revenue Code (including, among others, the limitation on the amount of annual compensation for purposes of calculating eligible remuneration for a participant under a qualified retirement plan ($220,000 in 2006)), such excess benefits may be paid from the Company’s nonqualified, unfunded, noncontributory Supplemental Retirement Plan. Prior to the February 6, 2007, meeting of the Committee, benefits were not earned under the Supplemental Retirement Plan until the individual reached age 55 and had five continuous years of service with the Company. At its February 6, 2007 meeting, the Committee revised the Supplemental Retirement Plan to follow the same vesting schedule as the Retirement Plan by deleting the age requirement. As revised, benefits under the plan are earned once the individual has completed five continuous years of service with the Company. The formula used to calculate the benefit payable pursuant to the Supplemental Retirement Plan is the same as that which is used under the Retirement Plan described above.

Savings Plan

The Savings Plan is a tax-qualified retirement savings plan pursuant to which all U.S. based associates, including the named executive officers, are able to contribute the lesser of up to 25% of their annual salary or the limit prescribed by the Internal Revenue Service to the Savings Plan on a before-tax basis. The Company will match 100% of the first 3% of pay that is contributed to the Savings Plan and 60% of the next 3% of pay contributed. All contributions to the Savings Plan as well as any matching contributions are fully-vested upon contribution.

 

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In addition to the Savings Plan, named executive officers and certain other eligible executives can participate in the Savings Restoration Plan, which is a nonqualified retirement savings plan. Pursuant to the Savings Restoration Plan, a participant can contribute between 1% and 25% of his or her base salary to the Savings Restoration Plan on a before-tax basis. Any amounts in excess of the maximum annual before-tax contribution for qualified retirement plans allowed by the Internal Revenue Service will be deposited in the Savings Restoration Plan. As with the Savings Plan, the Company will match 100% of the first 3% of pay that is contributed to the Savings Restoration Plan and 60% of the next 3% of pay contributed.

Stock Award Program

The Company provides stock awards to select EICP participants under the management incentive plan, including the named executive officers, whose annual non-equity incentive compensation represents a significant portion of their total annual compensation. The transferability of stock awards is restricted until the executive’s retirement or the termination of the executive’s employment with the Company as they are intended to supplement benefits received under the Company’s Retirement Plan and Supplemental Retirement Plan (which cover only base salary) to provide a competitive level of retirement benefits based on an executive’s total cash compensation. Under the Stock Award Program, participants may be awarded a number of shares of the Company’s Common Stock comparable in value to the present value of 1.5% of the participant’s average EICP award received in the prior three years multiplied by such participant’s years of service, and reduced by the present value of prior awards under this program, as shown in the following formula.

 

Stock Award

  =  

[

  1.5%  

×

  Average EICP awarded to the participant in prior 3 years  

×

  Years of service  

]

 

  Present value of prior Stock Awards

Participants who receive shares under the Stock Award Program may elect to receive or reinvest dividends paid on the shares awarded, with the shares being retained in the Company’s custody and subject to restrictions on sale or transfer until after termination of employment. Alternatively, participants may elect to defer all or any portion of this benefit in the form of share units with restricted transferability.

Executive Compensation Deferral Program

The named executive officers, in addition to certain other U.S.-based eligible executives, are entitled to participate in the Executive Compensation Deferral Program. Pursuant to the Executive Compensation Deferral Program, eligible employees can defer up to 100% of earnings from EICP awards, the Long-Term Stock Grant Program and the Stock Award Program and may defer up to 25% of salary (including amounts deferred pursuant to the Savings Plan) in excess of the limits prescribed by the Internal Revenue Service, in the Savings Restoration Plan. The Executive Compensation Deferral Program is discussed in further detail under the heading “Nonqualified Deferred Compensation” on page 32.

Perquisites and Other Personal Benefits

The Company provides named executive officers with perquisites and other personal benefits that the Company and the Committee believe are reasonable and consistent with its overall compensation program to better enable the Company to attract and retain superior employees for key positions. The Committee periodically reviews the levels of perquisites and other personal benefits provided to named executive officers.

The named executive officers are provided use of company automobiles, financial planning assistance, participation in the plans and programs described above and the use of administrative assistant services for personal matters. In addition, the Executive Chairman of the Company, for security purposes, is required to use corporate aircraft for all personal and business-related air travel

 

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and is provided with security and driver services by the Company. Upon relocation, key executive officers may receive, at the discretion of the Benefits Committee, which is a committee comprised of senior-level employees of the Company, a $75,000 relocation allowance which is paid in five equal annual installments.

Each named executive officer and certain other members of senior management designated by the Benefits Committee are entitled to receive a cash payment upon such executive’s death through the Senior Executive Death Benefit Program. In the event of the executive’s death after the executive’s retirement, his or her designated beneficiaries would be entitled to receive a net benefit of $150,000 after taking into account federal and state taxes payable by the beneficiary. In the event of the executive’s death prior to actual retirement at age 65, the executive’s designated beneficiaries would be entitled to receive $10,000 per year which is paid in monthly installments from the date of the executive’s death through the month in which such executive would have attained age 80. If the executive’s employment with the Company continues after age 65, upon the executive’s death, the executive’s designated beneficiaries would be entitled to receive the $10,000 per year salary continuation for the greater of fifteen years or until the executive would have attained age 80. The executive forfeits all benefits under the Senior Executive Death Benefit Program if he or she voluntarily terminates his or her employment with the Company prior to retirement at age 65 or if the executive’s employment with the Company is terminated by the Company for cause. However, benefits under the program may be paid to an eligible executive whose employment is terminated as a result of a disability or for any other reason, other than termination for cause, prior to such executive attaining age 65.

Attributed costs of the personal benefits described above for the named executive officers for the fiscal year ended December 31, 2006, are included in column (i) of the “Summary Compensation Table” on page 24.

The Company has entered into Change of Control Severance Agreements with certain key employees, including the named executive officers. The Change of Control Severance Agreements are designed to promote stability and continuity of senior management. Information regarding applicable payments under such agreements for the named executive officers is provided under the heading “Payments Made Upon a Change of Control” on page 33.

Tax and Accounting Implications

Deductibility of Executive Compensation

As part of its role, the Committee reviews and considers the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code, which provides that the Company may not deduct compensation of more than $1,000,000 that is paid to certain individuals. The Company believes that compensation paid under the management incentive plans are generally fully deductible for federal income tax purposes. However, in certain situations, the Committee may approve compensation that will not meet these requirements in order to ensure competitive levels of total compensation for its executive officers. In this regard, for fiscal 2006, the amount of base salary in excess of $1,000,000 for any named executive officer was not deductible for federal income tax purposes.

Nonqualified Deferred Compensation

On October 22, 2004, the American Jobs Creation Act of 2004 was signed into law, changing the tax rules applicable to nonqualified deferred compensation arrangements. While the final regulations have not become effective yet, the Company believes it is operating in good faith compliance with the statutory provisions which were effective January 1, 2005. A more detailed discussion of the Company’s nonqualified deferred compensation arrangements is provided on page 32 under the heading “Nonqualified Deferred Compensation”.

 

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Accounting for Stock-Based Compensation

Beginning on January 1, 2006, the Company began accounting for stock-based payments including its Stock Option Program, Long-Term Stock Grant Program, Restricted Stock Program and Stock Award Program in accordance with the requirements of FASB Statement 123(R).

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

THE COMPENSATION COMMITTEE

Thomas A. Knowlton, Chairman

Howard B. Bernick

John Rau

Steven B. Sample

 

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SUMMARY COMPENSATION TABLE

The table below summarizes the total compensation paid or earned by each of the named executive officers for the fiscal year ended December 31, 2006. The Company has not entered into any employment agreements with any of the named executive officers. When setting total compensation for each of the named executive officers, the Committee reviews tally sheets which show the executive’s current compensation, including equity and non-equity based compensation.

The named executive officers were not entitled to receive payments which would be characterized as “Bonus” payments for the fiscal year ended December 31, 2006. Amounts listed under column (g), “Non-Equity Incentive Plan Compensation”, were determined by the Committee at its February 5, 2007, meeting and, to the extent not deferred by the executive, were paid out shortly thereafter.

Based on the fair value of equity awards granted to named executive officers in 2006 and the base salary of the named executive officers, “Salary” accounted for approximately 25% of the total compensation of the named executive officers, incentive compensation accounted for approximately 60% of the total compensation of the named executive officers and benefits accounted for approximately 15% of the total compensation of named executive officers. Because the table below reflects less than the full fiscal year salary for individuals who were not employed by the Company for the full fiscal year, and because the value of certain equity awards included below is based on the FAS 123(R) value rather than the fair value, these percentages cannot be derived using the amounts reflected in the table below.

Mr. Waters and Mr. Splithoff retired in 2006 and the amounts listed below in column (i) include amounts paid pursuant to severance arrangements between the Company and each of Messrs. Waters and Splithoff.

 

(a)   (b)   (c)   (d)   (e)   (f)   (g)   (h)   (i)   (j)
Name and
Principal Position
  Year  

Salary

($)

 

Bonus

($)

 

Stock
Awards

($)(1)

 

Option
Awards

($)(2)

 

Non-Equity
Incentive
Plan
Compensation

($)(3)

 

Change in
Pension Value
and Nonquali-
fied Deferred
Compensation
Earnings

($)(4)

 

All Other
Compensation

($)(5)(6)

 

    Total    

($)

William Wrigley, Jr.

  2006   $ 1,412,500     $ 1,592,259   $ 2,535,608   $ 2,171,013   $ 167,154   $ 801,994   $ 8,680,528

Executive Chairman &
Chairman of the Board    

        (7)                         (8)  
                 

William D. Perez

  2006   $ 288,256     $ 147,258   $ 158,855   $ 379,633   $ 27,692   $ 33,750   $ 1,035,445

President & Chief Executive Officer (9)

                        (10)         (11)  
                 

Reuben Gamoran

  2006   $ 386,667     $ 254,910   $ 276,963   $ 286,520   $ 75,096   $ 36,452   $ 1,316,607

Senior Vice President & Chief Financial Officer

                        (12)         (13)  
                 

Peter R. Hempstead

  2006   $ 610,833     $ 380,704   $ 1,075,412   $ 603,503   $ 78,233   $ 61,887   $ 2,810,572

Senior Vice President, Worldwide Strategy & New Business

                                (14)  
                 

Dushan Petrovich

  2006   $ 537,500     $ 564,207   $ 642,645   $ 531,050   $ 242,302   $ 48,711   $ 2,566,415

Senior Vice President and Chief Administrative Officer

                                (15)  
                 

Surinder Kumar

  2006   $ 416,667     $ 252,566   $ 768,869   $ 352,917   $ 86,829   $ 109,378   $ 1,987,225

Senior Vice President & Chief Innovation Officer

                                (16)  
                 

Ronald V. Waters, III

  2006   $ 337,645     $ 693,576   $ 813,057       $ 110,952   $ 2,219,140   $ 4,174,371

Chief Operating
Officer (17)

                                (18)  
                 

Darrell Splithoff

  2006   $ 229,859     $ 190,295   $ 781,088       $ 57,948   $ 808,190   $ 2,067,379

Senior Vice President, Worldwide Supply
Chain (19)

                                          (20)      

 

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(1)

The amounts in column (e) reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2006, in accordance with FAS 123(R) of awards pursuant to the Long-Term Stock Grant Program and the Stock Award Program and thus may include amounts from awards granted in and prior to 2006. Assumptions used in the calculation of these amounts are included in footnote 12 to the Company’s audited financial statements for the fiscal year ended December 31, 2006, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on or around February 13, 2007.

 

(2)

The amounts in column (f) reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2006, in accordance with FAS 123(R) of awards pursuant to the Stock Option Program and thus include amounts from awards granted in and prior to 2006. Assumptions used in the calculation of this amount for fiscal years ended December 31, 2004, 2005 and 2006 are included in footnote 12 to the Company’s audited financial statements for the fiscal year ended December 31, 2006, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on or around February 13, 2007. Assumptions used in the calculation of this amount for the fiscal year ended December 31, 2003, are included under the heading “Stock-Based Compensation Plans” in the Accounting Policies and Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2005, filed with the Securities and Exchange Commission on February 16, 2006.

 

(3)

The amounts in column (g) reflect the cash awards to the named individuals under the EICP, which is discussed in further detail on page 17 under the heading “Executive Incentive Compensation Program”.

 

(4)

The amounts in column (h) reflect the actuarial increase in the present value of the named executive officer’s benefits under all pension plans established by the Company determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements and includes amounts which the named executive officer may not currently be entitled to receive because such amounts are not vested.

 

(5)

The amount shown in column (i) reflects for each named executive officer:

 

   

matching contributions allocated by the Company to each of the named executive officers pursuant to the Savings Plan and the Savings Restoration Plan (each of which is more fully described on page 20 under the heading “Retirement and Other Benefits”);

 

   

the value attributable to life insurance benefits provided pursuant to the Senior Executive Death Benefit Program more fully described on page 21 under the heading “Perquisites and Other Personal Benefits”; and

 

   

the aggregate incremental cost to the Company attributable to personal use of administrative assistance services provided by the Company to each of the named executive officers, if any.

The amount attributable to each such perquisite or benefit for each named executive officer does not exceed the greater of $25,000 or 10% of the total amount of perquisites received by such named executive officer.

 

(6)

The value attributable to personal use of Company-provided automobiles and corporate aircraft (each as calculated in accordance with Internal Revenue Service guidelines) and the cost of financial planning services reimbursed by the Company, are included as compensation on the W-2 of named executive officers who receive such benefits. Each such named executive officer is responsible for paying income tax on such amount.

 

(7)

Mr. Wrigley, Jr. served as the Company’s President, Chief Executive Officer and Chairman of the Board until October 20, 2006, at which time he became the Executive Chairman and remained the Chairman of the Board. The amount shown in column (c) is the salary paid to Mr. Wrigley, Jr. as President and Chief Executive Officer until such time and salary paid to Mr. Wrigley, Jr. in his capacity as Executive Chairman after such time.

 

(8)

In addition to the items noted in footnote (5) above, the amount in column (i) reflects:

 

   

the cost of financial planning services provided to Mr. Wrigley, Jr.;

 

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the cost attributable to personal use of Company-provided automobiles and other transportation services provided by the Company to Mr. Wrigley, Jr.;

 

   

the cost attributable to security and driver services for Mr. Wrigley, Jr.; and

 

   

$540,210 relating to personal use of the corporate aircraft.

The aggregate incremental cost of Mr. Wrigley, Jr.’s personal use of the corporate aircraft is determined on a per flight basis and includes the cost of actual fuel used, the cost of on-board catering, the hourly cost of aircraft maintenance for the applicable number of flight hours, landing fees, trip related hangar and parking costs, universal weather monitoring costs, if applicable, crew expenses and other variable costs specifically incurred. The amount attributable to each such perquisite or benefit, other than use of the corporate aircraft, does not exceed the greater of $25,000 or 10% of the total amount of perquisites for Mr. Wrigley, Jr.

 

(9)

Mr. Perez was elected as the Company’s President and Chief Executive Officer on October 20, 2006.

 

(10)

Mr. Perez has elected to defer the receipt of the amount reflected in column (g).

 

(11)

In addition to the items noted in footnote (5) above, the amount shown in column (i) reflects a relocation allowance paid by the Company to Mr. Perez. Such amount does not exceed the greater of $25,000 or 10% of the total perquisites for Mr. Perez.

 

(12)

Mr. Gamoran has elected to defer the receipt of the amount reflected in column (g).

 

(13)

In addition to the items noted in footnote (5) above, the amount shown in column (i) includes the amount received by Mr. Gamoran in lieu of the use of a Company-provided automobile. Such amount does not exceed the greater of $25,000 or 10% of the total perquisites for Mr. Gamoran.

 

(14)

In addition to the items noted in footnote (5) above, the amount shown in column (i) reflects an aggregate incremental cost to the Company attributable to personal use of a Company-provided automobile, the cost of financial planning services incurred by Mr. Hempstead and reimbursed by the Company and the amount of social security taxes paid by the Company on Mr. Hempstead’s accrued benefit under the nonqualified Supplemental Retirement Plan. Each such amount does not exceed the greater of $25,000 or 10% of the total perquisites for Mr. Hempstead.

 

(15)

In addition to the items noted in footnote (5) above, the amount shown in column (i) reflects an aggregate cost to the Company attributable to personal use of a Company-provided automobile.

 

(16)

In addition to the items noted in footnote (5) above, the amount shown in column (i) reflects an aggregate cost to the Company attributable to personal use of a Company-provided automobile, an annual housing allowance of $72,000, the cost of financial planning services incurred by Dr. Kumar and reimbursed by the Company and the amount of social security taxes paid by the Company on Dr. Kumar’s accrued benefit under the nonqualified Supplemental Retirement Plan. Each such amount does not exceed the greater of $25,000 or 10% of the total perquisites for Dr. Kumar.

 

(17)

Mr. Waters retired as of April 11, 2006. If Mr. Waters remained employed by the Company as of December 31, 2006, he would have been considered a named executive officer of the Company.

 

(18)

In connection with Mr. Waters’ retirement, he: (A) received on November 1, 2006, a lump sum payment of $430,000 representing six months’ salary; (B) is entitled to receive monthly installment payments of approximately $71,665 from November 1, 2006 through July 31, 2007; and (C) is entitled to receive a one-time severance payment of $1,089,333. However, if, as of April 30, 2007, Mr. Waters has obtained a similar position with another employer, Mr. Waters will not receive the monthly installment payments for the period of May 2007 through July 2007 and Mr. Waters’ one-time severance payment will be reduced by $172,023. Pursuant to his severance agreement, Mr. Waters will be entitled to a final stock award around February 2007 reflecting service through his severance period in addition to 3,000 shares. Mr. Waters’ Voluntary Separation Agreement was filed as Exhibit 10(u) to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2006. In addition to these items and the items noted in footnote (5) above, the amount in column (i) also includes a cost to the Company attributable to personal use of a Company-provided automobile and the cost of financial planning services incurred by Mr. Waters and reimbursed by the Company.

 

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Table of Contents
(19)

Mr. Splithoff retired as of June 30, 2006. If Mr. Splithoff was employed by the Company as of December 31, 2006, he would have been considered a named executive officer of the Company.

 

(20)

In connection with Mr. Splithoff’s retirement, he: (A) received on January 1, 2007, a lump sump payment of $215,000, representing six-month’s salary; (B) is entitled to receive monthly installment payments of $26,875 from January 1, 2007 through September 1, 2007; and (C) is entitled to receive a one-time severance payment of $357,000. Pursuant to his severance agreement, Mr. Splithoff will be entitled to a final stock award around February 2007 reflecting service through his severance period. Mr. Splithoff’s Voluntary Separation Agreement was filed as Exhibit 99.1 to the Current Report on Form 8-K filed on July 18, 2006. In addition to these items and the items noted in footnote (5) above, the amount in column (i) also includes a cost to the Company attributable to personal use of a Company-provided automobile and the amount of social security taxes paid by the Company on Mr. Splithoff’s accrued benefit under the nonqualified Supplemental Retirement Plan.

 

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Table of Contents

GRANTS OF PLAN BASED AWARDS

 

            Estimated Future Payouts Under
Non- Equity Incentive Plan
Awards (1)
    Estimated Future Payouts
Under Equity Incentive
Plan Awards (2)
                             
(a)   (b)     (c)     (d)     (e)     (f)     (g)     (h)     (i)     (j)     (k)     (l)  
Name   Grant
Date
    Threshold
($)
   

Target

($)

    Maximum
($)
    Threshold
(#)
   

Target

(#)

    Maximum
(#)
   

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

(#) (3)

   

All Other
Option
Awards:
Number of
Securities
Underlying
Options

(#)

   

Exercise
or Base
Price of
Option
Awards

($/sh)

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

William

Wrigley, Jr.

  05/18/2006                                                            300,000        $ 46.60        $ 2,613,000     
  02/23/2006                                   8,135                  $ 417,944  
  02/23/2006                       7,813     31,250     62,500                      $ 1,310,088  
  N/A     $ 783,750     $ 1,567,500     $ 3,135,000                                    N/A  
             

William D.

Perez

  10/20/2006                                       300,000     $ 46.83     $ 2,535,000  
                      (4)    
  10/20/2006                                       250,000     $ 62.28     $ 832,500  
                      (5)    
  10/20/2006                       7,813     31,250     62,500                   $ 1,310,088  
  10/20/2006                       7,813     31,250     62,500                   $ 1,310,088  
  N/A     $ 803,000     $ 1,606,000     $ 3,212,000                                 N/A  
             

Reuben

Gamoran

  05/18/2006                                       42,800     $ 46.60     $ 372,788  
  02/23/2006                             1,044               $ 53,637  
  02/23/2006                       1,094     4,375     8,750                   $ 183,412  
  N/A     $ 120,000     $ 240,000     $ 480,000                                 N/A  
             

Peter R.

Hempstead

  05/18/2006                                       59,300     $ 46.60     $ 516,503  
  02/23/2006                                   1,784               $ 91,655  
  02/23/2006                       1,500     6,000     12,000                   $ 251,537  
  N/A     $ 215,250     $ 430,500     $ 861,000                                 N/A  
             

Dushan

Petrovich

  05/18/2006                                       59,300     $ 46.60     $ 516,503  
  02/23/2006                                   4,220               $ 216,807  
  02/23/2006                       1,500     6,000     12,000                   $ 251,537  
  N/A     $ 196,000     $ 392,000     $ 784,000                                 N/A  
             

Surinder

Kumar

  05/18/2006                                       42,800     $ 46.60     $ 372,788  
  02/23/2006                                   1,304               $ 66,994  
  02/23/2006                       1,094     4,375     8,750                   $ 183,412  
  N/A     $ 126,000     $ 252,000     $ 504,000                                 N/A  
             

Ronald V.

Waters, III

  02/23/2006                                   3,636         $ 186,803  
  02/23/2006                       2,719     10,875     21,750                 $ 455,911  
  (6)                      
             

Darrell

Splithoff

  05/18/2006                                       42,800     $ 46.60     $ 372,788  
  02/23/2006                                   1,146               $ 58,890  
  02/23/2006                       1,094     4,375     8,750                   $ 183,412  
  (6)                                                                        

 

(1)

The amounts shown in column (c) reflect the minimum payment level under the Company’s Executive Incentive Compensation Plan which is 50% of the target amount shown in column (d). The amount shown in column (e) is 200% of such target amount. These amounts are based on the individual’s current salary and position.

 

(2)

The amounts shown in column (f) reflect the Long-Term Stock Grant minimum which is 25% of the target amount shown in column (g). The amount shown in column (h) is 200% of such target amount.

 

(3)

The amounts shown in column (i) reflect the number of shares of stock granted to each named executive officer pursuant to the Stock Award Program.

 

(4)

Upon his employment with the Company, Mr. Perez received options to purchase 300,000 shares of the Common Stock of the Company with a grant price equal to $46.83, which was the closing price of the Company’s Common Stock on the New York Stock Exchange on the grant date.

 

(5)

Upon his employment with the Company, Mr. Perez received premium-priced options to purchase 250,000 shares of the Common Stock of the Company with a grant price of $62.28, which was 133% of the closing price of the Company’s Common Stock on the New York Stock Exchange on the grant date.

 

(6)

Because the named executive officer is no longer actively employed by the Company, the final amount of such award will be prorated to reflect the amount of time such individual was included on the Company’s payroll.

 

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Table of Contents

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

 

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

William Wrigley, Jr.  

    300,000     $ 46.60   05/18/2016            128,313   $ 6,636,348
  54,687   164,063     $ 55.48   05/19/2015            
  59,375   118,750     $ 49.82   05/25/2014            
  59,375   59,375     $ 43.73   05/20/2013            
  35,000       $ 45.85   05/21/2012            
  17,969       $ 38.48   05/23/2011            
  (2)                   
  20,938       $ 29.96   05/23/2010            
  (2)                   
  62,813       $ 29.96   05/23/2010            
  (2)                   
  70,000       $ 35.02   05/25/2009            
  (2)                   
   

William D. Perez

    300,000     $ 46.83   10/20/2016         62,500   $ 3,232,500
    250,000     $ 62.28   10/20/2016            
   

Reuben Gamoran

    42,800     $ 46.60   05/18/2016         20,563   $ 1,063,518
  6,687   20,063     $ 55.48   05/19/2015            
  13,125   13,125     $ 49.82   05/25/2014            
  12,187   4,063     $ 43.73   05/20/2013            
  16,250       $ 45.85   05/21/2012            
  8,750       $ 38.48   05/23/2011            
  5,000       $ 29.96   05/23/2010            
   

Peter R. Hempstead

    59,300     $ 46.60   05/18/2016         33,063   $ 1,710,018
  13,156   39,469     $ 55.48   05/19/2015            
  31,250   31,250     $ 49.82   05/25/2014            
  46,875   15,625     $ 43.73   05/20/2013            
  47,500       $ 45.85   05/21/2012            
  52,500       $ 38.48   05/23/2011            
  62,500       $ 29.96   05/23/2010            
  50,000       $ 31.11   10/27/2009            
   

Dushan Petrovich

    59,300     $ 46.60   05/18/2016         32,588   $ 1,685,451
  13,156   39,469     $ 55.48   05/19/2015            
  31,250   31,250     $ 49.82   05/25/2014            
  34,687   11,563     $ 43.73   05/20/2013            
  33,750       $ 45.85   05/21/2012            
   

Surinder Kumar

    42,800     $ 46.60   05/18/2016         19,963   $ 1,032,486
  9,437   28,313     $ 55.48   05/19/2015            
  23,125   23,125     $ 49.82   05/25/2014            
  34,687   11,563     $ 43.73   05/20/2013            
  23,750       $ 45.85   05/21/2012            
  62,500       $ 38.48   05/23/2011            
  (3)                   
  26,250       $ 38.48   05/23/2011            
   

Ronald V. Waters, III

  23,437   70,313     $ 55.48   05/19/2015         42,505   $ 2,198,359
  53,125   53,125     $ 49.82   05/25/2014            
  46,875   15,625     $ 43.73   05/20/2013            
  47,500       $ 45.85   05/21/2012            
   

Darrell Splithoff

    42,800     $ 46.60   05/18/2016         14,881   $ 769,645
  9,437   28,313     $ 55.48   05/19/2015            
  23,125   23,125     $ 49.82   05/25/2014            
  34,687   11,563     $ 43.73   05/20/2013            
  33,750       $ 45.85   05/21/2012            
  37,500       $ 38.48   05/23/2011            
  30,000       $ 30.76   10/25/2010            

 

(1)

All options listed above vest at a rate of 25% per year over the first four years of the ten-year option term.

 

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Table of Contents
(2)

Pursuant to a qualified domestic relations order entered into in 2001, between April 26, 2004 and June 23, 2005, Mr. Wrigley, Jr. transferred options to purchase an aggregate of 225,627 shares of the Company’s Common Stock, of which 53,907 options have been exercised.

 

(3)

In connection with his employment by the Company, Dr. Kumar was granted performance based stock options to purchase 67,500 shares of the Company’s Common Stock, of which options to purchase 62,500 shares of the Company’s Common Stock have vested to Dr. Kumar based on the attainment of the performance goals. The remaining options to purchase 5,000 shares of the Company’s Common Stock were cancelled.

OPTION EXERCISES AND STOCK VESTED

None of the Company’s named executive officers exercised any stock options during the fiscal year ended December 31, 2006.

 

      Option Awards    Stock Awards(1)
(a)    (b)    (c)    (d)    (e)
Name    Number of Shares
  Acquired On Exercise  
(#)
     Value Realized  
on Exercise
($)
  

Number of Shares
  Acquired on Vesting  

(#)

   Value Realized on
Vesting
($)

William Wrigley, Jr.

         35,004    $1,798,366
                 (2)
       

William D. Perez

                 —   
       

Reuben Gamoran

           6,219    $   319,507
                 (3)
       

Peter R. Hempstead

         13,390    $   687,925
       

Dushan Petrovich

         14,795    $   760,108
                 (4)
       

Surinder Kumar

           6,779    $   348,278
                 (5)
       

Ronald V. Waters, III    

         21,561    $1,107,718
       

Darrell Splithoff

           7,765    $   398,935

 

(1)

Reflects shares received pursuant to the Long-Term Stock Grant Program for the 2001-2005 grant cycle by each named executive officer in February 2006. In addition, includes shares awarded to each named executive officer in February 2006 pursuant to the Stock Award Program which vest upon grant.

 

(2)

Mr. Wrigley, Jr. has elected to defer receipt of the $417,944 payable to him under the Stock Award Program pursuant to the Executive Compensation Deferral Program described on page 21.

 

(3)

Pursuant to the Executive Compensation Deferral Program described on page 21, Mr. Gamoran has elected to defer receipt of the $265,871 payable to him under the Long-Term Stock Grant Program for the 2001-2005 grant cycle and the $53,624 payable to him under the Stock Award Program.

 

(4)

Mr. Petrovich has elected to defer receipt of the $216,807 payable to him under the Stock Award Program pursuant to the Executive Compensation Deferral Program described on page 21.

 

(5)

Pursuant to the Executive Compensation Deferral Program described on page 21, Dr. Kumar has elected to defer receipt of the $281,284 payable to him under the Long-Term Stock Grant Program for the 2001-2005 grant cycle and the $66,981 payable to him under the Stock Award Program.

 

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Table of Contents

PENSION BENEFITS

The table below shows the present value of accumulated benefits payable to each of the named executive officers, including the number of years of service credited to each such named executive officer, under each of the Retirement Plan and the Supplemental Retirement Plan determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. Information regarding the Retirement Plan and the Supplemental Retirement Plan can be found under the heading “Retirement Plans” on page 20.

 

(a)    (b)   (c)   (d)     (e)
Name    Plan Name  

Number of Years
  Credited Service  

(#)

 

Present Value of
Accumulated
Benefit

($)(1)

   

Payments
During Last
Fiscal Year

($)

William Wrigley, Jr.

   Retirement Plan   21.3   $ 184,563       
       Supplemental Retirement Plan     21.3   $ 1,035,545    
       

William D. Perez

   Retirement Plan     0.2   $ 3,753    
     Supplemental Retirement Plan     0.2   $ 23,939    
       

Reuben Gamoran

   Retirement Plan   21.2   $ 217,435    
     Supplemental Retirement Plan   21.2   $ 122,540    
       

Peter R. Hempstead

   Retirement Plan     7.3   $ 130,319    
     Supplemental Retirement Plan     7.3   $ 241,121    
       

Dushan Petrovich

   Retirement Plan   31.7   $ 492,203    
     Supplemental Retirement Plan   31.7   $ 631,438    
       

Surinder Kumar

   Retirement Plan     5.6   $ 154,835    
     Supplemental Retirement Plan     5.6   $ 135,114    
       

Ronald V. Waters, III

   Retirement Plan     7.3   $ 122,211    
     Supplemental Retirement Plan     7.3   $ 359,221    
       

Darrell Splithoff

   Retirement Plan     6.3   $ 127,262    
     Supplemental Retirement Plan     6.3   $ 121,250    

 

(1)

Includes amounts which the named executive officer may not currently be entitled to receive because such amounts are not vested.

 

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NONQUALIFIED DEFERRED COMPENSATION

Pursuant to the Company’s Executive Compensation Deferral Program, certain executives, including named executive officers, may defer awards earned under the EICP, the Long-Term Stock Grant Program, the Stock Award Program and the Savings Restoration Plan. Deferral elections are made by eligible executives in November of each year for amounts to be earned (or granted with regard to long-term stock grants) in the following year. An executive may defer all or a portion of his or her annual non-equity incentive compensation, long-term stock grants, awards under the Stock Award Program and up to 25% of the executive’s base pay under the Savings Restoration Plan.

The investment options available to an executive under the deferral program vary depending upon the type of compensation being deferred. Deferral of compensation granted pursuant to the Long-Term Stock Grant Program or the Stock Award Program must be made into share equivalents of the Company, however the amounts deferred pursuant to the Long-Term Stock Grant Program may be transferred out of Wrigley stock units six months after the date of deferral. If earnings received pursuant to the EICP or the Savings Restoration Plan are being deferred, the executive may invest such amounts in any funds available under the Savings Plan. The table below shows the funds available under the Savings Plan and their annual rate of return for the calendar year ended December 31, 2006, as reported by the administrator of the Savings Plan.

 

Name of Fund   Rate of Return     Name of Fund   Rate of Return  

Vanguard Target Ret Income

  6.38 %       Putnam Investors Fund   13.89 %    

Vanguard Target Ret 2045 Fund

  15.98 %   Vanguard Institutional Index   15.78 %

Vanguard Target Ret 2035 Fund

  15.24 %   Managers Special Equity Fd. Ins.   11.53 %

Vanguard Target Ret 2025 Fund

  13.24 %   Europacific Growth Fund R-5   22.17 %

Vanguard Target Ret 2015 Fund

  11.42 %   Federated Stock Trust   17.40 %

Vanguard Target Ret 2005 Fund

  8.23 %   PIMCO Total Return Fund   3.74 %

Wrigley Common Stock

  -0.70 %   PIMCO Low Duration Fund   3.49 %

Putnam Vista Fund

  5.63 %   Putnam Money Market Fund   4.71 %

Harbor Capital Appreciation

  2.33 %             

Benefits under the Executive Compensation Deferral Program will be paid no earlier than at the beginning of the year following the executive’s retirement or termination. However, upon a showing of financial hardship and receipt of approval from the Compensation Committee, an executive may be allowed to access funds in his deferred compensation account earlier than the beginning of the year following the executive’s retirement or termination. Benefits can be received either as a lump sum payment or in annual installments, or a combination thereof.

 

(a)   (b)     (c)     (d)     (e)     (f)  
Name  

Executive
Contributions in
Last Fiscal Year

($) (1)

   

Registrant
Contribution in
Last Fiscal
Year

($)

   

Aggregate Earnings
in Last Fiscal Year

($)

    Aggregate
Withdrawals/
Distributions
($)
   

Aggregate Balance
at Last

Fiscal Year End

($) (1)

 

William Wrigley, Jr.

  $ 481,634        $ 57,240        $ 6,253        $ 0        $ 2,116,093     

William D. Perez

  $ 52,064     $ 5,840     $ -136     $ 0     $ 57,768  

Reuben Gamoran

  $ 663,651     $ 8,000     $ 138,041     $ 0     $ 2,448,919  

Peter R. Hempstead

  $ 16,650     $ 16,300     $ -22,675     $ 0     $ 3,158,091  

Dushan Petrovich

  $ 224,693     $ 15,091     $ -866     $ 0     $ 1,108,360  

Surinder Kumar

  $ 705,839     $ 0     $ 168,546     $ 0     $ 3,001,991  

Ronald V. Waters, III        

  $ 1,091,669     $ 2,920     $ 4,334     $ 0     $ 3,728,986  

Darrell Splithoff

  $ 391,490     $ 0     $ 585     $ 0     $ 1,452,662  

 

(1)

Reflects the following amounts for each of the following named executive officers which is reported as compensation to such named executive officer in the Summary Compensation Table on page 24: Mr. Wrigley, Jr., $69,750; Mr. Perez, $52,064; Mr. Gamoran, $81,667; Mr. Hempstead, $16,650; and Mr. Petrovich, $12,000.

 

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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

The tables below reflect the amount of compensation to each of the named executive officers of the Company in the event of termination of such executive’s employment. The amount of compensation payable to each named executive officer upon voluntary termination, early retirement, involuntary not-for-cause termination, for cause termination, termination following a change of control and in the event of disability or death of the executive is shown below. The amounts shown assume that such termination was effective as of December 31, 2006, and thus includes amounts earned through such time and are estimates of the amounts which would be paid out to the executives upon their termination. The actual amounts to be paid out can only be determined at the time of such executive’s separation from the Company.

Payments Made Upon Termination

Regardless of the manner in which a named executive officer’s employment terminates, he may be entitled to receive amounts earned during his term of employment. Such amounts include:

 

   

non-equity incentive compensation earned during the fiscal year;

 

   

grants pursuant to the Long-Term Stock Grant Program for the most-recently completed cycle;

 

   

shares awarded under the Company’s Stock Award Program for the most recently completed fiscal year;

 

   

amounts contributed under the Savings Plan and the Executive Compensation Deferral Program;

 

   

unused vacation pay; and

 

   

amounts accrued and vested through the Company’s Retirement Plan and Supplemental Retirement Plan.

Payments Made Upon Retirement

In the event of the retirement of a named executive officer, in addition to the items identified above:

 

   

he will continue to vest in all outstanding options and retain such options for the remainder of the outstanding ten-year term;

 

   

he will be entitled to receive a prorated share of each outstanding Long-Term Stock Grant cycle upon the completion of such cycle;

 

   

he will continue to receive health and welfare benefits until he reaches age 65 and will receive health and welfare benefits for his dependants, as applicable;

 

   

he will continue to receive life insurance benefits until his death; and

 

   

the Company will reimburse the executive for up to $20,000 of financial planning services incurred in the subsequent year.

Payments Made Upon Death or Disability

In the event of the death or disability of a named executive officer, in addition to the benefits listed under the headings “Payments Made Upon Termination” and “Payments Made Upon Retirement” above, the named executive officer will receive benefits under the Company’s disability plan or payments under the Company’s life insurance plan, as appropriate.

Payments Made Upon a Change of Control

The Company has entered into Change of Control Severance Agreements with each named executive officer. Pursuant to these agreements, if an executive’s employment is terminated following a change of control (other than termination by the Company for cause or by reason of death or disability) or if the executive terminates his employment in certain circumstances defined in the agreement which

 

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Table of Contents

constitute “good reason”, in addition to the benefits listed under the heading “Payments Made Upon Termination”:

 

   

the named executive officer will receive:

 

  ¡  

a lump sum severance payment of three times the sum of the executive’s base salary and the highest annual bonus earned by the executive pursuant to incentive compensation plans maintained by the Company in any of the three prior fiscal years;

 

  ¡  

a lump sum amount representing a pro rata portion of any incentive compensation earned by the executive through the date of termination, assuming achievement of the target level of the performance goals; and

 

  ¡  

an amount equal to the excise tax charged to the named executive officer as a result of the receipt of any change-of-control payments;

 

   

all stock options held by the executive will automatically vest and become exercisable; and

 

   

the executive will be credited with three additional years of service and age under the Retirement Plan and the Supplemental Retirement Plan.

Other than as noted below with regard to Mr. Wrigley, Jr., the Change of Control Severance Agreements for each of the named executive officers are substantially similar. Forms of these agreements have been filed as Exhibits 10(h) and 10(i) to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001.

Generally, pursuant to the agreements, a change of control is deemed to occur:

 

  (i)

if any person acquires 25% or more of the Company’s voting securities (other than securities acquired directly from the Company or its affiliates);

 

  (ii)

if a majority of the Directors as of the date of the agreement are replaced other than in specific circumstances;

 

  (iii)

upon the consummation of a merger of the Company or any subsidiary of the Company other than (a) a merger which would result in the voting securities of the Company outstanding immediately prior to the merger continuing to represent at least 60% of the voting power of the securities of the Company outstanding immediately after such merger, or (b) a merger effected to implement a recapitalization of the Company in which no person is or becomes the beneficial owner of securities of the Company representing 25% or more of the combined voting power of the Company’s then-outstanding securities; or

 

  (iv)

upon the liquidation or sale of the Company’s assets, other than a sale or disposition by the Company of the Company’s assets to an entity of which at least 60% of the voting power is owned by stockholders of the Company.

As of April 30, 2006, Ronald V. Waters, III retired as the Company’s Chief Operating Officer. In connection with his retirement and pursuant to the Voluntary Separation Agreement and General Release entered into between the Company and Mr. Waters (which was filed as Exhibit 10(u) to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2006), on November 1, 2006, Mr. Waters received a lump sum payment of $430,000 representing six months’ salary. In addition, from November 1, 2006 through July 31, 2007, Mr. Waters is entitled to receive monthly installment payments of approximately $71,665 and Mr. Waters will receive a one-time severance payment of $1,089,333. However, if, as of April 30, 2007, Mr. Waters has obtained a similar position with another employer, Mr. Waters will not receive the monthly installment payments for the period of May 2007 through July 2007 and Mr. Waters’ one-time severance payment will be reduced by $172,023. Pursuant to the Agreement, Mr. Waters will be entitled to a final stock award around February 2007 reflecting service through his severance period in addition to 3,000 shares.

As of June 30, 2006, Darrell Splithoff retired as the Company’s Senior Vice President, Worldwide Supply Chain. In connection with Mr. Splithoff’s retirement and pursuant to the Voluntary Separation

 

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Table of Contents

Agreement entered into between the Company and Mr. Splithoff (which was filed as Exhibit 99.1 to the Current Report on Form 8-K filed on July 18, 2006), on January 1, 2007, Mr. Splithoff received a lump sump payment of $215,000, representing six-month’s salary. In addition, from January 1, 2007 through September 1, 2007, he is entitled to receive monthly installment payments of $26,875 and Mr. Splithoff will receive a one-time severance payment of $357,000. Pursuant to the Agreement, Mr. Splithoff will be entitled to a final stock award around February 2007 reflecting service through his severance period.

William Wrigley, Jr.

The following table shows the potential payments upon termination or a change of control of the Company for William Wrigley, Jr., the Company’s Executive Chairman and Chairman of the Board. Per Mr. Wrigley, Jr.’s Change of Control Severance Agreement, if Mr. Wrigley, Jr. is terminated following a change of control (other than termination by the Company for cause or by reason of death or disability), or if Mr. Wrigley, Jr. voluntarily terminates his employment for any reason during the one-month anniversary of the change of control, he is entitled to receive a lump sum severance payment of three times the sum of his base salary and the highest annual bonus earned by him pursuant to incentive compensation plans maintained by the Company in any of the three prior fiscal years.

 

Executive Benefits and

Payments Upon

Separation

  Voluntary
Termination
on
12/31/2006
  Early
Retirement
on
12/31/2006
  Normal
Retirement
on
12/31/2006
  Involuntary
Not For
Cause
Termination
on
12/31/2006
  For Cause
Termination
on
12/31/2006
  Involuntary
for Good
Reason
Termination
(Change-in-
Control)
on
12/31/2006
  Disability
on
12/31/2006
  Death
on
12/31/2006

Compensation:

               

Short-Term Incentive Compensation (EICP)

  $ 2,171,000   $ 2,171,000   $ 2,171,000   $ 2,171,000   $ 2,171,000   $ 2,171,000   $ 2,171,000   $ 2,171,000

Stock Options

    —     $ 2,236,000   $ 2,236,000     —       —     $ 2,236,000   $ 2,236,000   $ 2,236,000

Performance Shares (LTSG)

  $ 842,000   $ 3,538,000   $ 3,538,000   $ 842,000   $ 842,000   $ 3,538,000   $ 3,538,000   $ 3,538,000
               

Benefits & Perquisites:

               

Stock Awards (1)

  $ 133,000   $ 133,000   $ 133,000   $ 133,000   $ 133,000   $ 133,000   $ 133,000   $ 133,000

Savings Plan

  $ 184,000   $ 184,000   $ 184,000   $ 184,000   $ 184,000   $ 184,000   $ 184,000   $ 184,000

Retirement Plans (2)

  $ 185,000   $ 2,829,000   $ 2,713,000   $ 185,000   $ 185,000   $ 211,000   $ 2,713,000   $ 189,000

Executive Compensation Deferral Program

  $ 2,116,000   $ 2,116,000   $ 2,116,000   $ 2,116,000   $ 2,116,000   $ 2,116,000   $ 2,116,000   $ 2,116,000

Health and Welfare Benefits (3)

    —     $ 167,000   $ 23,000     —       —     $ 40,000   $ 332,000     —  

Disability Income (4)

    —       —       —       —       —       —     $ 3,353,000     —  

Life Insurance Benefits (5)

    —     $ 36,000   $ 33,000     —       —       —     $ 23,000   $ 1,156,000

Excise Tax & Gross-Up

    —       —       —       —       —       —       —       —  

Cash Severance

    —       —       —       —       —     $ 10,994,000     —       —  

Accrued Vacation Pay

  $ 148,000   $ 148,000   $ 148,000   $ 148,000   $ 148,000   $ 148,000   $ 148,000   $ 148,000

Financial Guidance

    —     $ 20,000   $ 20,000     —       —       —     $ 20,000     —  

 

(1)

Reflects the value of all shares earned and not deferred by Mr. Wrigley, Jr. prior to December 31, 2006 pursuant to the Stock Award Program.

(2)

Reflects the estimated lump-sum present value of qualified and non-qualified retirement plans to which Mr. Wrigley, Jr. would be entitled.

(3)

Reflects the estimated lump-sum present value of all future premiums which will be paid on behalf of Mr. Wrigley, Jr. under the Company’s health and welfare benefit plans.

(4)

Reflects the estimated lump-sum present value of all future payments which Mr. Wrigley, Jr. would be entitled to receive under the Company’s disability program. Mr. Wrigley, Jr. would be entitled to receive such benefits until he reaches age 65.

(5)

Reflects the estimated lump-sum present value of the cost of coverage for life insurance provided by the Company to Mr. Wrigley, Jr.; provided, however, that the amount reflected under the heading “Death” reflects the estimated present value of the proceeds payable to Mr. Wrigley, Jr.’s beneficiaries upon his death.

 

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Table of Contents

William D. Perez

The following table shows the potential payments upon termination or a change of control of the Company for William D. Perez, the Company’s President and Chief Executive Officer.

 

Executive Benefits and

Payments Upon

Separation

 

Voluntary

Termination
on
12/31/2006

 

Early

Retirement
on
12/31/2006

 

Normal

Retirement
on
12/31/2006

 

Involuntary

Not For

Cause
Termination
on
12/31/2006

 

For Cause

Termination
on
12/31/2006

 

Involuntary

for Good

Reason

Termination

(Change-in-

Control)
on
12/31/2006

  Disability
on
12/31/2006
  Death
on
12/31/2006
               

Compensation:

               

Short-Term Incentive Compensation (EICP)

  $ 380,000   $ 380,000   $ 380,000   $ 380,000   $ 380,000   $ 380,000   $ 380,000   $ 380,000

Stock Options

    —     $ 1,467,000   $ 1,467,000     —       —     $ 1,467,000   $ 1,467,000   $ 1,467,000

Performance Shares (LTSG)

    —     $ 970,000   $ 970,000     —       —     $ 970,000   $ 970,000   $ 970,000
               

Benefits & Perquisites:

               

Stock Awards (1)

    —       —       —       —       —       —       —       —  

Savings Plan

  $ 28,000   $ 28,000   $ 28,000   $ 28,000   $ 28,000   $ 28,000   $ 28,000   $ 28,000

Retirement Plans (2)

  $ 4,000   $ 820,000   $ 964,000   $ 4,000   $ 4,000   $ 70,000   $ 964,000   $ 65,000

Executive Compensation Deferral Program

  $ 58,000   $ 58,000   $ 58,000   $ 58,000   $ 58,000   $ 58,000   $ 58,000   $ 58,000

Health and Welfare Benefits (3)

    —     $ 31,000   $ 19,000     —       —     $ 31,000   $ 171,000     —  

Disability Income (4)

    —       —       —       —       —       —     $ 1,515,000     —  

Life Insurance Benefits (5)

    —     $ 82,000   $ 81,000     —       —       —     $ 9,000   $ 1,124,000

Excise Tax & Gross-Up

    —       —       —       —       —     $ 2,249,000     —       —  

Cash Severance

    —       —       —       —       —     $ 4,380,000     —       —  

Accrued Vacation Pay

  $ 122,000   $ 122,000   $ 122,000   $ 122,000   $ 122,000   $ 122,000   $ 122,000   $ 122,000

Financial Guidance

    —     $ 20,000   $ 20,000     —       —       —     $ 20,000     —  

 

(1)

Reflects the value of all shares earned and not deferred by Mr. Perez prior to December 31, 2006 pursuant to the Stock Award Program.

(2)

Reflects the estimated lump-sum present value of qualified and non-qualified retirement plans to which Mr. Perez would be entitled.

(3)

Reflects the estimated lump-sum present value of all future premiums which will be paid on behalf of Mr. Perez under the Company’s health and welfare benefit plans.

(4)

Reflects the estimated lump-sum present value of all future payments which Mr. Perez would be entitled to receive under the Company’s disability program. Mr. Perez would be entitled to receive such benefits until he reaches age 65.

(5)

Reflects the estimated lump-sum present value of the cost of coverage for life insurance provided by the Company to Mr. Perez; provided, however, that the amount reflected under the heading “Death” reflects the estimated present value of the proceeds payable to Mr. Perez’s beneficiaries upon his death.

 

36


Table of Contents

Reuben Gamoran

The following table shows the potential payments upon termination or a change of control of the Company for Reuben Gamoran, the Company’s Chief Financial Officer.

 

Executive Benefits and
Payments Upon
Separation
  Voluntary
Termination
on
12/31/2006
  Early
Retirement
on
12/31/2006
  Normal
Retirement
on
12/31/2006
  Involuntary
Not For
Cause
Termination
on
12/31/2006
  For Cause
Termination
on
12/31/2006
  Involuntary
for Good
Reason
Termination
(Change-in-
Control)
on
12/31/2006
  Disability
on
12/31/2006
  Death
on
12/31/2006

Compensation:

               

Short-Term Incentive Compensation (EICP)

  $ 287,000   $ 287,000   $ 287,000   $ 287,000   $ 287,000   $ 287,000   $ 287,000   $ 287,000

Stock Options

    —     $ 277,000   $ 277,000     —       —     $ 277,000   $ 277,000   $ 277,000

Performance Shares (LTSG)

  $ 178,000   $ 614,000   $ 614,000   $ 178,000   $ 178,000   $ 614,000   $ 614,000   $ 614,000
               

Benefits & Perquisites:

               

Stock Awards (1)

    —       —       —       —       —       —       —       —  

Savings Plan

  $ 379,000   $ 379,000   $ 379,000   $ 379,000   $ 379,000   $ 379,000   $ 379,000   $ 379,000

Retirement Plans (2)

  $ 217,000   $ 822,000   $ 805,000   $ 217,000   $ 217,000   $ 248,000   $ 805,000   $ 205,000

Executive Compensation Deferral Program

  $ 2,449,000   $ 2,449,000   $ 2,449,000   $ 2,449,000   $ 2,449,000   $ 2,449,000   $ 2,449,000   $ 2,449,000

Health and Welfare Benefits (3)

    —     $ 198,000   $ 28,000     —       —     $ 50,000   $ 499,000   $ 119,000

Disability Income (4)

    —       —       —       —       —       —     $ 2,712,000     —  

Life Insurance Benefits (5)

    —     $ 41,000   $ 37,000     —       —       —     $ 8,000   $ 552,000

Excise Tax & Gross-Up

    —       —       —       —       —     $ 1,137,000     —       —  

Cash Severance

    —       —       —       —       —     $ 2,020,000     —       —  

Accrued Vacation Pay

  $ 42,000   $ 42,000   $ 42,000   $ 42,000   $ 42,000   $ 42,000   $ 42,000   $ 42,000

Financial Guidance

    —     $ 20,000   $ 20,000     —       —       —     $ 20,000     —  

 

(1)

Reflects the value of all shares earned and not deferred by Mr. Gamoran prior to December 31, 2006 pursuant to the Stock Award Program.

(2)

Reflects the estimated lump-sum present value of qualified and non-qualified retirement plans to which Mr. Gamoran would be entitled.

(3)

Reflects the estimated lump-sum present value of all future premiums which will be paid on behalf of Mr. Gamoran under the Company’s health and welfare benefit plans.

(4)

Reflects the estimated lump-sum present value of all future payments which Mr. Gamoran would be entitled to receive under the Company’s disability program. Mr. Gamoran would be entitled to receive such benefits until he reaches age 65.

(5)

Reflects the estimated lump-sum present value of the cost of coverage for life insurance provided by the Company to Mr. Gamoran; provided, however, that the amount reflected under the heading “Death” reflects the estimated present value of the proceeds payable to Mr. Gamoran’s beneficiaries upon his death.

 

37


Table of Contents

Peter R. Hempstead

The following table shows the potential payments upon termination or a change of control of the Company for Peter R. Hempstead, the Company’s Senior Vice President, Worldwide Strategy & New Business.

 

Executive Benefits and

Payments Upon

Separation

 

Voluntary
Termination

on

12/31/2006

 

Early
Retirement

on

12/31/2006

 

Normal
Retirement

on

12/31/2006

 

Involuntary
Not For
Cause
Termination

on

12/31/2006

 

For Cause
Termination

on

12/31/2006

 

Involuntary
for Good
Reason
Termination
(Change-in-
Control)

on

12/31/2006

 

Disability

on

12/31/2006

 

Death

on

12/31/2006

Compensation:

               

Short-Term Incentive Compensation (EICP)

  $ 604,000   $ 604,000   $ 604,000   $ 604,000   $ 604,000   $ 604,000   $ 604,000   $ 604,000

Stock Options

    —     $ 488,000   $ 488,000     —       —     $ 488,000   $ 488,000   $ 488,000

Performance Shares (LTSG)

  $ 356,000   $ 1,059,000   $ 1,059,000   $ 356,000   $ 356,000   $ 1,059,000   $ 1,059,000   $ 1,059,000
               

Benefits & Perquisites:

               

Stock Awards (1)

  $ 114,000   $ 114,000   $ 114,000   $ 114,000   $ 114,000   $ 114,000   $ 114,000   $ 114,000

Savings Plan

  $ 33,000   $ 33,000   $ 33,000   $ 33,000   $ 33,000   $ 33,000   $ 33,000   $ 33,000

Retirement Plans (2)

  $ 371,000   $ 504,000   $ 904,000   $ 371,000   $ 371,000   $ 525,000   $ 904,000   $ 429,000

Executive Compensation Deferral Program

  $ 3,158,000   $ 3,158,000   $ 3,158,000   $ 3,158,000   $ 3,158,000   $ 3,158,000   $ 3,158,000   $ 3,158,000

Health and Welfare Benefits (3)

    —     $ 117,000   $ 15,000     —       —     $ 51,000   $ 295,000   $ 66,000

Disability Income (4)

    —       —       —       —       —       —     $ 2,144,000     —  

Life Insurance Benefits (5)

    —     $ 72,000   $ 63,000     —       —       —     $ 8,000   $ 747,000

Excise Tax & Gross-Up

    —       —       —       —       —     $ 1,712,000     —       —  

Cash Severance

    —       —       —       —       —     $ 3,720,000     —       —  

Accrued Vacation Pay

  $ 38,000   $ 38,000   $ 38,000   $ 38,000   $ 38,000   $ 38,000   $ 38,000   $ 38,000

Financial Guidance

    —     $ 20,000   $ 20,000     —       —       —     $ 20,000     —  

 

(1)

Reflects the value of all shares earned and not deferred by Mr. Hempstead prior to December 31, 2006 pursuant to the Stock Award Program.

(2)

Reflects the estimated lump-sum present value of qualified and non-qualified retirement plans to which Mr. Hempstead would be entitled.

(3)

Reflects the estimated lump-sum present value of all future premiums which will be paid on behalf of Mr. Hempstead under the Company’s health and welfare benefit plans.

(4)

Reflects the estimated lump-sum present value of all future payments which Mr. Hempstead would be entitled to receive under the Company’s disability program. Mr. Hempstead would be entitled to receive such benefits until he reaches age 65.

(5)

Reflects the estimated lump-sum present value of the cost of coverage for life insurance policies provided by the Company to Mr. Hempstead; provided, however, that the amount reflected under the heading “Death” reflects the estimated present value of the proceeds payable to Mr. Hempstead’s beneficiaries upon his death.

 

38


Table of Contents

Dushan Petrovich

The following table shows the potential payments upon termination or a change of control of the Company for Dushan Petrovich, the Company’s Senior Vice President and Chief Administrative Officer.

 

Executive Benefits and

Payments Upon

Separation

 

Voluntary
Termination
on

12/31/2006

 

Early
Retirement

on

12/31/2006

 

Normal
Retirement

on

12/31/2006

 

Involuntary
Not For
Cause
Termination

on

12/31/2006

 

For Cause
Termination

on

12/31/2006

 

Involuntary
for Good
Reason
Termination
(Change-in-
Control)

on

12/31/2006

 

Disability

on

12/31/2006

 

Death

on
12/31/2006

Compensation:

               

Short-Term Incentive Compensation (EICP)

  $ 531,000   $ 531,000   $ 531,000   $ 531,000   $ 531,000   $ 531,000   $ 531,000   $ 531,000

Stock Options

    —     $ 455,000   $ 455,000     —       —     $ 455,000   $ 455,000   $ 455,000

Performance Shares (LTSG)

  $ 332,000   $ 1,035,000   $ 1,035,000   $ 332,000   $ 332,000   $ 1,035,000   $ 1,035,000   $ 1,035,000
               

Benefits & Perquisites:

               

Stock Awards (1)

  $ 44,000   $ 44,000   $ 44,000   $ 44,000   $ 44,000   $ 44,000   $ 44,000   $ 44,000

Savings Plan

  $ 603,000   $ 603,000   $ 603,000   $ 603,000   $ 603,000   $ 603,000   $ 603,000   $ 603,000

Retirement Plans (2)

  $ 492,000   $ 1,944,000   $ 1,861,000   $ 492,000   $ 492,000   $ 1,240,000   $ 1,861,000   $ 335,000

Executive Compensation Deferral Program

  $ 1,108,000   $ 1,108,000   $ 1,108,000   $ 1,108,000   $ 1,108,000   $ 1,108,000   $ 1,108,000   $ 1,108,000

Health and Welfare Benefits (3)

    —     $ 178,000   $ 25,000     —       —     $ 51,000   $ 363,000   $ 94,000

Disability Income (4)

    —       —       —       —       —       —     $ 2,032,000     —  

Life Insurance Benefits (5)

    —     $ 61,000   $ 56,000     —       —       —     $ 9,000   $ 699,000

Excise Tax & Gross-Up

    —       —       —       —       —     $ 1,833,000     —       —  

Cash Severance

    —       —       —       —       —     $ 3,194,000     —       —  

Accrued Vacation Pay

  $ 70,000   $ 70,000   $ 70,000   $ 70,000   $ 70,000   $ 70,000   $ 70,000   $ 70,000

Financial Guidance

    —     $ 20,000   $ 20,000     —       —       —     $ 20,000     —  

 

(1)

Reflects the value of all shares earned and not deferred by Mr. Petrovich prior to December 31, 2006 pursuant to the Stock Award Program.

(2)

Reflects the estimated lump-sum present value of qualified and non-qualified retirement plans to which Mr. Petrovich would be entitled.

(3)

Reflects the estimated lump-sum present value of all future premiums which will be paid on behalf of Mr. Petrovich under the Company’s health and welfare benefit plans.

(4)

Reflects the estimated lump-sum present value of all future payments which Mr. Petrovich would be entitled to receive under the Company’s disability program. Mr. Petrovich would be entitled to receive such benefits until he reaches age 65.

(5)

Reflects the estimated lump-sum present value of the cost of coverage for life insurance policies provided by the Company to Mr. Petrovich; provided, however, that the amount reflected under the heading “Death” reflects the estimated present value of the proceeds payable to Mr. Petrovich’s beneficiaries upon his death.

 

39


Table of Contents

Surinder Kumar

The following table shows the potential payments upon termination or a change of control of the Company for Surinder Kumar, the Company’s Senior Vice President and Chief Innovation Officer.

 

Executive Benefits and

Payments Upon

Separation

 

Voluntary
Termination

on

12/31/2006

 

Early
Retirement

on

12/31/2006

 

Normal
Retirement

on

12/31/2006

 

Involuntary
Not For
Cause
Termination

on

12/31/2006

 

For Cause
Termination

on

12/31/2006

 

Involuntary
for Good
Reason
Termination
(Change-in-
Control)

on

12/31/2006

 

Disability

on

12/31/2006

 

Death

on

12/31/2006

Compensation:

               

Short-Term Incentive Compensation (EICP)

  $ 353,000   $ 353,000   $ 353,000   $ 353,000   $ 353,000   $ 353,000   $ 353,000   $ 353,000

Stock Options

    —     $ 355,000   $ 355,000     —       —     $ 355,000   $ 355,000   $ 355,000

Performance Shares (LTSG)

  $ 165,000   $ 586,000   $ 586,000   $ 165,000   $ 165,000   $ 586,000   $ 586,000   $ 586,000
               

Benefits & Perquisites:

               

Stock Awards (1)

    —       —       —       —       —       —       —       —  

Savings Plan

    —       —       —       —       —       —       —       —  

Retirement Plans (2)

  $ 290,000   $ 341,000   $ 447,000   $ 290,000   $ 290,000   $ 446,000   $ 447,000   $ 206,000

Executive Compensation Deferral Program

  $ 3,002,000   $ 3,002,000   $ 3,002,000   $ 3,002,000   $ 3,002,000   $ 3,002,000   $ 3,002,000   $ 3,002,000

Health and Welfare Benefits (3)

    —     $ 50,000   $ 22,000     —       —     $ 37,000   $ 84,000   $ 36,000

Disability Income (4)

    —       —       —       —       —       —     $ 446,000     —  

Life Insurance Benefits (5)

    —     $ 99,000   $ 97,000     —       —       —     $ 2,000   $ 530,000

Excise Tax & Gross-Up

    —       —       —       —       —     $ 1,355,000     —       —  

Cash Severance

    —       —       —       —       —     $ 2,367,000     —       —  

Accrued Vacation Pay

  $ 26,000   $ 26,000   $ 26,000   $ 26,000   $ 26,000   $ 26,000   $ 26,000   $ 26,000

Financial Guidance

    —     $ 20,000   $ 20,000     —       —       —     $ 20,000     —  

 

(1)

Reflects the value of all shares earned and not deferred by Dr. Kumar prior to December 31, 2006 pursuant to the Stock Award Program.

(2)

Reflects the estimated lump-sum present value of qualified and non-qualified retirement plans to which Dr. Kumar would be entitled.

(3)

Reflects the estimated lump-sum present value of all future premiums which will be paid on behalf of Dr. Kumar under the Company’s health and welfare benefit plans.

(4)

Reflects the estimated lump-sum present value of all future payments which Dr. Kumar would be entitled to receive under the Company’s disability program. Dr. Kumar would be entitled to receive such benefits until he reaches age 65.

(5)

Reflects the estimated lump-sum present value of the cost of coverage for life insurance policies provided by the Company to Dr. Kumar; provided, however, that the amount reflected under the heading “Death” reflects the estimated present value of the proceeds payable to Dr. Kumar’s beneficiaries upon his death.

DIRECTOR COMPENSATION

The Company uses a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on the Board. In setting director compensation, the Company considers the significant amount of time that Directors expend in fulfilling their duties to the Company as well as the skill-level required by the Company of members of the Board. Similar to executive officers, Directors are subject to a minimum share ownership requirement. Within two years after joining the Board, each Director is required to directly own shares or share units of the Company’s Common Stock with an aggregate value of at least two times the annual cash retainer.

 

40


Table of Contents

Cash Compensation Paid to Board Members

For the fiscal year ended December 31, 2006, members of the Board who are not employees of the Company are entitled to receive an annual cash retainer of $53,000 and an attendance fee for unscheduled Board or committee meetings of $3,000 per meeting. Each Director who serves as a committee chair receives $10,000 annually in addition to the annual cash retainer. Directors who are employees of the Company receive no compensation for their service as directors. In 2007, the annual cash retainer to be paid to each non-employee Director will be increased to $60,000.

Stock Option Program

Each non-employee Director receives a stock option grant having a calculated Black-Scholes value approximately equal to the non-employee Director’s annual retainer. In May 2006, each non-employee Director received a grant of 4,800 options at the fair market price of the Company’s Common Stock on the date of the grant, or $46.60. Until an option is exercised, shares subject to options cannot be voted nor do they receive dividends or dividend equivalents. Options received by Directors vest over four years of service with 25% of the grant vesting each year.

Stock Deferral Program for Non-Employee Directors

The Stock Deferral Program for Non-Employee Directors is a program under the management incentive plans. The objectives of this program are to provide deferred benefits to non-employee Directors, increase the Director’s beneficial ownership in the Company and more closely align the Director’s interests in the long-term growth and profitability of the Company with that of the stockholders.

Pursuant to the Stock Deferral Program for Non-Employee Directors, a deferred stock account is established for each non-employee Director and credited with a number of share units at the beginning of each new fiscal year. The value of the share units so credited is equivalent to the annual retainer in effect on the first business day of the current year. In accordance with this program, each non-employee Director’s account was credited with 797 share units on January 3, 2006 for fiscal 2006 and 1,160 share units on January 3, 2007 for fiscal 2007. Share units are equivalent to shares of the Company’s Common Stock, except that share units have no voting rights and receive dividend equivalents rather than dividends.

Each Director receives dividend equivalents on the share units contained in his or her deferral account, which are equal in value to dividends paid on the Company’s Common Stock. The dividend equivalents granted are then reinvested in the non-employee Director’s stock deferral account in the form of additional share units. Upon retirement or termination of services as a Director, each non-employee director receives a share of Common Stock for each share unit awarded. Such shares are received either in a lump sum or over a period not to exceed fifteen years, as elected in advance by each director.

Deferred Compensation Program for Non-Employee Directors

The Deferred Compensation Program for Non-Employee Directors is a program under the management incentive plans pursuant to which each non-employee Director may defer up to 100% of his or her total retainer fees. Each non-employee Director who defers his or her annual retainer or fees through this program has the option of investing any deferred amounts through a grantor trust either in the form of share units or money credits deposited in one or more funds offered by the plan’s trustee. The interest rate earned on the money credits is not above-market or preferential.

Amounts deferred pursuant to this program are generally distributed to each non-employee Director at the earlier of age 70 or termination of such individual’s service as a Director of the Company. At such time, the director may chose to either receive the distribution in a lump sum or in equal annual installments over a period not to exceed fifteen years, or a combination thereof.

 

41


Table of Contents

Non-Employee Directors’ Death Benefit Plan

The Company maintains a Non-Employee Directors’ Death Benefit Plan. Under this plan, the designated beneficiaries of a non-employee Director receive a lump sum benefit of $250,000 if the non-employee Director’s death occurs after his or her service as a director terminates, or $25,000 per year for ten years if his or her death occurs prior to termination of service as a Director. To participate in the plan, a Director must agree to contribute $600 per year for a maximum of ten years. All non-employee Directors participate in the plan. The Company may purchase life insurance policies on the lives of the Directors with the Company as the beneficiary to cover obligations for payments under the plan. Currently, the Company has elected to self-insure the plan as this provides the most cost-effective method of covering future obligations under the Non-Employee Directors’ Death Benefit Plan.

Director Summary Compensation Table

The table below summarizes the compensation paid by the Company to non-employee Directors for the fiscal year ended December 31, 2006.

 

(a)    (b)     (c)     (d)     (e)     (f)     (g)  
Name (1)   

Fees Earned or
Paid in Cash

($)

   

Stock
Awards

($)(2)

   

Option
Awards

($)(3)

   

Change in
Pension Value
and Deferred
Compensation
Earnings

($)

   

All Other
Compensation

($)

   

Total

($)

 

John F. Bard

   $ 68,000        $ 53,000        $ 39,627        $ 0        $ 1,821        $ 162,448     

Howard B. Bernick

   $ 74,000     $ 53,000     $ 39,627     $ 0     $ 0     $ 166,627  

Thomas A. Knowlton

   $ 90,000     $ 53,000     $ 39,627     $ 0     $ 1,264     $ 183,891  

John Rau

   $ 77,000     $ 53,000     $ 16,242     $ 0     $ 369     $ 146,611  

Melinda R. Rich

   $ 93,000     $ 53,000     $ 39,627     $ 0     $ 0     $ 185,627  

Steven B. Sample

   $ 80,000     $ 53,000     $ 39,627     $ 0     $ 1,821     $ 174,448  

Alex Shumate

   $ 77,000     $ 53,000     $ 39,627     $ 0     $ 157     $ 169,784  

Richard K. Smucker

   $ 81,000     $ 53,000     $ 39,627     $ 0     $ 969     $ 174,596  

 

(1)

William Wrigley, Jr., the Company’s Executive Chairman and Chairman of the Board, and William D. Perez, the Company’s President and Chief Executive Officer, are not included in this table as they are employees of the Company and thus receive no compensation for their services as Directors. The compensation received by Messrs. Wrigley, Jr. and Perez as employees of the Company are shown in the Summary Compensation Table on page 24.

 

(2)

Reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2006 in accordance with FAS 123(R) and thus may include amounts from awards granted in and prior to 2006. As of December 31, 2006, each Director has the following aggregate number of deferred share units accumulated in their deferral accounts for all years of service as a Director, including additional share units credited as a result of reinvestment of dividend equivalents: John F. Bard, 6,277 units; Howard B. Bernick, 5,130 units; Thomas A. Knowlton, 10,351 units; John Rau, 1,011 units; Melinda Rich, 7,242 units; Steven B. Sample, 9,033 units; Alex Shumate, 8,114 units and Richard K. Smucker, 35,015 units. These share units for each Director are included in the Security Ownership Table on page 43.

 

(3)

Reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2006 in accordance with FAS 123(R), and thus includes amounts from awards granted in and prior to 2006. As of December 31, 2006, each Director has the following number of options outstanding: John F. Bard: 109,550; Howard Bernick: 22,050; Thomas A. Knowlton: 22,050; John Rau: 8,050; Melinda R. Rich: 22,050; Steven B. Sample: 22,050; Alex Shumate: 22,050; and Richard K. Smucker: 22,050.

 

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Table of Contents

SECURITY OWNERSHIP

Security Ownership of Directors and Executive Officers

The following table sets forth the beneficial ownership of the Company’s Common Stock and Class B Common Stock as of January 12, 2007, for each director and nominee for director, each executive officer named in the Summary Compensation Table herein, and by all Directors (including nominees) and executive officers of the Company as a group.

 

Name   Common Stock (1)*     Common Stock
Units (2)
   

Options Currently
Exercisable

Or within 60 days

    Class B
Common
Stock
    Total
Stock and
Stock Based
Holdings
 

John F. Bard

  11,516        13,790        99,624        3,198        128,128     

Howard B. Bernick

  20,000     13,238     12,124     5,000     50,362  

Thomas A. Knowlton

  5,000     12,833     12,124     1,250     31,207  

William D. Perez

  2,900     0     0     0     2,900  

John Rau

  1,000     2,177     812     250     4,239  

Melinda Rich

  1,847     10,510     12,124     461     24,942  

Steven B. Sample

  2,000     10,192     12,124     500     24,816  

Alex Shumate

  200     9,279     12,124     50     21,653  

Richard K. Smucker

  7,403     54,392     12,124     1,843     75,762  

William Wrigley, Jr.

  9,478,671     38,281     208,437     24,074,207     33,799,596  

        

  (3)              (3)         

Reuben Gamoran

  63     18,037     61,999     15     80,114  

Dushan Petrovich

  24,654     20,884     112,843     10,199     168,580  

Peter R. Hempstead

  8,424     60,382     303,781     2,105     374,692  

Surinder Kumar

  0     22,425     179,749     0     202,174  

All Directors and

executive officers as

a group — (32)

  9,676,688     552,129     1,905,068     24,142,876     36,276,761  

        

                          (4)       

 

(1)

Includes restricted shares held by directors and executive officers over which they have voting power but not investment power, shares held directly or in joint tenancy, shares held in trust, by broker, bank or nominee or other indirect means and over which the individual or member of the group has sole voting or shared voting and/or investment power. Unless otherwise noted, each individual or member of the group has sole voting and investment power with respect to the shares shown in the table above. No director or executive officer, except Mr. William Wrigley, Jr., owns more than one tenth of one percent of the total outstanding shares of either class of Common Stock. Mr. Wrigley, Jr. beneficially owns 4.37% of the shares of Common Stock outstanding and 40.77% of the shares of Class B Common Stock outstanding.

 

(2)

Indicates the nonvoting share units credited to the account of the named individual or members of the group, as applicable, under the Deferred Compensation Program for Non-employee Directors and the Stock Deferral Program for Non-employee Directors (as described on page 40 of this proxy statement) and with respect to employees, as credited pursuant to deferred compensation elections under various programs of the Company’s 1997 MIP, as amended.

 

(3)

Includes 8,404,529 shares of Common Stock and 23,205,685 shares of Class B Common Stock held by various trusts for the benefit of Mr. Wrigley, Jr. and/or members of his family and also includes 960,000 shares of Common Stock and 840,000 shares of Class B Common Stock held by a corporation. Mr. Wrigley, Jr. has sole voting and investment power over all shares listed in the table above with the exception of 960,000 shares of Common Stock and 840,000 shares of Class B Common Stock (held by a corporation) as to which Mr. Wrigley, Jr. has sole voting power pursuant to an irrevocable proxy granted to him of indeterminate duration (depending on the occurrence of certain events), but as to which he has no investment power. Of the total shares shown in the table above for Mr. Wrigley, Jr., he disclaims any beneficial interest in 8,591,784 shares of Common Stock and 8,433,439 shares of Class B Common Stock.

 

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According to an Amendment to Schedule 13D filed by Mr. Wrigley, Jr. on June 13, 2006, Mr. Wrigley, Jr. resigned as trustee or co-trustee, as the case may be, of trusts for the benefit of certain members of his family, effective on May 31, 2006. Upon such resignations, Mr. Wrigley, Jr. no longer had voting or dispositive power over the shares of Common Stock and Class B Common Stock held by such trusts, which shares were included in the table above in prior years.

 

(4)

Includes 3,486 shares of Common Stock and 1,327 shares of Class B Common Stock over which members of the group share voting or investment power.

 

 *

Shares of Class B Common Stock are at all times convertible into shares of Common Stock on a share-for-share basis. Assuming conversion of the shares of Class B Common Stock into shares of Common Stock, the percentage of Common Stock owned beneficially would be 14% for Mr. Wrigley, Jr. and 14.81% for all directors and executive officers as a group. No other individual named or member of the group would own beneficially more than 0.10% of the Common Stock as a result of the conversion.

Security Ownership of Certain Beneficial Owners

As of January 12, 2007, the Company’s records and other information available from outside sources indicated that the following stockholders were beneficial owners of more than five percent of the outstanding shares of the Company’s Common Stock or Class B Common Stock. The information below is as reported in their filings with the Securities and Exchange Commission. The Company is not aware of any other beneficial owner of more than 5% of either class of the Company’s Common Stock. Due to their substantial stock holdings, the below-listed stockholders may each be deemed a “control person” of the Company under applicable regulations of the Securities and Exchange Commission.

 

     Amount and Nature of Beneficial Ownership  
     Common Stock*  

Class B

Common Stock

 
Name   Shares         Percent of Class       Shares     Percent of Class  

William Wrigley, Jr. (1)

  9,687,108          4.46   24,074,207        40.77     

410 N. Michigan Avenue

                      

Chicago, Illinois 60611

                      

William J. Hagenah, III (2)

  10,015,164       4.61   11,862,346     20.09  

One Northfield Plaza

                      

Northfield, Illinois 60693

                      

Capital Research and Mgmt. Co. (3)

  22,403,400     10.32   0     0  

333 South Hope Street

                      

55th Floor

                      

Los Angeles, CA 90071

                      

ClearBridge Advisors, LLC, et. al. (4)

  11,759,071       5.42   0     0  

399 Park Avenue

                      

New York, NY 10022

                            

 

(1)

Includes 8,404,529 shares of Common Stock and 23,205,685 shares of Class B Common Stock held by various trusts for the benefit of Mr. Wrigley, Jr. and/or members of his family and also includes 960,000 shares of Common Stock and 840,000 shares of Class B Common Stock held by a corporation. Mr. Wrigley, Jr. has sole voting and investment power over all shares listed in the table above with the exception of 960,000 shares of Common Stock and 840,000 shares of Class B Common Stock (held by a corporation) as to which Mr. Wrigley, Jr. has sole voting power pursuant to an irrevocable proxy granted to him of indeterminate duration (depending on the occurrence of certain events), but as to which he has no investment power. Of the total shares shown in the table above for Mr. Wrigley, Jr., he disclaims any beneficial interest in 8,591,784 shares of Common Stock and 8,433,439 shares of Class B Common Stock. The Common Stock listed in the table above

 

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includes Excercisable Options (see Security Ownership Table on page 43) and excludes the nonvoting Common Stock Units (see footnote 2 to the Security Ownership Table on page 43).

According to an Amendment to Schedule 13D filed by Mr. Wrigley, Jr. on June 13, 2006, Mr. Wrigley, Jr. resigned as trustee or co-trustee, as the case may be, of trusts for the benefit of certain members of his family, effective on May 31, 2006. Upon such resignations, Mr. Wrigley, Jr. no longer had voting or dispositive power over the shares of Common Stock and Class B Common Stock held by such trusts, which shares were included in the table above in prior years.

 

(2)

Of the shares listed, Mr. Hagenah, III has sole voting power and investment power over 9,375,164 shares of Common Stock and 11,302,346 shares of Class B Common Stock and shared voting and investment power over 640,000 shares of Common Stock and 560,000 shares of Class B Common Stock. Of the total shares shown in the table above for Mr. Hagenah, III, he disclaims beneficial ownership of 8,426,922 shares of Common Stock and 9,845,445 shares of Class B Common Stock.

 

(3)

Based upon the statement on Schedule 13G filed with the Securities and Exchange Commission on February 7, 2007, Capital Research and Management Company has sole voting power over 8,605,900 shares of Common Stock and sole dispositive power over 22,403,400 shares of Common Stock.

 

(4)

Based on the statement on Schedule 13G/A filed with the Securities and Exchange Commission on February 8, 2007 which reported on behalf of ClearBridge Advisors, LLC and various other entities. According to the Schedule 13G/A, ClearBridge Advisors, LLC has shared voting power over 9,741,439 shares of Common Stock and shared dispositive power over 11,040,593 shares of Common Stock; ClearBridge Asset Management, Inc. has shared voting power over 25,169 shares of Common Stock and shared dispositive power over 612,242 shares of Common Stock; and Smith Barney Fund Management, LLC has shared voting and dispositive power over 106,237 shares of Common Stock.

 

*

Shares and percent of class indicated for Common Stock do not reflect the shares of Common Stock that could be acquired upon the conversion of the shares of Class B Common Stock into shares of Common Stock on a share-for-share basis. In such event, the percentage of Common Stock beneficially owned would be 14% for Mr. William Wrigley, Jr., and 9.56% for Mr. William J. Hagenah, III.

 

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PROPOSAL 2

Proposal to Amend the Company’s Second Restated Certificate of Incorporation

to Permit Amendment of the Bylaws to Adopt Majority Voting for the Election of Directors

On October 20, 2006, the Board, in its continuing review of corporate governance matters, determined that it is in the best interests of the Company and its stockholders to amend the Bylaws and Second Restated Certificate of Incorporation of the Company (the “Certificate of Incorporation”) to allow for majority voting in uncontested elections of Directors.

The Board approved an amendment to Section 3.4 of the Bylaws of the Company to change the standard for the election of Directors in uncontested elections from a plurality voting standard to a majority voting standard. The amendment to the Bylaws will become effective upon the deletion of the requirement of plurality voting from Article THIRTEENTH of the Certificate of Incorporation. Thus, the Board proposes an amendment to the Article THIRTEENTH, paragraph (a) of the Certificate of Incorporation to delete the last sentence of the paragraph which states that “[u]nless otherwise required by applicable law, at each succeeding annual meeting of the shareholders of the Corporation, the successors of the class of Directors whose term expires at that meeting shall be elected by a plurality vote of all votes cast at such meeting.” The specific language of the amendments to the Certificate of Incorporation and Bylaws are set forth in Appendix C and Appendix D, respectively.

Currently, Directors are elected by a plurality vote. Under a plurality voting standard, a nominee for director receiving the most “for” votes is elected. Thus, votes not cast and votes cast to withhold authority to vote on the issue have no impact. Under a majority voting standard, the number of “for” votes cast in favor of a Director nominee must be greater than the number of “against” votes received by the Director nominee. In the event of a contested election, a plurality voting standard will apply to guard against a failed election contest in which no candidate receives a majority of the “for” votes.

 

 

Your Board Recommends That Stockholders

Vote FOR The Amendment of the Second Restated Certificate of Incorporation.

 

PROPOSAL 3

The Ratification of Appointment of Ernst & Young LLP

as the Company’s Independent Registered Public Accounting Firm (Independent Auditors)

At its October 19, 2006, meeting, the Audit Committee recommended and approved the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm (independent auditors) to examine the consolidated financial statements of the Company for the year ending December 31, 2007. The Company is seeking the stockholders’ ratification of such action.

It is expected that representatives of Ernst & Young LLP will attend the Meeting and be available to make a statement or respond to appropriate questions.

 

 

Your Board And The Audit Committee Recommend That Stockholders

Vote FOR The Ratification of Appointment Of

Ernst & Young LLP As The Company’s Independent Registered Public Accounting Firm (Independent Auditors).

 

 

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AUDIT COMMITTEE DISCLOSURE

The Audit Committee is comprised solely of independent Directors, and, among other things, is responsible for:

 

   

establishing policies and procedures for, appointing, reviewing, and overseeing the performance and independence of the independent registered public accounting firm (independent auditors);

 

   

reviewing with independent auditors and financial management of the Company and approving the plan and scope of the audit and permissible audit related work;

 

   

pre-approving all audit and permissible non-audit fees;

 

   

reviewing and approving the guidelines established for the dissemination of financial information;

 

   

holding meetings periodically with the independent and internal auditors, the Board and management to review and monitor the adequacy and effectiveness of reporting, internal controls, risk assessment, and compliance with Company policies;

 

   

reviewing consolidated financial statements and disclosures;

 

   

reviewing with management and independent auditors and approving disclosure controls and procedures and accounting principles and practices; and

 

   

performing other functions or duties deemed appropriate by the Board.

Audit Committee Pre-approval Policy

The Audit Committee has established a pre-approval policy and procedures for audit, audit-related and tax services that can be performed by the independent auditors without specific authorization from the Audit Committee subject to certain restrictions. The policy is attached to this Proxy Statement as Appendix E. The policy sets out the specific services pre-approved by the Audit Committee and the applicable limitations, while ensuring the independence of the independent auditors to audit the Company’s financial statements is not impaired. The pre-approval policy does not include a delegation to management of the Audit Committee responsibilities under the Securities Exchange Act of 1934.

Service Fees Paid to the Independent Registered Public Accounting Firm

The Audit Committee, with the ratification of the stockholders, engaged Ernst & Young LLP to perform an annual audit of the Company’s financial statements for the fiscal year ended December 31, 2006. The following is the breakdown of aggregate fees paid to the auditors for the Company for the last two fiscal years:

 

            2006                 2005        
      $    %(*)     $     %(*)  

Audit Fees

   3,846,700          3,765,500           

(1) Audit Related Fees**

   134,000    0%     150,000     0%  

(2) Tax Fees***

   -0-    0%     150,500     0%  

(3) All Other Fees

   -0-    0%     -0-     0%  

Total

   3,980,700            4,066,000          

 

    *

Percentage of the services (if any) for which pre-approval was waived by the Audit Committee with respect to (1), (2) and (3) only.

 

  **

Consists primarily of certain attestation services in connection with benefit plan audits.

 

***

Consists primarily of international tax compliance and planning.

 

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Report of the Audit Committee

In connection with the financial statements for the fiscal year ended December 31, 2006, the Audit Committee has:

 

  (1)

reviewed and discussed the audited financial statements with management,

 

  (2)

discussed with Ernst & Young LLP, the Company’s independent registered public accounting firm (the “Auditors”), the matters required to be discussed by the statement on Auditing Standards No. 61, as amended, and

 

  (3)

received the written disclosure and letter from the Auditors the matters required by Independence Standards Board Standard No. 1.

Based upon these reviews and discussions, the Audit Committee recommended to the Board at the February 5, 2007, meeting of the Board that the Company’s audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2006 filed with the Securities and Exchange Commission. The Board has approved this inclusion.

THE AUDIT COMMITTEE

Richard K. Smucker, Chairman

John F. Bard

Howard B. Bernick

Alex Shumate

 

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The Company’s executive officers, Directors and 10% stockholders are required under the Securities Exchange Act of 1934 to file reports of ownership and changes in ownership with the Securities and Exchange Commission and the New York and Chicago Stock Exchanges. Copies of these reports must also be furnished to the Company.

Based solely on a review of copies of reports furnished to the Company, or written representations that no reports were required, the Company believes that during 2006 its executive officers, Directors and 10% holders complied with all filing requirements.

STOCKHOLDER PROPOSALS FOR THE 2008 ANNUAL MEETING OF STOCKHOLDERS

If any stockholder intends to present a proposal to be considered for inclusion in the Company’s proxy material in connection with the 2008 Annual Meeting of Stockholders, the proposal must be in proper form (per SEC Regulation 14A, Rule 14a-8—Stockholder Proposals) and received by the Secretary of the Company on or before October 16, 2007. Stockholder proposals to be presented at the 2008 Annual Meeting of Stockholders which are not to be included in the Company’s proxy materials must be received by the Company no earlier than November 15, 2007, nor later than December 17, 2007, in accordance with the procedures in the Company’s Bylaws.

OTHER BUSINESS

The Company’s management does not know of any other matter to be presented for action at the Annual Meeting. If any other matter should be properly presented at the Annual Meeting, however, it is the intention of the persons named in the accompanying proxy to vote said proxy in accordance with their best judgment.

LOGO

HOWARD MALOVANY

Vice President, Secretary and General Counsel

Chicago, February 13, 2007

 

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Appendix A

WM. WRIGLEY JR. COMPANY

DIRECTOR INDEPENDENCE STANDARDS

It is the policy of the Board of Directors of Wm. Wrigley Jr. Company (“Wrigley”) that a majority of its members be independent of Wrigley management. A Director is independent if the Board affirmatively determines that the Director does not have any direct or indirect material relationship with Wrigley or its affiliates1 or any member of senior management of Wrigley or his or her affiliates. The determination of independence of Directors will be disclosed in the Proxy Statement for each Annual Meeting of Stockholders of Wrigley, and specific explanation will be provided only for any Director who is not considered to be independent. The Board has established the following standards to assist it in making the determination of director independence:

 

  1.

A Director is not independent if the Director is or within the preceding three years was:

 

 

 

employed by Wrigley or any of Wrigley’s affiliates1

 

   

affiliated with or employed by a present or former independent auditor of Wrigley or any of Wrigley’s affiliates, or

 

   

an employee of a company at the same time an executive officer of Wrigley or any of Wrigley’s affiliates is or was a member of that company’s compensation committee.

 

 

2.

A Director is not independent if an immediate family member2 of the Director is or within the preceding three years was:

 

   

employed as an executive officer of Wrigley

 

   

affiliated with or employed by a present or former independent auditor of Wrigley or any of Wrigley affiliates and participates or participated, as the case may be, in the independent auditor’s audit, assurance or tax compliance (but not tax planning) practice, or

 

   

an employee of a company at the same time an executive officer of Wrigley or any of Wrigley’s affiliates is or was a member of that company’s compensation committee.

 

  3.

A Director is not independent if the Director or the Director’s immediate family member receives or has received, during any twelve month period within the preceding three years, more than $100,000 as direct compensation from Wrigley other than Director and committee fees and pension and other deferred compensation for prior services as Director (or, in the case of the immediate family member, salaries and other benefits as employee of Wrigley or any Wrigley affiliate).

 

  4.

A Director is not independent if the Director or the Director’s immediate family member is or was, within the preceding three years, a director, executive officer (or the Director only is or was an employee of the entity), general partner or an equity holder of 1% or more, of an entity to which Wrigley makes or made, or from which Wrigley receives or received, payment for property or services in any single fiscal year in excess of the greater of $1 million or 1% of that entity’s consolidated gross revenues.


1

The term “affiliates” means any corporation or other entity that controls, is controlled by, or is under common control with Wrigley, evidenced by the power to elect a majority of the Board of Directors or comparable governing body of such entity.

2

For the purpose of these independence standards, the term “Director’s immediate family member” means spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters- in-law, brothers-and sisters-in-laws and anyone (other than domestic employees) sharing the Director’s home.

 

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  5.

A Director is not independent if the Director or the Director’s immediate family member is or was, within the preceding three years, a director, executive officer (or the Director only is or was an employee of the entity), partner or an equity holder of 1% or more, of an entity which is indebted to Wrigley, or to which Wrigley is indebted and the aggregate indebtedness of either party to the other in any single fiscal year in excess of the greater of $1 million or 1% of that party’s consolidated assets.

 

  6.

A Director is not independent if the Director or the Director’s immediate family member is or was, within the preceding three years, a director, executive officer (or the Director only is or was an employee of the organization), or trustee of a charitable organization or other not-for-profit organization, and Wrigley’s contributions, or the contributions of any member of senior management of Wrigley, to such organization in any single fiscal year exceeds or exceeded the greater of $1 million or 1% of the organization’s consolidated gross revenues.

 

  7.

A Director is not independent if the Director or the Director’s immediate family member or an entity (in which the Director or the Director’s immediate family member is a director, executive officer or partner), is a beneficial holder of more than 5% of the total number of shares of the Company’s Common Stock and Class B Common Stock then outstanding.

 

  8.

A Director is not independent if the Director is an executive officer, partner, employee or holder directly or indirectly of 1% or more of the total number of outstanding shares, of an entity that supplies any banking, legal or accounting services to the Company or any other services with the exception of services provided on an occasional or minimal basis.

 

  9.

For relationships not covered by the above standards, the determination of whether such relationships are material for the purpose of determining whether a Director is independent, shall be made by Directors who satisfy the standards set out in paragraphs 1-8 above. In such situations, determination of independence shall be on a case-by-case basis, after consideration of all relevant facts and circumstances. For illustration purpose, if a Director is an executive officer of a company that has paid Wrigley in excess of the greater of $1 million or 1% of that company’s consolidated gross revenues in the last one year for the purchase of Wrigley products, the Board could determine, after considering all relevant facts and circumstances, that the relationship is not material to make a finding that the Director is not independent. Wrigley must explain in its next annual proxy statement the basis for any determination by the Board that a relationship is not material even though the relationship did not meet the standards set forth under paragraphs 1-8 above.

The Board shall undertake an annual review of the independence of all non-emp