DEF 14A 1 flirdefproxy2013.htm DEF 14A FLIR Def Proxy 2013


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
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FLIR SYSTEMS, INC.
(Name of Registrant as Specified In Its Charter)  

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27700 SW Parkway Avenue
Wilsonville, Oregon 97070
(503) 498 -3547
___________________________________________ 
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 26, 2013
________________________________________________________________________
To the Shareholders of FLIR Systems, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the “Annual Meeting”) of FLIR Systems, Inc. (the “Company”) will be held on Friday, April 26, 2013, at 10:00 a.m., at FLIR Systems, Inc., 27700 SW Parkway Avenue, Wilsonville, Oregon 97070 for the following purposes:
1.
Election of Directors.  To elect the three director nominees identified in the attached Proxy Statement, each for a three-year term expiring in 2016 and to hold office until his successor is elected and qualified;
2.
Ratification of Appointment of the Independent Registered Public Accounting Firm.  To ratify the appointment by the Audit Committee of the Company’s Board of Directors of KPMG LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2013;
3.
Proposal to Amend the Company's Second Restated Articles of Incorporation regarding Declassification of the Board. To consider amendments to the Company's Second Restated Articles of Incorporation to eliminate classification of the Company's Board of Directors;
4.
Proposal to Amend the Company's Second Restated Articles of Incorporation regarding Adoption of a Majority Vote Standard.  To consider amendments to the Company's Second Restated Articles of Incorporation to adopt a majority vote standard to be used in uncontested director elections; and
5.
Other Business.   To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.
The Board of Directors of the Company has fixed the close of business on February 27, 2013 as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting. Only shareholders of record at the close of business on that date will be entitled to notice of and to vote at the Annual Meeting or any adjournments or postponements thereof.
By Order of the Board,
Earl R. Lewis
Chairman of the Board of Directors, President
and Chief Executive Officer
Wilsonville, Oregon
March 15, 2013
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 26, 2013
The Notice of Annual Meeting, Proxy Statement and Annual Report on Form 10-K are available at www.flir.com/investor.
IT IS IMPORTANT THAT PROXIES BE COMPLETED AND SUBMITTED PROMPTLY. THEREFORE, WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SUBMIT YOUR VOTE BY PROXY VIA THE INTERNET, BY TELEPHONE OR BY MAIL IN THE ENCLOSED POSTAGE-PAID ENVELOPE IN ACCORDANCE WITH THE ACCOMPANYING INSTRUCTIONS.




FLIR SYSTEMS, INC.
27700 SW Parkway Avenue
Wilsonville, Oregon 97070
(503) 498-3547
_____________________________________
PROXY STATEMENT
for the
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 26, 2013
_____________________________________

INTRODUCTION
General
This Proxy Statement is being furnished to the shareholders of FLIR Systems, Inc., an Oregon corporation (“FLIR,” the “Company, “we,” “us,” or “our”), as part of the solicitation of proxies by the Company’s Board of Directors (the “Board of Directors” or the “Board”) from holders of the outstanding shares of FLIR common stock, par value $0.01 per share (the “Common Stock”), for use at the Company’s Annual Meeting of Shareholders to be held on April 26, 2013, and at any adjournments or postponements thereof (the “Annual Meeting”). At the Annual Meeting, shareholders will be asked to elect three members to the Board of Directors, ratify the appointment by the Audit Committee of the Board of Directors of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2013, consider proposed amendments to the Company's Second Restated Articles of Incorporation for the purpose of declassifying the Company's Board of Directors, consider proposed amendments to the Company's Second Restated Articles of Incorporation for the purpose of adopting a majority vote standard for use in uncontested director elections, and transact such other business as may properly come before the Annual Meeting. This Proxy Statement, together with the enclosed proxy card, is first being made available to shareholders of FLIR on or about March 15, 2013.
Solicitation, Voting and Revocability of Proxies
The Board of Directors has fixed the close of business on February 27, 2013 as the record date for the determination of the shareholders entitled to notice of and to vote at the Annual Meeting. Accordingly, only holders of record of shares of Common Stock at the close of business on such date will be entitled to vote at the Annual Meeting, with each such share entitling its owner to one vote on all matters properly presented at the Annual Meeting. On the record date, there were 144,645,337 shares of Common Stock then outstanding. The presence, in person or by proxy, of a majority of the total number of outstanding shares of Common Stock entitled to vote at the Annual Meeting is necessary to constitute a quorum at the Annual Meeting.
If you are a shareholder of record, you can vote (i) by attending the Annual Meeting, (ii) by signing, dating and mailing in your proxy card, or (iii) by following the instructions on your proxy card for voting by telephone or on the Internet. If you hold your shares through a broker, bank or other nominee, that institution will instruct you as to how your shares may be voted by proxy. If you hold your shares through a broker, bank or other nominee and would like to vote in person at the Annual Meeting, you must first obtain a proxy issued in your name from the institution that holds your shares.
If the form of proxy is properly executed and returned in time to be voted at the Annual Meeting, the shares represented thereby will be voted in accordance with the instructions marked thereon. Executed but unmarked proxies will be voted FOR the election of the three nominees to the Board of Directors, FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for 2013, FOR the proposed amendments to the Company's Second Restated Articles of Incorporation that will declassify the Company's Board of Directors, and FOR the proposed amendments to the Company's Second Restated Articles of Incorporation that will adopt a majority vote standard for use in uncontested director elections. The Board of Directors does not know of any matters other than those described in the Notice of Annual Meeting that are to come before the Annual Meeting. If any other matters are properly brought before the Annual Meeting, the persons named in the proxy will vote the shares represented by such proxy upon such matters as determined by a majority of the Board of Directors.
The presence of a shareholder at the Annual Meeting will not automatically revoke such shareholder’s proxy. A shareholder may, however, revoke a proxy at any time prior to its exercise by filing a written notice of revocation with, or by delivering a duly executed proxy bearing a later date to, the Corporate Secretary, FLIR Systems, Inc., 27700 SW Parkway Avenue, Wilsonville, Oregon 97070, or by attending the Annual Meeting and voting in person. However, a shareholder who attends the Annual Meeting need not revoke a previously executed proxy and vote in person unless such shareholder wishes to do so. All valid, unrevoked proxies will be voted at the Annual Meeting.

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PROPOSAL 1: ELECTION OF DIRECTORS
The Company’s Board of Directors has seven members. At the Annual Meeting, three directors will be elected, each for a three-year term expiring in 2016 and to hold office until his successor is elected and qualified. Unless otherwise specified on the proxy, it is the intention of the persons named in the proxy to vote the shares represented by each properly executed proxy “FOR” the election as directors of the persons named below as nominees. The Board of Directors believes that the nominees will stand for election and will serve if elected as directors. However, if any of the persons nominated by the Board of Directors fails to stand for election or is unable to accept election, the number of directors constituting the Board of Directors may be reduced prior to the Annual Meeting or the proxies may be voted for the election of such other person as the Board of Directors may recommend.
Under the Company’s current Articles of Incorporation and Bylaws, the directors are divided into three classes. The term of office of only one class of directors expires in each year, and the successors of the members of each class are elected for terms of three years and until their successors are elected and qualified. There is no cumulative voting for election of directors.
Information as to Nominees and Continuing Directors
The following table sets forth the names of the Board of Directors’ nominees for election as a director and those directors who will continue to serve after the Annual Meeting. Also set forth in this section is certain other information with respect to each such person’s age, principal occupation or employment during at least the past five years, the periods during which he has served as a director of FLIR, the expiration of his term as a director, and the positions currently held with FLIR.
 
Nominees:
 
 
Age
 
Director
   Since .
 
Expiration
of
Current
   Term .
 
Expiration
of Term
for which
Nominated
 
Position Held with FLIR
John D. Carter
 
67
 
2003
 
2013
 
2016
 
Director
Michael T. Smith
 
69
 
2002
 
2013
 
2016
 
Director
John W. Wood, Jr.
 
69
 
2009
 
2013
 
2016
 
Director
Continuing Directors:
 
 
 
 
 
 
 
 
 
 
Earl R. Lewis
 
69
 
1999
 
2015
 
 
Chairman of the Board of Directors, President and Chief Executive Officer
William W. Crouch
 
71
 
2005
 
2014
 
 
Director
Angus L. Macdonald
 
58
 
2001
 
2014
 
 
Director
Steven E. Wynne
 
60
 
1999
 
2015
 
__
 
Director
JOHN D. CARTER. Mr. Carter has served as a director of the Company since August 2003. His current term on the Board expires at the Company's 2013 Annual Meeting of Shareholders, at which time his election to the Board for a three year term expiring in 2016 and to hold office until his successor is elected and qualified will be voted upon. Mr. Carter served as President and Chief Executive Officer of Schnitzer Steel Industries Inc., a metals recycling company, from May 2005 to November 2008. Since December 1, 2008, Mr. Carter has served as Chairman of the Board of Directors of Schnitzer Steel Industries, Inc. From 2002 to May 2005, Mr. Carter was a principal in the consulting firm of Imeson & Carter, a firm specializing in transportation and international businesses transactions. From 1982 to 2002, Mr. Carter served in a variety of senior management capacities at Bechtel Group, Inc., including Executive Vice President and Director, as well as President of Bechtel Enterprises, Inc., a wholly owned subsidiary and other operating groups. Mr. Carter is a member of the Board of Directors of Northwest Natural Gas Company. He is Chairman of privately-owned Kuni Enterprises, Inc. and on the Board of the Oregon chapter of the Nature Conservancy. He also is the manager of Birch Creek Associates LLC and Dusky Goose LLC, engaged in agricultural and commercial land ownership, vineyard ownership and wine business. He received his B.A. in History from Stanford University and his J.D. from Harvard Law School. Qualifications: In addition to his legal experience gained while practicing law, Mr. Carter brings many years of senior executive management experience, most recently as president and chief executive officer of a multi-billion dollar public company.  This combination of legal and management experience enables Mr. Carter to provide guidance to the Company in the areas of legal risk oversight, enterprise risk management, corporate governance, financial management and corporate strategic planning.
MICHAEL T. SMITH. Mr. Smith has served as a director of the Company since July 2002. His current term on the Board expires at the Company's 2013 Annual Meeting of Shareholders, at which time his election to the Board for a three year term expiring in 2016 and to hold office until his successor is elected and qualified will be voted upon. From 1997 until his retirement in May 2001, Mr. Smith was Chairman of the Board and Chief Executive Officer of Hughes Electronics Corporation. From 1985 until 1997 he served in a variety of capacities for Hughes, including Vice Chairman of Hughes Electronics, Chairman of Hughes Missile Systems and Chairman of Hughes Aircraft Company. Prior to joining Hughes in 1985, Mr. Smith spent nearly 20 years

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with General Motors in a variety of financial management positions. Mr. Smith is also a director of Ingram Micro, Inc., Teledyne Technologies Incorporated and WABCO Holdings Inc. Mr. Smith holds a B.A. from Providence College and an MBA from Babson College. He also served as an officer in the United States Army. Qualifications: Throughout his career, Mr. Smith has had extensive financial and general management experience, including service as the chief executive officer of a large public company. These skills and experiences qualify him to serve as the Company’s Audit Committee financial expert. By virtue of his years of service on other public company boards of directors, Mr. Smith also provides the Company with expertise in corporate governance, enterprise risk management and strategic planning. In addition, Mr. Smith’s years in a variety of executive leadership roles with other companies qualify him to provide guidance to the Company in the areas of global operations and corporate strategic development.
JOHN W. WOOD, JR. Mr. Wood has served as a director of the Company since May 2009. His current term on the Board expires at the Company's 2013 Annual Meeting of Shareholders, at which time his election to the Board for a three year term expiring in 2016 and to hold office until his successor is elected and qualified will be voted upon. Mr. Wood served as Chief Executive Officer of Analogic Corporation, a leading designer and manufacturer of medical imaging and security systems, from 2003 to 2006, and is currently a consultant. Prior to joining Analogic, Mr. Wood held senior executive positions over a 22-year career at Thermo Electron Corporation. He served as President of Peek Ltd., a division of Thermo Electron Corporation, and as a Senior Vice President of the parent company. He previously served as President and Chief Executive Officer of Thermedics, a subsidiary of Thermo Electron Corporation. Mr. Wood is a director of ESCO Corporation and American Superconductor. Mr. Wood earned a Bachelor’s degree in Electrical Engineering from Louisiana Tech University and a Master’s degree in Electrical Engineering from Massachusetts Institute of Technology. Mr. Wood holds a Masters Professional Director Certification from the American College of Corporate Directors, a public company director education and credentialing organization. Qualifications: Through his academic training and his extensive executive experience with companies in relevant industries, Mr. Wood possesses the knowledge and expertise to understand and offer guidance regarding the Company’s technologies and markets. In addition, as the former chief executive officer of a public company, Mr. Wood is qualified to provide leadership in the areas of corporate governance, operations and enterprise risk management.
EARL R. LEWIS. Mr. Lewis has served as Chairman, President and Chief Executive Officer of the Company since November 1, 2000. Mr. Lewis was initially elected to the Board in June 1999 in connection with the acquisition of Spectra Physics AB by Thermo Instrument Systems, Inc. Prior to joining FLIR, Mr. Lewis served in various capacities at Thermo Instrument Systems, Inc., with his last role as President and Chief Executive Officer. Mr. Lewis is a member of the Board of Directors of Harvard BioScience and NxStage Medical, Inc. Mr. Lewis is a Trustee of Clarkson University and New Hampton School. Mr. Lewis holds a B.S. from Clarkson College of Technology and has attended post-graduate programs at the University of Buffalo, Northeastern University and Harvard University. Mr. Lewis holds a Masters Professional Director Certification from the American College of Corporate Directors, a public company director education and credentialing organization. Qualifications: Mr. Lewis’ leadership of the Company for the past decade affords him a deep understanding of the Company’s technology and operations, as well as the markets in which the Company operates. Mr. Lewis’ prior service in executive management positions and his past and present service on other boards of directors, including public company boards, enable him to provide insight and guidance in an array of areas including global operations and strategic planning, enterprise risk management, and corporate governance. Mr. Lewis has played, and continues to play, an active role in the Company’s financial management and corporate development, including merger and acquisition activity.
GENERAL WILLIAM W. CROUCH (UNITED STATES ARMY—RETIRED). General Crouch has served as a director of the Company since May 2005. General Crouch retired from the United States Army in 1999 following a 36-year career during which he served in numerous roles including Commanding General—Eighth Army and Chief of Staff, United Nations Command and United States Forces Korea; Commander in Chief, United States Army, Europe; Commanding General, NATO Implementation (later Stabilization) Force, Bosnia/Herzegovina; and the United States Army’s 27th Vice Chief of Staff. Until 2010, he served as one of five generals who oversaw the Army’s Battle Command Training Program. In October 2000, General Crouch was named co-chair of the USS COLE Commission, which was formed to examine the terrorist attack on the USS COLE. He has served as a Distinguished Senior Fellow with the Center for Civil Military Operations at the United States Naval Post Graduate School, and serves on the Board of the Keck Institute for International and Strategic Studies at Claremont McKenna College. He received a B.A. in Civil Government from Claremont McKenna College, and a M.A. in History from Texas Christian University. Qualifications: General Crouch’s career as an Army officer and continuing interest in the U.S. military afford the Company significant insight into the Company’s important military customers in terms of strategic and tactical doctrines and how the Company’s products should be developed and adapted to facilitate the implementation of these doctrines. General Crouch also possesses an understanding of the political and military realities in certain global regions in which the Company’s products are employed. In addition, General Crouch’s experience in senior leadership roles in large Army commands enables him to offer guidance on the leadership of complex organizations.

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ANGUS L. MACDONALD. Mr. Macdonald has served as a director of the Company since April 2001. In 2000, Mr. Macdonald founded and is currently President of Venture Technology Merchants, LLC, an advisory and merchant banking firm to growth companies regarding capital formation, corporate development and strategy. From 1996 to 2000, Mr. Macdonald was Senior Vice President and headed Special Situations in the health care equities research group at Lehman Brothers, Inc. Prior to joining Lehman Brothers, Mr. Macdonald was a senior securities analyst at Fahnestock, Inc. (now Oppenheimer). He holds a B.A. from the University of Pennsylvania and an MBA from Cranfield University, UK. Qualifications: Through his education and prior experiences, including his current role as founder and President of Venture Technology Merchants, LLC, Mr. Macdonald has developed extensive expertise in corporate development strategies for technology enterprises such as the Company as well as in financial structuring and strategy. Mr. Macdonald’s years of experience in the financial services sector provide the Company with insight into the value creation impacts of various financial and operational strategies. These skills enable him to serve as a member of the Company’s Audit Committee and to provide insight to the Company in the development of its financial management and capital deployment strategies.
STEVEN E. WYNNE. Mr. Wynne has served as a director of the Company since November 1999. Since July 2012, Mr. Wynne has served as Executive Vice President of Moda Health (previously Health Services Group, Inc.), a diversified health insurance company. From January 2011 through June 2012, Mr. Wynne served as Executive Vice-President of JELD-WEN, Inc., an international manufacturer of doors and windows. Mr. Wynne was Senior Vice President of The ODS Companies, a diversified insurance company from February 1, 2010 to January 2011. From March 1, 2004 through March 31, 2007, Mr. Wynne was President and Chief Executive Officer of SBI International, Ltd., parent company of sports apparel and footwear company Fila. From August 2001 through March 2002, and from April 2003 through February 2004, Mr. Wynne was a partner in the Portland, Oregon law firm of Ater Wynne LLP. Mr. Wynne served as acting Senior Vice President and General Counsel to the Company from April 2002 through March 2003. Mr. Wynne was formerly Chairman and Chief Executive Officer of eteamz.com, an on-line community serving amateur athletics, from June 2000 until its sale to Active.com in January 2001. From February 1995 to March 2000, Mr. Wynne served as President and Chief Executive Officer of adidas America, Inc. Prior to that time, he was a partner in the law firm of Ater Wynne LLP. Mr. Wynne received an undergraduate degree and a J.D. from Willamette University. Mr. Wynne also serves on the Board of Directors of Planar Systems, Inc. Qualifications: Mr. Wynne has been associated with the Company in a variety of capacities since 1983, including prior service as its outside counsel. By virtue of this extensive relationship, Mr. Wynne has developed a high degree of familiarity with the Company’s operations, risks and opportunities. In addition, Mr. Wynne’s legal training and senior executive leadership experience with other companies qualify him to provide insight and guidance as a member of the Company’s Audit Committee, as well as in the areas of corporate governance, strategic planning and enterprise risk management.
Recommendation of the Board of Directors
The Board of Directors unanimously recommends that shareholders vote FOR the election of its nominees for director. If a quorum is present, the Company’s Bylaws provide that directors are elected by a plurality of the votes cast by the shares entitled to vote. Abstentions and broker non-votes are counted for purposes of determining whether a quorum exists at the Annual Meeting, but are not counted and have no effect on the determination of whether a plurality of the votes cast by the shares entitled to vote exists with respect to a given nominee. See “Corporate Governance and Related Matters – Majority Vote Policy” for additional information regarding procedures relating to the election of the Company’s directors.

CORPORATE GOVERNANCE AND RELATED MATTERS
Communications with Directors
Shareholders and other parties interested in communicating directly with the Chairman or with the non-employee directors as a group may do so by writing to the Chairman of the Board, c/o Corporate Secretary, FLIR Systems, Inc., 27700 SW Parkway Avenue, Wilsonville, Oregon 97070. Concerns relating to accounting, internal controls or auditing matters are promptly brought to the attention of the Audit Committee and handled in accordance with procedures established by the Audit Committee with respect to such matters.
Meetings
During 2012, the Company’s Board of Directors held four meetings. Each incumbent director attended more than 75% of the aggregate of the total number of meetings held by the Board of Directors and the total number of meetings held by all committees of the Board on which he served. Under the Company’s Corporate Governance Principles, each director is expected to commit the time necessary to prepare for and attend all Board meetings and meetings of committees of the Board on which they serve, as well as the Company’s Annual Meeting of Shareholders. All members of the Company’s Board of Directors attended the 2012 Annual Meeting of Shareholders.

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Board of Directors Committees
The Board of Directors has standing Audit, Compensation, Corporate Governance and Strategy and Technology Committees. Each committee operates pursuant to a written charter, which is reviewed annually. The charter of each committee may be viewed online at www.flir.com/investor. The performance of each committee is reviewed annually. Each committee may obtain advice and assistance from internal or external legal, accounting and other advisors. The members of the Audit, Compensation and Corporate Governance Committees have all been determined to be “independent” as defined by applicable NASDAQ Stock Market (“NASDAQ”) rules. The members of each committee are identified in the following table. Mr. Lewis, the Company’s President and Chief Executive Officer, is not “independent” as defined by applicable NASDAQ rules.
 
Name
Audit
 
Corporate
Governance
 
Compensation
 
Strategy and Technology
John D. Carter
 
 
Chair
 
 
 
 
William W. Crouch
 
 
X
 
X
 
X
Earl R. Lewis
 
 
 
 
 
 
Chair
Angus L. Macdonald
X
 
 
 
Chair
 
 
Michael T. Smith
Chair
 
 
 
X
 
 
John W. Wood, Jr.
 
 
X
 
 
 
X
Steven E. Wynne
X
 
X
 
 
 
 

The Audit Committee is responsible for overseeing the integrity of the Company’s financial statements and financial reporting process; the Company’s compliance with legal and regulatory requirements; the independent registered public accounting firm’s qualifications, appointment and independence; the performance of the internal audit function; the review of all third-party transactions involving, directly or indirectly, the Company and any of its directors or officers; and the adequacy of the Company’s accounting and internal control systems. During fiscal year 2012, the Audit Committee held five meetings.

The Compensation Committee is responsible for all matters relating to the compensation of the Company’s executives, including salaries, bonuses, fringe benefits, incentive compensation, equity-based compensation, retirement benefits, severance pay and benefits, and compensation and benefits in the event of a change of control of the Company. The Compensation Committee also administers the Company’s equity compensation plans. During fiscal year 2012, the Compensation Committee held six meetings. See also the “Compensation Discussion and Analysis” section of this Proxy Statement for a description of the Company’s processes and procedures for determining executive compensation.

The Corporate Governance Committee is responsible for recommending to the Board operating policies that conform to appropriate levels of corporate governance practice; overseeing the Board’s annual self-evaluation; identifying qualified candidates to serve on the Board; determining the qualification of Board members; evaluating the size and composition of the Board and its committees; reviewing the Company’s Corporate Governance Principles; reviewing the compensation policies for non-employee directors, and recommending nominees to stand for election at each annual meeting of shareholders. The Corporate Governance Committee seeks candidates to serve on the Board who are persons of integrity, with significant accomplishments and recognized business experience. As required by its charter, the Corporate Governance Committee considers diversity of backgrounds and viewpoints when considering nominees for director but has not established a formal policy regarding diversity in identifying director nominees. During fiscal year 2012, the Corporate Governance Committee held four meetings.

The Strategy and Technology Committee is responsible for serving as a liaison between the Board and the Company's operating unit personnel in the areas of technology innovations and strategy development (including, without limitation, products and applications, markets and customers, and potential acquisitions); providing guidance and expertise in these areas to the operating units; and monitoring industry developments in the technologies and strategic initiatives that are of importance to the Company and its shareholders.  During fiscal year 2012, the Strategy and Technology Committee held two meetings.
Shareholder Nominations
The Corporate Governance Committee will review recommendations by shareholders of individuals for consideration as candidates for election to the Board of Directors. Any such recommendations should be submitted in writing to the Corporate Secretary, FLIR Systems, Inc., 27700 SW Parkway Avenue, Wilsonville, Oregon 97070. Historically, the Company has not had a formal policy concerning shareholder recommendations to the Corporate Governance Committee (or its predecessors) because it believes that the informal consideration process in place to date has been adequate given that the Company has never received any director recommendations from shareholders. The absence of such a policy does not mean, however, that a recommendation

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would not have been considered had one been received. The Corporate Governance Committee will consider director candidates recommended by shareholders on the same basis it considers director candidates identified by the Committee.
The Company’s Bylaws set forth procedures that must be followed by shareholders seeking to nominate directors. The Company’s Bylaws may be accessed at http://www.sec.gov/Archives/edgar/data/354908/000119312509170208/dex32.htm. Each notice given by a shareholder with respect to nominations for the election of directors must comply with the requirements of Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Company’s Bylaws.

Majority Vote Policy
In 2011, the Board approved an amendment to the Company’s Corporate Governance Principles that provides that any nominee for director in an uncontested election who receives a greater number of votes “withheld” from his or her election than votes “for” such election must tender his or her resignation for consideration by the Corporate Governance Committee. The Corporate Governance Committee is then required to make a recommendation to the Board as to whether to accept or reject the resignation of such director, or whether other action should be taken. The Board must then make a decision regarding the resignation and publicly disclose its decision, and the rationale underlying it, within 90 days of the election. This 90-day period is subject to extension for an additional 90-day period. The director who has tendered his or her resignation may not participate in any of the deliberations of the Corporate Governance Committee or the Board regarding whether to accept the resignation.

Corporate Governance
FLIR maintains a Corporate Governance page on its website that provides specific information about its corporate governance initiatives, including FLIR’s Corporate Governance Principles, Codes of Ethical Business Conduct, Code of Ethics for Senior Financial Officers and charters for the committees of the Board of Directors. The Corporate Governance page can be found on our website at www.flir.com/investor.
FLIR’s policies and practices reflect corporate governance initiatives that are compliant with the listing requirements of NASDAQ and the corporate governance requirements of the Sarbanes-Oxley Act of 2002 (“SOX”) and the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), including:
The Board of Directors has adopted clear corporate governance policies;
A majority of the Board members are independent of FLIR and its management based on the relevant independence requirements contained in the Company’s Corporate Governance Principles as well as any additional or supplemental independence standards established by NASDAQ;
All members of the Board's Audit, Compensation and Corporate Governance Committees are independent based on the relevant independence requirements contained in the Company’s Corporate Governance Principles as well as any additional or supplemental independence standards established by NASDAQ, SOX, and the Dodd-Frank Act;
The independent members of the Board of Directors meet regularly without the presence of management;
FLIR has a Code of Ethical Business Conduct for FLIR Operations Inside the U.S. and a Code of Ethical Business Conduct for FLIR Operations Outside the U.S.;
The charters of the Board committees clearly establish their respective roles and responsibilities;
FLIR has an ethics officer and an internet-based hotline monitored by EthicsPoint® that is available to all employees, and FLIR’s Audit Committee has procedures in place for the anonymous submission of employee complaints on accounting, internal controls or auditing matters; and
FLIR has adopted a Code of Ethics for Senior Financial Officers that applies to its Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer/Corporate Controller, Corporate Treasurer, Business Unit Controllers and Site Controllers.
You may obtain copies of the documents posted on FLIR’s Corporate Governance page on its website by writing to the Corporate Secretary, FLIR Systems, Inc., 27700 SW Parkway Avenue, Wilsonville, Oregon 97070.
Board Leadership Structure and Role in Risk Oversight
The Board has determined that having its Chief Executive Officer serve as Chairman of the Board is appropriate for the Company at this time. Mr. Lewis’ extensive knowledge of the Company’s business and industry combined with his experience as Chairman and Chief Executive Officer promotes strategy development and execution and facilitates information flow between management and the Board. No single leadership model is right for all companies at all times, however, so the Board periodically reviews its leadership structure. The Board does not currently have a lead independent director.

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The Board is actively involved in oversight of risks inherent in the operation of the Company’s business including, without limitation, those risks described in the Company’s reports filed from time to time with the Securities and Exchange Commission (the "SEC"). It is management’s responsibility to manage risk and bring to the Board’s attention the material risks to the Company. The Board of Directors has oversight responsibility of the processes established to report and monitor systems for material risks applicable to the Company. The Board manages this responsibility at the Board level with assistance from its four committees, as appropriate. The Board has delegated to the Audit Committee certain tasks related to the Company’s risk management process. The Audit Committee (i) serves as an independent and objective body to monitor the Company’s financial reporting process and internal control systems, and (ii) assists the Board in oversight of the Company’s compliance with legal and regulatory requirements. The Board has delegated to the Compensation Committee basic responsibility for oversight of management’s compensation risk assessment, including the annual determination of whether or not the Company’s compensation policies and practices are reasonably likely to have a material adverse effect on the Company. The Corporate Governance Committee oversees the Company’s risks in the areas of corporate governance and ethics and compliance, and is primarily responsible for Board and committee performance and director nomination/succession. The Strategy and Technology Committee serves as a liaison between the Board and management in the areas of technology innovation and strategy development. These committees report the results of their review processes to the full Board during regularly scheduled Board meetings or more frequently, if warranted. In addition to review and discussion of reports prepared by the committees of the Board, the Board periodically discusses risk oversight in specific areas as they arise, including as part of its corporate strategy review.
Compensation Risk
We recently conducted an assessment of our compensation policies and practices, including our executive compensation programs, to evaluate the potential risks associated with these policies and practices. We reviewed and discussed the findings of the assessment with the Compensation Committee and concluded that our compensation programs are designed with an appropriate balance of risk and reward and do not encourage excessive or unnecessary risk-taking behavior. As a result, we do not believe that risks relating to our compensation policies and practices for our employees are reasonably likely to have a material adverse effect on the Company.
In conducting this review, we considered the following attributes of our programs:
Mix of base salary, annual incentive opportunities, and long-term equity compensation;
Balance between annual and longer-term performance opportunities;
Alignment of annual and long-term incentives to ensure that the awards encourage consistent behaviors and achievable performance results;
Use of equity awards that vest over time;
Generally providing senior executives with long-term equity-based compensation on an annual basis. We believe that accumulating equity over a period of time encourages executives to take actions that promote the long-term sustainability of our business;
Stock ownership guidelines that are reasonable and designed to align the interests of our executive officers with those of our shareholders. This discourages executive officers from focusing on short-term results without regard for longer-term consequences; and
Compensation decisions include subjective considerations, which limit the influence of strictly formulaic factors on excessive risk taking.
Our Compensation Committee considered compensation risk implications during its deliberations on the design of our 2013 executive compensation programs with the goal of appropriately balancing short-term incentives and long-term performance.


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MANAGEMENT
Executive Officers
The executive officers of the Company are as follows:
Name
 
Age
 
Position
Earl R. Lewis
 
69

 
Chairman of the Board of Directors, President and Chief Executive Officer
William W. Davis
 
56

 
Senior Vice President, General Counsel and Secretary
William A. Sundermeier
 
49

 
President, Government Systems
Andrew C. Teich
 
52

 
President, Commercial Systems
Anthony L. Trunzo
 
50

 
Senior Vice President, Finance and Chief Financial Officer
Information concerning the principal occupation of Mr. Lewis is set forth under “Election of Directors - Information as to Nominees and Continuing Directors.” Information concerning the principal occupation or employment during at least the past five years of the executive officers of the Company who are not also directors of the Company is set forth below.
WILLIAM W. DAVIS.    Mr. Davis joined FLIR in July 2007 as Senior Vice President, General Counsel and Secretary. Prior to joining FLIR, from 1999 to 2007, Mr. Davis was employed as in-house legal counsel with Brunswick Corporation, a global manufacturer and marketer of recreation products (2005-2007), and two subsidiaries of General Dynamics Corporation (1999-2005).  From 1990 to 1992 and 1993 to 1999, Mr. Davis engaged in the private practice of law, most recently as a partner in the firm of Katten, Muchin & Zavis LLP.  From 1992 to 1993, Mr. Davis served as a law clerk to the Honorable Edward Carnes of the United States Court of Appeals for the Eleventh Circuit.  Mr. Davis received his B.S. with distinction from the United States Naval Academy and his J.D. from the University of Chicago Law School.  Following graduation from the Naval Academy, Mr. Davis served as an officer in the United States Marine Corps and Marine Corps Reserve.
WILLIAM A. SUNDERMEIER.    Mr. Sundermeier has been serving as the President of FLIR’s Government Systems Division since April 2006. Mr. Sundermeier joined FLIR in 1994 as Product Marketing Manager for Thermography Products and was appointed Director of Product Marketing for commercial and government products in 1995. In 1999, Mr. Sundermeier was appointed Senior Vice President for Product Strategy, focused on the integration of newly acquired companies. In September 2000, Mr. Sundermeier was appointed Senior Vice President and General Manager, Portland Operations. In April 2004, he was appointed Co-President of the Imaging Division. Prior to joining FLIR, Mr. Sundermeier was a founder of Quality Check Software, Ltd. in 1993. Mr. Sundermeier received his B.S. in Computer Science from Oregon State University and is an alumnus of the Harvard Business School Advanced Management Program.
ANDREW C. TEICH.    Mr. Teich has been President of the Company’s Commercial Systems Division since January 2010. From April 2006 to January 2010, he served as President of the Company’s Commercial Vision Systems Division. From 2000 to 2006, he served as the Senior Vice President of Sales and Marketing and then as Co-President of the Imaging Division at FLIR. Mr. Teich joined FLIR as Senior Vice President, Marketing, as a result of FLIR’s acquisition of Inframetrics in March 1999. While at Inframetrics, Mr. Teich served as Vice President of Sales and Marketing from 1996 to 1999. From 1984 to 1996, Mr. Teich served in various capacities within the sales organization at Inframetrics. He holds a B.S. degree in Marketing from Arizona State University and is an alumnus of the Harvard Business School Advanced Management Program.
ANTHONY L. TRUNZO.    Mr. Trunzo has been FLIR's Senior Vice President, Finance and Chief Financial Officer since June 2010. From August 2003, when he joined FLIR, until June 2010 he served as FLIR's Senior Vice President, Corporate Strategy and Development. From 1996 until joining FLIR, Mr. Trunzo was Managing Director in the Investment Banking Group at Banc of America Securities, LLC. From 1986 to 1996, he held various positions at PNC Financial Services Group, Inc. Mr. Trunzo holds a B.A. in Economics from the Catholic University of America, an MBA with a concentration in Finance from the University of Pittsburgh, and is an alumnus of the Harvard Business School Advanced Management Program.


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COMPENSATION DISCUSSION AND ANALYSIS
The following discussion and analysis contains statements regarding future Company performance targets and goals. These targets and goals are disclosed in the context of FLIR’s compensation programs and should not be understood to be statements of management’s expectations or estimates of results or other guidance. FLIR specifically cautions investors not to apply these statements to other contexts.
For purposes of this Compensation Discussion and Analysis, our Named Executive Officers ("NEOs") consist of our Chief Executive Officer (the “CEO”), our Chief Financial Officer (the “CFO”), and our three next most highly compensated executives as of December 31, 2012.

Executive Summary
Our Business and Strategy
FLIR Systems, Inc. is a world leader in sensor systems that enhance perception and awareness. Our advanced sensors and integrated sensor systems enable the gathering and analysis of critical information through a wide variety of applications in commercial, industrial, and government markets worldwide.
Our strategy is focused on enabling our customers to benefit from the valuable information produced by advanced sensing technologies and on delivering sustained superior financial performance and returns for our shareholders. Over the past ten years we have dramatically expanded the availability of thermal imaging technology in a wide range of applications through a business model that focuses on reducing costs through innovation and vertical integration into core technologies. This has resulted in a nearly fifty-fold increase in annual unit volumes since 2002, and the establishment of thermal imaging solutions in numerous markets where it was previously unavailable due to cost or technology constraints. Our strategy has resulted in significant long term growth and well above average returns to shareholders. Since the end of 2002, our total return to shareholders has been 274%, compared with 99% for the Standard and Poor's 500 Index (the "S&P 500").

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Additionally, for the five-year period ending in 2012, we are in the top quartile of our peer group in such key metrics as gross margin, operating margin, return on capital, and revenue growth.

2012 Business and Financial Highlights
Our 2012 financial performance was below both our historical results and our long-term objectives. Revenue and adjusted earnings per share, defined as United States GAAP earnings per share excluding a pre-tax legal settlement expense of $39 million in 2011, declined by 9% and 8%, respectively. This was the first year of declines in revenue and adjusted earnings per share since 2000, a period of 12 years. This performance was a result of challenging economic conditions and reduced government demand for advanced technology driven by global military and government spending constraints. Among the S&P 500 companies from 2000 to 2011, no company has had a longer period than ours of consecutive annual growth in adjusted earnings per share and only

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9% of companies have had a longer period of consecutive annual revenue growth. As a result of our 2012 performance, our stock price declined by 11% during the year.
Despite these challenges, we made significant progress in 2012 in several areas consistent with our long-term strategy, including:
Continued investment in research and development - During 2012, we invested $138 million in research and development, continuing our longstanding practice of investing between 8% and 10% of total revenue on research and development. Notable investments in 2012 included continued development of next generation, high volume, low cost thermal imagers and the introduction of key new products in such markets as stabilized gimbal systems, building inspection and predictive maintenance, and outdoor recreation.
Cost reductions - Our selling, general and administrative expenses declined by 21% in 2012, reflecting our management's ability to respond to lower revenue and generate operating leverage.
Operating cash flow - During 2012, we generated record cash flow from operations of $286 million, representing 128% of net income. We were able to generate cash sufficient to continue investments in the business, make two strategic acquisitions, and return $257 million to shareholders through share repurchases and dividend payments, while still ending the year with cash balances in excess of $320 million.
Strategic acquisitions - In late 2012, we acquired Traficon International NV, a leading provider of intelligent traffic solutions, and Lorex Technology, Inc., a leader in the do-it-yourself security market. We believe that these acquisitions will position us to access several potentially large markets for our sensing technology, and we expect them to contribute substantially to earnings in 2013 and beyond.
Return of capital - During 2012, we continued to return capital to shareholders both directly and indirectly. We repurchased 10.5 million shares of our Common Stock at an average price of $20.47 per share, and paid common stock dividends of $42 million. During 2012, these initiatives improved our total shareholder return by 5%, and improved our return on equity by 1%. Since inception, our share repurchase program has generated an internal rate of return of 35% as of December 31, 2012.

2012 Executive Compensation Actions
In 2012 we introduced a new approach to our long-term incentive program (“LTIP”) delivery, consisting of stock options to reinforce the focus on stock price appreciation, restricted stock units (RSUs) to support long-term ownership and retention, and a relative total shareholder return performance share program (“TSR Program”) with a three-year performance period designed to directly link the earning of LTIP compensation to sustained long-term stock price performance. The TSR Program provides incremental LTIP value above an annual market median core grant of stock options and RSUs to the NEOs only if our Common Stock substantially outperforms the S&P 500 over the performance period. The TSR Program also adds a key retention element for our most-critical employees due to there being no incremental vesting over the three-year performance period. If the growth in our stock price does not outperform the S&P 500, a substantial portion of the 2012 LTIP compensation reported in the 2012 Summary Compensation Table will not vest, and no value will accrue to the NEOs.
Similar to many three-year relative TSR programs, our TSR Program was front loaded in 2012, reflecting at target the difference between the 50th and the 75th percentile market long-term incentive value for the next three years. This explains the higher reported Stock Awards value for 2012 in the 2012 Summary Compensation Table.
As illustrated in our comparison of CEO Target Compensation versus Realized/Realizable Compensation on page 13, realized/realizable compensation from long-term incentives for 2012 and the earlier years of 2011 and 2010 has been substantially reduced as a result of the decline in our stock price. More importantly, if FLIR does not outperform the S&P 500 over the three-year performance period of the TSR Program, $1.5 million of our CEO's and $1.6 million of our other NEOs' reported 2012 Stock Awards value in the 2012 Summary Compensation Table will be forfeited. As of December 31, 2012, in the eight months since the commencement of the TSR Program, FLIR had underperformed the S&P 500 according to the definition in the TSR Program by 14%. This underperformance of 14%, in addition to the 33 1/3% outperformance required to achieve target vesting, thus requires 47% outperformance for the remainder of the performance period to achieve target vesting. The TSR Program is described in detail in the Long-Term Incentive Program section on page 18.
We believe this plan fully supports CEO pay-for-performance alignment. In addition, for 2012 our Compensation Committee took further steps to reinforce that alignment. Our NEOs were awarded no annual incentive plan (“AIP”) payments for 2012 due to the Company not achieving the performance-based goals set in our 2012 plan. Our CEO recommended, and the Compensation Committee agreed, that he not receive a base salary increase for 2013.

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The Compensation Committee annually reviews all elements of compensation for our NEOs and makes modifications as needed to remain competitive, fair, reasonable and consistent with the financial objectives of the Company. We expect to make changes to our NEO compensation plans and practices when they are suggested by evolving market practices, changes in Company financial performance, and changes in accounting and tax rules.

Forfeiture of Pay, At-Risk Compensation and Impact of Stock Price Decline

As a result of our ongoing practice of making elements of our long-term incentive pay performance based over multi-year periods and specific rules related to disclosure of certain other pay elements in the 2012 Summary Compensation Table, we believe the following summary is important for a reader to understand the impact of our recent performance on our NEOs' actual compensation.
Forfeiture of payments under the 2012 AIP - We did not achieve the levels of revenue and diluted earnings per share ("EPS") required for payments under the 2012 AIP. The value forfeited totaled $2.3 million at target.
Forfeiture of performance-based stock options and RSUs - During 2011 and 2012, we did not achieve levels of EPS required to vest performance-based stock options granted in 2010 and performance-based RSUs granted in 2011. The value forfeited as a result of 2011 and 2012 performance totaled $1.9 million as measured by the aggregate grant date fair value. The initial grant values were reported in the Summary Compensation Tables in the years these RSUs and stock options were granted, but the forfeitures as a result of 2011 and 2012 performance are not reflected in the Summary Compensation Tables for 2011 and 2012.
2012 TSR Program - The grant date fair value of the entire 2012 TSR Program described above is reflected in the 2012 Summary Compensation Table, even though the program is specifically designed to measure our performance over a three-year time horizon, and no payouts, vesting or any other value realization event can occur unless both (a) we outperform the S&P 500 during the three year period of the program and (b) three years have elapsed from the grant date. In respect of our CEO, $1.5 million, or 57% of the amount reported in the Stock Awards column of the 2012 Summary Compensation Table is from the TSR Program. The shares underlying the calculation of this amount will only vest to the extent that FLIR outperforms the S&P 500 by 33 1/3 percentage points for the three year period of the program. As of December 31, 2012, FLIR had underperformed the S&P 500 since the inception of the TSR Program by 14%, meaning FLIR will need to outperform the S&P 500 by 47 percentage points from the end of 2012 through the end of the program for the shares underlying these grants to vest. In the event these shares do not vest, the forfeiture would not be captured as a reduction in the Summary Compensation Table in any year.
Wealth impact of share price decline - Our NEOs each have a significant amount of wealth directly tied to our Common Stock. Each NEO holds an amount of our Common Stock well in excess of levels required by our stock ownership requirements. As of December 31, 2012, our CEO, his spouse and trusts controlled by him owned approximately 940,000 shares of our Common Stock and he had exercisable stock options to purchase 1.7 million shares. The combined value of these holdings declined by $5.9 million from December 31, 2011 to December 31, 2012.
Supplemental Executive Retirement Plan ("SERP") - We have a SERP for three of our NEOs. This plan is described on page 19. The amounts reflected in the Change in Pension Value column of the 2012 Summary Compensation Table for our NEOs do not relate to any changes in plan design, but rather the ongoing low interest rate environment. In the event interest rates rise, the value of the SERP will decline, but such a decline would not be reported in the Summary Compensation Table in any year.


Alignment between Strategy, Results and Executive Compensation
Our approach to executive compensation is to pay for performance – that is, our NEOs total compensation should rise or fall based on Company and individual performance. By making equity a substantial component of NEO compensation, we tie our NEOs’ long-term interests to that of our shareholders. In 2012, our long-term incentive compensation, the actual value of which is directly correlated with the performance of our stock price, comprised 60% of total target compensation (“TTC”) for our CEO and, on average, 57% for our other NEOs. TTC is defined as the sum of base salary, target annual incentive compensation and target long-term incentive compensation. The higher proportion of long-term incentive compensation for our CEO reflects market practices as well as our objective to align a significant portion of his compensation with long-term corporate performance. In addition, 36% of the long-term incentive compensation reported in the 2012 Summary Compensation Table is only realized if FLIR outperforms the S&P 500 by 33 1/3 percentage points in the three years following the date of grant. As a result of our failure to reach certain EPS targets in 2011 and 2012, our NEOs forfeited a total of $1.4 million in performance-based equity awards in 2011 and an additional $542,000 of such awards in 2012.

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Our annual incentive plan is designed to reflect annual financial performance as measured by growth in EPS and revenue, thereby complementing our longer-term, share value based long-term incentive plan. In each of the past two years, our annual performance did not meet the thresholds set for full payout. Accordingly, our NEOs' annual incentive compensation, as a percent of target, declined by 58% in 2011 compared to 2010, and in 2012, no annual incentive compensation was paid to our NEOs. In 2012, our annual incentive plan targets, comprised 21% of TTC for our CEO and, on average, 19% for our other NEOs.
In 2012, base salary accounted for 19% of TTC for our CEO and, on average, 24% for our other NEOs. This means our NEOs, on average, have 78% of their TTC opportunity tied to annual and long-term incentive compensation.
This strong link between pay and performance is highlighted in our "Annual Incentive Plan" and "Long-Term Incentive Program" descriptions in the "Compensation Design and Elements of Compensation" section below.

CEO Target Compensation versus Realized/Realizable Compensation
The chart below compares our CEO's target compensation for each of the past three years to the actual value of the compensation realized or still realizable based on our stock price on December 31, 2012 and the achievement of performance goals established under our AIP and our LTIP. As a result of our significant emphasis on incentive-based compensation and the cumulative decline in our stock price over the past three years, the realized and still realizable pay for our CEO has declined from the originally targeted value by 58% for 2010, 61% for 2011, and 30% for 2012.
Specifically, for 2012 our CEO's target AIP was $962,500; however, based on our performance, no AIP compensation was received. The LTIP granted in 2012 at its target value was $5.2 million; however, based on our stock price on December 31, 2012, the intrinsic value of the 2012 LTIP grants was $4.0 million. Therefore, the decrease in total value from what was originally targeted for our CEO's compensation in 2012 was $2.1 million. Correspondingly, the decreases in total value for 2010 and 2011 were $2.5 million and $2.9 million, respectively.

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_______________
Notes to the chart on page 13:
The information in the Target Delivery columns reflect base salaries as set out in the 2010, 2011 and 2012 Summary Compensation Tables, target annual incentives and stock option compensation as set out in the 2010, 2011 and 2012 Grants of Plan-Based Awards Tables and the grant date target value of time-based, performance-based, and market-based restricted stock units ("RSUs"). The grant date target value in the above chart is defined as the market price of our Common Stock on the grant date times the number of RSUs.
The information in the Compensation Value as of December 31, 2012 columns reflect base salaries and actual annual incentive compensation as set out in the 2012 Summary Compensation Table on page 22, the intrinsic value of outstanding stock options (the difference between the option exercise price and the market price of our Common Stock on December 31, 2012, $22.32 per share), the intrinsic value of time-based RSUs as of December 31, 2012, and the intrinsic value of performance-based and market-based RSUs still outstanding and eligible to be earned as of December 31, 2012. Of the performance-based RSUs granted in 2011, the two-thirds that were forfeited based on the Company's 2011 and 2012 performance are excluded from this column, while the final one-third is included at an estimated threshold payout value of 50%.
RSUs that vested during the period are reflected based on the value realized at the time of vesting.
The decreases in value illustrated in the chart reflect the change in value of compensation delivered each year between the time of delivery or grant date and December 31, 2012, which, in the case of long-term equity incentives, reflects the decline in FLIR's stock price and the forfeiture of the first two thirds of the 2011 performance-based RSUs.

As reflected in the foregoing table, unless the efforts of the Company translate into sustained long-term value creation for our shareholders, the CEO will not be able to fully realize the intended economic benefits of the equity awards granted to him.

Philosophy and Objectives of Compensation Programs
General Philosophy
We believe the total compensation of our NEOs should support the following objectives:
To attract and retain NEOs with the skills, experience and motivation to enable the Company to achieve its stated objectives. This means that the Company provides an opportunity for NEOs to earn above average compensation for delivering consistently superior results;
To provide a mix of current, short-term and long-term compensation to achieve a balance between current income and long-term incentive opportunity and promote focus on both annual and multi-year business objectives. This means that NEOs have a higher percentage of their total pay opportunity tied to performance-based (versus fixed) and long-term (versus short-term) pay;
To align total compensation with the performance commitments we make to our shareholders, including, long-term growth in revenue and EPS. This means that benefits to our NEOs from both our short-term and long-term incentive programs are heavily influenced by our achieving EPS and revenue growth;
To allow NEOs who demonstrate consistent performance over a multi-year period to earn above-average compensation when FLIR achieves above-average long-term performance. This means that our compensation program for NEOs has a high degree of variability—significant upside for performance that exceeds goals, with commensurate risk when performance falls short of goals;
Is affordable and appropriate in light of the Company’s size, strategy and anticipated performance. This means that while the Compensation Committee considers competitive practices in its decision-making, it places significant emphasis on the Company’s specific strategy, financial situation and performance in the ultimate determination of compensation decisions; and
Is straightforward and transparent in its design, so that shareholders and other interested parties can clearly understand all elements of our compensation plans, individually and in the aggregate. This means generally limiting the number of compensation elements, types of compensation, perquisites and post-employment benefits while still remaining competitive in our compensation practices.
Annual Process for Determining NEO Compensation
We evaluate our compensation plans and programs annually. In the case of establishing our 2012 compensation, the process began in December 2011. In February 2012, Aon Hewitt's technology compensation consulting group, Radford (“Radford”), who had been retained by the Compensation Committee in 2011 as its independent compensation consultant, provided an executive

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compensation overview presentation to the Compensation Committee. The presentation contained a competitive pay analysis based on a methodology that included a review of peer group data, and evaluated the three major components of our executive compensation program - base salary, annual incentive, and long term incentive, as well as the impact of FLIR’s financial performance on executive compensation. This data was then integrated with other considerations such as relative compensation among the NEOs, overall Company performance in both absolute terms and relative to the peer group, and the results achieved by each individual NEO during the previous year. With the assistance of our human resources team, our CEO then made recommendations regarding base salary and target levels of annual incentive and long-term incentive compensation for each NEO (other than the CEO) to the Compensation Committee for its review and approval. The Compensation Committee independently reviewed the peer group data relating to CEO compensation, the overall Company performance and the performance of our CEO to determine his base salary and target levels of annual incentive and long-term incentive compensation. Concurrently, our human resources team and our CFO and CEO developed and recommended performance targets for the Annual Incentive Plan (“AIP”) to the Compensation Committee for its review and approval. The criteria for establishing these metrics included our anticipated financial performance for the year as measured by our internal budget, our long-term performance outlook as communicated to our shareholders, the Company’s recent and anticipated financial results, and consistency with historical practice.
We currently use the same metrics and similar plan design elements for the AIP compensation offered to our NEOs as those we use for the rest of our employees. While the amount of compensation that is at risk for performance varies among employee groups, all of our annual incentive pools are determined based on achievement of a target level of EPS and revenue. We believe EPS and revenue, and their annual growth rates, are important performance metrics for our shareholders. EPS and revenue growth are equally weighted. We believe that the use of these two key metrics in the AIP is aligned with market practice (as discussed on page 17).
Our LTIP compensation vehicles have varied historically. In 2012, the LTIP compensation vehicles granted to the NEOs consisted of time-based stock options, time-based RSUs and market-based RSUs (as discussed on page 18).
We believe this approach to short-term and long-term compensation offers appropriate incentives to our NEOs who are most able to impact long-term success, while aligning the objectives of all of our employees with those of our shareholders. The Compensation Committee periodically reviews this approach to ensure it remains consistent with the interests of our shareholders.

Defining the Market—Benchmarking
Management, in collaboration with the Compensation Committee and our compensation consultant, reviews the group of comparison companies that we benchmark our NEO compensation against (the “Peer Group”). In January 2012, the Compensation Committee, based on input from Radford, approved several changes to our Peer Group to better reflect the evolution in our business, and to include companies that represent key aspects of our business. Since there are no public companies directly comparable to FLIR, the Peer Group consisted of U.S.-based publicly-traded companies of similar size (based on revenues, employee size and market capitalization) and in the test and measurement and sensor systems industries. The Compensation Committee and Radford also quantitatively evaluated each potential comparison company based on their business focus and corporate strategy and ultimately selected companies most similar to FLIR with regards to business focus and financial profile.
Based on the Compensation Committee's review of our Peer Group, in January 2012, we added ten companies to the Peer Group and removed eight companies. The following companies were removed from the Peer Group for 2012: Ametek, Barnes Group, Dionex, ESCO Technologies, Illumina, Itron, Mettler Toledo International, and National Instruments. The following companies were added to the Peer Group for 2012: FEI Company, Finisar, Graf Tech International, JDS Uniphase, KLA-Tencor, Lam Research, Novellus Systems, Robbins & Myers, Teradyne, and Woodward.
The 2012 Peer Group was as follows: (1) Esterline Technologies, (2) FEI Company, (3) Finisar, (4) Garmin, (5) Graf Tech International, (6) JDS Uniphase, (7) KLA-Tencor, (8) Lam Research, (9) Mine Safety Appliances, (10) MKS Instruments, (11) Novellus Systems, (12) Perkin Elmer, Inc., (13) Rofin-Sinar Technologies, Inc., (14) Robbins & Myers, (15) Roper Industries, Inc., (16) Teledyne Technologies, (17) Teradyne, (18) Trimble Navigation, (19) Waters, and (20) Woodward. Based on data compiled by Radford and available at the time of the benchmarking, the Company was below the median of the Peer Group based on employee size (29th percentile), near the median of the Peer Group based on revenues (49th percentile), and above the Peer Group median with respect to market capitalization (72nd percentile).

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Over the five year period ending December 31, 2012, FLIR has underperformed both the S&P 500 and the Peer Group in total shareholder return ("TSR"), as reflected in the following graph. At December 31, 2012, the closing price of our Common Stock was $22.32.
Since we place significant emphasis on pay-for-performance in our executive compensation programs, we believe the fact that our NEOs received no AIP payments for 2012 and they forfeited the performance-based RSUs granted in 2011 that were based on our 2012 performance is aligned with the fact that our TSR performance was below that of our Peer Group and the S&P 500.
Compensation Design and Elements of Compensation
We have designed our compensation plans to reward achievement of superior financial results, as measured by growth in EPS and revenue both annually and over multi-year periods. If we meet the objectives we have set for the Company, which reflect superior results compared to the market and our Peer Group, our NEOs will earn above-average compensation. Failure to achieve targeted results will significantly reduce total compensation, since a significant portion of our NEOs’ pay is in the form of short-term incentives that are based on achieving a target growth in EPS and revenue and long-term incentives in the form of performance-based RSUs that are based on achieving TSR in excess of the S&P 500. We believe this pay-for-performance philosophy attracts, retains and motivates our NEOs to be aligned with the Company’s objectives, and helps attract and retain the talent needed to meet its goals.
Base Salary
Key considerations in establishing base salary levels include the overall level of responsibility a given NEO has, the importance of his role, and the experience, expertise and specific performance of the individual. For each NEO we compare his base salary against the 50th percentile of the Peer Group. We consider current base salary levels for each of our NEOs to be consistent with these criteria and, absent any changes in responsibilities, that the individuals would expect increases in base salary to be in line with the market for such positions in the future. Our CEO’s base salary is contractually established in his employment agreements at $875,000 for 2012 and 2013. This represents a 3% increase over his base salary in 2011. All other NEOs’ base salaries are determined annually by the Compensation Committee in consultation with our CEO. In 2012, these recommendations were derived principally from information and analysis provided by Radford and resulted in 3% increases for each NEO.

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Annual Incentive Plan
We have an Annual Incentive Plan that covers virtually all U.S. employees that are not eligible for sales incentives and all employees outside of the United States that are not eligible for sales incentives, profit sharing or other individual incentives. For our NEOs, this program awards annual cash incentive compensation based upon achievement of increases in EPS and revenue from the prior year.
The 2012 AIP funding was based on achievement of reported EPS and revenue targets, which were the same for our NEOs and all other employees. For the Company, growth in EPS and revenue are critical performance measures. We believe that aligning our NEOs’ non-equity incentive awards with these measures, if done annually and consistently, is a simple and easy to understand approach that is aligned with our shareholders’ interests. The Annual Incentive Plan was designed so that if the Company achieves the EPS and revenue targets, the AIP pool would equal 100% of the target incentive awards for all NEOs, including our CEO. The EPS and revenue metrics are equally weighted at 50% each, with each metric measured separately. For the half measured against the EPS metric, with each $0.01 variance above or below the target EPS, the AIP pool for NEOs was increased or decreased by 5%. The EPS target for 2012 was $1.65, representing a 6% increase over our EPS of $1.55 in 2011, as adjusted to exclude a pre-tax legal settlement expense of $39 million. For the half measured against the revenue metric, with each $1.0 million variance above or below the target revenue, the AIP pool for NEOs was increased or decreased by 0.5%. The revenue target for 2012 was $1,600 million, representing a 4% increase over our actual revenue of $1,544 million in 2011. Based on the analysis provided by Radford, the Compensation Committee increased the target award levels for each NEO to be in line with the 50th percentile of the comparable individuals in the Peer Group. The new target award for our CEO was 110% of his base salary compared to 100% in 2011. Target awards for our other NEOs ranged from 65% to 80% of base salary, compared to 60% to 70% in 2011. The Compensation Committee also reduced the maximum payout possible from 300% of target to 200% of target and increased the threshold payout possible from 30% of target to 50% of target. Based on our performance and our compensation objectives, the Compensation Committee determined that these new target award levels were appropriate. While we compared our specific AIP targets against the Peer Group on a position by position basis, we also evaluated the overall mix of base salaries, short-term and long-term incentive compensation using the Peer Group data as a guide.
2012 Annual Incentive Plan Matrix
 
Below Threshold
 
Threshold
  
Target
  
Maximum
  
Actual
EPS
Below $1.55
 
94% of target
$1.55
  
100% of target
$1.65
  
112% of target
$1.85
  
88% of target
$1.45
Revenue
Below $1,500M
 
94% of target
$1,500M
  
100% of target
$1,600M
  
113% of target
$1,800M
  
88% of target
$1,405M
Annual Incentive
No payout
 
50% of target
  
100% of target
  
200% of target
  
0% of target
For 2012, FLIR’s reported EPS and revenue were $1.45 and $1,405 million, respectively, resulting in no AIP payouts for the NEOs.
The NEOs’ incentive payments and the non-executive employee pools have fluctuated from year to year in relation to our performance relative to our targets. The chart below details the past six years of AIP targets, actual results and payouts as a percentage of the target awards. The AIP results illustrate our pay-for-performance philosophy. Note that from 2007 to 2009, we utilized a single AIP target of EPS and, commencing in 2010, we have used revenue and EPS targets under the AIP.
Annual Incentive Plan Historical Targets and Results
Year
 
Target EPS
 
Actual EPS (1)
 
Target Revenue (in millions)
 
Actual Revenue (in millions)
 
Payout as Percent of Target
2007
 
$0.76
 
$0.89
 
n/a
 
n/a
 
200
%
2008
 
  1.06
 
  1.28
 
n/a
 
n/a
 
254
%
2009
 
  1.54
 
  1.50
 
n/a
 
n/a
 
72
%
2010
 
  1.60
 
  1.54
 
$1,262
 
$1,388
 
125
%
2011
 
  1.69
 
  1.55
 
  1,593
 
  1,544
 
53
%
2012
 
  1.65
 
  1.45
 
  1,600
 
  1,405
 
%
_______________
(1)
The 2009 Actual EPS was adjusted to exclude pre-tax legal expenses of $13.5 million and the 2011 Actual EPS was adjusted to exclude a pre-tax legal settlement expense of $39 million.

17



Long-Term Incentive Program
We believe sustained long-term growth in our share price, achieved through growing revenue and EPS, is the primary responsibility of our NEOs. Long-term incentives in the form of stock options, time-based RSUs, performance-based RSUs or other equity instruments are an appropriate way to link the interests of management and shareholders, and to incent management to achieve this objective. Therefore, we have consistently used such instruments as an integral part of our compensation programs, and the largest single component of each NEO’s TTC. Over the past several years, it has been our practice to issue stock-based compensation annually following our annual meeting of shareholders. Pursuant to the Compensation Committee Charter and the Equity Granting Policy adopted by the Compensation Committee in March 2007, we expect to continue to make annual grants in the future.
Our 2012 LTIP has two components. The first LTIP component is a grant where the target value is benchmarked against the 50th percentile of the Peer Group. For this component the value is allocated as follows: 50% time-based RSUs and 50% stock options. The stock options and RSUs granted in 2012 vest at the rate of one third per year, subject to the executive's continued employment on the applicable vesting date. The second LTIP component, the TSR Program, is a market-based RSU that provides the opportunity for executives to earn above market awards for above market performance. Based on the analysis provided by Radford, this second LTIP component, at target, provides LTIP awards that approximate the 75th percentile of the Peer Group. The market-based RSUs vest based on FLIR's relative TSR versus the S&P 500 for the three-year period beginning May 1, 2012. It is key to note that vesting only occurs if FLIR's TSR performance exceeds that of the S&P 500. If FLIR's TSR is equal to or below that of the S&P 500 over such three-year period, no market-based RSUs will vest. For each 1% that FLIR's TSR exceeds that of the S&P 500, NEOs earn 3% of the target grant value. Potential awards are capped at 200% of target. For the FLIR TSR calculation, the beginning and ending values are an average of FLIR's 20 closing stock prices prior to the date of grant and the vesting date. For the S&P 500 TSR calculation, the beginning and ending values are an average of the index's 20 composite values prior to the date of grant and the vesting date.
Vesting and Performance Criteria for 2012 Market-Based RSUs (TSR Program)
 
 
Performance Period May 1, 2012 - April 30, 2015
 
 
Performance Level
Percent of Target Shares that will Vest
Threshold Performance
 
TSR Equal to or Less than S&P 500
—%
Target Performance
 
FLIR TSR exceeds that of the S&P 500 by 33 1/3%
100%
Maximum Performance
 
FLIR TSR exceeds that of the S&P 500 by 66 2/3%
200%
During 2012, the second tranche of the performance-based RSUs granted in 2011 were forfeited based on our EPS performance during 2012. The following table reflects the number of equity instruments forfeited and their respective dollar values at the time of grant. The fact that the NEOs do not receive full vesting when our performance does not meet the established thresholds illustrates our pay-for-performance philosophy. Based on 2012 performance, our NEOs forfeited an aggregate of 15,701 performance-based RSUs, representing an aggregate grant date fair value of $541,756.
Forfeiture of 2011 Performance-Based RSUs
 
2011 Performance-Based RSUs Forfeited Based on 2012 Performance (1)
 
Value at Grant
Earl R. Lewis
    7,477
 
$257,957
Anthony L. Trunzo
    2,243
 
    77,384
William A. Sundermeier
    2,243
 
    77,384
Andrew C. Teich
    2,243
 
    77,384
William W. Davis
    1,497
 
    51,647
TOTAL
  15,703
 
$541,756
_______________
(1)
Performance-based RSUs were granted on May 3, 2011. By not achieving our 2012 performance threshold of EPS of $1.86, these performance-based RSUs were forfeited.

18



Perquisites and Other Benefits
In general, we minimize the value and number of perquisites provided to our NEOs. We believe this makes our overall compensation program simpler, easier to understand, and more transparent to stakeholders. The primary perquisite for our NEOs is an automobile allowance. In addition, our NEOs have supplemental life insurance benefits beyond those provided to other U.S.-based employees. Our standard life insurance benefit is equal to two times an employee’s annual salary up to a maximum benefit of $500,000. The NEOs supplemental life insurance benefit provides three times the NEO’s salary, up to a maximum benefit of $1,200,000. The values of all perquisites for our NEOs are included in the 2012 All Other Compensation Table on page 23.
Our NEOs are also eligible to participate in our other benefit plans on the same terms as other employees. These plans include health plans, disability plans, retirement plans and an employee stock purchase plan.
Supplemental Executive Retirement Plan
In January 2001, we implemented a SERP for certain executives then employed by FLIR in the United States. This plan was implemented as an important retention tool at a time of uncertainty in the Company. Since the SERP’s inception, no additional participants have been added, and we do not intend to add participants in the future. Messrs. Lewis, Sundermeier and Teich are the only participants in the SERP.
Non-Qualified Deferred Compensation Plans
In early 2008, we implemented a non-qualified deferred compensation (“NQDC”) plan and a stock deferral plan. Participation by our employees, including our NEOs, is optional. The NQDC plan provides an additional pre-tax savings vehicle for our more highly compensated U.S.-based employees whose retirement savings opportunity is limited under our 401(k) plan. The stock deferral plan allows eligible employees to defer the receipt of vested RSUs. The NQDC and stock deferral plans are available to all our U.S.-based employees earning over a specified annual salary. The NQDC plan does not allow for Company contributions to be made to the plan on behalf of any employee, including the NEOs. See page 28 for additional details.

Employment Agreements
Our CEO had a two-year employment agreement, effective January 1, 2011 through December 31, 2012, approved by the Compensation Committee that establishes base salary levels and provides for annual incentive and long-term incentive awards under our approved plans (i.e., AIP and LTIP) for each year covered by his contract. The employment agreement was extended for one year through December 31, 2013, with terms consistent with those provided under the prior agreement. In addition, the agreement includes provisions regarding various termination scenarios which are described in the Potential Payments Upon Termination or Change of Control section on page 29.

19



Post-Termination Elements of Compensation
Severance
With the exception of our CEO, we do not have any formal severance arrangements with any of our NEOs.
In the past we have provided severance on a case by case basis in situations where a termination was not for cause, and such payment was deemed to be appropriate and in the best interests of the Company. We are likely to continue doing so in the future.
Change of Control Agreements
We consider a sound and vital management team to be essential in protecting and enhancing the best interests of the Company and our shareholders. To this end, we recognize that the possibility of a change of control could arise and that such possibility may result in the departure or distraction of management to the detriment of the Company and our shareholders. In order to encourage the continued attention and dedication of our NEOs to their assigned duties without distraction in circumstances arising from the possibility of a change of control of the Company, we entered into change of control agreements, effective April 30, 2009, with our NEOs, with the exception of our CEO.
The terms and value of these severance and change of control termination benefits are further described starting on page 31.
Compensation Committee Governance
Compensation Committee Members and Compensation Committee Charter
Our NEO compensation policies are established, reviewed and approved by the Compensation Committee of the Board of Directors. The Compensation Committee is composed of three non-employee directors—Angus L. Macdonald (Chair), William W. Crouch and Michael T. Smith—all of whom have been determined by the Board to be “independent” as defined by the Board’s Corporate Governance Principles and applicable SEC and NASDAQ rules. The members of the Compensation Committee, in aggregate, have significant experience in executive positions including management, talent development, finance, and accounting, and have been involved in executive compensation matters in their respective careers. See pages 2-4 in this Proxy Statement for a more detailed biography for each of our directors. In accordance with its Charter, the Board’s Corporate Governance Committee annually reviews the operation, structure, and membership of all committees, including the Compensation Committee.

The Compensation Committee has primary responsibility for all matters relating to the compensation of our NEOs, as well as certain compensation elements for other employees. “Compensation” for this purpose means all forms of remuneration including, without limitation, salaries, bonuses, annual and long-term incentive compensation, equity-based compensation, retirement benefits, severance pay and benefits, fringe benefits and perquisites, and compensation and benefits in the event of a change of control of the Company. The Compensation Committee, in its discretion, may retain the services of outside consultants to assist it in compensation matters. The Compensation Committee is governed by a charter adopted by the Board, which can be found at www.flir.com/investor. The Corporate Governance Committee of the Board annually considers and makes recommendations, as appropriate, to the Board regarding the content of all Board committee charters, including the Compensation Committee’s charter. The Compensation Committee charter was first adopted by the Board in October  2002, and was most recently updated in February 2010.
Compensation Consultant
The Compensation Committee has from time to time engaged professional compensation consultants to advise the Compensation Committee on our executive compensation programs and policies. As indicated earlier, the Compensation Committee engaged Radford to conduct a competitive analysis of our executive compensation levels in late 2011, and utilized that analysis as part of its determination of executive compensation levels for 2012. The Compensation Committee and the Corporate Governance Committee intend to continue using compensation consultants in the future, but not necessarily on an annual basis. Decisions as to whether the use of a consultant is appropriate for any annual period will be determined by the respective committees based on considerations including length of time since the last engagement of a consultant and changes in factors affecting executive compensation at the Company or in the market at large.
Role of Executives in Establishing Compensation
Our CFO and Vice President of Global Human Resources have participated in the development of certain NEO compensation programs, particularly the AIP and the LTIP described above. Once formulated, these programs are reviewed by our CEO and other individuals whose counsel may be sought from time to time and submitted to the Compensation Committee for its review and approval. The Committee considers these recommendations in its decision process, but they are not necessarily determinative. As noted previously, with the assistance of our human resources team, our CEO makes recommendations regarding base salary

20



and target levels of the AIP and LTIP compensation for each NEO (other than himself) to the Compensation Committee. Our human resources team, CFO and CEO also recommend to the Compensation Committee the performance targets under the AIP and LTIP, if applicable. From time to time, certain individuals including our CEO, CFO and Vice President of Global Human Resources are invited to attend meetings of the Compensation Committee. A person, who may be a member of the Company’s management, will be designated by the Compensation Committee Chairman to act as Secretary to the Compensation Committee. During 2012, the Company’s Senior Vice President, General Counsel and Secretary served in this capacity. While these individuals may be asked to provide input and perspective, only Compensation Committee members vote on NEO compensation matters. Our Vice President of Global Human Resources is responsible for the implementation, execution and operation of our compensation programs, as directed by the CEO and the Compensation Committee.
Stock Ownership/Retention Requirements/Insider Trading Policy
We impose stock ownership requirements on our NEOs. The Corporate Governance Principles require our NEOs to hold shares of Common Stock, time-based RSUs, performance-based RSUs (valued at the target performance level) or in-the-money stock options valued in an amount equal to no less than one year’s base salary. The Corporate Governance Principles are reviewed annually by the Corporate Governance Committee of the Board. As of the date of this Proxy Statement, all NEOs are in compliance with these requirements. In addition, the Company's insider trading policy prohibits our executive officers and directors from pledging our securities or engaging in hedging transactions with respect to our securities.
“Say on Pay” Vote
The Compensation Committee seeks to align the objectives of the Company’s executive compensation program with the interests of our shareholders. In that respect, as part of its on-going review of the NEOs’ compensation programs, the Compensation Committee considered the approval by approximately 97% of the votes cast for our “say on pay” vote at our prior annual meeting of shareholders and determined that the NEO compensation philosophy and compensation elements continued to be appropriate and did not make any changes to the NEO compensation program in response to such shareholder vote.
Impact of Tax and Accounting on Compensation Decisions
As a general matter, the Compensation Committee takes into account the various tax and accounting implications of the compensation vehicles employed by the Company.
When determining the amounts of long-term incentive compensation for NEOs and employees, the Compensation Committee examines the accounting cost associated with the grants. Grants of stock options, RSUs and other share-based payments result in an accounting expense for the Company. The accounting expense is equal to the fair value of the instruments being issued. For time-based and performance-based RSUs, the expense is equal to the fair value of a share of Common Stock on the date of grant times the number of units granted. For market-based RSUs, the expense is equal to the grant date fair value of the RSU based on the probable satisfaction of the market condition times the number of units granted. For stock options, the expense is equal to the fair value of the option on the date of grant using a Black-Scholes option pricing model times the number of stock options granted. The expenses are amortized over the vesting period.
Section 162(m) of the United States Internal Revenue Code ("Section 162(m)") generally prohibits any publicly held corporation from taking a federal income tax deduction for compensation paid in excess of $1,000,000 in any taxable year to “covered employees” within the meaning of Section 162(m). Exceptions are made for qualified performance-based compensation, among other things. It is the Compensation Committee’s policy to maximize the effectiveness of our NEO compensation plans in this regard. However, the Compensation Committee believes that compensation and benefits decisions should be primarily driven by the needs of the business, rather than by tax policy. Therefore, the Compensation Committee may make decisions that result in compensation expense that is not fully deductible under Section 162(m).

COMPENSATION COMMITTEE REPORT
We have reviewed and discussed the Compensation Discussion and Analysis with FLIR’s management and, based on our review and discussions, we recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and the Company's Annual Report on Form 10-K for the year ended December 31, 2012.
 
THE COMPENSATION COMMITTEE
Angus L. Macdonald, Chair
William W. Crouch
Michael T. Smith

21



COMPENSATION OF EXECUTIVE OFFICERS
2012 Summary Compensation Table
The following table summarizes compensation for our CEO, CFO and our three other NEOs for the years ended December 31, 2012, 2011 and 2010.

 
 
 
 
Salary
 
Stock Awards
 
Option Awards
 
Non-Equity Incentive Plan Compensation
 
Change in Pension Value
 
All Other Compensation
 
Total
Name and Principal Position
 
Year
 
($)
 
($)(1)
 
($)(2)
 
($)(3)
 
($)(4)
 
($)(5)
 
($)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earl R. Lewis
 
2012
 
$
870,192

 
$
2,649,950

 
$
1,120,560

 
$

 
$
539,516

 
$
34,411

 
$
5,214,629

President and
 
2011
 
849,039

 
1,547,670

 
1,535,919

 
448,375

 
1,810,116

 
  
39,493

 
6,230,612

Chief Executive Officer
 
2010
 
825,000

 

 
2,717,891

 
1,031,250

 
755,473

 
  
40,778

 
5,370,392

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Anthony L. Trunzo
 
2012
 
442,115

 
945,940

 
473,280

 

 
n/a

 
  
27,685

 
1,889,020

Senior Vice President,
 
2011
 
427,692

 
464,370

 
460,416

 
158,778

 
n/a

 
  
27,089

 
1,538,345

Finance and Chief
 
2010
 
367,308

 

 
731,875

 
277,500

 
n/a

 
  
27,060

 
1,403,743

Financial Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
William A. Sundermeier
 
2012
 
442,115

 
945,940

 
473,280

 

 
291,892

 
  
27,310

 
2,180,537

President, Government
 
2011
 
428,846

 
464,370

 
460,416

 
158,778

 
719,750

 
  
26,727

 
2,258,887

Systems Division
 
2010
 
397,385

 

 
836,094

 
350,000

 

 
  
27,941

 
1,611,420

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Andrew C. Teich
 
2012
 
445,000

 
945,940

 
473,280

 

 
309,155

 
  
30,975

 
2,204,350

President, Commercial
 
2011
 
428,846

 
464,370

 
460,416

 
158,778

 
755,442

 
  
28,762

 
2,296,614

Systems Division
 
2010
 
397,385

 

 
836,094

 
350,000

 

 
  
29,690

 
1,613,169

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
William W. Davis
 
2012
 
362,115

 
494,640

 
257,520

 

 
n/a

 
  
33,230

 
1,147,505

Senior Vice President,
 
2011
 
348,846

 
309,810

 
306,944

 
110,775

 
n/a

 
  
28,626

 
1,105,001

General Counsel and
 
2010
 
319,039

 

 
522,266

 
240,000

 
n/a

 
27,892

 
1,109,197

Secretary
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
__________ 
(1)
Represents the aggregate grant date fair value for time-based, performance-based and market-based RSUs granted in 2012 and 2011. The amounts reported in this column are calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation (“FASB ASC Topic 718”). For additional information regarding the calculation of the grant date fair value of the RSU awards, see Note 1 to Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2012. For the market-based RSUs granted in 2012, the likelihood of achieving the market condition required for vesting was included in the determination of the grant date fair value of the RSUs. Under FASB ASC Topic 718, the vesting condition related to the market-based RSUs is considered a market condition and not a performance condition. Accordingly, there is no grant date fair value in excess of the amount reflected in the table above that could be calculated and disclosed based on achievement of the market condition.
(2)
Represents the aggregate grant date fair value for stock options granted in 2012, 2011 and 2010 at an exercise price of $22.30, $35.22 and $30.27 per share, respectively. In accordance with FASB ASC Topic 718, the aggregate grant date fair value for these awards is determined using the Black-Scholes option pricing model. For additional information regarding the calculation of the grant date fair value of the stock option awards, see Note 1 to Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2012.
(3)
Represents amounts earned under our AIP with respect to the specified year. The 2012 AIP and performance metrics are described in the Compensation Discussion and Analysis under “Annual Incentive Plan.”
(4)
Represents the aggregate change in actuarial present value of each NEO’s accumulated benefit under the SERP during the years indicated. The Change in Pension Value in the table above is calculated on the basis of Minimum Retirement Benefit (as described in the Pension Benefits table on page 27) for all participants, even though Messrs. Sundermeier and Teich have not achieved eligibility for such benefits. The primary reason for the increase in the present value of accrued benefits was a change in the interest rate assumption used to discount expected future payments.
(5)
Represents actual cash expenses incurred by the Company and includes car allowances, Company matching contributions under our 401(k) plan, group life insurance premiums, and other personal benefits. Details are described in the All Other Compensation Table on page 23.



22



2012 All Other Compensation Table
The following table provides the components of the amounts shown for 2012 in the “All Other Compensation” column of the 2012 Summary Compensation Table.
 
 
Car
Allowance
 
Company
Contributions
under 401(k)
Plan
 
Group Life
Insurance
Premiums
 
Other
Personal
Benefits
 
 
Total
Name
 
($)
 
($)
 
($)
 
($)(1)
 
 
($)
 
 
 
 
 
 
 
 
 
 
 
 
Earl R. Lewis
 
$18,000
 
$8,500
 
$6,858
 
$1,053
(1)
 
$34,411
Anthony L. Trunzo
 
  18,000
 
  8,500
 
       810
 
  375
(2)
 
  27,685
William A. Sundermeier
 
  18,000
 
  8,500
 
       810
 
 
 
  27,310
Andrew C. Teich
 
  18,000
 
  8,500
 
    1,242
 
  3,233
(3)
 
  30,975
William W. Davis
 
  18,000
 
  8,500
 
    2,322
 
  4,408
(4)
 
  33,230
_______________
(1)
Represents spousal travel expenses.
(2)
Represents airline club membership dues.
(3)
Represents spousal travel expenses of $1,923 and a patent award payment of $1,310.
(4)
Represents spousal travel expenses of $3,358, fitness club dues of $600 and airline club membership dues of $450.
2012 Grants of Plan-Based Awards
The following Grants of Plan-Based Awards table provides information regarding non-equity incentive plan awards and equity-based awards granted to our NEOs during the year ended December 31, 2012. The equity-based awards were granted under the FLIR Systems, Inc. 2011 Stock Incentive Plan, while the non-equity incentive plan awards were granted under the FLIR Systems, Inc. Executive Bonus Plan.
 
 
 
 
 
 
Estimated Future Payouts under Non-Equity Incentive Plan Awards(1)
 
Estimated Future Payouts under Equity Incentive Plan Awards
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Threshold
 
Target
 
Maximum
 
Threshold
 
Target
 
Maximum
 
All Other Stock Awards; Number of Shares of Stock or Units
 
All Other Option Awards; Number of Securities Underlying Options
 
Exercise or Base Price of Option Awards
 
Grant Date Fair Value of Stock and Option Awards
Name
 
Grant Date
 
Approval Date
 
($)
 
($)
 
($)
 
(#)
 
(#)
 
(#)
 
(#)
 
(#)
 
($/Sh)
 
($)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earl R.
Lewis
 
 
 
02/09/12
 
$
481,250

 
$
962,500

 
$
1,925,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
05/01/12
(2
)
04/26/12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
161,000

 
$
22.30

 
$
1,120,560

 
 
05/01/12
(3
)
04/26/12
 
 
 
 
 
 
 
64,000

 
128,000

 
256,000

 
 
 
 
 
 
 
1,501,440

 
 
05/01/12
(4
)
04/26/12
 
 
 
 
 
 
 
 
 
 
 
 
 
53,000

 
 
 
 
 
1,148,510

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Anthony L. Trunzo
 
 
 
02/09/12
 
178,000

 
356,000

 
712,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
05/01/12
(2
)
04/26/12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
68,000

 
22.30

 
473,280

 
 
05/01/12
(3
)
04/26/12
 
 
 
 
 
 
 
20,000

 
40,000

 
80,000

 
 
 
 
 
 
 
469,200

 
 
05/01/12
(4
)
04/26/12
 
 
 
 
 
 
 
 
 
 
 
 
 
22,000

 
 
 
 
 
476,740

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
William A. Sundermeier
 
 
 
02/09/12
 
178,000

 
356,000

 
712,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
05/01/12
(2
)
04/26/12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
68,000

 
22.30

 
473,280

 
 
05/01/12
(3
)
04/26/12
 
 
 
 
 
 
 
20,000

 
40,000

 
80,000

 
 
 
 
 
 
 
469,200

 
 
05/01/12
(4
)
04/26/12
 
 
 
 
 
 
 
 
 
 
 
 
 
22,000

 
 
 
 
 
476,740

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Andrew C. Teich
 
 
 
02/09/12
 
178,000

 
356,000

 
712,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
05/01/12
(2
)
04/26/12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
68,000

 
22.30

 
473,280

 
 
05/01/12
(3
)
04/26/12
 
 
 
 
 
 
 
20,000

 
40,000

 
80,000

 
 
 
 
 
 
 
469,200

 
 
05/01/12
(4
)
04/26/12
 
 
 
 
 
 
 
 
 
 
 
 
 
22,000

 
 
 
 
 
476,740

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
William W. Davis
 
 
 
02/09/12
 
118,625

 
237,250

 
474,500

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
05/01/12
(2
)
04/26/12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
37,000

 
22.30

 
257,520

 
 
05/01/12
(3
)
04/26/12
 
 
 
 
 
 
 
10,000

 
20,000

 
40,000

 
 
 
 
 
 
 
234,600

 
 
05/01/12
(4
)
04/26/12
 
 
 
 
 
 
 
 
 
 
 
 
 
12,000

 
 
 
 
 
260,040


23



_______________
(1)
Represents the target awards under the AIP. The AIP threshold is 50% of target. The Compensation Committee approved the AIP grants at a committee meeting on February 9, 2012. See the Annual Incentive Plan section of Compensation Discussion and Analysis on page 17 for details on the AIP.
(2)
The Compensation Committee approved the stock option grants at a committee meeting on April 26, 2012. The stock option grants were issued on May 1, 2012 which was the second trading day after the date of the Company’s public earnings announcement for the first quarter. These stock options vest over a three-year period, in three equal installments on May 1, 2013, 2014 and 2015. The grant date fair value represents the maximum grant date fair value of $6.96 per share, calculated in accordance with FASB ASC Topic 718. The assumptions made in determining the grant date fair value of each stock option grant are disclosed in Note 1 of the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2012.
(3)
The Compensation Committee approved the market-based RSU grants at a committee meeting on April 26, 2012. The market-based RSU grants were issued on May 1, 2012 which was the second trading day after the date of the Company’s public earnings announcement for the first quarter. These market-based RSU grants vest on May 1, 2015 based on the Company's relative TSR performance from May 1, 2012 through May 1, 2015. The TSR metric to be used to determine vesting for the market-based RSUs are described in the Compensation Discussion and Analysis under "Long-Term Incentive Program." The grant date fair value of $11.73 per market-based RSU is calculated in accordance with FASB ASC Topic 718 based on the probable satisfaction of the market conditions. The assumptions made in determining the grant date fair value of each market-based RSU grant are disclosed in Note 1 or the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2012.
(4)
The Compensation Committee approved the time-based RSU grants at a committee meeting on April 26, 2012. The time-based RSU grants were issued on May 1, 2012 which was the second trading day after the date of the Company’s public earnings announcement for the first quarter. These time-based RSU grants vest over a three-year period, in three equal installments on June 1, 2013, May 1, 2014 and May 1, 2015. In accordance with FASB ASC Topic 718, the grant date fair value for these awards was $21.67, which was the closing market price of our Common Stock on the date of grant, discounted by the net present value of our quarterly dividends.



24



Outstanding Equity Awards at Fiscal Year-End 2012
The following Outstanding Equity Awards at Fiscal Year-End 2012 table summarizes the equity awards we have made to our NEOs which were outstanding as of December 31, 2012.
 
 
Option Awards
 
Stock Awards
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Incentive Plan Awards:
 
 
Number of Securities Underlying Unexercised Options
Exercisable
 
Number of Securities Underlying Unexercised Options
Unexercisable
 
Option Exercise Price
 
Option Expiration
 
Number of Shares or Units of Stock That Have Not Been Vested
 
Market Value of Shares or Units of Stock That Have Not Been Vested
 
Number of Unearned Shares, Units or Other Rights That Have Not Vested
 
Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
Name
 
(#)
 
(#)
 
($)
 
Date
 
(#)
 
($)(1)
 
(#)
 
($)(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earl R.
Lewis
 
680,000

 
 
 
 
$
18.06

 
02/04/15
 
 
 
 
 
 
 
 
 
 
 
274,492

 
 
 
 
12.57

 
02/13/16
 
 
 
 
 
 
 
 
 
 
 
 
250,000

 
 
 
 
20.75

 
05/01/17
 
 
 
 
 
 
 
 
 
 
 
 
129,500

 
 
 
 
34.31

 
04/28/18
 
 
 
 
 
 
 
 
 
 
 
 
189,800

 
 
 
 
25.64

 
05/05/19
 
 
 
 
 
 
 
 
 
 
 
 
154,733

 
77,367

(2)
 
30.27

 
04/27/20
 
 
 
 
 
 
 
 
 
 
 
 
42,700

 
85,400

(3)
 
35.22

 
05/03/21
 
 
 
 
 
 
 
 
 
 
 
 
 
 
161,000

(4)
 
22.30

 
05/01/22
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14,954

(5)
 
333,709

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
53,000

(6)
 
1,182,732

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,738

(7
)
 
83,416

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
128,000

(8
)
 
2,856,410

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Anthony L. Trunzo
 
120,000

 
 
 
 
18.06

 
02/04/15
 
 
 
 
 
 
 
 
 
 
 
35,862

 
 
 
 
12.57

 
02/13/16
 
 
 
 
 
 
 
 
 
 
 
 
47,000

 
 
 
 
20.75

 
05/01/17
 
 
 
 
 
 
 
 
 
 
 
 
23,500

 
 
 
 
34.31

 
04/28/18
 
 
 
 
 
 
 
 
 
 
 
 
63,250

 
 
 
 
25.64

 
05/05/19
 
 
 
 
 
 
 
 
 
 
 
 
41,666

 
20,834

(2)
 
30.27

 
04/27/20
 
 
 
 
 
 
 
 
 
 
 
 
12,800

 
25,600

(3)
 
35.22

 
05/03/21
 
 
 
 
 
 
 
 
 
 
 
 
 
 
68,000

(4)
 
22.30

 
05/01/22
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,487

(5)
 
100,131

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22,000

(6)
 
490,945

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,122

(7)
 
25,038

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40,000

(8)
 
892,628

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
William A. Sundermeier
 
119,400

 
 
 
 
12.57

 
02/13/16
 
 
 
 
 
 
 
 
 
 
 
65,200

 
 
 
 
20.75

 
05/01/17
 
 
 
 
 
 
 
 
 
 
 
 
32,500

 
 
 
 
34.31

 
04/28/18
 
 
 
 
 
 
 
 
 
 
 
 
75,950

 
 
 
 
25.64

 
05/05/19
 
 
 
 
 
 
 
 
 
 
 
 
47,600

 
23,800

(2)
 
30.27

 
04/27/20
 
 
 
 
 
 
 
 
 
 
 
 
12,800

 
25,600

(3)
 
35.22

 
05/03/21
 
 
 
 
 
 
 
 
 
 
 
 
 
 
68,000

(4)
 
22.30

 
05/01/22
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,487

(5)
 
100,131

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22,000

(6)
 
490,945

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,122

(7)
 
25,038

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40,000

(8)
 
892,628

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

25



 
 
Option Awards
 
Stock Awards
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Incentive Plan Awards:
 
 
Number of Securities Underlying Unexercised Options
Exercisable
 
Number of Securities Underlying Unexercised Options
Unexercisable
 
Option Exercise Price
 
Option Expiration
 
Number of Shares or Units of Stock That Have Not Been Vested
 
Market Value of Shares or Units of Stock That Have Not Been Vested
 
Number of Unearned Shares, Units or Other Rights That Have Not Vested
 
Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
Name
 
(#)
 
(#)
 
($)
 
Date
 
(#)
 
($)(1)
 
(#)
 
($)(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Andrew C. Teich
 
150,000

 
 
 
 
$
18.06

 
02/04/15
 
 
 
 
 
 
 
 
 
 
 
119,400

 
 
 
 
12.57

 
02/13/16
 
 
 
 
 
 
 
 
 
 
 
 
65,200

 
 
 
 
20.75

 
05/01/17
 
 
 
 
 
 
 
 
 
 
 
 
32,500

 
 
 
 
34.31

 
04/28/18
 
 
 
 
 
 
 
 
 
 
 
 
75,950

 
 
 
 
25.64

 
05/05/19
 
 
 
 
 
 
 
 
 
 
 
 
47,600

 
23,800

(2)
 
30.27

 
04/27/20
 
 
 
 
 
 
 
 
 
 
 
 
12,800

 
25,600

(3)
 
35.22

 
05/03/21
 
 
 
 
 
 
 
 
 
 
 
 
 
 
68,000

(4)
 
22.30

 
05/01/22
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,487

(5)
 
100,131

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22,000

(6)
 
490,945

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,122

(7)
 
25,038

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40,000

(8)
 
892,628

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
William W. Davis
 
15,000

 
 
 
 
22.40

 
07/27/17
 
 
 
 
 
 
 
 
 
 
 
23,500

 
 
 
 
34.31

 
04/28/18
 
 
 
 
 
 
 
 
 
 
 
 
55,300

 
 
 
 
25.64

 
05/05/19
 
 
 
 
 
 
 
 
 
 
 
 
29,733

 
14,867

(2)
 
30.27

 
04/27/20
 
 
 
 
 
 
 
 
 
 
 
 
8,533

 
17,067

(3)
 
35.22

 
05/03/21
 
 
 
 
 
 
 
 
 
 
 
 
 
 
37,000

(4)
 
22.30

 
05/01/22
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,994

(5)
 
66,813

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12,000

(6)
 
267,788

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
748

(7)
 
16,692

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20,000

(8)
 
446,314

_______________
(1)
Based on the closing market price of our Common Stock as of December 31, 2012 ($22.32), as reported on NASDAQ.
(2)
Time-based stock options granted on April 27, 2010 that will vest on April 27, 2013.
(3)
Time-based stock options granted on May 3, 2011 that will vest in two equal installments on May 3, 2013 and 2014.
(4)
Time-based stock options granted on May 1, 2012 that will vest in three equal installments on May 1, 2013, 2014 and 2015.
(5)
Time-based RSUs granted on May 3, 2011 that will vest in two equal installments on May 3, 2013 and 2014.
(6)
Time-based RSUs granted on May 1, 2012 that will vest in three equal installments on June 1, 2013, May 1, 2014 and May 1, 2015.
(7)
Performance-based RSUs granted on May 3, 2011 that will vest on May 3, 2014 based on the Company’s EPS performance from January 1, 2013 through December 31, 2013. 100% of the performance-based RSUs that were scheduled to vest on May 3, 2013 were forfeited based on our EPS performance during 2012.
(8)
Market-based RSUs granted on May 1, 2012 that will vest on May 1, 2015 based on the Company's relative TSR performance versus the S&P 500 for the three-year period beginning May 1, 2012.

26



2012 Option Exercises and Stock Vested
The following Option Exercises and Stock Vested table provides additional information about the value realized by our NEOs on the vesting of RSUs during the year ended December 31, 2012.
 
 
 
Option Awards
 
Stock Awards(1)
 
 
Number of Shares Acquired on Exercise
 
Value Realized on Exercise
 
Number of Shares Acquired on Vesting
 
Value Realized on Vesting
Name
 
(#)
 
($)
 
(#)
 
($)
 
 
 
 
 
 
 
 
 
 
Earl R. Lewis
 

 

 
13,660

(2)
 
$
292,073

Anthony L. Trunzo
 

 

 
4,310

(3)
 
92,224

William A. Sundermeier
 

 

 
4,710

(4)
 
100,908

Andrew C. Teich
 

 

 
4,710

(5)
 
100,908

William W. Davis
 

 

 
3,296

(6)
 
70,659

_______________
(1)
The value realized on vesting was determined by multiplying the number of RSUs vesting by the closing price of our Common Stock as reported on NASDAQ on the vesting date.
(2)
Represents 6,184 RSUs that vested on May 5, 2012 for which distribution has been deferred until June 1, 2015, and 7,476 RSUs that vested on June 3, 2012 for which distribution has been deferred until June 1, 2017.
(3)
Included are 2,067 RSUs that vested on May 5, 2012 for which distribution has been deferred until June 1, 2014. The value realized on vesting of these deferred units was $44,875.
(4)
Included are 2,243 RSUs that vested on June 3, 2012 for which distribution has been deferred until June 1, 2016. The value realized on vesting of these deferred units was $47,350.
(5)
Included are 2,467 RSUs that vested on May 5, 2012 for which distribution has been deferred until June 1, 2016. The value realized on vesting of these deferred units was $53,559.
(6)
Included are 1,496 RSUs that vested on June 3, 2012 for which distribution has been deferred until June 1, 2014. The value realized on vesting of these deferred units was $31,581.

2012 Pension Benefits
The following Pension Benefits table provides the present value of the accumulated benefits payable to each of our NEOs under our SERP.
 
 
 
 
 
Number of Years of Credited Service
 
Present Value of Accumulated Benefit
 
Payments During Last Fiscal Year
Name
 
Plan Name
 
(#)
 
($)(1)
 
($)
 
 
 
 
 
 
 
 
 
Earl R. Lewis
 
SERP
 
12
 
$
13,233,921

 
$

Anthony L. Trunzo
 
n/a
 
n/a
 
n/a
 
n/a
William A. Sundermeier
 
SERP
 
12
 
2,502,880

 

Andrew C. Teich
 
SERP
 
12
 
2,815,801

 

William W. Davis
 
n/a
 
n/a
 
n/a
 
n/a
__________
(1)