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Executive Compensation Highlights (beginning on page 26)
Our compensation philosophy, which extends to every employee level at the Company, is to provide pay-for-
performance that is directly linked to the Company’s results. We believe this is the most effective method for creating
shareholder value and that it has played a significant role in making the Company an industry leader.
The Company’s executive compensation programs reflect our corporate governance best practices principles:
Independent Compensation Committee oversees the program;
Independent compensation consultant hired by and reporting to the Compensation Committee;
Rigorous pay-for-performance formulaic structure for CEO compensation, in place for 17 years, which is
regularly evaluated by the Compensation Committee;
The Compensation Committee modified the CEO pay for performance evaluation process to better align the
CEO’s compensation with the Company’s relative financial and total shareholder return performance in the
same year, eliminating the performance measurement lag that had previously existed under the program;
For the past 17 years, 100% of the CEO’s total direct compensation has been determined based on the
Company’s performance versus peers;
Annual report by the independent compensation consultant to the full Board of Directors on CEO pay and
performance alignment;
First public company in the U.S. to provide shareholders with a say-on-pay vote (voluntary action starting in
2008, three years before the vote became required);
Prohibition on entering into 10b5-1 plans (unless approved by the Compensation Committee), hedging, or
future pledging of the Company’s stock by executive officers and Directors;
Stock ownership guidelines for executive officers and Directors in place since 1998; grandfathered pledged
shares do not count toward the stock ownership guidelines;
Clawback policy in place since 2007; and
No change-in-control excise tax gross-ups.
Response to Say-on-Pay Vote
The Company, which allowed shareholders a “say-on-pay” advisory vote beginning in 2008, before the requirement later
imposed on companies by the Dodd-Frank Wall Street Reform and Consumer Protection Act, had received
endorsement rates from our shareholders that had averaged more than 96% since its institution through 2013.
The favorable vote in 2014 (74%) was the lowest since adding the advisory vote to our proxy. Based on feedback from
our shareholder engagement as well as internal analysis and external analysis, we:
conducted a thorough analysis of best practices, which indicated that the time lag in the CEO compensation
program that resulted in paying the CEO’s total compensation for a given year over two proxy seasons, was
performance-based yet an outlier relative to best practice;
made modifications to the process for setting the CEO’s compensation to better align our relative financial and
total shareholder return performance with the CEO’s pay in the same year, thus eliminating the timing
disconnect under the prior method; and
otherwise validated the components and performance measures used.
Our 2014 relative performance ranking versus our peers resulted in a decrease of 51% in total direct compensation for
the CEO.
Further, for 2015, we have eliminated the overlap in performance metrics used in the annual non-equity incentive plan
and long-term equity incentive plan.
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