DEF 14A 1 d505595ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

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

Check the appropriate box:

 

¨   Preliminary Proxy Statement
¨   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x   Definitive Proxy Statement
¨   Definitive Additional Materials
¨   Soliciting Material Pursuant to §240.14a-12

Sealed Air Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x   No fee required.
¨   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

 

   

 

  (2)  

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  (3)  

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):

 

 

   

 

  (4)  

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¨   Fee paid previously with preliminary materials.
¨   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

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LOGO   

Sealed Air Corporation

200 Riverfront Boulevard

Elmwood Park, NJ 07407-1033

April 5, 2013

Dear Fellow Stockholder:

It is my pleasure to invite you to attend the Annual Meeting of Stockholders of Sealed Air Corporation scheduled to be held on Thursday, May 16, 2013 at 10:00 a.m., Eastern Time, at the Hilton Woodcliff Lake, 200 Tice Boulevard, Woodcliff Lake, New Jersey 07677. Your Board of Directors and senior management look forward to greeting you at the meeting.

At this meeting, you will be asked to elect the entire Board of Directors of Sealed Air, to approve the amended 2005 Contingent Stock Plan of Sealed Air Corporation, to approve the amended Performance-Based Compensation Program of Sealed Air Corporation, and to ratify the selection of KPMG LLP, an Independent Registered Public Accounting Firm, as our independent registered public accounting firm for 2013. In addition, you will be asked for an advisory vote to approve our executive compensation as disclosed in the proxy statement. These matters are important, and we urge you to vote in favor of the nominees, our amended 2005 Contingent Stock Plan of Sealed Air Corporation, our amended Performance-Based Compensation Program, our executive compensation and the ratification of the appointment of our independent auditor.

For your convenience, we are also offering a webcast of the meeting. If you choose to follow the meeting via webcast, go to http://ir.sealedair.com shortly before the meeting time and follow the instructions to join the event. We will also provide a replay of this meeting for your reference.

This year as in 2012 we are taking advantage of the Securities and Exchange Commission rule that allows us to furnish proxy materials to our stockholders over the Internet. This e-proxy process expedites stockholders’ receipt of proxy materials, lowers our costs and reduces the environmental impact of our Annual Meeting. Today, we sent to most of our stockholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our 2013 proxy statement and 2012 annual report and vote via the Internet. Other stockholders will receive a copy of the proxy statement and annual report by mail or e-mail.

Regardless of the number of shares of common stock you own, it is important that you vote your shares in person or by proxy. You will find the instructions for voting on the Notice of Internet Availability of Proxy Materials or proxy card. We appreciate your prompt cooperation.

On behalf of your Board of Directors, we thank you for your ongoing support.

Sincerely,

 

LOGO

Jerome A. Peribere

President and

Chief Executive Officer


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SEALED AIR CORPORATION

200 Riverfront Boulevard

Elmwood Park, New Jersey 07407-1033

 

 

PROXY STATEMENT

Dated April 5, 2013

 

 

For the 2013 Annual Meeting of Stockholders

 

 

General Information

We are furnishing this Proxy Statement and related proxy materials in connection with the solicitation by the Board of Directors of Sealed Air Corporation (“Sealed Air,” the “Company,” “we,” “us” or “our”), a Delaware corporation, of proxies to be voted at our 2013 Annual Meeting of Stockholders and at any adjournments. We are providing these materials to the holders of Sealed Air common stock, par value $0.10 per share. We are first making available or mailing the materials on or about April 5, 2013 to stockholders of record at the close of business on March 18, 2013.

The Annual Meeting is scheduled to be held:

 

Date:

   Thursday, May 16, 2013

Time:

   10:00 a.m., Eastern Time

Place:

  

Hilton Woodcliff Lake

200 Tice Boulevard

Woodcliff Lake, New Jersey 07677

Your vote is important. Please see the detailed information that follows.


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2013 Proxy Summary

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.

Annual Meeting of Stockholders

 

Time and Date    10:00 a.m. (ET) May 16, 2013

 

Place

  

 

Hilton Woodcliff Lake

   200 Tice Boulevard
   Woodcliff Lake, New Jersey 07677

 

Record Date

  

 

March 18, 2013

 

Voting

  

 

Stockholders of record of Sealed Air common stock at the close of business on March 18, 2013, the record date, will be entitled to vote at the Annual Meeting. Each outstanding share is entitled to one vote.

Annual Meeting Agenda

 

     

Board Vote

Recommendation

 

 Election of Directors (Proposals 1-11)

     FOR each Director Nominee   

 Approval of the Amended 2005 Contingent Stock Plan of Sealed Air Corporation

     FOR   

 Approval of the Amended Performance-Based Compensation Program of Sealed Air Corporation

     FOR   

 Advisory Vote to Approve our Executive Compensation

     FOR   

 Ratification of Auditors

     FOR   

How to Cast Your Vote

 

You can vote by any of the following methods:

 

  ·  

Internet (http://www.proxyvote.com for “street name” holders and www.investorvote.com/SEE for registered holders) until May 15, 2013;

 

  ·  

Telephone (1-800-454-8683 for “street name” holders and 800-652-8683 for registered holders) until May 15, 2013;

  ·  

Completing, signing and returning your proxy or voting instruction card before May 15, 2013; or

·  

In person, at the annual meeting: If you are a stockholder of record, your admission ticket is attached to your proxy card. If your shares are held in the name of a broker, nominee or other intermediary, you must bring proof of ownership with you to the meeting.

 
 

 

Governance of the Company

 

  ·  

Corporate Governance Guidelines

 

  ·  

Independence of Directors

 

  ·  

Code of Conduct

 

  ·  

Board Oversight of Risk

 

  ·  

Communicating with Directors

 

  ·  

Board Leadership Structure

·  

Board of Directors Overview

 

·  

Audit Committee

 

·  

Nominating and Corporate Governance Committee

 

·  

Organization and Compensation Committee

 

·  

Compensation Committee Interlocks and Insider Participation

 

 

 

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PROXY SUMMARY

 

Director Nominees

 

                        Independent          
         

Director

since

       

Experience/

Qualifications

  (Yes/No)          
 Name   Age       Occupation     Yes     No     Committee Memberships   Other Company Boards

 Hank Brown

    73        1997      Senior Counsel at  

Leadership

    X       

Audit (Chair)

 

Sensient Technologies

      Brownstein Hyatt  

Industry

     

Nominating and Corporate

    Corporation
      Farber Schreck  

Government

        Governance  

 Michael Chu

    64        2002      Managing Director  

Leadership

    X       

Audit

 

Arcos Dorados

      of IGNIA Fund and  

Global

     

Organization and

 
      Professor at Harvard  

Finance

        Compensation Committee  
      Business School          

 Lawrence R. Codey

    68        1993      Retired President  

Leadership

    X       

Audit

 

Horizon Blue Shield Blue

      and COO of PSE&G  

Government

     

Nominating and Corporate

    Cross of New Jersey
       

Finance

        Governance  

United Water Resources

 Patrick Duff

    54        2010      General Partner of  

Leadership

    X       

Audit

 
      Prospect Associates  

Finance

       
       

Education

       

 William V. Hickey

    68        1999      CEO of Sealed Air  

Leadership

      X       

Public Service Enterprise

      Corporation  

Industry

          Group Incorporated
       

Finance

       

Sensient Technologies

                  Corporation

 Jacqueline B. Kosecoff

    63        2005      Managing Partner of  

Leadership

    X       

Nominating and Corporate

 

CareFusion Corporation

      Moriah Partners LLC  

Industry

        Governance  

Steris Corporation

       

Global

     

Organization and

 
                Compensation Committee  

 Kenneth P. Manning

    71        2002      Chairman and  

Leadership

    X       

Nominating and Corporate

 

Sensient Technologies

      CEO of Sensient  

Industry

        Governance     Corporation
      Technologies  

Global

     

Organization and

 
      Corporation           Compensation Committee  

 William J. Marino

    69        2002      Retired Chairman,  

Leadership

    X       

Nominating and Corporate

 

Sun Bancorp

      President and CEO  

Industry

        Governance  
      of Horizon Blue  

Governance

     

Organization and

 
      Shield Blue Cross of           Compensation Committee  
      New Jersey          

 Jerome A. Peribere

    58        2012      President and  

Leadership

      X       

BMO Financial

      CEO of Sealed  

Global

          Corporation
      Air Corporation  

Industry

       

 Richard L. Wambold

    61        2012      Retired CEO of  

Leadership

    X       

Organization and

 

Precision Castparts

      Reynolds/Pactiv  

Industry

        Compensation Committee     Corp.
      Food Service and  

Global

       

Cooper Tire & Rubber

      Consumer Products             Company

 Jerry R. Whitaker

    62        2012      Retired President of  

Leadership

    X       

Nominating and Corporate

 

Crescent Electric

      Electrical Sector-  

Global

        Governance     Corporation
      Americas, Eaton  

Industry

       

Matthews International

                    Corporation                             Corporation

 

2012 Review

(For more detail please see 2012 Annual Report)

Sealed Air underwent considerable transformation in 2012. Early in the year, the Company expanded the size of its Board of Directors to eleven members and added two new members, Richard Wambold and Jerry Whitaker. The Company hired a new Chief Financial Officer, Carol Lowe, replacing Tod Christie, our Treasurer, who also served as Interim Chief Financial Officer prior to Ms. Lowe’s appointment, in June 2012 and a new President and Chief Operating Officer, Jerome Peribere, in September 2012. Mr. Peribere assumed the role of Chief Executive Officer upon the retirement of Bill Hickey from that role in March 2013. We

also appointed a new Vice President and Chief Human Resources Officer, Carole De Mayo, in December 2012, and a new Controller and Chief Accounting Officer, William Stiehl, effective as of January 1, 2013. Additionally, management streamlined its decision making with a new eight-member executive committee, replacing the historical sixteen-member leadership team. As a result of these personnel changes, our named executive officers for 2012 were Bill Hickey, Carol Lowe, Jerome Peribere, Emile Chammas, Yagmur Sagnak and Tod Christie. Throughout this Proxy Statement, these individuals are referred to as the “named executive officers” or “executive officers.”

Our business continued to grow in 2012 from organic sales improvement and from the acquisition of Diversey Holdings,

 

 

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PROXY SUMMARY

 

Inc., on October 3, 2011. Additionally, we commercialized more than one dozen new products that drove new sales across multiple regions and divisions. Also, during the fourth quarter of 2012, we began to operate under three new business divisions for our segment reporting structure, which

better aligns our organization to meet customer needs, maximizes profitable growth and enables us to focus on targeted growth opportunities and represents a productive way to manage our performance.

 

 

Compensation Philosophy and Objectives

 

Our executive compensation philosophy is to provide compensation in the forms and at levels that will permit us to retain and motivate our existing executives and to attract new executives with the skills and attributes that we need. The compensation program is intended to provide appropriate and balanced incentives toward achieving our annual and long-term strategic objectives, to support a performance-oriented environment based on the attainment of goals and objectives intended to benefit us and our stockholders and to create an alignment of interests between our executives and our stockholders. The compensation program is designed to

establish an appropriate balance between short and long-term strategic objectives, with a greater weight placed on rewarding the achievement of longer term objectives and financial performance of the Company.

The Compensation Committee is responsible for establishing and implementing our executive compensation philosophy and for ensuring that the total compensation paid to our executive officers and other executives is fair and competitive and motivates high performance.

 

 

ELEMENTS OF EXECUTIVE COMPENSATION

 

 Compensation Element

  Description

 Base Salary

 

Fixed cash compensation

 Annual Incentive Compensation

 

Annual cash award based on percentage of base salary

   

Officer may elect to receive portion in restricted stock with a 25% premium

 Long-Term Incentives

 

Performance share units

   

Occasional restricted stock award

 Retirement Plans

 

Profit Sharing Plan

   

Defined Contribution Plan

 Post-Employment Benefits

 

Severance

 Other Benefits

 

Health care and life insurance programs

   

Limited perquisites

2012 Executive Total Compensation Mix

 

LOGO

 

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PROXY SUMMARY

 

Director and Executive Compensation

2012 DIRECTOR COMPENSATION TABLE

 

     Fees Earned or           All Other        
 Director    Paid in Cash ($)     Stock Awards ($)     Compensation ($)     Total ($)  

 Hank Brown

     ($)                92,500        ($)                79,999        ($)                        0        ($)            172,499   

 Michael Chu

     80,000        79,999        0        159,999   

 Lawrence R. Codey

     90,000        79,999        5,000        174,999   

 Patrick Duff

     10,000        139,999        0        149,999   

 T. J. Dermot Dunphy

     60,000        79,999        5,000        144,999   

 Jacqueline B. Kosecoff

     77,500        79,999        0        157,499   

 Kenneth P. Manning

     77,500        79,999        0        157,499   

 William J. Marino

     21,000        139,999        4,000        164,999   

 Richard L. Wambold

     15,000        139,999        0        154,999   

 Jerry R. Whitaker

     78,500        79,999        0        158,499   

Summary Compensation Table

 

                        Stock     Non-Equity     All Other        

 Name and

        Salary        Bonus        Awards        Incentive Plan        Compensation        Total   

 Principal Position

     Year         ($)        ($)        ($)        Compensation        ($)        ($)   

 William V. Hickey

     2012         195,833          5,400,000        0        20,200        5,616,033   

 Chairman and Chief Executive Officer

     2011         675,000          4,993,758        0        46,141        5,714,900   
     2010         670,833          4,218,763        0        50,486        4,940,082   

 Jerome A. Peribere

     2012         316,667          4,257,695        1,045,000        123,832        5,743,194   

 President and Chief Operating Officer

               

 Carol P. Lowe

     2012         284,375        250,000        633,360        315,000        69,816        1,552,551   

 Senior Vice President and
Chief Financial Officer

               

 Yagmur I. Sagnak

     2012         428,666          1,123,226        0        619,350        2,171,242   

 Vice President

               

 Emile Z. Chammas

     2012         420,833          949,324        0        30,106        1,400,729   

 Senior Vice President

     2011         408,333          840,528        0        70,602        1,319,463   

 Tod S. Christie

     2012         292,250        100,000        670,467        38,153        39,859        1,130,729   

 Treasurer and Former Interim
Chief Financial Officer

     2011         252,667          201,388        9,813        38,053        501,921   

Approval of Amended 2005 Contingent Stock Plan of Sealed Air Corporation

We are asking for stockholder approval of the amended 2005 Contingent Stock Plan of Sealed Air Corporation.

Approval of Amended Performance-Based Compensation Program of Sealed Air Corporation

We are asking for stockholder approval of the amended Performance-Based Compensation Program of Sealed Air Corporation.

 

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PROXY SUMMARY

 

Advisory Vote to Approve Our Executive Compensation

We are asking for stockholder approval of the compensation of our named executive officers as disclosed in this proxy statement in accordance with SEC rules, which disclosures include the disclosures under “Executive Compensation — Compensation Discussion and Analysis,” the compensation tables and the narrative discussion following the compensation tables.

Auditors

The Audit Committee has approved the retention of KPMG LLP, an Independent Registered Public Accounting Firm, as the independent auditor of Sealed Air to examine and report on the Company’s consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting for the fiscal year ending December 31, 2013, subject to ratification of the retention by the stockholders at the Annual Meeting.

 

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Notice of Annual Meeting of Stockholders

of

Sealed Air Corporation

 

 

We will hold the Annual Meeting of Stockholders of Sealed Air Corporation, a Delaware corporation, on May 16, 2013 at 10:00 a.m., Eastern Time, at the Hilton Woodcliff Lake, 200 Tice Boulevard, Woodcliff Lake, New Jersey 07677. The purposes for the Annual Meeting are to elect Sealed Air’s entire Board of Directors, to approve the amended 2005 Contingent Stock Plan of Sealed Air Corporation, to approve the amended Performance-Based Compensation Program of Sealed Air Corporation, to provide for an advisory vote of the stockholders to approve our executive compensation as disclosed in the attached proxy statement, to ratify the appointment of the independent auditor of Sealed Air, and to transact such other business as may properly come before the meeting. The individual proposals are:

 

  1. Election of Hank Brown as a Director.

 

  2. Election of Michael Chu as a Director.

 

  3. Election of Lawrence R. Codey as a Director.

 

  4. Election of Patrick Duff as a Director.

 

  5. Election of William V. Hickey as a Director.

 

  6. Election of Jacqueline B. Kosecoff as a Director.

 

  7. Election of Kenneth P. Manning as a Director.

 

  8. Election of William J. Marino as a Director.

 

  9. Election of Jerome A. Peribere as a Director.

 

10. Election of Richard L. Wambold as a Director.

 

11. Election of Jerry R. Whitaker as a Director.

 

12. Approval of the amended 2005 Contingent Stock Plan of Sealed Air Corporation.

 

13. Approval of the amended Performance-Based Compensation Program of Sealed Air Corporation.

 

14. Advisory vote to approve our executive compensation as disclosed in the proxy statement.

 

15. Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2013.

 

16. In accordance with the Proxy Committee’s discretion, upon such other matters as may properly come before the meeting.

The Board of Directors has fixed the close of business on March 18, 2013 as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting.

We have sent or made available a copy of our 2012 Annual Report to Stockholders to all stockholders of record. Additional copies are available upon request.

We invite you to attend the meeting so that management can discuss business trends with you, listen to your suggestions, and answer any questions that you may have. Because it is important that as many stockholders as possible be represented at the meeting, please review the proxy statement promptly and carefully and then vote. You may vote by following the instructions for voting set forth on the Notice of Internet Availability of Proxy Materials or on your proxy card, or if you receive a paper copy of the proxy card by mail, you may complete and return the proxy card in the accompanying post-paid, addressed envelope. If you attend the meeting, you may vote your shares personally even though you have previously voted by proxy.

 

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The only voting securities of the Company are the outstanding shares of its common stock, par value $0.10 per share. The Company will keep a list of the stockholders of record at its principal office at 200 Riverfront Boulevard, Elmwood Park, New Jersey 07407-1033 for a period of ten days prior to the Annual Meeting.

On behalf of the Board of Directors

GUY CHAYOUN

Interim Secretary

Elmwood Park, New Jersey

April 5, 2013

Important Notice Regarding the Availability of Proxy Materials

for the Stockholder Meeting to be held on May 16, 2013

Please note that the Company’s Notice of Annual Meeting of Stockholders, Proxy Statement for the Annual Meeting of Stockholders and 2012 Annual Report are available at:

http://proxyreport.sealedair.com

 

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Contents

 

         Page      

General Information

     1   

2013 Proxy Summary

     2   

Questions and Answers about the Annual Meeting

     11   

Vote Required for Election or Approval

     15   

Corporate Governance

     17   

Corporate Governance Guidelines

     17   

Independence of Directors

     17   

Code of Conduct

     17   

Board Oversight of Risk

     18   

Communicating with Directors

     18   

Board Leadership Structure

     18   

Board of Directors Overview

     18   

Audit Committee

     19   

Nominating and Corporate Governance Committee

     19   

Organization and Compensation Committee

     20   

Compensation Committee Interlocks and Insider Participation

     21   

Certain Relationships and Related Person Transactions

     22   

Director Compensation

     23   

Election of Directors (Proposals 1-11)

     27   

Director Qualifications

     27   

Identifying and Evaluating Nominees for Directors

     28   

Information Concerning Nominees

     28   

Nominees for Election as Directors

     29   

Section 16(a) Beneficial Ownership Reporting Compliance

     35   

Voting Securities

     35   

Executive Compensation

     38   

Compensation Discussion and Analysis

     38   

Compensation Committee Report

     57   

2012 Summary Compensation Table

     58   

Grants of Plan-Based Awards in 2012

     60   

Outstanding Equity Awards at 2012 Fiscal Year-End

     63   

Stock Vested in 2012

     65   

Payments Upon Termination or Change in Control

     65   

Equity Compensation Plan Information

     69   

Approval of Amended 2005 Contingent Stock Plan of Sealed Air Corporation (Proposal 12)

     70   

Approval of Amended Performance-Based Compensation Program of Sealed Air Corporation (Proposal 13)

     73   

Advisory Vote to Approve Our Executive Compensation (Proposal 14)

     77   

Selection of Independent Auditor (Proposal 15)

     78   

Principal Independent Auditor Fees

     78   

Audit Committee Pre-Approval Policies and Procedures

     78   

Report of the Company’s Audit Committee

     79   

 

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         Page      

Stockholder Proposals for the 2014 Annual Meeting

     80   

Delivery of Documents to Security Holders Sharing an Address

     80   

Other Matters

     80   

Sealed Air Corporation Standards for Director Independence

     Annex A   

Policy and Procedure for Stockholder Nominations to the Board

     Annex B   

Qualifications for Nomination to the Board

     Annex C   

Amended 2005 Contingent Stock Plan of Sealed Air Corporation

    
Annex D
  

Amended Performance-Based Compensation Program of Sealed Air Corporation

     Annex E   

Directions to the Annual Meeting of Stockholders

     Back Cover   

 

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Questions and Answers about the Annual Meeting

 

Q: Why am I receiving these materials?

 

A: We are providing these proxy materials to you in connection with our Annual Meeting of Stockholders, which will take place on May 16, 2013. These materials were first made available on the Internet or mailed to shareholders on or about April 5, 2013. You are invited to attend the Annual Meeting and requested to vote on the proposals described in this Proxy Statement.

 

Q: Why did I receive a notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?

 

A: In accordance with rules and regulations adopted by the Securities and Exchange Commission, or SEC, instead of mailing a printed copy of our proxy materials to each stockholder of record, we may furnish proxy materials, including this Proxy Statement and our 2012 Annual Report to Stockholders, by providing access to such documents via the Internet. This e-proxy process expedites stockholders’ receipt of proxy materials, lowers our costs and reduces the environmental impact of our Annual Meeting.

Most stockholders will not receive printed copies of the proxy materials unless they request them. Instead, we have mailed a Notice of Internet Availability of Proxy Materials that will tell you how to access and review all of the proxy materials on the Internet. The notice also tells you how to vote on the Internet. If you would like to receive a paper or e-mail copy of our proxy materials, you should follow the instructions for requesting such materials in the notice.

 

Q: What is included in these materials?

 

A: These materials include:

Our Proxy Statement for the Annual Meeting; and

Our 2012 Annual Report to Stockholders, which includes our audited consolidated financial statements.

If you requested or receive printed versions of these materials by mail, these materials also include the proxy card for the Annual Meeting.

 

Q: What are the stockholders voting on?

 

A: •  Election of the entire Board of Directors

The eleven nominees are:

   

Hank Brown

   

Michael Chu

   

Lawrence R. Codey

   

Patrick Duff

   

William V. Hickey

   

Jacqueline B. Kosecoff

   

Kenneth P. Manning

   

William J. Marino

   

Jerome A. Peribere

   

Richard L. Wambold

   

Jerry R. Whitaker

   

Approval of Amended 2005 Contingent Stock Plan of Sealed Air Corporation

   

Approval of Amended Performance-Based Compensation Program of Sealed Air Corporation

   

Advisory vote to approve our executive compensation

   

Ratification of KPMG LLP as our independent registered public accounting firm for 2013

 

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Q: Who can vote?

 

A: Stockholders of record of Sealed Air common stock at the close of business on March 18, 2013, the record date, will be entitled to vote at the Annual Meeting. Each outstanding share is entitled to one vote.

 

Q: What is a stockholder of record?

 

A: A stockholder of record is a stockholder whose ownership of Sealed Air stock is reflected directly on the books and records of our transfer agent, Computershare. If you hold stock through an account with a bank, broker or similar organization, you are considered the beneficial owner of shares held in “street name” and are not a stockholder of record. For shares held in street name, the stockholder of record is your bank, broker or similar organization. As described below, if you are not a stockholder of record, you will not be able to vote your shares in person at the Annual Meeting unless you have a proxy from the stockholder of record authorizing you to vote your shares.

 

Q: How do I vote my shares?

 

A: Stockholders of record may vote via the Internet or, if you received a paper proxy card, by mail. Also, the proxy card contains a toll free telephone number that you may use to vote. If you received a paper proxy card and choose to vote by mail, we have provided a postage-paid envelope. For your information, voting via the Internet is the least expensive to the Company, followed by telephone voting, with voting by mail being the most expensive. Also, you may help us to save the expense of a second mailing if you vote promptly.

Beneficial owners of shares held in “street name” may vote by following the voting instructions provided to you by your bank or broker or other nominee.

You may also vote in person at the Annual Meeting as described below.

 

Q: How do I vote via the Internet?

 

A: Stockholders of record may vote via the Internet as instructed on the Notice of Internet Availability of Proxy Materials or proxy card. We provide voting instructions on the web site for you to follow. Internet voting is available 24 hours a day. You will be given the opportunity to confirm that your instructions have been recorded properly. If you vote via the Internet, you do not need to return a proxy card. Please see the notice or proxy card for Internet voting instructions.

 

Q: How do I vote by telephone?

 

A: Stockholders of record who receive a proxy card may vote by calling the toll-free number listed on the proxy card and following the instructions provided on the telephone line. Telephone voting is available 24 hours a day. Easy-to-follow voice prompts allow you to vote your shares and confirm that your instructions have been recorded properly. If you vote by telephone, you do not need to return a proxy card. Please see the proxy card for telephone voting instructions.

 

Q: How do I vote by mail?

 

A: If you have received a paper proxy card and choose to vote by mail, simply mark your proxy card, sign and date it, and return it in the postage-paid envelope provided.

 

Q: Can I access the Annual Meeting materials via the Internet?

 

A: The Company’s Notice of Annual Meeting of Stockholders, Proxy Statement for the Annual Meeting of Stockholders and 2012 Annual Report are available at:

http://proxyreport.sealedair.com

 

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Q: May I change my vote? May I revoke my proxy?

 

A: If you are a stockholder of record, whatever method you use to vote, you may later change or revoke your proxy at any time before it is exercised by:

 

   

voting via the Internet or telephone at a later time;

 

   

submitting a properly signed proxy card with a later date; or

 

   

voting in person at the Annual Meeting.

 

Q: Can I vote at the Annual Meeting?

 

A: The method by which you vote will not limit your right to vote at the Annual Meeting if you decide to attend in person. Any stockholder of record may vote in person at the Annual Meeting whether or not he or she has previously voted. If your shares are held in “street name,” you must obtain a written proxy, executed in your favor, from the record holder to be able to vote at the meeting. If you hold shares through our Profit-Sharing Plan or our 401(k) Thrift Plan, you cannot vote those shares in person at the Annual Meeting; see the question and answer below.

 

Q: What is the deadline for voting my shares if I do not intend to vote in person at the Annual Meeting?

 

A: If you are a stockholder of record and do not intend to vote in person at the Annual Meeting, you may vote by Internet or by telephone until 11:59 p.m., E.D.T., on May 15, 2013. If you are a beneficial owner of shares held through a bank or brokerage firm, please follow the voting instructions provided by your bank or brokerage firm.

 

   If you hold shares of the Company through Sealed Air’s Profit-Sharing Plan or Sealed Air’s 401(k) Thrift Plan, please refer to the next question.

 

Q: How do I vote if I participate in Sealed Air’s Profit-Sharing Plan or 401(k) Thrift Plan?

 

A: For each participant in Sealed Air’s Profit-Sharing Plan, the proxy also serves as a voting instruction card permitting the participant to provide voting instructions to Fidelity Management Trust Company (“Fidelity”), trustee for the Profit-Sharing Plan, for the shares of common stock allocated to the participant’s account in the plan. For each participant in Sealed Air’s 401(k) Thrift Plan, the proxy also serves as a voting instruction card permitting the participant to provide voting instructions to Fidelity, which also acts as trustee for the 401(k) Thrift Plan, for the shares of common stock allocated to the participant’s account in the plan. Internet voting is available to plan participants. Fidelity will vote the allocated shares in each plan as directed by each participant who provides voting instructions to it before 11:59 p.m. (Eastern Time) on May 13, 2013. The terms of each plan provide that Fidelity will vote shares allocated to the accounts of participants who do not provide timely voting instructions in the same proportion as shares it votes on behalf of participants who do provide timely voting instructions.

 

Q: What if my broker holds shares in street name for me?

 

A: Under the rules of the New York Stock Exchange, Inc., or “NYSE,” brokers who hold shares in street name for customers have the authority to vote on specified items when they have not received instructions from their customers who are the beneficial owners of the shares. We understand that, unless instructed to the contrary by the beneficial owners of shares held in street name, brokers may exercise this authority to vote on the ratification of the appointment of the independent auditor of Sealed Air. For the purpose of determining a quorum, we will treat as present at the meeting any proxies that are voted on any matter to be acted upon by the stockholders, including abstentions or any proxies containing broker non-votes.

 

Q: What happens if I do not give specific voting instructions?

 

A: If you are a stockholder of record and you sign and return a proxy card without giving specific voting instructions then the proxy holders will vote your shares in the manner recommended by the Board of Directors on all matters presented in this proxy statement and as the proxy holders may determine in their discretion for any other matters properly presented for a vote at the meeting.

 

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   If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, the organization that holds your shares may generally vote on routine matters but cannot vote on non-routine matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the organization that holds your shares will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is referred to as a “broker non-vote.” The only routine matter expected to be voted on at the Annual Meeting is the ratification of the appointment of the independent auditor.

 

Q: What if other matters are presented at the Annual Meeting?

 

A: If any other matters are properly presented for consideration at the Annual Meeting, the persons named in the proxy will have the discretion to vote on those matters for you. We do not know of any other matters to be presented for consideration at the Annual Meeting.

 

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Vote Required for Election or Approval

Introduction

Sealed Air’s only voting securities are the outstanding shares of our common stock. As of the close of business on March 18, 2013, 195,779,811 shares of common stock were outstanding, each of which is entitled to one vote at the Annual Meeting. Only holders of record of common stock at the close of business on March 18, 2013, the record date, will be entitled to notice of and to vote at the Annual Meeting. A majority of the outstanding shares of common stock present in person or represented by proxy and entitled to vote on any matters to be considered at the Annual Meeting will constitute a quorum for the transaction of business at the Annual Meeting. For the purpose of determining a quorum, we will treat as present at the meeting any proxies that are voted on any matter to be acted upon by the stockholders, as well as abstentions or any proxies containing broker non-votes.

Election of Directors: Majority Vote Requirement

Each director will be elected by a vote of the majority of the votes cast with respect to that director, where a majority of the votes cast means that the number of shares voted “for” a director must exceed the number of votes cast “against” the director. We will not count shares voted to “abstain” for the purpose of determining whether a director is elected. Under the Company’s Certificate of Incorporation, its By-laws and the Delaware General Corporation Law, a director holds office until a successor is elected and qualified or until his or her earlier resignation or removal. If any of the nominees that is currently in office is not elected at the Annual Meeting, then the By-laws provide that the director shall offer to resign from our Board of Directors. The Nominating and Corporate Governance Committee will make a recommendation to our Board whether to accept or reject the resignation, or whether other action should be taken. Our Board will consider and act on the recommendation of the Nominating and Corporate Governance Committee and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of the election results. The director who offers his or her resignation will not participate in the decision of the Nominating and Corporate Governance Committee or of the Board of Directors. If the Board of Directors accepts such resignation, then the Board can fill the vacancy resulting from that resignation or can reduce the number of directors that constitutes the entire Board of Directors so that no vacancy exists.

Approval of Amended 2005 Contingent Stock Plan of Sealed Air Corporation

The amended 2005 Contingent Stock Plan of Sealed Air Corporation must be approved by the affirmative vote of the holders of a majority of the shares of common stock entitled to vote and present in person or represented by proxy at the Annual Meeting. Abstentions will count as votes against this proposal since shares with respect to which the stockholder abstains will be deemed present and entitled to vote. Broker non-votes will have no effect on the outcome of this proposal since such shares will not be deemed entitled to vote.

Approval of Amended Performance-Based Compensation Program of Sealed Air Corporation

The amended Performance-Based Compensation Program of Sealed Air Corporation must be approved by the affirmative vote of the holders of a majority of the shares of common stock entitled to vote present in person or represented by proxy at the Annual Meeting. Abstentions will count as votes against this proposal since shares with respect to which the stockholder abstains will be deemed present and entitled to vote. Broker non-votes will have no effect on the outcome of this proposal since such shares will not be deemed entitled to vote.

Advisory Vote to Approve Our Executive Compensation

The advisory vote to approve our executive compensation must be approved by the affirmative vote of the holders of a majority of the shares of common stock entitled to vote present in person or represented by

 

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proxy at the Annual Meeting. Abstentions will count as votes against this proposal since shares with respect to which the stockholder abstains will be deemed present and entitled to vote. Broker non-votes will have no effect on the outcome of this proposal since such shares will not be deemed entitled to vote.

Ratification of KPMG LLP as Our Independent Registered Public Accounting firm for 2013

The ratification of KPMG LLP as our independent registered public accounting firm for 2013 must be approved by the affirmative vote of the holders of a majority of the shares of common stock present in person or represented by proxy at the Annual Meeting. Abstentions will be deemed present and, therefore, will count as votes against this proposal. Because this proposal is routine, there will not be any broker non-votes on this proposal.

Other Matters

Any other matters considered at the Annual Meeting must be approved by the affirmative vote of the holders of a majority of the shares of common stock entitled to vote present in person or represented by proxy at the Annual Meeting.

 

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Corporate Governance

Corporate Governance Guidelines

The Board has adopted and operates under Corporate Governance Guidelines that reflect our current governance practices in accordance with applicable statutory and regulatory requirements, including those of the SEC and the NYSE. The Corporate Governance Guidelines are available on our web site at www.sealedair.com.

Independence of Directors

Under the Corporate Governance Guidelines and the requirements of the NYSE, the Board must consist of a majority of independent directors. The Board annually reviews the independence of all non-employee directors. The Board has established categorical standards consistent with the corporate governance standards of the NYSE to assist it in making determinations of the independence of Board members. We have attached a copy of our current director independence standards to this Proxy Statement as Annex A and also posted a copy on our web site at www.sealedair.com. These categorical standards require that, to be independent, a director may not have a material relationship with the Company. Even if a director meets all categorical standards for independence, the Board reviews other relationships with the Company in order to conclude that each independent director has no material relationship with the Company either directly or indirectly.

The Board of Directors has determined that the following directors are independent: Hank Brown, Michael Chu, Lawrence R. Codey, Patrick Duff, Jacqueline B. Kosecoff, Kenneth P. Manning, William J. Marino, Richard L. Wambold and Jerry R. Whitaker. In evaluating the independence of the non-employee directors, the Board considered the following transactions, relationships or arrangements:

 

 

Dr. Kosecoff was previously an employee of UnitedHealth Group. In 2012, Sealed Air Corporation and all of its subsidiaries (including the Diversey entities) paid approximately $578,282 to UnitedHealth Group for employee vision plan services. The fees paid to UnitedHealth Group during 2012 have been substantially less than 2% of UnitedHealth Group’s consolidated gross revenues. Our Board determined that these immaterial transactions and relationships did not impair the independence of Dr. Kosecoff.

 

 

Mr. Manning is the Chairman and Chief Executive Officer and a director of Sensient Technologies Corporation. Messrs. Hickey and Brown are directors of Sensient Technologies Corporation but not members of the Sensient compensation committee. Sensient is a supplier of colors and other products to Sealed Air and its affiliates, with sales to legacy Sealed Air during 2009 through 2011 totaling less than $200,000 per year. Sensient also supplied products to Diversey entities with sales totaling approximately $180,000 in 2011. Legacy Sealed Air sold Sensient and its affiliates products in an amount totaling no more than $225,000 in 2011. In 2012, Sealed Air Corporation and its subsidiaries (including the Diversey entities) purchased approximately $160,203 of products from Sensient and sold approximately $328,558 of products to Sensient. These relationships are expected to continue at approximately the same levels during 2013. The fees paid to Sensient during each year were substantially less than 2% of Sensient’s consolidated gross revenues. Our Board determined that these immaterial transactions and relationships did not impair the independence of Mr. Manning, Mr. Hickey or Mr. Brown.

Code of Conduct

For many years, we have had a Code of Conduct applicable to the Company and its subsidiaries. The Code of Conduct applies to all of our employees and to our officers and directors. We also have a supplemental Code of Ethics for Senior Financial Executives that applies to our Chief Executive Officer, Chief Financial Officer, Controller, Treasurer, and all other employees performing similar functions. We have posted the texts of the Code of Conduct and the Code of Ethics for Senior Financial Executives on our web site at www.sealedair.com. We will post any amendments to the Code of Conduct and the Code of Ethics for Senior Financial Executives on our web site. In accordance with the requirements of the SEC and the NYSE, we will

 

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also post waivers applicable to any of our officers or directors from provisions of the Code of Conduct or the Code of Ethics for Senior Financial Executives on our web site. We have not granted any such waivers.

Board Oversight of Risk

The Board is actively involved in oversight of risks that could affect the Company. While the Audit Committee oversees our major financial risk exposures and the steps we have taken to monitor and control such exposures, and the Organization and Compensation Committee considers the potential of our executive compensation programs to raise material risks to the Company, the Board as a whole is responsible for oversight of our risk management processes and the development of our enterprise risk management program.

Communicating with Directors

Stockholders and other interested parties may communicate directly with the non-management directors of the Board by writing to Non-Management Directors, c/o Corporate Secretary, at Sealed Air Corporation, 200 Riverfront Boulevard, Elmwood Park, New Jersey 07407-1033, or by sending an email to directors@sealedair.com. In either case, the lead director of our Board will receive all correspondence and will communicate with the other directors about the correspondence. We have posted information on how to communicate with the non-management directors on our web site at www.sealedair.com.

Board Leadership Structure

Mr. Hickey was elected as the Chairman of the Board of Directors in August 2012. The Chairman presides at meetings of the Board of Directors at which he is present and leads the Board of Directors in fulfilling its responsibilities as specified in the By-laws. The Chairman has the right to call special and emergency meetings. The Chairman and the lead director shall each serve as liaisons for interested parties who request direct communications with the Board of Directors.

Mr. Marino has served as the lead director since December 2011. The lead director, among other things, oversees the executive sessions of non-employee or independent directors and presides at all meetings of the Board at which the Chairman or the Chief Executive Officer are not present. Additionally, the lead director serves as principal liaison on Board-wide issues between the Chairman and the non-management directors and provides input to the Chairman and the Chief Executive Officer on agendas for Board and Committee meetings and on an appropriate schedule of Board meetings. Notwithstanding the appointment of a lead director, the Board considers all of its members responsible and accountable for oversight and guidance of its activities. All directors have the opportunity to request items to be included on the agendas of upcoming meetings.

The leadership structure is reviewed annually as part of the Board’s self-assessment process, and changes may be made in the future to reflect the Board’s composition as well as our needs and circumstances.

Board of Directors Overview

Under the Delaware General Corporation Law and the Company’s By-laws, our business and affairs are managed by or under the direction of the Board of Directors, which delegates some of its responsibilities to its Committees and to management.

The Board of Directors generally holds seven regular meetings per year and meets on other occasions when circumstances require. Directors spend additional time preparing for Board and Committee meetings, and we may call upon them for advice between meetings. Also, we encourage our directors to attend director education programs.

The Corporate Governance Guidelines adopted by the Board provide that the Board will meet regularly in executive session without management in attendance. The lead director presides at each executive session. The chair of the Nominating and Corporate Governance Committee serves as the presiding director if the lead director is unable to serve.

 

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Under the Corporate Governance Guidelines, we expect directors to regularly attend meetings of the Board and of all Committees on which they serve and to review the materials sent to them in advance of those meetings. We expect nominees for election at each annual meeting of stockholders to attend the Annual Meeting. All eleven of the nominees for election at the Annual Meeting this year currently serve as directors of the Company, and ten of those nominees attended the 2012 Annual Meeting. The other director was not elected to the Board until the third quarter of 2012.

During 2012, the Board of Directors held twelve meetings, excluding actions by unanimous written consent, and held five executive sessions with only non-employee directors in attendance, one of which was attended by only independent directors. Each current member of the Board of Directors attended at least 75 percent of the aggregate number of meetings of the Board of Directors and of the Committees of the Board on which the director served during 2012.

The Board of Directors maintains an Audit Committee, a Nominating and Corporate Governance Committee, and an Organization and Compensation Committee. The members of these Committees consist only of independent directors. The Board of Directors has adopted charters for each of the Committees, which are reviewed annually by each Committee and the Board of Directors. The Committee charters are available on our web site at www.sealedair.com.

Audit Committee

The principal responsibility of the Audit Committee is to assist the Board of Directors in fulfilling its responsibilities for monitoring and overseeing:

 

 

our internal control system, including information technology security and control;

 

 

our public reporting processes;

 

 

the performance of our internal audit function;

 

 

the annual independent audit of our consolidated financial statements;

 

 

the integrity of our consolidated financial statements;

 

 

our legal and regulatory compliance; and

 

 

the retention, performance, qualifications, rotation of personnel and independence of our independent auditor.

Our independent auditor is directly accountable to the Audit Committee. The Audit Committee has the authority and responsibility to select, evaluate, approve terms of retention and compensation of, and, where appropriate, replace the independent auditor, subject to ratification of the selection of the independent auditor by our stockholders at the Annual Meeting.

The current members of the Audit Committee are Mr. Brown, who serves as chair, and Messrs. Chu, Codey, Duff and Manning. Our Board of Directors has determined that each current member of the Audit Committee is independent, as defined in the listing standards of the NYSE, is financially literate, and is an audit committee financial expert in accordance with the standards of the SEC. No director is eligible to serve on the Audit Committee if that director simultaneously serves on the audit committees of three or more other public companies. The Audit Committee held twelve meetings in 2012, excluding actions by unanimous written consent. During 2012, the Audit Committee met privately with representatives of the independent auditor of Sealed Air, KPMG LLP, on four occasions, met privately with the Company’s Executive Director of Internal Audit on four occasions, met privately with the Company’s management on four occasions, and held one executive session with only non-employee directors in attendance.

Nominating and Corporate Governance Committee

The principal responsibilities of the Nominating and Corporate Governance Committee are to:

 

 

identify individuals qualified to become Board members, consistent with criteria approved by the Board, and recommend to the Board director nominees for the next annual meeting of stockholders and director nominees to fill vacancies or newly-created directorships at other times;

 

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provide oversight of the corporate governance affairs of the Board and the Company, including developing and recommending to the Board the Corporate Governance Guidelines;

 

 

assist the Board in evaluating the Board and its Committees; and

 

 

recommend to the Board the compensation of non-management directors.

The current members of the Nominating and Corporate Governance Committee are Mr. Marino, who serves as chair, and Messrs. Brown, Manning and Whitaker and Dr. Kosecoff. Our Board of Directors has determined that each current member of the Nominating and Corporate Governance Committee is independent, as defined in the listing standards of the NYSE. The Nominating and Corporate Governance Committee held four meetings in 2012, excluding actions by unanimous written consent. During 2012, the Nominating and Corporate Governance Committee met in private session on one occasion.

The Nominating and Corporate Governance Committee has the sole authority to retain and terminate any consulting or search firm to be used to identify director candidates or assist in evaluating director compensation and to approve the fees payable to any such firm. Starting in late 2010, the Nominating and Governance Committee has engaged Frederic W. Cook & Co., Inc. (“Cook”) to advise the Nominating and Corporate Governance Committee on director compensation. Cook also advises the Organization and Compensation Committee regarding executive compensation.

The Nominating and Corporate Governance Committee will consider director nominees recommended by our stockholders in accordance with a policy adopted by the Committee. Recommendations should be submitted to the Secretary of the Company in writing at Sealed Air Corporation, 200 Riverfront Boulevard, Elmwood Park, New Jersey 07407-1033, along with additional required information about the nominee and the stockholder making the recommendation. A copy of the policy is attached to this Proxy Statement as Annex B and posted on our web site at www.sealedair.com. Information on qualifications for nominations to the Board and procedures for stockholder nominations to the Board is included below under “Director Qualifications” and “Identifying and Evaluating Nominees for Directors.”

Organization and Compensation Committee

The principal responsibilities of the Organization and Compensation Committee, which we refer to as the Compensation Committee, are to assist the Board in fulfilling its responsibilities relating to:

 

 

compensation of our officers and key employees;

 

 

performance of our Chief Executive Officer and management;

 

 

management development and succession planning;

 

 

administration of our 2005 Contingent Stock Plan, as amended, including authorizing awards under that plan;

 

 

Company-sponsored tax-qualified retirement plans; and

 

 

matters presented to the stockholders that relate to executive compensation, including advisory stockholder votes on executive compensation and the frequency of such advisory votes, and the actions to be taken in response to such votes.

The current members of the Organization and Compensation Committee are Mr. Codey, who serves as chair, Messrs. Chu, Marino and Wambold and Dr. Kosecoff. Our Board of Directors has determined that each current member of the Compensation Committee is independent, as defined in the listing standards of the NYSE. The Compensation Committee held ten meetings in 2012, excluding actions by unanimous written consent. During 2012, the Compensation Committee met in private session with other non-employee directors on one occasion.

The Compensation Committee oversees and provides strategic direction to management with respect to our executive compensation plans and programs. The Compensation Committee reviews our Chief Executive Officer’s performance and compensation with the other non-employee directors. Based on that review, the Compensation Committee evaluates the performance of our Chief Executive Officer, reviews the

 

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Compensation Committee’s evaluation with him, and makes all compensation decisions for our Chief Executive Officer. The Compensation Committee also reviews and approves the compensation of the other executive officers and other executives whose base salary equals or exceeds $300,000 per year. The Compensation Committee makes most decisions regarding changes in salaries and bonuses during the first quarter of the year based on Company, division or function and individual performance during the prior year.

The Compensation Committee has the sole authority to retain and terminate any compensation consultant to be used to assist in the evaluation of executive compensation and to approve the consultant’s fees and retention terms. As noted below, since November 2006, the Compensation Committee has retained Cook as its executive compensation consultant. Cook also advises the Nominating and Corporate Governance Committee regarding director compensation but does not provide any other services to the Company. The Company pays Cook’s fees. Additional information on the executive compensation services performed in 2012 by Cook is included in “Compensation Discussion and Analysis—Role of Committee Consultant” below.

Compensation Committee Interlocks and Insider Participation

During 2012, Messrs. Chu, Codey, Marino and Wambold and Dr. Kosecoff served as members of the Compensation Committee. None of the members of the Compensation Committee has been an officer or employee of the Company or any of its subsidiaries. See “Corporate Governance—Independence of Directors” above for a description of transactions, relationships or arrangements concerning Dr. Kosecoff and Mr. Marino.

 

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Certain Relationships and Related Person Transactions

Under the Audit Committee charter, the Audit Committee has the responsibility to review and, if appropriate, approve conflicts of interest or potential conflicts of interest involving our senior financial executives and to act, or recommend Board action, on any other violations or potential violations of our Code of Conduct by executive officers. Under our Code of Conduct, the Board reviews any relationships or transactions that might constitute a conflict of interest for a director.

In 2007, the Board adopted its Related-Person Transactions Policy and Procedures. The current Related-Person Policy is in writing and is posted on the Company’s web site at www.sealedair.com. The Related-Person Policy provides for the review of all relationships and transactions in which the Company and any of its executive officers, directors and five-percent stockholders or their immediate family members are participants to determine whether to approve or ratify such relationships or transactions, as well as whether such relationships or transactions might affect a director’s independence or must be disclosed in our proxy statement. All such transactions or relationships are covered if the aggregate amount may exceed $120,000 in a calendar year and the person involved has a direct or indirect interest other than solely as a director or a less than 10 percent beneficial ownership interest in another entity. The Related-Person Policy includes a list of pre-approved relationships and transactions. Determinations whether to approve or ratify any other relationship or transaction are based on the terms of the transaction, the importance of the relationship or transaction to the Company, whether the relationship or transaction could impair the independence of a non-employee director, or whether the relationship or transaction would present an improper conflict of interest for any director or executive officer of the Company, among other factors. Information on relationships and transactions is requested in connection with annual questionnaires completed by each of our executive officers and directors.

The Nominating and Corporate Governance Committee has the responsibility to review and, if appropriate, approve or ratify all relationships and transactions covered under the Related-Person Policy, although the Board has delegated to the chair of the Nominating and Corporate Governance Committee and to the Chief Executive Officer of the Company the authority to approve or ratify specified transactions. For potential conflicts of interest involving an executive officer, the chair of the Nominating and Corporate Governance Committee and the chair of the Audit Committee can agree that only one of those Committees will address the matter. No director can participate in any discussion or approval of a relationship or transaction involving himself or herself (or one of his or her immediate family members).

Prior to joining the Company as its President, Chief Operating Officer and director, Mr. Peribere was an executive officer of The Dow Chemical Company. During 2012, the Company purchased resins and chemicals from Down Chemical in the amount of over $100 million, and during the same period Dow Chemical purchased protective packaging and hygiene products from the Company for approximately $1 million. The amounts paid to Dow Chemical are substantially less than 2% of Dow Chemical’s consolidated gross revenues. Mr. Peribere advised the Company that he did not have a direct or indirect material interest in any of these transactions or relationships, and these transactions were ratified or approved in accordance with the Related-Person Policy.

Other than transactions that are considered pre-approved under the Related-Person Policy, the transactions described above under “Corporate Governance—Independence of Directors” were ratified or approved in accordance with the Related-Person Policy.

 

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Director Compensation

During 2012, annual compensation for our non-employee directors was comprised of the following components: annual or interim retainers paid at least 50% in shares of common stock, committee fees paid in cash, and other fees for special assignments or director education programs paid in cash. A director may defer payment of annual or interim retainers until retirement from the Board of Directors, as described below. Our non-employee directors also participate in our matching gift program, as noted below. The following table shows the total compensation for non-employee directors during 2012:

2012 DIRECTOR COMPENSATION TABLE

 

         
Director    Fees Earned or
Paid in Cash1
($)
     Stock  Awards2
($)
     All Other
Compensation3
($)
    

Total

($)

 

Hank Brown*

   $ 92,500       $ 79,999       $ 0       $ 172,499   

Michael Chu

     80,000         79,999         0         159,999   

Lawrence R. Codey*

     90,000         79,999         5,000         174,999   

Patrick Duff

     10,000         139,999         0         149,999   

T. J. Dermot Dunphy

     60,000         79,999         5,000         144,999   

Jacqueline B. Kosecoff

     77,500         79,999         0         157,499   

Kenneth P. Manning

     77,500         79,999         0         157,499   

William J. Marino**

     21,000         139,999         4,000         165,499   

Richard L. Wambold

     15,000         139,999         0         154,999   

Jerry R. Whitaker

     78,500         79,999         0         158,799   

 

  * Chair of committee for all or part of 2012.

 

  ** Mr. Marino was the Lead Director.

 

  1 

This column reports the amount of cash compensation paid in 2012.

 

  2 

The amounts shown in the Stock Awards column represent the aggregate grant date fair value of stock awards granted in the fiscal year ended December 31, 2012 in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation, or FASB ASC Topic 718, for the stock portion of the annual retainers for 2012 under the 2002 Stock Plan for Non-Employee Directors, described below under “Board Retainers” and “Form and Payment of Retainers.” For additional information, refer to “Directors Stock Plan” in Note 19, “Stockholders’ Equity,” of Notes to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, as filed with the SEC. Messrs. Chu, Codey, Marino, Wambold and Whitaker received stock units under the Deferred Compensation Plan described below. All other directors listed in the table received shares of common stock. The number of shares or stock units paid as the equity portion of the annual retainer in 2012 was determined by dividing the amount of the annual retainer so paid ($80,000) by the closing price of a share of common stock on May 17, 2012, the date of the 2012 Annual Meeting, at which meeting all of the non-employee directors were elected, and rounding up to the nearest whole share. In addition, Messrs. Marino and Wambold elected to have the cash portion of their annual retainer paid in shares or stock units, with the number of shares or stock units similarly determined by dividing the amount of the annual retainer so paid ($60,000) by the closing price on May 17, 2012. All shares and stock units paid as all or part of annual retainers in 2012 are fully vested. Directors are credited with dividend equivalents on stock units, as described under “Deferred Compensation Plan” below, which are not included in the table above.

 

  3 

The amounts in this column represent fees received in connection with director education and special projects undertaken by a director during 2012, as well as matching gifts to educational institutions. Directors are permitted to participate in the Company’s matching gift program, whereby the Company will match gifts to educational institutions on a dollar for dollar basis to a maximum of $5,000 per participant in any calendar year, on the same basis as employees.

Director Compensation Processes

Our director compensation program is intended to enhance our ability to attract, retain and motivate non-employee directors of exceptional ability and to promote the common interest of directors and stockholders in enhancing the value of our common stock.

 

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The Board reviews director compensation at least annually based on recommendations by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee has the sole authority to engage a consulting firm to evaluate director compensation and starting in late 2010 engaged Cook to assist in establishing director compensation. The Nominating and Corporate Governance Committee and the Board base their determinations on director compensation on recommendations from Cook as well as reviewing commercially available survey data related to general industry director compensation trends at companies of comparable size. Cook also serves as the independent consultant to the Organization and Compensation Committee on executive compensation.

Board Retainers

Under the 2002 Stock Plan for Non-Employee Directors, each member of the Board of Directors who is neither an officer nor an employee of the Company and who is elected at an annual meeting of stockholders receives an annual retainer for serving as a director. The Board sets the amount of the annual retainer prior to the Annual Meeting based on the recommendation of the Nominating and Corporate Governance Committee.

The 2002 Stock Plan gives the Board the flexibility to set annual retainers based on a fixed number of shares of common stock, a fixed amount of cash, or a combination of shares of common stock and cash.

A non-employee director who is elected other than at an annual meeting is entitled to an interim retainer on the date of election. The interim retainer is a pro rata portion of the annual retainer to reflect less than a full year of service.

Form and Payment of Retainers

We pay at least half of each retainer, whether annual or interim, in shares of common stock or deferred stock units and the remainder in cash, provided that each non-employee director can elect, prior to becoming entitled to the retainer, to receive the entire retainer in shares of common stock. For any portion of an annual or interim retainer denominated in cash but paid in shares of common stock, we calculate the number of shares of common stock to be issued by dividing the amount payable in shares of common stock by the fair market value per share. The fair market value per share is the closing price of the common stock on the Annual Meeting date or, if no sales occurred on that date, the closing price on the most recent prior day on which a sale occurred. The number of shares issued as all or part of an interim retainer is the amount of cash payable as shares of common stock divided by the fair market value per share on the date of the director’s election to the Board. If any calculation would result in a fractional share of common stock being issued, then we round the number of shares to be issued up to the nearest whole share.

We issue shares of common stock in payment of the portion of a retainer that is payable in shares of common stock to the non-employee director promptly after he or she becomes entitled to receive it. We pay the portion of an annual retainer payable in cash in a single payment shortly after the end of the calendar quarter during which the director is elected. We pay the portion of an interim retainer payable in cash shortly after the end of the calendar quarter in which the non-employee director is elected, except that if the non-employee director is elected between April 1 and the next annual meeting of stockholders, then we pay the cash portion of the interim retainer shortly after the non-employee director is elected.

Deferred Compensation Plan

The Sealed Air Corporation Deferred Compensation Plan for Directors permits a non-employee director to elect to defer all or part of the director’s annual retainer until the non-employee director retires from the Board. Each non-employee director has the opportunity to elect to defer the portion of the annual retainer payable in shares of common stock. If a non-employee director makes that election, he or she may also elect to defer the portion, if any, of the annual retainer payable in cash. We hold deferred shares of common stock as stock units in a stock account. Such stock units may not be transferred by a director. We do not issue these shares until we pay the non-employee director, normally after retirement from the Board, so the

 

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non-employee director cannot vote the stock units. We consider deferred shares, when issued, as issued under the 2002 Stock Plan for Non-Employee Directors. We credit deferred cash and dividend equivalents on stock units to an unfunded cash account that earns interest quarterly at the prime rate less 50 basis points until paid. During 2012, none of the non-employee directors who participated in the Deferred Compensation Plan for Directors received above market earnings on the cash or stock units credited to his or her account. The non-employee director can elect to receive the balances in his or her stock and cash accounts in a single payment during January of the year after retirement or in five annual installments starting during January of the year after retirement.

Restrictions on Transfer

A director may not sell, transfer or encumber shares of common stock issued under the 2002 Stock Plan for Non-Employee Directors while the director serves on the Board of Directors, except that a non-employee director may make gifts of shares issued under the 2002 Stock Plan to family members or to trusts or other forms of indirect ownership so long as the non-employee director would be deemed a beneficial owner of the shares with a direct or indirect pecuniary interest in the shares and would retain voting and investment control over the shares while the non-employee director remains a director of the Company. During this period, the director, or the director’s accounts under the Deferred Compensation Plan for Directors, if the director has elected to defer payment of the shares, is entitled to receive or be credited with any dividends or other distributions in respect of the shares. The director has voting rights in respect of the shares issued to the director under the 2002 Stock Plan. Since we hold deferred shares of common stock as stock units in a stock account, with no shares issued until payment is made to the non-employee director, directors cannot vote stock units representing deferred shares of common stock. The restrictions on the disposition of shares issued pursuant to the 2002 Stock Plan terminate upon the occurrence of specified events related to a change of control of the Company.

Other Fees and Arrangements

During 2012, non-employee directors who undertook special assignments at the request of the Board or of any Committee of the Board, or who attended a director education program, received a fee of $2,000 per day. All directors are entitled to reimbursement for expenses incurred in connection with Board service, including attending Board or Committee meetings. We pay these fees and reimbursements in cash; these payments are not eligible for deferral under the Deferred Compensation Plan for Directors described above. Additionally, directors are permitted to participate in our matching gift program, described in Note 3 to the 2012 Director Compensation Table above, on the same basis as employees.

2012 Director Compensation

In late 2010, the Nominating and Corporate Governance Committee engaged Cook to assist in developing a philosophy on director compensation, and each year since then Cook has benchmarked the Company’s director compensation against the peer companies used for executive compensation purposes, described under “Compensation Discussion and Analysis—Use of Peer Group Data” below. Based on Cook’s recommendation in early 2011, the Board decided that that non-employee director compensation should be generally within the median range for peer companies and meeting fees would be eliminated except in unusual situations.

In early 2012 the Nominating and Corporate Governance Committee recommended and the Board approved 2012 annual retainers in the amount of $80,000 payable in shares of common stock and $60,000 payable in cash (or in shares of common stock at the election of each director). The chair of the Audit Committee receives an annual fee of $25,000, and other members of the Audit Committee received annual fees of $10,000. The chair of the Nominating and Corporate Governance Committee received an annual fee of $15,000, and other members of the Nominating and Corporate Governance Committee received annual fees of $7,500. The chair of the Organization and Compensation Committee received an annual fee of $20,000, and other members of the Organization and Compensation Committee received annual fees of $10,000. Committee fees are paid in quarterly installments in cash.

 

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In the first quarter of 2012, the Nominating and Corporate Governance Committee recommended and the Board approved that the lead director be paid an annual fee in the amount of $30,000 for serving in such role, or $25,000 if serving as lead director and as chair of one of the standing Committees at the same time. This fee is paid in quarterly installments in cash.

2013 Director Compensation

In early 2013, based on peer company data provided by Cook, the Nominating and Corporate Governance Committee determined that the Company’s annual retainers were significantly below the median range for peer companies and decided to increase annual retainers to within the median range by 2014. Thus the Nominating and Corporate Governance Committee recommended and the Board approved 2013 annual retainers in the amount of $90,000 payable in shares of common stock and $75,000 payable in cash (or in shares of common stock at the election of each director). No changes were made in any of the other fees payable to directors for 2013.

Director Stock Ownership Guidelines

In order to align the interests of directors and stockholders, we believe that our directors should have a significant financial stake in the Company. To further that goal, we adopted stock ownership guidelines for non-employee directors during 2006. The current stock ownership guidelines for non-employee directors, which are part of our Corporate Governance Guidelines, require that they hold shares of common stock and stock units under the Sealed Air Corporation Deferred Compensation Plan for Directors equal in aggregate value to five times the amount of the annual retainer payable in cash, or $300,000 for 2012 and $375,000 for 2013. As of March 18, 2013, all directors had met the guidelines for 2013 other than Messrs. Wambold and Whitaker, who were first elected as directors during 2012. Directors first elected after February 18, 2010 have five years following first election to achieve the guidelines. In the event of an increase in the amount of the annual retainer payable in cash, directors serving when the increase is approved by the Board have two years after such approval to achieve the increased guideline.

 

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Election of Directors (Proposals 1-11)

At the Annual Meeting, the stockholders of the Company will elect the entire Board of Directors to serve for the ensuing year and until their successors are elected and qualified. During the first quarter of 2012, the Board of Directors increased the number of directors to eleven from nine and appointed Messrs. Wambold and Whitaker to fill the vacancies thus created. During the third quarter of 2012, the Board of Directors further increased the number of directors to twelve from eleven in connection with the appointment of Mr. Peribere as President, Chief Operating Officer and director. The Board of Directors has designated as nominees for election the eleven persons named below, all of whom currently serve as directors of the Company. On February 14, 2013, T.J. Dermot Dunphy informed the Company and the Nominating and Corporate Governance Committee that he will retire and not stand for re-election as a director at the Annual Meeting of Stockholders. In connection with Mr. Dunphy’s retirement, the number of directors will be decreased to eleven at the Annual Meeting.

Shares of common stock that are voted as recommended by the Board of Directors will be voted in favor of the election as directors of the nominees named below. If any nominee becomes unavailable for any reason or if a vacancy should occur before the election, which we do not anticipate, the shares represented by a duly completed proxy may be voted in favor of such other person as may be determined by the holder of the proxy.

Director Qualifications

Several years ago, the Nominating and Corporate Governance Committee of the Board adopted its “Qualifications for Nomination to the Board,” a copy of which is attached to this Proxy Statement as Annex C and posted on the Company’s web site at www.sealedair.com. The Qualifications provide that, in selecting directors, the Board should seek to achieve a mix of Board members that enhances the diversity of background, skills and experience on the Board, including with respect to age, gender, international background, ethnicity and specialized experience. Directors should have relevant expertise and experience and be able to offer advice and guidance to our Chief Executive Officer based on that expertise and experience. Also, a majority of directors should be independent under applicable listing standards, Board and Committee guidelines and applicable legislation. Each director is also expected to:

 

 

be of the highest ethical character and share the values of the Company as reflected in its Code of Conduct;

 

 

be highly accomplished in his or her field, with superior credentials and recognition;

 

 

have sound business judgment, be able to work effectively with others, have sufficient time to devote to the affairs of the Company, and be free from conflicts of interest; and

 

 

be independent of any particular constituency and be able to represent all stockholders of the Company.

The Board has determined that, as a whole, it must have the right mix of characteristics and skills and diversity to provide effective oversight of the Company. However, we do not have a formal policy concerning the diversity of the Board of Directors. Based on an evaluation of our business and the risks associated with the business, the Board believes that it should be comprised of persons with skills in areas such as:

 

 

knowledge of the industries in which we operate;

 

 

financial literacy;

 

 

management of complex businesses;

 

 

international business;

 

 

relevant technology and innovation;

 

 

financial markets;

 

 

manufacturing;

 

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information technology;

 

 

sales and marketing;

 

 

legislative and governmental affairs;

 

 

legal and regulatory environment; and

 

 

strategic planning.

The Board conducts a self-assessment process every year and periodically reviews the diversity of skills and characteristics needed by the Board in its oversight of the Company, as well as the effectiveness of the diverse mix of skills and experience. As part of the review process, the Board considers the skill areas represented on the Board, those skill areas represented by directors expected to retire or leave the Board in the near future, and recommendations of directors regarding skills that could improve the ability of the Board to carry out its responsibilities.

Identifying and Evaluating Nominees for Directors

When the Board or the Nominating and Corporate Governance Committee has identified the need to add a new Board member with specific qualifications or to fill a vacancy on the Board, the chair of the Committee will initiate a search, seeking input from other directors and senior management, review any candidates that it has previously identified, and, if necessary, hire a search firm. The Committee will identify the initial list of candidates who satisfy the specific criteria, if any, and otherwise qualify for membership on the Board. At least one member of the Committee (preferably the chair) and our lead director and Chief Executive Officer will interview each qualified candidate; other directors will also interview the candidate if practicable. Based on a satisfactory outcome of those reviews, the Committee will make its recommendation on the candidate to the Board. Mr. Peribere was elected in connection with his appointment as President and Chief Operating Officer of the Company in the third quarter of 2012.

Our By-laws include a procedure that stockholders must follow in order to nominate a person for election as a director at an annual meeting of stockholders, other than a nomination submitted by a stockholder to the Nominating and Corporate Governance Committee under the policy and procedures described above under “Corporate Governance—Nominating and Corporate Governance Committee.” The By-laws require that timely notice of the nomination in proper written form including all required information be provided to the Secretary of the Company. A copy of our By-laws is posted on our web site at www.sealedair.com.

Information Concerning Nominees

The information appearing in the following table sets forth, for each nominee for election as a director:

 

 

The nominee’s business experience for at least the past five years.

 

 

The year in which the nominee first became a director of the Company or of the former Sealed Air Corporation. On March 31, 1998, the Company completed a multi-step transaction, one step of which was a combination of the Cryovac business with the former Sealed Air Corporation. The period of service before that date includes time during which each director served continuously as a director of the Company or of the former Sealed Air Corporation.

 

 

The nominee’s age as of the date of the Annual Meeting.

 

 

Directorships held by each nominee presently and at any time during the past five years at any public company or registered investment company.

 

 

The reasons that the Board concluded that the nominee should serve as our director, at the time we file our proxy statement, in light of our business and structure.

There are no family relationships among any of the Company’s directors or officers.

 

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Nominees for Election as Directors

 

Hank Brown   

Director since 1997

Audit Committee (Chair)

Nominating and Corporate Governance

Committee

Age 73

 

Mr. Brown has served as Senior Counsel with the law firm of Brownstein Hyatt Farber Schreck since June 2008, where he is a member of the Government Relations and Natural Resources groups. Previously, Mr. Brown was President of the University of Colorado from August 2005 until March 2008. Prior to that service, he was President and Chief Executive Officer of The Daniels Fund, a charitable foundation, from July 2002 until August 2005. Mr. Brown is a director of Sensient Technologies Corporation. During the past five years, Mr. Brown was also a director of Guaranty Bancorp and Delta Petroleum Corporation. Previously, Mr. Brown served as a director of other public companies.

 

Mr. Brown has a bachelor of science degree in accounting as well as a law degree from the University of Colorado. He also has a master of laws degree in taxation from George Washington University. Additionally, he is a certified public accountant. Mr. Brown spent six years serving Colorado in the U.S. Senate, five consecutive terms in the U.S. House of Representatives representing Colorado’s 4th Congressional District and four years in the Colorado Senate. Mr. Brown was also President of the University of Northern Colorado and was a Vice President of Monfort of Colorado, a Fortune 500 company and a major meat packer and processor. Mr. Brown has extensive leadership experience gained as a U.S. Senator, president of two universities and the head of a foundation, all involving management of complex operations and contributing to strategic planning. He is knowledgeable about the meat processing business, which is important for an understanding of our Food & Beverage business segment. Mr. Brown has experience as a director of other public companies, which aids in the exchange of ideas and strategies. Mr. Brown’s background also enables him to guide the company in legislative and governmental affairs and in the legal and regulatory environment.

 

Michael Chu   

Director since 2002

Audit Committee

Organization and Compensation Committee

Age 64

 

Mr. Chu is Managing Director and Co-Founder of IGNIA Fund, an investment firm based in Monterrey, Mexico, dedicated to investing in commercial enterprises serving low-income populations in Mexico, since July 2007. He is also Senior Advisor since June 2007 (previously Senior Partner and Managing Director from August 2000 to June 2007) and Founding Partner of Pegasus Capital, a private investment firm deploying equity capital in Latin America. Mr. Chu has been a Senior Lecturer on the faculty of the Harvard Business School since July 2003. Mr. Chu serves as a director of Arcos Dorados, a public company and the largest operator of McDonald’s restaurants in Latin America and the world’s largest McDonald’s franchisee.

 

Mr. Chu received his bachelor of arts degree from Dartmouth College and his masters of business administration with highest distinction from Harvard Business School. His experience includes serving as a management consultant with Boston Consulting Group, in senior management positions with U.S. corporations and as an executive and limited partner with Kohlberg Kravis Roberts & Co., a private equity firm. Additionally, he is director emeritus of ACCION International, a non-profit corporation dedicated to microfinance. Mr. Chu previously served as the President and Chief Executive Officer of ACCION International. He brings to the Board extensive international experience, particularly in the increasingly important region of Latin America, where Mr. Chu grew up. Mr. Chu has proven leadership capabilities and an entrepreneurial vision, as demonstrated by his roles with IGNIA and Pegasus Capital. He also has experience as a chief financial officer and extensive involvement in mergers and acquisitions.

 

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Lawrence R. Codey   

Director since 1993

Audit Committee

Organization and Compensation Committee (Chair)

Age 68

 

Mr. Codey is a retired President and Chief Operating Officer of Public Service Electric and Gas Company (PSE&G), a public utility. Currently, Mr. Codey serves as a director of New Jersey Resources Corporation, a natural gas holding company, where he is lead director and chairs the executive committee and also serves on the governance and audit committees. Further, he serves as a director of Horizon Blue Cross Blue Shield of New Jersey, a health insurance company, where he chairs the audit committee and is a member of the governance committee. Mr. Codey also serves on the board of United Water Resources, a subsidiary of Suez Environment, where he chairs the compensation committee of that subsidiary and is a member of the audit committee. Neither Horizon Blue Cross Blue Shield of New Jersey nor United Water Resources is a public company.

 

Mr. Codey received his bachelor of science degree from St. Peter’s College, a juris doctor degree from Seton Hall School of Law, and a masters in business administration from Rutgers University. In addition, he completed the Advanced Management program at Harvard University’s School of Business. Mr. Codey’s career at PSE&G started as a trial attorney and then as a Vice President in charge of preparation and presentation of utility rate proceedings before both federal and state regulatory bodies. Thereafter, Mr. Codey was in charge of the gas business unit and subsequently the electric business unit. Mr. Codey previously served on the Board of Directors of Public Service Enterprise Group, an energy holding company of which PSE&G was its largest subsidiary. Mr. Codey has served on numerous governmental and non-governmental boards and commissions, including the EPA Clean Air Act Advisory Committee under both President George W. Bush and President William J. Clinton. In addition to the knowledge gained from his experience as our director, Mr. Codey has a broad background of experience and education in the areas of executive management, general management, legal and regulatory matters, finance, accounting, human resource management, legislative and governmental affairs, environmental affairs, and operations. He has been accountable for the performance of large, complex, multi-disciplined organizations and brings that discipline to the Board. Mr. Codey also brings to the Board the experience of a director who has served in various leadership capacities across an array of companies involved in energy, utilities and government.

 

Patrick Duff   

Director since 2010

Audit Committee

Age 54

 

Mr. Duff is a general partner of Prospect Associates, a private investment firm. Previously, he served as a director of Hercules, Inc. While at Hercules, Mr. Duff was chairman of the audit committee and served on the corporate governance, nominating and ethics committee, emergency committee and finance committee.

 

Mr. Duff received his bachelor of science degree in accounting from Lehigh University and a masters of business administration degree from the Columbia Graduate School of Business. He taught security analysis at Columbia University from 1993 until 1999. Formerly, Mr. Duff was a senior managing director at Tiger Management Corp., an investment management firm, from 1989 through December 1993, where he was a member of the management committee. Prior to joining Tiger in 1989, Mr. Duff worked in asset management at Mitchell Hutchins and Capital Builders Advisory Services. He is a certified public accountant and a chartered financial analyst. Mr. Duff has an extensive knowledge of investing, asset management and financial markets gained from his experience with Tiger and with prior employers as well as through his teaching position at Columbia University. He brings a unique perspective to the Board as a stockholder and investor. In addition, he has accounting and financial expertise. He also has prior board experience, including service on a public company board.

 

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William V. Hickey   

Director since 1999

Age 68

 

Mr. Hickey has served as Chairman of Sealed Air since September 1, 2012. He also served as Chief Executive Officer of Sealed Air until retiring from that position as of March 1, 2013. Mr. Hickey previously served as the President and Chief Executive Officer of Sealed Air since March 2000. He is a director of Public Service Enterprise Group Incorporated, a public utility, and Sensient Technologies Corporation, a global manufacturer and marketer of colors, flavors and fragrances and other specialty chemicals.

 

Mr. Hickey received his bachelor of science degree in engineering from the United States Naval Academy and his masters of business administration from the Harvard Business School. He received a certificate in professional accounting from Northwestern University and is a certified public accountant. In addition to his work as a certified public accountant, Mr. Hickey was a financial executive at a public company prior to joining Sealed Air. At Sealed Air, prior to his current appointment, Mr. Hickey served in a variety of increasingly responsible executive positions, including Controller, Vice President & General Manager of the Cellu Products Division and Food Packaging Division, Chief Financial Officer, Executive Vice President and Chief Operating Officer. Mr. Hickey’s extensive knowledge of the Company, his understanding of the businesses we are in and seek to enter, and his expertise in financial matters, financial markets and strategic planning, combine to make him a key contributor to the Board.

 

Jacqueline B. Kosecoff   

Director since 2005

Nominating and Corporate Governance Committee

Organization and Compensation Committee

Age 63

 

Dr. Kosecoff works in private equity to identify, select, mentor and manage health services and IT companies. She is a managing partner at Moriah Partners and a senior advisor to Warburg Pincus.

 

From 2002 to 2012, Dr. Kosecoff was a senior executive inside UnitedHealth Group-PacifiCare. Dr. Kosecoff joined UnitedHealth Group as part of its acquisition of PacifiCare Health Systems in 2005. At PacifiCare, Dr. Kosecoff served as Executive Vice President with responsibility for its specialty businesses, including its PBM, the Medicare Part D Drug Program, PacifiCare Behavioral Health, PacifiCare Dental & Vision, and Women’s Health Solutions. Upon joining United, Dr. Kosecoff took responsibility for the Medicare Part D business, pharmacy services for United’s senior, legacy PacifiCare and external PBM business, as well as the consumer health product division serving seniors. In 2007, Dr. Kosecoff was appointed CEO of Prescription Solutions (now known as OptumRx) with responsibility for United’s PBM, Specialty Pharmacy and Consumer Health Products, providing services as of 2011 to more than 13 million members with annual revenue of $18.5 billion. In 2011, Dr. Kosecoff was named Senior Advisor for Optum to identify and develop new growth and collaborative opportunities. Optum encompasses the health services businesses of UnitedHealth Group, consisting of OptumHealth, OptumInsight and OptumRx.

 

Dr. Kosecoff is a Director of athenahealth, Inc., a leading provider of cloud-based electronic health record practice management and care coordination services to medical groups and health systems, where she serves on the compensation and nominating & corporate governance committees; CareFusion Corporation, a global medical technology company where she services on the audit committee; and STERIS Corporation, a global leader in infection prevention, contamination control and surgical and critical care technologies, where she serves a chair of the compliance committee and is on the nominating & corporate governance committee. She also sits on the Advisory Board for SAP.

 

 

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Dr. Kosecoff received a bachelor of arts degree from the University of California, Los Angeles. She received a master of science degree in applied mathematics from Brown University and a Ph.D. degree in research methods from the University of California, Los Angeles. Previously, she founded information technology and drug development businesses in the medical field. Dr. Kosecoff was also previously on the faculty on the Schools of Medicine and Public Health at the University of California, Los Angeles. She has served as a consultant to the World Health Organization’s Global Quality Assessment Programs, on the Institute of Medicine’s Board of Health Care Services, the RAND Graduate School’s Board of Governors, and the Board of Directors for ALARIS, City of Hope, the Alliance for Aging Research, and the Pharmaceutical Care Management Association. Dr. Kosecoff is a seasoned health care executive. Dr. Kosecoff brings to the Board her outstanding background as a business leader in the medical field. Sealed Air benefits from her experience in leading complex operations and in strategic planning. Additionally, Dr. Kosecoff brings an entrepreneurial direction to the Company.

 

Kenneth P. Manning   

Director since 2002

Audit Committee

Nominating and Corporate Governance Committee

Age 71

 

Mr. Manning has been Chairman and Chief Executive Officer of Sensient Technologies Corporation, a global manufacturer and marketer of colors, flavors and fragrances and other specialty chemicals, since 1996. At Sensient, he was the architect of that company’s strategic moves overseas and the transformation of the company from a producer of yeast and other commodities into a producer of flavor, fragrance and colors for foods, beverages, cosmetics and pharmaceuticals. Sensient also manufactures color, ink and other specialty chemicals for inkjet inks, display imaging systems and other applications. Sensient now has 70 locations in more than 30 countries. Mr. Manning is also a director of Sensient. Previously, Mr. Manning was a director of Badger Meter, Inc., a manufacturer of flow measurement and control products. In all, Mr. Manning has been a director in five different public companies.

 

Mr. Manning received his bachelor of science degree in mechanical engineering from Rensselaer Polytechnic Institute and his master of business administration degree from American University in operations research. He also has honorary doctor’s degrees from Cardinal Stritch University and Marian University. Prior to joining Sensient, Mr. Manning worked for W. R. Grace, where he held various executive positions including: Assistant to the CEO, Vice President of Operations—European Division, President of the Educational Products Division, President of Real Estate Division, Vice President—Corporate Technical Group and President and CEO of the Ambrosia Chocolate Division. Mr. Manning retired from the United States Naval Reserve as an Aerospace Engineering Duty Officer with the rank of Rear Admiral. He served on active duty in the United States Navy from 1963 to 1967 and during his tenure in the Reserve, was the Commanding Officer of four different commands. His last assignment was Director of the Naval Reserve Air System Program. His military awards include the Legion of Merit. Mr. Manning is a member of the American Society of Mechanical Engineers and the American Chemical Society, Navy League, the United States Naval Institute, the Naval Reserve Association, and the National Maritime Historic Association. He is also a Knight of Malta. Mr. Manning has extensive executive experience in international business, specialty chemicals and the food and beverage industry, with 17 years as a CEO and an additional five years as a COO.

William J. Marino   

Director since 2002

Lead Director since 2011

Nominating and Corporate Governance Committee (Chair)

Organization and Compensation Committee

Age 69

 

Mr. Marino is the retired Chairman, President and Chief Executive Officer of Horizon Blue Cross Blue Shield of New Jersey, the state’s largest health insurer, providing coverage for over 3.6 million people.

 

 

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Mr. Marino joined Horizon BCBSNJ as Senior Vice President of Health Industry Services in January 1992, responsible for all aspects of Managed Care operations in New Jersey, as well as Market Research, Product Development, Provider Relations and Health Care Management. He became President and CEO in January 1994 and Chairman effective January 2010.

 

Since November 2010 Mr. Marino has served as a director of Sun Bancorp, Inc., where he chairs the nominating and corporate governance committee and is a member of the asset and liability committee. Mr. Marino is a director and chair of the compensation committee of Care Core National, a privately held company which provides care and utilization management services to its clients, primarily large insurers, and LCA Holdings, a privately held company which provides home health care services to a large population of individual patients via its customers in both the private and public sectors. Mr. Marino also serves as a director or trustee for numerous New Jersey-based cultural and community organizations.

 

Mr. Marino has over 40 years of experience in the health and employee benefits field, primarily in managed care, marketing and management. Before joining Horizon BCBSNJ, He was Vice President of Regional Group Operations for New York and Connecticut for the Prudential, capping a 23-year career with them.

 

Mr. Marino has extensive experience in the areas of management and strategic planning and board governance, as evidenced by his career at Horizon BCBSNJ. The breadth of his involvement in many corporate and community organizations has given him knowledge of corporate governance processes and practices and organizational structure optimization.

 

Mr. Marino is a recipient of the 1997 Ellis Island Medal of Honor. In 2007 he received The American Conference on Diversity’s Humanitarian of the Year Award. Mr. Marino graduated from St. Peter’s College in Jersey City with a Bachelor of Science degree in Economics.

 

Jerome A. Peribere   

Director since 2012

Age 58

 

Mr. Peribere is the President and Chief Executive Officer of Sealed Air since March 1, 2013. Prior to such position, Mr. Peribere served as the President and Chief Operating Officer of Sealed Air and was elected to the Board in September 2012. Prior to joining the Company, Mr. Peribere worked at The Dow Chemical Company (“Dow”) from 1977 through August 2012. Mr. Peribere served in multiple managerial roles with Dow, most recently as Executive Vice President of Dow and President and Chief Executive Officer, Dow Advanced Materials, a unit of Dow, from 2010 through August 2012. Mr. Peribere currently serves as a board member of BMO Financial Corporation. Mr. Peribere graduated with a degree in business economics and finance from the Institut D’Etudes Politiques in Paris, France.

 

Mr. Peribere brings his extensive leadership, global operations, strategy and integration experience to the Board.

 

Richard L. Wambold   

Director since 2012

Organization and Compensation Committee

Age 61

 

Mr. Wambold joined the Board of the Company effective in March 2012. Mr. Wambold previously served as Chief Executive Officer of Reynolds/Pactiv Foodservice and Consumer Products, a global manufacturer and supplier of consumer food and beverage packaging and store products from November 2010 until January 2011 when he retired. Mr. Wambold was Chief Executive Officer of Pactiv from November 1999 until November 2010 and was Chairman of the Board from 2000 until November 2010. Mr. Wambold has been a private investor since January 2011. Mr. Wambold is also a director of Precision Castparts Corp. and Cooper Tire & Rubber Company.

 

 

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Mr. Wambold holds a B.A. in Government and a masters of business administration from the University of Texas. Mr. Wambold’s education, board member experience, business management experience, including his service as a public company chairman and chief executive officer, and knowledge of the packaging industry qualify him to continue to serve as a member of the Board of Directors.

 

Jerry R. Whitaker   

Director since 2012

Nominating and Corporate Governance Committee

Age 62

 

Mr. Whitaker was elected to the Board of the Company in January 2012. Mr. Whitaker served as President of Power Components & Systems Group from 2004 through 2009 and as President of Electrical Sector-Americas, Eaton Corporation, a global manufacturer of highly engineered products, until his retirement in June 2011. Prior thereto, he served in various management positions at Eaton Corporation since 1994. Prior to joining Eaton Corporation, Mr. Whitaker spent 22 years with Westinghouse Electric Corp.

 

Mr. Whitaker received a Bachelor of Science degree from Syracuse University and a masters of business administration from George Washington University. He currently serves as a director of Crescent Electric Company, an independent distributor of electrical hardware and supplies, and Matthews International Corporation. Mr. Whitaker also serves on the Boards of the Carnegie Science Center, The Carnegie Museums of Pittsburgh, the American Middle East Institute and the Renewable Manufacturing Gateway. Mr. Whitaker’s experience and knowledge as an executive in global manufacturing industries are valuable resources to the Company.

 

The Board of Directors recommends a vote FOR the eleven nominees for election as directors.

 

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Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors and any persons owning ten percent or more of the common stock to file reports with the SEC to report their beneficial ownership of and transactions in our securities and to furnish the Company with copies of the reports.

Based solely upon a review of the Section 16(a) reports furnished to us, along with written representations from or on behalf of executive officers and directors that no other such reports were required during 2012, we believe that all required reports were timely filed during 2012, except that Carol P. Lowe, our Senior Vice President and Chief Financial Officer of the Company, did not timely file the report of the initial statement of beneficial ownership of securities due in connection with her commencing employment. Ms. Lowe did not own any shares of the Company at the time of such filing.

Voting Securities

The only voting securities of the Company are the outstanding shares of its common stock. As of the close of business on the record date, March 18, 2013, 195,779,811 shares of common stock were outstanding, each of which is entitled to one vote at the Annual Meeting. Only holders of record of common stock at the close of business on March 18, 2013 will be entitled to notice of and to vote at the Annual Meeting.

Beneficial Ownership Table

The following table sets forth the number of outstanding shares of common stock beneficially owned (as of the record date, or Schedule 13G or Schedule 13D date where indicated) and the percentage of the class beneficially owned (as of the record date):

 

 

by each person known to us to be the beneficial owner of more than five percent of the then outstanding shares of common stock;

 

 

directly or indirectly by each current director, nominee for election as a director, and named executive officer who is included in the 2012 Summary Compensation Table below; and

 

 

directly or indirectly by all directors and executive officers of the Company as a group.

The number of shares of our common stock owned by each person is determined under the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days after March 18, 2013, or by May 17, 2013, through the conversion of a security or other right. Unless otherwise indicated, each person has sole investment and voting power, or shares such power with a family

 

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member, with respect to the shares set forth in the following table. The inclusion in this table of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares.

 

Beneficial Owner     

Shares of

Common Stock

Beneficially

Owned

    

Percentage of

Outstanding

Shares of Common

Stock

 

Vanguard Group, Inc.1

       11,297,720         6.0  

100 Vanguard Blvd

           

Malvern, PA 19355

           

Hank Brown

       31,956 2        *   

Emile Z. Chammas

       71,111 5       *   

Tod S. Christie

       87,142 3,4,5       *   

Michael Chu

       16,900 2,3       *   

Lawrence R. Codey

       35,692 2,3       *   

Patrick Duff

       88,655 2       *   

T. J. Dermot Dunphy

       832,294 3       *   

William V. Hickey

       1,354,933 3,5       *   

Jacqueline B. Kosecoff

       22,626 2       *   

Carol P. Lowe

       42,565 5      

Kenneth P. Manning

       101,160         *   

William J. Marino

       39,990 2       *   

Jerome A. Peribere

       50,565 5      

Yagmur Sagnak

       63,581        

Richard L. Wambold

       10,592 2       *   

All directors and executive officers as a group (32 persons)

       4,386,973 6,7       2.0   

 

  * Less than 1%.

 

  1

The ownership information set forth in the table is based on information contained in a Schedule 13G, dated February 12, 2013, filed with the SEC by The Vanguard Group, Inc., with respect to ownership of shares of common stock, which indicated that The Vanguard Group, Inc. had sole voting power with respect to 338,981 shares, sole dispositive power with respect to 10,974,351 shares and shared dispositive power with respect to 323,369 shares.

 

  2

The number of shares of common stock listed in the table does not include 64,245 stock units held in the stock accounts of the non-employee directors under the Sealed Air Corporation Deferred Compensation Plan for Directors. Each stock unit represents one share of common stock. Holders of stock units cannot vote the shares represented by the units; see “Director Compensation—Deferred Compensation Plan” above. The stock units so held by non-employee directors are set forth below.

 

Hank Brown

     1,324   

Michael Chu

     6,976   

Lawrence R. Codey

     25,727   

Patrick Duff

     2,500   

Jacqueline B. Kosecoff

     2,322   

William J. Marino

     41,866   

Richard L. Wambold

     8,610   

Jerry R. Whitaker

     4,920   
  

 

 

 

Total

     94,245   
  

 

 

 

 

  3

The number of shares of common stock listed for Mr. Chu includes 2,000 shares for which he shares voting and investment power with a family member. The number of shares of common stock listed for Mr. Codey includes 2,960 shares held in a trust relating to a deceased family member for which he has voting and investment power but disclaims beneficial ownership. The number of shares of common stock held by Mr. Dunphy includes 64,800 shares held by him as custodian for a family member and 10,000 shares held by a charitable foundation for which he shares voting and investment power. The number of shares of common stock listed for Mr. Hickey includes 3,000 shares for which he shares voting and investment power with a family member. The number of shares of common stock held by Mr. Christie includes 400 shares for which he shares voting and investment power with a family member.

 

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  4 

This figure includes restricted stock units awarded to our executive officers who are retirement-eligible as stock leverage opportunity (SLO) awards. Under our Annual Incentive Plan, our executive officers have the opportunity to designate a portion of their annual bonus to be received as SLO awards under the 2005 Contingent Stock Plan. The numbers of such restricted stock units held by the named executive officers and by the directors and executive officers as a group who are retirement eligible are as follows.

 

Tod S. Christie

     3,286   

Directors and executive officers as a group

     32,551   

 

  5 

This figure includes shares of common stock held in our Profit-Sharing Plan trust fund with respect to which our executive officers individually and as a group may, by virtue of their participation in the plan, be deemed to be beneficial owners. As of March 18, 2013, approximately 4,066,304 common stock share equivalents were held in the trust fund under the plan, representing approximately 2]% of the outstanding shares of common stock. The approximate numbers of share equivalents held by the named executive officers and by the directors and executive officers as a group under the plan are set forth below.

 

Emile Z. Chammas

     1,204   

Tod S. Christie

     6,541   

William V. Hickey

     35,816   

Carol P. Lowe

     565   

Jerome A. Peribere

     565   

Directors and executive officers as a group

     141,221   

 

  6 

This figure includes shares of common stock held in the Company’s 401(k) Thrift Plan trust fund with respect to which our executive officers individually and as a group may, by virtue of their participation in the plan, be deemed to be beneficial owners. As of March 18, 2013, approximately 307,987 common stock share equivalents were held in the trust fund under the plan, representing approximately 0.2% of the outstanding shares of common stock. The approximate numbers of share equivalents held by the named executive officers and by the directors and executive officers as a group under the plan are set forth below.

 

Directors and executive officers as a group

     9,148   

 

  7

This figure includes, without duplication, the outstanding shares of common stock and restricted stock units referred to in Notes 2 through 6 above held by our current directors and executive officers as well as 3,194 shares with respect to which executive officers who are not named in the above table share voting and investment power with family members.

The address of all persons listed above other than Vanguard Group, Inc., is c/o Sealed Air Corporation, 200 Riverfront Boulevard, Elmwood Park, New Jersey 07407.

 

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Executive Compensation

Compensation Discussion and Analysis

Executive Summary

Business Highlights

Sealed Air underwent considerable transformation in 2012. Early in the year, the Company expanded the size of its Board of Directors to eleven members and added two new members, Richard Wambold and Jerry Whitaker. The Company hired a new Chief Financial Officer, Carol Lowe, replacing Tod Christie, our Treasurer, who also served as Interim Chief Financial Officer prior to Ms. Lowe’s appointment, in June 2012 and a new President and Chief Operating Officer, Jerome Peribere, in September 2012. Mr. Peribere assumed the role of Chief Executive Officer upon the retirement of Bill Hickey from that role in March 2013. We also appointed a new Vice President and Chief Human Resources Officer, Carole De Mayo, in December 2012, and a new Controller and Chief Accounting Officer, William Stiehl, effective as of January 1, 2013. Additionally, management streamlined its decision making with a new eight-member executive committee, replacing the historical sixteen-member leadership team. As a result of these personnel changes, our named executive officers for 2012 were Bill Hickey, Carol Lowe, Jerome Peribere, Emile Chammas, Yagmur Sagnak and Tod Christie. Throughout this Proxy Statement, these individuals are referred to as the “named executive officers” or “executive officers.”

Our business continued to grow in 2012 from organic sales improvement and from the acquisition of Diversey Holdings, Inc., on October 3, 2011. Additionally, we commercialized more than one dozen new products that drove new sales across multiple regions and divisions. Also, during the fourth quarter of 2012, we began to operate under three new business divisions for our segment reporting structure, which better aligns our organization to meet customer needs, maximizes profitable growth and enables us to focus on targeted growth opportunities and represents a productive way to manage our performance.

Executive Compensation Highlights

During 2012, the Compensation Committee took the following actions:

 

 

structured compensation opportunities for our named executive officers for 2012 similar to the design of our compensation program for 2011, with an emphasis on incentive-based compensation in the form of annual bonus opportunities under the Annual Incentive Plan and awards of long-term incentive compensation in the form of performance share unit awards;

 

 

established a special incentive award early in 2012 for our Chief Executive Officer, whereby his base salary was reduced by 85%, making a larger portion of his compensation at risk as incentive based compensation linked to performance of the Company in 2012;

 

 

established 2012 annual performance goals under the Annual Incentive Plan and under the Performance-Based Compensation Program. Additional information about these goals is discussed below;

 

 

established metrics and goals for the 2012-2014 three-year performance share unit awards, including total shareholder return as a new additional goal. Additional information about these goals is discussed below;

 

 

reviewed and considered the Company’s compensation risk and the related disclosure requirements; and

 

 

approved changes to the peer group for purposes of executive compensation comparison that more accurately reflect comparable companies following the acquisition of Diversey, as discussed further below.

 

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The 2012 performance goals under the Annual Incentive Plan were evaluated by the Committee in early 2013 against the actual performance of the Company during 2012. Based on such review, the Compensation Committee determined that:

 

 

funding of the 2012 annual bonus pool for our executive officers and other participants in the Annual Incentive Plan would be significantly below 2012 target levels, because performance against one of our primary goals, consolidated adjusted EBITDA, was below target levels, and performance against our other primary goal, net debt reduction from operations, was below the threshold level; and

 

 

our Chief Executive Officer would receive no bonus award for 2012 as a result of this performance; and

 

 

our other named executive officers would receive bonus awards for 2012 ranging from about 68% to 118% of target based on individual performance results.

The Compensation Committee set three primary performance metrics for the 2012-2014 three-year performance share unit awards: growth of net trade sales, return on invested capital and total shareholder return relative to the peer group.

As we move forward, we continue to focus on the integration of Diversey, improving earnings performance and reducing our debt level. We believe that these accomplishments will drive measurable value for all of our stockholders. The Compensation Committee believes that our executive compensation program supports these efforts by linking compensation levels to measurable results aligned to these goals.

Compensation Philosophy and Objectives

Our executive compensation philosophy is to provide compensation in the forms and at levels that will permit us to retain and motivate our existing executives and to attract new executives with the skills and attributes that we need. The compensation program is intended to provide appropriate and balanced incentives toward achieving our annual and long-term strategic objectives, to support a performance-oriented environment based on the attainment of goals and objectives intended to benefit us and our stockholders and to create an alignment of interests between our executives and our stockholders. The compensation program is designed to establish an appropriate balance between short- and long-term strategic objectives, with a greater weight placed on rewarding the achievement of longer term objectives and financial performance of the Company.

The Compensation Committee is responsible for establishing and implementing our executive compensation philosophy and for ensuring that the total compensation paid to our executive officers and other executives is fair and competitive and motivates high performance.

Summary of Compensation Programs

Under our executive compensation program, the Compensation Committee establishes each principal element of compensation for our executive officers, comprising base salary, annual bonus targets and long-term incentive compensation targets, close to the median range based on data from peer companies, as discussed further below. As a result, both the level and the mix of the total compensation opportunity are intended to generally approximate the competitive median range. This design addresses one of our key goals: to ensure we provide competitive compensation opportunities so that we can attract and retain executives with the necessary skills to successfully manage a business of our size and scope.

Executive officers earn annual incentive and long-term incentive awards based on achievement of performance goals, which we establish to support our annual and longer-term financial and strategic goals. Because annual and long-term incentives make up a significant portion of each executive officer’s total compensation, the program has been designed to pay close to the median range when target goals are met, provide above-median pay when our target goals are exceeded, and provide below-median pay when target goals are not met. These incentive award opportunities address another of our key goals: to provide a performance-oriented environment where above-median compensation can be realized when performance goals are exceeded and below-median compensation will be paid when performance goals are not achieved.

 

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“Say-on-Pay” Vote

The Compensation Committee and the Board considered the results of the “say-on-pay” vote at the Annual Meeting held on May 17, 2012, when 98% of the stockholders that voted favored approval of the compensation of our named executive officers. The Compensation Committee believes that this stockholder vote indicates strong support for our executive compensation program and considered the strong stockholder support in determining its 2013 compensation practices.

Role of Committee Consultant

Since 2007, Cook has advised the Compensation Committee on the selection of peer companies, provided the Compensation Committee with comparative industry trends and peer group data regarding salary, annual incentive and long-term incentive compensation levels for our executive officers and other key executives, and advised the Compensation Committee on recommended compensation levels for our management. During 2012, Cook assisted the Compensation Committee in selecting metrics and goals for the 2012 annual bonus program and for the 2012 three-year performance share unit awards. During 2012, Cook also advised the Compensation Committee on possible changes to the design of incentive compensation programs and on the risks posed by the Company’s incentive compensation programs. The Compensation Committee has assessed the independence of Cook pursuant to SEC rules and concluded that no conflict of interest exists that would prevent Cook from serving as an independent consultant to the Compensation Committee.

Role of CEO and Management in Compensation Decisions

The Compensation Committee often directs members of management to work with Cook to provide executive compensation information or recommendations to the Compensation Committee. However, the Compensation Committee has not delegated any of its authority to determine executive compensation programs, practices or other decisions to our management. As noted above, the current executive compensation program was developed and approved by the Compensation Committee with advice and support from Cook after consulting with the Chief Executive Officer and the Company’s compensation and legal professionals. The Chief Executive Officer and other executive officers and compensation professionals attend portions of meetings as requested by the Compensation Committee.

While Cook and the Compensation Committee recommended metrics for the 2012 annual bonus program and the 2012 long-term incentive program, the Chief Executive Officer and other members of our management also were consulted in developing the metrics and establishing the goals for the 2012 annual bonus program and the 2012 long-term incentive program, as well as for the Performance-Based Compensation Program for 2012. Such metrics and goals were approved by the Compensation Committee.

The Chief Executive Officer submits salary and bonus recommendations to the Compensation Committee for the other named executive officers as well as for the other executives whose compensation is set by the Compensation Committee. In addition, the Chief Executive Officer makes recommendations for equity awards for all employees to the Compensation Committee. Following a review of those recommendations with Cook, the Compensation Committee approves compensation decisions for our named executive officers. In making compensation decisions for named executive officers other than the Chief Executive Officer, the Compensation Committee relies on the Chief Executive Officer’s recommendations but makes independent adjustments and is not bound by those recommendations.

Use of Peer Group Data

Starting in early 2007, the Compensation Committee approved use of a peer group as a factor in setting executive compensation levels and in designing executive compensation programs. The peer group has been reviewed by the Compensation Committee annually since 2007. Following the Diversey transaction and the resulting change in the business and size of the Company, the Compensation Committee revised the

 

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peer group in the fourth quarter of 2011 to include companies primarily in the materials sector that are comparable to us based on sales, percentage of sales outside of the U.S., number of employees and market capitalization.

 

   
Company   Peer Group for 2012
Compensation

Agrium Inc.

  ü

Air Products & Chemicals, Inc.

  ü

Ashland Inc.

  ü

Avery Dennison Corporation

  ü

Ball Corporation

  ü

Bemis Company, Inc.

  ü

Celanese Corporation

  ü

Crown Holdings, Inc.

  ü

Eastman Chemical Company

  ü

Ecolab Inc.

  ü

Huntsman Corporation

  ü

MeadWestvaco Corporation

  ü

Monsanto Company

  ü

The Mosaic Company

  ü

Owens-Illinois, Inc.

  ü

PPG Industries, Inc.

  ü

Praxair, Inc.

  ü

The Sherwin-Williams Company

  ü

Sonoco Products Co.

  ü

The Compensation Committee considers comparative executive compensation levels and practices based on information from the peer companies as well as other data provided by Cook related to general industry executive compensation trends.

In 2012, the Compensation Committee generally established each element of compensation for the named executive officers, comprising base salary, annual cash bonus targets and long-term incentive compensation targets, close to the median range for persons with comparable positions based on data from the peer companies. Since each element of compensation is mainly set by reference to levels at other companies, the Compensation Committee has not set any fixed relationship between the compensation of the Chief Executive Officer and that of any other named executive officer.

 

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Elements of Executive Compensation

The main components of our executive compensation program for U.S. employees, including for our named executive officers, are set forth in the following table. A more detailed description is provided in the respective sections below.

 

Compensation Element   Description   Objective
Base Salary   Fixed cash compensation  

Provides compensation for the executive to perform his/her job functions

 

Assists with recruitment and retention

Annual Incentive  

Paid in cash each year if performance metrics are achieved

 

Opportunity to participate in a bonus pool that is funded between zero and 200% of all target awards. Each target award is based on a percentage of base salary.

 

Metrics and goals are established at the beginning of each year and the payout is made based on performance

 

Officers may elect to receive a portion of their annual cash bonus in the form of stock leverage opportunities that are granted in the form of restricted stock or restricted stock units with a premium of 25% that vest at the end of three years

 

Intended to reward for driving superior operating and financial results over a one-year timeframe

 

Creates a direct connection between business success and financial reward

 

Long-Term Incentives  

Performance share units, typically with the opportunity to earn from 0% to 200% of target at the end of the three - year performance period

 

Occasional awards of restricted stock or restricted stock units that vest at the end of three years of service

 

Intended to reward achievement of longer term goals typically over a three year period.

 

Creates a direct connection between the longer term business success and financial reward

 

 

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Compensation Element    Description    Objective
Retirement Plans   

Defined contribution plan for U.S. employees—Profit-Sharing Plan fully funded by the Company and 401(k) Thrift Plan with a partial Company matching contribution

 

Defined contribution pension plan for one of our named executive officers based outside the U.S.

  

Provides retirement income for participants

 

Assists with recruitment and retention

Deferred Compensation Plans    None     
Supplemental Executive Retirement Plan    None     
Post-Employment Benefits    Severance for some of our named executive officers and change-in-control benefits with respect to certain outstanding equity awards. Our new Chief Executive Officer and certain legacy Diversey executives have post-employment benefits under the terms of their employment arrangements.   

Assures the continuing performance of executives in the face of a possible termination of employment without cause following a change of control

 

Assists with retention

Other Benefits   

Health care and life insurance programs

 

Limited perquisites

  

To be competitive with peer companies

 

Assists with recruitment and retention

Salaries

We pay salaries because a fixed component of compensation is an important part of a competitive compensation package. The Compensation Committee establishes salary levels for executive officers primarily based on consideration of the median range for the peer companies, as well as reviews of broad-based surveys of compensation trends and practices at other industrial companies in the United States, while also considering country-specific guidelines for compensation increases and performance, which are more significant factors for those whose salary is within or near the median range.

In 2012, the Compensation Committee reduced Mr. Hickey’s base salary by 85%, shifting a larger portion of his compensation at risk as incentive based compensation linked to performance of the Company during 2012. See “Compensation of Chief Executive Officer” below. Mr. Christie’s salary increase was 18.3%, and Mr. Chammas’s salary increase was 3.1%. The salary increase for Mr. Sagnak was 7.0%, which was the budget increase for his home country of employment. The salary increase for Mr. Christie’s was larger relative to the other named executive officers to align him more closely with the median compensation range for his position as Treasurer of the Company. Mr. Peribere and Ms. Lowe joined the Company later in 2012, and their salaries were set at agreed-to levels to encourage their acceptance of our employment offers and to be consistent with the median compensation range of comparable positions with peer group companies.

 

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Salary increases in 2013 were modest reflecting continuing caution about economic conditions in 2013 and a desire to keep costs, including compensation costs, under tight control. Ms. Lowe’s salary increase was 3.5%, Mr. Christie’s salary increase was 3.0%, Mr. Chammas’s salary increase was 4.0%, and Mr. Sagnak’s salary increase was 2.5%.

Annual Incentive Compensation

A significant portion of each executive officer’s total annual compensation opportunity is made in the form of a target bonus objective under the Annual Incentive Plan. The Annual Incentive Plan is intended to drive high performance results based on the achievement of our strategic goals, with emphasis on performance and alignment of the interests of our executive officers with our stockholders. The program provides the opportunity to earn a significantly higher annual bonus if target performance is exceeded but the risk of a significantly lower annual bonus, or even no bonus, if target performance is not achieved.

The Annual Incentive Plan is based on a Company-wide annual bonus pool, which is the sum of bonus targets for bonus-eligible employees for the year. Company goals are established early in the performance year by the Compensation Committee. After the end of the year, the Compensation Committee determines how much of the annual bonus pool will be funded based on achievement of Company goals. Achievement below the minimum threshold for performance goals results in no funding, and achievement above the maximum level results in the maximum funding. The funded bonus pool can be adjusted up or down 25% by the Compensation Committee at its discretion based on the quality of earnings or performance relative to the peer companies. A funded bonus pool of up to 25% of the annual bonus pool is available at the discretion of the Compensation Committee even if the Company-wide goals have not been achieved in order to reward exceptional business unit or individual performance. Once the funded bonus pool has been determined, then it is divided among divisions and support functions based on success against goals for each of those groups. Individual performance is considered in setting the amount of the funded bonus pool that is earned by individual employees, including each of the named executive officers.

2012 Cash Bonus and Stock Leverage Opportunity (SLO) Program.

Under the Annual Incentive Plan, our executive officers also have the opportunity each year to designate a portion of their annual bonus to be received as equity awards under the 2005 Contingent Stock Plan, called stock leverage opportunity (SLO) awards. The portion to be denominated in SLO awards, in increments of 25% of the annual bonus, may be given a premium to be determined by the Compensation Committee each year. The stock price used to calculate the number of shares that can be earned is the closing price on the first trading day of the performance year, thereby reflecting stock price changes during the performance year in the value of the SLO award. Once the amount of the annual bonus that has been earned has been determined for each executive officer following the end of the year, the cash portion is paid out shortly thereafter, and the SLO award is provided in the form of an award of restricted stock (RS) or restricted stock units (RSU) under the 2005 Contingent Stock Plan with a two-year restriction period.

The percentages of salary at which the target bonus objectives were established for 2012 were based on consideration of the median ranges established through peer group and general industry survey data on compensation trends and practices for each named executive officer. As noted previously, Mr. Hickey did not participate in the Annual Incentive Plan in 2012. In 2012, Ms. Lowe’s target bonus was set at $315,000 as part of her offer for employment, reflecting a partial year of service. Ms. Lowe also received a $200,000 signing bonus in connection with her commencement of employment. Mr. Christie’s target bonus was set at 37% of annual base salary. Mr. Christie also received a $100,000 bonus in connection with his service as Interim Chief Financial Officer. The target bonuses for the other named executive officers were set in the range of 50% to 110% of annual base salary, depending on the role and responsibilities of each officer.

For participants in the Performance-Based Compensation Program, 2012 goals established under that Program were also required to be met in order to receive a 2012 annual bonus; see “Compliance with Section 162(m) of the Internal Revenue Code; Performance-Based Compensation Program” below.

 

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2012 Cash Bonus and SLO Targets.    Similar to prior years, the Compensation Committee set the SLO award premium at 25% and established the following annual bonus targets for the 2012 performance period. The SLO award target amounts noted below were calculated based on the proportion of the 2012 annual bonus target elected by each executive officer to be received in the form of an equity award after applying the 25% premium applicable to SLO awards and based on the closing price of $17.38 for a share of common stock on January 3, 2012.

2012 ANNUAL BONUS TARGETS

 

       
Name   

2012 Annual

Bonus Target

    

Percentage as

SLO Award

    

SLO

Award Target

 

William V. Hickey

     N/A         N/A         N/A   

Carol P. Lowe*

   $ 315,000         N/A         N/A   

Jerome A. Peribere**

     1,045,000         N/A         N/A   

Yagmur Sagnak‡

     216,059         100      15,549 shares   

Emile Z. Chammas

     253,800         100 %      18,254 shares   

Tod S. Christie***

     112,000         50 %      4,028 shares   

 

  * Ms. Lowe joined the Company effective June 18, 2012 and accordingly, did not participate in the SLO program for 2012.

 

  ** Mr. Peribere joined the Company effective September 1, 2012, and accordingly, did not participate in the SLO program 2012.

 

  *** Mr. Christie served as Interim Chief Financial Officer until June 18, 2012.

 

  Mr. Sagnak’s annual bonus is converted from Turkish Lira; see Note 4 to the Summary Compensation Table below.

2012 Performance Goals and Achievements. The primary performance goals for 2012 under the Annual Incentive Plan were consolidated adjusted EBITDA and net debt reduction from operations. In order to ensure that achievement of consolidated adjusted EBITDA represents the performance of the core business, non-U.S. GAAP adjusted EBITDA is derived from our U.S. GAAP net earnings by adjusting for specific items approved by the Compensation Committee, including restructuring charges, acquisition related expenses, integration costs and other income/(expense) as included in our consolidated statements of operations. These goals were weighted at 70% for consolidated adjusted EBITDA and 30% for net debt reduction.

The Compensation Committee selected these two goals because it believes that achieving consistently high levels of consolidated adjusted EBITDA and the reduction of debt are in the long-term interest of our stockholders. The target levels for these goals were based on the Company’s goals and strategies following the acquisition of Diversey in 2011 and the subsequent related integration of the two companies.

The 2012 bonus pool was funded based upon the achievement of the two primary performance goals with the following payout formula and payments for achievements between these levels based on a pro rata calculation.

Consolidated Adjusted EBITDA (weighted 70%)

 

     

Percentage of

Target Achieved

   Consolidated Adjusted
EBITDA Goal Achieved
    

Percentage of

Bonus Pool

to be Funded

 

<80

     Less than $787.5 million         0

80%

     $787.5 million         50

90%

     $886.0 million         75

100%

     $984.4 million         100

110%

     $1,082.8 million         150

120%

     $1,181.3 million         200

 

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Net Debt Reduction from Operations (weighted 30%)

 

     

Percentage of

Target Achieved

   Net Debt Reduction Goal
Achieved
    

Percentage of

Bonus Pool

to be Funded

 

Less than 90%

     Less than $225.0 million         0

90%

     $225.0 million         50

95%

     $237.5 million         75

100%

     $250.0 million         100

112%

     $275.0 million         150

123%

     $300.0 million         200

For 2012, we achieved above threshold but less than target performance for consolidated adjusted EBITDA at 85.3% achievement, but we did not achieve threshold performance for net debt reduction as there was only 71.3% achievement. Based on these results, the bonus pool funding would have been 44.3%. Consistent with the provisions of the Annual Incentive Plan, the Compensation Committee decided to use its discretion to increase the overall funding of the pool by 25%, therefore providing for an overall bonus pool funding of 69.3%. In using its discretion, the Compensation Committee noted the Company had exceeded its targets for synergy savings related to the Diversey transaction. The Compensation Committee avoided reliance solely on rigid formulaic designs and took into account both what was accomplished and how it was accomplished, when making the determination to increase the overall funding pool.

During the first quarter of 2013, the Compensation Committee approved the following 2012 bonus awards under the Annual Incentive Plan for the named executive officers:

ACTUAL 2012 BONUS AWARDS

 

         
Name   

Total 2012

Bonus Award

($)

    

Percentage

of

Target

    

2012

Cash Bonus

($)

    

SLO Award

(Shares)1

 

Mr. Hickey2

     N/A         N/A         N/A         N/A   

Ms. Lowe3

   $ 315,000         100    $ 315,000         0   

Mr. Peribere

     1,045,000         100      1,045,000         0   

Mr. Sagnak

     224,593         103.95      0         23,547   

Mr. Chammas

     299,002         117.81      0         21,505   

Mr. Christie

     76,306         68.13      38,153         2,745   

 

  1 

These awards were granted in the form of restricted stock.

 

  2 

Under Mr. Hickey’s 2012 compensation arrangement, he did not participate in the annual incentive and long-term incentive programs applicable to the Company’s other executive officers. Instead, Mr. Hickey was granted a special award of performance share units with a target amount set at the number of performance share units equal to $5.4 million divided by the closing price of our common stock on the grant date.

 

  3 

The minimum bonus amount to be paid to Ms. Lowe’s 2012 was established in connection with her offer of employment to join Sealed Air.

The Compensation Committee further considered the following factors for the individual annual bonus awards for our named executive officers for 2012: the bonus awards for the named executive officers other than the Chief Executive Officer were based on achievement of less than the target performance for the overall corporate goals as well as the Committee’s assessment of individual performance, with input from Mr. Hickey and Mr. Peribere. The bonus award for Ms. Lowe, our Chief Financial Officer was $315,000, as agreed in her offer of employment and reflecting a partial year of service. The bonus award for Mr. Christie, our Treasurer who served as Interim Chief Financial Officer through June 18, 2012, which was 68.13% of his target bonus, reflects having met departmental performance goals. The bonus award for Mr. Chammas, which was 117.81% of his target bonus, reflects that he and the supply chain organization that he leads

 

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achieved or exceeded departmental performance goals, including Total Recordable Incident Rate of 1.0 or better. The bonus award for Mr. Sagnak, which was 103.95% of his target bonus, reflects that he and our AMAT (Asia, Middle East, Africa and Turkey) business that he leads achieved greater than budgeted new product sales and incurred lower than budgeted expenses. Mr. Hickey’s 2012 compensation is discussed below under “Compensation of Chief Executive Officer.”

During the first quarter of 2013, the Compensation Committee established 2013 annual bonus targets for the named executive officers and for other officers and key executives.

Long-Term Incentive Compensation

We granted four categories of long-term incentive compensation awards during 2012:

 

 

2012-2014 PSU Awards. Similar to past practice, the Company granted PSUs with a three-year performance period (2012-2014) to Messrs. Christie, Chammas and Sagnak, but not to Mr. Hickey. Mr. Peribere received awards of 2012-2014 PSUs in connection with his initial employment with the Company in September 2012.

 

 

Special PSU Award for Mr. Hickey. Mr. Hickey received a special PSU award for 2012 in lieu of a 2012-2014 PSU award, with a one year performance period (2012) and an additional time-vesting requirement through December 31, 2014.

 

 

New Hire PSU Awards for Mr. Peribere. In accordance with his employment agreement and as an inducement to encourage Mr. Peribere to accept our offer of employment, Mr. Peribere received two special PSU awards at his hire date focused on performance of our total shareholder return against selected peer companies over a four year period following his hire date.

 

 

New Hire RS Award for Mr. Peribere. In accordance with his employment agreement and to help compensate Mr. Peribere for reduced pension benefits as a result of his acceptance of our offer of employment, Mr. Peribere received a grant of time-based RS at his hire date vesting on the third anniversary of grant. His employment agreement contemplates a second such RS award in September 2013 if he remains employed with us through the next grant date.

The following discussion provides additional detail about each of these awards.

2012-2014 Long-Term Incentive Compensation Awards. The executive compensation program provides for annual awards of performance share units, or PSU awards, under the 2005 Contingent Stock Plan to the named executive officers and other executive officers and key executives. The program is intended to align compensation closely to our performance while giving the executive officers the opportunity for exceptional value if performance targets are exceeded and while continuing to encourage the retention of our executive officers.

The PSU awards provide for three-year performance periods with a targeted number of shares to be earned if performance during the period meets goals set during the first 90 days of the period. If performance is below defined threshold levels, then no units will be earned, and if performance exceeds defined maximum levels, then a maximum number of units (above the target number) will be earned.

During the first quarter of 2012, the Compensation Committee established three-year PSU award target levels for the performance period starting January 1, 2012 for the named executive officers, other than Mr. Hickey, who instead received a separately designed PSU award discussed below. We refer to these as the “2012-2014 PSUs.” The target award levels were based on a multiple of base salary divided by the closing price of our common stock on the date the awards were made, where the multiple of salary was set within the median range for long-term incentive compensation as a multiple of salary for executives with similar positions and responsibilities. Mr. Peribere was granted a 2012-2014 PSU award by the Compensation Committee in September 2012 as part of his employment agreement.

 

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The Compensation Committee established three principal goals for the 2012-2014 PSU awards: (i) three-year average return on invested capital, weighted 50% (ii) three-year cumulative growth of net trade sales, weighted 25%; and (iii) total shareholder return relative to a peer group (often referred to as “relative TSR”), weighted 25%. The financial definitions for these goals are provided in more detail below. The Compensation Committee recognized that sustained three-year performance in sales growth and the effective use of invested capital should drive long-term value for our stockholders. The Compensation Committee selected relative TSR as a third metric to balance achievement of internal goals with performance against our peers in an easily measurable metric that directly demonstrates value creation for our stockholders. The results of each metric will determine the number of shares earned for that metric, based on that metric’s weighting. The total award will be the addition of the total number of shares earned for each of the three performance metrics.

Three-year average return on invested capital (ROIC) represents the three-year cumulative adjusted net operating profit after core tax (NOPAT) during the performance period divided by average invested capital for the three-year performance period. The core tax represents the effective tax rate after adjustment for permitted exclusions. Invested capital equals: Total debt + (plus) settlement liability and related accrued interest + (plus) total stockholders’ equity – /+ (less)/plus accumulated other comprehensive income/loss—(less) cash and cash equivalents. The three-year average ROIC is calculated as follows:

Cumulative Adjusted NOPAT for 2012 through 2014

Divided by

Average Quarter End Invested Capital from December 31, 2011 through December 31, 2014

That result divided by

Three (years)

The three-year average ROIC at threshold, target and maximum for the performance period (fiscal years 2012, 2013 and 2014), subject to permitted exclusions, are as follows:

2012 THREE-YEAR PSU:

ROIC PERFORMANCE GOAL

(weighted 50%)

 

     
     

Three-Year

Average ROIC

  

Percentage of

Target Award

Earned

 
     Under 7.2%      0

Threshold:

   7.2%      50

Target:

   9.0%      100

Maximum:

   10.8% and above      200

Award levels based on three-year average ROIC between any two of these levels will be based on a pro rata calculation of the number of shares earned, except that no shares for this metric will be earned for three year average ROIC under 7.2%.

The threshold, target and maximum levels for ROIC were set following a review of historical levels of ROIC for us and for those of our peer companies for which comparable data was available.

In order to ensure that achievement represents the performance of the core business, the calculation of ROIC will exclude the effect of specified restructuring programs, the effects of specified acquisitions and dispositions, charges related to goodwill impairment, specified litigation-related costs, expenses related to capital market transactions, and the effect of any accounting changes implemented during the performance period.

Three-year cumulative growth of net trade sales measures growth of net trade sales during the three-year performance period of 2012 excluding the impact of foreign currency translation.

 

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The three-year cumulative growth of net trade sales over base year 2011 at threshold, target and maximum for the performance period (fiscal years 2012, 2013 and 2014) are as follows:

2012 THREE-YEAR PSU:

GROWTH OF NET TRADE SALES PERFORMANCE GOAL

(weighted 25%)

 

     

Three-Year Cumulative

Growth over

Base Year 2011

  

Percentage of

Target Award

Earned

 
     Under 6.4%      0

Threshold:

   6.4%      50

Target:

   12.8%      100

Maximum:

   19.2% and above      200

Award levels based on three-year cumulative growth of net trade sales between any two of these levels will be based on a pro rata calculation of the number of shares earned, except that no shares for this metric will be earned for cumulative growth below 6.4%.

The threshold, target and maximum levels for three-year growth of net trade sales were based on a review of our 2011 reported net trade sales using 2011 reported exchange rates. The target range was based upon achieving a level above the 2011 growth of net trade sales.

Total Shareholder Return (TSR) represents the percent change in the share price from the beginning of the performance period to the end of the performance period and assumes immediate reinvestment of dividends when declared at the closing share price on the date declared. The beginning share price will be calculated as an average of 31 data points between the closing share price on January 3, 2012 and the closing share price within 15 trading days from January 3, 2012. The ending share price will be calculated as an average of 31 data points between the closing share price on December 31, 2014 and the closing share price within 15 trading days from December 31, 2014.

The performance of this metric will be assessed in comparison of the percentile rank to the approved peer group of companies. The lowest ranked company will be the 0% rank, the middle ranked company will be the 50th percentile rank and the top ranked company will be the 100th percentile rank. If a company is acquired or otherwise is no longer publicly traded and their share price no longer available, they will be excluded from the peer group.

The three year relative TSR percentile rank at threshold, target and maximum for the performance period are as follows:

2012 THREE-YEAR PSU;

RELATIVE TSR PERFORMANCE GOALS

(weighted 25%)

 

     
Achievement    TSR Percentile Rank    Percent of
Target Earned
 

Below Threshold

   Below  25th percentile      0

Threshold

   25th percentile      25

Target

   50th percentile      100

Maximum

   75th percentile      200

Award levels based on three year relative TSR percentile rank between any two of these levels would be based on a pro-rata calculation of the number of shares earned, except that no shares for this metric will be earned for three year relative TSR percentile rank below 25th percentile.

 

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If the threshold level is achieved for any of three principal goals, then the number of shares earned for each participant can be increased (if the additional goal set forth below is achieved) or decreased (if the additional goal set forth below is not achieved) by up to 10% of the target level at the discretion of the Compensation Committee. The additional goal is a 2014 safety result (Total Recordable Incident Rate) of 0.90 or better, excluding facilities acquired during the performance period.

The number of shares earned based on the three principal goals and, if applicable, the additional goal will be rounded up to the nearest whole share. The Compensation Committee has retained the discretion in extraordinary circumstances to reduce downward any award that would otherwise be payable.

New Hire PSU Awards for Mr. Peribere. As an inducement to accept our offer of employment, Mr. Peribere’s employment agreement includes two new hire PSU awards that are earned based on our total shareholder return (TSR) relative to our peer group over a four-year period from September 1, 2012 (his hire date) through August 31, 2016. The Compensation Committee believes that these awards will focus Mr. Peribere on the Company’s long-term, sustainable performance in alignment with the interests of our long-term stockholders. For each of these awards, the peer group and the manner for determining relative TSR results are the same as described above for the 2012-2014 PSUs.

Under the first award, there will be four separate tranches of 25,000 shares each (for a total of 100,000 shares) that become earned based on our relative TSR for the four consecutive 12-month performance periods ending on August 31 in each of 2013, 2014, 2015 and 2016. The shares for a tranche are earned if our relative TSR for the applicable 12-month performance period is at or above median of the peer group. Any shares that become earned based on TSR performance for a performance period will be vested and settled by delivery of shares on August 31, 2016 (or earlier in case of death or disability before that date), provided that any such shares will be forfeited if, following the performance period but before August 31, 2016, Mr. Peribere’s employment is terminated by the Company for cause or he breaches any of the covenants in his employment agreement. Such shares (to the extent earned based on TSR performance) are not forfeited for any other termination of employment after the applicable performance period. If Mr. Peribere’s employment terminates during one of the 12-month performance periods due to death or disability, he will vest in a pro rata portion of the shares for that tranche subject to TSR performance during that performance period, to be settled immediately following the determination of TSR performance. For any other termination of employment during one of the 12-month performance periods, Mr. Peribere will forfeit the shares for that tranche and the tranche for any remaining 12-month performance period commencing after that date.

The second award provides an opportunity to earn a significantly higher number of shares, but also requires additional stock price growth on an absolute basis. Under this award, Mr. Peribere will be eligible to receive up to an additional 250,000 shares based on cumulative TSR through August 31, 2016 and our stock price, as follows: (i) if cumulative TSR on August 31, 2016 is in the top 40% of peers and the stock price is at or above $30 per share on that date, an additional 150,000 shares will be earned; (ii) if cumulative TSR on August 31, 2016 is in the top 40% of peers and the stock price is at or above $35 per share on that date, an additional 200,000 shares will be earned; or (iii) if cumulative TSR on August 31, 2016 is in the top 33% of peers and the stock price is at or above $40 per share on that date, an additional 250,000 shares will be earned. This award is subject to our standard employment termination provisions. Under these provisions, if Mr. Peribere’s employment terminates for any reason other than death or disability before August 31, 2016, he will forfeit the award. In case of death or disability, he will be eligible to receive a pro rata portion of the award subject to the applicable performance requirements.

In addition, as part of his offer if employment, Mr. Peribere received a 2012-2014 PSU Award in the target amount of $2,000,000 (based on a $4,000,000 full year target prorated by 50%). The terms of the award are the same as described above for the other named executive officers.

New Hire RS Award for Mr. Peribere. By accepting our employment offer, Mr. Peribere stood to receive reduced pension benefits from his prior employer. As an inducement to accept our offer of employment and to help make up for those reduced pension benefits, Mr. Peribere’s employment agreement includes two new hire restricted stock (RS) awards. The first award, for 50,000 shares, was granted at the time of his hire date in 2012 and vests in full on the third anniversary of his hire date, provided he remains employed

 

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with us through that date. A second RS award, for 25,000 shares, will be granted later this year and will also vest in full on the third anniversary date. These awards will be subject to our standard employment termination provisions. Under these provisions, if Mr. Peribere’s employment terminates for any reason other than death or disability before the scheduled vesting date, he will forfeit the award. In case of death or disability, he will vest in full.

2013—2015 Long-Term Incentive Compensation Awards. During the first quarter of 2013, the Compensation Committee established three-year PSU award target levels for the performance period starting January 1, 2013 for the named executive officers and for other officers and key executives. The performance goals that were established were improvement of adjusted EBITDA margin weighted at 65% and relative TSR percentile rank weighted at 35%. The manner for determining relative TSR rank is the same as described for the 2012-2014 PSUs.

Compensation of Chief Executive Officer

Mr. Hickey received a special PSU award for 2012, rather than a 2012-2014 PSU award. In the first quarter of 2013, the Compensation Committee revised Mr. Hickey’s compensation to place a substantial portion of his compensation at risk by reducing his base salary to $100,000 in March 2012 and granting him most of his 2012 compensation as long-term incentive pay in the form of an equity award tied to the achievement of financial goals related to the success of the Diversey transaction. The Compensation Committee determined that Mr. Hickey would not participate in the annual incentive and long-term incentive programs applicable to the Company’s other executive officers. Instead, Mr. Hickey was granted a special award of performance share units. The target amount of Mr. Hickey’s award was set at the number of performance share units equal to $5.4 million divided by the closing price of our common stock on the grant date, rounded up to the next whole share.

The special PSU award for Mr. Hickey would be earned based on a combination of our 2012 financial performance and Mr. Hickey’s continued employment through scheduled vesting dates, subject to special retirement provisions tied to his compliance with post-employment covenants.

The Compensation Committee selected two financial performance measures for Mr. Hickey’s special PSUs: (i) consolidated adjusted EBITDA (as described above), weighted 70%; and (ii) net debt reduction, weighted 30%. The definitions of these measures are the same as for our 2012 annual cash bonus program described above. The range of performance for these two measures is as follows:

2012 Consolidated Adjusted EBITDA

(weighted 70%)

 

     

Percentage of

Target Achievement

  

Consolidated Adjusted

EBITDA Goal Achieved

  Target Annual
Incentive
 

Less than 90%

   Less than $886.0 million     0

90%

   $886.0 million     25

100%

   $984.4 million     100

110%

   $1,082.8 million     150

120% or more

   $1,181.3 million     200

2012 Net Debt Reduction from Operations

(weighted 30%)

 

     
Percentage of
Target Achievement
  2012 Net Debt Reduction from
Operations Goal Achieved
  Target Annual
Incentive
 

Less than 90%

  Less than $225.0 million     0

90%

  $225.0 million     25

100%

  $250.0 million     100

110%

  $275.0 million     150

120%

  $300.0 million     200

 

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In February 2013, the Compensation Committee determined that performance goals for Mr. Hickey were not met and therefore he did not earn any performance shares units for 2012 performance.

Savings, Retirement and Health and Welfare Programs

Our named executive officers participate in the retirement programs available generally to employees in the countries in which they work because we believe that participation in these programs and in the other health and welfare programs mentioned below is an important part of a competitive compensation package. In the United States, our named executive officers participate in two tax-qualified defined contribution retirement plans, the Profit-Sharing Plan of Sealed Air Corporation and the Sealed Air Corporation 401(k) Thrift Plan. As a result of participating in these broad-based retirement plans, our executive officers are eligible to receive Company-paid profit-sharing and matching contributions.

We do not offer any non-qualified excess or supplemental benefit plans or deferred compensation plans to our named executive officers in the U.S.

Mr. Sagnak participates in a local defined contribution retirement plan in Turkey.

All of our named executive officers participate in the health, life insurance, disability benefits and other welfare programs that are provided generally to employees in the countries in which they work.

Perquisites and Other Personal Benefits

Consistent with our performance-oriented environment, we provided limited perquisites to our named executive officers, as discussed below.

Employees in the United States, including United States-based executive officers, who have a Company-leased vehicle are permitted to purchase the vehicle at the end of the lease term or upon retirement, if earlier, at a discount from the fair market value of the vehicle. Employees who leave for any other reason are not generally eligible for this discount. Because we offer this benefit to generally all employees in the United States, our named executive officers are also eligible to receive this benefit. We believe these benefits provide for market competitive compensation practices.

Additionally, from time to time we provide relocation benefits or expatriate allowances to Company employees that relocate in connection with their employment with the Company or are required to work outside of the United States. In 2012, the Company provided relocation benefits or relocation allowances to the following named executive officers: Ms. Lowe and Mr. Peribere.

Ms. Lowe received relocation benefits consistent with our Company’s standard policies.

In connection with Mr. Peribere’s offer of employment in 2012 and as part of his negotiated employment agreement, the Company agreed to make a one-time payment to Mr. Peribere in the amount of approximately $40,000 for temporary living accommodations, utilities and additional storage costs related to his relocation to New Jersey. This payment was part of his negotiated employment agreement as an inducement to accept our offer of employment.

Mr. Sagnak, who is employed by one of our Turkish subsidiaries, received certain expat benefits relating to his working in Singapore, including a Company-leased vehicle and related expenses, a housing allowance, a cost of living salary adjustment, school expenses for his children, home leave, global medical, storage and tax gross-up and equalization benefits.

Employment, Severance and Change in Control Arrangements

Employment and Severance Arrangements. We do not generally enter into employment agreements or severance programs covering executive officers or other employees except in countries outside the U.S. where such agreements or programs are customary. However, in recent years, most exempt employees in the U.S. have been required to enter into a Non-Compete and Confidentiality Agreement with the Company at the time of hire. The Non-Compete and Confidentiality Agreement addresses the confidentiality of proprietary Company information and disclosure and assignment of inventions to the Company and includes a two-year post-employment non-compete obligation by the employee with payment

 

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to the employee of one to two months’ salary as severance pay if his or her employment is terminated by the Company other than for gross misconduct. Our named executive officers hired in recent years, Mr. Chammas and Ms. Lowe, signed Non-Compete and Confidentiality Agreements when they were hired.

The Company entered into an employment agreement, effective September 1, 2012, with Mr. Peribere. The employment agreement includes provisions regarding Mr. Peribere’s position and duties, compensation, post-employment covenants and other matters. The Company received guidance from Cook in the negotiation of the employment agreement with Mr. Peribere. The Compensation Committee believes that the terms of the employment agreement with Mr. Peribere are reasonable and were necessary to cause him to leave his prior employer and accept a significant leadership role with our Company. The key terms of the employment agreement are summarized as follows:

 

 

Under the agreement, Mr. Peribere became President and Chief Operating Officer effective September 1, 2012, and effective March 1, 2013, Mr. Peribere assumed the role of President and Chief Executive Officer.

 

 

The agreement has an initial term of four years that lasts until August 31, 2016 (the “Initial Term”), and then automatically renews for an additional year on each anniversary of the effective date, unless the Company or Mr. Peribere gives at least 90 days’ notice that the agreement will not be renewed.

 

 

The agreement provides that Mr. Peribere will receive an annual base salary of $950,000, subject to annual review and increase, and a target bonus of 110% of his base salary (with a maximum bonus of 200% of his target).

 

 

Upon his commencement of employment, Mr. Peribere received certain new-hire equity awards, which are discussed above.

 

 

During the Initial Term, if the Company terminates Mr. Peribere’s employment without “cause” (as defined in the agreement), the Company will provide Mr. Peribere with 90 days notice prior to termination and cash severance in the form of (1) a pro rata bonus for the year of termination, subject to actual performance during the year, to be paid when bonuses are normally paid, (2) one year of continued salary payments, and (3) his target annual bonus for the year of termination, paid in 12 monthly installments following termination.

 

 

Under the employment agreement, Mr. Peribere is subject to a covenant not to compete with the Company for 18 months following his termination of employment and other restrictive covenants in favor of the Company.

 

 

If Mr. Peribere retires from the Company at any time after completing the Initial Term, then any outstanding long-term incentive awards will continue to vest under their original vesting schedules without any pro rata adjustments for the period of service completed, but any performance conditions will continue to apply. This continued vesting is subject to Mr. Peribere’s continued compliance with the post-employment restrictive covenants in the agreement.

In connection with the acquisition of Diversey, the Company assumed an employment agreement with Mr. Sagnak, dated December 1, 2010. The employment agreement includes provisions regarding Mr. Sagnak’s position and duties, compensation, post-employment covenants and other matters. The initial term of the agreement ended on November 30, 2012, and extends automatically for one-year periods unless terminated by written notice at least 60 days in advance of the termination. This agreement was automatically extended in accordance with its terms at the end of the term. The base salary, annual incentive and long term incentives were set by the Compensation Committee as discussed above and set forth in the Summary Compensation Table below. If Mr. Sagnak is terminated without “cause” or resigns for “good reason” (each as defined in the agreement), he will be entitled to: (a) a continuation of his base salary for a period of two years, (b) a prorated bonus at the target level for the year in which he was terminated, (c) a bonus at the target level for year two year base salary continuation period and (c) a senior executive level outplacement program. Additionally, if Mr. Sagnak is terminated without cause or resigns for good

 

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reason, the Company will relocate him back to his home country. In the event that the Company does not extend Mr. Sagnak’s employment beyond the initial term or a renewal term, it will be considered a termination other than for cause.

Except for the arrangements described above, none of the named executive officers has an agreement or arrangement providing for severance payments following termination of employment.

Change in Control Arrangements.    Our only change in control arrangements are those in connection with our equity compensation awards. The 2005 Contingent Stock Plan provides that restricted stock or restricted stock unit awards made under the plan vest upon termination of employment within two years following a change in control as defined in the plan if such termination is by the Company without cause or by the participant for good reason (as such terms are defined in the plan). This provision avoids automatic triggering of the change in control provision merely due to the occurrence of a change in control event even if there were no adverse effect on the employment of executives and other employees holding unvested awards. These provisions also apply to SLO awards, which are made in the form of restricted stock or restricted stock unit awards.

The 2005 Contingent Stock Plan provides that a participant earns a pro rata portion of a PSU award if the participant’s employment is terminated by the Company without cause or by the participant for good reason within two years following a change in control. The earned amount is the greater of the target award level or the actual level of achievement as of the fiscal quarter preceding the change in control, and the pro rata portion is the percentage of the performance period that has elapsed prior to termination of employment.

Executive Officer Stock Ownership Guidelines

In order to align the interests of directors, executive officers and stockholders, we believe that our directors and executive officers should have a significant financial stake in the Company. To further that goal, we adopted stock ownership guidelines during 2006 for directors and for executive officers and other key executives, which has been subsequently been amended. The stock ownership guidelines for non-employee directors, which are part of our Corporate Governance Guidelines, are described above under “Director Compensation—Director Stock Ownership Guidelines.” The guidelines for our executive officers are as follows:

 

 

Executive officers are required to hold a multiple of their salary, where the multiple ranges from five for the Chief Executive Officer, to three for the Senior Vice Presidents and two for the other executive officers.

 

 

Share equivalents held in the Profit-Sharing Plan and the 401(k) Thrift Plan are included, but unvested awards under the 2005 Contingent Stock Plan are excluded. Executive officers have five years from the later of the adoption of the stock ownership guidelines or their appointment as executive officers to reach the guidelines.

 

 

Until the minimum stock ownership has been reached, executive officers are expected to retain all shares received as awards under the Company’s equity compensation programs after payment of applicable taxes.

 

 

Once the minimum stock ownership has been reached, executive officers are expected to retain half of any additional shares received as awards under our equity compensation programs (after payment of applicable taxes) until retirement.

 

 

The Compensation Committee can approve exceptions to the stock ownership guidelines for executive officers in the event of home purchase, higher education expenses, major illness, gifts or financial hardship.

As of March 18, 2013, all of our named executive officers, other than Mr. Peribere and Ms. Lowe who joined the Company during 2012 and Mr. Chammas who joined the Company in 2011, had met these guidelines.

 

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Compliance with Section 162(m) of the Internal Revenue Code; Performance-Based Compensation Program

The Performance-Based Compensation Program of Sealed Air Corporation (the “Program”) was approved by our stockholders at the 2005 annual meeting with amendments approved by our stockholders at the 2008 annual meeting. The Program is subject to re-approval by our stockholders this year. See Proposal 13 below.

The objective of the Program is to permit the Compensation Committee to make awards of restricted stock and restricted stock units under our 2005 Contingent Stock Plan and to approve cash bonuses under our cash bonus arrangements that are subject to the attainment of pre-established objective performance goals. As a result, these awards and bonuses that are designed to that meet the requirements of Section 162(m) of the Internal Revenue Code and are thus intended to be fully deductible as performance-based compensation even if compensation exceeds the $1 million limit of Section 162(m). Under the current executive compensation program, the Compensation Committee intends to rely on the Program for deductibility of annual cash bonuses and SLO awards, as well as for any other grants of restricted stock or restricted stock units that may be awarded to participating executive officers. However, long-term incentive compensation awards are intended to be made primarily in the form of PSU awards under the 2005 Contingent Stock Plan, which awards once earned are intended to qualify as performance-based compensation under the provisions of the 2005 Contingent Stock Plan rather than under the Program.

2012 Performance-Based Compensation Program Goals and Achievements.    During the first ninety days of 2012, the Compensation Committee approved pre-established performance goals for Messrs. Chammas and Sagnak for 2012 cash bonuses that would be paid in 2013, for SLO awards to be made in connection with 2012 bonuses, and for stock awards that the Compensation Committee may make in 2013 under the 2005 Contingent Stock Plan. None of the other named executive officers participated in the program in 2012. The goals and the achievement levels required to allow the Compensation Committee to approve bonuses and awards up to the limit provided in the Program were as follows:

 

 

2012 diluted earnings per share (adjusted as described below) of at least $1.70 per share;

 

 

2012 operating expenses (as adjusted) at budgeted exchange rates (including selling, general, administrative and research and development expenses but excluding goodwill impairment charges) less than or equal to $2,177 million;

 

 

2012 net operating profit after tax (as adjusted) of at least $623 million;

 

 

2012 net income (as adjusted) above $301 million;

 

 

2012 operating profit (as adjusted) as a percentage of 2012 net sales at least 10.1%; or

 

 

2012 gross profit (as adjusted) as a percentage of 2012 net sales at least 32.7%.

Based on criteria established at the beginning of the performance period, the Compensation Committee adjusted the results on which performance achievements were based to eliminate the effects of specified items. The adjustments were intended to ensure that achievements represented the underlying performance of the core business. The categories of adjustments that were approved by the Compensation Committee related to restructuring and other related charges, acquisition related expenses charges related to goodwill impairment, specified litigation-related costs, expenses related to capital market transactions, and the effect of any accounting changes implemented during the performance period and the related tax adjustments for each of such items.

During the first quarter of 2013, the Compensation Committee certified achievement of two of the goals that had been established for calendar year 2012, adjusted operating expenses and gross margins. This permitted us to pay fully tax-deductible 2012 cash bonuses of up to $6,726,011 million to each of the participating executives and to make fully tax-deductible SLO awards and other stock awards under the 2005 Contingent Stock Plan during 2013 in the aggregate amount of up to approximately 384,124 shares to each of the participating executives. The Compensation Committee has the discretion to approve cash

 

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bonuses, SLO awards and other stock awards lower than these maximum levels, including the possibility of paying no 2012 cash bonuses and making no SLO or other stock awards to some or all of the executives during 2013. Since the objective of the Program is to ensure that these 2013 cash bonuses and stock awards are performance-based and thus tax-deductible, the amounts of 2012 cash bonuses and SLO awards were established at lower levels based on the processes and criteria discussed previously under “Annual Incentive Compensation.”

The Compensation Committee currently intends that its future awards of annual and long-term incentive compensation for our executive officers should qualify as performance-based compensation under Section 162(m) and thus should be fully tax-deductible by the Company, although exceptions may be made in special circumstances such as appointment or recruitment of an executive officer or as a result of a business combination or acquisition.

Recoupment Policy

The recoupment policy requires each executive officer to reimburse the Company for all or a portion of any annual or long-term incentive compensation paid to the executive officer based on achievement of financial results that were subsequently the subject of a restatement due to error or misconduct regardless of whether the executive officer was responsible for the error or misconduct so long as no payment or award or a lower payment or award would have been made to the officer based on the restated results. The Board of Directors will make the determination whether to seek recovery. The Recoupment Policy is part of our overall risk management practices to ensure that compensation programs do not encourage manipulation of financial results.

In addition, the policy provides that our Chief Executive Officer and Chief Financial Officer shall reimburse the Company for any compensation or profits from the sale of securities under Section 304 of the Sarbanes-Oxley Act of 2002. The policy has been incorporated into SLO and PSU award documents.

Timing of Award Grants

PSU awards made to the Company’s executive officers under the Company’s 2005 Contingent Stock Plan are made during the first 90 days of each year, either at the regularly-scheduled meeting of the Compensation Committee held in February of each year or at a special meeting held later but during the first 90 days of the year. In addition, SLO awards are made effective on a date set by the Compensation Committee in advance but no later than March 15 to those executive officers who have elected to receive a portion of their annual bonus as an SLO award. The date is selected based on when the Compensation Committee expects that all bonuses will be determined and to allow our staff sufficient time to assist executive officers to make required SEC filings for the SLO awards on a timely basis.

To the extent that other awards of restricted stock or restricted stock units may be made to executive officers, they are generally made at one of the regularly-scheduled meetings of the Compensation Committee. Awards are generally effective on the date of the meeting at which they were approved. However, when an award is to be made to an executive officer who is traveling or otherwise not available to make the required filing regarding such award with the SEC on a timely basis, then at the meeting the award is given an effective date after the date of the meeting so that the filing can be made on a timely basis. Dates for Compensation Committee meetings are usually set during the prior year, and the timing of meetings and awards is unrelated to the release of material non-public information.

 

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Compensation Committee Report

The Organization and Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on its review and discussions with management, the members of the Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in the Company’s 2013 Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for 2012.

Organization and Compensation Committee

Lawrence R. Codey, Chair

Michael Chu

Jacqueline B. Kosecoff

William J. Marino

Richard L. Wambold

Board Oversight of Compensation Risks

We believe that risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on the Company. In 2012 as in prior years, at the request of the Compensation Committee and with the assistance of Cook, we evaluated our incentive compensation plans relative to our enterprise risks and determined that there were no significant changes to the compensation risks identified below. We determined, taking into account advice from Cook, that there were no significant risk areas from a compensation risk perspective.

With respect to our executive compensation programs, a number of risk mitigation features were in place in 2012, including the following:

 

 

The primary metric for the Annual Incentive Plan focused on earnings (consolidated adjusted EBITDA and net debt reduction), and the Compensation Committee had discretion to adjust bonus pool funding and individual award payouts.

 

 

The principal long-term incentive program for executives is PSU awards that vest based on achievement of measurable financial three-year goals balanced by relative stock return performance. No stock options are used.

 

 

The Compensation Committee has discretion in extraordinary circumstances to reduce long-term incentive (PSU) awards below the amount otherwise earned.

 

 

Pay leverage is reasonable and generally does not exceed 200% of target.

 

 

The recoupment policy that applies to executive officers and other key executives discourages excessive risk taking and manipulation of financial results.

 

 

Our stock ownership guidelines require executives to hold at least a portion of vested equity awards during employment, thus discouraging excessive risk taking.

 

 

Different metrics are used for annual and long-term incentive plans for executives, thus not placing too much emphasis on a single metric.

 

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2012 Summary Compensation Table

The following table includes information concerning 2012 compensation for our Chief Executive Officer, our Chief Financial Officer, our Treasurer, who also served as our Interim Chief Financial Officer during part of 2012, and our three other most highly compensated executive officers during 2012 who served as such at the end of the year. The positions shown are those held at the end of 2012.

 

               

Name and

Principal Position

  Year    

Salary

($)

   

Bonus

($)

   

Stock

Awards1

($)

   

Non-Equity

Incentive

Plan

Compensation2

   

All Other

Compensation3

($)

   

Total

($)

 

William V. Hickey

Chairman and

Chief Executive Officer

    2012        195,833            5,400,000        0        20,200        5,616,033   
    2011        675,000            4,993,758        0        46,141        5,714,900   
    2010        670,833            4,218,763        0        50,486        4,940,082   

Jerome A. Peribere

President and Chief Operating Officer

    2012        316,667            4,257,695        1,045,000        123,832        5,743,194   

Carol P. Lowe

Senior Vice President and Chief Financial Officer

    2012        284,375        250,000        633,360        315,000        69,816        1,552,551   

Yagmur I. Sagnak4

Vice President

    2012        428,666            1,123,226        0        619,350        2,171,242   

Emile Z. Chammas

Senior Vice President

    2012        420,833            949,324        0        30,106        1,400,263   
    2011        408,333            840,528        0        70,602        1,319,463   

Tod S. Christie

    2012        292,250        100,000        670,467        38,153        39,859        1,130,729   
Treasurer and Former Interim Chief Financial Officer     2011        252,667                201,388        9,813        38,053        501,921   

 

  1

The Stock Awards column shows the value of equity awards granted during the year indicated. The amounts do not correspond to the actual amounts that may be earned by the named executive officers. Equity awards granted during each year may include: (i) awards of restricted stock (RS) under the 2005 Contingent Stock Plan, (ii) SLO awards under the Annual Incentive Plan, and (iii) PSU awards granted under the 2005 Contingent Stock Plan. RS awards are valued at the grant date fair value computed in accordance with FASB ASC Topic 718. SLO awards are valued at the fair value at the service inception date based on the percentage of the target bonus to be paid as an SLO award, increased by the 25% premium, using the closing price of our common stock on the first trading day of the calendar year, where the service inception date is the beginning of the calendar year. PSU awards are valued based on the grant date fair value on the date on which the PSU award was granted by the Compensation Committee. In valuing the SLO awards and PSU awards, we assumed the probable achievement of the target levels for the primary performance goals. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures. For the portion of PSU awards earned based on relative TSR (excluding Mr. Peribere’s two new hire PSU awards granted in 2012), the grant date fair value is based on a Monte Carlo simulation that determines the likely payout of the award (which was $23.40 per share for the PSUs granted on March 27, 2012, and $12.57 per share for the PSUs granted on September 1, 2012). The grant date fair value of the first new hire PSU award for Mr. Peribere was $9.09 for the first tranche of 25,000 shares, $8.82 for the second tranche of 25,000 shares, $8.73 for the third tranche of 25,000 shares and $9.43 for the fourth tranche of 25,000 shares. The grant date fair value of the second new hire PSU award for Mr. Peribere was $3.51. For additional assumptions made in valuing these awards and other information, see Note 19, “Stockholders’ Equity,” of Notes to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012. For the PSU awards made in 2012 (excluding Mr. Peribere’s two new hire PSU awards), the value of the awards as of the grant date assuming that the highest level of performance conditions would be achieved (which is 200% of target), are as follows:

 

   
      2012
Maximum
PSU Award
 

Mr. Hickey

   $ 10,800,013   

Mr. Peribere

     3,440,455   

Ms. Lowe

     n/a   

Mr. Sagnak

     1,427,958   

Mr. Chammas

     1,151,134   

Mr. Christie

     439,632   

 

    

With respect to Mr. Hickey’s award in the table, the Compensation Committee determined that the performance goals for his PSU award were not met and therefore he did not receive any shares under the award. Also, the value shown for Mr. Peribere’s

 

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  award does not reflect the cap on the number of shares of common stock that could be issued of two-tenths of 1% (0.2%) of the issued and outstanding shares of common stock on January 1 of the year of issuance as described in Note 3 to the Grants of Plan-Based Awards in 2012 table below. For the other named executive officers, the values in the table do not include the potential 10% increase that could be earned if the additional performance goals are achieved; see “Compensation Discussion and Analysis—2012-2014 Long-Term Incentive Compensation Awards.” See the Grants of Plan-Based Awards in 2012 and the Outstanding Equity Awards at 2012 Fiscal Year-End tables below for additional information on awards made in 2012, as well as information on outstanding awards for prior year. For purposes of illustration, in 2012, the maximum number of shares that could be issued to a participant with respect to a PSU award would be approximately 384,124 shares.

 

  2 

The amounts in the Non-Equity Incentive Compensation column for 2012 reflect the cash portion of annual bonuses earned by the named executive officers for 2012. All named executive officers except Messrs. Hickey and Peribere and Ms. Lowe also received SLO awards as all or part of their annual bonuses for 2012. The values of the SLO award portion of annual bonuses at the service inception date are included in the Stock Awards column. For further discussion regarding annual bonus awards in 2012, see “Compensation Discussion and Analysis—2012 Cash Bonus and Stock Leverage Opportunity (SLO) Program” above.

 

  3 

The amounts shown in the All Other Compensation column for 2012 are attributable to the following:

 

             
     Mr.
Hickey
    Mr. Peribere     Ms. Lowe     Mr.
Christie
    Mr.
Chammas
    Mr. Sagnak  

Personal use of Company-leased car*

  $ 0      $ 0      $ 4,051      $ 15,136      $ 11,856      $ 64,578   

Company contribution to Profit-Sharing Plan

    9,792        12,500        12,500        12,500        12,500        0   

Company matching contributions to 401(k) Thrift Plan or Local DC Plan

    10,183        2,108        0        11,998        5,750        36,700   

Health club reimbursement

    225        0        0        225        0        0   

Relocation Tax Benefits

    0        109,224 **     53,265 **     0        0        0   

Expatriate Allowances***

    0        0        0        0        0        477,592   

Tax Gross Up

                                            40,480   

Total

  $ 20,200      $ 123,832      $ 69,816      $ 39,859      $ 30,106        619,350   

 

  * The amounts shown for the cost to the Company for each of the Company-leased cars include the costs of the lease, maintenance, fuel and insurance coverage.

 

  ** Includes tax gross-up of $32,611 for Mr. Peribere and $8,178 for Ms. Lowe.

 

  *** Expatriate Allowances include the following: Cost of Living Differential, Children’s Education, Home Leave Trip(s), Housing, Storage and Utilities Allowance.

 

  4 

For Mr. Sagnak, all amounts in the Summary Compensation Table other than the amounts in the Stock Award column, as well as all dollar amounts of compensation noted elsewhere in this proxy statement for Mr. Sagnak, except for the value of shares of common stock and equity awards, represent data converted from Turkish Lira. For 2012, compensation was converted at the average exchange rate during 2012 of .55343 dollars per Turkish Lira.

 

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Grant of Plan-Based Awards in 2012

The following table sets forth additional information concerning stock awards granted during 2012 under the 2005 Contingent Stock Plan and the cash and SLO portions of the annual bonus targets for 2012 performance under the Company’s Annual Incentive Plan.

 

             
               

Estimated

Possible

Payouts Under

Non-Equity

Incentive Plan

Awards2

   

Estimated Future Payouts Under

Equity Incentive Plan Awards3

    All Other
Stock
Awards:
Number of
Shares of
Common
Stock
   

Grant Date

Fair Value

of Stock

Awards4

($)

 
Name  

Type of

Award1

 

Grant

Date

   

Target

($)

   

Threshold

(#)

   

Target

(#)

   

Maximum

(#)

     

Mr. Hickey

  12PSU#1     3/27/2012                68,458        273,834        547,668                5,400,000   

Mr. Peribere

  Cash     $ 1,045,000                   
    12PSU3     9/1/12            24,090        140,155        280,310            1,940,445   
   

12PSU#2

    9/1/12            25,000        N/A        100,000            901,750   
   

12PSU#3

    9/1/12            150,000        200,000        250,000            702,000   
   

RS

    9/1/12                    50,000        713,500   

Ms. Lowe

  Cash     $ 393,750                   
    RS     7/12/12                    42,000        633,360   

Mr. Sagnak

  12SLO     2/16/12              23,547              409,247   
   

12PSU3

    3/27/12            17,296        34,592        69,184            713,979   

Mr. Chammas

  12SLO     2/16/12              21,505              373,757   
   

12PSU3

    3/27/12            13,943        27,886        55,772            575,567   

Mr. Christie

  Cash     2/16/12      $ 56,000                   
   

12 SLO

    2/16/12              2,745              47,708   
   

12PSU3

    3/27/12            5,325        10,650        21,300            219,816   
   

RS

    2/16/12                    5,000        102,950   
   

RS

    4/19/12                                        15,690        299,993   

 

  1 

Type of award:

 

       Cash = cash portion of 2012 annual bonus

 

       12SLO = SLO award portion of 2012 annual bonus

 

       12PSU#1 = The special PSUs granted to Mr. Hickey in 2012 as described above under “Compensation Discussion and Analysis—Compensation of Chief Executive Officer.”

 

       12PSU#2 = The first PSU award granted to Mr. Peribere as described above under “Compensation Discussion and Analysis—New Hire PSU Awards for Mr. Peribere.”

 

       12PSU#3 = The second PSU award granted to Mr. Peribere as described above under “Compensation Discussion and Analysis—New Hire PSU Awards for Mr. Peribere.”

 

       12PSU3 = three-year PSU award for the performance period beginning January 1, 2012.

 

       RS = Restricted Stock

 

  2 

This column shows the target awards established in early 2012 for the cash portion of 2012 annual bonuses for each of the named executive officers under the Company’s Annual Incentive Plan. While the overall funded bonus sub-pool applicable to the named executive officers has a 25% of target threshold level and a 200% of target maximum funding limit, individual bonus awards can vary as long as the total of all bonus awards is within the overall funded sub-pool. Actual payouts for 2012 are shown in the Non-Equity Incentive Plan Compensation column of the 2012 Summary Compensation Table.

 

  3 

These columns show target awards established in early 2012 for the SLO portion of 2012 annual bonuses for each of the named executive officers under the Company’s Annual Incentive Plan, as well as the threshold, target and maximum awards for PSU awards granted in 2012 for each of the named executive officers under the 2005 Contingent Stock Plan. The maximum number of shares that can be issued to any participant in any calendar year with respect to a PSU award is two-tenths of 1% (0.2%) of the outstanding shares on January 1 of that calendar year. That restriction may limit the maximum number of shares that can be issued to Mr. Peribere on account of the PSU awards shown in the table. For purposes of illustration, in 2012, the maximum number of shares that could be issued to a participant with respect to a performance share unit award would be approximately 384,124 shares. Shares, to the extent earned, will be issued in 2015 for the PSU awards.

 

     2012-14 PSU awards:    The threshold number of shares for PSU awards is 50% of the target number of shares, and the maximum number of shares for such awards is 200% of the target number of shares. The maximum awards shown for the PSU awards do not include the potential 10% increase that could be earned if the additional performance goal is achieved; see “Compensation Discussion and Analysis—2012-2014 Long Term Incentive Compensation Awards.”

 

     New Hire PSU Awards for Mr. Peribere:    For the first of Mr. Peribere’s two new hire PSU awards, the threshold number of shares is 25,000 shares and the maximum number of shares is 100,000. There is no separate target below the maximum payout. For Mr. Peribere’s second new hire PSU awards, the threshold is 150,000 shares, the target is 200,000 shares, and the maximum is 250,000 shares. Mr. Peribere’s new hire PSU awards are described in more detail above under “Compensation Discussion and Analysis—New Hire PSU Awards for Mr. Peribere.”

 

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     Special PSU award granted to Mr. Hickey:    Mr. Hickey’s PSU award for 2012 is weighted between two performance measures: consolidated adjusted EBITDA (weighted 70%) and net debt reduction (weighted 30%). For both performance measures, the award is funded at 25% of the target at threshold performance and 100% of target at target performance. The maximum payout is 200% for the consolidated adjusted EBITDA measure and 200% for the new debt reduction measure. Mr. Hickey’s special PSU award is described in more detail above under “Compensation Discussion and Analysis—Compensation of Chief Executive Officer.”

 

  4 

This column shows the fair value on the grant date or service inception date of the equity awards shown in the table computed in accordance with FASB ASC Topic 718. The manner in which grant date fair value was determined for awards granted in 2012 is discussed above in Note 1 to the Summary Compensation Table.

Description of Annual and Long-Term Incentive Awards in the 2012 Summary Compensation Table and the Grants of Plan-Based Awards in 2012 Table

Annual Incentive Plan: Cash Bonuses and SLO Awards.    Each of the named executive officers has a target bonus that is established by the Compensation Committee during the first quarter of the year (or at the time of hire in the case of Ms. Lowe and Mr. Peribere). Also, each of the named executive officers has the opportunity at a time determined by the Compensation Committee (usually prior to the start of the performance year) to designate a portion of his or her annual bonus to be received as an equity award under the 2005 Contingent Stock Plan, called a stock leverage opportunity (SLO) award. The portion to be denominated as SLO awards, in increments of 25% of the annual bonus, may be given a premium to be determined by the Compensation Committee each year. The stock price used to calculate the number of shares that can be earned is the closing price on the first trading day of the performance year, thereby reflecting stock price changes during the performance year in the value of the SLO award.

Once the amount of the annual bonus that has been earned has been determined for each named executive officer following the end of the year, the cash portion is paid out shortly thereafter, and the SLO award is provided in the form of an award of restricted stock or restricted stock units under the 2005 Contingent Stock Plan that vest on the second anniversary of the grant date, or earlier in the event of death, disability or retirement from employment with the Company. The shares subject to the award are not transferable by the recipient until the earlier of vesting or the second anniversary of the grant date. The award is granted on a date determined by the Compensation Committee, but no later than the March 15 following the end of the performance year. Retirement for the purpose of SLO awards and the PSU awards described below means termination of employment after five or more years of employment and with years of employment plus age equal to 70 or more, except termination for cause. If the recipient ceases to be employed by the Company prior to vesting, then the shares are forfeited, except for certain circumstances following a change in control. Each SLO award is made in the form of restricted stock unless the award would be taxable to the recipient prior to the shares becoming transferable by the recipient, in which case the SLO award is made in the form of restricted stock units. Recipients who hold SLO awards in the form of restricted stock receive dividends and have the right to vote the shares of restricted stock. Recipients who hold SLO awards in the form of restricted stock units have no voting rights until shares are issued to them but do receive a cash payment in the amount of the dividends (without interest) on the shares they have earned at about the same time that shares are issued to them following the period of restriction.

Performance Share Unit Awards.    PSU awards, which are awarded under the 2005 Contingent Stock Plan, provide for a minimum one-year performance period with a targeted number of shares to be earned if performance during the period meets goals set by the Compensation Committee during the first 90 days of the period. If performance is below defined threshold levels, then no units will be earned, and if performance exceeds defined maximum levels, then a maximum number of units (above the target number) will be earned. PSU awards are not transferable by the participant until the end of the performance period and certification by the Compensation Committee with respect to each performance measure used for the award. If a participant terminates employment during the performance period due to death, disability or retirement, then the participant (or his or her estate) will receive a pro rata payout following the end of the performance period based on the portion of the performance period during which the participant was employed and based on the number of units that would have been earned by the participant if he or she had remained employed for the entire performance period prior to applying the pro rata factor. If the participant leaves employment during the performance period for any other reason, then the units are forfeited, except

 

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for certain circumstances following a change in control. At about the same time that shares are issued to participants following the performance period, participants also receive a cash payment in the amount of the dividends (without interest) that would have been paid during the performance period on the number of shares that they have earned. Holders of PSU awards have no voting rights as stockholders until shares of common stock are issued after the end of the performance period.

Mr. Hickey received a special PSU award in 2012 that would become earned based on performance during the year ended December 31, 2012, but was subject to an additional vesting requirement: 50% of the performance-adjusted shares would become vested on December 31, 2014 and 50% would become vested on December 31, 2015. In case of death or disability, vesting of the performance-adjusted shares was accelerated. In case of retirement, the performance-adjusted shares continue to vest and pay per schedule. In case of termination for cause, the performance-adjusted shares would be forfeited. Mr. Hickey earned none of the special PSU award.

Mr. Peribere received two new hire PSU awards in 2012 that become vested based on relative TSR performance over a four year period ending August 31, 2016. The vesting and termination treatment for those awards is described in more detail under “New Hire PSU Awards for Mr. Peribere” in the Compensation Discussion and Analysis above.

Restricted Stock and Restricted Stock Units.    Awards of restricted stock and restricted stock units are made under the 2005 Contingent Stock Plan, which provides for a vesting period of at least three years after the grant date. Awards vest earlier in the event of the participant’s death or disability. If a participant terminates employment prior to vesting, then the award of restricted stock or restricted stock units is forfeited, except for certain circumstances following a change in control. Within 90 days following the date of termination, the Compensation Committee can waive the forfeiture of all or a portion of an award. During the vesting period, holders of unvested shares of restricted stock (but not holders of unvested shares of restricted stock units) are entitled to receive dividends on the same basis as dividends are paid to other stockholders and are entitled to vote the unvested shares. Mr. Peribere received a new hire restricted stock award in 2012 under his employment agreement, as described in more detail under “New Hire RS Award for Mr. Peribere” in the Compensation Discussion and Analysis above.

 

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Outstanding Equity Awards at 2012 Fiscal Year-End

The following table shows, as of December 31, 2012, outstanding stock appreciation rights held by Mr. Sagnak and outstanding and unvested stock awards under the 2005 Contingent Stock Plan for the named executive officers. All market or payout values in the table shown for stock awards are based on the closing price of common stock on December 31, 2012 of $17.51 per share.

 

          Option Awards   Stock Awards  
Name  

Type of

Award1

 

Number
of
Securities
Under-

lying
Unexer-

cised
Options
(#)

Exer-

cisable

   

Number of
Securities
Underlying
Unexer-

cised
Options5
(#)
Unexer-

cisable

   

Equity
Incentive
Plan
Awards:
Number
of
Securities
Under-

lying
Unexer-

cised
Unearned
Options
(#)

    Option
Exercise
Price
($)
   

Option
Expira-

tion Date

 

Number of

Shares or
Units of

Common
Stock

That Have
Not

Vested3

(#)

   

Market
Value of

Shares or

Units of

Common
Stock

That
Have Not

Vested3

($)

   

Equity

Incentive
Plan

Awards:
Number

of
Unearned

Shares,
Units or

Other
Rights

That
Have Not

Vested4

(#)

   

Equity

Incentive
Plan

Award:
Market

or Payout
Value

of
Unearned

Shares,
Units or

Other
Rights

That Have
Not

Vested2

($)

 

Mr. Hickey

  10SLO               7,664        134,197         
    11PSU3                   158,518        2,775,650   

Mr. Peribere

  RS               50,000        875,000         
    12PSU                   140,155        2,454,114   
    12PSU#2                   25,000        437,750   
    12PSU#3                   150,000        2,626,500   

Ms. Lowe

  RS               42,000        735,420         

Mr. Sagnak

  12SLO

12PSU3

              23,547        412,308        34,592        605,706   
    SAR1     15,591        46,700        —          6.82      1/11/20          
    SAR2     —          57,164        —          6.82      1/11/20          
    SAR3     61,899        123,796        —          6.82      2/23/20          
    SAR4     41,266        41,265        —          8.59      12/1/20          

Mr. Chammas

  RS               25,000        437,750         
    11SLO               3,402        59,569         
    12SLO               21,505        376,553         
    11PSU3                   20,360        356,503   
    12PSU3                   27,886        488,284   

Mr. Christie

  RS               20,690        362,282         
    10SLO               879        15,391         
    11SLO               541        9,473         
    12SLO               2,745        48,065         
    11PSU3                   5,818        101,873   
    12PSU3                                                         10,650        186,482   

 

  1 

Type of award:

 

       RS = restricted stock award

 

       10SLO = SLO award portion of 2010 annual bonus

 

       11SLO = SLO award portion of 2011 annual bonus

 

       12SLO = SLO award portion of 2012 annual bonus

 

       11PSU3 = three-year PSU award for the performance period beginning January 1, 2011

 

       12PSU3 = three-year PSU award for the performance period beginning January 1, 2012

 

       12PSU#2 = The first PSU award granted to Mr. Peribere as described above under “Compensation Discussion and Analysis—New Hire PSU Awards for Mr. Peribere.”

 

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       12PSU#3 = The second PSU award granted to Mr. Peribere as described above under “Compensation Discussion and Analysis—New Hire PSU Awards for Mr. Peribere.”

 

       SAR1, SAR2, SAR3, SAR4 = Cash-settled Stock Appreciation Rights on Sealed Air common stock (“SARs”) held by Mr. Sagnak which were converted from legacy Diversey awards in 2011.

 

  2 

For awards shown in these columns, the market values shown above are based on the closing price of common stock on December 31, 2012 of $17.51 per share as reported on the NYSE.

 

  3

The number of shares shown in this column for 10SLO awards are the actual numbers of shares of restricted stock or restricted stock units earned by each named executive officer under the stock leverage opportunity feature of the Annual Incentive Plan for 2010. The 10SLO awards for all named executive officers were made in the form of awards of restricted stock units that vest and pay on March 13, 2013, or earlier in case of death, disability or retirement.

 

       The number of shares shown in this column for 11SLO awards are the actual numbers of shares of restricted stock or restricted stock units earned by Messrs. Chammas and Christie under the stock leverage opportunity feature of the Annual Incentive Plan for 2011. The 11SLO awards for Messrs. Chammas and Christie were made in the form of awards of restricted stock units that vest and pay on March 9, 2014, or earlier in case of death, disability or retirement. Mr. Christie is retirement-eligible and Mr. Chammas is not retirement eligible.

 

       The amounts shown in this column for 12SLO awards are the actual numbers of shares of restricted stock or restricted stock units earned by each named executive officer under the stock leverage opportunity feature of the Annual Incentive Plan for 2012. The 12SLO awards for all named executive officers were made in the form of awards of restricted stock that vest and pay on March 13, 2015, or earlier in case of death, disability or retirement. Mr. Christie is retirement-eligible and Messrs. Chammas and Sagnak are not retirement-eligible.

 

       RS awards vest as follows:

 

Name    Type of
Award
   Number of
Shares or Units
     Date of
Vesting
 

Mr. Chammas

   RS      25,000         11/01/2013   
     11SLO      3,402         03/09/2014   
     12SLO      21,505         03/13/2015   

Mr. Christie

   RS      5,000         02/16/2015   
     RS      15,690         04/19/2015   
     RS      10,310         02/14/2016   
     11SLO      541         03/09/2014   
     12SLO      2,745         03/13/2015   

Ms. Lowe

   RS      42,000         07/12/2015   

Mr. Peribere

   RS      50,000         09/01/2015   

Mr. Sagnak

   12SLO      23,547         03/13/2015   

 

  4 

11PSU3 awards are performance shares unit awards for the performance period January 1, 2011 through December 31, 2013 that vest on the latter date. Pursuant to Securities and Exchange Commission rules, the amounts shown in this column for 11PSU3 awards represent 100% of the target number of shares, since the previous fiscal year’s performance has exceeded the threshold performance goals, and the next highest performance measure is target performance. Therefore the hypothetical amounts shown in the table are based on the assumption that the 11PSUs granted in 2011 would vest at 100% of the target level.

 

       12PSU3 awards are performance shares unit awards for the performance period January 1, 2012 through December 31, 2014 that vest on the latter date. Pursuant to Securities and Exchange Commission rules, the amounts shown in this column for 12PSU3 awards represent 100% of the target number of shares, since the previous fiscal year’s performance has exceeded the threshold performance goals, and the next highest performance measure is target performance. Therefore the hypothetical amounts shown in the table are based on the assumption that the 12PSUs granted in 2012 would vest at 100% of the target level.

 

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  5 

Mr. Sagnak’s SARs vest as follows:

 

Name    Type of
Award
     Number of
Shares
     Date of
Vesting
 

Mr. Sagnak

     SAR1         15,590         3/17/13   
       SAR1         15,590         3/17/14   
       SAR1         15,590         3/17/15   
       SAR2         19,055         1/6/13   
       SAR2         19,055         1/6/14   
       SAR2         19,054         1/16/15   
       SAR3         61,898         2/23/13   
       SAR3         61,898         2/23/14   
       SAR4         20,633         12/1/13   
       SAR4         20,632         12/1/14   
    

 

 

    

 

 

    

 

 

 

Stock Vested in 2012

The following table shows the number of shares acquired by the named executive officers on vesting of stock awards during 2012, as well as the value of the shares realized upon vesting. All awards were awarded under the 2005 Contingent Stock Plan.

 

  

   Stock Awards          
Name   

Type of

Award

  

Number of Shares

Acquired on Vesting

(#)

    

Value Realized

on Vesting

($)

 

Mr. Hickey

   09SLO

10PSU

    

 

57,009

188,308

  

  

    

 

1,111,676

3,297,273

  

  

Mr. Christie

   09SLO

10PSU

    

 

3,074

8,319

  

  

    

 

59,943

145,666

  

  

The value of the 09SLO awards is based on the closing price of common stock on the vesting date. The 09SLO awards vested on March 13, 2012. In all cases the Company withheld a portion of the vested shares to cover withholding taxes due upon payment of shares under the award. The 2010 three year PSU (10PSU) awards represent the actual number of shares earned for the performance period from January 1, 2010 through December 31, 2012 that vested on December 31, 2012. The values for such awards are based on the closing price of common stock on December 31, 2012 of $17.51 per share and represent 116.5% of target.

Payments Upon Termination or Change in Control

We do not have any severance programs or agreements covering any of our named executive officers, except for the arrangements described below and benefits generally available to salaried employees, also noted below. We also have no programs or agreements providing any payments or benefits to our named executive officers in connection with a change in control, except as part of our equity compensation awards as discussed in more detail below. The following describes arrangements that address cash payments or other benefits to certain of our named executive officers following termination of employment:

 

 

Peribere Employment Agreement:    When he was hired, Mr. Peribere signed an employment agreement. See the discussion above in “Compensation Discussion and Analysis—Employment, Severance and Change in Control Arrangements” for more details. Mr. Peribere is entitled to certain severance benefits upon a termination of employment by the Company without “cause” (as defined in the agreement) at any time during the “Initial Term” of the agreement, which is the four-year period ending August 31, 2016. Upon a termination of employment without cause on December 31, 2012, Mr. Peribere would have been entitled to total cash severance payments equal to $2,256,250 (comprised of the following individual components: (1) $261,250 for his bonus for 2012, based on minimum bonus to be paid when bonuses are normally paid, (2) $950,000 for one year of continued salary payments, and (3) $1,045,000 for his

 

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target annual bonus for 2012, paid in 12 monthly installments following termination). The severance payments are conditioned on Mr. Peribere providing the Company with a release of claims and complying with certain post-employment covenants including an 18-month non-compete. (Note that the treatment of Mr. Peribere’s equity awards, that were granted under the employment agreement upon a termination of employment or a change in control is discussed below.)

 

 

Sagnak Employment Agreement:    In connection with the acquisition of Diversey, the Company assumed an employment agreement with Mr. Sagnak, dated December 1, 2010. See the discussion above in “Compensation Discussion and Analysis—Employment, Severance and Change in Control Arrangements” for more details. Under the terms of the agreement, if Mr. Sagnak is terminated without “cause” or resigns for “good reason” (each as defined in the agreement), he will be entitled to: (a) a continuation of his base salary for a period of two years, (b) a prorated bonus at the target level for the year in which he was terminated, (c) a bonus at the target level for year two year base salary continuation period and (d) a senior executive level outplacement program. Additionally, if Mr. Sagnak is terminated without cause or resigns for good reason, the Company will relocate him back to his home country. In the event that the Company does not extend Mr. Sagnak’s employment beyond the initial term or a renewal term, it will be considered a termination other than for cause. Upon a termination without cause on December 31, 2012, Mr. Sagnak would have been entitled Upon a termination without cause on December 31, 2102, Mr. Sagnak would have been entitled to $1,512,413 (comprised of (a) $864,236 for his base salary for a period of two years, (b) $216,059 a prorated target level bonus for 2012, and (c) $432,118 for a bonus at the target level for a two year period.

 

 

Non-Compete and Confidentiality Agreements:    When they were hired, Mr. Chammas and Ms. Lowe each signed a Non-Compete and Confidentiality Agreement. See the discussion above in “Compensation Discussion and Analysis—Employment, Severance and Change in Control Arrangements” for more details. Under this agreement, the executive would be entitled to one to two months’ salary as consideration for the non-compete and other covenants benefiting the Company contained in the agreement, payable in case of any termination of employment by the Company other than for gross misconduct. Amounts are not payable in case of voluntary resignation, retirement, disability or death while employed. The amount each named executive officer would have received had his employment been terminated as of December 31, 2012 by the Company (other than for gross misconduct) is as follows: Mr. Hickey—$0; Mr. Peribere as described above; Ms. Lowe – $87,500; Mr. Christie—$0; Mr. Chammas $70,500; Mr. Sagnak as described above.

 

 

Discount on Car Purchases:    The Company generally permits a retiring employee in the U.S. who had the use of a Company-leased car while employed to purchase the car at a discount to fair market value. Employees who leave employment for any other reason are not generally eligible for this benefit. See the discussion under “Compensation Discussion and Analysis—Perquisites and Other Personal Benefits” for more details. The discount each named executive officer would have received had he retired as of December 31, 2012 is as follows: Mr. Hickey—$5,185; Mr. Peribere – 0; Ms. Lowe – 0; Mr. Christie—$7,945; and Mr. Chammas—$3,305.

Our incentive award programs include provisions addressing the extent to which the award becomes vested and payable or is forfeited upon termination of employment. The following briefly describes the key features of these provisions. See also “Description of Annual and Long-Term Incentive Awards in the 2012 Summary Compensation Table and the Grants of Plan-Based Awards in 2012 Table” above for more details.

 

 

Annual Bonus Awards:    Under the Annual Incentive Plan, employees must remain employed through the applicable payment date in order to be entitled to receive an annual bonus for a year; otherwise, payment of the annual bonus is at the discretion of the Company. Bonuses are paid during the month of March for the prior year, so termination of the named executive officers as of the end of 2012 would have meant that they were not entitled to receive a cash bonus or SLO award based on 2012 performance. For 2012, the Company’s usual practice for employees was to pay an annual bonus in the event of termination of employment as of the end of the year due to death, disability or retirement and not to pay an annual bonus in the case of involuntary termination due to gross misconduct. With respect to a

 

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voluntary resignation or other involuntary termination, the payment of an annual bonus is discretionary depending on the circumstances.

The annual bonus paid (as cash and/or SLO award) under the Annual Incentive Plan to each named executive officer for 2012 was as follows Mr. Hickey—$0; Mr. Peribere – $1,045,000; Ms. Lowe – $315,000; Mr. Christie—$76,306; Mr. Chammas—$299,002; Mr. Sagnak—$224,593. These amounts may not represent the amounts that would have been awarded if the named executive officers had terminated employment at the end of 2012 for any of the reasons noted above.

 

 

Restricted Stock and Restricted Stock Units:    These awards will vest in case of death or disability before the scheduled vesting date and will generally forfeit for any other termination of employment before the scheduled vesting date with three exceptions. First, SLO awards that have been awarded as restricted stock shares or units after the end of the performance year will vest in full upon retirement. Second, restricted stock shares or units will vest upon a termination of employment by the Company without cause or by the executive with good reason that occurs within two years after a change in control. Third, within 90 days following the date of termination, the Compensation Committee can waive the forfeiture of restricted stock shares or units.

 

 

Performance Share Units:    Termination of employment before the end of the performance period generally results in the forfeiture of any outstanding PSU awards with two exceptions. First, in case of death, disability or retirement before the end of the performance period, a pro rata number of the PSUs will become payable after the end of the performance period, based on the actual performance results for the performance period. Second, in case of a change in control of the Company followed within two years by a termination of employment by the Company without cause or by the executive with good reason, a pro rata number of the PSUs will become payable as of the date of termination based on target performance (or actual performance through the quarter prior to the change in control, if greater).

Mr. Peribere’s two new hire PSU awards generally follow the same termination treatment provisions as other PSU awards, with (i) pro rata vesting based on actual performance in case of termination due to death or disability and (ii) pro rata vesting based on target performance (or actual performance through the quarter prior to the change in control, if greater) for a termination without cause or with good reason within two years after a change in control. The first of those two new hire PSU awards includes certain unique provisions due to the design of the award. First, the pro rata vesting described above applies only to the one-year performance period then in effect at the date of termination. Second, no amount is payable for any one-year performance period beginning after the date of termination. Finally, for any portion of the award that has become earned based on relative TSR performance for a prior one-year performance period but has not yet been paid (because each annual amount to the extent earned is generally not paid until after August 31, 2016 under the terms of the award), that amount will be forfeited in case of a termination for cause, but otherwise will be paid according to schedule (or earlier in case of death or disability) for any other termination of employment.

Mr. Sagnak currently holds cash-settled stock appreciation rights on Sealed Air common stock (“SARs”). The SARs were granted on October 3, 2011, in connection with Sealed Air’s acquisition of Diversey, as a substitution for certain stock options that Mr. Sagnak held with respect to Diversey stock. The SARs generally vest and become exercisable over time but include the following provisions regarding accelerated vesting. First, 100% of Mr. Sagnak’s unvested SARs accelerate upon death or disability. Second, 100% of Mr. Sagnak’s unvested SARs accelerate upon a termination of employment by the Company without Cause (as defined in the SAR award agreement) or by Mr. Sagnak due to a Constructive Termination (as defined in the SAR award agreement), in either case, on or before October 3, 2013. Third, 100% of Mr. Sagnak’s unvested SARs accelerate upon a change in control of the Company.

 

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The following table shows the amounts that would have been payable to the named executive officers under these equity award programs for a termination of employment as of December 31, 2012, based on the closing price of the Company’s common stock of $17.51 as of that date.

 

               
Name   Type of
Award
  Death or
Disability
    Involuntary for
gross misconduct
    Involuntary
(all others)
    Voluntary     CIC only     CIC + qualifying
termination1
 

Mr. Hickey

  SLO2     134,197        134,197 6      134,197        134,197          134,197   
    PSU3     1,848,583        0        1,848,583        1,848,583          1,848,583   

Mr. Peribere

  RS     875,000        0        0        0          875,000   
    12PSU3     350,588        0        0        0          350,588   
    12PSU#24     145,917        0        0        0          145,917   
    12PSU#35     291,833        0        0        0          291,833   

Ms. Lowe

  RS     735,420        0        0        0          735,420   

Mr. Christie

  SLO2     72,929        72,929        72,929        72,929          72,929   
    PSU3     129,946        0        129,946        129,946          129,946   

Mr. Chammas

  RS     437,750        0        0        0          437,750   
    SLO2     436,122        0        0        0          436,122   
    PSU3     400,030        0        0        0          400,030   

Mr. Sagnak

  SLO2     412,308        0        0        0          412,308   
    PSU3     201,700        0        0        0          201,700   
    SAR7     2,801,769        0        2,801,769        0        2,801,769        0   

 

1 

The amounts shown in the column labeled “CIC + qualifying termination” represent the amounts that would have been paid to the named executive officers if a change in control had occurred within the two-year period ending December 31, 2012 and a qualifying termination of employment had occurred at the end of 2012.

 

2 

The amounts shown in these rows represent the amounts that would have been paid to the named executive officer connection with the 2010 and 2011 SLO awards.

 

3 

The amounts shown in these rows represent the amounts that would have been paid to the named executive officer in connection with his (i) 2011 three-year PSU award assuming achievement of 100% of the target performance under the principal performance goals for the 2011 three-year PSU awards, including for the column labeled “CIC + qualifying termination;” plus (ii) 2012 three year PSU award assuming achievement of 100% of the target performance under the principal performance goals for the 2012 three-year PSU awards, including for the column labeled “CIC + qualifying termination.”

 

     Messrs. Hickey and Christie are retirement-eligible under the terms of these PSU awards, so any voluntary or involuntary termination of employment on December 31, 2012 would be treated as a retirement except for an involuntary termination for gross misconduct. Messrs. Peribere, Chammas and Sagnak and Ms. Lowe were not retirement-eligible at the end of 2012.

 

4 

The amounts shown in this row represent the pro rata amount that would have been paid under the first of Mr. Peribere’s new hire PSU awards, assuming the performance goal for the September 1, 2012 - August 31, 2013 performance period is attained.

 

5 

The amounts shown in this row represent the pro rata amount that would have been paid on the second of Mr. Peribere’s new hire PSU awards, assuming target performance for the four - year performance period.

 

6 

SLO awards held by retirement-eligible officers are not forfeited upon an involuntary termination for gross misconduct. However, depending on the circumstances, the Recoupment Policy might require the named executive officer to reimburse the Company for all or part of this award.

 

7

The amounts shown for SARs represents the value of the accelerated vesting that Mr. Sagnak would be entitled to upon an accelerated vesting event on December 31, 2012, based on the closing price of the Company’s common stock of $17.51 as of that date, net of any applicable exercise price for the SARs.

The benefits described or referenced above are in addition to benefits available generally to salaried employees of the Company upon termination of employment, such as, for employees in the United States, distributions under the Sealed Air Corporation 401(k) Thrift Plan and the Profit-Sharing Plan of Sealed Air Corporation, non-subsidized retiree medical benefits, disability benefits and accrued vacation pay.

 

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Equity Compensation Plan Information

The following table provides information as of December 31, 2012 with respect to shares of common stock that may be issued under the 2005 Contingent Stock Plan of Sealed Air Corporation and the Sealed Air Corporation 2002 Stock Plan for Non-Employee Directors.

 

Plan Category

   Number of Securities to be
Issued Upon Exercise of
Outstanding Options,
Warrants and Rights
(a)
     Weighted-Average
Exercise Price of
Outstanding
Options,
Warrants, and Rights
(b)
     Number of Securities
Remaining Available for
Future Issuance Under
Equity  Compensation
Plans1
(c)
 

Equity compensation plans approved by stockholders2

     1,277,946                       5,417,158   

Equity compensation plans not approved by stockholders

                             
  

 

 

    

 

  

 

 

    

 

  

 

 

 

Total2

     1,277,946                       5,417,158   
  

 

 

    

 

  

 

 

    

 

  

 

 

 

 

  1 

Excludes securities reflected in column (a).

 

  2 

Consists of the 2005 Contingent Stock Plan of Sealed Air Corporation and the 2002 Stock Plan for Non-Employee Directors. Column (a) includes the following as of December 31, 2012:

 

   

472,865 restricted stock units awarded under the 2010 three-year PSU award. This number reflects an assumption that such awards are paid out based upon the achievement above the target level of performance conditions, resulting in an award equal to 116.5% of the target.

 

   

268,718 restricted stock units awarded under the 2011 three-year PSU award. This number reflects an assumption that such awards are paid out based upon the achievement below the target level of performance conditions, resulting in an award equal to 71% of the target.

 

   

319,813 restricted stock units awarded under the 2012 three-year PSU award. This number reflects an assumption that such awards are paid out based upon the achievement below the target level for performance conditions, resulting in an award equal to 58.5% of the target.

 

   

36,100 shares of restricted stock and restricted stock units awarded under the 2005 Contingent Stock Plan but not yet issued as of December 31, 2012.

 

   

73,698 restricted stock shares and restricted stock units awarded as 2012 SLO awards.

 

   

106,752 deferred stock units held by non-employee directors.

There is no exercise price for shares or units awarded under the 2005 Contingent Stock Plan. There was no exercise price for deferred stock units credited to the accounts of non-employee directors in 2012. As of December 31, 2012, there were 5,255,759 shares available for future awards under the 2005 Contingent Stock Plan and 161,399 shares available for future awards under the 2002 Directors Stock Plan.

 

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Table of Contents

Approval of the Amended 2005 Contingent Stock Plan of Sealed Air Corporation (Proposal 12)

The Compensation Committee and our Board of Directors amended the 2005 Contingent Stock Plan of Sealed Air Corporation (the “2005 Contingent Stock Plan”) on February 14, 2013, and the Board of Directors is submitting the amended 2005 Contingent Stock Plan to our stockholders for approval. The sole purpose for the amendment of the 2005 Contingent Stock Plan and the request for stockholder approval at this time is to increase maximum number of shares of Common Stock that may be issued to an employee with respect to PSUs during any calendar year to one-half of one percent (0.5%) of the issued and outstanding shares of the Corporation’s Common Stock on January 1 of such calendar year.

Background

On May 20, 2005, the Company’s stockholders approved the 2005 Contingent Stock Plan of Sealed Air Corporation (the “2005 Contingent Stock Plan”). The 2005 Contingent Stock Plan has been further amended since then, including amendments approved by the Company’s stockholders on May 18, 2011. The 2005 Contingent Stock Plan provides for awards of equity-based compensation, including restricted stock, restricted stock units, performance share units, stock leverage opportunity (SLO) awards and cash awards measured by share price, to executive officers and other key employees of the Company and its subsidiaries, as well as to U.S.-based key consultants to the Company. The 2005 Contingent Stock Plan is intended to provide and has provided an incentive to permit those officers, employees and consultants responsible for the Company’s growth to share directly in that growth, to motivate them by means of appropriate incentives to achieve the Company’s long-range goals, and to further the identity of their interests with those of the stockholders of the Company.

Summary of Change to the 2005 Contingent Stock Plan to be Approved by Stockholders

If approved, the only change to the 2005 Contingent Stock Plan would be to increase the maximum number of shares of Common Stock that may be issued to an employee with respect to PSUs during any calendar year to from two tenths of one percent (0.2%) to one-half of one percent (0.5%) of the issued and outstanding shares of the Corporation’s Common Stock on January 1 of such calendar year. The Company is not seeking to add additional shares of common stock for awards under the 2005 Contingent Stock Plan.

Description of the Material Terms of the 2005 Contingent Stock Plan as Amended

The 2005 Contingent Stock Plan is set forth in Annex D, which is incorporated herein by reference. The principal provisions of the 2005 Contingent Stock Plan as amended are summarized below:

Administration.    The 2005 Contingent Stock Plan is administered by the Compensation Committee, which comprises at least three non-employee directors, none of whom may receive any awards under the 2005 Contingent Stock Plan. The Compensation Committee selects participants to receive awards and determines the time, types and sizes of awards to be granted and the terms and conditions of awards. The Compensation Committee may also condition awards under the 2005 Contingent Stock Plan upon achievement of performance measures under any other plan adopted by the Company, including the Performance-Based Compensation Program, described below.

Participants.    The Compensation Committee may grant awards other than performance share units to any officer, key employee or U.S.-based consultant of the Company or any of its direct or indirect subsidiaries in which the Company holds a significant interest. Performance share units may only be granted to officers or key employees. There are approximately 1,178 participants under this plan.

Shares Available.    At the time of its adoption in 2005, the 2005 Contingent Stock Plan provided for the issuance of 5,000,000 shares of Common Stock, as adjusted for a two-for-one stock split in 2007, which is