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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. )
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Filed by the Registrant
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Filed by a Party other than the Registrant o |
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Check the appropriate box: |
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o Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
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þ Definitive Proxy Statement |
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o Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Dean Foods Company
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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þ No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11. |
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2) Aggregate number of securities to which transaction applies: |
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
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4) Proposed maximum aggregate value of transaction: |
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o Fee paid previously with preliminary materials. |
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o Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
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1) Amount Previously Paid: |
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2) Form, Schedule or Registration Statement No.: |
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SEC 1913 (11-01) |
Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number. |
NOTICE OF
STOCKHOLDERS MEETING
We will hold this years annual stockholders meeting
on Thursday, May 22, 2008, at 10:00 a.m. at the Dallas
Museum of Art, 1717 North Harwood, Dallas, Texas 75201.
At the meeting, we will ask you to consider and vote on the
following proposals recently adopted by our Board of Directors:
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Proposal One: A proposal to re-elect Tom C. Davis, Stephen
L. Green, Joseph S. Hardin, Jr. and John R. Muse as members
of our Board of Directors for a three-year term.
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Proposal Two: A proposal to ratify the selection of
Deloitte & Touche LLP as our independent auditor for
2008.
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We will also discuss and take action on any other business that
is properly brought before the meeting.
If you were a stockholder of record on March 25, 2008, you
are entitled to vote on the proposals to be considered at this
years meeting.
This Notice and the accompanying Proxy Statement are first being
mailed to stockholders on or about April 21, 2008.
By order of the Board of Directors,
Sincerely,
Steven J. Kemps
Senior Vice President, General Counsel and
Corporate Secretary
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL STOCKHOLDERS MEETING TO BE HELD ON MAY 22,
2008
The
Companys Proxy Statement and Annual Report to Security
Holders for the fiscal
year ended December 31, 2007 are available at
http://bnymellon.mobular.net/bnymellon/df
TABLE OF
CONTENTS
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YOU
ARE INVITED
April 21, 2008
Dear Fellow
Stockholders,
We hope that you will come to our annual stockholders
meeting on Thursday, May 22, 2008. At the annual meeting,
after we vote on the proposals described in this Proxy
Statement, we will present a brief report on our 2007 results
and an update on our business. As always, we will conclude the
meeting by inviting you to ask questions and make comments. For
your convenience, we will present a live webcast of the annual
meeting, which you can access through our corporate website at
www.deanfoods.com.
If you have questions regarding any of the matters contained in
this Proxy Statement, please contact our Investor Relations
Department at 800.431.9214. We look forward to seeing you at
this years meeting.
Sincerely,
Gregg L. Engles
Chairman of the Board and
Chief Executive Officer
QUESTIONS
AND ANSWERS
Why did I
receive this Proxy Statement?
On April 21, 2008, we began mailing this Proxy Statement to
everyone who was a stockholder of record of our Company on
March 25, 2008. One purpose of this Proxy Statement is to
let our stockholders know when and where we will hold our annual
stockholders meeting.
More importantly, this Proxy Statement:
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Includes detailed information about the matters that will be
discussed and voted on at the meeting, and
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Provides updated information about our Company that you should
consider in order to make an informed decision at the meeting.
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I
received more than one Proxy Statement. Why?
If you received more than one Proxy Statement, your shares are
probably registered differently or are in more than one account.
Please vote each proxy card or voting card that you received.
How can I
change the number of copies of the Annual Report and Proxy
Statement being delivered to my household?
Family members who are registered owners of our stock and who
live in the same household generally receive only one copy of
the Annual Report, Proxy Statement, and most other mailings per
household. The only item which is separately mailed for each
registered stockholder or account is a proxy card. If you would
like to start receiving separate copies in your name, apart from
others in your household, please contact our Investor Relations
Department at 800.431.9214 and request that action. Within
30 days after your request is received we will start
sending you separate mailings. If for any reason you and members
of your household are receiving multiple copies and you want to
eliminate duplications, please contact our Investor Relations
Department at 800.431.9214 and request that action. That request
must be made by each person in the household.
How can I
obtain my own separate copy of the Annual Report and Proxy
Statement for the meeting in May?
For multiple stockholders who live in the same household and
want separate copies of the Annual Report and Proxy Statement,
you may pick up copies in person at the meeting in May or
download them from
http://bnymellon.mobular.net/bnymellon/df. If you want copies
mailed to you and you are a beneficial owner, you must request
them from your broker, bank, or other nominee. If you would like
copies mailed to you and you are a registered stockholder, we
will mail them promptly if you request them from our transfer
agent. We cannot guarantee you will receive mailed copies before
the meeting.
What will
occur at the annual meeting?
First we will determine whether enough stockholders are present
at the meeting to conduct business. A stockholder will be deemed
to be present at the meeting if the stockholder:
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Is present in person, or
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Is not present in person but has voted by proxy by telephone,
online or mail prior to the meeting.
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According to our bylaws, holders of at least
75,708,275 shares of our common stock (which is a majority
of the shares of our common stock that were outstanding on
March 25, 2008) must be present at this years
meeting in order to conduct the meeting. Abstentions and
broker non-votes are counted as present and entitled
to vote for purposes of determining if enough stockholders are
present (in person or by proxy) to conduct the meeting. A
broker non-vote occurs when a bank, broker or other
holder of record holding shares for a beneficial owner does not
vote on a particular proposal because that holder does not have
discretionary voting power for that particular item and has not
received instructions from the beneficial owner.
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If holders of fewer than 75,708,275 shares are present at
the meeting, we will adjourn the meeting and reschedule it. The
new meeting date will be announced at the meeting. If enough
stockholders are present at the meeting to conduct business,
then we will vote on:
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Proposal One: A proposal to re-elect Tom
C. Davis, Stephen L. Green, Joseph S. Hardin, Jr. and John
R. Muse as members of our Board of Directors for a three-year
term.
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Proposal Two: A proposal to ratify the
selection of Deloitte & Touche LLP as our independent
auditor for 2008.
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Proposals One and Two have been approved by our Board of
Directors. The Board of Directors is now soliciting your vote on
these proposals and recommends that you vote FOR each of
Proposals One and Two.
On each proposal, you are entitled to one vote for each share of
stock that you owned on March 25, 2008. Cumulative voting
is not permitted.
Our common stock was the only class of stock outstanding on
March 25, 2008. As of that date, there were
151,416,548 shares of common stock issued and outstanding.
After each proposal has been voted on at the meeting, we will
discuss and take action on any other matter that is properly
brought before the meeting. Also, our management team will
present a brief report on our 2007 results and an update on our
business.
How many
votes are necessary to re-elect the nominees for
director?
The four nominees receiving the highest number of
yes votes will be elected as directors. This number
is called a plurality.
What if a
nominee for director is unwilling or unable to stand for
re-election?
Each of the persons nominated for re-election has agreed to
stand for re-election. However, if unexpected events arise which
cause one or more of them to be unable to stand for re-election,
then either:
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The Board of Directors can vote at the meeting to reduce the
size of the Board of Directors, or
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The Board of Directors may, during the meeting, nominate another
person for director.
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If our Board of Directors nominates someone at the meeting, the
person(s) to whom you have given your proxy will be able to use
his or her discretion to vote on your behalf.
How many
votes are necessary to pass the other proposal?
The Audit Committee of our Board of Directors has responsibility
for selection of our independent auditor. Stockholder
ratification is not required. However, the Board of Directors is
soliciting your opinion regarding the selection of
Deloitte & Touche LLP. The Audit Committee of the
Board of Directors plans to take your opinion into account in
selecting our independent auditor for 2009. The proposal will
pass if a majority of shares present and entitled to vote at the
annual meeting are voted in favor of it.
How do I
vote?
To vote, follow the instructions on the enclosed proxy card or
voting card.
If you are a registered stockholder, you can also vote at the
meeting. If your shares are held in a brokerage account, you
might not be a registered stockholder. In this case, your shares
would not be officially registered in your name; rather, they
would be registered in your brokers name (which is
sometimes called street name). If your shares are in
street name, you cannot vote in person at the meeting unless you
have a proper power of attorney
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from your broker. You should therefore vote by telephone, online
or mail according to the instructions on the enclosed voting
card in order to ensure that your vote is counted.
Voting by any means other than voting in person at the meeting
has the effect of appointing Gregg Engles, our Chairman of the
Board and Chief Executive Officer, and Steven J. Kemps, our
Senior Vice President, General Counsel and Corporate Secretary,
as your proxies. They will be required to vote on the proposals
described in this Proxy Statement exactly as you have voted.
However, if any other matter requiring a stockholder vote is
properly raised at the meeting, then Mr. Engles and
Mr. Kemps will be authorized to use their discretion to
vote on such issues on your behalf.
If you sign your proxy card, but do not specify how you want to
vote on a proposal, your shares will be voted FOR
Proposals One and Two.
We encourage you to vote now (by telephone, online or by mail)
even if you plan to attend the meeting in person.
Did Dean
Foods Company utilize the SECs new
e-proxy
rules for delivery of the proxy materials this year?
No. Dean Foods Company delivered its proxy materials in the same
manner as it has in the past. However, many stockholders have
previously consented to receive electronic delivery of proxy
materials and therefore did not receive hard copies of the proxy
materials.
Can I
access Dean Foods Companys Proxy Statement and Annual
Report electronically?
This Proxy Statement and the 2007 Annual Report are available
online at
http://bnymellon.mobular.net/bnymellon/df. Most stockholders can
elect to view future proxy statements and annual reports over
the Internet instead of receiving hard copies in the mail. You
can choose this option by following the instructions when you
vote over the Internet.
I
previously consented to receive electronic delivery of my proxy
materials. Can you send me a hard copy of these proxy
materials?
For stockholders of record: We will deliver
promptly, upon written or oral request, a separate copy of these
proxy materials. Contact our transfer agent either by writing
BNY Mellon Shareowner Services, P.O. Box 358015,
Pittsburgh, PA
15252-8015,
or by telephoning 866.557.8698.
For holders in street name: You must contact
your bank, broker or other intermediary to receive copies of
these materials.
Where can
I find the voting results of the meeting?
We will announce preliminary voting results at the meeting. We
will publish the final results in our quarterly report on
Form 10-Q
for the second quarter of 2008. We will file that report with
the Securities and Exchange Commission (SEC) in
August of this year, and you can obtain a copy on our website at
www.deanfoods.com, on the SECs website at www.sec.gov, or
by contacting our Investor Relations Department at 800.431.9214
or the SEC at 800.SEC.0330.
What if I
want to change my vote?
You can revoke your vote on a proposal at any time before the
meeting for any reason. To revoke your proxy before the meeting,
either:
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Write to our Corporate Secretary at 2515 McKinney Avenue,
Suite 1200, Dallas, Texas 75201, or
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Vote again, either by telephone or online (your last vote before
the meeting begins will be counted).
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If you are a registered stockholder (or if you hold your shares
in street name and have a proper power of attorney
from your broker), you may also come to the meeting and change
your vote in writing or orally.
What if I
do not vote?
If you do not vote, your failure to vote could affect whether
there are enough stockholders present at the meeting to hold the
meeting. Holders of a majority of the outstanding shares of our
common stock must be present (in person or by proxy) in order to
conduct the meeting. Proxies received but marked as abstentions,
if any, will be included in the calculation of the number of
shares considered to be present at the meeting for quorum
purposes. Because abstentions represent shares entitled to vote,
the effect of an abstention will be the same as a vote against a
proposal. However, abstentions will have no effect on
Proposal One regarding the election of directors.
Broker non-votes will be considered present for
quorum purposes but will not be considered present and entitled
to vote on any matter for which a broker does not have
authority. Accordingly, broker non-votes will not
have any impact on the outcome of any proposal.
If your shares are held in street name and you do
not vote, your brokerage firm could:
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Vote for you, if it is permitted by the exchange or organization
of which your broker is a member, or
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Leave your shares unvoted.
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Your broker will be permitted to vote for you on
Proposals One and Two regarding the election of directors
and the ratification of Deloitte & Touche LLP.
How do I
raise an issue for discussion or vote at the annual
meeting?
According to our bylaws, if a stockholder wishes to present a
proposal for consideration at an annual meeting, he or she must
send written notice of the proposal by certified mail to our
Corporate Secretary by no later than March 1 of the year of the
meeting.
If you would like your proposal to be included in next
years proxy statement, you must submit it to our Corporate
Secretary in writing no later than December 22, 2008. We
will include your proposal in our next annual proxy statement if
it is a proposal that we are required to include in our Proxy
Statement pursuant to the rules of the SEC.
You may write to our Corporate Secretary at 2515 McKinney
Avenue, Suite 1200, Dallas, Texas 75201.
According to our bylaws, any proposal properly raised at the
meeting by a stockholder will require the affirmative vote of a
majority of the shares deemed present at the meeting (whether in
person or by proxy).
Who will
pay for this solicitation?
We will pay all costs associated with this Proxy Statement and
the solicitation of proxies. Upon request, we will reimburse
stockbrokers, dealers, banks and trustees, or their nominees,
for reasonable expenses incurred by them in forwarding proxy
materials to beneficial owners of shares of our common stock.
Our transfer agent, BNY Mellon Shareowner Services, will count
the votes and act as inspector of election.
5
PROPOSALS
BY OUR BOARD OF DIRECTORS
Proposal One:
Re-Election of Directors
Our Board of Directors is divided into three classes serving
three-year terms. This years nominees for re-election to
the Board of Directors for a three-year term are the following
Class I directors:
Tom C. Davis
Director since March 2001
Mr. Davis, age 59, has served as Managing Partner
of Gryphon Special Situations Fund L.P. since July 2004. He
also has served as Chief Executive Officer of The Concorde
Group, a private investment firm, since March 2001. He was the
managing partner and head of banking and corporate finance for
the Southwest division of Credit Suisse First Boston from March
1984 to February 2001. In this position, Mr. Davis worked
with several large private equity firms, in addition to a
variety of public and private companies, including companies in
the broadcast and telecommunications, energy, foodservice, food
processing and retailing industries. In addition to ours,
Mr. Davis also serves on the Boards of Directors of
Affirmative Insurance Holdings, Inc., an insurance holding
company, where he serves on the Audit Committee, and Westwood
Holdings Group, an investment management and trust services
company, where he serves on the Audit and Compensation
Committees.
Stephen L. Green
Director since October 1994
Mr. Green, age 57, has served as a general
partner of Canaan Capital Partners, L.P., the general partner of
Canaan Capital Limited Partnership and Canaan Capital Offshore
Limited Partnership, C.V., since November 1991. From October
1985 until November 1991, Mr. Green served as Managing
Director of GE Capitals Corporate Finance Group.
Joseph S. Hardin, Jr.
Director since May 1998
Mr. Hardin, age 62, served as Chief Executive
Officer of Kinkos, Inc. from May 1997 until January 2001.
Currently retired, Mr. Hardin held a variety of positions
from 1986 to April 1997 with increasing responsibility at
Wal-Mart Stores, Inc., ultimately as an Executive Vice President
and as the President and Chief Executive Officer of Sams
Club, the wholesale division of Wal-Mart Stores, Inc. In
addition to our Board, Mr. Hardin also serves on the Boards
of Directors of American Greetings Corporation, where he serves
on the Nominating and Governance Committee and the Compensation
and Management Development Committee, and Petsmart, Inc., where
he serves on the Corporate Governance Committee.
John R. Muse
Director since November 1997
Mr. Muse, age 57, is Chairman of HM Capital
Partners LLC (formerly known as Hicks, Muse, Tate &
Furst Incorporated), a private equity firm, which he co-founded
in 1989. Mr. Muse also serves on the Board of Visitors of
the UCLA Anderson School of Management. Mr. Muse was a
member of the Board of Directors of The Morningstar Group Inc.
prior to our acquisition of that company in November 1997.
Mr. Davis, Mr. Green, Mr. Hardin and
Mr. Muse were each unanimously nominated for re-election by
our Board of Directors following the recommendation of the
Governance Committee of our Board of Directors. They have each
consented to be re-elected as members of our Board of Directors.
Our Board of Directors recommends that you vote for
Mr. Davis, Mr. Green, Mr. Hardin and
Mr. Muse.
Proposal Two:
Ratification of Selection of Independent Auditor
The Audit Committee of our Board of Directors has selected
Deloitte & Touche LLP to serve as our independent
auditor for the 2008 fiscal year and is soliciting your
ratification of that selection.
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Your ratification of the Audit Committees selection of
Deloitte & Touche LLP is not necessary because the
Audit Committee has responsibility for selection of our
independent auditor. However, the Audit Committee will take your
vote on this proposal into consideration when selecting our
independent auditor in the future.
The Audit Committee of our Board of Directors has responsibility
for overseeing our financial reporting and various other
matters. See page 13 of this Proxy Statement for further
information about the responsibilities of our Audit Committee
and page 18 for an important report by the Audit Committee.
Our Board of Directors recommends that you vote for the
proposal to ratify the selection of Deloitte & Touche
LLP as our independent auditor for 2008.
7
OTHER
INFORMATION
Who is on
our Board of Directors?
Our Board of Directors is authorized to have between ten and
fifteen members. The Board of Directors has the ability to
determine the appropriate number of members within that range in
order to maximize the Board of Directors effectiveness and
efficiency. Our Board of Directors has set the number of
directors constituting the full board at twelve and we currently
have twelve directors. The Board of Directors is divided into
three classes, each of whose members serve for staggered
three-year terms.
In addition to the four directors nominated for re-election, the
following persons currently serve on our Board of Directors:
Alan J. Bernon
Director since August 1997
Mr. Bernon, age 53, served as President of our
Dairy Group from January 1, 2006 to August 31, 2007.
From 1997 through the end of 2005, he served as Chief Operating
Officer of the Northeast Region of our Dairy Group. He was
originally elected to our Board of Directors in connection with
our acquisition of The Garelick Companies in 1997. From
September 1985 until July 1997, Mr. Bernon served as
President of The Garelick Companies. His term will expire in
2010.
Lewis M. Collens
Director since December 2001
Mr. Collens, age 70, is Professor of Law and
President Emeritus at Illinois Institute of Technology
(IIT). He served as the President of IIT and
Chairman of IIT Research Institute from 1990 to 2007. From 1974
to 1990, he served as Dean of IIT Chicago-Kent College of Law.
Mr. Collens was originally elected to our Board of
Directors in connection with our acquisition of the former Dean
Foods Company (Legacy Dean) on December 21,
2001. Mr. Collens served on the Board of Directors of
Legacy Dean since 1991 and was Chairman of its Audit Committee
and a member of its Corporate Governance Committee. His term
will expire in 2009.
Gregg L. Engles
Chairman of the Board,
Director since October 1994
Mr. Engles, age 50, has served as our Chief
Executive Officer and as a director since the formation of our
Company in October 1994. From October 1994 until
December 21, 2001, he served as Chairman of the Board. When
we acquired Legacy Dean, Mr. Howard Dean was named Chairman
of the Board pursuant to the merger agreement concerning our
acquisition of Legacy Dean, and Mr. Engles was named Vice
Chairman of the Board. In April 2002, Mr. Dean retired, and
Mr. Engles resumed his position as Chairman of the Board.
His term on our Board of Directors will expire in 2010. In
addition to ours, Mr. Engles also serves on the Board of
Directors of TreeHouse Foods, Inc.; however, Mr. Engles
will retire from the TreeHouse Foods, Inc. Board when his term
expires in May of 2008.
Janet Hill
Director since December 2001
Mrs. Hill, age 60, has served as Vice President of
Alexander & Associates, a corporate consulting firm,
since 1981. She was originally elected to our Board of Directors
in connection with our acquisition of Legacy Dean in December
2001. Mrs. Hill had served on the Board of Directors of
Legacy Dean since 1997. In addition to our Board, Mrs. Hill
also serves on the Boards of Directors of Wendys
International, Inc., where she serves on the Compensation
Committee, and Sprint Nextel Corporation, where she serves on
the Human Capital and Compensation Committee, and the Nominating
and Corporate Governance Committee. She also serves as a trustee
of Duke University. Her term will expire in 2009.
Ronald Kirk
Director since February 2003
Mr. Kirk, age 53, has been a partner with the law
firm of Vinson & Elkins L.L.P. since February 2005. He
was a partner with the law firm of Gardere Wynne Sewell LLP from
1994 through January 2005. From June 1995 to November 2001, he
also served as Mayor of the City of Dallas, Texas. In addition
to ours, Mr. Kirk also serves on the
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Boards of Directors of Brinker International, Inc., a restaurant
operator, where he serves on the Governance and Executive
Committees, and Petsmart Inc., where he serves on the Corporate
Governance Committee. His term will expire in 2010.
Hector M. Nevares
Director since October 1994
Mr. Nevares, age 57, currently serves as Managing
Partner of Suiza Realty SE. He was formerly President of Suiza
Dairy, a Puerto Rico dairy processor, from June 1983 until
September 1996, having served in additional executive capacities
at Suiza Dairy since June 1974. Mr. Nevares served as a
consultant for us from March 1998 until April 2000. In addition
to ours, Mr. Nevares also serves on the Board of Directors
of FirstBank Puerto Rico, where he serves on the Audit and
Asset, Liability and Risk Management Committees. His term will
expire in 2009.
Pete Schenkel
Director since January 2000
Mr. Schenkel, age 72, joined our Company in
January 2000 as President of our Dairy Group and a member of our
Board of Directors. Effective December 31, 2005,
Mr. Schenkel retired as President of our Dairy Group. He
now serves as a consultant to our Company. From 1959 to
December 31, 1999, he served in various capacities at
Southern Foods Group (now a part of our Dairy Group), including
Chairman of the Board and Chief Executive Officer from 1994
through 1999, and President from 1987 to 1994. He was originally
elected to our Board of Directors in connection with our
acquisition of Southern Foods Group in January 2000. His term
will expire in 2009.
Jim L. Turner
Director since November 1997
Mr. Turner, age 62, currently serves as Principal
of JLT Beverages. In June 2005, Mr. Turner retired from Dr
Pepper/Seven Up Bottling Group, Inc., where he had served as
President and Chief Executive Officer since its formation in
1999. Prior to that, since 1985, he was the Owner/Chairman of
the Board and Chief Executive Officer of the Turner Beverage
Group, the largest privately owned independent bottler in the
United States. Mr. Turner was a member of the Board of
Directors of The Morningstar Group Inc. prior to our acquisition
of that company in November 1997. Mr. Turner also serves on
the Board of Directors of Crown Holdings, Inc., a manufacturer
of consumer packaging products, where he serves on the
Compensation Committee, and is a member of Baylor
Universitys Board of Regents. His term will expire in 2009.
Who are
our independent directors?
Under applicable New York Stock Exchange rules, a director
qualifies as independent only if the Board of
Directors affirmatively determines that he or she has no
material relationship with the Company (either directly or as a
partner, shareholder or officer of an organization that has a
material relationship with the Company). Our Board of Directors
conducts an annual assessment of the independence of each member
of our Board of Directors, taking into consideration all
relationships between our Company
and/or our
officers, on the one hand, and each director on the other,
including the directors commercial, economic, charitable
and family relationships, and such other criteria as our Board
of Directors may determine from time to time. The guidelines
established by our Board of Directors to determine director
independence are available on our website at www.deanfoods.com.
In making its independence determinations, the Board considered
the following relationships and transactions in addition to
those described under Related Party Transaction
Policy on page 45 of this Proxy Statement. In 2007,
our Board determined that the following members of our Board of
Directors are independent, as that term is used in
the New York Stock Exchange rules and our Corporate Governance
Principles: Lewis Collens, Tom Davis, Stephen Green, Joseph
Hardin, Janet Hill, Ron Kirk, John Muse, Hector Nevares and Jim
Turner. Mr. Engles, Mr. Bernon and Mr. Schenkel
were not determined to be independent directors in 2007.
Mr. Engles is currently the Chief Executive Officer of our
Company. Mr. Bernon served as President of our Dairy Group
until September 1, 2007, and Mr. Schenkel was employed
as Vice Chairman of our Company through December 31, 2007.
Mr. Kirk serves on the Board of Directors of Brinker
International, Inc. and Mrs. Hill serves on the Boards of
Directors of Wendys International, Inc. and Sprint Nextel
Corporation. We sell products to Brinker International, Inc. and
Wendys International, Inc., and we purchase products and
services from Sprint Nextel Corporation, all in the ordinary
course of our business. In 2007, Wendys International,
Inc. paid approximately $53.3 million and
9
Brinker International, Inc. paid approximately $9 million
for purchases of our products. We paid approximately
$1.8 million for products and services purchased from
Sprint Nextel Corporation in 2007. In addition, we made employee
tuition payments of approximately $60,000 to Duke University.
Ms. Hill serves as a trustee of Duke University. These
amounts are not material either to us or to the other parties.
Our Board of Directors has determined, considering all relevant
facts and circumstances, that these relationships are not
material and do not impact Mr. Kirks or
Mrs. Hills status as independent directors, as
defined by the rules of the New York Stock Exchange and our
Corporate Governance Principles.
What are
the responsibilities of our Board of Directors?
Our Board of Directors is responsible for overseeing and
interacting with senior management with respect to key aspects
of our business, including strategic planning, management
development and succession, operating performance, compliance
and stockholder returns. It is the responsibility of the Board
of Directors to select and evaluate a well-qualified Chief
Executive Officer of high integrity, and to approve the
appointment of other members of the senior management team. The
Board of Directors provides general advice and counsel to our
Chief Executive Officer and other senior executives.
All directors are expected to avoid conflicts of interest and to
represent the best interests of our stockholders in maintaining
and enhancing the success of our business. The Board conducts a
self-evaluation annually to ensure that it is functioning
effectively.
Members of our Board of Directors are required to regularly
attend Board meetings and to attend our Annual Meeting of
Stockholders, unless unforeseen circumstances prevent them from
doing so. Mr. Muse was unable to attend our 2007 Annual
Meeting of Stockholders.
Our Board of Directors meets according to a set schedule and
also holds special meetings and acts by unanimous written
consent from time to time as appropriate. The Board met eleven
times during 2007, including four regular meetings and seven
special meetings. In 2007, all directors attended at least 75%
of the meetings of the Board of Directors and the Board
Committees on which they served.
The Board of Directors has adopted a set of Corporate Governance
Principles for our Company, a copy of which is accessible
through our corporate website at www.deanfoods.com. You may also
receive a printed copy of our Corporate Governance Principles by
writing to us at the following address: Dean Foods Company,
Attention: Corporate Secretary, 2515 McKinney Avenue,
Suite 1200, Dallas, TX 75201.
According to our Corporate Governance Principles, the Lead
Director, who must be an independent director, is elected
annually by the Board of Directors. The Lead Director:
(1) calls all Board meetings; (2) approves the
schedule and agenda for all Board meetings; (3) presides at
executive sessions of the Board; and (4) acts as a liaison
between the non-employee directors and our Chief Executive
Officer. The independent directors on our Board meet in
executive session at the end of each regularly scheduled Board
meeting and following special meetings from time to time. Our
Board of Directors has elected Mr. Hardin to serve as our
Lead Director.
How much
are Board members paid?
Our objectives for non-employee director compensation are to
remain competitive with the compensation paid to non-employee
directors of comparable companies so that we may attract and
retain qualified candidates for Board service and to reinforce
our practice of encouraging stock ownership by our directors.
For the fiscal year ended December 31, 2007, non-employee
directors were entitled to receive the following cash
compensation:
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$35,000 annual retainer, payable quarterly in arrears, plus
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$3,000 for each meeting (Board of Directors or Committee)
attended in person and $1,000 for each meeting attended by
telephone, plus
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$5,000 per year for serving on the Audit Committee or
Compensation Committee and $2,000 per year for serving on any
other Board Committee, plus
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10
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$10,000 per year for chairing the Audit Committee or
Compensation Committee and $4,000 per year for chairing any
other Board Committee, plus
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$25,000 per year for serving as Lead Director.
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Directors may elect to receive their fees in restricted stock
rather than in cash. If a director makes this election, he or
she will receive shares with a value equal to 150% of the cash
amount owed to him or her, determined as of the last day of the
quarter based on the average closing price of our common stock
over the last 30 trading days of the quarter. One-third of the
restricted shares vest on the grant date; one-third vest on the
first anniversary of the grant date; and the final one-third
vest on the second anniversary of the grant date. In 2007,
Mrs. Hill elected to receive all of her fees in cash, and
Mr. Kirk elected to receive one-half of his fees in cash.
All other directors elected to receive their fees in shares of
restricted stock.
In addition to cash compensation, on
June 30th of
each year, each non-employee director receives a grant of 7,500
immediately exercisable stock options and 2,550 restricted stock
units that vest over a three-year period and which may be
accelerated upon the occurrence of certain events, such as a
change in control, and in the event of death, disability or
retirement for grants under the 2007 Stock Incentive Plan.
The following table summarizes the compensation paid to
non-employee directors for the fiscal year ended
December 31, 2007. Pete Schenkel is not included in the
table as he was an employee of the Company through
December 31, 2007, and received no additional compensation
for his services as a director.
Director
Compensation Table for Fiscal Year 2007
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Fees Earned or
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Paid in Cash
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Cash
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Stock
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Stock
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Option
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Name
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Value($)(1)
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Value($)(2)
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Awards($)(3)(9)
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Awards($)(4)(9)
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Total($)(5)(6)
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Alan J.
Bernon(7)
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8,026
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8,026
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Lewis M. Collens
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50,657
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90,967
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72,225
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213,849
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Tom C. Davis
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52,473
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90,967
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72,225
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215,665
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Stephen L. Green
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73,329
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90,967
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72,225
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236,521
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Joseph S. Hardin, Jr.
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99,975
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90,967
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72,225
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263,167
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Janet Hill
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70,000
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90,967
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72,225
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233,192
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Ronald Kirk
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32,500
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29,327
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90,967
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72,225
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225,019
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John S. Llewellyn,
Jr.(8)
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21,648
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77,422
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99,070
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John R. Muse
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41,636
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90,967
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72,225
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204,828
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Hector M. Nevares
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50,839
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90,967
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72,225
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214,031
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Jim L. Turner
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60,298
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90,967
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72,225
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223,490
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(1) |
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This column includes the value of fees earned and paid in cash.
Directors may elect to receive their earned fees in shares of
restricted common stock rather than in cash. If a director makes
this election, he or she will receive shares of restricted stock
with a value equal to 150% of the cash amount owed to him or
her, determined as of the last day of the quarter based on the
average closing price of our common stock over the last 30
trading days of the quarter. One-third of the restricted shares
vest on the grant date; one-third vest on the first anniversary
of the grant date; and the final one-third vest on the second
anniversary of the grant date. In 2007, Mrs. Hill elected
to receive all of her fees in cash, and Mr. Kirk elected to
receive one-half of his fees in cash. All other directors
elected to receive their fees in shares of restricted stock. |
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(2) |
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For directors who elected to receive shares of restricted stock
instead of cash for all or part of the fees earned in 2007, the
amounts shown in this column include the amounts recognized in
2007 for financial reporting purposes in accordance with
FAS 123R Share Based Payment. |
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(3) |
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On June 30 of each year, each non-employee director receives a
grant of 2,550 restricted stock units that vest over a
three-year period, and which may be accelerated upon the
occurrence of certain events, such as a change in control, and
in the event of death, disability or retirement for grants under
the 2007 Stock Incentive Plan. This |
11
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column reflects the dollar amount recognized in 2007 for
financial reporting purposes for the fair value of stock awards
granted in 2007, as well as prior fiscal years, in accordance
with FAS 123R Share Based Payment. The
assumptions used in valuing the stock units we granted during
2007 are described under the caption Restricted Stock
Units in Note 10 to our consolidated financial
statements on
Form 10-K
for the year ended December 31, 2007. The grant date fair
value of each grant of restricted stock units awarded in 2007
was $81,268.50, computed in accordance with FAS 123R. Mr.
Llewellyn did not receive a grant of restricted stock units in
fiscal 2007. |
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(4) |
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This column reflects the expense recognized in 2007 for
financial reporting purposes for the fair value of option awards
granted in 2007 in accordance with FAS 123R. The
assumptions used in valuing the stock options we granted during
2007 are described under the caption Stock Options
in Note 10 to our consolidated financial statements on
Form 10-K
for the year ended December 31, 2007. The grant date fair
value of each grant of stock options awarded was $72,225,
computed in accordance with FAS 123R, as each grant immediately
vests in full on the grant date. |
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(5) |
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Represents the sum of the numbers shown in the columns to the
left. |
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(6) |
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We pay, or in some cases reimburse, all travel, lodging and meal
expenses associated with attending Board meetings, Board
Committee meetings and other Company functions. These amounts
are not reflected in the table because we do not consider them
to be compensation as they are directly and integrally related
to the performance of our directors duties. |
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(7) |
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Mr. Bernon became eligible to participate in all
non-employee director compensation plans for his director
service beginning on and after September 1, 2007, in
connection with the termination of his employment. His severance
payments are described in the Summary Compensation Table on
page 32 of this Proxy Statement. |
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(8) |
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Mr. Llewellyn retired effective May 18, 2007. |
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(9) |
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The following table shows the aggregate number of outstanding
restricted stock awards, restricted stock unit awards, and stock
option awards as of December 31, 2007, for each
non-employee director serving as such on that date: |
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Restricted
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Restricted Stock
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Option
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Name
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Stock Awards
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Unit Awards
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Awards
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Alan J. Bernon
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592
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899,114
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Lewis M. Collens
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3,348
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6,297
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94,803
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Tom C. Davis
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3,551
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6,297
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133,960
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Stephen L. Green
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5,126
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6,297
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251,431
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Joseph S. Hardin, Jr.
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7,050
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6,297
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228,807
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Janet Hill
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6,297
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108,413
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Ronald Kirk
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1,589
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6,297
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55,646
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John R. Muse
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2,823
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6,297
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251,431
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Hector M. Nevares
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3,762
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6,297
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251,431
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Jim L. Turner
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4,192
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6,297
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147,011
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Per our Corporate Governance Principles, our directors are
encouraged to own stock of the Company. As a general rule, each
director is expected, over time, to own Company stock having a
value of at least three times the directors annual
retainer paid for service on our Board of Directors.
What are
the Committees of our Board of Directors and who serves on those
Committees?
Our Board of Directors has established certain committees to
assist in the performance of its various functions.
12
The chart below lists the standing Committees of our Board of
Directors and indicates who currently serves on those committees
and how many times each Board Committee met during 2007.
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Strategic
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Board Member
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Audit(2)(3)
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Compensation(2)
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Executive
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Governance(2)
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Planning(4)
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Alan J. Bernon
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*
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Lewis M. Collens
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*
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Tom C. Davis
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*
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Gregg L. Engles
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*
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(1)
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*
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Stephen L. Green
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*(1
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*
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*
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*
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Joseph S. Hardin, Jr.
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*(1
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*
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*
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*
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(1)
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Janet Hill
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*
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(1)
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Ronald Kirk
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*
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*
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John R. Muse
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*
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Hector M. Nevares
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*
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Pete Schenkel
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Jim L. Turner
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*
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*
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Meetings in 2007
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8
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8
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1
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4
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1
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* |
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Committee Member |
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(1) |
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Committee Chair |
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(2) |
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Our Board of Directors has determined that all of the members of
our Audit, Compensation and Governance Committees are
independent as defined under the rules of the New York Stock
Exchange and in accordance with our Corporate Governance
Principles, including, in the case of all members of the Audit
Committee, the independence requirements contemplated by
Rule 10A-3
under the Securities Exchange Act of 1934. All Committee members
are appointed by our Board of Directors. |
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(3) |
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Our Board of Directors has determined that all of the members of
the Audit Committee are audit committee financial
experts, as that term is defined by the SEC. |
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(4) |
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Our Strategic Planning Committee was dissolved during the first
quarter of 2008. |
What are
the responsibilities of our Board Committees?
Audit Committee. The Audit
Committees responsibilities include:
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appointing, approving the compensation of, and assessing the
independence of our independent auditor;
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overseeing the work of our independent auditor for the purpose
of preparing or issuing an audit report or related work;
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reviewing and discussing with management and the independent
auditor, our annual and quarterly financial statements;
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meeting regularly with members of our management and with our
independent auditor outside the presence of management;
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overseeing our internal audit function;
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discussing risk assessment and risk management policies;
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recommending policies regarding the hiring of employees from our
independent auditor;
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establishing procedures for the receipt and retention of
accounting related complaints and concerns;
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monitoring our compliance with applicable legal and regulatory
requirements;
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providing oversight of our policies and practices with respect
to corporate social responsibility, including environmentally
sustainable solutions, ethics and compliance and the management
of reputation risk;
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pre-approving all permitted non-audit services to be performed
by our independent auditor; and
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preparing the Audit Committee report required by SEC rules,
which is included on page 18 of this Proxy Statement.
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The Audit Committee has authority to retain independent legal,
accounting or other advisors, at our expense.
The Audit Committee makes regular reports to the Board of
Directors and reviews its own performance annually. The Audit
Committee is required to meet at least quarterly and operates
under a charter. In November of 2007, the Audit Committee
amended its charter to include the responsibility to provide
oversight of the Companys policies and practices with
respect to corporate social responsibility, including
environmentally sustainable solutions, ethics and compliance and
the management of reputation risk. The revised charter is
attached as Appendix A to this Proxy Statement and is also
accessible on our corporate website at www.deanfoods.com.
Stockholders may also contact our Investor Relations Department
at 800.431.9214 to obtain a free copy.
Compensation Committee. The
Compensation Committees responsibilities include:
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reviewing and evaluating the performance of the Chief Executive
Officer;
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determining the Chief Executive Officers compensation;
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reviewing and approving the compensation of our other executive
officers and certain other key employees and acting in an
advisory role on non-executive employee compensation;
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setting our executive compensation policies and objectives and
administering our executive compensation programs;
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overseeing our stock option and stock award plans and making
final determinations regarding grants of stock options and other
stock-based awards;
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reviewing and discussing annually with management our
Compensation Discussion and Analysis, which begins
on page 20 of this Proxy Statement; and
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preparing the Compensation Committee report required by SEC
rules, which is included on page 32 of this Proxy Statement.
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Additional information regarding the processes and procedures
followed by the Compensation Committee in considering and
determining executive and director compensation is provided
below under the heading Executive Compensation
Compensation Discussion and Analysis.
The Compensation Committee operates under a charter, a copy of
which is accessible on our corporate website at
www.deanfoods.com. Stockholders may also contact our Investor
Relations Department at 800.431.9214 to obtain a free copy. The
Compensation Committee also performs annual self-evaluations.
The Compensation Committee reviews and approves the compensation
for our executive officers, including the Chief Executive
Officer. Our Chief Executive Officer makes recommendations to
the Compensation Committee each year on the appropriate
compensation to be paid to our executive officers, excluding
himself. The Compensation Committee makes the final
determination of the amount of compensation to be awarded to
each executive officer, including the Chief Executive Officer,
based on the Compensation Committees determination of how
that compensation achieves the objectives of our compensation
policies. The Compensation Committee has delegated limited
authority to the Chief Executive Officer and two designated
Executive Vice Presidents to grant stock options and restricted
stock units in connection with the hiring of new employees or
the promotion or special recognition of selected employees.
The Compensation Committee meets several times each year to
discuss setting individual compensation levels, and it adjusts
the initial recommendations based on its assessments of the
personal attributes and achievements of the individual officers.
The Compensation Committee goes through a similar process in
considering and establishing our short-term and long-term
incentive plans and other executive benefits. For more
information
14
regarding the actions of our Compensation Committee, see the
Compensation Discussion and Analysis section of this Proxy
Statement.
The Compensation Committee has the authority to retain
compensation consultants and other outside advisors to assist in
the evaluation of executive officer compensation. The
Compensation Committee uses a compensation consultant, Mercer
Human Resource Consulting, Inc., to assist in connection with
setting compensation. For more information on the Compensation
Committees relationship with Mercer, see
Compensation Methodology Role of Compensation
Consultant in the Compensation Discussion and Analysis
section of this Proxy Statement.
Compensation Committee Interlocks and Insider
Participation. The Compensation Committee is
comprised entirely of independent directors. None of our
executive officers has served as a director or member of the
compensation committee (or other committee serving an equivalent
function) of any other entity whose executive officers served as
a director or member of the Compensation Committee.
Executive Committee. The Executive
Committee may act on behalf of the Board of Directors when the
Board of Directors is not in session on a limited basis, as to
matters specifically delegated to the Executive Committee from
time to time. The Executive Committee meets only as needed.
Governance Committee. The purpose of
the Governance Committee is to consider, develop and make
recommendations to the Board of Directors regarding corporate
governance principles generally and the appropriate size,
function and operation of the Board and its committees to
optimize the effectiveness of the Board. The Governance
Committee also performs the functions of a nominating committee.
The Governance Committees responsibilities include:
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establishing the criteria for membership on the Board of
Directors;
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reviewing periodically our Corporate Governance Principles;
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reviewing and making recommendations to the Board of Directors
with respect to management succession planning and management
development;
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considering, recommending and recruiting candidates to fill new
or open positions on the Board of Directors;
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reviewing candidates recommended by stockholders;
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conducting the appropriate inquiry into the backgrounds and
qualifications of potential candidates;
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recommending director nominees for approval by the Board of
Directors and our stockholders;
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considering possible conflicts of interest of Board members and
executive officers;
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recommending Board Committee members and director
development; and
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reviewing transactions under our Related Party Transactions
Policy.
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The processes and procedures followed by the Governance
Committee in identifying and evaluating director candidates are
described below under the heading What is the process for
nominating directors?
The Governance Committee operates under a charter, a copy of
which is accessible on our corporate website at
www.deanfoods.com. Stockholders also may contact our Investor
Relations Department at 800.431.9214 to obtain a free copy. The
Governance Committee also performs annual self-evaluations.
Committee
Charters/Form 10-K. In
compliance with applicable corporate governance rules of the New
York Stock Exchange, the Board has adopted charters for the
Audit, Compensation and Governance Committees. These charters
and a copy of our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007, as filed with
the SEC, are available on our Company website at
www.deanfoods.com. Stockholders may also contact Investor
Relations at 2515 McKinney Avenue, Suite 1200, Dallas,
Texas 75201 or at 800.431.9214 to obtain copies of the committee
charters or
Form 10-K
without charge.
15
How can I
communicate with our Board of Directors?
Should you wish to contact our Lead Director or any of the other
members of our Board of Directors on a board-related issue, you
may write to him or her in care of our Corporate Secretary at
2515 McKinney Avenue, Suite 1200, Dallas, Texas 75201.
Relevant communications will be distributed to the Board, or to
any individual director or directors as appropriate, depending
on the facts and circumstances outlined in the communication.
Communications that are unrelated to the duties and
responsibilities of the Board will not be forwarded, such as:
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business solicitations or advertisements,
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junk mail and mass mailings,
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new product suggestions,
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product complaints,
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product inquiries,
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resumes and other forms of job inquiries,
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spam, and
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surveys.
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In addition, material that is threatening, illegal or similarly
unsuitable will be excluded. Any communication that is filtered
out will be made available to any director upon his or her
request.
What is
the process for nominating directors?
When searching for or considering a candidate for Board
membership (including any candidate who may be recommended by a
stockholder), the Governance Committee will require that the
candidate have the highest ethical standards, integrity, sound
business judgment and a willingness to devote adequate time to
Board duties. Our Board of Directors seeks to ensure that the
Board includes members with appropriately diverse backgrounds,
skills and experience, including financial and other expertise
relevant to the business of our Company. The Governance
Committee has, as appropriate, retained search firms to assist
in identifying qualified director candidates.
Stockholders may recommend individuals to the Governance
Committee for consideration as potential director candidates by
submitting their names, together with appropriate biographical
information and the number of shares of our common stock
beneficially owned by the director nominee to the Governance
Committee,
c/o Corporate
Secretary, 2515 McKinney Avenue, Suite 1200, Dallas, Texas
75201. Assuming the appropriate information has been provided on
a timely basis, the Governance Committee will evaluate
stockholder-recommended candidates by following substantially
the same process, and applying substantially the same criteria,
as it follows for candidates submitted by others. If the Board
of Directors determines to nominate a stockholder-recommended
candidate and recommends his or her election, then his or her
name will be included in the Proxy Statement for the next annual
meeting of stockholders.
Stockholders also have the right under our bylaws to directly
nominate candidates, without any action or recommendation on the
part of the Governance Committee or the Board of Directors. Our
bylaws require that the Company be given advance written notice
of stockholder nominations for election to the Board of
Directors. The Secretary must receive such notice at the address
noted above no later than
March 1st of
any calendar year; provided, however, that in the event that
less than 35 days notice of a meeting called for the
election of directors is given to stockholders, the Secretary
must receive such notice not later than the close of business on
the seventh day following the day on which the notice was
mailed, and in the case of a special meeting of stockholders,
not later than the close of business on the tenth day following
the day on which notice of the date of the meeting was mailed or
public disclosure of the date of the meeting was made, whichever
occurs first.
Do we
have a Code of Ethics?
We have adopted a Code of Ethics that applies to all of our
directors, executive officers and employees, including the Chief
Executive Officer, a copy of which is posted on our corporate
website at www.deanfoods.com.
16
Any amendments to or waivers of our Code of Ethics also will be
posted on our website. If you would like a copy of our Code of
Ethics, please request one by writing or calling our Investor
Relations Department at:
Dean Foods Company
Attention: Investor Relations
2515 McKinney Avenue, Suite 1200
Dallas, Texas 75201
800.431.9214
Do we
have a Lead Director?
Mr. Hardin currently serves as Lead Director. The Lead
Director is responsible for calling all meetings of our Board of
Directors, approving the schedule and agenda for all meetings of
our Board of Directors, and presiding at executive sessions of
the Board of Directors. The Lead Director also serves as a
liaison between the non-employee directors and our Chief
Executive Officer.
Do we
have a Corporate Responsibility/Sustainability
Officer?
We have appointed a Corporate Responsibility/Sustainability
Officer who works to promote business activities that are
socially responsible and environmentally sustainable. He also
oversees our ethics and compliance program. He provides reports
to the Audit Committee on the programs effectiveness and
works closely with various compliance functions to provide
coordination and sharing of best practices across our Company.
Do we
have a Disclosure Committee?
We have established a Disclosure Committee composed of members
of management to assist in fulfilling our obligations to
maintain effective disclosure controls and procedures, and to
coordinate and oversee the process of preparing our securities
filings with the SEC.
Who is
our Independent Auditor?
Deloitte & Touche LLP has served as independent
auditor for the Company since its formation.
Deloitte & Touche periodically changes the personnel
who work on the audit. In addition to performing the audit of
the Companys consolidated financial statements,
Deloitte & Touche also provides various other services
to the Company. All of the services provided for the Company by
Deloitte & Touche in 2007 were approved by the Audit
Committee. The aggregate fees and reimbursable expenses billed
to the Company and its subsidiaries by Deloitte &
Touche for 2007 and 2006 were:
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2007
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2006
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Audit
Fees(1)
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$
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6,741,000
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$
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6,281,000
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Audit-Related
Fees(2)
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2,345,000
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3,082,000
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Tax
Fees(3)
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831,000
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463,000
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All Other
Fees(4)
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101,000
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Total
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$
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9,917,000
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$
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9,927,000
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(1) |
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Audit Fees includes fees and expenses billed for the
audit of the Companys annual financial statements and
review of financial statements included in the Companys
quarterly reports on
Form 10-Q,
and services provided in connection with statutory and
regulatory filings. Audit Fees also include the audit of the
Companys internal controls. |
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(2) |
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Audit-Related Fees includes fees billed for services
that are related to the performance of the audit or review of
the Companys financial statements (which are not reported
above under the caption Audit Fees), such as fees
for accounting due diligence on acquisitions and divestitures. |
17
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(3) |
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Tax Fees includes fees billed for services that are
related to tax compliance, our special dividend, and the
adoption of Financial Interpretation No. 48
Accounting for Uncertainty in Income Taxes an
Interpretation of FASB Statement No. 109. |
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(4) |
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All Other Fees in 2006 included a license fee for
certain tax preparation software. |
The Audit Committee has also recommended ratification of its
engagement of Deloitte & Touche as the Companys
independent auditor for 2008.
The Audit Committee has sole authority to engage and determine
the compensation of the Companys independent auditor. The
Audit Committees pre-approval is required for any
engagement of Deloitte & Touche, and the Audit
Committee has established the following pre-approval policies
and procedures. Annually, the Audit Committee pre-approves
services to be provided by Deloitte & Touche. The
Audit Committee also considers the engagement of
Deloitte & Touche for the provision of other services
during the year. In addition to conducting the Companys
2008 audit, the Audit Committee has pre-authorized
Deloitte & Touche to provide services to the Company
in connection with the following types of audit-related and tax
matters:
Audit-Related
Engagements
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Audit of the combined financial statements of our Dairy Group
segment or any other subsidiary;
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Ordinary course accounting consultations; and
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Due diligence services related to potential acquisitions and
divestitures of businesses.
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Tax
Engagements
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U.S. federal, state and local tax compliance advice;
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International tax compliance advice;
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Review of federal, state, local and international income,
franchise and other tax returns;
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Advice on tax audits; and
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Tax structuring and related advice in connection with potential
acquisitions, divestitures and restructurings.
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The pre-approval described above will expire in the first
quarter of 2009. In the event a matter of a type listed above
arises before the first quarter of 2009, the Audit Committee has
authorized management, if necessary, to negotiate, for the Audit
Committees approval and execution, an engagement agreement
related to that matter. For each such matter, management is
required to provide the Audit Committee, at its next regularly
scheduled meeting, with detailed documentation about the
services provided or to be provided. Any service that management
requests Deloitte & Touche to provide that is of a
type that has not been pre-approved must be considered at a
meeting of the Audit Committee before the service is provided.
In determining whether to approve the engagement of
Deloitte & Touche, the Audit Committee considers
whether such service is consistent with Deloitte &
Touches independence. The Audit Committee also considers
the amount of audit and audit-related fees in comparison to all
other fees paid to Deloitte & Touche and the Audit
Committee reviews such comparisons regularly.
Representatives of Deloitte & Touche will be present
at the annual meeting to make a statement, if they choose, and
to answer any questions you have.
Audit
Committee Report
We have met with representatives of Deloitte & Touche
and Company management to review and discuss the Companys
audited consolidated financial statements for the year ended
December 31, 2007, and the assessment of the Companys
internal control over financial reporting. We have discussed
significant accounting policies applied by the Company in its
financial statements, as well as alternative treatments. We
discussed with the Companys Chief Audit Executive and with
Deloitte & Touche the overall scope and plans for
their respective audits. We met with the Chief Audit Executive
and with Deloitte & Touche, with and without
management present, to discuss the results of their
examinations, the evaluations of the Companys internal
controls and the overall quality of the
18
Companys financial reporting. We also regularly review and
discuss the Companys activities with respect to risk
assessment and risk management, and receive regular reports
regarding the Companys compliance program.
We regularly discuss with Deloitte & Touche, and they
have provided written disclosures to us, regarding (1) the
matters required to be communicated under generally accepted
auditing standards (Standard No. 61, as amended,
Communication with Audit Committees), and
(2) Deloitte & Touches independence, as
required by the Independence Standards Board (Standard
No. 1, Independence Discussions with Audit Committees).
We have considered whether the services performed by
Deloitte & Touche, other than audit services or
services related to the audit, are compatible with maintaining
the independence of Deloitte & Touche, and we have
concluded that they are. Based on our reviews and discussions
with management and Deloitte & Touche, as described
above, we recommended to the Board of Directors that the audited
consolidated financial statements be included in the
Companys Annual Report on
Form 10-K
for the year ended December 31, 2007, for filing with the
SEC.
This report is presented by:
The members of the Audit Committee
Stephen L. Green (Chairman)
Lewis M. Collens
Tom C. Davis
Hector M. Nevares
Who are
our executive officers?
The term executive officer is defined by applicable
securities law as the companys president, any vice
president in charge of a principal business unit, division or
function (such as sales, administration or finance), any other
officer who performs a policy-making function, or any other
person who performs similar policy-making functions for the
public company. According to that definition, our Board of
Directors has determined that at the end of 2007 our
executive officers were:
Gregg L. Engles Chairman of the Board and
Chief Executive Officer
See Mr. Engles biography on page 8.
Jack F. Callahan, Jr. Executive Vice
President and Chief Financial Officer
Mr. Callahan, age 49, joined us in May 2006 as
Executive Vice President and Chief Financial Officer. Prior to
joining us, from 1996 to 2006 he held a number of positions at
PepsiCo, Inc. including Senior Vice President of Corporate
Strategy and Development for PepsiCo and Chief Financial Officer
for Frito Lay International. Before joining PepsiCo, he held
various positions at General Electric Company and
McKinsey & Company.
Joseph E. Scalzo President and Chief
Executive Officer, WhiteWave Foods Company and Morningstar
Foods Mr. Scalzo, age 49, joined us in October
2005 as President and Chief Executive Officer of our WhiteWave
Foods Company subsidiary. He was promoted to President and Chief
Executive Officer of WhiteWave Foods Company and Morningstar
Foods in February 2008. Prior to joining us, he was employed by
The Gillette Company from 2001 to October 2005, serving most
recently as Group President, Personal Care and Global Value
Chain. Prior to joining The Gillette Company, Mr. Scalzo
served in various capacities at the
Coca-Cola
Company from 1997 to 2001, including Senior Vice President and
Chief Marketing Officer of The Minute Maid Company. He began his
career at Procter & Gamble in 1985 where he held
various leadership positions. Mr. Scalzo also serves on the
Board of Directors of HNI Corporation, a leading office
furniture and wood burning fireplace manufacturer, where he
serves on the Audit Committee.
Michelle P. Goolsby Executive Vice
President, Development, Sustainability and Corporate Affairs
Ms. Goolsby, age 50, joined us in July 1998 as
Executive Vice President, General Counsel and Corporate
Secretary. In August 1999, she assumed the additional role of
Chief Administrative Officer. In January of 2008, she was named
Executive Vice President, Development, Sustainability and
Corporate Affairs. From September 1988 until July 1998,
Ms. Goolsby held various positions with the law firm of
Winstead Sechrest & Minick. Prior to joining Winstead
Sechrest & Minick, she held various positions with
Trammel Crow Company.
19
Gregg A. Tanner Executive Vice President
and Chief Supply Chain Officer
Mr. Tanner, age 51, joined us in November 2007 as
Executive Vice President and Chief Supply Chain Officer. Prior
to joining us, Mr. Tanner spent the last year and a half at
The Hershey Company where he was Senior Vice President, Global
Operations. Before joining Hershey, Mr. Tanner was Senior
Vice President, Retail Supply Chain at ConAgra Foods, Inc.,
where he directed the supply chain for retail products.
Previously, Mr. Tanner held various positions at the Quaker
Oats Company and Ralston Purina Company. Mr. Tanner also
serves on the Board of Directors of The Boston Beer Company,
Inc., where he serves on the Audit Committee.
Paul T. Moskowitz Executive Vice
President, Human Resources
Mr. Moskowitz, age 43, joined us in June 2007 as
Executive Vice President, Human Resources. Prior to joining us,
Mr. Moskowitz served as Chief People Officer of Pizza Hut,
a division of Yum! Brands. Previously, Mr. Moskowitz
directed the Human Resources activities for all of Pizza
Huts field operations, and led the organizations
training function. Prior to joining Pizza Hut,
Mr. Moskowitz served in various Human Resources roles,
including senior positions with Brinker International, Inc. and
Darden Restaurants, Inc.
How is
the compensation of our Named Executive Officers
determined?
Compensation
Discussion and Analysis
This Compensation Discussion and Analysis is intended to provide
investors with an understanding of our compensation policies and
practices with respect to our Chief Executive Officer, Chief
Financial Officer, our three other most highly compensated
executive officers, and our former Dairy Group President. These
individuals, referred to as Named Executive Officers or NEOs,
are identified below:
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Gregg L. Engles, Chairman of the Board and Chief Executive
Officer
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Jack F. Callahan, Jr., Executive Vice President and Chief
Financial Officer
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Joseph E. Scalzo, President and Chief Executive Officer,
WhiteWave Foods Company and Morningstar Foods
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Michelle P. Goolsby, Executive Vice President, Development,
Sustainability and Corporate Affairs
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Gregg A. Tanner, Executive Vice President and Chief Supply Chain
Officer
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Alan J. Bernon, former Dairy Group President
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Mr. Bernon left his position as President of the
Companys Dairy Group effective September 1, 2007;
however, he remains a member of our Board of Directors.
Mr. Bernon is included as an NEO because, but for the fact
that he was not an executive officer of the Company at the end
of the fiscal year, Mr. Bernon would have been one of the
three other executive officers who were most highly compensated
in fiscal 2007.
We will discuss and analyze the following topics in this
Compensation Discussion and Analysis:
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Executive Compensation Objectives and Policies
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Comparison Group for Executive Compensation Purposes
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Elements of Compensation
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Agreements with Named Executive Officers
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Compensation Methodology
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Role of Compensation Consultant
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Compensation of the Chief Executive Officer
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Role of Chief Executive Officer in Compensation of Other
Executive Officers
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Compensation Mix
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Annual Cash Compensation
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Base Salary
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Short-Term Incentive Compensation
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Long-Term Equity Incentive Compensation
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Timing of Long-Term Equity Grants
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Deferred Compensation Plan and Supplemental Employee Retirement
Plan
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Other Compensation
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Severance and Change in Control Benefits
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Tax Deductibility Policy
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To further illustrate these concepts, we have included charts
and tables where we believe appropriate to enhance our
stockholders understanding of the compensation of our
Named Executive Officers. These tables and charts are meant to
be in addition to, and not an alternative to, the charts and
tables provided under the heading How much are our Named
Executive Officers paid? on page 32 of this Proxy
Statement.
Executive
Compensation Objectives and Policies
Our Compensation Committee is responsible for establishing and
administering our policies governing the compensation of our
senior executives, including our Named Executive Officers. For a
description of the Compensation Committees charter and
additional information regarding the processes and procedures it
follows in determining executive compensation, see Other
Information What are the responsibilities of our
Board Committees? The Compensation Committee is composed
entirely of independent directors. In accordance with its
charter, the Compensation Committee has adopted executive
compensation policies that are designed to achieve the following
four objectives:
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Attract and retain top talent;
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Motivate and reward the performance of officers in support of
achievement of the Companys strategic, financial and
operating performance objectives;
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Ensure that our total compensation package is competitive in
comparison to our peers, and that the programs are consistent
with the highest standards of good corporate governance and best
practices within our industry; and
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Align our executives interests with the long-term
interests of our stockholders through awards of stock options
and restricted stock units.
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21
Comparison
Group for Executive Compensation Purposes
In order to ensure that we are able to attract and retain the
highest caliber management, we analyze our total compensation to
ensure that it is comparable to that offered by competitors for
the Companys management talent. Specifically for 2007, we
considered the following companies, which we will refer to in
this Proxy Statement as the Comparison Group:
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Archer-Daniels-Midland Company
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The J.M. Smucker Company
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Campbell Soup Company
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Kellogg Company
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The Clorox Company
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Kimberly-Clark Corporation
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Coca-Cola
Enterprises Inc.
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Kraft Foods Inc.
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Colgate-Palmolive Company
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McCormick & Co., Incorporated
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ConAgra Foods, Inc.
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The Pepsi Bottling Group, Inc.
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Cott Corporation
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The Procter & Gamble Company
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Del Monte Foods Company
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Sara Lee Corporation
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General Mills, Inc.
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Smithfield Foods, Inc.
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H.J. Heinz Company
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Tyson Foods, Inc.
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The Hershey Company
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Wm. Wrigley Jr. Company
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Hormel Foods Corporation
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The Comparison Group was selected based on analysis conducted by
Mercer, with the approval of the Compensation Committee. The
Compensation Committee believes this is the appropriate
Comparison Group because it consists of consumer packaged goods
companies against whom we compete for executive talent. The
Comparison Group is reviewed at least annually by the
Compensation Committee with input from its outside compensation
consultant.
Elements
of Compensation
The Companys executive compensation program is composed of
the following elements:
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Base salary;
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Annual cash incentives, which we will refer to as short-term
incentive compensation;
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Long-term incentives, which for the Named Executive Officers and
other senior executives consist of stock options and restricted
stock units;
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Our Executive Deferred Compensation Plan and Supplemental
Executive Retirement Plan; and
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Other Perquisites.
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The Company does not maintain an ERISA qualified defined benefit
pension plan for the Chief Executive Officer or for any of the
other Named Executive Officers.
Agreements
with Named Executive Officers
In general, we enter into letter agreements with our executive
officers that govern his or her terms of employment. Such
employment agreements generally state the executives base
salary, signing bonus, if any, annual short-term incentive
compensation opportunity, long-term incentive awards to be
granted upon hire or in the future, if applicable, and any other
benefits, such as relocation benefits, COBRA reimbursement, and
eligibility for the Dean Foods Executive Severance Pay Plan.
Neither Mr. Engles nor Ms. Goolsby has such an
agreement with the Company.
Compensation
Methodology
In order to ensure that managements interests are aligned
with those of stockholders and to motivate and reward individual
initiative and effort, we emphasize a pay for performance
compensation program so that
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attainment of Company, business unit and individual performance
goals are rewarded. Through the use of performance-based plans
that emphasize attainment of Company
and/or
business unit goals, we seek to foster an attitude of teamwork,
and the use of tools such as equity ownership is important to
ensure that the efforts of management are consistent with the
objectives of our stakeholders.
Role of Compensation Consultant. The
Compensation Committee has engaged Mercer Human Resource
Consulting, Inc. as its outside compensation consultant. The
Compensation Committee relies on the compensation consultant to
collect and analyze market compensation data. In addition, the
compensation consultant assists the Compensation Committee in
validating the Companys performance relative to the awards
made under our long-term incentive plans. The Compensation
Committee works with the compensation consultant to ensure that
position descriptions are appropriately comparable between our
Company and those companies in our Comparison Group and to
properly adjust the raw data so that it is appropriate for a
company of our size. Using this data, the compensation
consultant makes preliminary compensation recommendations based
on our Compensation Committees compensation philosophy.
The compensation consultant was retained by the Compensation
Committee and reports directly to the Compensation Committee
chairman. Although the Compensation Committee approves the scope
of the consultants work and its fees, the consultant works
with management as well to ensure that the consultants
advice and recommendations reinforce the Companys business
strategy and are consistent with the Companys pay for
performance philosophy.
Examples of services provided to the Compensation Committee by
the compensation consultant include, but are not limited to, the
following:
|
|
|
|
|
participation in Compensation Committee meetings as advisor to
the Committee;
|
|
|
|
market assessments of executive total compensation;
|
|
|
|
consultations on the design of annual and long-term incentive
plans;
|
|
|
|
periodic updates on market trends;
|
|
|
|
quarterly
and/or
monthly calculations of Total Stockholder Return performance for
long-term incentive plan compensation purposes;
|
|
|
|
assessment of Board of Director compensation; and
|
|
|
|
preparation of tally sheets for executive compensation.
|
Mercer provides advice and assistance to the Company in several
areas outside of executive compensation, including the
following: retirement consulting, which includes actuarial
valuations; consulting on multi-employer plans and bargaining
agreements, plan consolidations and government forms; defined
benefit outsourcing; internal job grading and benchmarking for
non-executive employees; health and benefit outsourcing and
consulting; and compensation software. Mercer operates its
compensation practice as a separate business unit from its other
services, and we have been advised that the compensation of its
compensation consultants is based solely on the fees generated
by the executive compensation practice. The Compensation
Committee has reviewed the other services provided to the
Company by Mercer and has determined that Mercers
executive compensation consultants are sufficiently objective to
provide executive compensation services to the Compensation
Committee. In addition, the Compensation Committee adopted the
following policy with respect to the compensation consultant:
|
|
|
|
|
The engagement letter with the Compensation Committees
compensation consultant is executed by the compensation
consultant and the Chair of the Compensation Committee.
|
|
|
|
The executive compensation services provided by the compensation
consultant are approved by the Compensation Committee.
|
|
|
|
At least biannually, the Compensation Committee reviews all
other support services provided by the compensation consultant
or its affiliates to the Company.
|
23
To determine the 2007 compensation for our Named Executive
Officers, the Compensation Committee directed Mercer to provide
it with a compilation of base salary, short-term incentive
compensation and long-term incentive compensation for senior
executives with similar responsibilities, including positions
within business groups, within the companies in the Comparison
Group. The Compensation Committee also directed Mercer to rank
our executive officers compensation by percentile as
compared to those senior executives in the Comparison Group for
base salary, short-term incentive compensation and long-term
incentive compensation. The Compensation Committee used these
rankings as a component in determining base salary, annual
short-term incentive compensation and long-term incentive awards
for the Named Executive Officers and other senior executives, in
addition to the consideration of the achievement of performance
targets and the subjective evaluation of such officers
overall performance and contribution to the Companys
results as will be discussed in more detail below. In addition
to the Comparison Group, the Compensation Committee may also
consider general industry data where such additional information
may be helpful.
The Compensation Committee met throughout 2007 with Mercer,
members of the management team and independently to keep
apprised of compensation metrics with respect to the executive
officers and other senior officers of the Company. In February
2007, the Compensation Committee met to approve short-term
incentive payouts for fiscal 2006, to approve the long-term
incentive grants for 2007 and to review the short-term incentive
compensation plan for 2007. In April and May, the Compensation
Committee met to further discuss and approve the short-term
incentive compensation plan, and receive updates on performance
to date compared to targets set forth in the plan. In August,
the Compensation Committee met with Mercer to review market
trends in executive compensation. In October, the Compensation
Committee met with Mercer to review data comparing total
stockholder return of the Company to that of the Comparison
Group. In November, the Compensation Committee met to compare
the Companys preliminary performance overall and by
business unit, and to review preliminary recommendations with
respect to compensation. In January 2008, the Compensation
Committee met to approve the long-term incentive grants. In
February 2008, the Compensation Committee met to review and
approve short-term incentive compensation payouts for the Named
Executive Officers, which were paid in February of 2008. The
Compensation Committee strives to keep an ongoing dialogue with
management and its compensation consultant throughout the year
with respect to executive compensation issues.
Compensation of the Chief Executive
Officer. At the beginning of each year, the
Compensation Committee establishes specific objectives for the
Chief Executive Officer for the upcoming year. In December of
each year, the Chief Executive Officer completes a self
evaluation in which he evaluates his performance against these
goals. In addition, the Compensation Committee, along with the
Chair of the Governance Committee, meets to review the Chief
Executive Officers goals and to review his self
evaluation. In January of the following year, the Compensation
Committee and Governance Committee Chair prepare a draft Chief
Executive Officer assessment and distribute the assessment to
the full Board of Directors for further input and comments. In
February, the Compensation Committee considers the results of
this assessment in determining the Chief Executive
Officers short-term incentive payout percentage. In March,
the Chief Executive Officer assessment is finalized and
communicated to the Chief Executive Officer. The objectives that
were established for the Chief Executive Officer for 2007 are
discussed below under the heading Annual Cash
Compensation Short-Term Incentive Compensation.
When considering Mr. Engles compensation, the
Compensation Committee compares base salary, short-term
incentive compensation, long-term incentive compensation and
total compensation to that of each Chief Executive Officer in
the Comparison Group. The Compensation Committee then uses this
information to set Mr. Engles compensation using the
measures described below under Annual Cash
Compensation Base Salary and Short-Term
Incentive Compensation, and Long-Term Equity
Incentive Compensation. Mr. Engles target total
annual compensation is at or near the 65th percentile of
total compensation for chief executive officers of companies
included in the Comparison Group.
The difference between Mr. Engles compensation and
the other Named Executive Officers reflects the significant
difference in their responsibilities. In general, the Chief
Executive Officers compensation is much higher than that
of other executive officers of public companies. The Chief
Executive Officer is directly responsible for driving the
strategy of the Company, and for ensuring that the strategy is
fully executed across the Company,
24
which encompasses all business units and functions across the
Company. In addition, the Chief Executive Officer is directly
responsible for selecting, retaining and coaching the executive
team that will execute corporate strategy.
Role of Chief Executive Officer in Compensation of Other
Executive Officers. A similar process of setting
objectives and reviewing performance against these objectives is
used by the Chief Executive Officer for each member of his
leadership team, which includes the other Named Executive
Officers. At the beginning of the year, the Compensation
Committee, with input from the Chief Executive Officer,
establishes specific objectives for each executive officer,
which are tracked throughout the year by the Compensation
Committee. In December of each year, each executive officer
completes a self evaluation and submits it to the Chief
Executive Officer. The Chief Executive Officer then meets with
each executive officer to review that officers self
evaluation and to assess that officers performance. In
February of the following year, the executive officers
assessments and the Chief Executive Officers recommended
pay-out percentages for short-term incentive compensation are
presented to the Compensation Committee for further input and
comments. Mr. Engles based his 2007 compensation
recommendations on the same Comparison Group market data
reviewed by the Compensation Committee and his subjective review
of each executive officers overall performance and
contribution to the Company. While the Compensation Committee
considers the recommendations of the Chief Executive Officer
with respect to these elements of compensation, the Compensation
Committee independently evaluates the recommendations and makes
all final compensation decisions.
Compensation
Mix
Because of the ability of executive officers to directly
influence the overall performance of the Company, and consistent
with our philosophy of linking pay to performance, it is our
goal to allocate a significant portion of compensation paid to
our executive officers to performance-based, short- and
long-term incentive programs. In addition, as an employees
responsibility and ability to affect the financial results of
the Company increases, base salary becomes a relatively smaller
component of total compensation and long-term, equity-based
compensation becomes a larger component of total compensation.
For 2007, our Named Executive Officers received a payout of only
a portion of their target short-term incentive compensation due
to the Companys financial performance. As a result, for
2007, each Named Executive Officers base salary and
long-term incentive compensation represented a larger percentage
of their total annual compensation than in previous years. See
the Summary Compensation and Grants of Plan-Based Awards tables
on pages 32 and 34 of this Proxy Statement.
Annual
Cash Compensation
Base Salary. The base salary component of our
compensation program is intended to compensate our senior
executives for their job responsibilities and the
executives level of experience and allows us to attract
and retain top talent, consistent with our objectives. It is our
practice to set the base salary levels at approximately the
60th percentile of the Comparison Group and the overall
general industry, adjusted to reflect each executives
individual performance and contributions. In some cases, when an
executive is recruited from another company, the base salary may
exceed the levels indicated, which may be necessary in order to
attract the executive.
Base salaries are reviewed annually by the Compensation
Committee. Adjustments are made based on changes in the
Comparison Group and on the performance of the executive,
considering recommendations from the Chief Executive Officer for
all executives except himself. The Compensation Committee
separately reviews the performance of the Chief Executive
Officer, as described above, and makes adjustments as warranted.
25
The table below discloses base salary for each NEO in fiscal
years 2006 and 2007.
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
|
Fiscal Year
|
|
NEO
|
|
2006 Salary
|
|
|
2007 Salary
|
|
|
Gregg L. Engles
|
|
$
|
1,200,000
|
|
|
$
|
1,275,000
|
|
Jack F. Callahan, Jr.
|
|
|
460,000
|
(1)
|
|
|
480,000
|
|
Joseph E. Scalzo
|
|
|
620,000
|
|
|
|
660,000
|
|
Michelle P. Goolsby
|
|
|
515,000
|
|
|
|
535,000
|
|
Gregg A. Tanner
|
|
|
N/A
|
|
|
|
525,000
|
(2)
|
Alan J. Bernon
|
|
|
620,000
|
|
|
|
660,000
|
|
|
|
|
(1) |
|
Represents Mr. Callahans annualized 2006 base salary.
Mr. Callahan joined us in May of 2006. |
|
(2) |
|
Represents Mr. Tanners annualized 2007 base salary.
Mr. Tanner joined us in November of 2007. |
The merit increases were reviewed by the Compensation Committee
in November and approved in December of 2006 and became
effective January 1, 2007. Changes were made based largely
on increases to the base salary of our Comparison Group, as well
as individual performance of each of the NEOs.
Short-Term Incentive Compensation. Short-term
incentive compensation is designed to motivate our senior
executives to achieve annual financial and other goals based on
the strategic, financial and operating performance objectives of
the Company. In conjunction with our review of the strategic and
operating plans of the Company, we establish target short-term
incentive pay-out levels for each executive tied to the
Companys performance, the performance of particular
operating units over which an executive has control and on
individual goals, or some combination thereof. It is our
practice to set target bonus levels between the median and the
75th percentile of the Comparison Group.
For 2007, cash incentive payments were based on the 2007
Short-Term Incentive Compensation Plan approved by our Board of
Directors. Our program places significant weight on the
achievement of financial objectives. For 2007, we used
achievement and growth in earnings per share for positions in
our corporate office, a combination of achievement and growth in
earnings per share and in operating income for our Dairy Group
segment and achievement and growth in operating income of the
Company and operating income and net sales for our WhiteWave
segment as the key financial metrics, as we believe sustained
performance in these areas is consistent with the expectations
of our stockholders. The individual objectives for the Chief
Executive Officer were set by the Compensation Committee, and
for the executive officers by the Chief Executive Officer with
review and input by the Compensation Committee.
Pursuant to our 2007 Short-Term Incentive Compensation Plan, the
target cash incentive for our corporate executives consisted of
two components: the Companys performance against an
adjusted earnings per share (EPS) target of $1.72 per share, and
the individual participants performance against his or her
individual objectives. Adjusted EPS consists of diluted net
income per share, adjusted to eliminate the net gain or net
expense from certain non-recurring items, consistent with the
disclosures provided in our earnings releases. Each corporate
executive was eligible for a maximum 200% payout on the adjusted
EPS portion of the cash incentive if the Company attained an
adjusted EPS of $1.81. Each corporate executive was eligible for
a 20% payout of the adjusted EPS portion of the cash incentive
if the Company attained an adjusted EPS of $1.65, or 96% of the
target. If the Company attained an adjusted EPS of less than
$1.65, corporate executives were not eligible for any payout of
the adjusted EPS portion of the cash incentive. In addition,
each corporate executive was eligible for a 120% payout on the
individual objective portion of the cash incentive if the
individual objectives were exceeded, which could have been
multiplied by up to 200% had the adjusted EPS target been
exceeded as described above.
For 2007, Mr. Engles individual objectives included
performance in the following categories: development and
execution of the Companys strategic plan; certain
organizational development initiatives; maintaining credibility
with the investment community; development of the Companys
senior management; and leadership in establishing and
maintaining a culture of compliance, ethical behavior and social
responsibility throughout the Company.
26
Mr. Callahans individual objectives included
performance in the following categories: the achievement of
certain business and strategic objectives; and continuing
progress in infrastructure initiatives.
Mr. Scalzos short-term cash incentive was subject to
the criteria applicable to the senior leadership of our
WhiteWave segment, including performance in the following
categories: the achievement of financial goals of the WhiteWave
segment of $1,370.9 million in net sales and
$132.7 million in operating income for fiscal 2007; the
achievement of $675.8 million of the Companys overall
operating income, adjusted to eliminate the net gain or net
expense from certain non-recurring items, consistent with the
disclosures provided in our earnings releases; and individual
objectives. The individual objective payout percentages for
WhiteWave could have been increased or decreased based on
WhiteWaves financial performance. Mr. Scalzos
individual objectives included the achievement of certain
business and strategic objectives, and building engagement,
process and functional capabilities.
Ms. Goolsbys individual objectives included
performance in the following categories: corporate governance
and compliance matters; organizational development; and the
facilitation and support of other strategic initiatives.
Mr. Tanner joined us in November of 2007. Pursuant to his
offer letter executed in connection with his employment, which
was attached as Exhibit 10.2 to our Quarterly Report on
Form 10-Q
for the period ended September 30, 2007, Mr. Tanner
was guaranteed a bonus of the greater of 100% of his target cash
incentive for 2007 or the actual calculated amount, prorated
based on the number of months he worked in 2007.
Pursuant to the Separation and Release Agreement between
Mr. Bernon and the Company, which was attached as
Exhibit 10.1 to our Quarterly Report on
Form 10-Q
for the period ended September 30, 2007, Mr. Bernon
received a bonus representing the individual objective component
of his target bonus, prorated for eight months. His compensation
is discussed further under the heading Do we have
agreements with our Named Executive Officers?
Separation and Release Agreement with Alan J. Bernon on
page 39 of this Proxy Statement.
The following table provides, for each Named Executive Officer
serving as such at the end of the fiscal year, each element of
cash incentive payment and the relative weight assigned to each
of the elements described above:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual
|
|
|
|
|
|
|
Company
|
|
|
Business Unit
|
|
|
Objective
|
|
|
|
|
|
|
Performance(1)
|
|
|
Performance
|
|
|
Performance
|
|
|
Total
|
|
|
Gregg L. Engles
|
|
|
80
|
%
|
|
|
|
|
|
|
20
|
%
|
|
|
100
|
%
|
Jack F. Callahan, Jr.
|
|
|
70
|
%
|
|
|
|
|
|
|
30
|
%
|
|
|
100
|
%
|
Joe E. Scalzo
|
|
|
20
|
%(2)
|
|
|
50
|
%(3)
|
|
|
30
|
%
|
|
|
100
|
%
|
Michelle P. Goolsby
|
|
|
70
|
%
|
|
|
|
|
|
|
30
|
%
|
|
|
100
|
%
|
Gregg A. Tanner
|
|
|
70
|
%
|
|
|
|
|
|
|
30
|
%
|
|
|
100
|
%
|
|
|
|
(1) |
|
Consists of adjusted EPS of $1.72 for all Named Executive
Officers except Mr. Scalzo. |
|
(2) |
|
Consists of the Companys consolidated operating income. |
|
(3) |
|
Consists of 25% WhiteWave net sales and 25% WhiteWave operating
income. |
In February 2008, the Compensation Committee assessed
performance against the financial goals for corporate
performance and business unit performance established at the
beginning of 2007. The results of this assessment are set forth
in the table below. In addition, the Compensation Committee
assessed performance against the strategic performance goals
that comprised the individual objective portion of the Named
Executive Officers goals. With respect to these goals, the
Committee determined that most were successfully achieved or
exceeded, based on the Named Executive Officers leadership
and execution of organizational objectives that furthered the
Companys long-term strategic plans. On balance, the
Committee determined that the payout percentage for the
individual objective portion of the goals should be at target
for each of the Named Executive Officers respective
individual objective percentage.
The chart below shows the eligible short-term cash incentive
percentage payout possible based on our fiscal 2007 results, for
each Named Executive Officer serving as such at the end of the
fiscal year, for each of the stated
27
elements of annual cash incentive for Mr. Engles
(Corporate CEO), Ms. Goolsby, Mr. Callahan
and Mr. Tanner (Corporate Non CEO), and
Mr. Scalzo (WhiteWave):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual
|
|
|
|
|
|
|
Company
|
|
|
Business Unit
|
|
|
Objective
|
|
|
Total Eligible
|
|
|
|
Performance
|
|
|
Performance
|
|
|
Performance
|
|
|
Payout
|
|
|
Corporate CEO
|
|
|
0
|
%(1)(4)
|
|
|
N/A
|
|
|
|
20
|
%
|
|
|
20
|
%
|
Corporate Non CEO
|
|
|
0
|
%(1)(4)
|
|
|
N/A
|
|
|
|
30
|
%
|
|
|
30
|
%
|
WhiteWave
|
|
|
0
|
%(2)(4)
|
|
|
25
|
%(3)
|
|
|
30
|
%
|
|
|
55
|
%
|
|
|
|
(1) |
|
On an adjusted basis, the Companys diluted EPS was $1.20.
For the full year ended December 31, 2007, the adjusted EPS
differs from the Companys EPS under GAAP of $0.95 as set
forth in footnote (4) to this table. |
|
(2) |
|
The Company reported consolidated adjusted operating income of
$589.7 million. For the full year ended December 31,
2007, the consolidated adjusted operating income differs from
the Companys operating income under GAAP of
$553.6 million as set forth in footnote (4) to this
table. |
|
(3) |
|
For fiscal 2007, our WhiteWave segment reported net sales of
$1,372.5 million and operating income of
$118.4 million. |
|
(4) |
|
For the year ended December 31, 2007, the adjusted results
reported above differ from the Companys results under GAAP
by excluding the following facility closing, reorganization, and
other nonrecurring charges: |
|
|
|
|
|
$36.1 million charge ($22.0 million net of income tax)
related to the realignment of our Dairy Groups finance and
accounting organization, the Dairy Groups management
realignment, workforce reduction activities in the Dairy
Groups operations, and previously announced facility
closings, as well as the sale of our tofu business; and
|
|
|
|
$19.8 million charge ($12.0 million net of income tax)
related to non-recurring special dividend costs, including the
write-off of finance costs resulting from the completion of our
new senior credit facility.
|
The table below shows the short-term incentive compensation
payout opportunities for fiscal year 2007 and the actual payouts
for the Named Executive Officers serving as such at the end of
the fiscal year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY07
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
Annual Incentive Plan Maximum
|
|
|
Annual
|
|
|
FY07 Actual
|
|
|
|
Target
|
|
|
Annual
|
|
|
Corporate/
|
|
|
|
|
|
Total
|
|
|
Incentive
|
|
|
Annual
|
|
Named
|
|
As % of
|
|
|
Incentive
|
|
|
Business Unit
|
|
|
Individual
|
|
|
Maximum
|
|
|
Award As a %
|
|
|
Incentive
|
|
Executive Officer
|
|
Salary
|
|
|
Plan Target
|
|
|
Objectives
|
|
|
Objectives(1)
|
|
|
Payout
|
|
|
of Target
|
|
|
Award
|
|
|
Gregg L. Engles
|
|
|
120
|
%
|
|
$
|
1,530,000
|
|
|
$
|
2,448,000
|
|
|
$
|
734,400
|
|
|
$
|
3,182,400
|
|
|
|
20
|
%
|
|
$
|
306,000
|
|
Jack F. Callahan, Jr.
|
|
|
70
|
%
|
|
|
336,000
|
|
|
|
470,400
|
|
|
|
241,920
|
|
|
|
712,320
|
|
|
|
30
|
%
|
|
|
100,800
|
|
Joe E. Scalzo
|
|
|
80
|
%
|
|
|
528,000
|
|
|
|
739,200
|
|
|
|
316,800
|
|
|
|
1,056,000
|
|
|
|
55
|
%
|
|
|
290,400
|
|
Michelle P. Goolsby
|
|
|
70
|
%
|
|
|
374,500
|
|
|
|
524,300
|
|
|
|
269,640
|
|
|
|
793,940
|
|
|
|
30
|
%
|
|
|
112,350
|
|
Gregg A. Tanner
|
|
|
70
|
%
|
|
|
61,250
|
(2)
|
|
|
85,750
|
(2)
|
|
|
44,100
|
(2)
|
|
|
129,850
|
(2)
|
|
|
100
|
%
|
|
|
61,250
|
|
|
|
|
(1) |
|
Calculated at 120% of each executive officers individual
objective portion, except for Mr. Scalzo, who was eligible
for 100% of his individual objective portion, multiplied by
200%, the maximum award based on corporate or business unit
performance. |
|
(2) |
|
Calculated based on Mr. Tanners prorated salary for
two months of 2007. Mr. Tanner received 100% of his target
bonus pursuant to his employment agreement. |
The incentive payments were paid to the Named Executive Officers
in February 2008 and are included in the Summary Compensation
Table.
Long-Term
Equity Incentive Compensation
We believe that a significant portion of each senior
executives compensation should be dependent on long-term
value created for our stockholders. Our current program is
designed to align the results achieved for stockholders with the
rewards provided to our senior executives. Each year we compare
our total stockholder return
28
(TSR) for the previous three years, which combines
share price appreciation and dividends paid to show the total
return to one stockholder over that period of time, to that of
our Comparison Group. The value of the long-term incentive
awards provided is based primarily on the results of this
comparison. If our performance is at the 75th percentile or
above, the awards are made at the 75th percentile of those
provided to similar positions in the Comparison Group. If our
performance is at the 25th percentile or below, the awards
are made at levels equivalent to the 25th percentile within
our Comparison Group. For results between the 25th and
75th percentiles, the value of the awards made is
consistent with the level of performance within the Comparison
Group. The value of the awards may be adjusted up or down by the
Compensation Committee depending upon the performance of the
individual executive officer; however, for awards granted in
fiscal 2007, no material adjustments were made.
Our awards are currently provided in the form of stock options
and restricted stock units, referred to as RSUs. Each award is
weighted equally between stock options and RSUs with respect to
dollar valuation, using the Black-Scholes valuation model for
the stock options and the fair market value as of the
determination date, discounted for the vesting period to reflect
potential forfeiture risk, for the RSUs.
Stock options are used to motivate and reward our senior
executives relative to value created for stockholders. RSUs are
used to provide an ongoing retention element and a continuing
link to stockholder value. In general, stock options vest over
three years and RSUs vest over five years in equal portions
following the grant. The vesting of RSUs may be accelerated to
30 months following the date of grant if certain share
price targets are reached over a certain period of time, which
for the outstanding grants is approximately 150% of our stock
price on the date of grant. The Compensation Committee annually
reviews both market practices and trends, and the availability
of shares and units in our incentive program, in determining the
mix of awards.
On April 2, 2007, we paid a special dividend of $15 to each
stockholder of record on March 27, 2007. As a result, the
amount of outstanding unvested RSUs and the amount and exercise
prices of our outstanding unexercised stock options were
adjusted in accordance with our stock option plan to reflect the
adjustment in market value of our common stock as a result of
the dividend. Such adjustments were made pro rata to all plan
participants who had outstanding RSUs or stock options,
including our NEOs.
Through November 30 of 2006, our three-year TSR was at the
90th percentile relative to the Comparison Group. As such,
our long-term incentive awards, which were granted in February
2007, were set at the 75th percentile. For details
regarding stock options and RSUs granted to the NEOs in fiscal
2007, see the table entitled Grants of Plan-Based Awards
During Fiscal Year 2007 in this Proxy Statement.
Timing
of Long-Term Equity Grants
Our policies and stock option plans require that stock options
have an exercise price equal to the closing price of the
Companys stock on the date of grant. In 2007, as required
by our policy at the time, we granted long-term incentive
compensation on February 12, 2007. Beginning in 2008, our
policies require that annual stock option and RSU grants to
senior executives and other employees be made by the
Compensation Committee at a meeting held on January 15 of each
year, or the next succeeding business day if January 15 is not a
business day. The Compensation Committee has the ability to
postpone the annual grant date if circumstances warrant such
postponement.
Our Chief Executive Officer and two designated Executive Vice
Presidents have limited authority to grant stock options and
restricted stock units in connection with the hiring of new
employees or the promotion or special recognition of selected
employees. These recruiting and recognition grants may not
exceed 400,000 shares in total annually and may not be made
to any executive officer of the Company. In addition, no
individual grant may exceed 50,000 shares without the
Compensation Committees approval. These recruiting and
recognition grants are made on the first business day of each
month for all employees selected for awards in the preceding
month or whose employment began during the preceding month.
Deferred
Compensation Plan and Supplemental Employee Retirement
Plan
Employees of the Company with a base compensation in excess of
$150,000, including the Named Executive Officers, may defer a
portion of their salary and bonus each year into the Dean Foods
Deferred Compensation Plan,
29
which is a tax deferred plan. This program is intended to
promote retention by providing a long-term savings opportunity
on a tax-efficient basis. A deferred salary and bonus plan is a
strong retention tool for our eligible executives. We believe
this program is similar to that offered at most of the companies
in our Comparison Group. Several Named Executive Officers have
elected to defer both salary and bonus over their careers with
us. The amounts deferred are partially funded and unsecured
obligations of the Company, receive no preferential standing,
and are subject to the same risks as any of the Companys
other unsecured obligations. The participants in this plan may
choose from a number of externally managed mutual fund
investments, and their investment balances track the rates of
return for these accounts. For more information on amounts
deferred pursuant to the Deferred Compensation Plan, see the
table entitled Nonqualified Deferred Compensation for
Fiscal Year 2007 on page 36 of this Proxy Statement.
In addition, we maintain a Supplemental Executive Retirement
Plan (SERP), which is a nonqualified deferred compensation
arrangement for our executive officers and other employees
earning compensation in excess of the maximum compensation that
can be taken into account with respect to the Dean Foods 401(k)
Plan, as set forth in the Internal Revenue Code. The SERP is
designed to provide these employees with retirement benefits
from the Company that are equivalent, as a percentage of total
compensation, to the benefits provided to other employees. The
Company credits to each eligible employees account an
amount equal to 4% of his or her covered compensation in excess
of the maximum described above, and credits interest on those
balances at the mid-term applicable federal rate set by the
Internal Revenue Service, plus 1%. Each employees plan
balance will be paid to him or her upon termination of
employment, a change in control or the employees death or
qualifying disability.
Other
Compensation
We provide our executive officers with a limited number of
perquisites. These are designed to minimize the amount of time
they devote to administrative matters other than Company
business, promote a healthy work/life balance and provide
opportunities for developing business relationships. For
example, we make available to our executive officers a health
screening program which helps to maintain their overall health.
We encourage our officers to take advantage of this service. In
addition, the Compensation Committee has approved club
memberships for certain of our executive officers.
The Compensation Committee has also approved certain personal
use of the corporate aircraft as described in the Summary
Compensation Table. The Compensation Committee believes the
enhanced security and efficiency this benefit provides is
appropriate and is in the best interests of the Company and our
stockholders. The incremental cost to us of providing personal
travel on corporate aircraft is included in the Summary
Compensation Table on page 32 of this Proxy Statement.
The Compensation Committee has also approved the payment of
relocation costs when hiring or moving executive officers and
other employees. The Compensation Committee believes it is
appropriate and necessary to pay these costs in attracting and
retaining top talent in the locations where we operate. The
incremental cost to us of providing relocation benefits is
included in the Summary Compensation Table on page 32 of
this Proxy Statement.
We purchase tickets to various cultural, charitable, civic,
entertainment and sporting events for business development and
relationship building purposes, as well as to maintain our
involvement in communities in which the Company operates and our
employees live. Occasionally, our employees, including our
executives, make personal use of tickets that would not
otherwise be used for business purposes.
Our senior executives participate in the Companys
broad-based programs generally available to all employees,
including our 401(k) retirement plan, health and dental and
various other insurance plans, including disability and life
insurance. For additional information regarding perquisites and
other compensation, see the Summary Compensation Table on
page 32 of this Proxy Statement.
Severance
and Change in Control Benefits
We have entered into agreements with each of our executive
officers pursuant to which we would provide certain payments in
the event of a qualified termination as described under the
heading Executive Officer Severance Potential
Benefits Upon a Change in Control following a change in
control. A copy of the form of
30
these change in control agreements is filed with the SEC as
Exhibit 10.21 to the Companys Annual Report on
Form 10-K
for the year ended December 31, 2007. Generally, the
executive officer would be paid a lump sum of cash equal to
three times his or her base annual salary and his or her target
bonus for the year, plus a
gross-up
payment for excise taxes, insurance benefits, outplacement
services and certain other benefits.
The Compensation Committee believes that change in control
benefits are important for attracting and retaining executive
talent and help to ensure that executive officers can remain
focused during periods of uncertainty. These are particularly
important in an environment where merger and acquisition
activity is high. We believe that our change in control benefits
are consistent with those maintained by comparable companies.
The change in control agreements also include provisions to
lessen the impact of the federal excise tax on excess
parachute payments. The so-called golden
parachute tax rules subject excess parachute
payments to a dual penalty: the imposition of a 20% excise
tax upon the recipient and non-deductibility of such payments by
the paying corporation. Excess parachute payments
are those payments that exceed three times the individuals
base amount (generally an average of the
individuals
W-2
compensation from the Company for the five years preceding the
year in which the change in control occurs). Depending upon
circumstances, the excise tax can effectively discriminate
against new hires who have not received previous compensation
from the Company, newly promoted employees depending on their
historical compensation from the Company, individuals who have
not exercised stock options and those who elect to defer
compensation. For these reasons, we believe that the provision
of the excise tax
gross-up is
appropriate. Estimated payments to the Named Executive Officers
pursuant to the change in control agreements are summarized
under the heading Executive Officer Severance
Potential Benefits upon a Change in Control.
We also maintain a severance plan for our executive officers,
other than the Chief Executive Officer, which provides certain
severance benefits in the event of a qualified termination
defined as other than for cause or if the executive
officer terminates his or her employment due to a reduction in
compensation or scope of duties or relocation (as described
under Estimated Payments Upon a Qualified
Termination). A copy of the Companys Executive
Severance Pay Plan, which was approved by the Compensation
Committee, is on file with the SEC as Exhibit 10.10 to the
Companys Annual Report on
Form 10-K
for the year ended December 31, 2007. Generally, upon a
qualified termination, an executive officer would receive a cash
payment equal to two times his or her base annual salary plus
his or her target bonus and a cash payment for the in-the-money
value of stock options and restricted stock units that would
vest during the two years following the date of severance and
certain health benefits and outplacement services. We believe
this plan helps create stability during periods of significant
change and enables us to avoid negotiating individual severance
arrangements with new hires. We also believe this plan reduces
the likelihood and extent of litigation from executive
severance. We believe that our severance benefits are consistent
with those maintained by comparable companies. Estimated
payments to the Named Executive Officers pursuant to the
Executive Severance Pay Plan are summarized under the heading
Executive Officer Severance Executive
Severance Pay Plan.
Tax
Deductibility Policy
The United States income tax laws generally limit the
deductibility of compensation paid to each Named Executive
Officer to $1 million per year. An exception to this
general rule exists for performance-based compensation that
meets certain Internal Revenue Service requirements. Stock
option awards under the Companys stockholder approved
long-term incentive plans qualify for the exemption offered by
Section 162(m) of the U.S. tax code. Currently, all
other compensation that we pay does not qualify for the
Section 162(m) exemption.
Although deductibility of compensation is preferred, tax
deductibility is not a primary objective of our compensation
programs. We believe it is more important to retain the
flexibility to compensate executive officers competitively. We
will continue to monitor our compensation practices, however,
and consider future opportunities to take advantage of the
Section 162(m) exemption when we believe it is in the best
interest of the Company and its stockholders.
31
Compensation
Committee Report
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with our management. Based on this review and discussion, the
Compensation Committee recommended to our Board of Directors
that the Compensation Discussion and Analysis be included in
this Proxy Statement.
This
report is presented by:
The
members of the Compensation Committee
Joseph S. Hardin, Jr. (Chairman)
Stephen L. Green
John R. Muse
Jim L. Turner
How much
are our Named Executive Officers paid?
The charts presented below should be read in conjunction with
the Compensation Discussion and Analysis set forth above. In
addition, on April 2, 2007, we paid to stockholders of
record as of March 27, 2007, a $15 per share special cash
dividend. As a result of the payment of the special cash
dividend, the number of shares subject to options, the exercise
prices of outstanding options and the number of unvested
restricted stock units were adjusted effective as of
March 27, 2007, in accordance with the terms of the plans
under which they were issued. The information concerning options
and restricted stock units in this Proxy Statement is presented
on a post-adjustment basis for all periods presented.
The following chart shows the compensation paid during fiscal
2006 and 2007 to our Named Executive Officers.
Summary
Compensation Table for Fiscal Year 2007
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Non-Equity
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Incentive Plan
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All Other
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Stock
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Option
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Compensation
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Compensation
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Name and Principal Position
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Year
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Salary
($)(1)
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Bonus ($)
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Awards
($)(2)
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Awards
($)(3)
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($)(4)
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($)(5)(6)(7)
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Total
($)(8)
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Gregg L. Engles
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2007
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1,275,000
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2,897,877
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3,438,636
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306,000
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235,285
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(9)
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8,152,798
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Chairman of the Board and
Chief Executive Officer
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2006
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1,200,000
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3,795,739
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3,386,074
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2,220,480
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423,200
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(10)
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11,025,493
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Jack F. Callahan, Jr.
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2007
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480,000
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553,576
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598,996
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100,800
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75,901
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(12)
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1,809,273
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Executive Vice President and
Chief Financial Officer
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2006
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297,620
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(11)
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271,701
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312,400
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495,880
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262,786
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(13)
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1,640,387
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Joseph E.
Scalzo(14)
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2007
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660,000
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162,250
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1,302,989
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290,400
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70,570
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(15)
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2,486,209
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President and
Chief Executive Officer
WhiteWave Foods
Company and Morningstar
Foods
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Michelle P. Goolsby
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2007
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535,000
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560,779
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662,318
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112,350
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65,897
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(16)
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1,936,344
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Executive Vice President,
Development,
Sustainability and Corporate Affairs
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2006
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515,000
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753,354
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654,837
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555,170
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98,726
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(17)
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2,577,087
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Gregg A. Tanner
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2007
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81,779
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(18)
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400,000
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40,799
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149,419
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61,250
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733,247
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Executive Vice President and
Chief Supply Chain Officer
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Alan J. Bernon
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2007
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440,000
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(19)
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2,316,154
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(20)
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3,147,499
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(21)
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105,600
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3,404,255
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(22)
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9,413,508
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Director and former Dairy
Group President
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2006
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620,000
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1,273,722
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1,206,891
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907,680
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860,157
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(23)
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4,868,450
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(1) |
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Includes salary deferred pursuant to our Deferred Compensation
Plans. |
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(2) |
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Amounts shown reflect restricted stock unit awards granted
pursuant to our 1989 Stock Awards Plan. This column reflects the
expense recognized in 2007 for financial reporting purposes for
the fair value of stock awards granted in 2007 as well as prior
fiscal years, in accordance with FAS 123R. Pursuant to SEC
rules, the amounts shown exclude the impact of estimated
forfeitures related to service-based vesting conditions. The
assumptions used in valuing the stock units we granted are
described under the caption Restricted Stock Units
in Note 10 to our Consolidated Financial Statements
included in our Annual Report on
Form 10-K
for the year ended December 31, 2007. |
32
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(3) |
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Amounts shown reflect stock option awards granted pursuant to
our 1997 Stock Option and Restricted Stock Plan. This column
reflects the expense recognized in 2007 for financial reporting
purposes for the fair value of option awards granted in 2007 as
well as prior fiscal years, in accordance with FAS 123R.
Pursuant to SEC rules, the amounts shown exclude the impact of
estimated forfeitures related to service-based vesting
conditions. The assumptions used in valuing the stock units we
granted are described under the caption Stock
Options in Note 10 to our Consolidated Financial
Statement on
Form 10-K
for the year ended December 31, 2007. |
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(4) |
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See Short-Term Incentive Compensation under the
Annual Cash Compensation section of Compensation Discussion and
Analysis. |
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(5) |
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Does not include group life, health, hospitalization, medical
reimbursement, disability or other benefits that are available
to all non-represented employees, or the incremental cost of any
health-related screenings. |
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(6) |
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Our Compensation Committee approved a supplemental retirement
plan for the benefit of employees who receive salary and bonus
in excess of the amount that IRS regulations allow to be
contributed to a 401(k) plan. The amount shown in this column
includes the amount credited to the Named Executive Officer
under the supplemental executive retirement plan
(SERP). See Deferred Compensation Plan and
Supplemental Employee Retirement Plan in the Compensation
Discussion and Analysis for more information on the SERP. |
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(7) |
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The Amounts shown for personal use of our aircraft by our
executive officers is our incremental cost of operating the
aircraft. The incremental cost of personal travel on our
corporate aircraft is based on our variable cost per hour of
operating aircraft multiplied by the number of hours of personal
travel. |
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(8) |
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Represents the sum of the compensation amounts (expressed in
dollars) shown in the columns to the left. |
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(9) |
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Includes $90,914 for personal use of Company aircraft, $9,000
for 401(k) match benefits, $130,819 for SERP benefits, and
$4,552 for club memberships. |
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(10) |
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Includes $15,338 for club memberships, $8,800 for 401(k) match
benefits, $257,142 for personal use of Company aircraft, and
$141,920 for SERP benefits. |
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(11) |
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Mr. Callahan joined us as Executive Vice President and
Chief Financial Officer in May, 2006. |
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(12) |
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Includes $36,866 for relocation costs, $9,000 for 401(k) match
benefits, and $30,035 for SERP benefits. |
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(13) |
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Includes $229,372 for relocation costs, $30,360 for personal use
of Company aircraft, and $3,054 for SERP benefits. Relocation
costs are the aggregate incremental cost paid by us for the
Named Executive Officers relocation. |
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(14) |
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Mr. Scalzo was not a Named Executive Officer in fiscal 2006. |
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(15) |
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Includes $34,250 for personal use of Company aircraft, $9,000
for 401(k) match benefits, and $27,320 for SERP benefits. |
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(16) |
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Includes $22,290 for personal use of Company aircraft, $9,000
for 401(k) match benefits, and $34,607 for SERP benefits. |
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(17) |
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Includes $53,686 for personal use of Company aircraft, $8,800
for 401(k) match benefits and $36,240 for SERP benefits. |
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(18) |
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Mr. Tanner joined us as Executive Vice President and Chief
Supply Chain Officer in November, 2007. |
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(19) |
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Represents Mr. Bernons base salary through
September 1, 2007. |
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(20) |
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Includes amounts recognized upon immediate vesting of stock
awards in the amount of $1,514,419 in connection with
Mr. Bernons separation from service, and $7,624 for
director fees paid in stock. |
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(21) |
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Includes amounts recognized upon immediate vesting of stock
option awards in the amount of $1,854,527 in connection with
Mr. Bernons separation from service. |
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(22) |
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Includes $3,246,000 for cash severance payment, $63,462 for
accrued but unused vacation, $35,610 for personal use of Company
aircraft, $9,000 for 401(k) match benefits, $44,907 for SERP
benefits, and $5,276 for club memberships. See discussion of
Mr. Bernons Separation and Release Agreement under
Agreements with Named Executive Officers. |
33
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(23) |
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Includes $749,175 relocation costs and interim housing, $52,582
for personal use of Company aircraft, $8,800 for 401(k) match
benefits and $49,600 for SERP benefits. Relocation costs are the
aggregate incremental cost paid by us for the Named Executive
Officers relocation. |
Grants of
Plan-Based Awards in Fiscal Year 2007
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
Estimated Possible Payouts
|
|
|
Estimated Future Payouts
|
|
|
Awards;
|
|
|
Awards;
|
|
|
Exercise or
|
|
|
Fair Value
|
|
|
|
|
|
|
Under Non-Equity
|
|
|
Under Equity
|
|
|
Number of
|
|
|
Number of
|
|
|
Base Price
|
|
|
of Stock
|
|
|
|
|
|
|
Incentive Plan
Awards(1)
|
|
|
Incentive Plan
Awards(2)
|
|
|
Shares of
|
|
|
Securities
|
|
|
of Option
|
|
|
and
|
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Awards
|
|
|
Option
|
|
Name
|
|
Grant Date
|
|
|
($)(3)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
Units
(#)(4)
|
|
|
Options (#)(5)
|
|
|
($/Sh)
|
|
|
Awards ($)
|
|
|
Gregg L. Engles
|
|
|
|
|
|
|
|
|
|
|
1,530,000
|
|
|
|
3,182,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
146,950
|
|
|
|
|
|
|
|
|
|
|
|
4,424,665
|
|
|
|
|
2/12/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
361,497
|
|
|
|
30.11
|
|
|
|
2,982,350
|
|
Jack F. Callahan, Jr.
|
|
|
|
|
|
|
|
|
|
|
336,000
|
|
|
|
712,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,451
|
|
|
|
|
|
|
|
|
|
|
|
796,440
|
|
|
|
|
2/12/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,128
|
|
|
|
30.11
|
|
|
|
545,556
|
|
Joseph E. Scalzo
|
|
|
|
|
|
|
|
|
|
|
528,000
|
|
|
|
1,056,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,390
|
|
|
|
|
|
|
|
|
|
|
|
884,933
|
|
|
|
|
2/12/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
146,950
|
|
|
|
30.11
|
|
|
|
1,212,338
|
|
Michelle P. Goolsby
|
|
|
|
|
|
|
|
|
|
|
374,500
|
|
|
|
793,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,451
|
|
|
|
|
|
|
|
|
|
|
|
796,440
|
|
|
|
|
2/12/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,128
|
|
|
|
30.11
|
|
|
|
545,556
|
|
Gregg A. Tanner(6)
|
|
|
|
|
|
|
|
|
|
|
61,250
|
|
|
|
129,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,556
|
|
|
|
|
|
|
|
|
|
|
|
1,241,649
|
|
|
|
|
12/17/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(7)
|
|
|
|
|
|
|
|
|
|
|
128,700
|
|
|
|
|
11/6/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
216,028
|
|
|
|
26.67
|
|
|
|
1,525,158
|
|
Alan J. Bernon
|
|
|
2/12/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73,475
|
|
|
|
30.11
|
|
|
|
606,169
|
|
|
|
|
(1) |
|
The amounts paid pursuant to these awards are included in the
Summary Compensation Table in the Non-Equity Incentive
Plan Compensation column. See Compensation
Discussion and Analysis Annual Cash
Compensation Short-Term Incentive Compensation
for a description of this plan. |
|
(2) |
|
We did not grant equity incentive plan awards subject to
conditions in fiscal 2007. |
|
(3) |
|
There was no minimum payout for our Named Executive Officers
under our 2007 Short-Term Incentive Compensation Plan. |
|
(4) |
|
Restricted stock unit awards were granted pursuant to our 1989
Stock Awards Plan and reflect adjustments as a result of the $15
special dividend paid on April 2, 2007. Each
employees restricted stock units vest ratably over five
years beginning on the first anniversary of the grant date and
are subject to certain accelerated vesting provisions based
primarily on our stock price, except as otherwise noted. |
|
(5) |
|
Stock option awards were granted pursuant to our 1997 Stock
Option and Restricted Stock Plan and reflect adjustments as a
result of the $15 special dividend paid on April 2, 2007.
Stock option awards vest as follows: one-third on the first
anniversary of grant; one-third on the second anniversary of
grant, and one-third on the third anniversary of grant, except
as otherwise noted. |
|
(6) |
|
Pursuant to Mr. Tanners offer letter, he was
guaranteed the greater of 100% of his target bonus in fiscal
2007 or the actual calculated amount, prorated based on his
start date. We also agreed to grant Mr. Tanner the
restricted stock units and stock options awards set forth in the
table above. For more information, see Employment
Agreement with Gregg A. Tanner under the heading
Agreements with Named Executive Officers. |
|
(7) |
|
Mr. Tanners restricted stock unit award vests in full
on November 1, 2012. In addition, the restricted stock unit
award was granted pursuant to the Companys 2007 Stock
Incentive Plan, and provides for accelerated vesting upon death,
qualified disability or retirement. |
34
Outstanding
Equity Awards at 2007 Fiscal
Year-End(1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards(3)
|
|
|
Stock
Awards(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
Stock That
|
|
|
Stock That
|
|
|
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Have Not
|
|
Name
|
|
Grant Date
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price ($)
|
|
|
Date
|
|
|
Vested (#)
|
|
|
Vested ($)
|
|
|
Gregg L. Engles
|
|
|
02/12/2007
|
|
|
|
|
|
|
|
361,497
|
|
|
|
30.11
|
|
|
|
02/12/2017
|
|
|
|
146,950
|
|
|
|
3,800,127
|
|
|
|
|
01/13/2006
|
|
|
|
213,569
|
|
|
|
427,133
|
|
|
|
25.68
|
|
|
|
01/13/2016
|
|
|
|
104,628
|
|
|
|
2,705,680
|
|
|
|
|
01/07/2005
|
|
|
|
334,134
|
|
|
|
167,066
|
|
|
|
18.30
|
|
|
|
01/07/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
01/13/2004
|
|
|
|
536,234
|
|
|
|
|
|
|
|
17.91
|
|
|
|
01/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
01/06/2003
|
|
|
|
950,101
|
|
|
|
|
|
|
|
14.25
|
|
|
|
01/06/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
01/14/2002
|
|
|
|
1,551,522
|
|
|
|
|
|
|
|
11.69
|
|
|
|
01/14/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
3,585,560
|
|
|
|
955,696
|
|
|
|
|
|
|
|
|
|
|
|
251,578
|
|
|
|
6,505,807
|
|
Jack F. Callahan, Jr.
|
|
|
02/12/2007
|
|
|
|
|
|
|
|
66,128
|
|
|
|
30.11
|
|
|
|
02/12/2017
|
|
|
|
26,451
|
|
|
|
684,023
|
|
|
|
|
05/09/2006
|
|
|
|
53,882
|
|
|
|
107,763
|
|
|
|
25.44
|
|
|
|
05/09/2016
|
|
|
|
42,027
|
(5)
|
|
|
1,086,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
53,882
|
|
|
|
173,891
|
|
|
|
|
|
|
|
|
|
|
|
68,478
|
|
|
|
1,770,841
|
|
Joseph E. Scalzo
|
|
|
02/12/2007
|
|
|
|
|
|
|
|
146,950
|
|
|
|
30.11
|
|
|
|
02/12/2017
|
|
|
|
29,390
|
|
|
|
760,025
|
|
|
|
|
10/11/2005
|
|
|
|
240,020
|
|
|
|
120,008
|
|
|
|
25.85
|
|
|
|
10/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
240,020
|
|
|
|
266,958
|
|
|
|
|
|
|
|
|
|
|
|
29,390
|
|
|
|
760,025
|
|
Michelle P. Goolsby
|
|
|
02/12/2007
|
|
|
|
|
|
|
|
66,128
|
|
|
|
30.11
|
|
|
|
02/12/2017
|
|
|
|
26,451
|
|
|
|
684,023
|
|
|
|
|
01/13/2006
|
|
|
|
42,226
|
|
|
|
84,445
|
|
|
|
25.68
|
|
|
|
01/13/2016
|
|
|
|
21,160
|
|
|
|
547,198
|
|
|
|
|
01/07/2005
|
|
|
|
64,971
|
|
|
|
32,485
|
|
|
|
18.30
|
|
|
|
01/07/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
01/13/2004
|
|
|
|
104,414
|
|
|
|
|
|
|
|
17.91
|
|
|
|
01/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
01/06/2003
|
|
|
|
164,458
|
|
|
|
|
|
|
|
14.25
|
|
|
|
01/06/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
01/14/2002
|
|
|
|
330,804
|
|
|
|
|
|
|
|
11.69
|
|
|
|
01/14/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
01/22/2001
|
|
|
|
133,137
|
|
|
|
|
|
|
|
8.26
|
|
|
|
01/22/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
840,010
|
|
|
|
183,058
|
|
|
|
|
|
|
|
|
|
|
|
47,611
|
|
|
|
1,231,221
|
|
Gregg A. Tanner
|
|
|
12/17/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(6)
|
|
|
129,300
|
|
|
|
|
11/06/2007
|
|
|
|
|
|
|
|
216,028
|
|
|
|
26.67
|
|
|
|
11/06/2017
|
|
|
|
46,556
|
|
|
|
1,203,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
216,028
|
|
|
|
|
|
|
|
|
|
|
|
51,556
|
|
|
|
1,333,238
|
|
Alan J. Bernon
|
|
|
02/12/2007
|
|
|
|
73,475
|
|
|
|
|
|
|
|
30.11
|
|
|
|
08/02/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
01/13/2006
|
|
|
|
405,514
|
|
|
|
|
|
|
|
25.68
|
|
|
|
08/02/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
01/13/2004
|
|
|
|
65,886
|
|
|
|
|
|
|
|
17.91
|
|
|
|
08/02/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
01/06/2003
|
|
|
|
136,557
|
|
|
|
|
|
|
|
14.25
|
|
|
|
08/02/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
01/14/2002
|
|
|
|
217,682
|
|
|
|
|
|
|
|
11.69
|
|
|
|
08/02/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
899,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts shown reflect outstanding equity awards granted
under our 1989 Stock Awards Plan and our 1997 Stock Option and
Restricted Stock Plan (the Equity Plans). |
|
(2) |
|
Numbers shown in the table include adjustments made in
connection with the TreeHouse Foods, Inc. spin-off and previous
stock splits, and reflect adjustments as a result of the $15
special dividend paid on April 2, 2007 to stockholders of
record on March 27, 2007. |
|
(3) |
|
Generally, stock option awards vest as follows: one-third on the
first anniversary of grant, one-third on the second anniversary
of grant, and one-third on the third anniversary of grant,
unless otherwise noted. |
|
(4) |
|
Each restricted stock unit represents the right to receive one
share of common stock in the future. Restricted stock units have
no exercise price. Generally, each grant vests ratably over five
years subject to certain accelerated vesting provisions based
primarily on our stock price, unless otherwise noted. |
35
|
|
|
(5) |
|
The restricted stock units vest ratably over three years,
pursuant to Mr. Callahans employment agreement. |
|
(6) |
|
The restricted stock units vest in full on November 1,
2012, pursuant to Mr. Tanners employment agreement.
In addition, the restricted stock unit award was granted
pursuant to the Companys 2007 Stock Incentive Plan, and
provides for accelerated vesting upon death, qualified
disability or retirement. |
Option
Exercises and Stock Vested in Fiscal Year 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Shares Acquired
|
|
|
Value Realized
|
|
|
Shares Acquired
|
|
|
Value Realized
|
|
|
|
|
Name
|
|
on Exercise (#)
|
|
|
on Exercise
($)(1)
|
|
|
on Vesting (#)
|
|
|
on Vesting
($)(2)
|
|
|
|
|
|
Gregg L. Engles
|
|
|
|
|
|
|
|
|
|
|
151,026
|
|
|
|
5,202,106
|
|
|
|
|
|
Jack F. Callahan, Jr.
|
|
|
|
|
|
|
|
|
|
|
16,019
|
|
|
|
527,185
|
|
|
|
|
|
Joseph E. Scalzo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michelle P. Goolsby
|
|
|
130,521
|
|
|
|
2,344,226
|
|
|
|
29,861
|
|
|
|
1,029,396
|
|
|
|
|
|
Gregg A. Tanner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan J.
Bernon(3)
|
|
|
49,950
|
|
|
|
355,148
|
|
|
|
16,808
|
|
|
|
347,391
|
|
|
|
|
|
|
|
|
(1) |
|
The value realized on exercise was the number of underlying
shares exercised multiplied by the difference between our
closing stock price on the exercise date and the exercise price
of the options. |
|
(2) |
|
The value realized on vesting was our closing stock price on the
vesting date multiplied by the number of shares vested. |
|
(3) |
|
All of Mr. Bernons outstanding stock options and
restricted stock units granted during his employment with the
Company vested on September 28, 2007 pursuant to the terms
and conditions of his Separation and Release Agreement. |
Deferred
Compensation Plan
Employees of the Company with a base compensation in excess of
$150,000, including the Named Executive Officers, may defer a
portion of their salary and bonus each year into the Dean Foods
Deferred Compensation Plan, which is a tax deferred plan. The
balance in the deferred compensation accounts are unsecured
general obligations of the Company. This program is intended to
promote retention by providing a long-term savings opportunity
on a tax-efficient basis. The Company makes no contributions to
the plan. Several Named Executive Officers have elected to defer
salary
and/or bonus
over their careers with us and have therefore accumulated the
deferred compensation amounts shown below:
Nonqualified
Deferred Compensation for Fiscal Year 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions
|
|
|
Contributions
|
|
|
Earnings
|
|
|
Withdrawals /
|
|
|
Balance
|
|
Name
|
|
in Last FY ($)
|
|
|
in Last FY ($)
|
|
|
in Last FY
($)(1)
|
|
|
Distributions
($)(2)
|
|
|
at Last FYE ($)
|
|
Gregg L. Engles
|
|
|
|
|
|
|
|
|
|
|
(686,213
|
)
|
|
|
|
|
|
|
12,468,889
|
|
Jack F. Callahan, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph E. Scalzo
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michelle P. Goolsby
|
|
|
90,000
|
(3)
|
|
|
|
|
|
|
21,072
|
|
|
|
|
|
|
|
1,434,542
|
|
Gregg A. Tanner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan J. Bernon
|
|
|
|
|
|
|
|
|
|
|
(13,952
|
)
|
|
|
|
|
|
|
253,411
|
|
|
|
|
(1) |
|
The aggregate earnings in last fiscal year reflect the deemed
investment income on deferred account balances. Participants are
responsible for selecting tracking investments and bear the
investment risk based on fund selection and market performance.
The investment alternatives available for tracking purposes
under the plan for 2007 were as follows: Lincoln VIP Money
Market Fund, American Funds US Government Securities Fund,
Lincoln VIP Delaware Bond Fund, American Funds High-Income Bond
Fund, Fidelity VIP Equity-Income |
36
|
|
|
|
|
Portfolio, Fidelity VIP Contrafund Portfolio, DWS Equity 500
Index VIP Class A, American Funds Growth Fund, Neuberger
Berman AMT Regency Portfolio, Neuberger Berman AMT Mid-Cap
Growth Portfolio, Delaware VIP Small Cap Value Series, Lincoln
VIP Baron Growth Opportunities Fund, Fidelity VIP Overseas
Portfolio, Delaware VIP Emerging Markets Series, Delaware VIP
REIT Series and Alliance Bernstein Global Technology Portfolio. |
|
(2) |
|
Participants are required to elect annually the scheduled
in-service distribution of amounts deferred in that annual
period. Participants have the ability to postpone withdrawals to
a later date, while employed, or to the end of their employment
with the Company. |
|
(3) |
|
Ms. Goolsby elected to defer a portion of her 2007
compensation into the plan. This amount has been included in the
Summary Compensation Table. |
Executive
Officer Severance
We maintain two severance plans for our executive officers,
depending on the circumstances that result in their termination.
The Executive Severance Pay Plan (the Severance
Plan), a copy of which is filed as Exhibit 10.10 to
our Annual Report on
Form 10-K
for the year ended December 31, 2007, is applicable in the
event of certain involuntary terminations. In addition, we have
entered into change in control agreements with each of our
executive officers, the form of which is filed as
Exhibit 10.21 of our Annual Report on
Form 10-K
for the year ended December 31, 2007, and which is
applicable in the event of a qualifying termination following a
change in control. Following is a description of the benefits
that may be paid to the executive officers pursuant to the
Severance Plan and the change in control agreements. An
executive officer may not receive benefits under both plans.
For a description of the post-employment arrangements with Alan
J. Bernon, former President of our Dairy Group, see Do we
have agreements with our Named Executive Officers? below.
Potential
Benefits upon a Change in Control
We have entered into agreements with our Named Executive
Officers pursuant to which we must, in the event of a change in
control and a qualifying termination (as defined below) provide
the following:
|
|
|
|
|
Pay each of the Named Executive Officers a lump sum of cash
equal to three times his or her base annual salary plus his or
her target bonus for the year in which the termination occurs,
plus a prorated bonus for the portion of the year served prior
to termination, in addition to a
gross-up
payment to pay for any applicable excise taxes,
|
|
|
|
pay each of the Named Executive Officers the unvested balance of
his or her 401(k) account, plus three times his or her most
recent Company match,
|
|
|
|
continue the Named Executive Officers insurance benefits
for two years, and
|
|
|
|
provide certain outplacement services.
|
A qualifying termination means a termination of employment
either involuntarily without cause, or by the executive officer
with good reason within two years following a change in control.
Pursuant to the agreements cause means the
following: (i) the willful and intentional material breach
by the executive officer of the change in control agreement,
(ii) the willful and intentional misconduct or gross
negligence in the performance of, or willful neglect of, the
executive officers duties, or (iii) the conviction
of, or plea of guilty or nolo contendere to a felony.
Good reason means any of the following: (i) any
reduction in the amount of the executive officers
compensation or significant reduction in benefits not generally
applicable to similarly situated employees of the Company,
(ii) removal of the executive officer from the position
held by him or her immediately prior to the change in control,
or (iii) transfer of the executive officers principal
place of employment.
Also, each officer has the right, at any time during the
thirteenth month after a change in control, to voluntarily
terminate his or her employment for any reason and receive the
same benefits as if he or she had been terminated by us or by a
successor company during the two years after a change in control
as described above.
37
The agreements also contain:
|
|
|
|
|
a covenant pursuant to which the executives have agreed not to
compete with us for two years after termination,
|
|
|
|
a confidentiality provision pursuant to which the executives
have agreed not to divulge any of our confidential
information, and
|
|
|
|
agreements not to solicit any of our employees for two years
after termination.
|
All of the Named Executive Officers unvested stock options
and stock units would automatically vest immediately upon a
change in control.
If a change in control occurred as of December 31, 2007,
and the rights of our Named Executive Officers serving as such
on December 31, 2007, under the agreements were triggered,
they would receive approximately the following:
Estimated
Payments Upon Termination Following a Change in
Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
Early Vesting of
|
|
|
Early Vesting
|
|
|
|
|
|
Estimated Tax
|
|
|
|
|
|
|
|
Name
|
|
Amount($)(1)
|
|
|
Restricted
Stock($)(2)
|
|
|
of Stock
Options($)(3)
|
|
|
Other($)(4)
|
|
|
Gross
Up($)(5)
|
|
|
Total($)
|
|
|
|
|
|
Gregg L. Engles
|
|
|
8,606,400
|
|
|
|
6,505,807
|
|
|
|
1,338,772
|
|
|
|
70,000
|
|
|
|
|
|
|
|
16,520,979
|
|
|
|
|
|
Jack F. Callahan, Jr.
|
|
|
2,719,200
|
|
|
|
1,770,841
|
|
|
|
44,840
|
|
|
|
70,000
|
|
|
|
1,633,119
|
|
|
|
6,238,000
|
|
|
|
|
|
Joseph E. Scalzo
|
|
|
3,591,000
|
|
|
|
760,025
|
|
|
|
1,752
|
|
|
|
70,000
|
|
|
|
1,600,726
|
|
|
|
6,023,503
|
|
|
|
|
|
Michelle P. Goolsby
|
|
|
2,918,100
|
|
|
|
1,231,220
|
|
|
|
260,564
|
|
|
|
70,000
|
|
|
|
|
|
|
|
4,479,884
|
|
|
|
|
|
Gregg A. Tanner
|
|
|
2,677,500
|
|
|
|
1,333,497
|
|
|
|
|
|
|
|
70,000
|
|
|
|
1,916,977
|
|
|
|
6,172,974
|
|
|
|
|
|
Alan J.
Bernon(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
This amount represents 3 times the sum of the Named Executive
Officers base salary in effect at the time of the
termination and the target annual incentive payment. |
|
(2) |
|
This amount represents the payout of all unvested restricted
stock units based on the Companys closing stock price on
December 31, 2007 ($25.86). |
|
(3) |
|
This amount represents the payout of all unvested stock options
based on the Companys closing stock price on
December 31, 2007 ($25.86). |
|
(4) |
|
This amount represents the value of outplacement services and
medical coverage. |
|
(5) |
|
The estimated tax gross up is based on the 20% excise tax,
grossed up for taxes, on the amount of severance and other
benefits above each individuals average five-year
W-2 earnings
if the amount of severance and other benefits exceeds the
individuals average five-year
W-2 earnings
times 3. |
|
(6) |
|
Mr. Bernons employment was terminated effective
September 1, 2007. As he was not serving as an executive
officer on December 31, 2007, his potential benefits upon a
change in control have not been provided. |
Executive
Severance Pay Plan
The Executive Severance Pay Plan provides severance benefits to
certain designated officers, including the Named Executive
Officers (other than the Chief Executive Officer), who are
involuntarily terminated, other than for cause (as defined
below), or who voluntarily terminate his or her employment for
good reason (as defined below). Generally, the executive officer
will be entitled to receive a payment in an amount up to two
times the sum of his or her base salary and target bonus, plus a
pro rata portion of his or her target bonus for the fiscal year
in which the termination occurs. The Severance Plan
Administrator may impose certain conditions on a
participants right to receive benefits under the plan
including the execution of a release, non-compete agreement,
non-solicitation agreement
and/or
non-disclosure agreement. In addition, participants would
receive a cash payment for the in-the-money value of option
awards and restricted stock units that would vest up to
24 months following the date of severance based on the
average closing price of the Companys stock for
45 days preceding the date of severance. The participant
would also be entitled to payments to be used to pay COBRA
health benefits and to obtain outplacement services.
38
Under the Severance Plan cause means the following:
(i) the breach by the executive officer of any written
covenant or agreement with the Company, (ii) the willful
and intentional misconduct or gross negligence in the
performance of, or willful neglect of, the executive
officers duties, (iii) the conviction of or plea of
guilty or of nolo contendere to a felony or any other
crime which makes the executive officers continued
employment untenable, or (iv) the executive officers
failure to comply with or breach of the Companys code of
ethics. Good reason means any of the following:
(i) any reduction in the amount of the executive
officers compensation or significant reduction in benefits
not generally applicable to similarly situated employees of the
Company, (ii) removal of the executive officer from the
position held by him or her immediately prior to the change in
control, or (iii) the transfer of the executive
officers principal place of employment.
In the event the rights of the Named Executive Officers under
the Severance Plan were triggered as of December 31, 2007,
they would have received approximately the following:
Estimated
Payments Upon a Qualified Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Early Vesting
|
|
|
|
|
|
|
|
|
|
|
|
|
Early Vesting of
|
|
|
of Stock
|
|
|
|
|
|
|
|
Name
|
|
Severance
Amount($)(1)
|
|
|
Restricted
Stock($)(2)
|
|
|
Options($)(3)
|
|
|
Other($)(4)
|
|
|
Total($)
|
|
|
Gregg L. Engles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack F. Callahan, Jr.
|
|
|
1,795,200
|
|
|
|
1,096,084
|
|
|
|
29,753
|
|
|
|
50,000
|
|
|
|
2,971,037
|
|
Joseph E. Scalzo
|
|
|
2,376,000
|
|
|
|
302,364
|
|
|
|
|
|
|
|
50,000
|
|
|
|
2,728,364
|
|
Michelle P. Goolsby
|
|
|
1,927,800
|
|
|
|
544,261
|
|
|
|
244,194
|
|
|
|
50,000
|
|
|
|
2,766,255
|
|
Gregg A. Tanner
|
|
|
1,785,000
|
|
|
|
530,449
|
|
|
|
|
|
|
|
50,000
|
|
|
|
2,365,449
|
|
Alan J. Bernon
|
|
|
2,601,600
|
(5)
|
|
|
1,514,419
|
(6)
|
|
|
1,854,527
|
(7)
|
|
|
813,462
|
(8)
|
|
|
6,784,008
|
|
|
|
|
(1) |
|
Mr. Engles is not a participant in the Executive Severance
Pay Plan. For the other Named Executive Officers, this amount
represents 2 times the sum of the Named Executive Officers
base salary in effect at the time of the termination and the
target annual incentive payment. |
|
(2) |
|
Represents the payout of restricted stock scheduled to vest in
the 24 months following December 31, 2007, based on
the prior 45 days average of the Companys
closing stock price ($25.72), except for Mr. Bernon, which
is described in note (6) below. |
|
(3) |
|
Represents the payout of stock options scheduled to vest in the
24 months following December 31, 2007, based on the
prior 45 days average of the Companys closing
stock price ($25.72), except for Mr. Bernon, which is
described in note (7) below. |
|
(4) |
|
This amount represents the value of outplacement services and
medical coverage, except for Mr. Bernon, which is described
in note (8) below. |
|
(5) |
|
Represents 2 times the sum of Mr. Bernons salary and
target bonus in effect as of his termination, plus pro rata
target bonus of $105,600 for 2007. |
|
(6) |
|
Represents the amount recognized in accordance with
FAS 123R for immediate vesting of restricted stock unit
awards. |
|
(7) |
|
Represents the amount recognized in accordance with
FAS 123R for immediate vesting of stock option awards. |
|
(8) |
|
Includes $50,000 for outplacement services and medical coverage,
$700,000 in lieu of relocation benefits, and $63,460 for accrued
but unused vacation. |
Do we
have agreements with our Named Executive Officers?
Separation
and Release Agreement with Alan J. Bernon
On September 1, 2007, Alan J. Bernons employment as
President of Dairy Group was terminated. We entered into a
Separation and Release Agreement with Mr. Bernon effective
as of his separation date which sets forth the separation
benefits to which Mr. Bernon is entitled pursuant to his
employment agreement with the Company dated September 1,
2005, and the Dean Foods Executive Severance Pay Plan.
39
Pursuant to his employment agreement, we paid Mr. Bernon an
amount equal to $2,496,000, representing two years of base
salary and target bonuses. In addition, we paid Mr. Bernon
a pro rata target bonus for 2007 for the individual objective
component of his bonus, in an amount equal to $105,600.
Mr. Bernon also received cash payments of $25,000 in lieu
of any Company-paid healthcare continuation, $25,000 in lieu of
outplacement benefits, and $700,000 in lieu of relocation
benefits as contemplated by his employment agreement. These
payments were made in consideration for his agreement to abide
by the terms and conditions of the Separation and Release
Agreement, including the non-solicitation, non-compete and
non-disclosure provision described below, and in exchange for
the release contained in the Separation and Release Agreement.
In addition, we paid Mr. Bernon his earned but unpaid
salary through the termination date plus five weeks of earned,
accrued and unused vacation pay in the amount of $63,462.
Pursuant to his employment letter agreement, all unvested stock
options and restricted stock units granted to Mr. Bernon
automatically vested. All exercised and unvested stock options
must be exercised on or before the earlier of September 2,
2008, or their respective ten-year expiration dates.
As Mr. Bernon remains on our Board of Directors, he is
eligible to participate in all non-employee director
compensation plans, programs and arrangements, including the
payment of retainer fees and Board Committee fees, for his
periods of director service beginning on and after
September 1, 2007. In addition, he is entitled to benefits
he has accrued and will accrue for compensation paid to him in
2007 prior to his termination date under the terms and
conditions of the Dean Foods Company Supplemental Executive
Retirement Plan, with distributions to be made pursuant to the
terms thereof.
Mr. Bernon agreed to abide by the terms and conditions of
his Proprietary Information, Inventions and Non-Compete
Agreement dated September 5, 2007, which provided that
Mr. Bernon would not compete with us or solicit any of our
employees or customers for a period of two years after his
termination date, and he agreed to maintain the confidentiality
of our trade secrets and other confidential information.
Finally, the Separation and Release Agreement contains a mutual
release pursuant to which Mr. Bernon and the Company have
agreed to release each other from all claims that may arise out
of or relate to his employment with the Company.
Employment
Agreement with Gregg A. Tanner
We entered into an employment agreement with Gregg A. Tanner
dated October 23, 2007, pursuant to which we offered him
the position of Executive Vice President and Chief Supply Chain
Officer. We agreed to pay him an annual salary of $525,000, to
be reviewed annually by the Compensation Committee, and a
one-time signing bonus of $400,000, less payroll taxes. If
Mr. Tanner voluntarily leaves the Company without good
reason during his first year of employment, he will be
responsible for reimbursing us on a prorated basis (based on the
number of months worked) for this one-time signing bonus. In
addition, we agreed to pay Mr. Tanner an additional
one-time signing bonus of $175,000, less payroll taxes, within
30 days of December 31, 2008, provided that he is
employed by us on December 31, 2008. Mr. Tanner is
eligible to earn short-term incentive compensation of 70% of his
annualized base salary, subject to the achievement of certain
operating targets and individual objectives, which could be
increased by up to 200% if operating targets are exceeded. For
2007, his bonus payment was prorated based on his actual start
date and was guaranteed to be the greater of the actual
calculated award or 100% of the target amount.
Upon commencement of his employment, Mr. Tanner was granted
options to purchase 60,000 shares of our common stock, with
an exercise price equal to the closing market value on
Mr. Tanners hire date. The options will vest in equal
installments over a three year period, beginning on the first
anniversary of the grant date. He was also awarded 24,000
restricted stock units, which vest in equal installments over a
five year period, beginning on the first anniversary of the
grant date. The restricted stock units could vest earlier if
certain stock performance targets are met. Mr. Tanner will
be eligible for future long-term incentive grants beginning in
January of 2009, along with our other executive officers,
subject to determination and approval by the Compensation
Committee. In addition, upon commencement of his employment,
Mr. Tanner was granted an additional number of stock
options having a Black-Scholes value, as determined by our
compensation consultant, of $1,100,000, and a grant of
restricted stock units with an approximate value of $600,000.
Each of these grants have terms and conditions equivalent to the
initial grants described above. Finally, Mr. Tanner will
receive five annual grants of 5,000 restricted stock units per
year
40
until November 1, 2011, for a total of 25,000 restricted
stock units. The first grant was made on December 17, 2007,
and the remaining grants will be on the first of the month
following the anniversary of Mr. Tanners employment
date. Each of these five grants will vest on November 1,
2012. Mr. Tanner will also receive five annual grants of
5,000 restricted shares each year from 2012 through 2016, for a
total of 25,000 restricted stock units. He will receive these
grants each year on the first of the month following the
anniversary of his employment date. Each of these grants will
vest one year after their issue date. Mr. Tanner must be
employed by the Company on the date of issue in order to receive
these annual grants of restricted stock units.
Pursuant to his employment agreement, Mr. Tanner will be
eligible for benefits under the Dean Foods Company Executive
Severance Plan. This plan provides that if
Mr. Tanners employment is terminated at any time for
reason of a qualifying termination, meaning any
termination as a result of his voluntary termination for good
reason, or his involuntary termination without cause, he will
receive payment of all base salary accrued through the date of
termination, prior years bonus to the extent earned but
not paid, target bonus through the date of termination and all
unused paid time off. In addition, he will be eligible to
receive a severance payment equivalent to two years of base
salary and target bonuses in exchange for executing a release of
claims against the Company.
Mr. Tanner will also be eligible to contribute to our
Executive Deferred Compensation Plan. We also agreed to provide
certain other benefits to Mr. Tanner, including paid time
off, payment of certain COBRA premiums, relocation benefits, and
home office equipment. Mr. Tanner is also eligible for
those benefits offered to all employees equally, including
401(k) and health insurance.
We also executed a Change In Control Agreement with
Mr. Tanner, dated November 5, 2007, that provides for
certain payments following upon a change in control as defined
in the agreement. The Change In Control Agreement is in the form
of those provided to our other executive officers, the terms and
conditions of which are described under the heading,
Executive Officer Severance Potential Benefits
Upon a Change In Control.
Finally, we entered into a Proprietary Information, Inventions
and Non-Compete Agreement with Mr. Tanner, dated
November 1, 2007, pursuant to which Mr. Tanner agreed
he would not compete with us or solicit any of our customers or
employees, or interfere with our customer relationships, for two
years following his termination. In addition, Mr. Tanner
agreed to keep the Companys proprietary information
confidential.
Employment
Agreement with Jack F. Callahan, Jr.
We entered into an employment agreement with Jack F.
Callahan, Jr. dated April 7, 2006, pursuant to which
we offered him the position of Executive Vice President and
Chief Financial Officer. We agreed to pay him an annual salary
of $460,000, to be reviewed annually by the Compensation
Committee, and a one-time signing bonus of $100,000, less
payroll taxes. Pursuant to the agreement, Mr. Callahan is
eligible to earn a bonus of 70% of his annualized base salary,
subject to the achievement of certain operating targets and
individual objectives, which could be increased by up to 200% if
operating targets are exceeded.
Upon commencement of his employment, Mr. Callahan was
granted long-term incentive compensation in the form of stock
options having a Black-Scholes value, as determined by our
compensation consultant, of $549,000, vesting in equal
installments over a three-year period, beginning on the first
anniversary of the grant date, and a grant of restricted stock
units with an approximate value of $646,000, vesting in equal
installments over a five-year period, beginning on the first
anniversary of the grant date. In addition, Mr. Callahan
received additional sign-on long-term incentive compensation in
the form of stock options having a Black-Scholes value, as
determined by our compensation consultant, of $793,000, vesting
in equal installments over a three-year period, beginning on the
first anniversary of the grant date, and a grant of restricted
stock units with an approximate value of $855,000, vesting in
equal installments over a three-year period, beginning on the
first anniversary of the grant date.
Pursuant to the employment agreement, if
Mr. Callahans employment is terminated at any time
for reason of a qualifying termination, meaning any
termination as a result of death, disability, his voluntary
termination for good reason, or his involuntary termination
without cause, he will receive payment of all base salary
accrued through the date of termination, prior years bonus
to the extent earned but not paid, target bonus through the date
of termination and all unused paid time off. In addition, he
will receive a lump sum severance payment equivalent to two
years of base salary and target bonuses in exchange for
executing a release of claims against the Company. If
Mr. Callahans
41
employment is terminated either for cause or by
Mr. Callahan voluntarily without good reason, no severance
payment will be made, and all unvested stock option and other
equity grants will be immediately be forfeited.
Mr. Callahan is also eligible to contribute to our
Executive Deferred Compensation Plan. We also agreed to provide
certain other benefits to Mr. Callahan, including paid time
off, payment of certain COBRA premiums, and relocation benefits.
Mr. Callahan is also eligible for those benefits offered to
all employees equally, including 401(k) and health insurance.
We also executed a Change in Control Agreement with
Mr. Callahan that provides for certain payments following
upon a change in control as defined in the agreement. The Change
In Control Agreement is similar to those provided to our other
executive officers, the terms and conditions of which are
described under the heading, Executive Officer
Severance Potential Benefits Upon a Change In
Control.
Finally, we entered into a Proprietary Information, Inventions
and Non-Compete Agreement with Mr. Callahan, pursuant to
which Mr. Callahan agreed he would not compete with us or
solicit any of our customers or employees, or interfere with our
customer relationships, for two years following his termination.
In addition, Mr. Callahan agreed to keep the Companys
proprietary information confidential.
Employment
Agreement with Joseph E. Scalzo
We entered into an employment agreement with Joseph E. Scalzo
dated October 7, 2005, pursuant to which we offered him the
position of President and Chief Executive Officer of WhiteWave
Foods. We agreed to pay him an annual salary of $600,000, to be
reviewed annually by the Compensation Committee, and a one-time
signing bonus of $200,000, less payroll taxes. Pursuant to the
agreement, Mr. Scalzo is eligible to earn a bonus of 80% of
his annualized base salary, subject to the achievement of
certain operating targets and individual objectives, which could
be increased by up to 200% if operating targets are exceeded.
Upon commencement of his employment, Mr. Scalzo was granted
long-term incentive compensation in the form of 245,000 stock
options, vesting in equal installments over a three-year period,
beginning on the first anniversary of the grant date.
Pursuant to his employment agreement, if Mr. Scalzos
employment is terminated at any time for reason of a
qualifying termination, meaning any termination as a
result of death, disability, his voluntary termination for good
reason, or his involuntary termination without cause, he will
receive payment of all base salary accrued through the date of
termination, prior years bonus to the extent earned but
not paid, target bonus through the date of termination and all
unused paid time off. In addition, he will receive a lump sum
severance payment equivalent to two years of base salary and
target bonuses in exchange for executing a release of claims
against the Company. If Mr. Scalzos employment is
terminated either for cause or by Mr. Scalzo voluntarily
without good reason, no severance payment will be made, and all
unvested stock option and other equity grants will be
immediately be forfeited.
Mr. Scalzo is also eligible to contribute to our Executive
Deferred Compensation Plan. We also agreed to provide certain
other benefits to Mr. Scalzo, including paid time off,
payment of certain COBRA premiums, and relocation benefits.
Mr. Scalzo is also eligible for those benefits offered to
all employees equally, including 401(k) and health insurance.
We also executed a Change in Control Agreement with
Mr. Scalzo, dated October 7, 2005, that provides for
certain payments following upon a change in control as defined
in the agreement. The Change in Control Agreement is similar to
those provided to our other executive officers, the terms and
conditions of which are described under the heading,
Executive Officer Severance Potential Benefits
upon a Change in Control.
Finally, we entered into a Proprietary Information, Inventions
and Non-Compete Agreement with Mr. Scalzo, dated
October 7, 2005, pursuant to which Mr. Scalzo agreed
he would not compete with us, provided that his employment is
not terminated by us for cause, as defined in the agreement, or
solicit any of our customers or employees, or interfere with our
customer relationships, for two years following his termination.
In addition, Mr. Scalzo agreed to keep the Companys
proprietary information confidential.
42
Other
Named Executive Officers
We do not maintain employment agreements with Gregg Engles or
Michelle Goolsby. Ms. Goolsby is eligible for the severance
benefits described under the heading Executive Officer
Severance Executive Severance Pay Plan. We do
have change in control agreements with Mr. Engles and
Ms. Goolsby, pursuant to which both are eligible for the
change in control benefits described under the heading
Executive Officer Severance Potential Benefits
upon a Change in Control.
Do we
have any other agreements?
Employment
Agreement with Pete Schenkel
On December 2, 2005, we entered into an employment
agreement with Mr. Schenkel pursuant to which he became
Vice Chairman of our Board of Directors effective
January 1, 2006. Mr. Schenkels term as Vice
Chairman continued through December 31, 2007, at which time
he resigned as Vice Chairman and as an employee. For his
services during his continued employment, we paid
Mr. Schenkel an annual base salary of $350,000 for 2007.
His target bonus was 50% of his annual base salary. Payment of
his bonus was subject to the achievement of certain operating
and other individual targets established by our Board of
Directors. For fiscal 2007, he earned a bonus of $43,750 that
was paid in 2008. Pursuant to the agreement, in January 2006 he
received 385,744 stock options with an exercise price of $25.68,
as adjusted for the special cash dividend paid on April 2,
2007. The options vest in equal installments over a five-year
period, beginning on the date of grant, subject to any earlier
vesting that may occur in the event of a change in control of
the Company. Continued vesting of the options granted in January
2006 is expressly contingent on Mr. Schenkels
continuing compliance with the restrictive covenants contained
in the Consulting and Noncompetition Agreement. Any portion of
the options that vest prior to the termination of
Mr. Schenkels employment shall remain exercisable for
a period of no less than twelve months following termination of
his employment, unless he is terminated for cause (as defined in
the Employment Agreement), in which case they will be
exercisable only for as long as provided in the award agreement.
If his employment is terminated for cause, any unvested options
will be forfeited.
Through the termination of his employment, Mr. Schenkel
continued to be eligible to participate in all employee benefit
plans that are available to our executive officers and to
receive all other benefits that were provided to him. Stock
options and other equity-based awards granted to
Mr. Schenkel prior to January 1, 2006, vested in full
as of December 31, 2007, and will expire according to the
terms of our long-term incentive plans and
Mr. Schenkels award agreements.
Independent
Contractor and Noncompetition Agreement with Pete
Schenkel
On December 2, 2005, we also entered into an Independent
Contractor and Noncompetition Agreement with Mr. Schenkel
under which we will generally retain access to his services.
This agreement was amended as of April 4, 2008 to extend
Mr. Schenkels consulting services through
December 31, 2011. Pursuant to the Independent Contractor
and Noncompetition Agreement, Mr. Schenkel has agreed to
provide general advice and consultation to our Chief Executive
Officer on matters of strategy and execution, and to provide
assistance with respect to such specific operating initiatives
as may be required from time to time. For his services under the
Independent Contractor and Noncompetition Agreement, we pay
Mr. Schenkel an advisory fee of $200,000 per year. Pursuant
to the amendment, he is eligible for an additional payment of
50% of the advisory fee, subject to the achievement of certain
operating targets consistent with those targets to be
established by our Board of Directors and the Compensation
Committee for our executive officers. Such additional payment
may be increased up to 200% if certain targets are exceeded. We
also provide him with a car allowance, club membership
reimbursement, life insurance, and medical coverage. In the
event that the advisory period contemplated by the Independent
Contractor and Noncompetition Agreement is ended by us prior to
December 31, 2011, and he has not breached any of his
obligations in that agreement, we will pay him a single lump sum
payment, six months and one day after his termination, of an
amount equal to the aggregate amount of the fees that would have
been payable during the remainder of the advisory period
contemplated by the Independent Contractor and Noncompetition
Agreement.
The Independent Contractor and Noncompetition Agreement also
contains Mr. Schenkels agreement to maintain the
confidentiality of our trade secrets and other confidential
information, not to compete with our dairy
43
operations for a period of two years after the termination of
his services (including his services under the consulting and
noncompetition agreement), and not to solicit or interfere with
our relationships with our employees or our customers. In
consideration for the confidentiality, non-compete and
non-solicit agreements, we paid Mr. Schenkel $280,000 on
January 2, 2006, and $425,000 on January 2, 2007, and
January 2, 2008, and we have agreed to pay him an
additional $425,000 annually each January 2, from
2009 2014. Such unpaid amounts will also be paid in
a lump sum in the event of his death.
How much
stock do our executive officers and directors own?
The following table presents information as of April 9,
2008 concerning
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Each director and each Named Executive Officer, and
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All directors and executive officers as a group, including
executive officers not named in the table.
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Exercisable
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Number of Shares
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Options/
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Beneficial Owner
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Common Stock
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RSUs(1)
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Total
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Percent(2)
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Alan J. Bernon
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1,067,329
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695,425
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1,762,754
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1.16
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%
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Jack F. Callahan, Jr.
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21,310
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145,825
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167,135
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0.11
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%
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Lewis M. Collens
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32,650
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94,803
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127,453
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0.08
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%
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Tom C. Davis
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26,385
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133,960
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160,345
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0.11
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%
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Gregg L. Engles
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2,591,502
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4,086,692
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6,678,194
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(3)
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4.29
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%
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Michelle P. Goolsby
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64,805
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936,761
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1,001,566
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0.66
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%
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Stephen L. Green
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100,455
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251,431
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351,886
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0.23
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%
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Joseph S. Hardin, Jr.
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69,519
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228,807
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298,326
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0.20
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%(4)
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Janet Hill
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17,116
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108,413
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125,529
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0.08
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%
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Ronald Kirk
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18,240
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55,646
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73,886
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0.05
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%
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John R. Muse
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254,807
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251,431
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506,238
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0.33
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%(5)
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Hector M. Nevares
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295,538
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251,431
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546,969
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0.36
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%
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Joseph E. Scalzo
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3,817
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289,005
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292,822
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0.19
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%
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Pete Schenkel
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103,386
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2,094,046
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2,197,432
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1.43
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%
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Gregg A. Tanner
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Jim L. Turner
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187,722
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251,428
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439,150
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0.29
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%(6)
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Executive Officers and Directors as a Group (21 persons)
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16,109,083
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(7)
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10.62
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%
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(1) |
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As of April 9, 2008, and including options exercisable and
restricted stock units vesting within the next 60 days. |
|
(2) |
|
Percentages based on 151,642,724 shares of common stock
issued and outstanding as of April 9, 2008, plus option
shares of the particular person(s), which are exercisable within
60 days, and restricted stock units vesting within the next
60 days, if applicable. |
|
(3) |
|
Includes 2,469,074 shares and options pledged as security
for a bank loan. |
|
(4) |
|
Includes 3,350 shares held by family trust, of which
Mr. Hardins children and sister are the
beneficiaries. Mr. Hardin is the trustee and disclaims all
beneficial interest except to the extent of his pecuniary
interest in the trust, if any. |
|
(5) |
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Includes 2,550 shares owned by Mr. Muses spouse;
Mr. Muse disclaims ownership of such shares. |
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(6) |
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Includes 104,417 options held by Mr. Turners spouse;
Mr. Turner disclaims ownership of such options. |
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(7) |
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Includes executive officers serving as such as of April 9,
2008, who are not Named Executive Officers. |
Do we
have any holders who beneficially own more than 5% of our common
stock?
As of April 9, 2008, there were no persons or groups known
to us who beneficially owned more than 5% of our common stock.
44
What are our policies regarding transactions with related
persons and what relationships do we have with our executive
officers and directors?
Related
Party Transaction Policy
Under our Code of Ethics, directors, officers and employees are
expected to make business decisions and take actions based upon
the best interests of the Company and not based upon personal
relationships or benefits.
The Board of Directors has recognized that some transactions,
arrangements and relationships present a heightened risk of an
actual or perceived conflict of interest and has adopted a
written policy governing these transactions. This policy governs
any transaction, arrangement or relationship (or any series of
similar transactions, arrangements or relationships) in which
our Company was, is or will be a participant and the amount
involved exceeds $120,000, and in which any of the following
persons had, has or will have a direct or indirect material
interest:
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our directors, nominees for director or executive officers;
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any person who is known to be the beneficial owner of more than
5% of any class of our voting securities;
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any immediate family member of any of the foregoing
persons; and
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any entity in which any of the foregoing persons is employed or
is a partner or principal or in a similar position or in which
such person has a 5% or greater beneficial ownership interest.
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The Governance Committee of the Board of Directors is
responsible for reviewing and approving these transactions.
Any transaction proposed to be entered into by the Company with
an interested person must be reported to our General Counsel and
reviewed and approved by the Governance Committee in accordance
with the terms of the policy, prior to effectiveness or
consummation of the transaction, whenever practicable. If
advance approval is not practicable under the circumstances, the
Governance Committee will review and, in its discretion, may
ratify the interested transaction at the next meeting of the
Governance Committee. In the event management becomes aware of
any further transactions subsequent to that meeting, such
transactions may be presented to the Governance Committee for
approval at the next Governance Committee meeting, or where it
is not practicable or desirable to wait until the next
Governance Committee meeting, to the Chair of the Governance
Committee (who has delegated authority to act between Committee
meetings) subject to ratification by the Governance Committee at
its next meeting.
Any transaction with an interested person previously approved by
the Governance Committee or otherwise already existing that is
ongoing in nature shall be reviewed by the Governance Committee
annually.
The Governance Committee (or the Chair) will approve only those
transactions that are in, or are not inconsistent with, the best
interests of the Company and our stockholders, as the Governance
Committee (or the Chair) determines in good faith in accordance
with its business judgment. In addition, the transaction must be
on terms comparable to those that could be obtained in
arms length dealings with an unrelated third party.
All transactions below have been considered and approved by the
Governance Committee pursuant to this policy.
Other transactions considered by our Board in assessing director
independence, but which do not involve a direct or indirect
material interest for the related person, are described in this
Proxy Statement under the heading Who are our independent
directors?
Real
Property Lease
We lease the land for our Franklin, Massachusetts, plant from a
partnership owned by Alan Bernon and his family. Our lease
payments during 2007 totaled approximately $785,000.
Minority
Interest in Consolidated Container Holding Company
We own an approximately 25% minority interest in Consolidated
Container Company through our subsidiary Franklin Plastics,
Inc., in which we own an approximately 99% interest. Alan Bernon
and his brother, Peter Bernon, collectively own the remaining
approximately 1% ownership interest of Franklin Plastics, Inc.
Consolidated
45
Container Company is one of the nations largest
manufacturers of rigid plastic containers and our largest
supplier of plastic bottles and bottle components. We have owned
our minority interest since July 1999, when we sold our plastic
packaging operations to Consolidated Container Company. During
2007, we spent approximately $264 million on products
purchased from Consolidated Container Company.
Professional
Fees
During 2007, we paid legal fees and expenses of approximately
$123,000 to Locke, Lord, Bissell and Liddell, LLP, formerly
known as Locke Liddell & Sapp LLP, where Michelle
Goolsbys husband is a partner, for legal services rendered
on various matters.
Employment
of Family Members
Pete Schenkels son and
son-in-law
are both employed by our Dairy Group. Stephen Schenkel, Pete
Schenkels son, is the sales Manager for Schepps Dairy and
received total compensation of approximately $155,500 in 2007
(including salary and bonus earned in 2007), in addition to
benefits available to all similarly situated employees. In
January 2007, he was granted options to purchase
6,613 shares (as adjusted for the special cash dividend) of
our common stock. Craig Roberts, Pete Schenkels
son-in-law,
is General Manager of Oak Farms Dairy, and received total cash
compensation of approximately $195,000 in 2007 (including salary
and bonus earned for 2007), in addition to benefits available to
all similarly situated employees. In January 2007, he was
granted options to purchase 6,613 shares (as adjusted for
the special cash dividend) of our common stock. Options granted
to Stephen Schenkel and Craig Roberts have an exercise price of
$30.11 and will expire on February 12, 2017.
Have our
equity compensation plans been approved by our
stockholders?
Our equity compensation plans have been approved by our
stockholders. In addition, from time to time we grant inducement
grants outside our approved plans as permitted by New York Stock
Exchange rules. The following table contains certain information
about our plans as of December 31, 2007.
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Number
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Number of
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of Securities
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Securities
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Weighted-
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Remaining
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to be Issued
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Average
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Available for
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Upon Exercise
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Exercise Price
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Future Issuance
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of Outstanding
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of Outstanding
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Under Equity
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Options, Warrants
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Options, Warrants
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Compensation
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Plan Category
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and Rights
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and Rights
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Plans
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Equity compensation plans approved by
security holders
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21,275,572
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18.15
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9,051,616
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Equity compensation plans not approved
by security holders
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740,263
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(1)
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25.62
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1,018,737
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(2)
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Total
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22,015,835
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18.40
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10,070.353
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(1) |
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Consists of options issued as inducement grants, as
such term is defined by the New York Stock Exchange. The options
generally vest over three years and will expire on the tenth
anniversary of the date of grant. The options are generally
subject to the same terms and conditions of those awarded
pursuant to the plans approved by stockholders. |
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(2) |
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Remaining shares authorized for issuance as inducement grants
which represents 1,759,000 million shares registered with
the SEC on June 30, 2006, less those previously issued, and
includes shares that may be granted pursuant to restricted stock
unit awards. We did not grant any inducement awards in fiscal
2007. |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires our executive officers, directors and persons who own
more than 10% of our common stock to file reports of ownership
and changes in ownership with the SEC. Based solely on our
review of these forms or written representations from the
executive officers and directors, we believe that all
Section 16(a) filing requirements were met during fiscal
year 2007 with the following exception: Mr. John Llewellyn
received a grant of 621 shares of restricted stock on
June 30, 2007. A Form 4 reflecting this transaction
was filed on July 16, 2007. Mr. Llewellyn retired from
the Board of Directors on May 18, 2007.
46
Appendix
A
DEAN
FOODS COMPANY
AUDIT
COMMITTEE CHARTER
Status
The Audit Committee is a committee of the Board of Directors of
Dean Foods Company (the Company).
Membership
The Audit Committee shall consist of no fewer than three
members. The members of the Audit Committee shall meet the
independence and experience requirements of the New York Stock
Exchange, Section 10A(m)(3) of the Securities Exchange Act
of 1934 (the Exchange Act) and the rules and
regulations of the Securities and Exchange Commission (the
Commission). At least one member of the Audit
Committee shall be an audit committee financial
expert as defined by the Commission. Audit Committee
members shall not simultaneously serve on the audit committees
of more than two other public companies. Audit Committee members
will be appointed, and may be replaced, by the Board of
Directors of the Company (the Board).
Purpose
The Audit Committee will assist the Board in monitoring
(1) the integrity of the financial statements of the
Company, (2) the independent auditors qualifications
and independence, (3) the performance of the Companys
internal audit function and independent auditors, and
(4) the compliance by the Company with legal and regulatory
requirements.
The Audit Committee shall prepare the report required by the
rules of the Commission to be included in the Companys
annual proxy statement.
Committee
Authority and Responsibilities
The Audit Committee shall have the sole authority to appoint or
replace the independent auditor (subject, if applicable, to
shareholder ratification). The Audit Committee shall be directly
responsible for the compensation and oversight of the work of
the independent auditor (including resolution of disagreements
between management and the independent auditor regarding
financial reporting) for the purpose of preparing or issuing an
audit report or related work.
The Audit Committee shall preapprove all permitted non-audit
services to be performed for the Company by its independent
auditor. The Audit Committee may form and delegate authority to
subcommittees consisting of one or more members when
appropriate, including the authority to grant preapprovals of
non-audit services, provided that decisions of such subcommittee
to grant preapprovals shall be presented to the full Audit
Committee at its next scheduled meeting.
The Audit Committee shall have the authority, to the extent it
deems necessary or appropriate, to retain independent legal,
accounting or other advisors, at the expense of the Company.
The Audit Committee shall make regular reports to the Board. The
Audit Committee shall review and reassess the adequacy of this
Charter annually and recommend any proposed changes to the Board
for approval. The Audit Committee shall annually review the
Audit Committees own performance.
The Audit Committee, to the extent it deems necessary or
appropriate, shall:
Financial
Statement and Disclosure Matters
1. Review and discuss with management and the independent
auditor the annual audited financial statements, including
disclosures made in the Managements Discussion and
Analysis portion of any documents filed with
A-1
the Commission, and recommend to the Board whether the audited
financial statements should be included in the Companys
Form 10-K.
2. Review and discuss with management and the independent
auditor the Companys quarterly financial statements prior
to the filing of each Form
10-Q,
including the results of the independent auditors review
of the quarterly financial statements.
3. Discuss with management and the independent auditor
significant financial reporting issues and judgments made in
connection with the preparation of the Companys financial
statements, including any significant changes in the
Companys selection or application of accounting
principles, any major issues as to the adequacy of the
Companys internal controls and any special steps adopted
in light of material control deficiencies.
Review and discuss quarterly reports from the independent
auditors on:
(a) All critical accounting policies and practices to be
used.
(b) All alternative treatments of financial information
within generally accepted accounting principles that have been
discussed with management, ramifications of the use of such
alternative disclosures and treatments, and the treatment
preferred by the independent auditor.
(c) Other material written communications between the
independent auditor and management, such as any management
letter or schedule of unadjusted differences.
(d) All discussions between the independent audit team and
the firms national office regarding the audit.
Discuss with management the Companys earnings press
releases, including the use of pro forma or
adjusted non-GAAP financial measures, as well as
financial information and earnings guidance provided to analysts
and rating agencies. Such discussion may be done generally
(consisting of discussing the types of information to be
disclosed and the types of presentations to be made).
Discuss with management and the independent auditor the effect
of regulatory and accounting initiatives as well as off-balance
sheet structures on the Companys financial statements.
Discuss with management the Companys major financial risk
exposures and the steps management has taken to monitor and
control such exposures, including the Companys risk
assessment and risk management policies.
Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61
relating to the conduct of the audit, including any difficulties
encountered in the course of the audit work, any restrictions on
the scope of activities or access to requested information, and
any significant disagreements with management.
4. Review disclosures made to the Audit Committee, if any,
by the Companys CEO and CFO during their certification
process for each
Form 10-K
and Form
10-Q about
any significant deficiencies in the design or operation of
internal controls or material weaknesses therein and any fraud
involving management or other employees who have a significant
role in the Companys internal controls.
Oversight
of the Companys Relationship with the Independent
Auditor
5. Obtain and review a report from the independent auditor
at least annually regarding (a) the independent
auditors internal quality-control procedures, (b) any
material issues raised by the most recent internal
quality-control review, or peer review, of the firm, or by any
inquiry or investigation by governmental or professional
authorities within the preceding five years respecting one or
more independent audits carried out by the firm, (c) any
steps taken to deal with any such issues, and (d) all
relationships between the independent auditor and the Company.
Evaluate the qualifications, performance and independence of the
independent auditor (including the lead partner), including
considering whether the auditors quality controls are
adequate and the provision of permitted non-audit services is
compatible with maintaining the auditors independence,
taking into account the opinions of management and internal
auditors. The Audit Committee shall present its conclusions with
respect to the independent auditor to the Board.
A-2
6. Ensure the rotation of the audit partners as required by
law. Consider whether, in order to assure continuing auditor
independence, it is appropriate to adopt a policy of rotating
the independent auditing firm on a regular basis.
7. Recommend to the Board policies for the Companys
hiring of employees or former employees of the independent
auditor who participated in any capacity in the audit of the
Company.
Oversight
of the Companys Internal Audit Function
8. Review the appointment and replacement of the senior
internal auditing executive.
9. Review the significant reports to management prepared by
the internal auditing department and managements responses.
10. Discuss with the independent auditor and management the
internal audit department responsibilities, budget and staffing
and any recommended changes in the planned scope of the internal
audit.
Compliance
Oversight Responsibilities
11. Establish procedures for the receipt, retention and
treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters,
and the confidential, anonymous submission by employees of
concerns regarding questionable accounting or auditing matters.
12. Discuss with management and the independent auditor any
correspondence with regulators or governmental agencies and any
published reports which raise material issues regarding the
Companys financial statements or accounting policies.
13. Discuss with the Companys General Counsel legal
matters that may have a material impact on the financial
statements or the Companys compliance policies.
14. Provide oversight of the Companys policies and
practices with respect to corporate social responsibility,
including environmentally sustainable solutions, ethics and
compliance and the management of reputation risk.
Meetings
The Audit Committee shall meet as often as it determines, but
not less frequently than quarterly. The Audit Committee shall
meet periodically with management, the internal auditors and the
independent auditor in separate executive sessions. The Audit
Committee may request any officer or employee of the Company or
the Companys outside counsel or independent auditor to
attend a meeting of the Committee or to meet with any members
of, or consultants to, the Committee.
Limitation
of Audit Committees Role
While the Audit Committee has the responsibilities and powers
set forth in this Charter, it is not the duty of the Audit
Committee to plan or conduct audits or to determine that the
Companys financial statements and disclosures are complete
and accurate and are in accordance with generally accepted
accounting principles and applicable rules and regulations.
These are the responsibilities of management and the independent
auditor.
Dated: November 15, 2007
A-3
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x
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Votes must be indicated (x) in Black or Blue ink.
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Mark, sign, date and return this proxy card promptly using the enclosed envelope.
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Please
Mark Here
for Address
Change or
Comments
SEE REVERSE SIDE
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 and 2.
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WITHHOLD
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AUTHORITY
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1.
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Re-election of directors
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FOR all
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to vote for all
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for a 3-year term.
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nominees
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nominees
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listed below
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listed below
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*EXCEPTIONS |
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Nominees: |
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01 Tom C. Davis
02 Stephen L. Green
03 Joseph S. Hardin, Jr.
04 John R. Muse
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INSTRUCTIONS: To withhold authority to vote for any
individual nominee, mark the Exceptions box and write
that nominees name in the space provided below.
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FOR
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AGAINST
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ABSTAIN |
2.
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Proposal to ratify Deloitte & Touche LLP as
independent auditor.
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In their discretion the proxies are authorized to
vote upon such other
business as may properly come before the meeting.
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I plan to attend the Annual Meeting.
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Please sign exactly as your name or names appear above. For joint holders, both should sign. When
signing as executor, administrator, attorney, trustee or guardian, etc., please give your title.
5FOLD AND DETACH HERE5
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING.
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and telephone voting are available through 11:59 PM Eastern Time the day
prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
INTERNET
http://www.eproxy.com/df
Use the Internet to vote your proxy. Have
your proxy card in hand when you access
the web site.
TELEPHONE
1-866-580-9477
Use any touch-tone telephone to
vote your proxy. Have your proxy card
in hand when you call.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy
card. To vote by mail, mark, sign and date your proxy card and return it in the enclosed
postage-paid envelope.
Choose MLinkSM for fast, easy and secure 24/7 online access to your future proxy
materials, investment plan statements, tax documents and more. Simply log on to Investor
ServiceDirect® at www.bnymellon.com/shareowner/isd where step-by-step instructions will
prompt you through enrollment.
You can view the Dean Foods Company Proxy Statement and Annual Report
on the Internet at http://bnymellon.mobular.net/bnymellon/df
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PROXY
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DEAN FOODS COMPANY
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PROXY |
ANNUAL MEETING OF STOCKHOLDERS MAY 22, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Gregg L. Engles and Steven J. Kemps, and each of them, as
proxies for the undersigned, with full power of substitution, to act and to vote all the shares of
common stock of Dean Foods Company held of record by the undersigned on March 25, 2008, at the
annual meeting of stockholders to be held on Thursday, May 22, 2008, or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED
STOCKHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
IMPORTANT IF YOU INTEND TO VOTE BY MAILING IN THIS PROXY CARD, RATHER THAN
BY INTERNET OR TELEPHONE, YOU MUST SIGN AND DATE THE REVERSE SIDE.
(Continued and to be marked, dated and signed, on the other side).
Address Change/Comments (Mark the corresponding box on the reverse side)
5FOLD AND DETACH HERE5
You can now access your DEAN FOODS COMPANY account online.
Access your Dean Foods Company stockholder account online via Investor ServiceDirect®
(ISD).
The
transfer agent for Dean Foods Company now makes it easy and
convenient to get current information on your stockholder account.
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View account status
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View payment history for dividends |
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View certificate history
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Make address changes |
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View book-entry information
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Obtain a duplicate 1099 tax form |
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Establish/change your PIN |
Visit us on the web at http://www.bnymellon.com/shareowner/isd
For Technical Assistance Call 1-877-978-7778 between
9am-7pm Eastern Time Monday-Friday
Dear Stockholder:
On the reverse side of this card are instructions on how to vote your shares for the election
of directors and the other proposal by Internet or telephone. We encourage you to vote now, by
Internet or telephone. Your vote will be recorded the same as if you mailed in your proxy card. See
the enclosed proxy statement and proxy card for further information about voting procedures.
If you have elected to view the Dean Foods Company proxy statement and annual report online
instead of receiving copies in the mail, you can now access the proxy statement for the 2008 annual
stockholders meeting and the 2007 annual report online through the following address:
http://bnymellon.mobular.net/bnymellon/df.
If you notified us previously that you prefer to receive the proxy statement and annual report
electronically, then you may not have received paper copies. If you would like paper copies of the
proxy statement and annual report, Dean Foods Company will provide a copy to you upon request. To
obtain a copy of these documents, please call 800-431-9214.
Thank you for your attention to these matters.
Dean Foods Company