DEF 14A 1 d466762ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.      )

 

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

Check the appropriate box:

 

¨   Preliminary Proxy Statement

 

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

 

x   Definitive Proxy Statement

 

¨   Definitive Additional Materials

 

¨   Soliciting Material Pursuant to §240.14a-12

 

 

Newell Rubbermaid Inc.

 

(Name of Registrant as Specified In Its Charter)

 

 

 

  

 

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

 

Payment of Filing Fee (Check the appropriate box):

 

x   No fee required.

 

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

 

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  (4)   Proposed maximum aggregate value of the transaction:

 

 

   

 

  (5)   Total fee paid:

 

 

   

 

 

¨   Fee paid previously with preliminary materials.

 

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

 

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LOGO

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held On May 7, 2013

To the Stockholders of NEWELL RUBBERMAID INC.:

You are cordially invited to attend the annual meeting of stockholders of NEWELL RUBBERMAID INC. (the “Company”) to be held on Tuesday, May 7, 2013, at 9:00 a.m., local time at Newell Rubbermaid’s corporate headquarters, Three Glenlake Parkway, Atlanta, Georgia.

At the annual meeting, you will be asked to:

 

  ·   

Elect the five directors of the Company nominated by the Board of Directors;

 

  ·   

Ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year 2013;

 

  ·   

Approve the Newell Rubbermaid Inc. 2013 Incentive Plan;

 

  ·   

Vote on an advisory resolution to approve executive compensation; and

 

  ·   

Transact such other business as may properly come before the annual meeting and any adjournment or postponement of the annual meeting.

Only stockholders of record at the close of business on March 15, 2013 may vote at the annual meeting or any adjournment or postponement thereof.

Whether or not you plan to attend the annual meeting, please act promptly to vote your shares with respect to the proposals described above. You may vote your shares by marking, signing and dating the enclosed proxy card and returning it in the postage-paid envelope provided. You also may vote your shares by telephone or through the Internet by following the instructions set forth on the proxy card. If you attend the annual meeting, you may vote your shares in person, even if you have previously submitted a proxy in writing, by telephone or through the Internet.

 

By Order of the Board of Directors,
LOGO
John K. Stipancich
Executive Vice President – General Counsel & Corporate Secretary & EMEA Executive Leader

March 28, 2013

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on

May 7, 2013—the Company’s Proxy Statement and 2012 Annual Report to Stockholders are available at

WWW.PROXYVOTE.COM


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TABLE OF CONTENTS

 

     Page  

Date, Time and Place of the Annual Meeting

     1   

Questions and Answers About Voting at the Annual Meeting and Related Matters

     1   

Proposal 1 – Election of Directors

     5   

Information Regarding Board of Directors and Committees and Corporate Governance

     10   

Certain Relationships and Related Transactions

     15   

Compensation Committee Interlocks and Insider Participation

     15   

Organizational Development & Compensation Committee Report

     16   

Executive Compensation

     17   

Equity Compensation Plan Information

     64   

Certain Beneficial Owners

     65   

Audit Committee Report

     66   

Proposal 2 – Ratification of Appointment of Independent Registered Public Accounting Firm

     68   

Proposal 3 – Approval of the Newell Rubbermaid Inc. 2013 Incentive Plan

     69   

Proposal 4 – Advisory Resolution to Approve Executive Compensation

     81   

Section 16(a) Beneficial Ownership Compliance Reporting

     82   

Other Business

     82   

Appendix A – Non-GAAP Reconciliation

     A-1   

Appendix B – Newell Rubbermaid 2013 Incentive Plan

     B-1   


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NEWELL RUBBERMAID INC.

Three Glenlake Parkway

Atlanta, Georgia 30328

 

 

PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 7, 2013

You are receiving this Proxy Statement and proxy card from us because you own shares of common stock of Newell Rubbermaid Inc. (the “Company”). This Proxy Statement describes the items on which the Company would like you to vote. It also gives you information so that you can make an informed voting decision. The Company first mailed this Proxy Statement and the proxy card to stockholders on or about March 28, 2013.

DATE, TIME AND PLACE OF THE ANNUAL MEETING

The Company will hold the annual meeting at Newell Rubbermaid’s corporate headquarters, Three Glenlake Parkway, Atlanta, Georgia, at 9:00 a.m., local time, on Tuesday, May 7, 2013.

QUESTIONS AND ANSWERS ABOUT

VOTING AT THE ANNUAL MEETING AND RELATED MATTERS

Who is entitled to vote at the annual meeting?

Record holders of the Company’s common stock at the close of business on March 15, 2013 are entitled to notice of and to vote at the annual meeting. On the record date, approximately 288,371,337 shares of common stock were issued and eligible to vote.

What constitutes a quorum for the annual meeting?

A quorum of stockholders is necessary to take action at the annual meeting. A majority of the outstanding shares of common stock of the Company, present in person or by proxy, will constitute a quorum. Votes cast in person or by proxy at the annual meeting will be tabulated by the inspectors of election appointed for the annual meeting. The inspectors of election will determine whether a quorum is present at the annual meeting. The inspectors of election will treat instructions to withhold authority, abstentions and broker non-votes as present for purposes of determining the presence of a quorum. In the event that a quorum is not present at the annual meeting, the Company expects that the annual meeting will be adjourned to solicit additional proxies.

How are votes counted?

You are entitled to one vote for each share you own on the record date on the election of directors and each proposal to be considered at the annual meeting. If your common stock is held in “street name” (i.e., in the name of a bank, broker or other record holder), you will need to instruct your broker or bank regarding how to vote your common stock. Pursuant to New York Stock Exchange (“NYSE”) rules, your broker or bank does not have discretion to vote your common stock without your instructions regarding the election of directors, the advisory vote on executive compensation, and the approval of the Newell Rubbermaid Inc. 2013 Incentive Plan (the “2013 Incentive Plan”). If you do not provide your broker or bank with voting instructions regarding these proposals, your shares of common stock will not be considered present at the Annual Meeting of Stockholders for purposes of voting on these proposals. However, please note that banks and brokers that have not received voting instructions from their clients may vote their clients’ shares on the ratification of the appointment of Ernst & Young LLP.

How many votes are required to elect a director or approve a proposal?

Election of Directors.    Directors receiving a majority of votes cast with respect to that director’s election (number of shares voted “for” a director must exceed the number of votes cast “against” that director) will

 

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be elected as a director. Shares not present, shares not voting and shares voting “abstain” will have no effect on the election of directors.

Approval of the Newell Rubbermaid Inc. 2013 Incentive Plan.    The vote required for approval of this proposal is the affirmative vote of a majority of the shares of common stock present in person or by proxy and entitled to vote at the annual meeting. With respect to this proposal, you may vote in favor of or against this item or you may abstain from voting. Any proxy marked “abstain” with respect to this item will have the effect of a vote against this proposal. In addition, with respect to this proposal only, the rules of the NYSE require that the total votes cast (including “for,” “against” and “abstain”) on this proposal must represent over 50% of all common stock entitled to vote on the proposal.

Ratification of the Appointment of Ernst & Young LLP and Approval of any Other Proposals.    The vote required for the ratification of the appointment of Ernst & Young LLP, the approval of executive compensation in the advisory vote, and the approval of any other proposal that may properly come before the annual meeting or any adjournment or postponement of the meeting is the affirmative vote of a majority of the shares of common stock present in person or by proxy and entitled to vote at the annual meeting. With respect to any such proposal, you may vote in favor of or against the item or you may abstain from voting. Any proxy marked “abstain” with respect to the item will have the effect of a vote against the proposal.

How do I vote my shares?

You may attend the annual meeting and vote your shares in person. You also may choose to submit your proxies by any of the following methods:

 

  ·   

Voting by Mail.    If you choose to vote by mail, simply complete the enclosed proxy card, date and sign it, and return it in the postage-paid envelope provided. Your shares will be voted in accordance with the instructions on your proxy card. If you sign your proxy card and return it without marking any voting instructions, your shares will be voted FOR the election of all director nominees, FOR the ratification of the appointment of Ernst & Young LLP, FOR the Newell Rubbermaid Inc. 2013 Incentive Plan, FOR the Advisory Resolution to Approve Executive Compensation and in the discretion of the persons named as proxies on all other matters that may properly come before the annual meeting or any adjournment or postponement of the meeting.

 

  ·   

Voting by Telephone.    You may vote your shares by telephone by calling the toll-free telephone number provided on your proxy card. Telephone voting is available 24 hours a day, and the procedures are designed to authenticate votes cast by using a personal identification number located on your proxy card. The procedures permit you to give a proxy to vote your shares and to confirm that your instructions have been properly recorded. If you vote by telephone, you should not return your proxy card.

 

  ·   

Voting by Internet.    You also may vote through the Internet by signing on to the website identified on your proxy card and following the procedures described in the website. Internet voting is available 24 hours a day, and the procedures are designed to authenticate votes cast by using a personal identification number located on your proxy card. The procedures permit you to give a proxy to vote your shares and to confirm that your instructions have been properly recorded. If you vote by Internet, you should not return your proxy card.

If you are a stockholder whose shares are held in street name, you must either direct the record holder of your shares how to vote your shares or obtain a proxy, executed in your favor, from the record holder to be able to vote at the annual meeting.

This Proxy Statement is also being used to solicit voting instructions for the shares of the Company’s common stock held by the trustee of the Newell Rubbermaid 401(k) Savings and Retirement Plan for the benefit of plan participants. Participants in this plan have the right to direct the trustee regarding how to vote the shares of Company stock credited to their accounts. Unless otherwise required by law, the shares credited to each participant’s account will be voted as directed. Participants in this plan may direct the

 

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trustee by telephone, through the Internet or by completing and returning a voting card. If valid instructions are not received from a Newell Rubbermaid 401(k) Savings and Retirement Plan participant by 11:59 Eastern Daylight Time on May 6, 2013, a participant’s shares will be voted proportionately by the trustee in the same manner in which the trustee votes all shares for which it has received valid instructions.

How may I revoke or change my vote?

You may revoke your proxy at any time before it is voted at the annual meeting by any of the following methods:

 

  ·   

Submitting a later-dated proxy by mail, over the telephone or through the Internet.

 

  ·   

Sending a written notice, including by facsimile, to the Corporate Secretary of the Company. You must send any written notice of a revocation of a proxy so that it is received before the taking of the vote at the annual meeting to:

Newell Rubbermaid Inc.

Three Glenlake Parkway

Atlanta, Georgia 30328

Facsimile: 1-770-677-8717

Attention: Corporate Secretary

 

  ·   

Attending the annual meeting and voting in person. Your attendance at the annual meeting will not in and of itself revoke your proxy. You must also vote your shares at the annual meeting. If your shares are held in “street name” by a bank, broker or other record holder, you must obtain a proxy, executed in your favor, from the record holder to be able to vote at the annual meeting.

If you require assistance in changing or revoking your proxy, please contact the Company’s proxy solicitor at the following address or telephone number:

Morrow & Co., LLC

470 West Avenue

Stamford, CT 06902

Phone Number: 1-800-662-5200

Who will count the votes?

Representatives from Broadridge Financial Solutions, Inc. will tabulate the votes and act as an independent inspector of election for the annual meeting.

Where can I find the voting results of the annual meeting?

The Company will include the voting results of the annual meeting in a Current Report on Form 8-K, which will be filed with the Securities and Exchange Commission not later than May 13, 2013.

Who will pay the costs of solicitation of proxies?

This Proxy Statement and the accompanying proxy card are being furnished to stockholders in connection with the solicitation of proxies by the Board of Directors of the Company. The Company will pay the costs of soliciting proxies.

Who is the Company’s proxy solicitor?

The Company has retained Morrow & Co., LLC to aid in the solicitation of proxies and to verify certain records related to the solicitation. The Company will pay Morrow & Co., LLC, a fee of $11,500 as compensation for its services and will reimburse it for its reasonable out-of-pocket expenses.

In addition to solicitation by mail, directors, officers and employees of the Company, at no additional compensation, may solicit proxies from stockholders by telephone, facsimile, Internet or in person. Upon

 

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request, the Company will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses in sending the proxy materials to beneficial owners.

How do I submit a stockholder proposal for the 2014 annual meeting?

To be considered for inclusion in next year’s proxy materials, stockholder proposals to be presented at the Company’s 2014 annual meeting of stockholders must be in writing and be received by the Company no later than November 28, 2013. At the 2014 annual meeting, the Company’s management will be able to vote proxies in its discretion on any proposal not included in the Company’s proxy statement for such meeting if the Company does not receive notice of the proposal on or before February 6, 2014.

If a stockholder does not submit a proposal for inclusion in next year’s proxy statement, but instead wishes to present it directly at the 2014 annual meeting, the Company’s By-Laws require that the stockholder notify the Company of such proposal in writing no later than 90 days prior to the anniversary date of the 2013 annual meeting, or February 6, 2014. The stockholder must also comply with the requirements of Section 2.12 of the Company’s By-Laws with respect to stockholder proposals.

How do I nominate a candidate for election as a director at the 2014 annual meeting?

Any stockholder wishing to nominate a candidate for election as a director at the Company’s 2014 annual meeting must notify the Company in writing no later than February 6, 2014. Such notice must include appropriate biographical information and otherwise comply with the requirements of the Company’s Restated Certificate of Incorporation and By-Laws relating to stockholder nominations of directors.

How do I provide a notice of my intention to present proposals and director nominations at the 2014 annual meeting?

Notices of intention to present proposals and director nominations at the 2014 annual meeting or requests in connection therewith, including requests for copies of the relevant provisions of the Company’s Restated Certificate of Incorporation or By-Laws relating to proposals and director nominations, should be addressed to Newell Rubbermaid Inc., Three Glenlake Parkway, Atlanta, Georgia 30328, Attention: Corporate Secretary.

How can I obtain a copy of the Company’s 2012 annual report on Form 10-K?

A copy of the Company’s 2012 annual report on Form 10-K (including the financial statements and financial statement schedules), as filed with the Securities and Exchange Commission, may be obtained without charge upon written request to the office of the Corporate Secretary of the Company at Three Glenlake Parkway, Atlanta, Georgia 30328. A copy of the Company’s Form 10-K and other periodic filings also may be obtained under the “SEC Filings” link on the Company’s website at www.newellrubbermaid.com and from the Securities and Exchange Commission’s EDGAR database at www.sec.gov.

Could other business be conducted at the annual meeting?

The Board of Directors does not know of any business to be brought before the annual meeting other than the matters described in the notice of annual meeting. However, if any other matters properly come before the annual meeting or any adjournment or postponement of the annual meeting, each person named in the accompanying proxy intends to vote the proxy in accordance with his judgment on such matters.

 

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PROPOSAL 1—ELECTION OF DIRECTORS

At our 2012 annual meeting, shareholders approved a proposal to phase out the classification of the Board of Directors and provide for the annual election of directors. Beginning with the 2013 annual meeting, directors will be elected to hold office until the next annual shareholders meeting or until a respective successor is duly elected and has qualified.

Our Board of Directors is presently comprised of twelve members. The terms of five directors will expire on May 7, 2013. These five directors have been nominated for re-election. Of the five nominees, four of the nominees were elected at the 2010 annual meeting and one of the nominees, Jose Ignacio Perez-Lizaur, was elected as a director in August 2012.

Proxies will be voted, unless otherwise indicated, FOR the election of the five nominees for director. All of the nominees are currently serving as directors of the Company and have consented to serve as directors if elected at this year’s annual meeting. The Company has no reason to believe that any of the nominees will be unable to serve as a director. However, should any nominee be unable to serve if elected, the Board of Directors may reduce the number of directors, or proxies may be voted for another person nominated as a substitute by the Board of Directors.

The Board of Directors unanimously recommends that you vote FOR the election of each nominee for director.

Information about the nominees and the continuing directors whose terms expire in future years is set forth below.

 

Name and Background

  

Director
Since

 

Nominees for election to terms ending in 2014 or when a successor is elected and has qualified:

  

Scott S. Cowen, age 66, has been the President of Tulane University and Seymour S Goodman Memorial Professor of Business since 1998. From 1984 to 1998, Dr. Cowen served as Dean and Albert J. Weatherhead III Professor of Management, Weatherhead School of Management, Case Western Reserve University. Prior to his departure in 1998, Dr. Cowen had been associated with Case Western Reserve University in various capacities since 1976. Dr. Cowen is also a director of American Greetings Corp. (a manufacturer of greeting cards and related merchandise) and Forest City Enterprises, Inc. (a real estate developer). Dr. Cowen is a former member of the Board of Directors of Jo-Ann Stores, Inc. (an operator of retail fabric shops). Dr. Cowen has been a director since the Company completed its merger with Rubbermaid. He has extensive academic and professional expertise in the areas of strategic financial management systems, corporate governance and leadership, including as a consultant with public companies in such areas, significant experience in crisis management (including in connection with recovery from Hurricane Katrina), and substantial institutional knowledge regarding the Company, including its operations and industries, due to his longstanding service to the Board.

     1999   

 

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Name and Background

  

Director
Since

 

Cynthia A. Montgomery, age 60, is the Timken Professor of Business Administration at the Harvard University Graduate School of Business, where she has served on the faculty since 1989. Prior thereto, Dr. Montgomery was a Professor at the Kellogg School of Management at Northwestern University from 1985 to 1989. Dr. Montgomery also serves on the Board of Directors of several Black Rock Mutual Funds. Dr. Montgomery has conducted extensive research in the areas of strategy and corporate governance, including in particular issues relating to boards of directors, the creation of value across multiple lines of business, and the role leaders play in developing and implementing strategy. She also has substantial institutional knowledge regarding the Company, including its operations and industries, due to her longstanding service to the Board.

     1995   

Jose Ignacio Perez-Lizaur, age 61, retired in 2010 as the Executive Vice President, Operations, of the Sam’s Club division of Walmart Stores, Inc., a post he held since 2009. From 1987 to 2009, Mr. Perez-Lizaur served in various management roles within Walmart’s Latin American operations, most recently as the President and CEO of Walmart Central America from 2006 to 2008. Prior to his tenure at Walmart, Mr. Perez-Lizaur held several positions in the Mexican government. Mr. Perez-Lizaur has distinguished international management experience, with a focus on Latin American retail markets, and possesses a deep knowledge of both the challenges and opportunities of pursing business growth across the region. Mr. Perez-Lizaur also serves on the Board of Directors of Grupo Bimbo, S.A.B. de C.V. (Mexico’s largest commercial bakery operation).

     2012   

Michael B. Polk, age 52, has been President and Chief Executive Officer of the Company since July 2011. Prior thereto, he was President, Global Foods, Home & Personal Care, Unilever (a consumer packaged goods manufacturer and marketer) since 2010. Mr. Polk joined Unilever in 2003 as Chief Operating Officer Unilever Foods USA and subsequently became President, Unilever USA in 2005. From 2007 to 2010, Mr. Polk served as President, Unilever Americas. Prior to joining Unilever, Mr. Polk spent sixteen years at Kraft Foods Inc. and three years at The Procter & Gamble Company. At Kraft Foods, Mr. Polk was President, Kraft Foods Asia Pacific, President, Biscuits and Snacks Sector, and was a member of the Kraft Foods Management Committee. Mr. Polk brings outstanding global marketing, consumer innovation, customer development, and operations leadership to the Board. He has been successful in leading multi-billion dollar brands, in managing diverse product categories, and navigating complex geographies. Mr. Polk is a former member of the Board of Directors of The Yankee Candle Company, Inc. (a manufacturer and retailer of home fragrance products).

     2009   

 

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Name and Background

  

Director
Since

 

Michael A. Todman, age 55, has been President, Whirlpool International since December 2009 and has been a member of the Board of Directors of Whirlpool Corporation (a manufacturer and marketer of major home appliances) since January 1, 2006. Prior thereto, he served as President, Whirlpool North America from June 2007 to December 2009. He served as President, Whirlpool International from January 2006 to June 2007 and served as Executive Vice President and President of Whirlpool Europe from October 2001 to January 2006. From March 2001 to October 2001, he served as Executive Vice President, North America of Whirlpool Corporation. From 1993 to 1999, Mr. Todman served in a number of roles at Whirlpool, including Senior Vice President, Sales and Marketing, North America; Vice President, Sears Sales and Marketing; Vice President, Product Management; Controller of North America; Vice President, Consumer Services, Whirlpool Europe; General Manager, Northern Europe; and Director, Finance, United Kingdom. Prior to joining Whirlpool, Mr. Todman held a variety of leadership positions at Wang Laboratories, Inc. (a developer and manufacturer of computer products) and Price Waterhouse and Co. Mr. Todman has distinguished international management experience as well as extensive sales and marketing leadership experience in his career with Whirlpool. He also serves on the Board of Trustees of Georgetown University and the Board of Regents of Loyola University of Chicago.

     2007   

Directors whose present terms continue until 2014

  

Kevin C. Conroy, age 52, has been President, Univision Interactive Media, Inc., Univision Communications, Inc. (the premier media company serving Hispanic America) since January 2009. From 2001 to 2009, he served in a variety of senior programming, product and marketing roles at AOL LLC (a global web services company), most recently as AOL’s Executive Vice President of Global Products and Marketing. From 1995 to 2001, Mr. Conroy served in a number of roles with Bertelsmann AG (a transnational media corporation), including as Chief Marketing Officer & President, New Technology, BMG Entertainment. Mr. Conroy has significant global experience in advertising and media with particular expertise in the Internet and online and mobile media businesses. He has led large global efforts to build consumer websites and software applications and has managed a number of popular web brands.

     2011   

 

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Name and Background

  

Director
Since

 

Michael T. Cowhig, age 66, has been Chairman of the Board since February 2010. He retired in December 2006 as President, Global Technical and Manufacturing of The Procter & Gamble Company—Gillette Global Business Unit, a post he held beginning October 2005. Prior thereto, he held the position of President, Global Technical and Manufacturing of The Gillette Company from January 2004 to October 2005. Mr. Cowhig joined Gillette in 1968, and thereafter served in a variety of roles, including Senior Vice President, Global Manufacturing and Technical Operations—Stationery Products from 1996 to 1997, Senior Vice President, Manufacturing and Technical Operations—Grooming from 1997 to 2000, Senior Vice President, Global Supply Chain and Business Development from 2000 to 2002, and Senior Vice President, Global Manufacturing and Technical Operations from 2002 to 2004. Mr. Cowhig has considerable operational expertise and global leadership experience, and he has demonstrated success in meeting the demands of product innovation by leveraging manufacturing technology with an intense focus on delivering cost reductions. He also has a strong track record for operational success, proven leadership abilities and knowledge of supply chain operations. Mr. Cowhig also has substantial institutional knowledge regarding the Company, including its operations and industries, due to his longstanding service to the Board. Mr. Cowhig is a former member of the Board of Directors of CCL Industries (a global specialty packaging company).

     2005   

Raymond G. Viault, age 68, retired in January 2005 as Vice Chairman of General Mills, Inc. (a manufacturer and marketer of consumer food products), a post he held since 1996. From 1990 to 1996, Mr. Viault was President of Kraft Jacobs Suchard in Zurich, Switzerland. Mr. Viault was with Kraft General Foods for a total of 20 years, serving in a variety of major marketing and general management positions. Mr. Viault is also a director of VF Corp. (an apparel company). Mr. Viault has broad experience in global brand building and general management and has substantial expertise in international matters and integration of acquired businesses and has made contributions as a board member of other organizations. He also has substantial institutional knowledge regarding the Company, including its operations and industries, due to his longstanding service to the Board. Mr. Viault is a former member of the Board of Directors of Cadbury plc (a manufacturer and marketer of foods and beverages) and Safeway Inc. (a food and drug retailer).

     2002   

Directors whose present terms continue until 2015

  

Thomas E. Clarke, age 61, has been President of New Business Ventures of Nike, Inc. (a designer, developer and marketer of footwear, apparel, equipment and accessory products) since 2001. Dr. Clarke joined Nike, Inc. in 1980. He was appointed divisional Vice President in charge of marketing in 1987, corporate Vice President in 1989, General Manager in 1990, and served as President and Chief Operating Officer from 1994 to 2000. Dr. Clarke previously held various positions with Nike, Inc., primarily in research, design, development and marketing. Dr. Clarke also serves on the Board of Directors of Starwood, Inc. (a hotels and resorts company). Dr. Clarke has expertise in global brand management, marketing and product development as well as substantial experience in organizational development and knowledge of supply chain operations. He also played an integral role in the globalization of Nike. He also has substantial institutional knowledge regarding the Company, including its operations and industries, due to his longstanding service to the Board.

     2003   

 

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Name and Background

  

Director
Since

 

Elizabeth Cuthbert-Millett, age 56, has been a private investor for more than five years. Ms. Cuthbert-Millett is also an adjunct professor in the school of Environment and Natural Resources at University of Wyoming. Ms. Cuthbert-Millett has substantial institutional knowledge regarding the Company, including its operations and industries, due to her longstanding service to the Board.

     1995   

Domenico De Sole, age 69, has been the Chairman of Tom Ford International since 2005. Prior thereto he was President and Chief Executive Officer of Gucci Group NV, and Chairman of the Group’s Management Board, a post he held from 1995 to 2004. From 1984 to 1994, Mr. De Sole served as Chief Executive Officer of Gucci America. Prior thereto, Mr. De Sole was a partner with Patton Boggs & Blow (a law firm) from 1970 to 1984. Mr. De Sole also serves on the Board of Directors of GAP, Inc. (a clothing retailer), Ermenegildo Zegna (a manufacturer and marketer of men’s luxury clothing) and is a Member of the Advisory Board of Harvard Law School. Mr. De Sole has extensive global business experience as well as significant expertise in building and developing luxury brands and strengthening global marketing and operations, all of which are relevant to the Company as it invests in growing its premium brands worldwide. Mr. De Sole is a former member of the Boards of Directors of Bausch & Lomb Incorporated (a manufacturer and marketer of eye care products), Delta Air Lines, Inc., Labelux SA (a manufacturer and marketer of luxury apparel), The Procter & Gamble Company and Telecom Italia S.p.A.

     2007   

Steven J. Strobel, age 55, was the Executive Vice President and Chief Financial Officer and a Director of BlueStar Energy Solutions (a retail electricity supplier) from August 2009 to March 2012, when it was acquired by American Electric Power. Mr. Strobel served as Senior Vice President—Treasurer of Motorola, Inc. (a wireless and broadband communications company) from June 2007 to March 2008. He served as Motorola’s Senior Vice President—Corporate Controller from 2003 to June 2007. From 2000 to 2003, Mr. Strobel was Vice President—Finance and Treasurer for Owens Corning (a manufacturer and marketer of building material and composites systems). From 1996 to 1999, Mr. Strobel served as Owens Corning’s Vice President—Corporate Controller. From 1986 to 1996, Mr. Strobel served in a number of roles with Kraft Foods, a former division of Philip Morris Companies, Inc. (a manufacturer and marketer of consumer products). While at Kraft, he held various financial positions, including Vice President, Finance, Kraft Grocery Products Division; Vice President and Controller, Kraft USA Operations; and Chief Financial Officer, Kraft Foods Canada. Mr. Strobel has substantial experience in financial matters and leadership in both consumer and industrial markets. He also has considerable experience with global, multi-divisional business models and a deep understanding of building brands and driving innovation at well-respected companies. He also has substantial institutional knowledge regarding the Company, including its operations and industries, due to his longstanding service to the Board.

     2006   

 

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INFORMATION REGARDING BOARD OF DIRECTORS AND COMMITTEES

AND CORPORATE GOVERNANCE

General

The primary responsibility of the Board of Directors is to oversee the affairs of the Company for the benefit of the Company’s stockholders. To assist it in fulfilling its duties, the Board of Directors has delegated certain authority to the Audit Committee, the Organizational Development & Compensation Committee and the Nominating/Governance Committee. The duties and responsibilities of these standing committees are described below under “Committees.”

The Board of Directors has adopted the “Newell Rubbermaid Inc. Corporate Governance Guidelines.” The purpose of these guidelines is to ensure that the Company’s corporate governance practices enhance the Board’s ability to discharge its duties on behalf of the Company’s stockholders. The Corporate Governance Guidelines are available under the “Corporate Governance” link on the Company’s website at www.newellrubbermaid.com and may be obtained in print without charge upon written request by any stockholder to the office of the Corporate Secretary of the Company at Three Glenlake Parkway, Atlanta, Georgia 30328. The Corporate Governance Guidelines include:

 

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a requirement that a majority of the Board will be “independent directors,” as defined under the applicable rules of The New York Stock Exchange, Inc. (“NYSE”) and any standards adopted by the Board of Directors from time to time;

 

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a requirement that all members of the Audit Committee, the Organizational Development & Compensation Committee and the Nominating/Governance Committee will be “independent directors”;

 

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a requirement that a director submit his or her resignation to the Board for consideration in the event he or she is not elected by a majority of the votes cast in an uncontested election;

 

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mandatory director retirement at the annual meeting immediately following the attainment of age 72;

 

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regular executive sessions of non-management directors outside the presence of management at least four times a year, provided that if the non-management directors include one or more directors who are not “independent directors” under the applicable NYSE rules, the independent directors also will meet, outside the presence of management in executive session, at least once a year;

 

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annual review of the performance of the Board and the Chairman of the Board;

 

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regular review of management succession planning and annual performance reviews of the Chief Executive Officer (“CEO”); and

 

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the authority of the Board to engage independent legal, financial, accounting and other advisors as it believes necessary or appropriate to assist it in the fulfillment of its responsibilities, without consulting with, or obtaining the advance approval of, any Company officer.

Over the past few years, the Board has responded to several governance issues of interest to stockholders. In 2006, the Board terminated its shareholder rights plan, or poison pill, and adopted a formal procedure in its Corporate Governance Guidelines to address and respond to successful stockholder proposals. In 2007, the Board implemented majority voting for directors; in 2008, stockholders approved a Board-recommended proposal to eliminate supermajority voting requirements in the Company’s charter documents; in February 2010, the Board adopted a “clawback,” or recoupment, policy with respect to the incentive compensation of executive officers; and in 2012, the Board recommended, and stockholders approved, an amendment to the Company’s Restated Certificate of Incorporation to provide for the annual election of Directors.

The positions of Chairperson of the Board and CEO are usually held by different persons. The Board believes that this separation has served the Company well for many years. However, the Board is free to change this at any time and in the manner it determines to be best for the Company under the then existing circumstances. Should the Chairperson position be held by the CEO, the Board will appoint a lead Director.

 

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Director Independence

Pursuant to the Corporate Governance Guidelines, the Board of Directors undertook its annual review of director independence in February 2013. During this review, the Board of Directors considered whether or not each director has any material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company) and has otherwise complied with the requirements for independence under the applicable NYSE rules.

As a result of these reviews, the Board of Directors affirmatively determined that all of the Company’s current directors are “independent” of the Company and its management within the meaning of the applicable NYSE rules and under the standards set forth in the Corporate Governance Guidelines, with the exception of Michael B. Polk. Mr. Polk is considered an inside director because of his employment as President and CEO of the Company.

Meetings

The Company’s Board of Directors held seven meetings during 2012. All directors attended at least 75% of the Board meetings and meetings of Board committees on which they served with the exception of Domenico De Sole who attended 67% of the meetings. Under the Company’s Corporate Governance Guidelines, each director is expected to attend the annual meeting of the Company’s stockholders. All of the directors attended the 2012 annual meeting of stockholders.

The Company’s non-management directors held four meetings during 2012 separately in executive session without any members of management present. The Company’s Corporate Governance Guidelines provide that the presiding director at each such session is the Chairman of the Board or lead director, or in his or her absence, the person the Chairman of the Board or lead director so appoints. The Chairman of the Board currently presides over executive sessions of the non-management directors.

Committees

The Board of Directors has an Audit Committee, an Organizational Development & Compensation Committee and a Nominating/Governance Committee.

Audit Committee.    The Audit Committee, whose Chair is Dr. Cowen and whose other current members are Mr. De Sole, Mr. Perez-Lizaur, Mr. Strobel and Mr. Todman, met fourteen times during 2012. The Board of Directors has affirmatively determined that each current member of the committee is an “independent director” within the meaning of the applicable U.S. Securities and Exchange Commission (“SEC”) regulations, the applicable NYSE rules and the Company’s Corporate Governance Guidelines. Further, the Board of Directors has affirmatively determined that each of Dr. Cowen, Mr. Strobel and Mr. Todman is qualified as an “audit committee financial expert” within the meaning of the applicable SEC regulations.

The Audit Committee assists the Board of Directors in fulfilling its fiduciary obligations to oversee:

 

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the integrity of the Company’s financial statements;

 

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the Company’s compliance with legal and regulatory requirements;

 

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the qualifications and independence of the Company’s independent registered public accounting firm;

 

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the performance of the Company’s internal audit function and independent registered public accounting firm; and

 

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the Company’s overall risk management profile and the Company’s process for assessing significant business risks.

In addition, the Audit Committee:

 

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is directly responsible for the appointment, compensation, retention and oversight of the work of the Company’s independent registered public accounting firm;

 

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  ·   

has established procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls and auditing matters, including procedures for confidential, anonymous submission by employees of concerns regarding questionable accounting or audit matters; and

 

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has the authority to engage independent counsel and other advisors as it deems necessary to carry out its duties.

Organizational Development & Compensation Committee.    The Organizational Development & Compensation Committee, whose Chair is Dr. Clarke and whose other current members are Ms. Cuthbert-Millett, Mr. Strobel, Mr. Todman and Mr. Viault, met eight times during 2012. The Board of Directors has affirmatively determined that each member of the committee is an “independent director” within the meaning of the applicable NYSE rules and the Company’s Corporate Governance Guidelines.

The Organizational Development & Compensation Committee is principally responsible for:

 

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assisting the independent directors in evaluating the CEO’s performance and fixing the CEO’s compensation;

 

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making recommendations to the Board with respect to incentive-compensation plans, equity-based plans and director compensation;

 

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reviewing and approving the compensation for executives other than the CEO; and

 

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assisting the Board in management succession planning.

Additional information on the Organizational Development & Compensation Committee’s processes and procedures for the consideration and determination of executive and director compensation is addressed below under the caption “Executive Compensation—Compensation Discussion and Analysis.”

Nominating/Governance Committee.    The Nominating/Governance Committee, whose Chair is Mr. Viault and whose other current members are Dr. Clarke, Mr. Conroy, Ms. Cuthbert-Millett and Dr. Montgomery met four times during 2012. The Board of Directors has affirmatively determined that each member of the Nominating/Governance Committee is an “independent director” within the meaning of the applicable NYSE rules and the Company’s Corporate Governance Guidelines.

The Nominating/Governance Committee is principally responsible for:

 

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identifying and recommending to the Board of Directors candidates for nomination or appointment as directors;

 

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reviewing and recommending to the Board of Directors appointments to Board committees;

 

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developing and recommending to the Board of Directors corporate governance guidelines for the Company and any changes to those guidelines;

 

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reviewing, from time to time, the Company’s Code of Business Conduct and Ethics and certain other policies and programs intended to promote compliance by the Company with its legal and ethical obligations, and recommending to the Board of Directors any changes to the Company’s Code of Business Conduct and Ethics and such policies and programs; and

 

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overseeing the Board of Directors’ annual evaluation of its own performance.

Each of the above committees acts under a written charter that is available under the “Corporate Governance” link on the Company’s website at www.newellrubbermaid.com and may be obtained in print without charge upon written request by any stockholder to the office of the Corporate Secretary of the Company at Three Glenlake Parkway, Atlanta, Georgia 30328.

 

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Risk Oversight

The Board of Directors has assigned the oversight of risk management of the Company to the Audit Committee. As set forth in the Audit Committee Charter, the Audit Committee oversees the Company’s overall risk management profile and the Company’s process for assessing significant business risks. The Audit Committee reports to the full Board of Directors at least annually regarding the Committee’s findings. Specifically, the Audit Committee:

 

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reviews and discusses with management, the Company’s internal auditors and the Company’s independent auditors (i) the Company’s guidelines and policies to govern risk assessment and risk management, including the risk of fraud, (ii) the Company’s major risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies and guidelines, and (iii) the status of the security for the Company’s electronic data processing information systems and the general security of the Company’s people, assets, and information systems;

 

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meets or consults with other committees of the Board, as appropriate, to discuss and review the Company’s potential major risk exposures, including but not limited to consultation with the Organizational Development & Compensation Committee to ensure the Company’s compensation programs do not promote excessive risk taking and are not reasonably likely to have a material adverse effect on the Company; and

 

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requests management, the Company’s internal auditors and the Company’s independent auditors to identify significant financial risk exposures of the Company and reviews and discusses with management and the independent auditors management’s steps to minimize such financial risk exposures, including reviewing the status of the Company’s financial instruments.

Director Nomination Process

The Nominating/Governance Committee is responsible for identifying and recommending to the Board of Directors candidates for directorships. The Nominating/Governance Committee considers candidates for Board membership who are recommended by members of the Nominating/Governance Committee, other Board members, members of management and individual stockholders. Once the Nominating/Governance Committee has identified prospective nominees for director, the Board is responsible for selecting such candidates. The Board considers candidates for director who are free of conflicts of interest or relationships that may interfere with the performance of their duties.

As set forth in the Corporate Governance Guidelines, the Board seeks to identify as candidates for director a diverse group of persons from various backgrounds and with a variety of life experiences, a reputation for integrity and good business judgment and experience in highly responsible positions in professions or industries relevant to the conduct of the Company’s business. In selecting director candidates, the Board takes into account the current composition and diversity of the Board (including diversity with respect to race, gender and ethnicity) and the extent to which a candidate’s particular expertise and experience will complement the expertise and experience of other directors. The Board has implemented this policy by establishing a set of directors whose makeup includes nine former CEOs or senior executives of large public companies, at least seven who have extensive international experience, one African-American, two women, two who were born and raised outside the United States and two academics. The Board assesses the effectiveness of this policy by conducting an annual review of its own performance to determine whether the Board and the Nominating/Governance Committee are functioning effectively and in compliance with this policy. The Nominating/Governance Committee is responsible for organizing and overseeing the review process and for soliciting the input of all of the directors. From time to time, the Nominating/Governance Committee has engaged the services of global executive search firms to assist the Nominating/Governance Committee and the Board of Directors in identifying and evaluating potential director candidates.

A stockholder who wishes to recommend a director candidate for consideration by the Nominating/ Governance Committee should submit such recommendation in writing to the Nominating/Governance

 

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Committee at the address set forth below under “Communications with the Board of Directors.” A candidate recommended for consideration must be highly qualified and must be willing and able to serve as a director. Director candidates recommended by stockholders will receive the same consideration given to other candidates and will be evaluated against the criteria outlined above.

Communications with the Board of Directors

The independent members of the Board of Directors have adopted the Company’s “Procedures for the Processing and Review of Stockholder Communications to the Board of Directors,” which provide for the processing, review and disposition of all communications sent by stockholders or other interested persons to the Board of Directors. Stockholders and other interested persons may communicate with the Company’s Board of Directors or any member or committee of the Board of Directors by writing to them at the following address:

Newell Rubbermaid Inc.

Attention: [Board of Directors]/[Board Member]

c/o Corporate Secretary

Newell Rubbermaid Inc.

Three Glenlake Parkway

Atlanta, Georgia 30328

Communications directed to the independent or non-management directors should be sent to the attention of the Chairman of the Board or the Chair of the Nominating/Governance Committee, c/o Corporate Secretary, at the address indicated above.

Any complaint or concern regarding financial statement disclosures, accounting, internal accounting controls, auditing matters or violations of the Company’s Code of Ethics for Senior Financial Officers should be sent to the attention of the General Counsel at the address indicated above or may be submitted in a sealed envelope addressed to the Chair of the Audit Committee, c/o General Counsel, at the same address, and labeled with a legend such as: “To Be Opened Only by the Audit Committee.” Such accounting complaints will be processed in accordance with procedures adopted by the Audit Committee. Further information on reporting allegations relating to accounting matters is available under the “Corporate Governance” link on the Company’s website at www.newellrubbermaid.com.

Code of Ethics

The Board of Directors has adopted a “Code of Ethics for Senior Financial Officers,” which is applicable to the Company’s senior financial officers, including the Company’s principal executive officer, principal financial officer, principal accounting officer and controller. The Company also has a separate “Code of Business Conduct and Ethics” that is applicable to all Company employees, including each of the Company’s directors and officers. Both the Code of Ethics for Senior Financial Officers and the Code of Business Conduct and Ethics are available under the “Corporate Governance” link on the Company’s website at www.newellrubbermaid.com. The Company posts any amendments to or waivers of its Code of Ethics for Senior Financial Officers or to the Code of Business Conduct and Ethics (to the extent applicable to the Company’s directors or executive officers) at the same location on the Company’s website. In addition, copies of the Code of Ethics for Senior Financial Officers and of the Code of Business Conduct and Ethics may be obtained in print without charge upon written request by any stockholder to the office of the Corporate Secretary of the Company at Three Glenlake Parkway, Atlanta, Georgia 30328.

 

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Various Company policies and procedures, which include the Code of Business Conduct and Ethics (applicable to all executive officers and non-employee directors), the Code of Ethics for Senior Financial Officers and annual questionnaires completed by all Company directors and executive officers, require disclosure of transactions or relationships that may constitute conflicts of interest or otherwise require disclosure under applicable SEC rules. Pursuant to its charter, the Company’s Nominating/Governance Committee considers and makes recommendations to the Board of Directors with respect to possible waivers of conflicts of interest or any other provisions of the Code of Business Conduct and Ethics and the Code of Ethics for Senior Financial Officers. Pursuant to the Company’s Corporate Governance Guidelines, the Nominating/Governance Committee also annually reviews the continuing independence of the Company’s nonemployee directors under applicable law or rules of the NYSE and reports its findings to the Board of Directors in connection with its independence determinations.

When the Nominating/Governance Committee learns of a transaction or relationship that may constitute a conflict of interest or may cause a director not to be treated as independent, the Committee determines if further investigation is required and, if so, whether it should be conducted by the Company’s legal, internal audit or other staff or by outside advisors. The Committee reviews and evaluates the transaction or relationship, including the results of any investigation, and makes a recommendation to the Board of Directors with respect to whether a conflict or violation exists or will exist or whether a director’s independence is or would be impaired. The Board of Directors, excluding any director who is the subject of the recommendation, receives the report of the Nominating/Governance Committee and makes the relevant determination. These practices are flexible and are not required by any document.

On January 2, 2013, Mr. Mark S. Tarchetti became the Company’s Executive Vice President and Chief Development Officer. Prior to his employment with the Company, Mr. Tarchetti was the sole shareholder of Tarchetti & Co., a strategic consulting firm. On September 9, 2011, the Company entered into a consulting agreement with Tarchetti & Co. pursuant to which Tarchetti & Co. provided strategic corporate planning and related business services. The agreement was amended on January 1, 2012. As amended, the consulting agreement was terminable by the Company upon 54 days prior written notice and provided for a monthly payment to Tarchetti & Co. of £138,929. During 2012, the Company paid Tarchetti & Co. an aggregate of £1,865,980 for services rendered under the consulting agreement. On December 13, 2012, the Company purchased Tarchetti & Co. for a net purchase price after allowances for cash on hand of $4.35 million.

In addition, in December 2011, the Company requested services from Catherine Turner Ltd. (“CTL”) for senior leadership meeting material development and planning services. Ms. Turner, the principal of CTL, subsequently became the spouse of Mr. Tarchetti in May 2012. Under this arrangement, the Company paid CTL an aggregate amount of $268,000, excluding reimbursement of third-party contractor fees incurred by CTL on the Company’s behalf, for services rendered in 2012 in connection with the material development, planning and execution of the Company’s 2012 and 2013 annual leadership forums, the Company’s February 2013 global sales meeting, and the Company’s May 2012 Analyst Day meeting.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 2012, Dr. Clarke, Ms. Cuthbert-Millett, Mr. Strobel, Mr. Todman and Mr. Viault served on the Organizational Development & Compensation Committee. No member of the Organizational Development & Compensation Committee was, during 2012, an officer or employee of the Company, was formerly an officer of the Company, or had any relationship requiring disclosure by the Company as a related party transaction under Item 404 of Regulation S-K. During 2012, none of the Company’s executive officers served on the board of directors or the compensation committee of any other entity, any officers of which served either on the Company’s Board of Directors or its Organizational Development & Compensation Committee.

 

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ORGANIZATIONAL DEVELOPMENT &

COMPENSATION COMMITTEE REPORT

The Organizational Development & Compensation Committee of the Board of Directors has furnished the following report to the stockholders of the Company in accordance with rules adopted by the Securities and Exchange Commission.

The Organizational Development & Compensation Committee of the Company states that the Committee reviewed and discussed with management the Company’s Compensation Discussion and Analysis contained in this Proxy Statement.

Based upon the review and discussions referred to above, the Organizational Development & Compensation Committee recommended to the Board of Directors that the Company’s Compensation Discussion and Analysis be included in this Proxy Statement.

This report is submitted on behalf of the members of the Organizational Development & Compensation Committee:

Thomas E. Clarke, Chair  

Elizabeth Cuthbert-Millett

Steven J. Strobel               

Michael A. Todman          

Raymond G. Viault           

 

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis explains the material elements of the compensation of the Company’s named executive officers and describes the objectives and principles underlying the Company’s executive compensation program and decisions made in 2012. For 2012, our named executive officers are:

 

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Michael B. Polk, President and Chief Executive Officer;

 

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Douglas L. Martin, Executive Vice President and Chief Financial Officer beginning September 4, 2012;

 

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William A. Burke, III, Executive Vice President and Chief Operating Officer;

 

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James M. Sweet, Executive Vice President, Human Resources and Corporate Communications;

 

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Paul G. Boitmann, Senior Vice President, Chief Customer Officer;

 

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Juan R. Figuereo, Former Executive Vice President and Chief Financial Officer; and

 

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G. Penny McIntyre, Former President, Newell Consumer.

2012 Highlights

In late 2011, the Company launched Project Renewal, a program designed to reduce the complexity of the organization and increase investment in the most significant growth platforms within the business. In October 2012, the Company expanded Project Renewal in order to further simplify and align the business around two key activities—Brand & Category Development and Market Execution & Delivery. As part of the expanded program, the Company’s Consumer and Professional groups were eliminated and the Company’s nine global business units were further streamlined into six business segments. As a result of the expansion of Project Renewal, a number executive departures have occurred, including Penny McIntyre, who left her position as President, Newell Consumer effective November 1, 2012, and Paul Boitmann, who left his position as Senior Vice President and Chief Customer Officer effective January 1, 2013. In addition, William Burke was promoted to the position of Chief Operating Officer effective October 26, 2012. Project Renewal and the related leadership changes are designed to facilitate the implementation of the Company’s Growth Game Plan, its comprehensive strategy designed to fulfill its ambition to build a bigger, faster growing, more global and more profitable company.

During 2012, the Company continued to deliver on its financial commitments. Core sales increased 2.2%, normalized EPS grew 6.9%, from $1.59 per share to $1.70 per share, and the annualized dividend rate was nearly doubled from $0.32 per year to $0.60 per year. For an explanation of core sales and normalized EPS, and a reconciliation of these non-GAAP financial measures to net sales and reported earnings per share, please see Appendix A.

 

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In 2012, the Company’s stock price increased 37.9%, compared to an increase of 23.1% in the Custom Comparator Group, 13.4% in the S&P 500 and 7.3% in the Dow Jones Industrial Average. Since the announcement of Mr. Polk as CEO in June 2011 through the end of 2012, the Company’s stock price has increased from $15.00 to $22.27, an increase of 48.5%. The Company’s 2012 stock price performance as compared to major indices is set forth below:

 

LOGO

Over the three-year period ending December 31, 2012, the Company’s total shareholder return (“TSR”) was 57.4%, placing it 6th out of the group of 20 companies remaining from the 2010 custom comparator group. As a result of the Company’s performance in 2012 and the three-year relative TSR results, the Company’s Management Cash Bonus Plan (the “Bonus Plan”) and the performance-based RSUs granted in 2010 paid out at 90.1% and 150%, respectively.

Beginning in 2012, the Committee undertook a comprehensive review of its compensation program to strengthen the alignment with the Company’s long-term strategy. While changes in the compensation program resulting from this review are expected to be implemented over the next few years, in 2012, the Committee made three significant changes to the compensation program:

 

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Increased Percentage of Performance-Based Equity Awards.    In order to increase incentives for delivering sustained long-term performance, the long-term incentive plan, or “LTIP”, under the Newell Rubbermaid Inc. 2010 Stock Plan (“2010 Stock Plan”) was revised to increase the percentage of performance-based RSUs awarded to participants. As a result, in February 2012, participants received an LTIP award consisting of 60% performance-based restricted stock units (“RSUs”) and 40% time-based RSUs. Mr. Polk’s award was even more heavily weighted towards performance with 70% of his award value consisting of performance-based RSUs and 30% time-based RSUs. The use of stock options under the LTIP was suspended.

 

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Company Focused Annual Incentive Plan.    The Bonus Plan was revised to focus 100% on Company-wide performance, and, therefore, the use of business unit performance metrics was eliminated. Thus, for 2012, all personnel were subject to the same Company-wide performance metrics—core sales, normalized earnings per share and operating cash flow. This change was made to emphasize a One Newell Rubbermaid culture, encourage collaboration among executives and across businesses, and enhance flexibility to make investment choices in the individual businesses in support of the Company’s overall business strategy.

 

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Eliminated Tax Gross-Ups in Employment Security Agreements.    In order to align with evolving market practice, beginning with the hiring of Mr. Figuereo in December 2009, the Committee no longer included tax gross up provisions in the Company’s Employment Security Agreements (“ESAs”) for new executive hires. In addition, by the end of 2012, all executive officers with

 

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grandfathered ESAs that included tax gross ups voluntarily entered into new ESAs that have no tax gross up provisions.

New 2013 Incentive Plan

The Company’s Board of Directors, based upon the Committee’s recommendation, has adopted a new incentive compensation plan, the Newell Rubbermaid Inc. 2013 Incentive Plan (“2013 Plan”), subject to shareholder approval at the Annual Meeting. The 2013 Plan, if approved by the Company’s stockholders at the Annual Meeting, will replace the 2010 Stock Plan, and also serve as an “umbrella” plan for the Company’s equity-based and cash-based incentive compensation programs. The 2010 Stock Plan will be terminated if the 2013 Plan is approved, although outstanding awards granted under the 2010 Stock Plan will continue to be governed by the terms of the 2010 Stock Plan. The two complementary purposes of the 2013 Plan are to attract, retain and motivate our executives, other selected employees and directors and to link the interests of these individuals with the interests of the Company’s stockholders. It is not expected that the 2013 Plan will result in any material change to the Company’s current equity and cash-based incentive compensation practices.

Compensation Program Objectives

Motivate executives to meet or exceed Company performance goals.    A significant portion of an executive’s total compensation is directly tied to achieving the Company’s performance goals. Each year, the Committee reviews the performance goals and modifies them as appropriate to reflect the Company’s current business objectives and strategies.

Reward individual performance and contributions.    The individual performance evaluation of each executive officer, together with the executive’s contribution to Company performance, generally affects most aspects of each executive’s compensation. For example, individual performance is typically considered in determining an executive’s annual salary, which, in turn, impacts the amount of incentive compensation that the executive could have earned for meeting or exceeding annual performance goals under the Bonus Plan. Annual salary also influences the grant value of RSUs that are granted to the executive under the LTIP. In addition, the CEO considers the individual performance of his direct reports when recommending adjustments, if any, to the grant value for the executive under the LTIP.

Link the financial interests of executives and stockholders.    In 2012, the Committee used performance-based and time-based RSUs to provide long-term incentive compensation and to link the financial interests of its executives with those of its stockholders.

Attract and retain the best possible executive talent.    Successful recruiting and retention of talented executives requires the Company to pay compensation at a competitive level. To do that, the Company obtains information about compensation practices of its relevant competitors, and in 2012, the Company used compensation information compiled from two separate comparator groups.

 

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Determination of Executive Officer Compensation

Summarized in the table below are roles and responsibilities for executive compensation:

 

   
Organizational Development & Compensation Committee  

•      Reviews Company performance and other factors, and assesses previously formulated executive objectives against the Company’s actual performance.

•      Certifies the payout level of performance awards, if any, for executives.

•      Reviews and recommends to the independent Board members the CEO’s annual compensation, including salary, bonus and long-term incentives.

•      Approves the annual compensation for all executive officers other than the CEO.

•      Reviews and sets performance goals under the Bonus Plan and LTIP.

•      Reviews and approves awards (including the terms and conditions of such awards) under the Bonus Plan and LTIP for all executive officers other than the CEO.

•      Approves any severance agreements, change in control agreements or similar agreements between the Company and its executive officers other than the CEO.

   
Independent Board Members  

•      Approve the CEO’s annual compensation, including salary, bonus, and long- term incentive compensation.

   
Committee Consultant—Frederic W. Cook & Co., Inc.  

•      Assists the Committee in reviewing the effectiveness and competitiveness of the Company’s executive compensation programs and policies.

•      Makes recommendations regarding executive compensation consistent with the Company’s business needs, pay philosophy, market trends, and the latest legal and regulatory considerations.

•      Provides market data as background to decisions regarding CEO and senior executive base salary and annual and long-term incentives.

•      Advises the Committee regarding executive compensation best practices.

•      Maintains independence by providing no other services to the Company (the Committee has evaluated its relationship with Frederic W. Cook & Co., Inc. and has determined that no conflict of interest exists with respect to the services Frederic W. Cook & Co., Inc. provides to the Committee).

   
CEO  

•      Recommends to the Committee, in the case of other executive officers, base salary amounts and equity awards and participates in the development of annual Company performance goals under the Bonus Plan.

   
Other Executives  

•      The CEO’s management team plays a prominent role in gathering information for, and by participating in meetings of, the Committee.

•      The CEO works with the Executive Vice President Human Resources regarding recommendations on base salary amounts and equity awards for executives other than the CEO using competitive market data.

•      The Chief Financial Officer assists in developing recommendations on annual performance goals and determining whether financial performance goals were attained by the Company under the Bonus Plan and LTIP.

In making compensation decisions, the Committee considers a number of factors including competitive market data, competitive philosophy, individual and Company performance, skills, experience, complexity of role, and internal equity. The Committee does not use a predetermined formula to make its overall decisions but takes into account all the above factors. However, in deciding each performance component of compensation of the Company’s executive officers, generally including annual incentive and long-term incentive compensation, the Committee ties payment to normalized earnings per share, core sales growth, operating cash flow, and total stockholder return. Such performance goals ensure that for the majority of

 

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their compensation, executive officers are aligned with the stockholders’ interest for the immediate and long term.

At the 2012 Annual Meeting of Stockholders, the advisory vote on executive compensation was approved by nearly 77% of shares voted, down from 88% in approval from the prior year. The level of stockholder support on the advisory vote was considered by the Committee and it noted that the reduction in support from the prior year was likely due to the increase in CEO compensation resulting from the transition compensation paid to Mr. Polk in order to compensate him for the substantial amount of long-term compensation foregone at his former employer to join the Company. The Committee believes that Mr. Polk’s ongoing compensation as reflected in the Summary Compensation Table for 2012 is more reflective of the Company’s ongoing compensation program.

Pursuant to Section 14A of the Exchange Act, the Company is required to submit to stockholders a resolution subject to an advisory vote to approve the compensation of the Company’s named executive officers. The Company currently submits the advisory vote on executive compensation annually to stockholders, with a vote being held at our 2013 Annual Meeting. See “Proposal 4—Advisory Vote on Executive Compensation.” The next such vote will occur at our 2014 Annual Meeting of Stockholders.

Competitive Market Data

Custom Comparator Group

For 2012, the Company used a custom comparator group consisting of companies that participate in the various consumer and commercial products industries in which the Company competes. The companies in the custom comparator group represent the Company’s principal competitors for executive talent and reflect companies of similar size, global presence, business complexity and brand recognition. Please see page 33 for a list of the companies in the custom comparator group.

Multiple Industry Index Comparator Group

For 2012, the Company also used compensation information compiled from a multiple industry index of 133 companies. This index includes companies both inside and outside of the consumer products industry in which the Company operates with annual revenues ranging from $3 billion to $12 billion. For 2012, the Company chose to utilize the multiple industry index, in addition to the Company’s custom comparator group, in order to provide a larger pool of data for a more statistically relevant comparison of compensation levels and pay practices. Please see page 34 for a list of the companies in the multiple industry index comparator group.

The Company periodically obtains surveys of the compensation practices of companies in both comparator groups and compares the Company’s executive compensation components with those of the comparator groups. In 2012, the Company used compensation information about the comparator groups as guidance for decisions regarding:

 

  ·   

the mix of executive compensation that is annual or long-term;

 

  ·   

the portion of total compensation that is equity or cash; and

 

  ·   

levels of salary, annual incentive opportunities and long-term incentive opportunities.

For purposes of evaluating relative total shareholder return for performance-based RSUs awarded under the LTIP, the Company uses only the custom comparator group as the most relevant businesses against which the Company competes.

Competitive Philosophy

Each element of the compensation program complements the others and, together, are intended to achieve the Committee’s principal compensation objectives. When decisions about compensation for an executive officer are made, the impact on the total value of all these elements of compensation for the individual is considered. The Committee annually reviews a summary report, or “tally sheet,” which

 

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identifies each element of the compensation paid to each executive officer. The Committee uses the summary report to review the overall pay and benefit levels and provide additional perspective on how the executive compensation program meets the Company’s compensation objectives.

The Summary Compensation Table shows the compensation of each named executive officer for the fiscal year ended December 31, 2012. The “Total Compensation” amount shown on the Summary Compensation Table differs from what the Committee views as relevant to its decisions about executive compensation. For example, while retirement benefits constitute a key component of the competitive compensation package offered to executives, and the design and cost of these programs and the benefits they provide are carefully considered, due to the numerous variables involved in calculating their present value, retirement benefits are not viewed as a meaningful measure of annual executive compensation.

For executives, including the named executive officers, as a group, the Committee historically, and in 2012, views the following comparator group percentiles as an indication of the competitive annual compensation level for its executives:

 

  ·   

50th percentile for base salary;

 

  ·   

65th percentile for aggregate annual incentive opportunities; and

 

  ·   

50th percentile for annual long-term incentive opportunities.

Short-term incentive opportunities are targeted at a level higher than the 50th percentile in order to provide a more attractive opportunity that rewards and incents annual performance, which, in turn, encourages efforts to increase stockholder value in the current challenging economic climate. Over the next two years, the Committee expects to transition the annual incentive compensation opportunity to the 50th percentile as part of an effort to provide total direct compensation opportunities commensurate with the market median.

An individual executive’s compensation may vary from these percentiles due to individual performance and other factors, including the breadth of the executive’s responsibility, internal equity, the circumstances surrounding the executive’s initial hiring or promotion to a position with increased responsibilities and the desire to promote executive retention.

Consideration of Individual Performance

The CEO recommends to the Committee, in the case of other executive officers, base salary amounts, equity awards and annual performance goals under the Bonus Plan. As part of the Company’s annual performance evaluation process, each year the CEO and each other executive officer establish that individual’s performance objectives for the coming year. These performance objectives are not intended to be rigid or formulaic, but rather serve as the framework upon which the CEO evaluates the executive officer’s overall performance. The CEO’s evaluation of an executive officer’s performance relative to these objectives is inherently largely subjective, involving a high degree of judgment based on the CEO’s observations of, and interaction with, the executive throughout the year. No single performance objective or group of objectives is material to the CEO’s evaluation of the executive officer’s performance; however, the performance goals that reinforce alignment of Company and stockholder interests dominate any evaluation.

At the beginning of the year, the Committee recommends to the independent members of the Board the CEO’s individual performance objectives. The Committee’s method of evaluation of the CEO’s performance is substantially similar to that used by the CEO to evaluate the other executive officers. As such, the CEO’s performance objectives are not intended to be rigid or formulaic, but rather serve as the framework upon which the Committee evaluates the CEO’s performance. The Committee’s evaluation of the CEO’s overall performance relative to these objectives is inherently subjective, involving a high degree of judgment. No single performance objective or group of objectives is material to the Committee’s evaluation of the CEO’s performance; however, the performance goals that reinforce alignment of Company and stockholder interests dominate any evaluation.

Most of Mr. Polk’s compensation for 2012 was previously established as part of his compensation arrangement agreed to in June 2011. As a result, his individual performance was not a key factor for his

 

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2012 compensation. However, as a result of the Company’s favorable financial results in the latter half of 2011 despite challenging macro-economic conditions as well as the rapid development and implementation of Project Renewal and the Growth Game Plan, the Board determined that his 2012 LTIP compensation should be 528% of his base salary. His June 2011 compensation arrangement had contemplated that his 2012 LTIP award would be between 480% and 575% of his base salary, with a target of 480%.

Key Elements of Executive Compensation

Salary

Salaries provide executives with a base level of income. In setting salaries, the Committee uses the 50th percentile as the general target for an executive’s position. However, salaries of individual named executive officers may be above or below those levels, reflecting individual performance, responsibilities and other relevant factors including breadth, scope and complexity of responsibilities, prior compensation, length of service and internal equity. The relative importance of each of these factors varies from executive to executive and from year to year.

The Committee generally sets annual salaries in February. In February 2012, the Committee approved a salary increase for Mr. Sweet of $13,020, or 2.8%, which was consistent with the increase in salary for Company employees generally in 2012. Messrs. Figuereo, Burke and Boitmann and Ms. McIntyre did not receive salary increases in February 2012. In addition, pursuant to the terms of his compensation arrangement, Mr. Polk’s salary did not increase in 2012.

Mr. Martin was appointed Chief Financial Officer in September 2012 at a salary of $500,000. His salary was subsequently increased in November 2012 to $540,000, a level more commensurate with CFOs at similarly situated companies, but still slightly below the 50th percentile.

In connection with the expansion of Project Renewal, in November 2012, Messrs. Burke and Sweet received salary increases of $100,000 and $56,980, respectively. Mr. Burke’s increase was related to his increase in responsibilities as the Company’s newly appointed Chief Operating Officer, and Mr. Sweet’s to his significant contributions in developing and executing the expansion of Project Renewal, including the redeployment of a significant number of associates into the new delivery/development structure. In February 2012, Mr. Burke received a one-time cash bonus of $10,000 relating to the favorable resolution to a litigation matter impacting one of his businesses. In April 2012, Mr. Martin received a one-time cash bonus of $65,000 in connection with his appointment as Deputy Chief Financial Officer.

The named executive officers’ salaries range from the 40th percentile to the 70st percentile for similar positions of executives in the comparator groups.

Annual Incentive Compensation

The annual incentive program under the Bonus Plan is designed to reward performance that supports short-term performance goals. A cash bonus, measured as a percentage of the executive’s salary, is paid based on the extent to which the performance goals are achieved.

Listed below are the performance goals and relative weight assigned under the Bonus Plan to each for 2012 for the named executive officers:

 

Performance Goals

   Weight   Rationale for the Measure

Core Sales Growth

   40%   Incent overall growth

Normalized Earnings Per Share

   30%   Incent profitable growth

Operating Cash Flow

   30%   Promote the overall health
and efficiency of operations

For purposes of measuring attainment of the overall Company performance goals in 2012:

 

  ·   

the Core Sales Growth goal is the percentage gain of net sales, excluding differences resulting from actual exchange rates in 2012 differing from 2011 exchange rates;

 

  ·   

the Normalized Earnings per Share (“EPS”) goal excludes the effects of restructuring and restructuring-related charges, one-time charges and other items and is generally based upon what the Company reports as “Normalized” EPS; and

 

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  ·   

the Operating Cash Flow goal is based on the same amount as the Company reports as Operating Cash Flow.

Bonus payments are made only on the Committee’s determination that the performance goals for the year were achieved. The overall Company targets used under the Bonus Plan for 2012 are summarized below:

2012 Bonus Plan Performance Targets

 

Performance Goal

   Target for
Payout at
100%
   Minimum
Threshold for
Payout
   Performance
for Maximum
Payout
(200%)
   Actual
Performance

Core Sales

   3.0%    1.5%    6.0%    2.2%

Normalized EPS

   $1.66    $1.60    $1.78    $1.70

Operating Cash Flow

   $575 million    $501 million    $725 million    $618.5 million

If a performance goal is met at the target level, the target bonus is generally paid for that goal. Performance above the target results in payment of a higher percentage of salary up to a pre-established maximum. Performance below the target generally results in a lower bonus payment for that goal if a minimum threshold is met, or no payment if the minimum threshold is not met.

The maximum payout for each measure was equal to 200% of the target cash bonus. The Bonus Plan does not provide for discretion to waive pre-established goals, although the Committee has the discretion to reduce the amount otherwise payable for each performance goal. As a result of the achievement of the performance goals set forth above, the percent of target opportunity paid to each of the named executive officers under the Bonus Plan for 2012 was 90.1%.

For 2012, the amount of bonus under the Bonus Plan paid to each named executive officer appears in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. The table below shows bonus payouts for 2012 to the named executive officers as a percentage of target opportunity and as a percentage of base salary.

 

Name

   Target as % of
Base Salary
     Actual % of Base
Salary Paid
 

Michael B. Polk

     135%         121.6%   

Douglas L. Martin

     70%/85%         67.6%   

William A. Burke

     85%         76.6%   

James M. Sweet

     75%         67.6%   

Paul G. Boitmann

     65%         58.6%   

Juan R. Figuereo

     85%         76.6%   

G. Penny McIntyre

     85%         91.9%   

Additional information appears in the “Estimated Possible Payouts Under Non-Equity Incentive Plan Awards” columns of the Grants of Plan-Based Awards table. Pursuant to Mr. Polk’s Compensation Arrangement, in the event his personal use of Company aircraft exceeds $165,000, any amounts in excess of $165,000 are to be deducted from the amount to be paid to him under the Bonus Plan. As a result of this provision, the amount he received under the Bonus Plan was reduced by $83,577. In addition, the applicable target percentage for Mr. Martin was 70% for his salary earned from January through August 2012, and was raised to 85% thereafter in connection with his appointment as Chief Financial Officer. Pursuant to her Separation Agreement, Ms. McIntyre was entitled to a bonus based on base salary that would have been paid to her had she remained employed for a full year, resulting in a higher percentage of base salary paid than the other named executive officers other than the CEO.

In authorizing the payouts under the Bonus Plan for 2012, the Committee noted that despite a continuing challenging economic environment the Company had strong operating cash flow and experienced its second straight year of growth in core sales and normalized EPS. These results came while

 

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the Company was undergoing a significant strategic transformation through the implementation of Project Renewal.

The Company believes that the cash bonuses it paid for 2012 to each named executive officer served the Company’s goals to:

 

  ·   

motivate each of them to achieve Company performance goals and enhance shareholder value; and

 

  ·   

allow the Company to retain their services because it provided each of them with the opportunity to receive a cash bonus at a competitive level based on the Company’s review of annual incentive and overall compensation paid by the companies in the Company’s comparator groups.

Long-Term Incentive Compensation

Long-term incentive awards granted under the LTIP motivate executives to increase stockholder value over the long term and align the interests of executives with those of stockholders. Under the LTIP, the Committee sets a target award value for each executive (the “LTIP Award Value”) based on competitive data and internal equity. The LTIP Award Value is generally set at the 50th percentile for aggregate long-term incentive opportunities for executives in similar positions in comparator group companies.

The CEO’s recommendation to the Committee for the other executive officers may include an adjustment to the target LTIP Award Value based upon the CEO’s evaluation of the executive officer’s performance. These adjustments are not typically significant. Similarly, when setting the CEO’s equity compensation, the independent members of the Board may adjust the CEO’s LTIP Award Value based upon the Board’s evaluation of the CEO’s performance.

The LTIP Award Values for each of the named executive officers receiving LTIP awards in 2012 were as follows:

 

Name

   LTIP Award
Value ($)
 

Mr. Polk

   $ 6,336,000   

Mr. Martin

     220,000   

Mr. Burke

     1,075,000   

Mr. Sweet

     850,000   

Mr. Boitmann

     475,000   

Mr. Figuereo

     1,000,000   

Ms. McIntyre

     1,100,000   

For Mr. Polk, 70% of the LTIP Award Value was provided in performance-based RSUs and 30% in time-based RSUs. For the other named executive officers, 60% of the LTIP Award Value was provided in performance-based RSUs and 40% in time-based RSUs. Each of these awards cliff vests on the third anniversary of the date of grant, except for Mr. Martin’s time-based RSUs, which vest ratably over a three-year period. Mr. Martin’s 2012 LTIP award was made while he was serving as Deputy Chief Financial Officer, and thus reflects his compensation arrangement prior to his promotion to Chief Financial Officer in September 2012. The mix of the awards was driven by the Committee’s intent to have a significant percentage of long-term incentive awards tied directly to total shareholder return and incorporate a retention incentive.

The vesting of performance-based RSUs is subject to the attainment of a relative total shareholder return performance goal. The holder of a performance-based RSU will not receive dividend equivalents at the time dividends are paid. Rather, all such dividend equivalents will be credited to an account for the holder, and will be paid only to the extent that the applicable performance criteria are met and the performance-based RSUs vest. At the end of the vesting period, the number of RSUs and related dividend equivalents, and thus the number of shares of common stock actually issued to the participant, will be adjusted depending on the level of achievement of the total shareholder return performance goal, up to a maximum of 200% of the initial number of performance-based RSUs granted and a minimum of 0% of the initial number of performance-based RSUs granted. Relative total shareholder return and number of

 

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performance-based RSUs earned is determined based on the Company’s ranking versus the custom comparator group companies as shown in the table below:

 

TSR Ranking

  

Multiplier*

1st

   200%

6th

   150%

11th

   100%

16th

   50%

Below 20th

   0%

 

* Interpolation is used if the Company’s ranking falls between the upper and lower comparator group TSR ranking.

Based upon the above criteria, the named executive officers identified below received the following grants in February 2012 under the LTIP:

 

Name

   Time-Based RSUs      Performance-Based RSUs  

Mr. Polk

     99,884         233,063   

Mr. Martin

     4,624         6,936   

Mr. Burke

     22,595         33,893   

Mr. Sweet

     17,866         26,799   

Mr. Boitmann

     9,984         14,976   

Mr. Figuereo

     21,019         31,529   

Ms. McIntyre

     23,646         34,682   

The awards made to Messrs. Figuereo and Boitmann and Ms. McIntyre were forfeited in connection with their separation from the Company.

In addition to the annual grants under the LTIP, from time to time RSUs will be granted to executive officers in circumstances such as a promotion, a new hire or for retention purposes. On September 28, 2012, in connection with his appointment as Chief Financial Officer, Mr. Martin was awarded 13,000 performance-based RSUs, one-third of which will vest when the Company’s average closing stock price for any twenty continuous trading day period (the “20 Day Price”) equals or exceeds $21.28 (but not earlier than September 28, 2013), one-third of which will vest when the 20 Day Price equals or exceeds $23.21 (but not earlier than September 28, 2014), and the remaining one-third of which will vest when the 20 Day Price equals or exceeds $25.15 (but not earlier than September 28, 2015). On November 6, 2012, in connection with his appointment as Chief Operating Officer, Mr. Burke was awarded 41,099 performance-based RSUs, one-third of which will vest when the Company’s 20 Day Price equals or exceeds $22.69 (but not earlier than November 6, 2013), one-third of which will vest when the 20 Day Price equals or exceeds $24.76 (but not earlier than November 6, 2014), and the remaining one-third of which will vest when the 20 Day Price equals or exceeds $26.82 (but not earlier than November 6, 2015). The performance thresholds applicable to these awards represent stock price increases of 10%, 20% and 30%, compared to the average closing price over the 10 trading days prior to the grant of the award. The Committee believes that these performance-based RSUs help to align stockholder and executive officer interests as superior results support stock price appreciation.

The named executive officers below received the following grants in February 2013 under the LTIP:

 

Name

   Time-Based RSUs      Performance-Based RSUs  

Mr. Polk

     83,123         193,953   

Mr. Martin

     20,074         30,111   

Mr. Burke

     24,535         36,802   

Mr. Sweet

     16,109         24,163   

Grant Policies and Practices

The Company’s practice has been to make annual equity awards and award other incentive compensation to named executive officers at the time of regularly scheduled meetings of the Board of

 

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Directors or the Committee in February of each year. On occasion, the Company makes additional grants to named executive officers, typically in connection with their hiring or promotion or for retention purposes. The Company’s policy is that, except for new hires or certain promotions, all equity awards will be made only at quarterly meetings of the Committee or the Board of Directors, which closely follow the release of the Company’s quarterly or annual financial results.

Incentive Compensation Recoupment Policy

Subject to the discretion and approval of the Board, the Company will require reimbursement and/or cancellation of any bonus or other incentive compensation, including equity-based compensation, awarded to an executive officer after January 1, 2010 where all of the following factors are present: (a) the award was predicated upon the achievement of certain financial results that were subsequently the subject of a material restatement, (b) in the Board’s view, the executive engaged in fraud or willful misconduct that was a significant contributing cause to the need for the restatement, and (c) a lower award would have been made to the executive based upon the restated financial results. In each such instance, the Company will, to the extent permitted by applicable law and subject to the fiduciary duties of the Board, seek to recover the individual executive’s bonus award or other incentive compensation paid or issued to the executive officer in excess of the amount that would have been paid or issued based on the restated financial results. All executive officers have agreed to the terms of this policy.

Stock Ownership Guidelines

Executives and Outside Directors are expected to maintain ownership of Company stock equal to the following applicable market value:

 

President and CEO

   6 times annual salary

CFO, COO and CDO

   3 times annual salary

Other Direct Reports to the CEO

   2 times annual salary

Outside Directors

   5 times annual base retainer

Until their ownership level is met, executives are required to retain 75% of the net after-tax shares received from stock option exercises and the vesting of RSUs. All shares held directly or beneficially, including shares of time-based RSUs, shares of performance-based RSUs for which all performance criteria have been satisfied but have not yet vested due to time-based vesting requirements and shares of Company stock allocated to executives’ accounts held under the Newell Rubbermaid 401(k) Savings and Retirement Plan, count toward attainment of these targets. Unexercised stock options and other unvested performance-based RSUs are not counted. The Committee continues to monitor best practices in this area and in 2012 increased the President and CEO’s requirement to 6 times from 5 times, and outside directors to 5 times from 3 times in response to developing best practices.

Risk Management of Compensation Practices

The Committee considered, with the assistance of management and the independent compensation consultant, whether the Company’s compensation policies and practices in 2012 for its employees, including the named executive officers, would motivate inappropriate levels of risk taking that could have a material adverse effect on the Company. The Compensation Committee determined that there was no such material adverse effect. The Committee noted the following aspects of the executive compensation program that serve to mitigate any potential risk:

 

  ·   

The program provides an appropriate balance between cash and equity compensation, fixed and variable compensation, and short-term and long-term compensation.

 

  ·   

Bonus Plan payouts are based on a variety of performance metrics.

 

  ·   

Bonus Plan and performance-based RSUs are capped at 200% of target.

 

  ·   

The 2012 LTIP awards are generally subject to a three-year cliff vesting, thus promoting employee development and retention.

 

  ·   

LTIP design and stock ownership guidelines link executives’ interests to increasing the value of the Company’s common stock over the long-term, thus aligning management’s interest with those of the Company’s stockholders.

 

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  ·   

Executive incentive awards are subject to an incentive recoupment policy.

 

  ·   

The hedging and pledging of Company securities is prohibited.

Retirement Compensation

The Company provides its eligible executives with retirement benefits that are in addition to those provided to its employees generally in order to provide competitive benefits and assist in attracting and retaining key executives. These retirement benefits for named executive officers are provided using the Newell Rubbermaid Supplemental Executive Retirement Plan (“SERP”) and/or Newell Rubbermaid Inc. 2008 Deferred Compensation Plan (“2008 Plan”), depending upon the executive’s employment date and participation date in these plans.

If the executive was a participant in the SERP before January 1, 2007 (namely, Messrs. Boitmann, Burke, Martin and Sweet), the executive participates in both the SERP and 2008 Plan. Under the 2008 Plan, the executive is credited with annual contribution amounts under his or her SERP Cash Account, at the discretion of the Company, equal to 3% to 6% of annual compensation, depending on age and years of service. Under the SERP, the executive accrues an annual benefit at age 65 equal to a target percentage of his or her average annual compensation, reduced pro rata if credited service is less than 25 years, and is offset by benefits under the Newell Rubbermaid Pension Plan (“Pension Plan”), Social Security and SERP Cash Account.

If the executive was not a participant in the SERP before January 1, 2007 (namely, Messrs. Polk and Figuereo and Ms. McIntyre), the executive participates only in the 2008 Plan. Under the 2008 Plan, the executive is credited with annual contribution amounts under his or her SERP Cash Account, at the discretion of the Company, equal to (1) 3% to 6% of annual compensation over certain limits, depending on age and years of service and (2) 10% of annual compensation. The supplemental 10% contribution is provided in consideration for the executive not participating in the SERP.

Regarding vesting, each named executive officer must satisfy extended vesting requirements before becoming entitled to the retirement benefits. These extended vesting periods encourage executives to remain with the Company until retirement, with certain limited exceptions for early retirement at age 55.

A more detailed discussion of the retirement benefits under the SERP and 2008 Plan appears under “Executive Compensation—Retirement Plans,” below.

Other Compensation

Executive officers are provided other benefits as part of the Company’s executive compensation program which the Committee believes are in line with competitive practices. See the “All Other Compensation” column of the Summary Compensation Table and the related footnotes and narrative discussion. In February 2011, the Committee decided to eliminate the leased vehicle program for executives as well as Company paid tax planning and preparation services in favor of a monthly cash stipend. In lieu of paying for these programs and services, the Company will pay the named executive officers a monthly cash stipend of $1,803. An executive will not receive the full amount of the stipend until the three-year lease on his or her vehicle expires or he or she chooses to purchase the vehicle. Pursuant to the terms of his Compensation Arrangement, Mr. Polk receives a monthly stipend of $3,000 in lieu of these perquisites.

While the Company maintains corporate aircraft primarily for business travel, the Committee believes that it is often in the best interests of the Company from a productivity, safety and security concern that the CEO be permitted to use the aircraft for personal travel. Pursuant to his Compensation Arrangement, Mr. Polk is limited to personal use up to $165,000 annually, with any use in excess of such amount to result in an equivalent reduction in the payout to be received by him under the Bonus Plan. Other named executive officers may use the corporate aircraft for personal travel only in exceptional circumstances.

 

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Additional benefits include:

 

  ·   

Company contributions to the 401(k) Plan, including Company contributions that match employee deferrals as well as retirement savings contributions;

 

  ·   

payment of life and long-term disability insurance premiums;

 

  ·   

annual health examinations encouraged by the Company; and

 

  ·   

assistance upon a new hire or transfer necessitating relocation, which includes reimbursement of various relocation expenses, a relocation allowance, a bonus for an early sale of the executive’s home and tax assistance on certain taxable reimbursed expenses.

Retirement Guidelines

The Company has established retirement guidelines which provide for vesting and retention of the awards granted under the Newell Rubbermaid Inc. 2003 Stock Plan (“2003 Stock Plan”) and 2010 Stock Plan and benefits provided under the Bonus Plan, SERP and 2008 Plan. In general, the guidelines assign points to a retired executive based on the sum of the executive’s age and completed years of service. The guidelines were established primarily in order to encourage uniform treatment of outstanding equity awards in the event of retirement, to reflect market practice and to reward long-term service to the Company. A more detailed discussion of the accelerated vesting and other benefits available under the retirement guidelines appears in the discussion of each plan under “Executive Compensation—Retirement Plans” and “Potential Payments Upon Termination or Change in Control of the Company,” below.

Deductibility of Compensation

Section 162(m) limits the deductibility of executive compensation paid to the CEO and to each of the three other most highly compensated officers (other than the chief financial officer) of a public company to $1 million per year. However, compensation that is considered qualified “performance-based compensation” generally does not count toward the $1 million deduction limit. Annual salary does not qualify as performance-based compensation under Section 162(m) due to its nature. Amounts paid under the Bonus Plan and equity awards subject to company performance criteria generally qualify as fully deductible performance-based compensation. Any equity awards (other than stock options) not based on Company performance criteria are not likely to be fully deductible by the Company when the restrictions lapse and the shares are taxed as income to an executive officer while he or she is subject to Section 162(m). The Company expects that the majority of compensation, including awards under the Bonus Plan, the exercise of stock options and the vesting of performance-based RSUs will be deductible for Federal income tax purposes.

The Committee considers the tax deductibility of executive compensation as one factor to be considered in the context of its overall compensation philosophy and objectives. However, the Committee will not necessarily limit executive compensation to amounts deductible under Section 162(m), since the Committee desires to maintain the flexibility to structure compensation programs that attract, retain and motivate the best possible executive talent and meet the objectives of the Company’s executive compensation program, and to enhance stockholder value.

Michael Polk’s Compensation Arrangement

In connection with his appointment as President and CEO in July 2011, Mr. Polk entered into a compensation arrangement (“Compensation Arrangement”) with the Company that was the result of arm’s-length negotiation between representatives of Mr. Polk and members of the Board, who received advice and input from the Organizational Development & Compensation Committee’s independent advisor, Frederic W. Cook & Co., Inc.

Mr. Polk’s Compensation Arrangement provides for:

 

  ·   

Base salary of $1,200,000, with no salary increase prior to April 2014.

 

  ·   

An annual bonus opportunity under the Bonus Plan, with a target payout equal to 135% of base salary and a maximum payout equal to 270% of base salary.

 

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  ·   

Participation in the Company’s LTIP beginning in 2012, with the value of his award at time of issuance ranging between 385% and 575% of his base salary, with a target of 480% of his base salary.

 

  ·   

A monthly stipend of $3,000 in lieu of all perquisites other than an executive physical, the cost of which will be paid by the Company, and up to $165,000 for personal use of Company aircraft with any amounts in excess of $165,000 to be deducted from the amount to be paid to him under the Bonus Plan.

 

  ·   

Eligibility to participate in the 2008 Plan, including the SERP Cash Account component of the 2008 Plan.

 

  ·   

Participation in the Company’s medical and dental coverage, with eligibility to continue such coverage at COBRA rates until Medicare eligibility is achieved in the event of his retirement as CEO on or after age 55.

In addition, as more fully described under “Potential Payments Upon Termination or Change in Control of the Company—Employment Security Agreements” the Company entered into an Employment Security Agreement, or “ESA”, with Mr. Polk pursuant to which he is entitled to a lump sum severance payment upon a qualified termination following a change in control equal to three times his base salary and target bonus and a pro-rata portion of his bonus for the year of termination, plus other benefits. Mr. Polk’s ESA does not provide for any tax gross-up.

Mr. Polk’s Compensation Arrangement also provides that, in the event he is involuntarily terminated prior to a change in control (except for good cause or a violation of the Company’s Code of Business Conduct and Ethics) or resigns for good reason (as such terms are defined in his ESA), he will be entitled to the following benefits: (i) salary continuation payments for two years, but with all remaining payments paid in a lump sum by the March 15th after the year of termination; (ii) a lump sum cash payment for COBRA continuation of medical and dental coverage for two years equal to the difference between the COBRA premium and coverage rates for active employees; (iii) a pro-rata portion of his annual cash bonus under the Bonus Plan for the year of termination; (iv) vesting of the balance of his SERP Cash Account (including interest accrued thereon); (v) vesting of transition time-based RSUs awarded to him in July 2011; (vi) retention of the transition performance-based RSUs awarded to him in July 2011 to the extent not already vested (the performance criteria with respect to these awards were satisfied in 2012); and (vi) vesting of the stock options awarded to him in July 2011 with a one year exercise window.

James Sweet Retention Agreement

On December 5, 2012, the Company entered into a Retention Agreement with James Sweet for the purpose of incentivizing him to remain employed with the Company through June 2014. The Committee believes the services of Mr. Sweet, who is approaching retirement, will be critical to the successful implementation of Project Renewal and other strategic initiatives throughout the organization. Pursuant to the Retention Agreement, Mr. Sweet’s annual salary will be $535,000 from January 1, 2013 through June 2014. In addition, he will be entitled to a cash bonus of $275,000 upon his retirement provided he has successfully identified, and transitioned his responsibilities to, his successor. In addition, so long as he remains employed through June 2014, he will be entitled to the full vesting of the LTIP awards made to him in 2012 and 2013. He will not receive a 2014 LTIP award.

Employment Agreements

The Company does not generally enter into formal employment agreements with its executive officers. In connection with hiring an executive officer, the Company does make written compensation offers and arrangements. It also has Employment Security Agreements, described below, with its executive officers, which apply only if there is a termination of employment following a change in control of the Company. Executive officers may also receive post-employment benefits under the severance plans described below, with the exact amount dependent on the Company’s discretion.

 

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Employment Security Agreements

The Company has Employment Security Agreements (“ESAs”) with its executives, including the named executive officers and certain key employees. The ESAs provide severance benefits following certain terminations of employment occurring within two years of a change in control of the Company. In August 2009, the Committee determined that it would no longer include tax gross up provisions in ESAs for new hires. As a result, neither Mr. Polk’s nor Mr. Figuereo’s ESA contains a tax gross up provision. Moreover, during 2012 each of Messrs. Burke, Martin and Sweet entered into amended ESAs that eliminate the tax gross up provisions. The decision to exclude tax gross up provisions in ESAs was in response to increasing concern among stockholders about such provisions. Rather, payments and benefits payable to the executive will be reduced to the extent necessary if doing so would result in the executive retaining a larger after-tax amount, taking into account the income, excise and other taxes imposed on the payments and benefits. Please see the caption “Potential Payments Upon Termination or Change in Control of the Company—Termination of Employment Following a Change in Control—Employment Security Agreements” below for a discussion of the terms of the ESAs.

The Company believes that the protections afforded by the ESAs are a valuable incentive for attracting and retaining top managers. It believes that the ESAs are particularly important because the Company does not generally have employment agreements or long-term employment arrangements with its executives. The Company also believes that, in the event of an extraordinary corporate transaction, the ESAs could prove crucial to the Company’s ability to retain top management through the transaction process. In addition, the Company believes that the benefits provided under the ESAs represent fair and appropriate consideration for the agreement of the executives to the restrictive covenants in the ESAs that prohibit them from competing with the Company and from soliciting Company employees for 24 months following a termination of employment. The benefits provided under the ESAs were determined to be at levels appropriate and competitive with the benefits provided under similar arrangements of companies in the Company’s comparator groups. The Committee, with the assistance of its independent compensation consultant, continues to monitor best practices with respect to ESAs.

Severance Plans

The Company maintains two severance plans that provide benefits to non-union employees who are involuntarily terminated. The Newell Rubbermaid Supplemental Unemployment Pay Plan (“Supplemental Plan”) is designed so that its monetary severance benefit is not subject to FICA tax. The Newell Rubbermaid Excess Severance Pay Plan (“Excess Plan”) provides severance benefits that do not qualify for the exemption from FICA tax.

The Supplemental Plan supplements state unemployment benefits with respect to those employees whose employment is generally terminated involuntarily without cause. If an employee is eligible, the amount of the benefit provided under the Supplemental Plan is determined by the number of years of service the employee has provided to the Company with one week of pay for each year of service (up to a maximum of 25 weeks). The amount of the severance benefit provided under the Supplemental Plan is reduced by an estimate of amounts to which an employee may be entitled under any federal, state or local unemployment pay program. The Excess Plan provides severance benefits and a Company-subsidized medical benefit for certain non-union employees whose employment is involuntarily terminated. The Company in its sole discretion determines eligibility for Excess Plan benefits, as well as the amount and duration of those benefits.

The named executive officers may become entitled to severance benefits under the Excess Plan and/or the Supplemental Plan. The Company considers the executive’s position in the Company in addition to length of service in determining the amount and duration of the severance benefit. The Company believes that appropriate severance benefits are essential to attracting and retaining talented executives.

Figuereo Separation Agreement

On September 2, 2012, the Company entered into a Separation Agreement and General Release with Juan R. Figuereo, Executive Vice President and Chief Financial Officer under which he would no longer serve as the Company’s Executive Vice President and Chief Financial Officer as of September 4, 2012.

 

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Pursuant to the agreement, Mr. Figuereo was entitled to receive base salary continuation through May 2013 as well as a full bonus payment under the Bonus Plan for 2012, subject to the satisfaction of the applicable performance criteria. He was also entitled to continued coverage under the Company’s health and dental programs during the salary continuation period, at active employee rates, as well as continued use of his Company-leased car through January 1, 2013.

Mr. Figuereo also retained all stock options and RSUs that were scheduled to vest prior to February 28, 2013, and is permitted to exercise all options then vested through May 31, 2013. All other stock options and RSUs held by Mr. Figuereo were forfeited.

Until May 31, 2014, Mr. Figuereo is prohibited from acting as a senior financial executive on behalf of a U.S. based competitor of the Company and from soliciting certain Company employees. The agreement also contains a release of claims provision.

McIntyre Separation Agreement

The Company entered into a Separation Agreement and General Release with Ms. McIntyre on October 24, 2012 under which she would no longer serve as the Company’s President, Newell Consumer Group, effective as of November 1, 2012. Under the agreement, Ms. McIntyre is entitled to: (1) continued base pay for 73 weeks or, if earlier, until she finds alternative employment, (2) a full bonus payment under the Bonus Plan for 2012, subject to the satisfaction of the applicable performance criteria, (3) continued health coverage at the same cost for active employees during the salary continuation period, provided she elects her COBRA benefit and pays the applicable premiums, (4) continued use of a Company leased vehicle during the severance period, (5) a stipend of $30,000 to use for outplacement services, and (6) 20% vesting of any non-vested portion of her SERP Cash Account under the 2008 Plan. The agreement also provides Ms. McIntyre with a reemployment bonus equal to 50% of her remaining salary continuation payments in the event she finds suitable employment before the end of the severance period.

Ms. McIntyre’s outstanding stock option and RSU awards are treated as follows: (i) her June 15, 2009 stock option award, which vested on June 15, 2012, was exercisable through January 31, 2013; (ii) her February 10, 2010 stock option award vested on February 11, 2013, and is exercisable through June 30, 2013; (iii) her February 9, 2011 stock option award will vest on February 9, 2014, and be exercisable through June 30, 2014; and (iv) her February 9, 2010, February 10, 2010 and February 9, 2011 RSU awards, will vest pursuant to their original terms, subject to any applicable performance conditions. The RSU awards made to her on February 8, 2012 have been be forfeited.

Until October 15, 2014, Ms. McIntyre is prohibited from competing with the Company’s writing instrument, internet postage or labeling technology business and from soliciting certain Company employees. The agreement also contains a release of claims provision.

Boitmann Separation Agreement

The Company entered into a Separation Agreement and General Release with Mr. Boitmann on November 2, 2012 under which he would no longer be employed by the Company as of March 31, 2013. While he remains employed through March 31, 2013, as a result of various changes in the organization, Mr. Boitmann no longer served as an executive officer of the Company as of January 1, 2013. Under the Separation Agreement, Mr. Boitmann is entitled to: (1) continued base pay for 61 weeks or, if earlier, until he finds alternative employment, (2) a full bonus payment under the Bonus Plan for 2012, subject to the satisfaction of the applicable performance criteria, (3) continued health coverage at the same cost for active employees during the salary continuation period, provided he elects his COBRA benefit and pays the applicable premiums, (4) continued use of a Company leased vehicle during the severance period, (5) a stipend of $35,000 to use for outplacement services, and (6) full vesting in any non-vested portion of his SERP Cash Account under the 2008 Plan. The agreement also provides Mr. Boitmann with a reemployment bonus equal to 50% of his remaining salary continuation payments in the event he finds suitable employment before the end of the severance period.

Mr. Boitmann’s outstanding stock option and RSU awards are treated as follows: (i) his February 10, 2010 stock option award vested on February 11, 2013, and is exercisable through June 30, 2013; (ii) his

 

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February 9, 2011 stock option award will vest on February 9, 2014, and be exercisable through June 30, 2014; and (iii) his February 10, 2010 and February 9, 2011 RSU awards will vest pursuant to their original terms, subject to any applicable performance conditions. The RSU awards made to him on February 8, 2012 have been forfeited.

Until September 30, 2014, Mr. Boitmann is prohibited from competing with the Company and from soliciting certain Company employees. The agreement also contains a release of claims provision.

Each of the above severance agreements were the result of arm’s length negotiations, involved the input and advice of the Committee’s independent compensation consultant, Frederic W. Cook & Co., Inc., and provide benefits similar, but in addition to, those the executive would have received under the Company’s Severance Plans, as well as additional benefits with respect to certain outstanding equity awards and retirement plans to reflect each executive’s significant contribution to the past and future success of the Company. Each of the agreements also imposes certain non-compete, non-solicit and confidentiality obligations upon the executives which the Company determined are in the Company’s best interests to secure.

Custom Comparator Group

The following 22 companies were in the Company’s custom comparator group for 2012:

 

3M Company

   Energizer Holdings, Inc.

Avery Dennison Corporation

   Group Seb

The Bic Group

   Illinois Tool Works Inc.

Campbell Soup Co.

   Jarden Corp.

Church & Dwight Inc.

   Kimberly-Clark Corporation

The Clorox Company

   Masco Corporation

Colgate-Palmolive Company

Cooper Industries, Ltd.

  

Mattel, Inc.

Reckitt-Benckiser Group PLC

Danaher Corporation

   Stanley Black & Decker Inc.

Dorel Industries Inc.

   The Sherwin-Williams Company

Ecolab Inc.

   Tupperware Brands Corporation

For 2013, the Committee added Snap-On Inc. to the custom comparator group as Cooper Industries, Ltd. was acquired in 2012.

 

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Multiple Industry Index Comparator Group

The following 133 companies were in the Company’s multiple industry index comparator group for 2012:

 

Advance Auto Parts, Inc.

AECOM Technology Corporation

Air Products and Chemicals, Inc.

Alaska Airlines

Alcon Laboratories, Inc.

Allegheny Technologies

Allergan, Inc.

Alliant Techsystems Inc.

Amway

Anixter International Inc.

Apollo Group

ArvinMeritor, Inc.

Automatic Data Processing, Inc.

Avery Dennison Corporation

Avis Budget Group, Inc.

Avon Products, Inc.

Ball Corporation

BorgWarner Inc.

The Brink’s Company

Cameron International Corporation

Campbell Soup Co.

Chicago Bridge and Iron Company

Chiquita Brands International, Inc.

The Clorox Company

Con-way, Inc.

Constellation Brands, Inc.

Cooper Industries, Ltd.

Corn Products International Inc.

Covidien

CSX Corporation

Cummins, Inc.

Danaher Corporation

Dean Foods Company

Del Monte Foods Company

Diageo North America, Inc.

Diversey, Inc.

Dole Food Company, Inc.

Eastman Chemical Company

Eastman Kodak Company

Eaton Corporation

Ecolab Inc.

Energizer Holdings, Inc.

Expeditors International

Federal-Mogul Corporation

Fiserv, Inc.

 

Flowserve Corporation

Fortune Brands, Inc.

Foster Wheeler Corporation

Gannett Co., Inc.

Goodrich Corporation

Graphic Packaging Corporation

H&R Block, Inc.

H.J. Heinz Company

Hallmark Cards, Inc.

Hanesbrands, Inc.

Harley-Davidson Motor Company, Inc.

Hasbro, Inc.

Henkel of America, Inc.

The Hershey Company

Hexion Specialty Chemicals, Inc.

Hormel Foods Corporation

Hyatt Hotels Corporation

Insight Enterprises, Inc.

Interpublic Group of Companies, Inc.

ITT Corporation

Jarden Corp.

Joy Global Inc.

Kohler Company

L’Oreal USA, Inc.

Land O Lakes, Inc.

Leggett & Platt Inc.

Levi Strauss & Co.

Lorillard Tobacco Company

Marriott International, Inc.

Masco Corporation

Mattel, Inc.

McCormick & Company, Inc.

McGraw-Hill Companies

MeadWestvaco Corporation

Mohawk Industries

Molson Coors Brewing Company

Nalco Company

NCR Corporation

Nestlé Purina PetCare Company

Nestlé USA

NewPage Corporation

The Nielsen Company

Nintendo of America

 

Oshkosh Truck Corporation

Owens Corning

Owens-Illinois, Inc.

PACCAR Inc.

Pactiv Corporation

Pitney Bowes, Inc.

Praxair, Inc. R.R. Donnelly & Sons Company

Reynolds American Inc.

Robert Bosch Corporation Rockwell Automation, Inc.

Royal Caribbean Cruises Ltd.

Ryder System, Inc.

S.C. Johnson & Son, Inc.

SAIC, Inc.

Schneider Electric USA

Schreiber Foods Inc.

The Scotts Miracle-Gro Company

Sealed Air Corporation

The ServiceMaster Company

The Sherwin-Williams Company

J.M. Smucker Co.

Sonoco Products Company

Starwood Hotels & Resorts Worldwide, Inc.

Synnex Corporation

Temple-Inland Inc.

Terex Corporation

Textron Inc.

The Timken Company

TRW Automotive Inc.

Tyco Electronics Corporation

Unisys Corporation

URS Energy & Construction

USG Corporation

UTI Worldwide Inc.

Visteon Corporation

W.W. Grainger, Inc.

Warner Bros. Entertainment Inc.

Waste Management, Inc.

The Western Union Company

Westinghouse Electric Co.

Weyerhaeuser Company

Wm. Wrigley Jr. Company

Wolters Kluwers

Wyndham Worldwide Corporation

 

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2012 Summary Compensation Table

 

Name and Principal

Position

  Year     Salary
($)
    Bonus
($)(1)
    Stock
Awards
($)(2)
    Option
Awards
($)(3)
    Non-Equity
Incentive
Plan
Compensation
($)
    Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(4)
    All Other
Compensation
($)
    Total
($)
 

Michael B. Polk,

President and Chief

Executive Officer

   

 

2012

2011

  

  

  $

 

1,200,000

550,000

  

  

  $

 


2,558,000

  

  

  $

 

6,335,981

14,282,328

  

  

  $

 


1,099,997

  

  

  $

 

1,459,680

(5) 

  

  $

 


  

  

  $

 

611,340

282,396

  

  

  $

 

9,607,001

18,772,721

  

  

Douglas L. Martin,

Executive Vice President and Chief Financial Officer

    2012        464,792        65,000        439,203               314,016        793,717        55,845        2,132,573   

Juan R. Figuereo,

Former Executive Vice President, Chief Financial Officer

   

 

 

2012

2011

2010

  

  

  

   

 

 

545,000

542,917

520,000

  

  

  

   

 

 


  

  

  

   

 

 

2,194,849

692,992

738,560

(6) 

  

  

   

 

 

383,967

284,654

252,164

(6) 

  

  

   

 

 

417,415

214,126

535,860

  

  

  

   

 

 


  

  

  

   

 

 

141,897

185,910

204,881

  

  

  

   

 

 

3,683,128

1,920,599

2,251,465

  

  

  

William A. Burke, III,

Executive Vice President and Chief Operating Officer

   

 

 

2012

2011

2010

  

  

  

   

 

 

576,667

543,333

538,750

  

  

  

   

 

 

10,000

50,000

  

  

  

   

 

 

1,847,880

654,498

654,720

  

  

  

   

 

 


268,846

261,844

  

  

  

   

 

 

441,669

206,955

509,550

  

  

  

   

 

 

503,202

451,997

199,632

  

  

  

   

 

 

107,396

126,430

99,332

  

  

  

   

 

 

3,486,814

2,302,059

2,263,828

  

  

  

James M. Sweet,

Executive Vice President, Human Resources and Corporate Communications

    2012        487,595               2,052,375 (7)             329,517        274,015        106,994        3,250,496   

Paul G. Boitmann,

Sr. Vice President, Chief Customer Development Officer

    2012        422,500               1,262,464 (8)      244,309 (8)      247,458        499,466        85,894        2,762,091   

G. Penny McIntyre,

Former President, Newell Consumer

   

 

 

2012

2011

2010

  

  

  

   

 

 

483,333

531,250

486,667

  

  

  

   

 

 

30,000

25,000

  

  

  

   

 

 

2,886,856

692,992

738,560

(9) 

  

  

   

 

 

506,349

284,654

294,272

(9) 

  

  

   

 

 

444,222

189,570

587,699

  

  

  

   

 

 


  

  

  

   

 

 

144,002

207,528

184,091

  

  

  

   

 

 

4,494,762

1,930,994

2,291,289

  

  

  

 

(1) Bonus Amounts.    In April 2012, Mr. Martin received a cash retention payment of $65,000. In February 2012, Mr. Burke received a cash payment of $10,000 in connection with the successful resolution of litigation impacting one of his businesses. In July 2011, Mr. Polk received a $1,100,000 signing bonus. In addition, as part of his Compensation Arrangement, Mr. Polk was entitled to a bonus of no less than 90% of target (135% of his full year salary ($1,200,000)), or $1,458,000, under the Bonus Plan for 2011, which was paid in February 2012. In November 2012, Ms. McIntyre received a lump sum payment of $30,000 in lieu of outplacement services in connection with her separation agreement. In February 2011, in lieu of a salary increase, Mr. Burke received a lump sum payment of $15,000. In November 2011, in connection with the implementation of Project Renewal, Mr. Burke and Ms. McIntyre received lump sum payments of $35,000 and $25,000 respectively.

 

(2)

Stock Awards.    This column shows the grant date fair value of awards of time-based and performance-based RSUs granted to the executive officers in the years indicated computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. In February 2012, performance-based RSUs were awarded in the following amounts: Mr. Polk, 233,063 RSUs; Mr. Martin, 6,936 RSUs; Mr. Figuereo, 31,529 RSUs; Mr. Burke, 33,893 RSUs; Mr. Sweet, 26,799 RSUs; Mr. Boitmann, 14,976 RSUs; and Ms. McIntyre, 34,682 RSUs. The grant date fair values of these performance-based RSU awards are based on the probability of outcomes possible under the RSUs and the shares the recipient would receive under each of the outcomes. The values of the February 2012 performance-based RSUs on the grant date assuming that the performance condition will be achieved at the maximum level are $8,870,378, $263,984, $1,199,994, $1,289,968, $1,019,970, $569,987 and $1,319,997, respectively. In September of 2012, Mr. Martin was awarded 13,000 performance-based RSUs, and in November 2012, Mr. Burke was awarded 41,099 performance-based RSUs. These performance-based RSUs differ from those awarded in February 2012 in that they may vest only if certain stock price criteria are met within a specified period of time, and may not be adjusted up or down. The value of these performance-based RSUs on the grant date is $219,216 for Mr. Martin and $772,913 for Mr. Burke. See the Stock-Based Compensation Footnote to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 for an explanation of the assumptions

 

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  made by the Company in the valuation of the awards shown in this column. Details regarding 2012 stock awards can be found in the table “2012 Grants of Plan-Based Awards.” Details regarding the 2012, 2011 and 2010 stock awards that are still outstanding can be found in the table “Outstanding Equity Awards At 2012 Fiscal Year End.”

 

(3) Option Awards.    The amounts in this column represent the grant date fair value of awards of stock options made to the named executive officers in the years indicated, or with respect to Messrs. Figuereo and Boitmann and Ms. McIntyre for 2012, modified as set forth in footnotes (6), (8) and (9) below, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. See the Stock-Based Compensation Footnote to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 for an explanation of the assumptions made by the Company in the valuation of the Company’s option grants. Details regarding 2012 stock option modifications can be found in the table “2012 Grants of Plan-Based Awards.” Details regarding 2011 and 2010 stock option awards that are still outstanding can be found in the table “Outstanding Equity Awards At 2012 Fiscal Year-End.”

 

(4) Change in Pension Value and Nonqualified Deferred Compensation Earnings.    The amounts in this column represent the annual net increase (but not less than zero) in the present value of accumulated benefits under the SERP and the Company’s Pension Plan for the years ended December 31, 2012, 2011 and 2010 (the measurement dates for reporting purposes of these plans in the Company’s Form 10-K filings) for those named executive officers who participate in these plans. Mr. Martin’s amount includes $1,905 in above market earnings under the Newell Co. Deferred Compensation Plan. Mr. Boitmann’s amount includes $8,231 and $10,255 in above market earnings under the Newell Rubbermaid 2002 Deferred Compensation Plan and the 2008 Plan, respectively. No other named executive officer participated in a plan with above-market earnings. Messrs. Polk and Figuereo and Ms. McIntyre do not participate in either the SERP or the Pension Plan. Mr. Sweet participates in the SERP, but not the Pension Plan. Messrs. Martin, Burke and Boitmann participate in both the SERP and the Pension Plan. The present values of accumulated benefits under the SERP and Pension Plan were determined using assumptions consistent with those used for reporting purposes of these plans in the Company’s Form 10-K for each year, with no reduction for mortality risk before age 65. Please refer to Footnote (2) to the 2012 Pension Benefits table for additional information regarding the assumptions used to calculate the amounts in this column for 2012.

 

(5) Reduction of Mr. Polk’s Award under the Bonus Plan.    As described in the Compensation Discussion and Analysis section above, in connection with Mr. Polk’s Compensation Arrangement any amounts in excess of $165,000 for his personal use of Company-owned aircraft are required to be deducted from the amount to be paid to him under the Bonus Plan. As a result of this provision, the amount paid to Mr. Polk under the Bonus Plan for 2012 was reduced by $83,577 from $1,459,680 to $1,376,103.

 

(6) Mr. Figuereo’s Separation Agreement.    As described in the Compensation Discussion and Analysis section above, in connection with Mr. Figuereo’s separation from the Company, certain of his awards were modified as follows: (i) he was permitted to retain stock options awarded to him in 2009 and 2010 which will vest on their original vesting dates; and (ii) he was permitted to retain time-based and performance–based RSUs awarded to him in 2009 and 2010 which will vest on their original vesting dates. The value of these modified awards on the date of modification is reflected in the Option Awards column as $383,967 and in the Stock Awards column as $1,194,861. Given that a significant portion of the original grant date fair value of these awards had been expensed prior to the modification, the modifications resulted in a net expense reversal in the case of the Option Awards and a non-cash charge significantly less than the value reported in the Stock Awards column (a net expense reversal of $87,562 for the stock options and a charge of $358,446 for the RSUs). Amounts in the Stock Awards and Option Awards columns also include the grant date fair values of the 2012 awards forfeited by Mr. Figuereo as a result of his separation from the Company: 21,019 time-based RSUs ($399,992) and 31,529 performance-based RSUs ($599,997).

 

(7)

Mr. Sweet’s Retention Agreement.    As described in the Compensation Discussion and Analysis section above, in connection with Mr. Sweet’s retention agreement with the Company, the RSUs awarded to him in 2012 were modified to allow him to retain the full award upon his expected retirement in June

 

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  2014. The value of these modified awards on the date of modification is reflected in the Stock Awards column as $1,202,400, while the original grant date fair value of the awards is $849,975. As a result, the Total and Stock Awards columns include two amounts related to the same award. Had the value of the original grant been excluded from the Stock Awards column, the amount reported in the Total column for Mr. Sweet would have been reduced by $849,975.

 

(8) Mr. Boitmann’s Separation Agreement.    As described in the Compensation Discussion and Analysis section above, in connection with Mr. Boitmann’s separation from the Company, certain of his awards were modified as follows: (i) he was permitted to retain stock options awarded to him in 2010 and 2011 which will vest on their original vesting dates; and (ii) he was permitted to retain time-based and performance-based RSUs awarded to him in 2010 and 2011 which will vest on their original vesting dates. The value of these modified awards on the date of modification is reflected in the Option Awards column as $244,309 and in the Stock Awards column as $787,475. Given that a significant portion of the original grant date fair value of these awards had been expensed prior to the modification, the modifications resulted in non-cash charges significantly less than the value reported in the Option Awards and Stock Awards columns ($65,152 for the stock options and $333,142 for the RSUs). Amounts in the Stock Awards and Option Awards columns also include the grant date fair values of the 2012 awards forfeited by Mr. Boitmann as a result of his separation from the Company: 9,984 time-based RSUs ($189,996) and 14,976 performance-based RSUs ($284,993).

 

(9) Ms. McIntyre’s Separation Agreement.    As described in the Compensation Discussion and Analysis section above, in connection with Ms. McIntyre’s separation from the Company, certain of her awards were modified as follows: (i) she was permitted to retain stock options awarded to her in 2010 and 2011 which will vest on their original vesting dates; and (ii) she was permitted to retain time-based and performance–based RSUs awarded to her in 2010 and 2011 which will vest on their original vesting dates. The value of these modified awards on the date of modification is reflected in the Option Awards column as $506,349 and in the Stock Awards column as $1,776,874. Given that a significant portion of the original grant date fair value of these awards had been expensed prior to the modification, the modifications resulted in non-cash charges significantly less than the value reported in the Option Awards and Stock Awards columns ($92,215 for the stock options and $717,742 for the RSUs). Amounts in the Stock Awards and Option Awards columns also include the grant date fair values of 2012 awards forfeited by Ms. McIntyre as a result of her separation from the Company: 23,646 time-based RSUs ($449,983) and 34,682 performance-based RSUs ($659,998).

Salary.    The “Salary” column of the Summary Compensation Table shows the salaries paid in the years indicated to each of the named executive officers. Salary increases, if any, for each year are generally approved in February of that year.

Bonus.    The “Bonus” column of the Summary Compensation Table shows special bonus, guaranteed minimum bonuses under the Bonus Plan and similar one-time, lump sum payments to the named executive officers paid during the year which are separate from Non-Equity Incentive Plan Compensation.

Stock Awards.    The amounts in the “Stock Awards” column of the Summary Compensation Table consist of the grant date fair value of awards of RSUs for each named executive officer as well as the value of modified awards that would have been forfeited absent such modifications.

Option Awards.    The amounts in the “Option Awards” column of the Summary Compensation Table consist of the grant date fair value of the awards of stock options for each named executive officer as well as the value of modified awards that would have been forfeited absent such modifications.

Non-Equity Incentive Plan Compensation.    The “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table shows the cash bonus the Company awarded under the Management Cash Bonus Plan to each named executive officer. The Company pays all of these amounts, if any, in the month of March following the year in which they are earned. Additional explanation of the non-equity incentive plan compensation for each named executive officer appears above under the caption “Compensation Discussion and Analysis – Key Elements of Executive Compensation – Annual Incentive Compensation” and below in the footnotes to the 2012 Grants of Plan-Based Awards table.

 

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All Other Compensation.    The “All Other Compensation” column of the Summary Compensation Table reflects the following amounts for each named executive officer in 2012.

 

Name

   Personal
Use of
Aircraft

(1)
     Other
Perquisites
and
Personal
Benefits

(2)
     401(k)
Savings
and
Retirement

Plan
(3)
     SERP
Cash
Account
Credit

(4)
     Insurance
Premiums
(5)
     Severance
Payments

(6)
     Total  

Michael B. Polk

   $ 165,000       $ 38,245       $ 20,000       $ 386,200       $ 1,895       $       $ 611,340   

Douglas L. Martin

             19,073         22,500         10,388         3,884                 55,845   

Juan R. Figuereo

             16,173         17,251         106,460         2,013                 141,897   

William A. Burke

     3,210         26,451         22,500         50,200         5,035                 107,396   

James M. Sweet

             34,401         22,500         43,526         6,567                 106,994   

Paul G. Boitmann

             21,638         22,500         37,708         4,048                 85,894   

G. Penny McIntyre

     13,300         20,455         10,000                 3,580         96,667         144,002   

 

(1) Personal Use of Aircraft.    This column shows the estimated incremental cost to the Company in 2012 of providing personal use of Company-owned aircraft to Messrs. Polk and Burke and Ms. McIntyre. The estimated cost of aircraft usage by the named executive officers is determined by multiplying flight hours by an average estimated hourly cost of operating the aircraft. The hourly cost is calculated at the beginning of each year by dividing total budgeted variable expenses, such as fuel, equipment repair, supplies, pilot lodging, meals and transportation, airport services and aircraft catering, by estimated flight hours for the year. With respect to Mr. Polk, any amounts exceeding $165,000 are deducted from amounts to be paid to him under the Bonus Plan. Since the cost of providing personal use of Company-owned aircraft to Mr. Polk in 2012 was $248,577, the amount paid to him under the Bonus Plan was reduced by $83,577.

 

(2) Other Perquisites and Personal Benefits.    The amounts in this column consist of (a) the incremental cost to the Company of providing personal use of a leased Company automobile to each named executive officer or a monthly stipend in lieu thereof as the Company transitions away from the leasing program; and (b) all amounts paid by the Company for physical examinations of Messrs. Polk, Martin, Burke and Sweet and Ms. McIntyre, which are permitted pursuant to Company policy.

 

(3) 401(k) Savings and Retirement Plan.    This column shows the amount of all Company matching and retirement contributions made for 2012 under the 401(k) Plan on behalf of each named executive officer.

 

(4) SERP Cash Account Credit.    Each of the named executive officers is eligible to participate in the 2008 Plan, including the SERP Cash Account feature. This column shows the employer contribution for 2012 (exclusive of employee deferrals) which was credited to each named executive officer’s SERP Cash Account in 2013, as described below under “2008 Deferred Compensation Plan.”

 

(5) Insurance Premiums.    This column shows all amounts paid by the Company on behalf of each named executive officer in 2012 for (a) life insurance premiums: Mr. Polk, $1,222; Mr. Martin, $1,030; Mr. Figuereo, $1,870; Mr. Burke, $1,222; Mr. Sweet, $2,592; Mr. Boitmann, $1,089; and Ms. McIntyre, $953; and (b) long-term disability insurance premiums: Mr. Polk, $673; Mr. Martin, $2,854; Mr. Figuereo, $143; Mr. Burke, $3,813; Mr. Sweet, $3,975; Mr. Boitmann, $2,959; and Ms. McIntyre, $2,627.

 

(6) Severance Payments.    This column shows salary continuation payments made to Ms. McIntyre in 2012 pursuant to her separation agreement.

 

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2012 Grants of Plan-Based Awards

 

Name  

Grant

Date

   

Estimated Future Payouts

Under Non-Equity Incentive

Plan Awards(1)

    Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)
   

All Other

Stock

Awards:

Number Of

Shares

Of Stock

Or Units

(#)(6)

   

All

Other
Option

Awards:

Number Of

Securities

Underlying

Options

(#)(7)

   

Exercise

Or Base

Price of

Option

Awards

($/sh)

   

Grant Date
Fair Value
of Stock
and Option
Awards

($)(8)

 
   

Thresh-

old

($)(3)

   

Target

($)(4)

   

Maxi-

mum

($)(5)

   

Thresh-

old

(#)

   

Target

(#)

   

Maxi-

mum

(#)

         

Michael B. Polk

    2/8/2012                                       233,063        466,126                                4,435,189   
      2/8/2012                                                        99,884                        1,900,793   
      2/8/2012               1,620,000        2,900,000                                                           

Douglas L. Martin

    2/8/2012                                       6,936        13,872                                131,992   
      2/8/2012                                                        4,624                        87,995   
      9/28/2012                                        13,000        13,000                                219,216   
      2/8/2012               348,510        697,021                                                           

Juan R. Figuereo(9)

    2/8/2012                                       31,529        63,058                                599,997   
      2/8/2012                                                        21,019                        399,992   
      2/8/2012               463,250        926,500                                                           
      9/4/2012                                        25,080        50,160                                405,619   
      9/4/2012                                                        18,920                        339,992   
      9/4/2012                                                        10,000                        179,700   
      9/4/2012                                                        15,000                        269,550   
      9/4/2012                                                                50,000        14.94        161,500   
      9/4/2012                                                                52,100        13.64        222,467   

William A. Burke

    2/8/2012                                       33,893        67,786                                644,984   
      2/8/2012                                                        22,595                        429,983   
      2/8/2012               490,167        980,334                                                           
      11/6/2012                                       41,099        41,099                                772,913   

James M. Sweet(10)

    2/8/2012                                       26,799        53,598                                509,985   
      2/8/2012                                                        17,866                        339,990   
      2/8/2012               365,696        731,392                                                           
      12/5/2012                                       26,799        53,598                                814,529   
      12/5/2012                                                        17,866                        387,871   

Paul G. Boitmann(11)

    2/8/2012                                       14,976        29,952                                284,993   
      2/8/2012                                                        9,984                        189,996   
      2/8/2012               274,625        549,250                                                           
      11/2/2012                                                        6,860                        144,334   
      11/2/2012                                       9,146        18,292                                153,927   
      11/2/2012                                                        9,460                        199,038   
      11/2/2012                                        12,540        25,080                                290,176   
      11/2/2012                                                                25,500        13.64        179,265   
      11/2/2012                                                                17,532        19.68        65,044   

G. Penny McIntyre(12)

    2/8/2012                                       34,682        69,364                                659,998   
      2/8/2012                                                        23,646                        449,983   
      2/8/2012               493,000        986,000                                                           
      10/24/2012                                                        10,000                        202,600   
      10/24/2012                        15,091              305,744   
      10/24/2012                                       20,122        40,244                                326,178   
      10/24/2012                                                        18,920                        383,319   
      10/24/2012                                       25,080        50,160                                559,033   
      10/24/2012                                                                60,800        13.64        380,608   
      10/24/2012                                                                38,571        19.68        125,741   

 

(1) Estimated Future Payouts Under Non-Equity Incentive Plan Awards.    Potential payouts under the Bonus Plan were based on performance in 2012. Thus, the information in the “Target” and “Maximum” columns reflects the range of potential payouts when the performance goals were set in February 2012.

 

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(2) Estimated Future Payouts Under Equity Incentive Plan Awards.    Except as described below in footnotes (9), (10), (11) and (12) with respect to modification of awards made to Messrs. Figuereo, Sweet and Boitmann and Ms. McIntyre, this column includes the number of performance-based RSUs granted in February 2012 to the named executive officers under the LTIP. The target number of shares shown in the table reflects the number of shares that will be awarded if the three-year total shareholder return performance metric is met at target level. Actual shares, if any, will be awarded in February 2015 and may range from 0% to 200% of the target. This column also includes performance-based RSUs granted to Mr. Martin and Mr. Burke in September 2012 and November 2012, respectively. Mr. Martin’s award will vest between September 2013 and September 2019, and Mr. Burke’s award will vest between November 2013 and November 2019, in each case provided that the applicable performance conditions are satisfied, and will vest, if at all, only at 100% of target. For additional information on performance-based RSUs, see “Compensation Discussion and Analysis—Long-Term Incentive Compensation.”

 

(3) Estimated Future Payouts Under Non-Equity Incentive Plan Awards—Threshold.    Pursuant to the Bonus Plan, performance at or below a specific percentage of a target goal will result in no payment with respect to that performance goal. As a result, no payment is to be made under the Bonus Plan until a minimum performance level for a performance goal is exceeded, and performance above such level will result in a payment ranging from $1 to the maximum bonus amount related to such goal, depending upon the level at which the goal was attained. For an explanation of the payouts made under the Management Cash Bonus Plan with respect to 2012 performance, see “Compensation Discussion and Analysis—Annual Incentive Compensation.”

 

(4) Estimated Future Payouts Under Non-Equity Incentive Plan Awards—Target.    Under the Bonus Plan, the amounts shown in this column represent: for Mr. Polk, 135% of full year salary; for Mr. Martin, 70% of salary from January 1, 2012 through August 31, 2012, and 85% of salary thereafter; for each of Messrs. Figuereo and Burke, 85% of full year salary; for Ms. McIntyre, 85% of what would have been her full year salary had she remained with the Company through the end of the year; for Mr. Sweet, 75% of full year salary; and for Mr. Boitmann, 65% of full year salary.

 

(5) Estimated Future Payouts Under Non-Equity Incentive Plan Awards—Maximum.    Under the Bonus Plan, the amounts shown in this column represent: for Mr. Polk, 270% of his full year salary subject to a cap of $2,900,000; for Mr. Martin, 140% of salary from January 1, 2012 through August 31, 2012, and 170% of salary thereafter; for each of Messrs. Figuereo and Burke, 170% of full year salary; for Ms. McIntyre, 170% of what would have been her full year salary had she remained with the Company through the end of the year; for Mr. Sweet, 150% of full year salary; and for Mr. Boitmann, 130% of full year salary.

 

(6) All Other Stock Awards: Number of Shares of Stock or Units.    Except as described below in footnotes (9), (10), (11) and (12) with respect to modification of awards made to Messrs. Figuereo, Sweet and Boitmann and Ms. McIntyre, this column shows the number of time-based RSUs awarded to the named executive officers in 2012. For additional information on these awards, see “Compensation Discussion and Analysis—Long-Term Incentive Compensation.”

 

(7) All Other Option Awards: Number of Securities Underlying Options.    As described in below in footnotes (9), (11) and (12), this column shows the number of shares that may be issued to Messrs. Figuereo and Boitmann and Ms. McIntyre with respect to modifications of option awards previously granted to these named executive officers.

 

(8) Grant Date Fair Value of Stock and Option Awards.    Except as described below in footnotes (9), (10), (11) and (12) with respect to modification of awards made to Messrs. Figuereo, Sweet and Boitmann and Ms. McIntyre, this column shows the grant date fair value of awards of RSUs and stock options granted to the named executive officers, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. See Footnote 15, Stock-Based Compensation, of the Notes to Consolidated Financial Statements included in the Company’s 2012 Annual Report on Form 10-K for an explanation of the assumptions made by the Company in valuing these awards.

 

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Table of Contents
(9) Mr. Figuereo’s Separation Agreement.    As described in the Compensation Discussion and Analysis section above, in connection with Mr. Figuereo’s separation from the Company, certain of his awards were modified as follows: (i) he was permitted to retain stock options awarded to him in 2009 and 2010 which will vest on their original vesting dates; and (ii) he was permitted to retain time-based and performance-based RSUs awarded to him in 2009 and 2010 which will vest on their original vesting dates. All RSUs granted to Mr. Figuereo in 2011 and 2012 were forfeited as a result of his separation from the Company. For additional information on these modified awards, see footnote (6) to the Summary Compensation Table.

 

(10) Mr. Sweet’s Retention Agreement.    As described in the Compensation Discussion and Analysis section above, in connection with Mr. Sweet’s retention agreement with the Company, the RSUs awarded to him in 2012 were modified to allow him to retain the full award upon his expected retirement in June 2014. For additional information on these modified awards, see footnote (7) to the Summary Compensation Table.

 

(11) Mr. Boitmann’s Separation Agreement.    As described in the Compensation Discussion and Analysis section above, in connection with Mr. Boitmann’s separation from the Company, certain of his awards were modified as follows: (i) he was permitted to retain stock options awarded to him in 2010 and 2011 which will vest on their original vesting dates; and (ii) he was permitted to retain time-based and performance-based RSUs awarded to him in 2010 and 2011 which will vest on their original vesting dates. All RSUs granted to Mr. Boitmann in 2012 were forfeited as a result of his separation from the Company. For additional information on these modified awards, see footnote (8) to the Summary Compensation Table.

 

(12) Ms. McIntyre’s Separation Agreement.    As described in the Compensation Discussion and Analysis section above, in connection with Ms. McIntyre’s separation from the Company, certain of her awards were modified as follows: (i) she was permitted to retain stock options awarded to her in 2010 and 2011 which will vest on their original vesting dates; and (ii) she was permitted to retain time-based and performance-based RSUs awarded to her in 2010 and 2011 which will vest on their original vesting dates. All RSUs granted to Ms. McIntyre in 2012 were forfeited as a result of her separation from the Company. For additional information on these modified awards, see footnote (9) to the Summary Compensation Table.

 

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Outstanding Equity Awards at 2012 Fiscal Year-End

 

     Option Awards(1)     Stock Awards  
Name  

Number

Of

Securities

Underlying

Unexercised

Options

(#)

Exercisable

   

Number

Of

Securities

Underlying

Unexercised

Options

(#)

Unexercisable

   

Option

Exercise

Price

($)

   

Option

Expiration

Date

   

Number

Of

Shares

Or Units

Of

Stock

That

Have

Not

Vested

(#)(2)

   

Market

Value

Of

Shares

Or Units

Of

Stock

That

Have

Not

Vested

($)(3)

   

Equity

Incentive

Plan

Awards:

Number

of

Unearned

Shares,

Units or

Other

Rights

That
Have Not
Vested

(#)

   

Equity

Incentive

Plan

Awards:

Market or

Payout

Value of
Unearned
Shares,

Units or

Other

Rights

That Have

Not Vested

($)(4)

 

Michael B. Polk(5)

            225,872        15.15        7/18/2021        184,515        4,109,149        910,111        20,268,172   

Douglas L. Martin(6)

    2,400        0        29.34        5/8/2013        13,861        308,684        28,390        632,245   
      12,000        0        22.98        5/13/2014                                   
      12,000        0        22.38        2/10/2015                                   
      9,600        0        23.99        2/8/2016                                   
      12,000        0        30.37        2/6/2017                                   
      9,600        2,400        23.32        2/13/2018                                   
      0        9,701        13.64        2/10/2020                                   
      0        6,788        19.68        2/9/2021                                   

Juan R. Figuereo(7)

    0        52,100        13.64        5/31/2013        28,920        644,048        25,080        558,532   

William A. Burke(8)

    15,000        0        29.34        5/8/2013        57,488        1,280,258        121,356        2,702,598   
      30,000        0        22.98        5/13/2014                                   
      20,000        0        22.38        2/10/2015                                   
      25,000        0        23.99        2/8/2016                                   
      20,000        0        30.37        2/6/2017                                   
      80,000        20,000        23.32        2/13/2018                                   
      0        54,100        13.64        2/10/2020                                   
      0        36,429        19.68        2/9/2021                                   

James M. Sweet(9)

    16,000        0        22.58        1/28/2014        42,346        943,045        59,329        1,321,257   
      14,000        0        23.64        4/30/2014                                   
      20,000        0        22.98        5/13/2014                                   
      22,500        0        22.38        2/10/2015                                   
      30,000        0        23.99        2/8/2016                                   
      50,000        0        30.37        2/6/2017                                   
      52,000        13,000        23.32        2/13/2018                                   
      0        34,000        13.64        2/10/2020                                   
      0        26,299        19.68        2/9/2021                                   

Paul G. Boitmann(10)

    22,500        0        29.34        6/30/2013        26,304        585,790        36,662        816,463   
      13,500        0        22.98        6/30/2013                                   
      13,500        0        22.38        6/30/2013                                   
      11,000        0        23.99        6/30/2013                                   
      11,000        0        30.37        6/30/2013                                   
      36,000        9,000        23.32        6/30/2013                                   
      0        25,500        13.64        6/30/2013                                   
      0        17,532        19.68        6/30/2014                                   

G. Penny McIntyre(11)

    0        60,800        13.64        6/30/2013        44,011        980,125        45,202        1,006,649   
      0        38,571        19.68        6/30/2014                                   

 

 

(1)

Option Awards.    Each stock option granted in 2010 and 2011 is subject to a three-year cliff vesting period and has a ten-year term. Options granted prior to 2009 become exercisable in annual cumulative installments of 20% commencing one year from the date of grant, with full vesting occurring on the fifth anniversary of the date of grant and have a ten-year term. Thus, the vesting date for each option award in this table can be calculated accordingly, except as follows: Mr. Figuereo’s option vested on February 10, 2013, Mr. Boitmann’s option with an exercise price of $23.32 fully vested on

 

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  February 13, 2013, and Mr. Boitmann’s and Ms. McIntyre’s options with an exercise price of $13.64 vested on February 10, 2013 and options with an exercise price of $19.68 will vest on February 9, 2014. Vesting may be accelerated and earlier exercise permitted as a result of death, disability, retirement or certain changes in control of the Company. All options were granted with exercise prices equal to the market value on the date of grant, based on the closing market price of the common stock for such date as reported in The Wall Street Journal.

 

(2) Number of Shares or Units of Stock That Have Not Vested.    Represents all time-based RSU awards held by the named executive officer as of December 31, 2012. Except as described below, all time-based RSU awards awarded to the named executive officers vest on the third anniversary of the date of grant.

 

(3) Market Value of Shares or Units of Stock That Have Not Vested.    Represents the value of the number of shares of common stock covered by the time-based RSU awards valued using $22.27 (the closing market price of the Company’s common stock as reported in The Wall Street Journal for December 31, 2012).

 

(4) Equity Incentive Plan Awards: Market Value or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested.    Represents the value of the number of shares of common stock covered by the performance-based RSU awards using $22.27 (the closing market price of the Company’s common stock as reported in The Wall Street Journal for December 31, 2012). The value provided assumes the performance-based RSU awards pay out at target and the stock price targets are achieved.

 

(5) Vesting Dates—Polk.    The vesting dates of the time-based RSU awards are July 18, 2013 (84,631 RSUs) and February 8, 2015 (99,884 RSUs). The vesting date of 677,048 of the performance-based RSU awards is July 18, 2013 following the satisfaction of the applicable stock price performance conditions in 2012. The vesting date of the remaining 233,063 performance-based RSU awards is February 8, 2015.

 

(6) Vesting Dates—Martin.    The vesting dates of the time-based RSU awards are February 8, 2013 (1,541 RSUs), February 10, 2013 (3,685 RSUs), February 8, 2014 (1,541 RSUs), February 9, 2014 (2,656 RSUs), June 30, 2014 (2,896 RSUs) and February 8, 2015 (1,542 RSUs). The vesting dates of 15,390 of the performance-based RSU awards are as follows: February 10, 2013 (4,913 RSUs), February 9, 2014 (3,541 RSUs) and February 8, 2015 (6,936 RSUs). The vesting dates of the remaining 13,000 performance-based RSU awards can be between September 28, 2013 and September 28, 2019 assuming the stock price performance conditions are met.

 

(7) Vesting Dates—Figuereo.    The vesting dates of the time-based RSU awards are February 9, 2013 (10,000 RSUs) and February 10, 2013 (18,920 RSUs). The vesting date of the performance-based RSU award is February 10, 2013 (25,080 RSUs). In connection with his separation from the Company, the RSU awards vesting in 2014 and 2015 were forfeited. For additional information on these awards, see “Compensation Discussion and Analysis—Figuereo Separation Agreement.”

 

(8) Vesting DatesBurke.    The vesting dates of the time-based RSU awards are February 10, 2013 (20,640 RSUs), February 9, 2014 (14,253 RSUs) and February 8, 2015 (22,595 RSUs). The vesting dates of 80,257 of the performance-based RSU awards are as follows: February 10, 2013 (27,360 RSUs), February 9, 2014 (19,004 RSUs) and February 8, 2015 (33,893 RSUs). The vesting dates of the remaining 41,099 performance-based RSU awards can be between November 6, 2013 and November 6, 2019 assuming the stock price performance conditions are met.

 

(9) Vesting DatesSweet.    The vesting dates of the time-based RSU awards are February 10, 2013 (14,190 RSUs), February 9, 2014 (10,290 RSUs) and February 8, 2015 (17,866 RSUs). The vesting dates of the performance-based RSU awards are February 10, 2013 (18,810 RSUs), February 9, 2014 (13,720 RSUs) and February 8, 2015 (26,799 RSUs). Pursuant to his Retention Agreement, if Mr. Sweet remains employed through June 1, 2014, his awards vesting in 2015 will vest upon his retirement, subject to the attainment of any performance criteria.

 

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(10) Vesting DatesBoitmann.    The vesting dates of the time-based RSU awards are February 10, 2013 (9,460 RSUs), February 9, 2014 (6,860 RSUs) and February 8, 2015 (9,984 RSUs). The vesting dates of the performance-based RSU awards are February 10, 2013 (12,540 RSUs), February 9, 2014 (9,146 RSUs) and February 8, 2015 (14,976 RSUs). In connection with his separation from the Company, the RSU awards vesting in 2015 will be forfeited. For additional information on these awards, see “Compensation Discussion and Analysis—Boitmann Separation Agreement.”

 

(11) Vesting Dates—McIntyre.    The vesting dates of the time-based RSU awards are February 9, 2013 (10,000 RSUs), February 10, 2013 (18,920 RSUs) and February 9, 2014 (15,091 RSUs). The vesting dates of the performance-based RSU awards are February 10, 2013 (25,080 RSUs) and February 9, 2014 (20,122 RSUs). In connection with her separation from the Company, the RSU awards vesting in 2015 have been forfeited. For additional information on these awards, see “Compensation Discussion and Analysis—McIntyre Separation Agreement.”

2012 Option Exercises and Stock Vested

 

     Option Awards     Stock Awards  

Name

   Number of
Shares
Acquired  on
Exercise

(#)
     Value
Realized on

Exercise
($)
    Number of
Shares
Acquired
on Vesting
(#)
     Value
Realized On
Vesting
($)
 

Michael B. Polk

                    89,995         1,620,780 (8)

Douglas L. Martin

     15,634         171,192 (1)      13,993         265,447 (9)

Juan R. Figuereo

     50,000         342,000 (2)      15,000         328,650 (10) 

William A. Burke

     76,500         808,605 (3)      66,700         1,265,299 (9)

James M. Sweet

     59,000         624,810 (4)      50,600         959,882 (9) 

Paul G. Boitmann

     41,500         472,685 (5)      35,075         665,373 (9) 

G. Penny McIntyre

     71,720         746,605 (6)                
     28,280         294,678 (7)                

 

(1) Value Realized on Exercise—Martin.    Represents the difference between $18.66 (the market price of the common stock upon the exercise of the option) and the option exercise price multiplied by the number of shares of common stock covered by the options exercised.

 

(2) Value Realized on Exercise—Figuereo.    Represents the difference between $21.78 (the market price of the common stock upon the exercise of the option) and the option exercise price multiplied by the number of shares of common stock covered by the options exercised.

 

(3) Value Realized on Exercise—Burke.    Represents the difference between $18.28 (the market price of the common stock upon the exercise of the option) and the option exercise price multiplied by the number of shares of common stock covered by the options exercised.

 

(4) Value Realized on Exercise—Sweet.    Represents the difference between $18.30 (the market price of the common stock upon the exercise of the option) and the option exercise price multiplied by the number of shares of common stock covered by the options exercised.

 

(5) Value Realized on Exercise—Boitmann.    Represents the difference between $19.10 (the market price of the common stock upon the exercise of the option) and the option exercise price multiplied by the number of shares of common stock covered by the options exercised.

 

(6) Value Realized on Exercise—McIntyre.    Represents the difference between $21.03 (the market price of the common stock upon the exercise of the option) and the option exercise price multiplied by the number of shares of common stock covered by the options exercised.

 

(7) Value Realized on Exercise—McIntyre.    Represents the difference between $21.04 (the market price of the common stock upon the exercise of the option) and the option exercise price multiplied by the number of shares of common stock covered by the options exercised.

 

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(8) Value Realized on Vesting—Polk.    Represents 5,364 RSUs which vested on May 11, 2012, valued using the closing market price of the Company’s common stock as reported in The Wall Street Journal on May 11, 2012 ($18.32) and 84,631 RSUs which vested on July 18, 2012, valued using the closing market price of the Company’s common stock as reported in The Wall Street Journal on July 18, 2012 ($17.99).

 

(9) Value Realized on Vesting—Martin.    Represents the number of shares of RSUs which vested on February 13, 2012, valued using the closing market price of the Company’s common stock as reported in The Wall Street Journal for February 13, 2012 ($18.97).

 

(10) Value Realized on Vesting—Figuereo.    Represents the number of shares of RSUs which vested on December 7, 2012, valued using the closing market price of the Company’s common stock as reported in The Wall Street Journal on December 7, 2012 ($21.91).

Retirement Plans

The Company provides its eligible executives in the U.S. with retirement benefits using a combination of the Newell Rubbermaid Inc. Pension Plan (“Pension Plan”), the Newell Rubbermaid 401(k) Savings and Retirement Plan, the Newell Rubbermaid Inc. Supplemental Executive Retirement Plan (“SERP”) and 2008 Deferred Compensation Plan (the “2008 Plan”).

2012 Pension Benefits

The Company provides defined benefit compensation under the SERP and Pension Plan for those named executive officers who participate in one or both of such plans (namely, Messrs. Martin, Burke, Sweet and Boitmann). This table shows (1) the years of credited service for benefit purposes currently credited to each named executive officer under the SERP and Pension Plan as of December 31, 2012 and (2) the current present value of the accumulated benefits payable under the SERP and Pension Plan to each named executive officer as of December 31, 2012 (if commencing at age 65).

 

Name

   Plan Name    Number of Years
Credited Service(1)
   Present
Value of
Accumulated
Benefit
($)(2)
     Payments
During
Last Fiscal Year
($)(3)
 

Douglas L. Martin

   SERP    25 years, 4 months      2,779,280          
   Pension Plan    17 years, 4 months      223,545          

William A. Burke

   SERP    10 years, 1 month      1,361,378          
   Pension Plan    2 years, 1 month      65,508          

James M. Sweet

   SERP    8 years, 11 months      740,905          

Paul G. Boitmann

   SERP    11 years, 9 months      1,306,312          
   Pension Plan    3 years, 9 months      110,041          

 

(1) Years of Credited Service.    The years of credited service for benefit purposes shown in this column for the SERP are calculated as of December 31, 2012, the measurement date used for reporting purposes in the Company’s 2012 Form 10-K. The years of credited service for benefit purposes for the Pension Plan are through December 31, 2004, the effective date for which the Pension Plan discontinued future benefit accruals.

 

(2)

Present Value of Accumulated Benefit.    The present value of accumulated benefits shown in this column are calculated as of December 31, 2012, the measurement date used for reporting purposes in the Company’s 2012 Form 10-K. Assumptions used in determining these amounts include a 3.50% discount rate and the RP-2000 projected to 2017 Combined Healthy Mortality Table, consistent with assumptions used for reporting purposes in the Company’s 2012 Form 10-K of the present value of accumulated benefits under the SERP and Pension Plan, except without reduction for mortality risk before age 65. See Footnote 13 to the Consolidated Financial Statements contained in the Company’s

 

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  2012 Annual Report on Form 10-K for information regarding the assumptions used by the Company for reporting purposes. The present values for the SERP reflect an offset for the executive’s Social Security benefit, a Pension Plan benefit amount and the executive’s SERP Cash Account under the 2008 Deferred Compensation Plan. A discussion of the SERP appears below.

 

(3) Payments During Last Fiscal Year.    No named executive officer received payments from the SERP or Pension Plan during 2012.

SERP

The SERP is intended to offer competitive benefits to attract and retain executive talent and covers executives who were participants prior to January 1, 2007 (namely, Messrs. Martin, Burke, Sweet and Boitmann). Messrs. Polk and Figuereo and Ms. McIntyre do not participate in the SERP. An executive generally is eligible to participate in the SERP if he or she is an officer of the Company or a participating affiliate with a title of President or above and became a participant before January 1, 2007.

Gross Benefit Formula.    The SERP calculates a gross pension benefit payable at Normal Retirement Date (age 65) prior to applying certain benefit offsets. The gross SERP benefit formula is as follows:

 

  ·   

For participants with a title of President or above on December 31, 2003 (which includes Messrs. Martin, Burke and Boitmann): a monthly benefit equal to 1/12 of 67% of average compensation for the five consecutive years in which it was highest, reduced proportionately if years of credited service are less than 25.

 

  ·   

For participants who are hired with or promoted to a title of President or above after December 31, 2003 (which includes Mr. Sweet): a monthly benefit equal to 1/12 of 50% of average compensation for the five consecutive years in which it was highest, reduced proportionately if years of credited service are less than 25.

Compensation.    Compensation for purposes of the gross SERP benefit formula generally includes base salary and management cash bonus amounts. However, for an executive employed before January 1, 2006 (namely, Messrs. Martin, Burke, Sweet and Boitmann), the amount of bonus compensation for 2006 and subsequent years generally is adjusted to equal the amount that would have been received by him under the bonus plan in effect for 2005.

Social Security and Pension Benefit Offsets.    The gross SERP benefit of each executive is reduced by his monthly primary Social Security benefit and Pension Plan benefit at age 65. The offset for the Pension Plan benefit is based on his marital status (i.e., a joint and 50% survivor annuity if married and a single life annuity if not married), includes the benefit the executive would receive if the Company had not frozen new enrollment and benefit accruals under the Pension Plan effective December 31, 2004 and is applied without regard to his vested status in any actual Pension Plan benefit.

SERP Present Value, Cash Account Offset.    The executive’s gross SERP benefit, as reduced by his foregoing Social Security and Pension Plan benefit amounts, is converted to a lump sum present value amount as of the January 1st after the year of the executive’s termination of employment. The actuarial assumptions for this purpose are based on the discount rate and mortality assumptions used by the Company in its Form 10-K for pension expense reporting purposes for the year of the executive’s termination of employment, except using a unisex mortality table and without reduction for mortality risk before age 65. The lump sum amount is then reduced (to not less than zero) by the full balance (both vested and unvested amounts) of the participant’s SERP Cash Account under the 2008 Plan as of the January 1st after the year of the executive’s termination of employment (including any contribution for the year of termination of employment). The remaining balance (if any) is transferred to the executive’s SERP Cash Account under the 2008 Plan, for the payout described below.

Benefit Entitlement.    An executive becomes vested in his SERP benefit as follows: (1) upon employment on or after age 60, (2) upon involuntary termination with 15 years of credited service, (3) upon death during employment, (4) upon 15 years of credited service, if employed on the date of any sale of his affiliate or division of the Company, (5) “Rule of 75 Vesting”: upon retirement under the Company’s retirement guidelines, if generally the sum of his age and service is 75 or more and he is at least 55 years old with five years of service, is not terminated for cause and enters into certain restrictive covenants with

 

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the Company or (6) upon a change in control of the Company, as defined in the 2003 Stock Plan. No named executive officer was vested under the SERP as of December 31, 2012, except Mr. Sweet who turned age 60 in 2012. In connection with Mr. Martin’s promotion, so long as he is employed with the Company through March 1, 2013, he will be treated as if he were 55 years old on his last day of employment with the Company for purposes of meeting the “Rule of 75 Vesting”, as described above, such that he will be vested per the terms of the SERP.

Time and Form of Benefit Payment.    An executive will receive his SERP benefit at the same time and in the same form as payment of his SERP Cash Account under the 2008 Plan (i.e., a lump sum or in annual installments not to exceed ten years). The payment or commencement of the SERP benefit will be in the year after the year of the executive’s termination of employment, but not sooner than six months after the date of such termination.

Forfeiture Events.    An executive will forfeit the SERP benefit if his employment is terminated due to fraud, misappropriation, theft, embezzlement or intentional breach of fiduciary duty, he competes with the Company in the areas that it serves, he makes an unauthorized disclosure of trade or business secrets or privileged information, he is convicted of a felony connected with his employment or he makes a material misrepresentation in any document he provides to or for the Company. Mr. Boitmann forfeited his SERP benefit as a result of his non-vested termination of employment on March 31, 2013.

Assumptions.    The assumptions used in calculating the present value of the accumulated benefit under the SERP are set forth in Footnote (2) to the 2012 Pension Benefits table above.

Pension Plan

The Pension Plan is a tax-qualified pension plan covering all eligible U.S. employees of the Company. The Pension Plan was amended to cease future benefit accruals and to suspend the addition of any future participants for non-union employees, including the named executive officers, beginning on January 1, 2005. As a result, among the named executive officers, only Messrs. Martin, Burke and Boitmann are participants in the Pension Plan.

Benefit Formula.    With respect to Messrs. Martin, Burke and Boitmann, benefits were accrued at the rate of 1.37% of compensation not in excess of $25,000 for each year of service plus 1.85% of compensation in excess of $25,000. For purposes of the Pension Plan, compensation generally includes regular or straight-time salary or wages, up to the applicable Internal Revenue Code limits. Messrs. Martin, Burke and Boitmann do not earn any additional pension benefits after December 31, 2004. However, they continue to earn years of service for vesting and early retirement eligibility purposes.

Retirement Benefit.    Messrs. Martin, Burke and Boitmann are not yet eligible for a normal or early retirement benefit under the Pension Plan. However, since they have completed five years of service, they are eligible for a deferred retirement benefit following termination of employment, beginning at age 65. They will become eligible for a reduced early retirement benefit at age 60 if they terminate employment with at least 15 years of vesting service. No named executive officer with a Pension Plan benefit has 15 years of service, except Mr. Martin who has 17.33 years of service on December 31, 2012.

Form of Benefit Payment.    The benefit formula calculates the amount of benefit payable in the form of a monthly life annuity, which is the normal form of benefit for an unmarried participant. The normal form of benefit for a married participant is a joint and 50% survivor annuity, which provides a reduced monthly amount for the participant’s life with the surviving spouse receiving 50% of the reduced monthly amount for life.

Assumptions.    The assumptions used in calculating the present value of accumulated benefits under the Pension Plan are set forth in Footnote (2) to the 2012 Pension Benefits table above.

401(k) Savings and Retirement Plan

In order to make up in part the Pension Plan benefits that stopped accruing as of December 31, 2004, the Company amended its 401(k) Plan to provide retirement contributions for eligible non-union participants beginning in 2005.

 

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The Company makes retirement contributions to a participant’s account each year under the 401(k) Plan in accordance with the following schedule:

 

Age + Completed

Years of Service

   % of
Covered Pay
 

Less than 40

     2   

40-49

     3   

50-59

     4   

60 or more

     5   

The retirement contributions are subject to a three-year cliff vesting schedule, which includes credit for years of service earned prior to 2005 and begins on the participant’s date of hire. The retirement contributions made for each named executive officer are reflected in the “All Other Compensation” column of the Summary Compensation Table. All named executive officers, except Mr. Polk, are fully vested in the retirement contributions as of December 31, 2012.

2012 Nonqualified Deferred Compensation

This table shows the contributions made by each named executive officer and the Company in 2012, the earnings accrued on the named executive officer’s account balances in 2012 and the account balances at December 31, 2012 under each of the Newell Co. Deferred Compensation Plan (the “Newell Co. Plan”), the Newell Rubbermaid 2002 Deferred Compensation Plan (the “2002 Plan”), and the 2008 Plan.

 

Name

   Name of Plan    Executive
Contributions
in Last FY
($)(1)
     Company
Contributions
in Last FY
($)(2)
     Aggregate
Earnings
(Loss) in
Last FY
($)(3)
    

Aggregate

Withdrawals/

Distributions

($)(4)

   Aggregate
Balance at
Last FYE
($)(5)
 

Michael B. Polk

   2008 Plan              386,200         2,790            459,240   

Douglas L. Martin

   Newell Co. Plan                      7,022            113,057   
   2002 Plan                      10,436            77,944   
   2008 Plan              10,388                    10,388   

Juan R. Figuereo

   2008 Plan              106,460         14,948            338,743   

William A. Burke

   2008 Plan              50,200         45,938            444,207   

James M. Sweet

   2008 Plan              43,526         9,045            408,458   

Paul G. Boitmann

   2002 Plan                      20,577            405,162   
   2008 Plan              37,708         26,058            598,108   

G. Penny McIntyre

   2008 Plan      142,178                 85,549            975,485   

 

(1) Executive Contributions in Last FY.    In 2012, Ms. McIntyre deferred $142,178 of her 2011 bonus payable in 2012, as reported in the Non-Equity Incentive Plan Compensation column (herein, “NEIPC column”) of the Summary Compensation Table (herein, “SCT”) for fiscal year 2011.

 

(2) Company Contributions in Last FY.    For 2012, the Company credited each named executive officer’s SERP Cash Account with these amounts under the 2008 Plan (except Ms. McIntyre who separated from the Company prior to December 31, 2012), as reported in the All Other Compensation column (herein, the “AOC” column) of the 2012 SCT.

 

(3) Aggregate Earnings (Loss) in Last FY.    The investment earnings/loss for 2012 reported in this column for each named executive officer is not included in the 2012 SCT, except that above market earnings of $1,905 earned by Mr. Martin under the Newell Co. Plan, and $8,231 and $10,255 earned by Mr. Boitmann under the 2002 Plan and 2008 Plan, respectively, are reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table.

 

(4) Aggregate Withdrawals/Distributions.    No named executive officers received withdrawals during 2012.

 

(5)

Aggregate Balance at Last FYE.    The aggregate balance as of December 31, 2012 reported in this column for each named executive officer reflects amounts previously reported as compensation in the SCTs for the 2008 through 2012 fiscal years (except as noted below). The foregoing aggregate balances, therefore, include: (a) for Mr. Polk, total SERP Cash Account credits of $456,450 (as reported in the 2011 and 2012 SCTs); (b) for Mr. Martin, a SERP Cash Account credit of $10,388 (as

 

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  reported in the 2012 SCT); (c) for Mr. Figuereo, total SERP Cash Account credits of $325,344 (as reported in the 2009 through 2012 SCTs); (d) for Mr. Burke, total SERP Cash Account credits of $254,307 (as reported in the 2008, 2010, 2011 and 2012 SCTs; note that Mr. Burke was not a named executive officer for 2009); (e) for Mr. Sweet, a SERP Cash Account credit of $43,526 (as reported in the 2012 SCT); (f) for Mr. Boitmann, a SERP Cash Account credit of $37,708 (as reported in the 2012 SCT); and (g) for Ms. McIntyre, an employee contribution of $440,774 from her 2010 bonus (as reported in the NEIPC column of the 2010 SCT), an employee contribution of $142,178 from her 2011 bonus (as reported in the NEIPC column of the 2011 SCT) and total SERP Cash Account credits of $330,722 (as reported in the 2009 through 2011 SCTs). All SERP Cash Account credits are reported in the AOC column of the SCT.

Deferred Compensation Plans

The Company maintains the Newell Co. Deferred Compensation Plan (the “Newell Co. Plan”), the 2002 Plan, and the 2008 Plan. The 2008 Plan, which was adopted effective as of January 1, 2008, succeeded the 2002 Plan with respect to all SERP Cash Accounts held under the 2002 Plan and executive deferrals (and earnings thereon) made under the 2002 Plan on and after January 1, 2005. The 2002 Plan continues to govern the distribution of deferrals that were made prior to January 1, 2005, but no additional amounts (other than earnings on prior deferrals) are credited under the 2002 Plan.

2008 Plan

Eligibility.    All of the named executive officers are eligible to participate in the 2008 Plan.

Participant Contributions.    For each calendar year, a participant can elect to defer up to 50% of his or her base salary and up to 100% of any cash bonus paid for the calendar year to the 2008 Plan. The deferred amounts are credited to an account established for the participant.

SERP Cash Account Feature.    Each executive hired with or promoted to a title of President or above after December 31, 2003 has a SERP Cash Account under the 2008 Plan. All named executive officers participate in the SERP Cash Account feature. Mr. Martin did not participate in the SERP Cash Account feature until his appointment to Chief Financial Officer in September 2012.

SERP Cash Account—Basic Contribution.    The Board has approved annual basic contribution credits to the SERP Cash Accounts, as provided under the table below. All named executive officers receive this basic contribution credit.

 

Age + Completed

Years of Service

   % of
Compensation
 

Less than 40

     3   

40-49

     4   

50-59

     5   

60 or more

     6   

SERP Cash Account—Supplemental Contribution.    If the executive was not a participant in the SERP before January 1, 2007 (namely, Messrs. Polk and Figuereo and Ms. McIntyre), the executive also is credited with a supplemental contribution amount under his or her SERP Cash Account equal to 10% of salary and bonus. The supplemental 10% contribution is provided in consideration for the executive not participating in the SERP.

Additional Contributions.    The Company may make additional discretionary matching and retirement savings contributions for participants whose Company matching and retirement savings contributions to the Company’s 401(k) Savings and Retirement Plan are reduced due to their compensation deferrals under the 2008 Plan. Historically, the Company has made additional retirement savings contributions but not additional Company matching contributions. None of the named executive officers received such additional retirement savings contributions in 2012.

Compensation.    Compensation for purposes of the SERP Cash Account will depend mainly on the executive’s employment date and participation date in the SERP Cash Account under the 2008 Plan and its predecessor, the 2002 Plan.

 

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For an executive who first participated in the SERP Cash Account on or after January 1, 2007 (namely, Messrs. Polk and Figuereo and Ms. McIntyre), as applicable for the basic contribution, compensation generally is the sum of his or her (1) base salary paid during the calendar year over the IRS maximum compensation limit for qualified retirement plans (i.e., $250,000 for 2012) and (2) management cash bonus (if any) paid in the same calendar year. However, for the supplemental 10% contribution, compensation generally is the sum of his or her (1) base salary paid during the calendar year and (2) management cash bonus (if any) paid in the same calendar year.

For an executive who first participated in the SERP Cash Account before January 1, 2007 (namely, Messrs. Martin, Burke, Sweet and Boitmann), as applicable for the basic contribution, compensation generally is the sum of his (1) base salary paid during the calendar year and (2) management cash bonus (if any), as adjusted to equal the amount that would have been received by him under the Bonus Plan in effect for 2005. Because Mr. Martin did not participate in the SERP Cash Account feature until his appointment to Chief Financial Officer in September 2012, compensation, as applicable for the basic contribution, earned prior to his promotion date is not considered.

Vesting.    A participant is fully vested in the portion of his or her account attributable to deferrals of salary and bonus. The SERP Cash Account portion vests over a 10-year period beginning at six years of credited service, at a rate equal to 10% per year with the participant becoming 100% vested after 15 years of credited service. In addition, a participant will become fully vested in the SERP Cash Account (1) upon employment on or after age 60, (2) upon death or disability during employment, (3) upon retirement under the Company’s retirement guidelines, if generally the sum of his or her age and years of service is 75 or more and he or she is at least 55 years old with five years of service, is not terminated for cause and enters into certain restrictive covenants with the Company or (4) upon a change in control of the Company, as defined in the 2003 Stock Plan. As of December 31, 2012, Messrs. Martin and Sweet are 100% vested in their SERP Cash Account balances, while Mr. Boitmann is 60% vested, Mr. Burke is 50% vested and Mr. Polk is 0% vested in his SERP Cash Account balance. Mr. Figuereo forfeited his SERP Cash Account benefit as a result of his non-vested termination of employment. Pursuant to his Separation Agreement with the Company, Mr. Boitmann will become fully vested in any non-vested portion of his SERP Cash Account under the 2008 Plan upon his Separation date of March 31, 2013. Pursuant to her Separation Agreement with the Company, Ms. McIntyre became 20% vested in the non-vested portion of her SERP Cash Account upon her separation date of November 1, 2012. Ms. McIntyre forfeited the remaining 80% of her SERP Cash Account benefit that was considered non-vested.

Investments.    Each participant’s account is credited with earnings and losses based on investment alternatives made available in the 2008 Plan and selected by the participant from time to time.

Distributions.    At the time a participant makes a deferral election, he or she must elect whether such amount is to be paid in a lump sum or in annual installments of not more than 10 years (five years in the case of in-service distributions). However, his or her account will be paid out in a lump sum upon termination of employment prior to attaining age 55. The SERP Cash Account will be paid out in a lump sum upon termination of employment for each named executive officer. The payment or commencement of the benefits will be made in the year after the year of the participant’s termination of employment, but not sooner than six months after the date of such termination. A participant also may elect, at the time of his or her initial deferral election, to have deferrals paid in January of any year during his or her employment, provided that the payment date is at least two years after the year for which the election is effective and amounts subject to such payment election will become payable upon his or her termination of employment.

In addition, upon a participant’s death, his or her deferrals and Company contributions will be paid to his or her beneficiaries in accordance with the participant’s payment election for amounts payable on a termination of employment. Upon a participant’s termination of employment within two years following a change in control of the Company (for Internal Revenue Code Section 409A purposes), his or her entire undistributed account under the 2008 Plan will be paid in a lump sum on the first business day of the seventh month following the participant’s termination of employment. A participant may also request a distribution as necessary to satisfy an unforeseeable emergency.

 

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2002 Plan

Effective January 1, 2008, the 2002 Plan was frozen with respect to future contributions. All amounts that were earned and vested under the 2002 Plan as of December 31, 2004 (other than amounts credited to the SERP Cash Account) continue to be governed by the terms of the 2002 Plan. Messrs. Martin and Boitmann are the only named executive officers who participate in the 2002 Plan and are fully vested under the 2002 Plan. In general, the terms of the 2002 Plan with respect to investments and plan funding are the same as the 2008 Plan (described above).

Amounts deferred under the 2002 Plan may be paid:

 

  ·   

in a lump sum or in annual installments (not to exceed 10 years) commencing in January of any year that follows the participant’s termination of employment, but not later than the January following the year the participant attains age 65; provided that if a participant’s employment terminates prior to age 60 and such termination is voluntary, or involuntary due to cause, the participant’s account will be distributed as soon as practicable;

 

  ·   

in a lump sum or in annual installments (not to exceed 5 years) commencing in January of any year during the participant’s employment; provided that if the participant’s employment terminates voluntarily, or involuntarily due to cause, all scheduled in-service payments will be made as soon as practicable after such termination;

 

  ·   

in an immediate lump sum at the election of the participant, subject to the requirement that the participant forfeit 10% of his or her account;

 

  ·   

upon the participant’s death or disability, in accordance with the payment schedule that has already commenced, or if payment of the participant’s account has not commenced, at the time of such death or disability, in accordance with the payment schedule elected by the participant;

 

  ·   

in a lump sum upon a change in control of the Company, provided that if the election to receive any portion of the account on a change in control is made within one year of the change in control, the amount distributed to the participant will be reduced by 5%; and

 

  ·   

in the discretion of the Committee, upon a Participant’s unforeseeable emergency, an amount necessary to meet the need.

Newell Co. Deferred Compensation Plan

The Newell Co. Plan is a non-qualified deferred compensation plan pursuant to which eligible employees could defer a portion of their cash bonus compensation. Deferrals ceased when the 2002 Plan was adopted, although the participants continue to maintain account balances under the Newell Co. Plan which are credited with earnings as described below. Mr. Martin is the only named executive officer who has an account balance under the Newell Co. Plan. The material terms and conditions of the Newell Co. Plan as they pertain to Mr. Martin are as follows:

Interest.    Prior to April 1, 2012, amounts credited to a plan account before January 1, 1997 were credited interest at the rate published in the Midwest Edition of The Wall Street Journal for United States Treasury Bills. Prior to April 1, 2012, amounts credited to a plan account on or after January 1, 1997 were credited interest at a fixed rate of 10% compounded quarterly. Beginning April 1, 2012, a participant’s entire Plan account is being credited with earnings and losses based on investment alternatives made available in the 2008 Plan and selected by the participant from time to time.

Distributions and Withdrawals.    A participant or his beneficiary is entitled to receive a distribution of his plan account following termination of employment or death. In each of these cases, the Company will choose the form of payment, which may be either a lump sum distribution or annual, quarterly or monthly installments over a period of up to 10 years. The Company will also choose the payment date or payment commencement date, which may not be more than 10 years after the date of termination or death. However, if the participant becomes employed by or otherwise provides services to a competitor of the Company following his termination, the Company will distribute the participant’s account to him in a lump

 

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sum as soon as practicable following the employment or provision of services. In 2005, the Company permitted all participants in the Newell Co. Plan to elect (1) the form of payment, which may be either a lump sum distribution or annual, quarterly or monthly installments over a period of up to 10 years, and (2) the payment date or payment commencement date, which may not be more than 10 years after the date of termination or death. Mr. Martin elected to receive quarterly payments over 10 years upon retirement at this time.

A participant may take an in-service withdrawal of any amounts that have been credited to his account for at least 36 months. Payment of this withdrawal will be made in a lump sum 12 months following the date of the request unless the participant terminates employment or dies before the payment is made. A participant may also make an in-service lump sum withdrawal if he has an unforeseeable emergency or if the Company undergoes a “change in control” as defined in the Newell Co. Plan.

Potential Payments Upon Termination or Change in Control of the Company

The Company provides certain additional benefits to eligible employees upon certain types of termination of employment, including termination of employment following a change in control of the Company or only upon a change in control of the Company. All named executive officers are eligible for benefits under these circumstances as of December 31, 2012, except Mr. Figuereo and Ms. McIntyre, each of whom were not executive officers of the Company as of December 31, 2012.

Termination of Employment Following a Change in Control

Employment Security Agreements

The Company has entered into Employment Security Agreements (“ESAs”) with each current named executive officer, as well as with certain other key employees, to provide benefits upon certain terminations of employment following a change in control of the Company. The ESAs of Messrs. Boitmann and Figuereo and Ms. McIntyre were terminated prior to December 31, 2012 in connection with their separation from the Company.

In General:    The ESAs provide for benefits upon either of two types of employment termination that occur within 24 months after a change in control of the Company: (i) an involuntary termination of the executive’s employment by the Company without “good cause”; or (ii) a voluntary termination of employment for “good reason”.

For purposes of the ESAs, a “change in control” generally means: (a) a person acquires 25% or more of the voting power of the Company’s outstanding securities; (b) a merger, consolidation or similar transaction that generally involves a change in ownership of at least 50% of the Company’s outstanding voting securities; (c) a sale of all or substantially all of the Company’s assets that generally involves a change in ownership of at least 50% of the Company’s outstanding voting securities; or (d) during any period of two consecutive years or less, the incumbent directors cease to constitute a majority of the Board.

Further, “good cause” exists under the ESAs if the executive in the performance of his or her duties engages in misconduct that causes material harm to the Company or the executive is convicted of a criminal violation involving fraud or dishonesty. Finally, “good reason” exists under the ESAs if there is a material diminution in the nature or the scope of the executive’s authority, duties, rate of pay or incentive or retirement benefits; the executive is required to report to an officer with a materially lesser position or title; the Company relocates the executive by 50 miles or more; or the Company materially breaches the provisions of the ESA. However, “good reason” will not exist if the Company’s reduction in benefits under an incentive or retirement plan is applicable to all other plan participants who are senior executives and either (1) the reduction is a result of an extraordinary decline in the Company’s earnings, share price or public image or (2) the reduction is done to bring the plan(s) in line with the compensation programs of comparable companies.

 

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The benefits provided upon such a termination of employment include the following (which are quantified in the table that follows this discussion):

 

  ·   

A lump sum severance payment equal to the sum of: (1) two times (three times in the case of Mr. Polk) the executive’s annual base salary, (2) two times (three times in the case of Mr. Polk) the executive’s bonus and (3) a pro-rata portion of the executive’s bonus for the year of the executive’s termination of employment.

 

  ·   

All benefits under the SERP and the 2008 Plan (to the extent applicable to the named executive officer) become fully vested and the equivalent of the unvested portion of the executive’s benefits under the 401(k) Plan shall be paid in a lump sum.

 

  ·   

All Company stock options held by the executive will become immediately exercisable and remain exercisable until the earlier of three years thereafter or the remaining term of the options; all restrictions on any Company restricted securities and RSUs held by the executive will lapse; and all performance goals on Company performance-based awards will be deemed satisfied at the target level.

 

  ·   

Continued medical coverage provided in the form of subsidized COBRA coverage that extends generally for 24 months, coverage under all other welfare plans generally for 24 months, outplacement services for six months and the payment of certain out of pocket expenses of the executive.

 

  ·   

No gross-up payment will be made to cover any excise and related income tax liability arising under Sections 4999 and 280G of the Internal Revenue Code as a result of any payment or benefit arising under the ESA. Instead, the ESAs provide for a reduction in amounts payable so that no excise tax would be imposed. However, a reduction in payments will not occur if the payment of the excise tax would produce a greater overall net after-tax benefit.

The ESAs contain restrictive covenants that prohibit the executive from (1) associating with a business that is competitive with any line of business of the Company for which the executive provided services, without the Company’s consent and (2) soliciting the Company’s agents and employees. These restrictive covenants remain in effect during the 24-month severance period.

2010 Stock Plan

If any awards under the 2010 Stock Plan are replaced with equivalent equity awards upon a change in control, then upon a termination of employment without good cause or for good reason within two years following the change in control, all such awards become fully exercisable and all restrictions applicable to such awards will terminate or lapse.

For purposes of the 2010 Stock Plan, a “change in control” generally has the same meaning as applicable for the ESAs. Further, “good cause” exists if a participant willfully engages in misconduct that causes material harm to the Company or the participant is convicted of a criminal violation involving fraud or dishonesty. Finally, “good reason” exists if there is a material diminution in the nature or the scope of the executive’s authority, duties, rate of pay or incentive or retirement benefits; the Company relocates the executive by 50 miles or more; or the Company materially breaches the provisions of an award agreement.

SERP/2008 Plan

See the discussion under “2012 Pension Benefits—SERP” and “2012 Nonqualified Deferred Compensation—2008 Plan” for an explanation of the benefits payable to a named executive officer upon the executive’s termination of employment in connection with a change in control. For purposes of the SERP and 2008 Plan, a “change in control” is determined under the 2003 Stock Plan. See 2003 and 2010 Stock Plans, below.

Mr. Polk’s Compensation Arrangement

Under Mr. Polk’s Compensation Arrangement and ESA, the benefits payable to him upon his termination of employment following a change in control (or generally upon a change in control) are governed exclusively by the ESA, 2010 Stock Plan and 2008 Plan. Mr. Polk’s general severance benefits

 

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under his Compensation Arrangement apply only upon his qualifying termination of employment prior to a change in control, and, therefore, would not apply to his termination of employment after a change in control. For additional information see “Compensation Discussion and Analysis—Michael Polk’s Compensation Arrangement.

Termination of Employment—No Change in Control

Company Severance Plans

As described above under the caption “Compensation Discussion and Analysis—Severance Plans”, the Company has two severance plans that provide benefits to non-union employees, including the named executive officers (except for Mr. Polk), who are involuntarily terminated.

The Supplemental Unemployment Pay Plan (“Supplemental Plan”) provides benefits in the event the named executive officer is terminated involuntarily without cause due to a plant closing, layoff, reduction in force, reorganization or other similar event. The amount of the monetary benefit is equal to one week of pay for each year of service (up to a maximum of 25 weeks), less an estimate of the governmental unemployment benefits available to the named executive officer. An extension of benefits (up to a maximum of 4 weeks) may be provided, in the sole discretion of the Company.

The Excess Severance Pay Plan (“Excess Plan”) provides benefits in the sole discretion of the Company any time a named executive officer is involuntarily terminated. The amount and duration of the monetary benefit is determined by the Company in its sole discretion, but the Company considers the executive’s position in the Company in addition to length of service in determining the amount and duration of the severance benefit.

Benefits are generally not paid under the Supplemental Plan if the named executive officer fails to qualify for state unemployment benefits or declines a reasonable offer of continued employment. Severance benefits are not paid under either plan if the named executive officer receives severance pursuant to a separate agreement that does not specifically provide for continued eligibility under the severance plans. Benefits under both plans are contingent upon the named executive officer’s execution of a release of claims against the Company. In addition, both plans provide continued health coverage pursuant to COBRA, with the named executive officer paying active employee premium rates for the duration of the severance period.

Monetary benefits under both plans are paid in installments on a periodic pay cycle. Under the Supplemental Plan, benefit payments and COBRA subsidy payments will stop if the named executive officer ceases to be eligible for state unemployment benefits or obtains other employment. Benefit payments and COBRA subsidy payments also stop under the Excess Plan if the named executive officer obtains other employment, but the Excess Plan provides for a discretionary benefit of up to 50% of the severance benefits that would have been paid for the remainder of the severance period.

2003 and 2010 Stock Plans

The following applies to stock options and RSUs issued under the 2003 Stock Plan and 2010 Stock Plan upon termination of employment, retirement generally and under the Company’s retirement guidelines, death or disability.

Stock Options:    In general, if an individual’s employment terminates for any reason other than death, disability or retirement, then all of his or her options expire on, and cannot be exercised after, the date of his or her termination. However, if the individual’s employment terminates due to death or disability, then all outstanding options fully vest and continue to be exercisable for one year following his or her termination (or the expiration of the term of the option, if earlier).

With respect to stock options awarded to Mr. Polk in 2011 pursuant to his Compensation Arrangement, in addition to the above, if he is involuntarily terminated (except for good cause or violation of the Company’s Code of Business Conduct and Ethics) or voluntarily terminates his employment for good reason, then all such outstanding options fully vest and continue to be exercisable for one year following his termination (or the expiration of the term of the option, if earlier).

 

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If the individual’s employment terminates due to retirement at age 65 or later, then all outstanding options granted before 2008 fully vest and continue to be exercisable until the earlier of one year following termination or the expiration of the term of the option. However, under the Company’s retirement guidelines, outstanding options granted in 2008 or later will vest and remain exercisable, if the individual is at least age 55 with five years of service, is not terminated for cause, enters into certain restrictive agreements with the Company, and meets certain age and service requirements in accordance with the following table:

 

Qualification

  

Options Granted in 2008 and Later

Age 65, or sum of age and years of service is at least 70

   Unvested options immediately vest. Options remain exercisable until the earlier of ten years following termination or the expiration of the option term.

Sum of age and years of service is at least 65 but less than 70

   Unvested options immediately vest. Options remain exercisable until the earlier of five years following termination or the expiration of the option term.

Sum of age and years of service is at least 60 but less than 65

   Unvested options are cancelled. Vested options remain exercisable until the earlier of one year following termination or the expiration of the option term.

Restricted Stock Units (RSUs):    In general, if a named executive officer’s employment terminates for any reason other than death, disability or retirement, then his or her RSUs that have not yet vested are forfeited. However, if the named executive officer’s employment terminates due to death or disability, then all restrictions lapse, and all RSUs fully vest, on the date of his or her termination.

With respect to RSUs awarded to Mr. Polk in 2011 pursuant to his Compensation Arrangement, in addition to the above, if he is involuntarily terminated (except for good cause or violation of the Company’s Code of Business Conduct and Ethics) or voluntarily terminates his employment for good reason, then all his time-based RSUs shall vest and, with respect to his performance-based RSUs, (i) the two-year time vesting condition shall be deemed to be satisfied, and (ii) he shall retain any unvested performance-based RSUs until the applicable performance condition is met, if at all, prior to the expiration of the award on July 18, 2018.

 

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If the named executive officer’s employment terminates due to retirement, under the Company’s retirement guidelines, a portion of the unvested RSUs become vested if the individual is at least age 55 with five years of service, is not terminated for cause, enters into certain restrictive agreements with the Company, and meets certain age and service requirements, depending upon the date and nature of the grant, in accordance with the following table:

 

Qualification

  

Time-Based RSUs

  

Performance-Based RSUs

Age 65, or sum of age and years of service is at least 75    100% of any awards made at least 12 months from date of retirement, plus 100% of pro-rata value of any award made less than 12 months prior to retirement.    Awards continue to vest per the terms of the award agreement and are paid based on actual Company performance. At the end of the vesting period, (i) eligible for 100% vesting of awards that were awarded at least 12 months from date of retirement and (ii) eligible for 100% of pro-rata value of any awards that were awarded less than 12 months from date of retirement.
Sum of age and years of service is at least 70 but less than 75    75% of pro-rata value    Awards will continue to vest per the terms of the award agreement and are paid based on actual Company performance. At the end of the vesting period, eligible for 75% of pro-rata value of award that vested per the agreement.
Sum of age and years of service is at least 65 but less than 70    50% of pro-rata value    Awards will continue to vest per the terms of the award agreement and are paid based on actual Company performance. At the end of the vesting period, eligible for 50% of pro-rata value of award that vested per the agreement.
Sum of age and years of service is at least 60 but less than 65    25% of pro-rata value    Awards will continue to vest per the terms of the award agreement and are paid based on actual Company performance. At the end of the vesting period, eligible for 25% of pro-rata value of award that vested per the agreement.

The pro-rata award generally is determined by dividing the months of employment during the three-year vesting period by 36. The RSUs awarded to Mr. Polk in 2011 pursuant to his Compensation Arrangement are not subject to the above retirement guidelines.

Additional Provisions:    The Board of Directors may condition the grant of an equity award upon the executive entering into one or more agreements with the Company not to compete with, or solicit the customers or employees of, the Company. Further, in the event of the executive’s termination of

 

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employment with the Company generally without cause, the Board has the discretion to accelerate the date as of which any stock option may become exercisable or to accelerate the date as of which the restrictions will lapse with respect to RSUs or other awards. Further, additional provisions may apply under the terms of the executive’s individual award letter.

Management Cash Bonus Plan

Under the Company’s retirement guidelines, an executive will be eligible for a bonus payment based on his or her current year earnings and paid at the normal bonus timetable, subject to attainment of his or her annual performance goals, if the individual is at least age 55 with five years of service, is not terminated for cause, enters into certain restrictive agreements with the Company and the sum of his or her age and years of service is at least 60.

SERP/2008 Deferred Compensation Plan

The vesting provisions that apply to a named executive officer’s benefits under the SERP and 2008 Plan can depend on the circumstances under which his or her employment terminates. See the discussion under the caption “Retirement Plans.”

Under the SERP, assuming a termination of employment on December 31, 2012 for other than death, no current named executive officer who participates in the SERP would be entitled to a SERP benefit. However, upon a termination of employment on December 31, 2012 due to death, each named executive officer who participates in the SERP would be entitled to a special preretirement death benefit, in lieu of any retirement benefit under the SERP.

Under the 2008 Plan, assuming a termination of employment on December 31, 2012 due to death or disability, each current named executive officer would be entitled to the entire balance of his or her 2008 Plan accounts as reported in the “Aggregate Balance at Last FYE” column of the 2012 Nonqualified Deferred Compensation table. However, Mr. Martin is 100% vested, Mr. Burke is 50% vested, Mr. Sweet is 100% vested, and Mr. Boitmann is 60% vested in the SERP Cash Account balance as of December 31, 2012 under the SERP Cash Account vesting schedule.

Mr. Polk Compensation Arrangement

For additional information regarding Mr. Polk’s Compensation Arrangement and the benefits payable to him in the event he is involuntarily terminated except for good cause prior to a change in control or voluntarily terminates for good reason, see “Compensation Discussion and Analysis—Michael Polk’s Compensation Arrangement”.

Change in Control Only—No Termination of Employment

2003 and 2010 Stock Plans

Under the 2003 Stock Plan, upon a change in control of the Company, (1) all options become fully vested and continue to be exercisable by their terms, (2) all restrictions on restricted securities lapse and such securities are fully vested and (3) all performance goals applicable to any award are deemed met at the highest level. These benefits do not require any termination of employment.

Under the 2010 Stock Plan, upon a change in control of the Company, (1) all awards that are subject to performance goals become fully exercisable, without restriction, as though the performance goals were met at the level that provides for a target payout and (2) all other awards that are not replaced with equivalent equity awards become fully exercisable without restriction. Awards that are earned but not paid become immediately payable in cash. These benefits do not require any termination of employment.

For purposes of the 2003 Stock Plan and 2010 Stock Plan, a “change in control” generally has the same meaning as applicable for the ESAs. See Employment Security Agreements, above.

 

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SERP/2008 Deferred Compensation Plan

See the discussion under “2012 Pension Benefits—SERP” and “2012 Nonqualified Deferred Compensation—2008 Plan” for the vesting of a named executive officer’s benefits under the SERP and 2008 Plan upon a change in control of the Company. For purposes of the SERP and 2008 Plan, a “change in control” has the same meaning as applicable under the 2003 Stock Plan. For purposes of the 2003 Stock Plan, a “change in control” generally has the same meaning as applicable for the ESAs.

Departing Executives

Mr. Figuereo Separation

Mr. Figuereo ceased serving as Executive Vice President and Chief Financial Officer effective September 4, 2012. His Separation Agreement supersedes his ESA and exclusively governs his remaining benefits from the Company. See “Compensation Discussion and Analysis—Figuereo Separation Agreement” for an explanation of the benefits payable to Mr. Figuereo on account of his separation and the section entitled “2012 Nonqualified Deferred Compensation” for the forfeiture of his nonqualified deferred compensation benefits. Under his Separation Agreement, Mr. Figuereo is not entitled to any benefits upon a change in control, nor any additional benefits upon his termination of employment other than as provided in the Separation Agreement. Under his Separation Agreement, after December 31, 2012, Mr. Figuereo can receive up to $227,083 in salary continuation, $7,768 in car allowance and $1,020 in allowance for tax services.

Ms. McIntyre Separation

Effective November 1, 2012, Ms. McIntyre terminated employment from the Company. Her Separation Agreement supersedes her ESA and exclusively governs her remaining benefits from the Company. See “Compensation Discussion and Analysis—McIntyre Separation Agreement” for an explanation of the benefits payable to Ms. McIntyre on account of her separation and the section entitled “2012 Nonqualified Deferred Compensation” for the forfeiture of her nonqualified deferred compensation benefits. Under her Separation Agreement, Ms. McIntyre is not entitled to any benefits upon a change in control, nor any additional benefits upon her termination of employment other than as provided in the Separation Agreement. Under her Separation Agreement, after December 31, 2012, Ms. McIntyre can receive up to $725,000 in salary continuation, $9,591 in COBRA continuation coverage, $23,987 in car allowance and $3,060 in allowance for tax services.

Mr. Boitmann Separation

Effective January 1, 2013, Mr. Boitmann ceased serving as an executive officer of the Company, and his employment will be terminated effective March 31, 2013. His Separation Agreement supersedes his ESA and exclusively governs his remaining benefits from the Company. See “Compensation Discussion and Analysis—Boitmann Separation Agreement” for an explanation of the benefits payable to Mr. Boitmann on account of his separation and the sections entitled “2012 Pension Benefits” and “2012 Nonqualified Deferred Compensation” for the forfeiture of his pension and nonqualified deferred compensation benefits. Under his Separation Agreement, Mr. Boitmann is not entitled to any benefits upon a change in control, nor any additional benefits upon his termination of employment other than as provided in the Separation Agreement. However, because he was a named executive officer and employed as of December 31, 2012, Mr. Boitmann’s compensation and benefits upon a change in control or termination of employment are nevertheless reflected in the following tables. Under his Separation Agreement, Mr. Boitmann can receive up to $490,000 in salary continuation, $9,568 in COBRA continuation coverage, $22,388 in car allowance, $2,856 in allowance for tax services and $35,000 of outplacement services.

 

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Additional Benefits for Termination or Change in Control Scenarios

The tables set forth below quantify the additional compensation and benefit amounts that would be payable to each named executive officer under the change in control and/or termination of employment scenarios described above if such events occurred as of December 31, 2012.

Termination of Employment Following a Change in Control

The amounts set forth in this table would be payable to or for each named executive officer, assuming a change in control of the Company and termination of employment of the named executive officer on December 31, 2012.

 

Name

   Michael B.
Polk
     Douglas L.
Martin
     William A.
Burke
     James M.
Sweet
     Paul G.
Boitmann
 

Two/Three Times Base Salary

   $ 3,600,000       $ 1,080,000       $ 1,320,000       $ 1,050,000       $ 492,692   

Two/Three Times Target Bonus

     4,860,000         918,000         1,122,000         787,500           

Prorata Bonus

     1,620,000         459,000         561,000         393,750         273,000   

Accrued Unvested Retirement Benefits—SERP(1)

             2,182,742         1,007,179                 970,540   

Accrued Unvested Retirement Benefits—SERP Cash Account(2)

     459,240                 222,103                 140,795   

Accrued Unvested Retirement Benefits—401(k) Plan

     20,776                                   

Value of Unvested Stock Options(3)

     1,608,209         101,301         561,234         361,534         265,473   

Value of Unvested Restricted Stock Units(4)

     24,377,321         1,050,342         4,592,163         2,683,201         1,681,519   

Welfare Benefits for Severance Period(5)

     13,852         13,852         13,852         13,852         8,125   

Automobile Expenses for Severance Period

                                       

Outplacement Services (6 mos.)

     7,500         7,500         7,500         7,500         35,000   

Reduction (§280G)(6)

                                     N/A   
  

 

 

 

Total

   $ 36,566,898       $ 5,812,737       $ 9,407,031       $ 5,297,337       $ 3,867,144   
  

 

 

 

 

(1) Accrued Unvested Retirement Benefits—SERP.    Amounts in this row are equal to the present value of the accumulated unvested benefit payable to each applicable named executive officer under the SERP as of December 31, 2012. None of the named executive officers who participate in the SERP (with the exception of Mr. Sweet) is vested under the SERP. Assumptions used in determining these amounts include a 4.50% discount rate and the RP-2000 projected to 2017 Combined Healthy Mortality Table, except using a unisex mortality table and without reduction for mortality risk before age 65, which are the actuarial assumptions to determine present value under the SERP assuming termination of employment on December 31, 2012. See “Retirement Plans—SERP,” above.

 

(2) Accrued Unvested Retirement Benefits—SERP Cash Account.    Amounts in this row represent the unvested portion of the named executive officer’s SERP Cash Account under the 2008 Plan as of December 31, 2012 (including the SERP Cash Account contribution for 2012 credited in 2013). Mr. Martin is 100% vested, Mr. Burke is 50% vested, Mr. Sweet is 100% vested, and Mr. Boitmann is 60% vested in the SERP Cash Account benefit. Mr. Polk is not vested in the SERP Cash Account benefit.

 

(3) Value of Unvested Stock Options.    Amounts in this row represent the value of stock options that would vest upon a change in control and termination of employment on December 31, 2012 pursuant to the terms of the executive’s ESA and applicable stock plan. The value of the stock options is based on the difference between the exercise price and the closing market price of the Company’s stock as reported in The Wall Street Journal for December 31, 2012 ($22.27).

 

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(4) Value of Unvested Restricted Stock Units.    Amounts in this row represent the value of the RSUs that would vest upon a change in control and termination of employment on December 31, 2012 pursuant to the terms of the executive’s ESA and applicable stock plan. Performance-based RSUs are paid out as if the performance targets are achieved at the maximum level under the 2003 Stock Plan and at the target level under the 2010 Stock Plan. The value of the RSUs is based on the closing market price of the Company’s stock as reported in The Wall Street Journal for December 31, 2012 ($22.27).

 

(5) Welfare Benefits for Severance Period.    Amounts in this row consist of projected premiums for life, medical, dental, vision, accidental death and disability and disability policies, reduced by the amount of projected employee premiums and employee paid administrative charges, during the 24 month severance period for each named executive officer. Projections assume no increase in premiums over the severance period.

 

(6) Payment Reduction (§280G).    Amounts in this row reflect the value, if any, of the reduction in payments to avoid any excise tax liability arising under Sections 4999 and 280G of the Internal Revenue Code, which applies to Messrs. Polk, Martin, Burke and Sweet under their respective ESAs. However, a reduction in payments would not occur for 2012 under their ESAs because the payment of an excise tax of $6,030,465, $919,813, $1,280,538 and $632,780 by Messrs. Polk, Martin, Burke, and Sweet, respectively, would produce a greater overall net after-tax benefit to them.

Death, Disability or Termination of Employment, Without a Change in Control

The amounts set forth in this table would be payable to or for each named executive officer, assuming no change in control of the Company and that the named executive officer terminated employment on December 31, 2012, including on account of death, disability or retirement.

 

Name

   Michael B.
Polk
     Douglas L.
Martin
     William A.
Burke
     James M.
Sweet
     Paul G.
Boitmann
 

Continued Salary(1)

   $ 2,400,000       $ 810,000       $ 990,000       $ 787,500       $ 492,692   

Target Bonus(2)

     1,620,000                         393,750           

Continued Health Payment/ Coverage(3)

     13,852         10,389         10,389         10,389         8,125   

Value of Unvested Stock Options(4)

     1,608,209         101,301         561,234         361,534         265,473   

Value of Unvested Restricted Stock Units(5)

     24,377,321         1,050,342         4,592,163         2,683,201         1,681,519   

SERP Benefits(6)

             2,182,742         2,632,970         1,617,743         2,212,619   

SERP Cash Account Benefits(7)

     459,240         10,388         444,207         408,458         351,987   

 

(1) Continued Salary.    Under Mr. Polk’s Compensation Agreement, he would receive 24 months of salary continuation upon his involuntary termination of employment except for good cause or voluntary termination for good reason. For all other named executive officers, amounts in this row are payable pursuant to the Company’s severance plans, assuming 18 months of severance, which is the mid-point of the range of severance provided for under the plans and is consistent with the Company’s actual practice in granting severance to executives with levels of service similar to those of the named executive officers.

 

(2) Target Bonus.    Under Mr. Polk’s Compensation Arrangement, he would be eligible for a pro-rated annual cash bonus for the year of his involuntary termination of employment except for good cause or voluntary termination for good reason (which is estimated in the table using a 100% achievement percentage). For all other named executive officers, no executive would be entitled to a bonus for the year of their termination of employment. Further, under the Company’s retirement guidelines, other than Mr. Sweet none of the named executive officers would vest in their target bonus upon their respective retirements.

 

(3)

Continued Health Payment/Coverage.    Under Mr. Polk’s Compensation Arrangement, upon his involuntary termination of employment except for good cause or voluntary termination for good reason, he would receive a lump sum cash payment for COBRA continuation of medical and dental benefits (but not vision benefits) for 24 months equal to the difference between the COBRA premium and

 

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  coverage rates for active employees. For all other named executive officers, amounts in this row reflect continued health benefits pursuant to the Company’s severance plans and consist of projected premiums for health benefits (medical, dental and vision) during an 18 month severance period, reduced by the projected employee premiums and employee paid administrative charges. Projections assume no increase in premiums over the severance period.

 

(4) Value of Unvested Stock Options.    Under Mr. Polk’s Compensation Arrangement, upon his involuntary termination of employment except for good cause or voluntary termination for good reason, or upon his death or disability, he would become fully vested in his transition stock options, with a one year exercise window. For all other named executive officers, amounts in this row represent the value of stock options that would vest upon death or disability on December 31, 2012 pursuant to the terms of the grant award. The value of the stock options is based on the difference between the exercise price and the closing market price of the Company’s stock as reported in The Wall Street Journal for December 30, 2012 ($22.27). Except for Mr. Sweet, under the Company’s retirement guidelines, none of the named executive officers in the above table would vest in their stock options upon their respective retirements.

 

(5) Value of Unvested Restricted Stock Units.     Amounts in this row represent the value of the RSUs that would vest upon death or disability on December 31, 2012 pursuant to the terms of the grant award. The value of the RSUs is based on the closing market price of the Company’s stock as reported in The Wall Street Journal for December 31, 2012 ($22.27), and reflects the payment of performance-based RSUs as if the performance targets are achieved at the target level. In addition, under the terms of Mr. Polk’s Compensation Arrangement, upon his involuntary termination of employment except for good cause or voluntary termination for good reason, he would become fully vested in the time-based RSUs granted to him in July 2011, and since all of the performance conditions relating to the performance-based RSUs granted to him in July 2011 have been met he would become vested in these RSUs as well. The amount related to the July 2011 RSU awards in the table above is $16,962,591. Except for Mr. Sweet, none of the named executive officers in the above table would vest in their RSUs upon their respective retirements.

 

(6) SERP Benefits.    Mr. Polk does not participate in the SERP. For Messrs. Martin, Burke, Sweet and Boitmann who participate in the SERP, amounts in this row represent the death benefit payable under the SERP on account of the applicable named executive officer’s death on December 31, 2012, as the present value of the special preretirement death benefit under the SERP (paid in lieu of any retirement benefit under the SERP) and in which an executive becomes automatically vested upon his or her death during employment. For Mr. Martin, the termination benefit is greater than the death benefit because he has already reached the full 25 year accrual under the benefit formula. Therefore, the termination benefit is shown for Mr. Martin instead of the death benefit. None of the named executive officers in the above table who participate in the SERP (with the exception of Mr. Sweet) is vested under the SERP. See Footnote (1) of the immediately preceding table for the assumptions used to determine this amount.

 

(7) SERP Cash Account Benefits.    Under Mr. Polk’s Compensation Arrangement, upon his involuntary termination of employment except for good cause or voluntary termination for good reason, or upon his death or disability, he would become fully vested in his SERP Cash Account balance as shown in the table as of December 31, 2012. For all other named executive officers, amounts in this row represent the death or disability benefit payable under the SERP Cash Account on account of the applicable named executive officer’s death or disability on December 31, 2012. Please refer to Footnote (2) of the immediately preceding table for a description of amounts in this row.

 

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Change in Control—No Termination of Employment

The amounts set forth in the following table would be payable to or for each named executive officer, assuming a change in control of the Company on December 31, 2012.

 

Name

   Michael B.
Polk
     Douglas L.
Martin
     William A.
Burke
     James M.
Sweet
     Paul G.
Boitmann
 

Value of Unvested Stock Options(1)

   $ 1,608,209       $ 101,301       $ 561,234       $ 361,534       $ 265,473   

Value of Unvested Restricted Stock Units(2)

     24,377,321         1,050,342         4,592,163         2,683,201    &nb