DEF 14A 1 a07-30538_1def14a.htm DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.     )

 

Filed by the Registrant  x

 

Filed by a Party other than the Registrant  o

 

Check the appropriate box:

o

Preliminary Proxy Statement

o

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

x

Definitive Proxy Statement

o

Definitive Additional Materials

o

Soliciting Material Pursuant to §240.14a-12

 

COURIER 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):

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No fee required.

o

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(1)

Title of each class of securities to which transaction applies:

 

 

 

 

(2)

Aggregate number of securities to which transaction applies:

 

 

 

 

(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)

Proposed maximum aggregate value of transaction:

 

 

 

 

(5)

Total fee paid:

 

 

 

o

Fee paid previously with preliminary materials.

o

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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(2)

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(4)

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COURIER CORPORATION

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

January 16, 2008

 

To the Stockholders of

COURIER CORPORATION:

 

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the “Annual Meeting”) of COURIER CORPORATION (the “Corporation”) will be held at the Boston University Corporate Education Center, 72 Tyng Road, Tyngsboro, Massachusetts, at ll:00 A.M. on Wednesday, January 16, 2008 for the following purposes:

 

1.                                   To elect three Class A Directors to hold office for a term of three years and until their respective successors shall be elected and shall have qualified;

 

2.                                   To ratify and approve the selection by the Audit and Finance Committee of the Corporation’s Board of Directors of Deloitte & Touche LLP as independent public accountants for the Corporation for the current fiscal year ending September 27, 2008; and

 

3.                                   To transact such other business as may properly come before the Annual Meeting or any adjournment thereof.

 

The Board of Directors has fixed the close of business on November 19, 2007 as the record date for the determination of the stockholders entitled to notice of and to vote at the Annual Meeting and at any adjournments or postponements thereof.

 

 

By order of the Board of Directors,

 

 

 

F. BEIRNE LOVELY, JR.

 

Secretary and Clerk

 

15 Wellman Avenue

North Chelmsford, Massachusetts 01863

December 7, 2007

 

IF YOU DO NOT EXPECT TO ATTEND IN PERSON, IT WOULD BE APPRECIATED IF YOU WOULD FILL IN AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.  YOU MAY ALSO VOTE YOUR SHARES THROUGH THE INTERNET OR BY TELEPHONE.

 

 


 


 

PROXY STATEMENT

 

COURIER CORPORATION

15 Wellman Avenue

North Chelmsford, Massachusetts 01863

 

ANNUAL MEETING OF STOCKHOLDERS

 

January 16, 2008

 

NATURE OF SOLICITATION

 

                This Proxy Statement is furnished in connection with and accompanies a Proxy Card (the “Proxy”) for and Notice of Annual Meeting of Stockholders (the “Notice”) of Courier Corporation (the “Corporation” or “Courier”), to be held Wednesday, January 16, 2008 at ll:00 A.M. at the Boston University Corporate Education Center, 72 Tyng Road, Tyngsboro, Massachusetts, for the purposes set forth in the Notice.  The solicitation is made on behalf of the Board of Directors of the Corporation.

 

                This Proxy Statement and the accompanying Notice and Proxy are first being sent to stockholders on or about December 7, 2007.  The Board of Directors has fixed the close of business on November 19, 2007 as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting (the “Record Date”).

 

                The cost of preparing, assembling and mailing the Proxy and Notice and this Proxy Statement and of soliciting Proxies is to be borne by the Corporation.  In addition to the use of the mails, solicitation may be made by telephone and personally by employees and Directors of the Corporation.  Georgeson Shareholder Communications, Inc. has been hired by the Corporation to act as a distribution agent and solicitor only with respect to record holders who are brokers, dealers, banks or other entities that exercise fiduciary powers in nominee name or otherwise, at a fee of approximately $5,500.  The Corporation will also bear the expense of record holders who are banks, brokers and other fiduciaries or nominees who may forward Proxies and proxy material to beneficial owners of such shares.

 

                Any Proxy given pursuant to this solicitation may be revoked by the person giving it prior to the exercise of the powers conveyed by it by filing with the Secretary/Clerk of the Corporation a written revocation or duly executed Proxy bearing a later date, properly casting a new vote through the Internet or by telephone at any time before the closure of the Internet or telephone voting facilities, or by attending the Annual Meeting and voting in person.  Unless a Proxy is revoked, the shares represented thereby will be voted at the Annual Meeting or at any adjournment thereof in the manner hereinafter described.

 

                The Annual Report of the Corporation for the fiscal year ended September 29, 2007, including financial statements for the fiscal year ended September 29, 2007, is being mailed to stockholders concurrently with this Proxy Statement.

 

VOTING SECURITIES

 

As of the Record Date, the securities outstanding and entitled to vote at the Annual Meeting consist of 12,616,172 shares of Common Stock, par value $1 per share, of the Corporation (the “Common Stock”).  Only holders of record on the Record Date will be

 

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entitled to vote at the Annual Meeting.  Each stockholder is entitled to one vote, in person or by proxy, for each share held.  A majority in interest of all shares of Common Stock issued, outstanding and entitled to vote at the Annual Meeting constitutes a quorum for the meeting (6,308,087 shares).  Abstentions and broker non-votes shall be counted in determining the number of shares present at the Annual Meeting.

 

A plurality of votes properly cast for the election of Directors by stockholders attending the Annual Meeting in person or by proxy will elect Directors to office.  A majority of votes properly cast at the Annual Meeting is required for approval of other matters presented at the meeting, unless a larger vote is required by law, or by the Corporation’s Articles of Organization or By-Laws, each as amended to date.  Abstentions and broker non-votes will not be counted as votes cast at the Annual Meeting for such other matters.  Under the Corporation’s new Corporate Governance Guidelines, Directors who do not receive a majority of the shares outstanding are required to submit their resignation to the Board of Directors.

 

Security Ownership of Certain Beneficial Owners and Management

 

                The following table sets forth, as of the Record Date, the ownership of Common Stock by each Director, by each executive officer named in the Summary Compensation Table below (each a “Named Executive Officer”), by all Directors and executive officers of the Corporation as a group, and by any person or group known to the Corporation to be the beneficial owner of more than 5% of the outstanding shares of Common Stock.  The number of shares beneficially owned by each person and entity is determined according to the rules of the Securities and Exchange Commission (the “Commission”), and the information is not necessarily indicative of beneficial ownership for any other purpose.  Under such rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power and also any shares which the individual or entity has the right to acquire within sixty days of November 19, 2007 through the exercise of an option or similar right.  Except as noted below, each holder has sole voting and investment power with respect to all shares of Common Stock listed as owned by such person or entity.

 

 

 

 

Number of Shares

 

 

 

 

 

Beneficially

 

% of Shares

 

Name

 

 

Owned (1)(2)(3)

 

Outstanding

 

James F. Conway III

 

959,153

(4)

7.6

%

Kathleen Foley Curley

 

44,849

 

0.4

%

Richard K. Donahue

 

107,633

 

0.9

%

Edward J. Hoff

 

384,198

(5)

3.0

%

Arnold S. Lerner

 

76,204

(6)

0.6

%

Peter K. Markell

 

16,983

 

0.1

%

George Q. Nichols

 

19,670

 

0.2

%

Ronald L. Skates

 

38,603

(7)

0.3

%

Robert P. Story, Jr.

 

320,358

(8)

2.5

%

W. Nicholas Thorndike

 

52,664

(9)

0.4

%

Susan L. Wagner

 

17,786

 

0.1

%

Peter M. Folger

 

66,401

 

0.5

%

Peter D. Tobin

 

42,386

 

0.3

%

Eric J. Zimmerman

 

66,394

 

0.5

%

All Directors and Executive Officers as a Group (14 persons)

 

2,213,282

 

17.1

%

T. Rowe Price Associates, Inc.

 

1,182,200

(10)

9.4

%

Wasatch Advisors, Inc.

 

640,155

(11)

5.1

%

Neuberger Berman

 

666,020

(12)

5.3

%

 

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(1)

The information concerning the amount of Common Stock of the Corporation beneficially owned by each of the Directors and executive officers was furnished to the Corporation by each such Director or executive officer. The address for the Directors and executive officers is c/o Courier Corporation, 15 Wellman Avenue, North Chelmsford, MA 01863.

 

 

(2)

Includes shares subject to options exercisable within sixty days of the Record Date as follows: Mr. Conway, 54,258 shares; Prof. Curley, 23,727 shares; Mr. Donahue, 25,227 shares; Mr. Hoff, 30,477 shares; Mr. Lerner, 25,227 shares; Mr. Markell, 14,727 shares; Mr. Skates, 28,227 shares; Mr. Story, 56,282 shares; Mr. Thorndike, 4,758 shares; Ms. Wagner, 14,727 shares; Mr. Tobin, 22,682 shares; Mr. Folger, 12,772 shares; Mr. Zimmerman, 1,519 shares; and all Directors and executive officers as a group, 314,610 shares. For purposes of calculating the percentage of shares outstanding with respect to each individual and the group, the shares subject to such options have been treated as if they were issued and outstanding only as to such individual or group.

 

 

(3)

Includes shares allocated to individual accounts in the Courier Employee Stock Ownership Plan (the “ESOP”) as follows: Mr. Conway, 9,162 shares; Mr. Story, 6,518 shares; Mr. Tobin, 234 shares; Mr. Folger, 4,220 shares; and Mr. Zimmerman, 181 shares.

 

 

(4)

Includes 334,111 shares owned by the James F. Conway, Jr. Trusts of which Mr. Conway III is a trustee with shared voting and investment power as to these shares. Mr. Conway’s address is c/o the Corporation, 15 Wellman Avenue, North Chelmsford, MA 01863.

 

 

(5)

Includes 13,500 shares pledged by Mr. Hoff against a margin loan with UBS Financial Services, Inc.

 

 

(6)

Includes 5,062 shares owned by Mr. Lerner’s wife, as to which shares Mr. Lerner disclaims beneficial ownership.

 

 

(7)

Includes 900 shares owned by family trusts of which Mr. Skates is a trustee with shared voting and investment power as to these shares, but to which he disclaims beneficial ownership. Mr. Skates’ children are the beneficiaries of those trusts.

 

 

(8)

Includes 4,050 shares owned by Mr. Story’s wife, as to which shares Mr. Story disclaims beneficial ownership.

 

 

(9)

Includes 4,500 shares owned by a family trust of which Mr. Thorndike is a trustee with shared voting and investment power as to these shares, but to which he disclaims beneficial ownership. Mr. Thorndike’s grandchildren are the beneficiaries of that trust. Also includes 1,250 shares owned by the Thorndike family’s charitable foundation, to which Mr. Thorndike has shared voting power, but to which he disclaims beneficial ownership.

 

 

(10)

Based upon information provided by T. Rowe Price Associates, Inc. (“Price Associates”) as of November 19, 2007. The total shares held of 1,182,200 are owned by various individual and institutional investors, including T. Rowe Price Small-Cap Value Fund, Inc. (which owns 990,000 shares representing 7.8% of the shares outstanding), for which Price Associates serves as investment adviser with power to direct investments and/or power to vote the securities. Price

 

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Associates has sole dispositive power for the entire holding of 1,182,200 shares and has sole voting power for 169,800 shares. For purposes of the reporting requirements of the Securities Exchange Act of 1934, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities. The address for Price Associates is 100 East Pratt Street, Baltimore, MD 21202.

 

 

(11)

Based upon the most recent Form 13F filing with the Securities and Exchange Commission by Wasatch Advisors, Inc. as of September 30, 2007, Wasatch Advisors, Inc. owned 640,155 shares. The address for Wasatch Advisors, Inc. is 1 South Main Street, Suite 800, Salt Lake City, UT 84133-1109.

 

 

(12)

Based upon information provided by Neuberger Berman, LLC as of September 30, 2007, Neuberger Berman, LLC owned 666,020 shares, with sole voting and dispositive power as to 473,000 of those shares and no voting or dispositive power as to the remaining 193,020 shares which are held in various individual funds. Neuberger Berman, LLC disclaims beneficial ownership as to all 666,020 shares. The address for Neuberger Berman, LLC is 605 Third Avenue, 2nd Floor, New York, NY 10158-3698.

 

 

ITEM 1:  ELECTION OF DIRECTORS

 

                Pursuant to the By-Laws, the Corporation’s directorships are divided into three classes, consisting of Class A, Class B and Class C Directors.  The term of each directorship is three years and the terms of the three classes are staggered in such a manner that only one class is elected in any one year.  Three Class A Directors are to be elected at the 2008 Annual Meeting.  Each of the three Class A Directors will serve until the 2011 Annual Meeting and until his/her successor shall have been elected and shall have qualified or until his/her earlier death, incapacity, resignation or removal.  It is proposed that Proxies not limited to the contrary will be voted to elect Edward J. Hoff, Robert P. Story, Jr., and Susan L. Wagner as Class A Directors.  Messrs. Hoff and Story, and Ms. Wagner are presently Class A Directors having terms expiring at the 2008 Annual Meeting.  If some unexpected occurrence should make necessary, in the judgment of the Board of Directors, the substitution of some other person for any of the nominees, it is the intention of the persons named in the Proxy to vote for the election of such other person as may be designated by the Board of Directors.

 

                Messrs. Hoff and Story, and Ms. Wagner were previously elected by the stockholders.

 

                The Board of Directors unanimously recommends a vote FOR the three Director Nominees listed below.

 

Nominees for Election as Class A Directors

 

Edward J. Hoff — Mr. Hoff, age 52, has been a Director of the Corporation since 1989.  He joined IBM as Vice President, Learning in 2001 and serves as a member of the IBM Senior Leadership Team. He was President of Leadership Development Inc., a management development firm, from 1998 to 2001.  He had been a Partner at The Center for Executive Development from 1992 to 1998. If elected, Mr. Hoff will serve as a Class A Director until the 2011 Annual Meeting.

 

Robert P. Story, Jr. — Mr. Story, age 56, has been a Director of the Corporation since 1995.  He was elected Executive Vice President and Chief Operating Officer of Courier in November 2006.  Mr. Story has operational responsibility for Courier’s publishing and

 

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book manufacturing operations.  He joined Courier in 1986 as Vice President and Treasurer and served as Senior Vice President and Chief Financial Officer from April 1989 through October 2006. If elected, Mr. Story will serve as a Class A Director until the 2011 Annual Meeting.

 

Susan L. WagnerMs. Wagner, age 58, has been a Director of the Corporation since November 1, 2004.  She is Vice President, Strategy and Insights, Pepsi-Cola Company, a position she has held since September 2006.  Prior to that time she was Vice President of Consumer and Market Knowledge, Procter and Gamble from 2005 to 2006, Vice President of Market Research, Personal Care Group for the Gillette Company from 2002 to 2005 and Vice President of Strategic Market Intelligence, Duracell, from 1998 to 2002.  If elected, Ms. Wagner will serve as a Class A Director until the 2011 Annual Meeting.

 

Directors Continuing in Office

 

                The following persons are incumbent Directors and have unexpired terms as Class B and Class C Directors as indicated.

 

James F. Conway III — Mr. Conway, age 55, has been a Director of the Corporation since 1988.  Mr. Conway was elected Chairman of the Corporation on September 22, 1994 and continues as President and Chief Executive Officer.  He had been Acting Chairman, President and Chief Executive Officer since December 1992, and President and Chief Operating Officer from 1988 to 1992. He is a Director of Enterprise Bancorp Inc. Mr. Conway was previously elected as a Class B Director to serve until the 2009 Annual Meeting.

 

Kathleen Foley Curley — Professor Curley, age 56, has been a Director of the Corporation since 1995.  She joined Boston University School of Management as a Research Professor in 2002. She had been Senior Vice President and Chief Community Builder at Communispace Corporation from 2000 to 2002 and Executive Director of Lotus Institute since 1999.  Prior to her industry positions, she was a tenured Professor at Northeastern University College of Business Administration in Management Information Systems between 1982 and 1997. Professor Curley was previously elected as a Class B Director to serve until the 2009 Annual Meeting.

 

W. Nicholas Thorndike — Mr. Thorndike, age 74, has been a Director of the Corporation since 1989.  He is an independent trustee of the mutual funds of Grantham, Mayo, and Van Otterloo (GMO).  He has also served as a Trustee of Massachusetts General Hospital from 1969 to 1999 and now serves as Honorary Trustee, and was the Chairman of the Board from 1987 to 1992 and President from 1992 to 1994.  Until December 1988, he was Chairman and Managing Partner of Wellington Management Company. Mr. Thorndike was previously elected as a Class B Director to serve until the 2009 Annual Meeting.

 

Arnold S. Lerner — Mr. Lerner, age 77, has been a Director of the Corporation since 1989.  He is a Director and Vice Chairman of Enterprise Bancorp Inc.  He was a partner in twenty radio stations. Mr. Lerner was previously elected as a Class C Director to serve until the 2010 Annual Meeting.

 

Peter K. Markell — Mr. Markell, age 52, has been a Director of the Corporation since November 1, 2004.  He joined Partners HealthCare System, Inc. as Vice President for Finance in 1999. He had previously been a partner at Ernst & Young LLP from 1988 to

 

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1998. Mr. Markell was previously elected as a Class C Director to serve until the 2010 Annual Meeting.

 

George Q. Nichols — Mr. Nichols, age 78, has been a Director of the Corporation since 1995.  He is Senior Vice President of Courier and became Chairman of National Publishing Company, a wholly owned subsidiary of Courier, in 2000.  He had previously been President of National Publishing Company since 1976.  Mr. Nichols was previously elected as a Class C Director to serve until the 2010 Annual Meeting.

 

Ronald L. Skates — Mr. Skates, age 66, has been a Director of the Corporation since 2003.  He is a private investor. From 1989 through 1999, he was president and chief executive officer of Data General Corporation, a computer and storage manufacturing company. He joined Data General in 1986 and was elected a director and executive vice president and chief operating officer in 1988. He retired in 1999 when EMC Corp. acquired the company. Prior to joining Data General, Mr. Skates was a certified public accountant and an audit partner with Price Waterhouse & Co. He is a director of Gilbane Corporation, Raytheon Company and State Street Corporation. Mr. Skates is a trustee of Massachusetts General Physicians’ Organization, Inc. Mr. Skates was previously elected as a Class C Director to serve until the 2010 Annual Meeting.

 

Richard K. Donahue (Retiring Director) — Mr. Donahue, age 80, has been a Director of the Corporation since 1995.  He retired as Vice Chairman of NIKE, Inc. of Beaverton, Oregon and as a member of the NIKE Board of Directors, having served since 1977.  He previously served as President and Chief Operating Officer of NIKE, Inc. from 1990 to 1994.  He was a partner in the law firm of Donahue & Donahue Attorneys, P.C. and is presently retired.  Mr. Donahue was previously elected as a Class A Director to serve until the 2008 Annual Meeting.  He will be retiring effective January 16, 2008 when his term ends.

 

CORPORATE GOVERNANCE

 

                The Corporation’s Corporate Governance Guidelines (attached as Exhibit A), the charters of the Nominating and Corporate Governance Committee, the Audit Committee, and the Compensation and Management Development Committee, the Corporation’s Business Conduct Guidelines, and the Environmental, Health and Safety Policy are available on the Corporation’s website at www.courier.com.  Printed copies are available free of charge by contacting General Counsel, Courier Corporation, 15 Wellman Avenue, North Chelmsford, MA 01863.

 

Code of Ethics

 

                On November 4, 2003, the Board of Directors adopted, and subsequently amended on September 18, 2007, The Courier Corporation Business Conduct Guidelines for all its directors, officers and employees.  The Courier Corporation Business Conduct Guidelines have been posted on the Corporation’s website at www.courier.com.

 

Board Meetings and Committees

 

                The Board of Directors of the Corporation held a total of eight meetings during the fiscal year ended September 29, 2007.  The Board of Directors has established the following separately designated standing committees: an Audit and Finance Committee, a

 

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Compensation and Management Development Committee and a Nominating and Corporate Governance Committee.

 

Audit and Finance Committee

 

                The Audit and Finance Committee (the “Audit Committee”) consists of Messrs. Lerner, Markell, and Skates.  Mr. Skates serves as Chairperson of the Audit Committee. The Board of Directors has determined that Mr. Skates and Mr. Markell each meet all of the qualifications of an Audit Committee Financial Expert, as defined in Item 407(d)(5) of Regulation S-K under the Securities Exchange Act of 1934.  All the members of the Audit Committee are “independent”, under the rules of the National Association of Securities Dealers and the Commission.  The functions of the Audit Committee include appointment and oversight of independent auditors for the Corporation; determination of compensation payable to the independent auditors; consultation with the Corporation’s independent auditors regarding the plan of audit; review, in consultation with the independent auditors, of their audit report and management letter; and review of reports and recommendations of the Corporation’s internal audit department. The Audit Committee has established procedures for the receipt, retention and treatment of complaints received regarding accounting, internal accounting controls or auditing matters.  These procedures, along with the Audit Committee Charter are available to stockholders on the Corporation’s website at www.courier.com. The Audit Committee held five meetings during the last fiscal year.  A part of each of the meetings was held with representatives of the Corporation’s independent auditors outside of the presence of management.  The Audit Committee also met separately with the Corporation’s internal audit manager at each of these formal meetings.

 

Compensation and Management Development Committee

 

                The Compensation and Management Development Committee (the “Compensation Committee”) consists of Messrs. Donahue, Hoff, Lerner, Markell, Skates, and Thorndike, Ms. Wagner and Professor Curley.   Mr. Hoff serves as Chairperson of the Committee.  All the members of the Compensation Committee are “independent” under the rules of the National Association of Securities Dealers and the Commission.  The Compensation Committee administers the Corporation’s executive compensation programs and approves the compensation of executive officers.  The Compensation Committee Charter is available to stockholders on the Corporation’s website at www.courier.com.  The Committee meets each September and November to formally review executive compensation and may meet at other times during the year on compensation matters.

 

                At its meeting in September of each year, the Compensation Committee reviews compensation data provided by the Vice President of Human Resources to establish compensation targets for the executives for the upcoming fiscal year.  The Compensation Committee has not engaged any compensation consultant to assist it in its compensation decisions.  As part of the process of setting executive compensation targets, the Compensation Committee reviews the following:

Compensation tally sheets for the Chief Executive Officer (“CEO”) and each executive as prepared by the Vice President of Human Resources. The tally sheets provide a four-year review of all compensation earned by the executives under our Executive Compensation Program, including salary, bonuses, perquisites, company contributions made on executives’ behalf to the Corporation’s retirement plan and deferred compensation plan, the value of stock options and restricted stock grants, and potential future payments under long-term plans and change in control arrangements.

 

 

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Compensation data of other companies of similar size or in similar industries as the Corporation. For fiscal year 2007, the Compensation Committee reviewed compensation data of executives from our peer group, which consisted of Banta Company; Bowne & Co.; Cadmus Communications Corporation; Ennis Business Forms, Inc.; The Standard Register Company; Thomas Nelson, Inc. and John Wiley & Sons. Inc.; and survey data as provided through The Survey Group 2006 Management Compensation Survey, which is a survey of compensation from 296 Massachusetts-based companies, reported on an aggregate basis based on size, industry, and geographic location without reference to company names.

 

                Each year at the September meeting, the Compensation Committee also grants stock options and restricted stock awards to the CEO and other executives as part of their compensation package for the next fiscal year.

 

                At its November meeting each year, following its review of the prior fiscal year’s operating results, the Compensation Committee approves awards earned under our Executive Compensation Program for the fiscal year just ended.  In addition, the Compensation Committee reviews the compensation targets it established for the CEO and other executives at the September meeting and formally approves the compensation of the CEO and the proposed compensation for the other executives for the new fiscal year.  The Compensation Committee also sets the performance targets for the new fiscal year’s performance-based incentive plans.

 

Management’s Role in the Compensation-Setting Process.  The CEO provides his evaluation of the performance of the other executives to the Compensation Committee.  Using tally sheets and peer group and company survey data as prepared by the Vice President of Human Resources described above, he recommends salary, non-equity incentive compensation, and equity compensation for the other executives, and recommends the business performance targets and objectives for approval by the Compensation Committee in connection with incentive compensation plans.  The CEO does not participate in discussions of his compensation by the Compensation Committee.

 

Nominating and Corporate Governance Committee

 

                The Nominating and Corporate Governance Committee (the “Nominating Committee”) consists of Messrs. Donahue, Hoff, Lerner, Markell, Skates, and Thorndike, Ms. Wagner and Professor Curley.  Professor Curley serves as Chairperson of the Nominating Committee.  All the members of the Nominating Committee are “independent” under the rules of the National Association of Securities Dealers and the Commission.  The Nominating and Corporate Governance Committee Charter is available to stockholders on the Corporation’s website at www.courier.com.

 

The Nominating Committee, on behalf of the Board of Directors (the “Board”), is responsible for identifying individuals qualified to become Board members and recommending to the Board Director nominees for election, including nominees to be elected or re-elected as Directors at each annual meeting of stockholders, as more fully detailed in the Nominating Committee Charter.  The Nominating Committee also periodically reviews and monitors the Corporation’s performance against the corporate governance guidelines established by the Committee.  Each of the Directors is in compliance with the stock ownership requirements set forth in the corporate governance guidelines.  Pursuant to the Nominating Committee’s Charter, the Nominating Committee

 

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will review and evaluate Director candidates recommended by stockholders as more fully set forth therein.

 

The Nominating Committee recommended that Messrs. Hoff and Story, and Ms. Wagner each be nominated for election to serve as Class A Directors until the 2011 Annual Meeting.  The Nominating Committee held two meetings during the last fiscal year.

 

Participation at Meetings

 

Each Director attended at least 75% of the total number of meetings held by the Board of Directors and any committees on which he or she served during fiscal year 2007. The Corporation has a formal policy requiring members of the Board to attend our annual meeting, and each of the Directors attended the 2007 Annual Meeting.

 

Contacting Members of the Board of Directors

 

The policy of the Board of Directors is that stockholders of the Corporation may contact the Board of Directors, including the Chairman of the Board, the independent Directors as a group, or any individual Director, by writing to the Board of Directors c/o, Courier Corporation, Attention: Compliance Officer, 15 Wellman Avenue, North Chelmsford, MA 01863.  Such writing must clearly specify the name of the individual Director or group of Directors to whom such writing is addressed.

If you wish to contact the Audit Committee to report complaints or concerns regarding accounting, internal accounting controls or auditing matters, you may do so by writing to the Compliance Officer, Courier Corporation, 15 Wellman Avenue, North Chelmsford, MA 01863.  You are welcome to make such reports anonymously, but we prefer that you identify yourself so that we may contact you for additional information if necessary or appropriate.

We recommend that all correspondence be sent via certified U.S. mail, return receipt requested.  All such correspondence received in this manner will be forwarded to the relevant Director or group of Directors or other addressee.

Director Independence

                The Board of Directors has determined that each of Messrs. Donahue, Hoff, Lerner, Markell, Skates and Thorndike, Prof. Curley and Ms. Wagner is an “independent director” in accordance with corporate governance rules of the National Association of Securities Dealers as a result of having no relationship with the Corporation other than (1) serving as a Director and a Board of Director committee member, (2) receiving related fees as disclosed in this Proxy Statement, and (3) having beneficial ownership of the Corporation’s Common Stock as disclosed in the section of this Proxy Statement entitled “Voting Securities — Security Ownership of Certain Beneficial Owners and Management.”  Therefore, the Corporation currently has a majority of “independent directors.”

Meetings of Independent Directors

                Independent directors of the Corporation regularly meet in executive session outside the presence of management.  The presiding director for these meetings is Mr. Thorndike.  Any interested parties who wish to make their concerns known to the

 

9



 

independent directors may avail themselves of the procedures listed above in the section of this Proxy Statement entitled “Contacting Members of the Board of Directors.”

Related Party Transactions

 

                Under the terms of the Corporation’s Audit Committee Charter and its Business Conduct Policy, information about transactions involving related persons would be reviewed by the independent directors of the Corporation.  Related persons include the Corporation’s directors and executive officers, as well as immediate family members of directors and officers.  If the determination is made that a related person has a material interest in any transaction of the Corporation, then the Corporation’s independent directors would review, and if it were in the best interest of the Corporation, approve or ratify it.  In addition, the transaction would be required to be disclosed in accordance with the Commission’s rules.  No such transactions took place.

 

Directors’ Compensation

 

                On January 17, 2007, the Corporation paid its non-employee Directors (Messrs. Donahue, Hoff, Lerner, Markell, Skates and Thorndike, Prof. Curley and Ms. Wagner) an annual retainer of $25,000 for calendar year 2007.  During fiscal year 2007, they also received meeting fees of $1,250 per meeting attended of the Board of Directors and any committee meetings of the Board of Directors. The Corporation paid annual retainer fees to non-employee Directors who serve as Chairpersons of Committees of the Board of Directors as follows:  Compensation Committee, $10,000; Audit Committee, $10,000; and Nominating Committee, $5,000.  Non-employee directors may receive additional fees for service on executive, strategic initiative, shareholder value and other special committees that the Board of Directors may from time to time establish.  Total compensation earned for fiscal 2007 for each of the non-employee Directors is detailed in the table below.

 

For fiscal 2007, the non-employee Directors were allowed, at their election, to receive all or one-half of their annual retainer fees for services as Directors and as Chairpersons of Committees (“annual retainer fees”) in the form of stock units or shares of Common Stock pursuant to the Corporation’s 2005 Stock Equity Plan (the “Stock Equity Plan”).  On January 17, 2007, an aggregate of 4,338 shares were awarded to the following Directors who elected to participate in the Stock Equity Plan:  Mr. Donahue, 638 shares; Mr. Hoff, 893 shares; Mr. Markell, 638 shares; Mr. Skates, 893 shares; Mr. Thorndike, 638 shares; and Ms. Wagner, 638 shares.  In addition, the non-employee Directors receive an annual stock option award granted at fair market value on the date of each annual meeting of stockholders.  This award is valued at $50,000 based on the Black-Scholes option pricing model.  Options for 4,758 shares of Common Stock each, or an aggregate of 38,064 shares, were granted on January 17, 2007 at an exercise price of $39.18 per share to all non-employee Directors.  All such options have a term of five years from the date of grant, are exercisable immediately and (except for transfers to or for the benefit of the Director’s immediate family) are non-transferable otherwise than by will or the laws of descent and distribution.  Both the stock grant and option awards were fully vested on the date of grant.

 

 

10



 

Directors’ Compensation Table - 2007

 

 

 

 

 

 

 

 

 

 

 

Change in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value and

 

 

 

 

 

 

 

Fees

 

 

 

 

 

Non-Equity

 

Non-qualified

 

All

 

 

 

 

 

Earned or

 

 

 

 

 

Incentive Plan

 

Deferred

 

Other

 

 

 

 

 

Paid in

 

Stock

 

Option

 

Compensation

 

Compensation

 

Comp

 

Total

 

Name of Director

 

Cash ($)(1)

 

Awards($)(2)

 

Awards($)(3)(4)

 

($)(5)

 

Earnings(5)

 

($)(5)

 

($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kathleen Foley Curley

 

45,000

 

0

 

50,000

 

0

 

0

 

0

 

95,000

 

Richard K. Donahue

 

12,500

 

25,000

 

50,000

 

0

 

0

 

0

 

87,500

 

Edward J. Hoff

 

13,750

 

35,000

 

50,000

 

0

 

0

 

0

 

98,750

 

Arnold S. Lerner

 

46,250

 

0

 

50,000

 

0

 

0

 

0

 

96,250

 

Peter K. Markell

 

21,250

 

25,000

 

50,000

 

0

 

0

 

0

 

96,250

 

Ronald L. Skates

 

21,250

 

35,000

 

50,000

 

0

 

0

 

0

 

106,250

 

W. Nicholas Thorndike

 

13,750

 

25,000

 

50,000

 

0

 

0

 

0

 

88,750

 

Susan L. Wagner

 

13,750

 

25,000

 

50,000

 

0

 

0

 

0

 

88,750

 


(1)

This column includes Board and Committee meeting fees paid in cash. It also includes annual retainers and committee retainers.

 

 

(2)

This column reflects the value of the stock grants that were awarded to those Directors who chose to participate in the Stock Equity Plan and receive their annual retainer and committee retainer in shares of stock.

 

 

(3)

This column reflects the Black-Scholes value of the annual stock option awards granted at the closing market price on January 17, 2007, the date of the annual meeting of stockholders.

 

 

(4)

Non-employee Directors had the following aggregate stock options outstanding at the end of fiscal 2007:

 

 

 

Stock Options Outstanding (#)

 

 

 

Kathleen Foley Curley

 

23,727

Richard K. Donahue

 

25,227

Edward J. Hoff

 

30,477

Arnold S. Lerner

 

25,227

Peter K. Markell

 

14,727

Ronald L. Skates

 

28,227

W. Nicholas Thorndike

 

4,758

Susan L. Wagner

 

14,727

 

(5)

These columns were intentionally left blank.  The non-employee Directors do not receive non-equity incentive plan compensation, pension, or non-qualified deferred compensation, nor did they receive any other form of compensation.

 

AUDIT COMMITTEE REPORT

 

The primary purpose of the Audit Committee is to assist the Board of Directors in its general oversight of the Corporation’s financial reporting process.

 

Management is responsible for the preparation, presentation, and integrity of the Corporation’s financial statements, accounting and financial reporting principles, internal controls, and procedures designed to ensure compliance with accounting standards, applicable laws, and regulations.  The Corporation’s independent auditors, Deloitte & Touche LLP, are responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles.

 

11



 

The Audit Committee has reviewed and discussed the audited financial statements of the Corporation for the fiscal year ended September 29, 2007 with the Corporation’s management and has discussed with Deloitte & Touche LLP the matters required to be discussed by Statement on Auditing Standards Board Standard No. 61 as amended, “Communication with Audit Committees”.  In addition, Deloitte & Touche LLP has provided the Audit Committee with the written disclosures and the letter required by the Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees”, and the Audit Committee has discussed with Deloitte & Touche LLP their independence.

 

Based on these reviews and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Corporation’s Annual Report on Form 10-K for the fiscal year ended September 29, 2007, for filing with the Securities and Exchange Commission.

 

Ronald L. Skates                  Arnold S. Lerner                   Peter K. Markell

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Compensation Philosophy

 

The goals of our Executive Compensation Program are to:

 

attract and retain high quality management talent and to motivate them to build and sustain value for shareholders;

provide aggregate compensation opportunities that, when performance goals are achieved, will be comparable to those provided by other companies with revenues and operating characteristics similar to us; and

establish for employees in management positions a significant risk/reward compensation structure through incentive pay plans.

 

Our Executive Compensation Program is designed to accomplish these goals by providing an annual incentive to motivate executives to achieve our annual earnings goals and two long-term incentives tying executives’ compensation to the results of the business decisions they make and to the creation of shareholder value over the long term.

 

Compensation Elements

 

The cash- and stock-based, short- and long-term components of our Executive Compensation Program begin with a total compensation amount established for each executive officer.  In determining total compensation amounts, the Committee considers the following:

 

compensation data of companies of a similar revenue size, in similar markets and in regional areas in which we compete for executive talent. Those companies are listed above on page 8. However, there is no attempt to benchmark total compensation of executive officers to particular levels (e.g., median, salary midpoint) within the survey group data. The Committee reviews the compensation data to make sure that the total compensation paid to our executives remain competitive.

 

12



 

the total compensation earned by executives over the past four years as provided on tally sheets provided to the Committee. The tally sheet information provides confirmation to the Committee that our compensation program is indeed performance-based.

the Corporation’s initiatives for the new fiscal year, and the challenges in achieving those initiatives.

the performance of our executives.

individual job responsibilities of our executives.

 

 

Our Executive Compensation Program is designed such that three of the four compensation components are variable; therefore, total compensation can fluctuate significantly year-to-year if performance targets are exceeded, achieved, or not attained.

 

Total compensation, as defined in our plan, is comprised of a fixed pay component, which is base salary, and up to three variable pay components, which consist of an annual cash bonus, a long-term stock incentive, and a long-term performance incentive.  The Committee uses as a guide a target pay mix for the four compensation components.  For the CEO, the target pay mix is 45 percent in fixed pay, 20 percent in annual cash bonus, 20 percent in the long-term stock incentive, and 15 percent in a long-term performance incentive.  For the other executive officers, the target pay mix is 50 percent in fixed pay, 20 percent in annual cash bonus, 15 percent in the long-term stock incentive, and 15 percent in the long-term performance incentive. The Committee believes it is reasonable and appropriate for executive officers to have at least half of their total compensation in the form of variable pay. The Committee further believes it is appropriate for the CEO to have a higher percentage of his total compensation in the form of variable pay because of the importance of his role to grow the Corporation and increase total shareholder returns.  The actual pay mix among all of these components may fluctuate year to year among individual executives.

 

The total compensation for fiscal 2007 for all of the executives, with the exception of Messrs. Nichols, Zimmerman, and Tobin, consisted of the four compensation components described above.  In light of Mr. Nichols’ retirement plans, the Committee did not believe it was appropriate to award him any long-term incentive awards.  Mr. Zimmerman, in his role as Vice President of Publishing, has his entire long-term incentive delivered as a long-term stock incentive, rather than a performance incentive, to encourage greater stock ownership and because the publishing segment is expected to have less impact on our return on assets (“ROA”) and more impact on our long-term shareholder value.  Mr. Tobin shifted roles in fiscal 2007, upon the announcement of Mr. Nichols’ intentions to retire, to focus on key customer relationships for National Publishing Company.  Mr. Tobin’s entire long-term incentive is delivered as a long-term stock incentive because as in the case of Mr. Zimmerman, Mr. Tobin’s role is expected to have more impact on our long-term shareholder value.

 

There is some disparity between the total compensation paid to our top three named executive officers and the other three named executive officers.  This is primarily because Messrs. Conway, Story and Nichols have a long tenure with us while the others have been promoted to their executive management roles only in recent years.

 

1.  Base Salary.  The base salary is designed to compensate executives for fulfilling their job responsibilities, their expected contribution to our performance, and to aid in their attraction and retention.  The base salary for Mr. Conway was increased by 9 percent for fiscal 2007 partly because of our strong fiscal year 2006 performance and partly

 

13



 

because compensation data of CEO’s in companies of similar size or in similar industries show that Mr. Conway’s base salary for 2006 was below the median.  Mr. Story received a base increase of 15 percent and Mr. Folger received a base increase of 25 percent in recognition of their increase in job responsibilities due to their promotions to Chief Operating Officer and Chief Financial Officer respectively.  Mr. Nichols received a 4 percent increase in his salary for fiscal 2007.  Mr. Zimmerman received an 11 percent increase in his fiscal 2007 salary, which was reflective of his expanded role upon the acquisition of a new publishing subsidiary.    Mr. Tobin received no base increase for fiscal 2007.

 

At its meeting in November 2007, the Committee approved a 3 percent base salary increase for fiscal year 2008 for all executives, including the CEO.  In light of the significant adjustment in base salaries for most executives in fiscal 2007, the Committee does not believe there is any need to provide for any increases beyond a 3 percent increase to cover increases in cost of living.

 

2.  Annual Cash Bonus.  The annual cash bonus is intended to promote the achievement of our business goals and annual earnings objectives, and is entirely based on quantitative objectives established by the Committee at its November meeting.  An “annual cash bonus target” is set by the Committee for each executive for the fiscal year, which corresponds to an earnings target.  If the earnings target is met for the fiscal year, the executive earns his or her annual cash bonus target for the year.  The cash bonus plan provides for the actual amount of annual cash bonus awards to vary from 0 percent of target to 200 percent of target depending on the Corporation’s actual earnings for the fiscal year.  No annual cash bonus is earned unless a minimum earnings threshold is achieved, at which an executive earns 25 percent of the annual cash bonus target.  Earnings targets are set in 25 percent increments, from 25 percent to a maximum of 200 percent, at which an executive may earn that percentage of his annual cash bonus target based on the earnings target.

 

All executives had a portion of their annual cash bonus for fiscal 2007 based on an earnings per share target for the Corporation.  Earnings growth is a key measure that we use to measure our performance year to year.  Therefore, the Committee believes it is appropriate to use an earnings per share measure for the annual cash bonus.  With the exception of Messrs. Zimmerman and Tobin, the CEO and other named executives had 100 percent of their annual bonus based on our achieving the earnings per share target.  Mr. Zimmerman had one-third of his annual cash bonus based on our achieving the earnings per share target.  The other two-thirds of his cash bonus was based on a pretax income target for our publishing segment, which the Committee believes is an appropriate measure since he manages just this segment of the Corporation and pretax income of the segment is a primary measurement of his performance for the year.  Mr. Tobin had one-half of his annual cash bonus based on our achieving the earnings per share target.  The other one-half of his cash bonus was based on a pretax income target for our book manufacturing segment, which the Committee believes is an appropriate measure since Mr. Tobin managed this segment of the Corporation for a portion of the year before shifting to his current role in managing key account relationships for National Publishing Company.

 

14



 

The earnings targets for fiscal 2007 are listed below:

 

 

 

0%

 

25%

 

50%

 

75%

 

100%

 

125%

 

150%

 

175%

 

200%

Earnings Per Share

< =

$

2.04

 

$

2.05

 

$

2.10

 

$

2.15

 

$

2.20

 

$

2.25

 

$

2.30

 

$

2.35

 

$

2.40

Book Manufacturing Pretax Income ($000 omitted)

< =

$

34,174

 

$

34,175

 

$

34,850

 

$

35,525

 

$

36,200

 

$

36,875

 

$

37,550

 

$

38,225

 

$

38,900

Publishing Segment Pretax Income ($000 omitted)

< =

$

9,099

 

$

9,100

 

$

9,450

 

$

9,800

 

$

10,150

 

$

10,500

 

$

10,850

 

$

11,200

 

$

11,550

 

Based on our performance in fiscal 2007, all of the executives earned zero percent of their annual cash bonus target that was based on the earnings per share measure because the minimum earnings threshold target of $2.05 was not achieved.  Mr. Zimmerman earned zero percent of his bonus award that was based on the publishing segment pretax income target for fiscal 2007 since the minimum threshold earnings target of $9.1 million was not achieved in 2007. Therefore, Messrs. Conway, Story, Folger, Nichols, and Zimmerman earned no bonus award for fiscal 2007. Mr. Tobin earned zero percent of the annual cash bonus target that was based on the earnings per share measure; he earned 100 percent of his bonus that was based on the book manufacturing segment pretax income measure because the 100 percent earnings target for that segment was achieved for fiscal 2007.

 

While Mr. Nichols was not entitled to receive a cash bonus under our annual cash bonus plan for fiscal 2007, the Committee nevertheless awarded him a special cash award of $30,000 in recognition of his 30 years of extraordinary service with the Corporation as he transitions toward retirement in the coming year.  In the case of Mr. Folger, the Committee determined that the compensation paid to him is significantly below what is paid to Chief Financial Officers of companies in our peer group.  Accordingly, the Committee awarded him a discretionary cash bonus of $20,000.

 

Earnings targets for the fiscal 2008 annual cash bonus will continue to be based on earnings per share and pretax income targets established by the Committee.

 

Change in Control.  In the event we undergo a change in control, executives are entitled to receive a pro rata portion of their annual cash bonus target.  It is the Committee’s belief that making such awards pro rata based on the elapsed time period and target amount is a fair and reasonable manner in which to treat executives who, as a result of the change in control, may not have the opportunity to earn all of this incentive.

 

3.  Long-Term Stock Incentive (“LTSI”).  The LTSI is comprised of awards of stock options and restricted stock under the Courier Corporation Amended and Restated 1993 Stock Incentive Plan approved by shareholders in November 2004. The Committee believes that stock-based awards closely align the interests of the executive officers with those of our shareholders.  The value of stock option awards cannot be realized unless an appreciation in the price of our Common Stock occurs over a number of years.  Similarly, the value of restricted stock awards will fluctuate with the value of our Common Stock.  We use a mix of options and restricted stock in order to control our annual run rate and minimize dilution.

 

Stock Option Awards.  One-half of the compensation value under the LTSI is delivered as a stock option.  The Committee uses the Black-Scholes option-pricing model to determine the number of shares that correspond to the compensation value to be

 

15



 

delivered through a stock option.  The Committee awards the stock option with an exercise price equal to the fair market value of the Corporation’s Common Stock on the date of the award.  Beginning with awards for fiscal 2006, the Committee granted stock option awards with a five-year term.  Stock option awards granted as part of the LTSI vest in equal amounts annually over a three-year period.

 

Restricted Stock Grants.  The other half of the compensation value to be delivered under the LTSI is awarded as a restricted stock grant which vests in full three years following the date of the grant.  Executives receive dividends on unvested shares during the restricted period in the same amount and manner as are paid to all shareholders.  In addition, we provide tax assistance to the executive of up to 30 percent of the taxable value realized upon vesting of the restricted stock grant in order to encourage our executives to retain their shares of our Common Stock and not to sell them to meet tax obligations that result from the vesting.

 

In addition to the LTSI awarded under the Executive Compensation Program, the Committee may also make discretionary stock awards for special purposes.   In fiscal 2007, the Committee awarded a restricted stock award in November 2006 to Mr. Conway in recognition of our strong fiscal 2006 earnings performance; to Mr. Story in recognition of his promotion to Executive Vice President and Chief Operating Officer; and to Mr. Folger in recognition of his promotion to Senior Vice President and Chief Financial Officer.  A description of these awards including the number of shares granted to these individuals is set forth in the Grant of Plan-based Awards table.

 

Change in Control.  If we should undergo a change in control, all outstanding restricted stock grants for the executives will vest and all outstanding stock options will become fully exercisable.  It is the Committee’s belief that accelerating such awards is a fair and reasonable manner in which to treat executives who, as a result of the change in control, could otherwise forfeit the value of these incentives.

 

4.  Long-Term Performance Incentive (“LTPI”).  The LTPI is a cash award earned by executive officers based upon our achieving an average return on asset (ROA) target over a three-year performance period as compared against our peer group’s average ROA over a comparable three-year performance period.  The Committee believes the three-year ROA measure is an effective way to encourage executives to manage our operations responsibly and to invest in our business wisely so that our ROA exceeds the performance of our industry peers over the long-term. ROA is a financial measure typically used in industries where investments in equipment are a critical component of performance.

 

The LTPI earned at the close of fiscal 2007 is the 2005 LTPI, which covers the three-year performance period of fiscal 2005, 2006, and 2007.  The award is earned if our average ROA for this period exceeds by 5 percent or more our peer group’s average ROA for a comparable period.  Since our average ROA for this three-year period was 11.9 percent and our peer group’s average ROA for the comparable period was 5.3 percent, the 2005 LTPI was earned.   The peer group of companies for the 2005 LTPI originally consisted of Banta Company; Bowne & Co.; Cadmus Communications Corporation; Ennis Business Forms, Inc.; The Standard Register Company; Thomas Nelson, Inc.; and John Wiley & Sons, Inc.  The Committee selects the peer group of companies based on a variety of factors including market capitalization, annual revenues, industry, and number of employees.  During the three-year performance period of the 2005 LTPI, Thomas Nelson, Inc. became a privately owned company in 2006, Banta Corporation was acquired by R.R. Donnelley & Sons in 2006; and Cadmus Communications Corporation was acquired by

 

16



 

Cenveo, Inc. in 2007.  As a result, these companies were excluded in the calculation of the three-year Peer Group ROA.

 

The 2005 LTPI awards were approved at the Committee’s November 2007 meeting and paid out soon thereafter.  The 2006 LTPI which covers the three-year period of fiscal 2006, 2007, and 2008, and the 2007 LTPI which covers the three-year period of fiscal 2007, 2008, and 2009 will be earned if our average ROA exceeds by 5 percent or more our peer group’s for the comparable three-year period.   The peer group of companies for fiscal 2006 and 2007 LTPI will consist of Bowne & Co.; Ennis Business Forms, Inc.; The Standard Register Company; John Wiley & Sons. Inc.; Consolidated Graphics; Scholastic, Inc. and Borders Group, Inc.

 

Change in Control.  In the event we undergo a change in control, executives are entitled to receive a pro rata portion of their target LTPI awards.  It is the Committee’s belief that making such awards pro rata based on the elapsed time period is a fair and reasonable manner in which to treat executives who, as a result of the change in control, may not have an opportunity to earn these incentives.

 

Other Benefits and Perquisites

 

Executives generally receive the same healthcare benefits, life and disability insurance, and vacation benefits as other employees.  The executives participate in the same manner as all employees in the Courier Profit Sharing and Savings Plan, which is our retirement plan.   The plan provides all non-union employees with a 401k savings feature, a company matching contribution, and an annual profit sharing contribution.

 

We provide executives with certain limited perquisites and other personal benefits that the Committee believes are reasonable and appropriate for attracting and retaining executives for key positions.  Executives receive a monthly car allowance, with Mr. Conway receiving a car allowance of $1,408 per month and the other named executive officers receiving an allowance of $1,179 per month.  This amount is normally adjusted annually in January by the same percentage as the percentage increase in the annual IRS mileage reimbursement rate.  We pay the annual dues, plus tax assistance on the value of the dues, associated with a country club membership for Messrs. Conway and Nichols, other club membership dues for Messrs. Conway and Nichols, and the annual tax preparation and planning fees for Mr. Nichols.  Messrs. Conway, Nichols, and Story participate in the Courier Corporation Deferred Compensation Program, which is a non-qualified, unfunded plan that provides for an annual award.  The annual award is the difference between what our annual profit sharing contribution would have been but for the IRS-mandated compensation maximum and the actual profit sharing contribution made to the participant’s account in the Courier Profit Sharing and Savings Plan for the plan year (which is a calendar year).   Interest is credited annually based on the investment return of one of four mutual funds within the Courier Profit Sharing and Savings Plan that the participant elects prior to the beginning of the plan year.  Messrs. Conway, Nichols, and Story make no contributions to the plan.

 

Senior Executive Severance Program

 

Our Board of Directors determined that it is appropriate to reinforce and encourage the continued attention and dedication of senior members of our management to their assigned duties without distraction in potentially disturbing circumstances arising from the possibility of a change in control.  In December 2005, the Board of Directors

 

17



 

approved the Amended and Restated Senior Executive Severance Program which sets forth the severance compensation which we will pay to certain executives in the event that the executive’s employment with us terminates under certain circumstances if we should undergo a change in control.

 

Messrs. Conway, Nichols, Story, Folger, Zimmerman, and Tobin are participants in our Senior Executive Severance Program (the “Severance Program”).  In accordance with the Severance Program, if we should undergo a “change in control,” as defined in the Severance Program, while one of these individuals is an employee, and his employment is subsequently terminated for reasons other than death, disability, or termination for cause, he shall be entitled to a severance payment and continuation of participation in our group health plan until the end of the second calendar year following the year of termination.

 

The occurrence or potential occurrence of a change in control transaction creates uncertainty regarding the continued employment of executive officers; and often times, such transactions are immediately followed by significant organizational changes, especially at the senior officer level.  In order to encourage executive officers to remain with us to create shareholder value and to obtain the highest value possible should we be acquired in the future, we have agreed to provide the severance benefits described above should their employment be terminated following the transaction.  In order to give the executives comfort that the obligations under the Severance Program will be fulfilled by any acquirer, we have provided for payment of severance benefits on termination by the executive for “good reason” (e.g., as a result of changes in title, responsibilities or salary), and which includes termination by the individual for any reason during a 30-day window commencing on the first anniversary of the change in control.  We provided this window period whereby the executive can resign and receive his severance to encourage the executive to remain employed for at least one year after the transaction to provide transition assistance to the acquirer.  No tax gross-up payment is provided under the Severance Program because of cost consideration.  It is the Committee’s belief that the benefits provided under our Severance Plan are consistent with severance benefits provided by other companies of similar size and in similar industries as us.

 

Supplemental Retirement Benefit Agreement

 

In June 1992, our Board of Directors approved a Supplemental Retirement Benefit Agreement with Mr. Nichols providing for a supplemental retirement benefit upon his retirement to encourage Mr. Nichols to remain with us at least until age 70.  The annual amount of the benefit Mr. Nichols is to receive is $70,000 upon retirement at or over age 70.  Mr. Nichols is currently age 78, and is still employed by us.  This benefit is more fully described in the section titled, “Pension Benefits.”

 

Other than Mr. Nichols, we have not entered into a supplemental retirement benefit agreement with any executive.

 

Employment Agreements

 

In light of Mr. Nichols’ importance to the success of our subsidiary, National Publishing Company, we entered into an employment agreement with Mr. Nichols effective as of March 3, 1993.  Mr. Nichols became Chairman of National Publishing Company in 2000, having served as President since 1976.  Mr. Nichols currently works full time.  The employment agreement provides that Mr. Nichols may elect part-time employment at a

 

 

18


 


 

reduced level of compensation with current benefits remaining unchanged. We may not terminate Mr. Nichol’s employment other than for cause.

 

Other than Mr. Nichols, we have not entered into an employment agreement with any executive.

 

Tax Deductibility of Compensation

 

In its deliberations, the Committee considers ways to maximize deductibility of executive compensation, but nonetheless retains the discretion to compensate executive officers at levels the Committee considers commensurate with their responsibilities and achievements. We have not adopted a policy that all executive compensation be fully deductible.

 

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.

 

We, the Compensation Committee of the Board of Directors of Courier Corporation, have reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management. Based on such review and discussion, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement for the fiscal year ended September 29, 2007.

 

Compensation Committee of the Board of Directors

 

Kathleen Foley Curley

 

Peter K. Markell

Richard K. Donahue

 

Ronald L. Skates

Edward J. Hoff

 

W. Nicholas Thorndike

Arnold S. Lerner

 

Susan L. Wagner

 

 

Summary Compensation Table

 

The following narrative, table, and footnotes describe the “total compensation” earned during fiscal 2007 by our Named Executive Officers (“executives”).

 

The table discloses compensation information for the Chief Executive Officer, those who served as Chief Financial Officer during fiscal 2007, and the three highest paid other executives as follows: Chief Executive Officer, James F. Conway, III; the Chief Operating Officer, Robert P. Story, Jr., who also served as Chief Financial Officer of the Corporation until his promotion to his current position in November 2006; the Chief Financial Officer, Peter M. Folger, who was promoted to this position in November 2006; George Q. Nichols, Chairman of National Publishing Company; Eric J. Zimmerman, Vice President, Publishing; and Peter Tobin, Executive Vice President, National Publishing Company.

 

The table discloses the salary of each executive. “Salary” is base salary paid during the fiscal year before salary reduction contributions to health insurance plans and to the Courier Profit Sharing and Savings Plan.

 

The amounts reported under the heading, “Bonus”, reflect discretionary, non-performance-based awards granted to Mr. Nichols and Mr. Folger, as described in the “Compensation Discussion and Analysis” section above.

 

19



 

The amounts reported under the heading, “Stock Awards”, reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ending September 29, 2007, in accordance with Statement of Financial Accounting Standards No. 123R (“SFAS 123R”), for awards of restricted stock grants subject to time-based vesting, which were granted in prior fiscal years and in fiscal 2007. The amounts reported under the heading, “Option Awards”, reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year ending September 29, 2007, in accordance with SFAS 123R, for awards of stock options subject to time-based vesting, which were granted in prior fiscal years and in fiscal 2007. Grants of restricted stock and stock options are explained in detail in the “Compensation Discussion and Analysis” section above.

 

Amounts listed as “Non Equity Incentive Plan Compensation” were earned in fiscal 2007 under the annual cash bonus for fiscal 2007 and the 2005 LTPI for the three-year performance period ended September 29, 2007, as described more fully in the “Compensation Discussion and Analysis” section above. These amounts were approved for payment by the Compensation Committee on November 7, 2007, and paid shortly thereafter. We have omitted the column with the heading, “Change in Pension Value and Non Qualified Deferred Compensation Earnings,” as we do not consider the interest credited under the Deferred Compensation Plan as above market. While we do provide a supplemental pension benefit for Mr. Nichols, that benefit has been fully accrued as Mr. Nichols is age 78.

 

Amounts listed under the heading, “All Other Compensation”, show the combined value of the executive’s perquisites, such as automobile allowance, payment of country club dues, club membership dues, and financial planning; tax assistance on amounts taxable as compensation as a result of vesting of restricted stock grant awards, payment of country club dues, and other tax reimbursements on imputed income; company contributions to the Courier Profit Sharing and Savings Plan and the Deferred Compensation Plan; and group-term life insurance premiums.

 

Summary Compensation Table — 2007

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Incentive

 

All

 

 

 

 

 

 

 

 

 

 

 

Stock

 

Option

 

Plan

 

Other

 

 

 

Name and

 

 

 

Salary

 

Bonus

 

Awards

 

Awards

 

Compensation

 

Compensation

 

Total

 

Principal Position

 

Year

 

($)

 

($)

 

($)(1)

 

($)(2)

 

($)(3)

 

($)(4)

 

($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

James F. Conway III

 

2007

 

499,202

 

0

 

85,666

 

46,014

 

135,000

 

134,942

 

900,824

 

Chairman, President and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Robert P. Story, Jr.

 

2007

 

399,011

 

0

 

65,139

 

40,184

 

120,000

 

95,936

 

720,270

 

Executive Vice President and Chief Operating Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Peter M. Folger

 

2007

 

249,038

 

20,000

 

24,392

 

9,077

 

25,000

 

40,852

 

368,359

 

Senior Vice President and Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

George Q. Nichols

 

2007

 

389,523

 

30,000

 

0

 

 

0

 

98,428

 

517,951

 

Senior Vice President; and Chairman of National Publishing Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eric J. Zimmerman

 

2007

 

199,620

 

0

 

21,735

 

16,490

 

0

 

43,952

 

281,797

 

Vice President, Publishing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Peter A. Tobin

 

2007

 

159,566

 

0

 

17,719

 

13,410

 

69,000

 

38,996

 

298,691

 

Executive Vice President, National Publishing Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20



 


(1)          The amounts reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ended September 29, 2007, in accordance with SFAS 123R but disregarding the estimate of forfeitures related to service-based vesting conditions of awards of restricted stock which were granted in and prior to 2007. Refer to note F to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended September 29, 2007, for a discussion of the relevant assumptions used in calculating the compensation expense.

 

(2)          The amounts reflect the dollar amount recognized for financial statement reporting purposes for the fiscal year ended September 29, 2007, in accordance with SFAS 123R but disregarding the estimate of forfeitures related to service-based vesting conditions of awards of stock options which were granted in and prior to 2007. Refer to note F to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended September 29, 2007, for a discussion of the relevant assumptions used in calculating the compensation expense.

 

(3)          Awards of Non Equity Incentive Plan Compensation were earned under the annual cash bonus for 2007 and the fiscal 2005 LTPI as provided in the following chart:

 

 

 

J. F. Conway III

 

R. P. Story

 

P. M. Folger

 

G. Q. Nichols

 

E. J. Zimmerman

 

P. Tobin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2007 Annual Cash Bonus

 

$

0

 

$

0

 

$

0

 

$

0

 

$

0

 

$

25,000

 

2005 Long-Term Incentive Plan

 

$

135,000

 

$

120,000

 

$

25,000

 

$

0

 

$

0

 

$

44,000

 

 

 

(4)          The table below presents an itemized account of “All Other Compensation” paid in 2007 to or on behalf of the executives in accordance with the Commission’s rules and regulations.

 

All Other Compensation

 

 

 

J. F. Conway III

 

R. P. Story

 

P. Folger

 

G. Q. Nichols

 

E. Zimmerman

 

P. Tobin

 

Perquisites(a)

 

$

28,314

 

$

13,857

 

$

13,857

 

$

27,566

 

$

13,512

 

$

13,857

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax assistance(b)

 

$

30,439

 

$

20,779

 

$

6,133

 

$

4,163

 

$

10,215

 

$

7,192

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company contributions(c)

 

 

 

 

 

 

 

 

 

 

 

 

 

profit sharing contribution to Courier PSSP

 

$

15,400

 

$

15,400

 

$

15,400

 

$

18,700

 

$

15,400

 

$

14,300

 

401k matching contribution

 

$

5,723

 

$

5,155

 

$

4,714

 

$

5,036

 

$

4,209

 

$

3,138

 

Deferred Compensation Plan

 

$

53,570

 

$

39,525

 

$

0

 

$

41,741

 

$

0

 

$

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Life insurance premiums(d)

 

$

1,496

 

$

1,221

 

$

748

 

$

1,223

 

$

616

 

$

509

 

 


(a)          Amounts listed are the value of executive’s perquisites: automobile allowance, payment of country club dues and club memberships, and payment of financial planning services. Amount does not include any amounts for the following perquisite because no incremental costs were incurred in fiscal 2007: The Corporation purchases season tickets for sporting events for business outings with customers and vendors. If the tickets are not being used for business purposes, the named executives and other employees may have opportunities to use these tickets.

 

21



 

(b)         Amounts listed represent the tax assistance paid upon the vesting of the restricted stock award, equal to 30 percent of the amount that is taxable as income to the executive for the fiscal year, tax assistance paid on country club dues; and tax reimbursement on imputed income on company-sponsored sales event in which the executive and spouse (if applicable) attended.

 

(c)          Represents amount paid to the profit sharing and 401k matching contribution accounts in the Courier Profit Sharing and Savings Plan and contributions made to the Deferred Compensation Plan in fiscal 2007.

 

(d)         Company cost of group-term life insurance premiums.

 

 

Grant of Plan-based Awards

 

During fiscal 2007, the Compensation Committee granted the following plan-based awards:

 

1.     An annual cash bonus, subject to minimum earnings performance thresholds for fiscal 2007.

 

2.     The 2007 LTPI, to be earned at the end of a three-year performance period (fiscal 2007, 2008, and 2009), subject to the Corporation exceeding its peer group’s three-year average ROA. Since a three-year long-term performance incentive is normally granted each year, there are three overlapping long-term performance incentive awards outstanding at any time.

 

3.     Special awards of restricted stock to Messrs. Conway, Story, and Folger.

 

4.     Restricted stock grant and stock option awards under the LTSI as part of executives’ fiscal 2008 compensation.

 

Information with respect to each of these awards on a grant-by-grant basis is set forth in the Grant of Plan-based Awards Table below and is explained more fully in the “Compensation Discussion and Analysis” section above.

 

The Compensation Committee granted restricted stock grants and stock option awards as part of the executive’s fiscal 2008 compensation at the Committee’s last meeting in fiscal 2007. The restricted stock grants awarded to executives in fiscal 2007 vest in full three years following the date of the grant. Stock option awards vest in equal amounts annually over a three-year period. The restricted stock grant awarded to Mr. Conway in November 2006 was awarded as special recognition of our strong fiscal 2006 performance. The restricted stock grants awarded to Mr. Story and Mr. Folger were in recognition of the promotions to the current roles each of them assumed in November 2006.

 

22



 

Grants of Plan-Based Awards 2007

 

 

 

 

 

 

 

 

 

 

 

Stock

 

All Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Awards:

 

Option

 

 

 

 

 

 

 

 

 

Estimated Future Payouts

 

Number

 

Awards:

 

Exercise

 

 

 

 

 

 

 

Under Non-Equity

 

of

 

Number of

 

or Base

 

Grant Date

 

 

 

 

 

Incentive Plan Awards(1)

 

Shares

 

Securities

 

Price of

 

Fair Value

 

 

 

 

 

 

 

 

 

 

 

of Stock

 

Underlying

 

Option

 

of Stock and

 

 

 

Grant

 

Threshold

 

Target

 

Maximum

 

or Units

 

Options

 

Awards

 

Option

 

Name

 

Date

 

($)

 

($)

 

($)

 

(#)(2)

 

(#)(3)

 

($/Sh)(4)

 

Awards(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

James F. Conway III

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual Cash Bonus

 

 

 

95,000

 

380,000

 

760,000

 

 

 

 

 

 

 

 

 

LTPI

 

 

 

 

 

145,000

 

 

 

 

 

 

 

 

 

 

 

Stock Incentive Plan

 

11/7/2006

 

 

 

 

 

 

 

2,000

 

 

 

76,600

 

Stock Incentive Plan

 

9/18/2007

 

 

 

 

 

 

 

 

 

9,925

 

36.51

 

87,415

 

Stock Incentive Plan

 

9/18/2007

 

 

 

 

 

 

 

1,825

 

 

 

 

 

66,631

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Robert P. Story, Jr.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual Cash Bonus

 

 

 

77,500

 

310,000

 

620,000

 

 

 

 

 

 

 

 

 

LTPI

 

 

 

 

 

130,000

 

 

 

 

 

 

 

 

 

 

 

Stock Incentive Plan

 

11/7/2006

 

 

 

 

 

 

 

1,000

 

 

 

38,300

 

Stock Incentive Plan

 

9/18/2007

 

 

 

 

 

 

 

 

 

8,675

 

36.51

 

76,406

 

Stock Incentive Plan

 

9/18/2007

 

 

 

 

 

 

 

1,600

 

 

 

 

 

58,416

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Peter Folger

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual Cash Bonus

 

 

 

31,250

 

125,000

 

250,000

 

 

 

 

 

 

 

 

 

LTPI

 

 

 

 

 

29,000

 

 

 

 

 

 

 

 

 

 

 

Stock Incentive Plan

 

11/7/2006

 

 

 

 

 

 

 

1,000

 

 

 

38,300

 

Stock Incentive Plan

 

9/18/2007

 

 

 

 

 

 

 

 

 

4,520

 

36.51

 

39,810

 

Stock Incentive Plan

 

9/18/2007

 

 

 

 

 

 

 

830

 

 

 

 

 

30,303

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

George Q. Nichols

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual Cash Bonus

 

 

 

83,750

 

335,000

 

670,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eric Zimmerman

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual Cash Bonus

 

 

 

28,750

 

115,000

 

230,000

 

 

 

 

 

 

 

 

 

Stock Incentive Plan

 

9/18/2007

 

 

 

 

 

 

 

 

 

3,535

 

36.51

 

31,135

 

Stock Incentive Plan

 

9/18/2007

 

 

 

 

 

 

 

650

 

 

 

 

 

23,732

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Peter D. Tobin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annual Cash Bonus

 

 

 

12,500

 

50,000

 

100,000

 

 

 

 

 

 

 

 

 

 


(1)   The amounts shown for the Annual Cash Bonus are the range of payouts that may be earned. If the minimum earnings threshold is met, the payout amount is 25% of the target bonus, as shown in the “Threshold” column above. If the minimum earnings threshold is not met, the payout amount is $0. The amount in the “Maximum” column reflects the maximum payout under the annual cash bonus program, which is 200 percent of the amount shown in the “Target” column. The target amount for the LTPI may be earned at the end of the three-year performance period of fiscal 2007, 2008, and 2009, as described in the Compensation Discussion and Analysis section above. These amounts were approved by the Committee on November 7, 2006.

 

(2)   Amounts shown in “All Other Stock Awards” column reflect shares of restricted stock granted in fiscal 2007. Awards vest in full three years following the date of grant. Dividends are paid on shares of restricted stock, when and if declared, at the same rate as paid to all shareholders.

 

(3)   The amounts shown in the “All Other Option Awards” column reflect stock options granted in fiscal 2007, which are for a term of five years and vest in equal amounts annually over a three-year period.

 

23



 

(4)   The stock option exercise price is the closing price of our Common Stock on the date of grant.

 

(5)   The grant date fair value for awards is calculated as follows: (a) for restricted stock, by multiplying the number of shares granted by the closing price of our Common Stock on the date of the award; and (b) for option awards, by using the Black-Scholes option pricing model, as described in Note F of the Corporation’s audited financial statements for fiscal 2007 included in the Corporation’s Annual Report. This value does not reflect estimated forfeitures or awards actually forfeited during the year or tax assistance on grants when they vest. The actual value, if any, that will be realized upon the exercise of an option will depend upon the difference between the exercise price of the option and the market price of our Common Stock on the date the option is exercised. The actual value realized by the executive with respect to a grant of restricted stock depends on the market value of the shares when the executive sells the shares after the shares have vested.

 

Outstanding Equity Awards at Fiscal Year-End 2007

 

The following table sets forth information concerning stock options and stock awards which were outstanding as of September 29, 2007:

 

 

 

Option Awards

 

 

 

Stock Awards

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

 

 

 

 

 

 

 

Number of

 

Number of

 

 

 

 

 

 

 

Shares or

 

 

 

Market Value

 

 

 

Securities

 

Securities

 

 

 

 

 

 

 

Units of

 

 

 

of Shares or

 

 

 

Underlying

 

Underlying

 

Option

 

 

 

 

 

Stock That

 

 

 

Units of Stock

 

 

 

Unexercised

 

Unexercised

 

Exercise

 

Option

 

 

 

Have Not

 

 

 

That Have Not

 

 

 

Options (#)

 

Options (#)

 

Price

 

Expiration

 

 

 

Vested

 

 

 

Vested

 

Name

 

Exercisable

 

Unexercisable

 

($)

 

Date

 

 

 

(#)

 

 

 

($)(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

James F. Conway III

 

6,748

 

 

 

25.60

 

9/25/2008

 

 

 

1,679

 

(4)

 

59,118

 

 

 

16,087

 

 

 

16.91

 

9/26/2009

 

 

 

1,672

 

(5)

 

58,871

 

 

 

17,550

 

 

 

23.27

 

9/25/2010

 

 

 

2,000

 

(6)

 

70,420

 

 

 

7,759

 

 

 

27.17

 

9/23/2011

 

 

 

1,825

 

(7)

 

64,258

 

 

 

2,363

 

4,726

 

37.09

 

9/25/2011

 

(2)

 

 

 

 

 

 

 

 

 

3,751

 

1,876

 

35.51

 

9/22/2012

 

(3)

 

 

 

 

 

 

 

 

 

 

 

9,925

 

36.51

 

9/18/2012

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Robert P. Story, Jr.

 

4,510

 

 

 

9.59

 

9/26/2008

 

 

 

1,462

 

(4)

 

51,477

 

 

 

2,250

 

 

 

13.75

 

11/8/2008

 

 

 

1,463

 

(5)

 

51,512

 

 

 

16,762

 

 

 

16.91

 

9/26/2009

 

 

 

1,000

 

(6)

 

35,210

 

 

 

20,699

 

 

 

23.27

 

9/25/2010

 

 

 

1,600

 

(7)

 

56,336

 

 

 

6,726

 

 

 

27.17

 

9/23/2011

 

 

 

 

 

 

 

 

 

 

 

2,068

 

4,135

 

37.09

 

9/25/2011

 

(2)

 

 

 

 

 

 

 

 

 

3,267

 

1,634

 

35.51

 

9/22/2012

 

(3)

 

 

 

 

 

 

 

 

 

 

 

8,675

 

36.51

 

9/18/2012

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Peter M. Folger

 

5,062

 

 

 

16.91

 

9/26/2009

 

 

 

325

 

(4)

 

11,443

 

 

 

5,062

 

 

 

23.27

 

9/25/2010

 

 

 

334

 

(5)

 

11,760

 

 

 

1,449

 

 

 

27.17

 

9/23/2011

 

 

 

1,000

 

(6)

 

35,210

 

 

 

473

 

945

 

37.09

 

9/25/2011

 

(2)

 

830

 

(7)

 

29,224

 

 

 

726

 

363

 

35.51

 

9/22/2012

 

(3)

 

 

 

 

 

 

 

 

 

 

 

4,520

 

36.51

 

9/18/2012

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eric J. Zimmerman

 

842

 

1,683

 

37.09

 

9/25/2011

 

(2)

 

607

 

(4)

 

21,372

 

 

 

677

 

678

 

35.51

 

9/22/2012

 

(3)

 

596

 

(5)

 

20,985

 

 

 

 

 

3,535

 

36.51

 

9/18/2012

 

(2)

 

650

 

(7)

 

22,887

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Peter Tobin

 

5,062

 

 

 

9.59

 

9/26/2008

 

 

 

498

 

(4)

 

17,535

 

 

 

6,750

 

 

 

16.91

 

9/26/2009

 

 

 

481

 

(5)

 

16,936

 

 

 

6,749

 

 

 

23.27

 

9/25/2010

 

 

 

 

 

 

 

 

 

 

 

2,328

 

 

 

27.17

 

9/23/2011

 

 

 

 

 

 

 

 

 

 

 

680

 

1,358

 

37.09

 

9/25/2011

 

(2)

 

 

 

 

 

 

 

 

 

1,113

 

557

 

35.51

 

9/22/2012

 

(3)

 

 

 

 

 

 

 

 

24



 


(1)   The market value is the closing price per share of our Common Stock of $35.21 per share on September 28, 2007, multiplied by the number of unvested shares of Common Stock.

 

(2)   Stock option award has a five-year term and vests in equal installments on the anniversary date of grant over a three-year period.

 

(3)   Stock option award has a seven-year term and vests in equal installments on the anniversary date of grant over a three-year period.

 

(4)     Award vests on 9/22/2008.

 

(5)     Award vests on 9/25/2009.

 

(6)     Award vests on 11/7/2009.

 

(7)     Award vests on 9/18/2010.

 

Option Exercises and Stock Vested — 2007

 

The following table sets forth information concerning stock option exercises and vesting of restricted stock during fiscal 2007:

 

 

 

Option Awards

 

Stock Awards

 

 

 

Number of

 

 

 

Number of

 

 

 

 

 

Shares Acquired

 

Value Realized

 

Shares Acquired

 

Value Realized

 

Name

 

on Exercise (#)

 

on Exercise ($)(1)

 

on Vesting (#)

 

on Vesting ($)(2)

 

 

 

 

 

 

 

 

 

 

 

James F. Conway III

 

7,875

 

173,288

 

2,163

 

79,901

 

 

 

 

 

 

 

 

 

 

 

Robert P. Story, Jr.

 

2,628

 

88,091

 

1,875

 

69,263

 

 

 

 

 

 

 

 

 

 

 

Peter M. Folger

 

0

 

0

 

403

 

14,887

 

 

 

 

 

 

 

 

 

 

 

Eric J. Zimmerman

 

13,647

 

238,794

 

793

 

29,293

 

 

 

 

 

 

 

 

 

 

 

Peter D. Tobin

 

5,062

 

160,820

 

649

 

23,974

 

 


(1)             Represents the amounts realized based on the difference between the market price of our Common Stock on the date of exercise and the exercise price.

 

(2)             Represents the amount realized based on the market price of our Common Stock on the vesting date. These restricted stock awards were granted in fiscal 2004 and vested in fiscal 2007.

 

Nonqualified Deferred Compensation

 

In November 1997, we established the Courier Corporation Deferred Compensation Program for certain key executives. The current eligible participants in the plan are Messrs. Conway, Story, and Nichols. The plan is a non-qualified, unfunded plan that provides for an annual award. The annual award is the difference between what the company annual profit sharing contribution would have been if not limited to the IRS-mandated compensation maximum and the actual profit sharing contribution made to the

 

25



 

participant’s account in the Courier Profit Sharing and Savings Plan for the plan year (which is a calendar year). The participants make no contributions to the plan.

 

Amounts are accrued and recorded in each participant’s Deferred Compensation Account. Interest is credited annually based on the investment return of one of four mutual funds within the Courier Profit Sharing and Savings Plan that the participant elects prior to the beginning of the plan year. We do not consider the interest credited to be above-market as the fund choices are available to all participants in the Savings Plan. All of the participants are fully vested in the amounts credited to their Deferred Compensation Account. Participants are eligible for a distribution of their accrued account upon retirement, termination of employment, disability, or to their beneficiary upon death.

 

The following table provides information with respect to the Deferred Compensation Accounts of the eligible executives:

 

Nonqualified Deferred Compensation — 2007

 

 

 

Executive

 

Registrant

 

Aggregate

 

Aggregate

 

Aggregate

 

 

 

Contributions in

 

Contributions in

 

Earnings in Last

 

Withdrawals/

 

Balance at Last

 

 

 

Last Fiscal Year

 

Last Fiscal Year

 

Fiscal Year

 

Distributions

 

Fiscal Year End

 

Name

 

($)

 

($)(1)

 

($)

 

($)

 

($)(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

J. F. Conway III

 

0

 

53,570

 

39,563

 

0

 

458,778

 

R. P. Story, Jr.

 

0

 

39,525

 

34,828

 

0

 

396,242

 

G. Q. Nichols

 

0

 

41,741

 

23,900

 

0

 

516,591

 

 


(1)             Amounts in this column are included in the “All Other Compensation” column in the Summary Compensation Table.

 

(2)             Represents the sum of all contributions and earnings credited to the participant’s Deferred Compensation Account as of the end of fiscal 2007.

 

Pension Benefits

 

In June 1992, the Board of Directors approved a Supplemental Retirement Benefit Agreement with Mr. Nichols providing for a supplement retirement benefit upon his retirement at or over age 70. On November 9, 2000, the Board of Directors voted to increase the annual amount of the benefit to $70,000 upon retirement at or over age 70. Mr. Nichols is currently age 78, and is still employed by the Corporation.

 

The Supplemental Retirement Benefit Agreement provides that the benefit would be payable as a single life annuity, payable in monthly installments commencing the first of the calendar month following his retirement. Before his retirement, Mr. Nichols may elect to have the benefit paid in an amount actuarially equivalent to the single life annuity and in the same form as the benefit he elects for his pension annuity. Mr. Nichols’ pension annuity is the benefit he earned through his participation in the National Publishing Company pension plan, which was terminated in 1988. He has elected to receive his pension annuity as a 50 percent joint and survivor annuity.

 

In the event that Mr. Nichols dies before he retires and is survived by his spouse, a monthly benefit will be paid to his spouse for her life in an amount equal to the benefit she would have received upon Mr. Nichols’ death had he retired on the day preceding his death. If Mr. Nichols has not selected an alternative form of annuity before his death, the spousal benefit will be determined as if he had selected a joint and 100 percent survivor

 

26



 

annuity. In the event we undergo a “change in control” (as defined in the Supplemental Retirement Benefit Agreement) during Mr. Nichols’ employment or the payment period of the benefit, the “commuted value” of the benefit will be paid to Mr. Nichols within 60 days after the change in control. The commuted value of the benefit is the present value of the benefit remaining to be paid at the time of the change in control, assuming that Mr. and Mrs. Nichols will survive for a period equal to their joint and last survivor life expectancies, and applying a rate of interest equal to the Internal Revenue Service applicable federal rate for that period.

 

Pension Benefits — 2007

 

 

 

 

 

Number of

 

 

 

 

 

 

 

 

 

Years of

 

Present Value of

 

Payments

 

 

 

 

 

Credited

 

Accumulated

 

During Last

 

 

 

 

 

Service

 

Benefits

 

Fiscal Year

 

Name

 

Plan Name

 

(#)

 

($)

 

($)

 

 

 

 

 

 

 

 

 

 

 

George Q. Nichols

 

Supplemental Retirement Benefit Agreement

 

n/a

 

507,971

 

0

 

 

Potential Payments Upon Termination or Change in Control

 

This section describes particular benefits that may become payable to executives, depending on the circumstances surrounding their termination of employment following a change in control of the Corporation. As described earlier, our Board of Directors approved the Severance Program which sets forth the severance compensation which we will pay to an executive in the event that executive’s employment with us terminates under certain circumstances following a change in control. The Compensation Committee established provisions for determining what amounts under the Executive Compensation Program would become payable to an executive upon a change in control. In addition, account balances provided in the Courier Corporation Deferred Compensation Program are immediately payable upon a change in control.

 

In calculating the amount of any potential payments to executive officers under the arrangements described below, we have assumed that the applicable triggering event (i.e., termination of employment) occurred on the last day of the fiscal year, September 29, 2007, and that the price per share of our Common Stock is equal to $35.21, which is the closing price on September 28, 2007, the last trading day in fiscal 2007.

 

Senior Executive Severance Program

 

Messrs. Conway, Nichols, Story, Folger, Zimmerman, and Tobin are participants in the Severance Program. In accordance with the Severance Program, if we undergo a “change in control”, as defined in the Severance Program, while one of these individuals remains an employee, and his employment is subsequently terminated for reasons other than death, disability, or termination for cause, he shall be entitled to a severance payment and continuation of participation in our group health plan until the end of the second calendar year following the year of termination. In addition, each such individual shall receive a severance payment and benefits if within two years of the change in control, he terminates his employment for “good reason,” defined in the Severance Program to include changes in his duties or titles inconsistent with his duties or titles prior to the change in control, reduction in his base salary or failure to increase his base salary by at least the average percentage increase for all corporate officers, reduction or termination of incentive or benefit plans or programs in which he participated prior to the change in control, or relocation of our principal offices. Termination by the individual for any reason during a

 

27



 

30-day window commencing on the first anniversary of the change in control is also considered “good reason” for purposes of the Severance Program.

 

The severance payment, which is due in a lump sum, is an amount equal to a multiple of 3.0 times the individual’s average annual salary and bonus paid or deferred during the five calendar years preceding the change in control, except in the case of Mr. Zimmerman and Mr. Tobin, the multiple is 2.0. Payment of the severance may be delayed up to six months after termination of employment to the extent necessary to comply with the requirement of Section 409A of the Internal Revenue Code and may also be reduced if the aggregate payment of amounts under the Severance Program and the Executive Compensation Program discussed below would trigger the payment of excise taxes under the Internal Revenue Code and the individual would be better off on an after-tax basis with such reduction. At the sole discretion of the Board of Directors, we may choose to set aside funds in a trust to satisfy its severance obligations.

 

Executive Compensation Program

 

Under the Executive Compensation Program (the “Program”), upon a “change in control” as defined in the Program, executives are entitled to receive a pro rata portion of the annual cash bonus target and target long term performance incentive awarded under the Program. Cash awards will be pro rated based on the number of elapsed days in the performance period from the start of the period through the date of the closing of the change in control transaction divided by the total days in the performance period.

 

Long-term stock incentive awards under the Program consist of a combination of stock options and restricted stock grants. Upon a change in control, outstanding restricted stock grants vest and related tax assistance payments will be made. In addition, outstanding stock options become fully exercisable.

 

Courier Corporation Deferred Compensation Program

 

As described earlier, Messrs. Conway, Nichols, and Story participate in the Deferred Compensation Program, which is a non-qualified, unfunded plan that provides for an annual award. Upon a change in control of the Corporation as defined in the Deferred Compensation program, the executive has the right to receive a distribution of his account value as of the December 31 preceding the change in control, adjusted for earnings or losses based on the total investment return of the executive’s investment choice from January 1 through the date of the change in control. Account balances as of our most recent fiscal year end are listed in the Nonqualified Deferred Compensation Table.

 

28



 

Potential Payments Upon Termination or Change in Control Table

 

Amounts assume a Change in Control and simultaneous termination of employment of each listed executive as of September 29, 2007.

 

 

 

Executive Severance Program

 

Executive Compensation Program

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock

 

Stock

 

 

 

Name

 

Cash Award(1)

 

Benefits(2)

 

Cash(3)

 

LTIP(4)

 

Options(5)

 

Grants(6)

 

Total(7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

James F. Conway III

 

$

2,523,564

 

$

33,652

 

$

135,000

 

$

141,667

 

$

0

 

$

188,409

 

$

3,022,291

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Robert P. Story, Jr.

 

$

2,028,296

 

$

33,652

 

$

120,000

 

$

126,667

 

$

0

 

$

138,199

 

$

2,446,814

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Peter M. Folger

 

$

834,020

 

$

33,652

 

$

25,000

 

$

27,000

 

$

0

 

$

58,413

 

$

978,086

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

George Q. Nichols

 

$

2,006,254

 

$

49,619

 

$

0

 

$

0

 

$

0

 

$

0

 

$

2,055,873

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eric Zimmerman

 

$

445,528

 

$

33,652

 

$

0

 

$

0

 

$

0

 

$

42,358

 

$

521,538

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Peter Tobin

 

$

769,115

 

$

33,652

 

$

69,000

 

$

30,000

 

$

0

 

$

34,471

 

$

936,237

 

 


(1)          Cash payments under the Senior Executive Severance Program are equal to three times the individual’s average annual salary and cash incentives paid during the five calendar years preceding the change in control for Messrs. Conway, Story, Folger, and Nichols. In the case of Mr. Zimmerman and Mr. Tobin, the cash amount is equal to two times the average annual salary and cash incentives paid during the five calendar years preceding the change in control.

 

(2)          Value of current medical insurance coverage with estimated annual 10 percent premium increases; coverage for 27 months.

 

(3)          Non-equity incentive compensation earned for fiscal 2007. See Summary Compensation Table for explanation of amounts.

 

(4)          Pro rata amounts through the date of the change in control transaction under the fiscal 2006 and 2007 LTPI plans.

 

(5)          The closing price of our Common Stock on September 28, 2007 (the last trading day of fiscal 2007) is less than the exercise price of the outstanding unvested options; therefore, the amount reported is $0.

 

(6)          Amounts listed are the value of restricted stock grants, based on the closing price of our Common Stock on September 28, 2007, that become vested upon a change in control.

 

(7)          The actual amounts payable to an executive upon termination due to a change in control would be reduced if the aggregate payment of amounts under the Severance Program and the Executive Compensation Program would trigger the payment of excise taxes under the Internal Revenue Code, and the executive would be better off on an after-tax basis with such reduction.

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

                Based on a review of the reports of changes in beneficial ownership of the Corporation’s Common Stock and written representations furnished to the Corporation, the Corporation believes that its executive officers, Directors and beneficial owners of more

 

29



than ten percent of the Corporation’s Common Stock filed on a timely basis the reports required to be filed under Section 16(a) of the Securities Exchange Act of 1934 during the fiscal year ended September 29, 2007, except for Kathleen M. Leon who filed Form 3 on May 8, 2007 as a result of her appointment to Corporate Controller on November 13, 2006 and to report a stock grant award on December 7, 2006.

 

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

                The Compensation Committee consists of Messrs. Donahue, Hoff, Lerner, Markell, Skates and Thorndike and Ms. Wagner and Prof. Curley.  Mr. Conway is a Director of Enterprise Bancorp Inc. (“Enterprise”) in Lowell, Massachusetts and a member of the Enterprise compensation committee.  Mr. Lerner is a Director and Vice Chairman of the Board of Directors of Enterprise and a member of its compensation committee.  However, Mr. Lerner is not employed as an “executive officer” of Enterprise and is “independent” as defined in the applicable provisions of Rule 4200(a)(15) of the National Association of Securities Dealers’ Marketplace Rules.

 

ITEM 2:  RATIFICATION AND APPROVAL OF SELECTION OF INDEPENDENT AUDITORS

 

                The Audit Committee has selected the firm of Deloitte & Touche LLP to be the Corporation’s independent auditors for the fiscal year ending September 27, 2008.  The firm became independent auditors for the Corporation in 1996.

 

                Although the Corporation is not required to submit the ratification and approval of the selection of its independent auditors to a vote of stockholders, the Board of Directors and the Audit Committee believe it is sound policy and in the best interests of the stockholders to do so.  In the event a majority of the votes cast are against the selection of Deloitte & Touche LLP, the Audit Committee will consider the vote and the reasons therefore in its future selection of independent auditors.

 

Representatives of Deloitte & Touche LLP will be present at the meeting and will have an opportunity to make a statement if they desire to do so.  They will be available to respond to appropriate questions.

 

The Board of Directors recommends that the selection of Deloitte & Touche LLP as independent auditors for the Corporation be ratified and approved, and therefore recommends a vote FOR this proposal.

 

FEES PAID TO DELOITTE & TOUCHE LLP

 

Audit Fees

 

Total aggregate fees billed by Deloitte & Touche LLP for professional services in connection with the audit and review of the Corporation’s Consolidated Financial Statements, and consultation regarding financial accounting and reporting standards were $592,500 and $645,000 in fiscal 2007 and 2006, respectively.

 

30



 

Audit-Related Fees

 

The aggregate fees billed for assurance and related services rendered by Deloitte & Touche LLP were $9,500 and $0 in fiscal 2007 and 2006, respectively.

 

Tax Fees

 

The aggregate fees billed for services rendered by Deloitte & Touche LLP tax personnel, except those services specifically related to the audit of the financial statements, were $17,500 and $17,000 in fiscal 2007 and 2006, respectively.  Such services include tax planning, tax return reviews, and tax compliance.

 

All Other Fees

 

Except as reported above, no other fees were billed by Deloitte & Touche LLP in fiscal 2007 and 2006.

 

                The Audit Committee has advised the Corporation that in its opinion the non-audit services rendered by Deloitte & Touche LLP are compatible with maintaining the independence of the auditor.

 

In April 2003, the Audit Committee established a policy to pre-approve all audit and non-audit services proposed to be provided by our independent auditor prior to management engaging the auditor for that purpose.  Consideration and approval of such services generally occur at the Committee’s regularly scheduled quarterly meetings.  In situations where it is impractical to wait until the next regularly scheduled quarterly meeting, the Committee may delegate, to one or more of its members, authority to approve audit and non-audit services.  Fees payable to the independent auditor for any specific non-audit service approved pursuant to the above-described delegation of authority requires the reporting of any such approvals to the full Committee at its next regularly scheduled meeting.

 

                In accordance with its pre-approval policy, the Audit Committee has pre-approved all services in fiscal 2007 and 2006.

 

MISCELLANEOUS

 

Stockholder Proposals

 

                The Corporation expects to hold its 2009 Annual Meeting on January 21, 2009.  Eligible stockholders may present proposals for inclusion in the Corporation’s 2009 Annual Meeting Proxy Statement, provided the proposals comply with applicable Securities and Exchange Commission regulations and are received by the Corporation no later than August 10, 2008.  Any proposal intended to be included in the Corporation’s 2009 Annual Proxy Statement should be sent to the Corporation at 15 Wellman Avenue, North Chelmsford, Massachusetts 01863, Attention:  Peter M. Folger, Senior Vice President and Chief Financial Officer.

 

                Stockholders who want to present business for action at the 2009 Annual Meeting, other than proposals included in the 2009 Annual Proxy Statement, must follow the procedures described in the Corporation’s By-laws.  The By-laws provide that stockholder proposals or nominations for director may be made only by a stockholder of

 

31



 

record who is entitled to vote at the meeting and has given the Corporation advance notice of the proposed business or nomination.  For the 2009 Annual Meeting, the Corporation must receive the stockholder’s notice between September 18, 2008, and October 18, 2008.  If there is a special meeting, or if the 2009 Annual Meeting is called for a date prior to December 18, 2008 or after March 16, 2009, the Corporation must receive the stockholder’s notice not earlier than the close of business on the 120th day prior to the special meeting or the 2009 Annual Meeting, as the case may be, and not later than the close of business on the later of (1) the 90th day prior to the special meeting or the 2009 Annual Meeting, as the case may be, or (2) the 10th day following the day on which the public announcement of the date of the special meeting or the 2009 Annual Meeting is first made.  The proposal must also comply with the other requirements contained in the Corporation’s By-laws, including supporting documentation and other information. Proxies solicited by the Board of Directors will confer discretionary voting authority with respect to these proposals, subject to the Commission’s rules governing the exercise of this authority.

 

Householding

 

The rules of the Commission allow for “householding,” which is th