def14a
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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x Definitive Proxy Statement |
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o Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
ARCHER-DANIELS-MIDLAND 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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x No fee required. |
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o
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11. |
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1) Title of each class of securities to which transaction applies: |
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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
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing. |
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1) Amount Previously Paid: |
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2) Form, Schedule or Registration Statement No.: |
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SEC 1913 (02-02) |
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. |
ARCHER-DANIELS-MIDLAND
COMPANY
4666 Faries Parkway, Decatur,
Illinois
62526-5666
NOTICE OF
ANNUAL MEETING
To All Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of Archer-Daniels-Midland Company, a Delaware corporation, will
be held at the JAMES R. RANDALL RESEARCH CENTER, 1001 Brush
College Road, Decatur, Illinois, on Thursday, November 6,
2008, commencing at 10:30 A.M., for the following purposes:
(1) To elect Directors to hold office until the next Annual
Meeting of Stockholders and until their successors are duly
elected and qualified;
(2) To ratify the appointment by the Board of Directors of
Ernst & Young LLP as independent auditors to audit the
accounts of the Company for the fiscal year ending June 30,
2009;
(3) If properly presented, to consider and act upon the
Stockholders proposal set forth in the accompanying Proxy
Statement; and
(4) To transact such other business as may properly come
before the meeting.
By Order of the Board of Directors
D. J. Smith,
Secretary
September 25, 2008
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON NOVEMBER 6,
2008: THE PROXY STATEMENT AND ANNUAL REPORT TO STOCKHOLDERS ARE
AVAILABLE AT www.admworld.com/proxy
ARCHER-DANIELS-MIDLAND
COMPANY
4666 Faries Parkway, Decatur,
Illinois
62526-5666
September 25, 2008
PROXY
STATEMENT
General
Matters
Our board of directors asks that you complete the accompanying
proxy for the annual stockholders meeting. The meeting
will be held at the time, place, and location mentioned in the
Notice of Annual Meeting included in this mailing. We are first
mailing our stockholders this proxy statement and a proxy form
(included in this mailing) around September 25, 2008.
We pay the costs of soliciting proxies from our stockholders. We
have retained Georgeson Inc. to help us solicit proxies. We will
pay Georgeson Inc. $23,000 plus reasonable expenses for its
services. Our officers may solicit proxies by means other than
mail. Our other employees or employees of Georgeson Inc. may
also solicit proxies in person or by telephone, mail, or the
internet at a cost we expect will be nominal. We will reimburse
brokerage firms and other securities custodians for their
reasonable expenses in forwarding proxy materials to their
principals.
We have a policy of keeping confidential all proxies, ballots,
and voting tabulations that identify individual stockholders.
Such documents are available for examination only by the
inspectors of election, our transfer agent and certain employees
associated with processing proxy cards and tabulating the vote.
We will not disclose any stockholders vote except in a
contested proxy solicitation or as may be necessary to meet
legal requirements.
Our common stock stockholders of record at the close of business
on September 12, 2008 are the only people entitled to
notice of the annual meeting and to vote at the meeting. At the
close of business on September 12, 2008, we had 641,781,914
outstanding shares of common stock, each share being entitled to
one vote on each of the nine director nominees and on each of
the other matters to be voted on at the meeting. Our
stockholders are the only people entitled to attend the annual
meeting. We reserve the right to direct stockholder
representatives with the proper documentation to an alternative
room to observe the meeting.
All stockholders will need a form of photo identification to
attend the annual meeting. If you are a stockholder of record
and plan to attend, please detach the admission ticket from the
top of your proxy card and bring it with you to the meeting. The
number of people we will admit to the meeting will be determined
by how the shares are registered, as indicated on the admission
ticket. If you are a stockholder whose shares are held by a
broker, bank, or other nominee, please request an admission
ticket by writing to our office at Archer-Daniels-Midland
Company, Shareholder Relations, 4666 Faries Parkway, Decatur,
Illinois
62526-5666.
Your letter to our office must include evidence of your stock
ownership. You can obtain evidence of ownership from your
broker, bank, or nominee. The number of tickets sent will be
determined by the manner in which shares are registered. If your
request is received by October 23, 2008, an admission
ticket will be mailed to you. Entities, such as a corporation or
limited liability company, that are stockholders may send one
representative to the annual meeting and the representative
should have a pre-existing relationship with the entity
represented. All other admission tickets can be obtained at the
registration table located at the James R. Randall Research
Center lobby beginning at 8:30 A.M. on the day of the
meeting. Stockholders who do not pre-register will only be
admitted to the meeting upon verification of stock ownership.
The use of cameras, video or audio recorders or other recording
devices in the James R. Randall Research Center is prohibited.
The display of posters, signs, banners or any other type of
signage by any stockholder in the James R. Randall Research
Center is prohibited.
Any request to deviate from the admittance guidelines described
above should be in writing, addressed to our office at
Archer-Daniels-Midland Company, Secretary, 4666 Faries Parkway,
Decatur, Illinois
62526-5666
and received by us by October 23, 2008. We will also have
personnel in the lobby of the James R. Randall Research Center
beginning at 8:30 A.M. on the day of the meeting to
consider special requests.
If you properly execute the enclosed proxy form, your shares
will be voted at the meeting. You may revoke your proxy form at
any time prior to voting by:
(1) delivering written notice of revocation to our
Secretary;
(2) delivering to our Secretary a new proxy form bearing a
date later than your previous proxy; or
(3) attending the meeting and voting in person (attendance
at the meeting will not, by itself, revoke a proxy).
Under our bylaws as amended in February 2007, directors are
elected by a majority vote in an uncontested election (one in
which the number of nominees is the same as the number of
directors to be elected) and by a plurality vote in a contested
election (one in which the number of nominees exceeds the number
of directors to be elected). Because this years election
is an uncontested election, each director nominee receiving a
majority of votes cast will be elected (the number of shares
voted for a director nominee must exceed the number
of shares voted against that nominee). Approval of
each other proposal presented in the proxy statement requires
the affirmative vote of the holders of a majority of the
outstanding shares of common stock present in person or by proxy
at the meeting and entitled to vote. Shares not present at the
meeting and shares voting abstain have no effect on
the election of directors. For the other proposals to be voted
on at the meeting, abstentions are treated as shares present or
represented and voting, and therefore have the same effect as
negative votes. Broker non-votes (shares held by brokers who do
not have discretionary authority to vote on the matter and have
not received voting instructions from their clients) are counted
toward a quorum, but are not counted for any purpose in
determining whether a matter has been approved.
Principal
Holders of Voting Securities
Based upon filings with the Securities and Exchange Commission
(SEC), we know that the following stockholders are beneficial
owners of more than 5% of our outstanding common stock shares:
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Name and Address of Beneficial Owner
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Amount
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Percent of Class
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State Farm Mutual Automobile Insurance Company
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56,575,847
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(1)
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8.82
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and Related Entities
One State Farm Plaza
Bloomington, IL 61710
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(1) |
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Based on a Schedule 13G filed with the SEC on
January 25, 2008, State Farm Mutual Automobile Insurance
Company and related entities have shared voting and dispositive
power with respect to 281,105 shares and sole voting and
dispositive power with respect to 56,294,742 shares. |
Proposal No. 1
Election of Directors for a One-Year Term
Our board of directors has fixed the size of the board at nine.
Unless you provide different directions, we intend for
board-solicited proxies (like this one) to be voted for the
nominees named below. Mr. Boeckmann, a current member of
our board of directors, is not a nominee for re-election due to
his employers corporate governance guidelines limiting the
number of outside corporate boards on which he can serve.
Although the nominees proposed for election to the board of
directors are all presently members of the board,
Mr. Buckley has not previously been elected by our
stockholders. Mr. Buckley was recommended by the
Nominating/Corporate Governance Committee after having been
identified by a third-party search firm retained by the
Nominating/Corporate Governance Committee to assist in
identifying and evaluating potential nominees.
The nominees would hold office until the next annual
stockholders meeting and until their successors are
elected and qualified. If any nominee for director becomes
unable to serve as a director, we intend that the
2
persons named in the proxy may vote for a substitute who will be
designated by the board of directors. The board has no reason to
believe that any nominee will be unable to serve as a director.
Our bylaws were amended in February 2007 to require that each
director be elected by a majority of votes cast with respect to
that director in an uncontested election (where the number of
nominees is the same as the number of directors to be elected).
In a contested election (where the number of nominees exceeds
the number of directors to be elected), the plurality voting
standard governs the election of directors. Under the plurality
standard, the number of persons equal to the number of directors
to be elected who receive more votes than the other nominees are
elected to the board, regardless of whether they receive a
majority of the votes cast. Whether an election is contested or
not is determined as of the day before we first mail our meeting
notice to stockholders. This years election was determined
to be an uncontested election, and the majority vote standard
will apply. If a nominee who is serving as a director is not
elected at the annual meeting, Delaware law provides that the
director would continue to serve on the Board as a
holdover director. However, under an amendment to
our Corporate Governance Guidelines approved by our board in
February 2007, each director annually submits an advance,
contingent, irrevocable resignation that the board may accept if
the director fails to be elected through a majority vote in an
uncontested election. In that situation, the
Nominating/Corporate Governance Committee would make a
recommendation to the board about whether to accept or reject
the resignation. The board will act on the Nominating/Corporate
Governance Committees recommendation and publicly disclose
its decision and the rationale behind it within 90 days
after the date the election results are certified. The board
will nominate for election or re-election as director, and will
elect as directors to fill vacancies and new directorships, only
candidates who agree to tender the form of resignation described
above. If a nominee who was not already serving as a director
fails to receive a majority of votes cast at the annual meeting,
Delaware law provides that the nominee does not serve on the
board as a holdover director.
3
The table below lists the nominees, their ages, positions with
our company, principal occupations, directorships of other
publicly-owned companies, the year in which each first became a
director, and the number of shares of common stock beneficially
owned as of September 12, 2008, directly or indirectly.
Unless otherwise indicated in the footnotes to the following
table, and subject to community property laws where applicable,
we believe that each nominee named in the table below has sole
voting and investment power with respect to the shares indicated
as beneficially owned. Unless otherwise indicated, all of the
nominees have been executive officers of their respective
companies or employed as otherwise specified below for at least
the last five years.
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Year First
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Name, Age, Principal Occupation or
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Elected
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Common
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Percent
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Position, Directorships of Other
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as
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Stock
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of
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Publicly-Owned Companies
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Director
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Owned
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Class
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George W. Buckley, 61
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2008
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2,239
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(1)
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*
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Chairman, President and Chief Executive Officer of 3M Company (a
diversified technology company) since December, 2005; Chairman,
President and Chief Executive Officer of the Brunswick
Corporation (a global manufacturer and marketer of recreation
products) from 2000 - December, 2005; served in other
executive positions at Brunswick Corporation from 1997 -
2000; Director of 3M Company and The Black & Decker
Corporation
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Mollie Hale Carter, 46
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1996
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11,728,954
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(1)(2)(3)
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1.83
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Chairman, Chief Executive Officer and President, Sunflower Bank
and Vice President, Star A, Inc. (a farming and ranching
operation); Director of Westar Energy, Inc.
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Victoria F. Haynes, 60
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2007
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2,680
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(1)
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*
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President and Chief Executive Officer of RTI International (an
independent, non-profit corporation that performs scientific
research and develops technology); Director of PPG Industries,
Inc. and Nucor Corporation
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Antonio Maciel Neto, 51
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2006
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6,677
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(1)
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*
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Chief Executive Officer of Suzano Papel e Celulose (a Brazilian
paper and pulp company) since April, 2006; President of Ford
South America from October, 2003 - April, 2006; President
of Ford Brazil from July, 1999 - October, 2003
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Patrick J. Moore, 54
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2003
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32,861
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(1)
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*
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Chairman and Chief Executive Officer of Smurfit-Stone Container
Corporation (a producer of paperboard and paper-based
packaging products)
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M. Brian Mulroney, 69
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1993
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92,960
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(1)
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*
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Senior Partner in the law firm of Ogilvy Renault; Director of
Barrick Gold Corporation, Quebecor Inc., Quebecor World, Inc.,
Wyndham Worldwide Corporation and Blackstone Group Management
L.L.C.
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Thomas F. ONeill, 61
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2004
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12,108
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(1)
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*
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Principal, Sandler ONeill & Partners, L.P. (an
investment banking firm); Director of The Nasdaq OMX Group, Inc.
and Misonix, Inc.
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Kelvin R. Westbrook, 53
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2003
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29,895
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(1)
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*
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President and Chief Executive Officer of KRW Advisors, LLC (a
consulting and advisory firm) since October, 2007; Chairman and
Chief Strategic Officer of Millennium Digital Media Systems,
L.L.C. (a broadband services company) from October, 2006 -
October, 2007; President and Chief Executive Officer of
Millennium Digital Media, L.L.C. from May 1997 - October,
2006; Director of Stifel Financial Corp. and Trust Manager of
Camden Property Trust
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Patricia A. Woertz, 55
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2006
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699,745
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(4)
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*
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Chairman since February 2007; President and Chief Executive
Officer since May 2006; previously Executive Vice President of
Chevron Corporation (a diversified energy company); Director of
The Procter & Gamble Company
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Less than 1% of outstanding shares |
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Includes stock units allocated under our Stock Unit Plan for
Nonemployee Directors that are deemed to be the equivalent of
outstanding shares of common stock for valuation purposes. |
4
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(2) |
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Includes 4,897,935 shares owned by or in trust for members
of Ms. Carters family with respect to which
Ms. Carter disclaims beneficial interest in
1,030,929 shares. Includes 6,645,882 shares held in
family corporations with respect to which Ms. Carter
disclaims any beneficial interest in 6,047,753 shares. |
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Includes 503,740 shares pledged as collateral by a
corporation in which Ms. Carter is a director, executive
officer, and 9.0% shareholder. |
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(4) |
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Includes 76,241 shares that are unissued but are subject to
stock options exercisable within 60 days from the date of
this proxy statement and 603 shares allocated under our
401(k) and Employee Stock Ownership Plan. |
Mr. Boeckmann beneficially owns 16,502 shares of
common stock, constituting less than 1% of the outstanding
shares of common stock, which number includes stock units
allocated under our Stock Unit Plan for Nonemployee Directors
that are deemed to be the equivalent of outstanding shares of
common stock for valuation purposes.
The Board of Directors recommends a vote FOR the
election of the nine nominees named above as directors. Unless
otherwise indicated on your proxy, your shares will be voted
FOR the election of such nine nominees as directors.
Section 16(a)
Beneficial Ownership Reporting Compliance
Based solely upon a review of copies of reports furnished to us
during the fiscal year ended June 30, 2008, the following
persons filed the number of late reports or failed to file
reports representing the number of transactions set forth after
his name: M. Cheviron, 1 report/5 transactions; D. C. Riddle, 1
report/1 transaction; J. Stott, 1 report/1 transaction.
Executive
Stock Ownership Policy
The board of directors believes that it is important for each
member of our senior management to acquire and maintain a
significant ownership position in shares of our common stock to
further align the interests of senior management with the
stockholders interests. Accordingly, we have adopted a
policy regarding ownership of shares of our common stock by
senior management. The policy calls for members of senior
management to own shares of common stock with a fair market
value within a range of one to five times that individuals
base salary, depending on each individuals level of
responsibility with the company.
Executive
Officer Stock Ownership
The following table shows the number of shares of our common
stock beneficially owned as of September 12, 2008, directly
or indirectly, by each of the executive officers, other than the
Chief Executive Officer, named in the Summary Compensation Table
on page 20.
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Options
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Common Stock
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Exercisable
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Percent
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Name
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Owned(1)
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Within 60 Days
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of Class
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D. J. Smith
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409,275
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121,608
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*
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W. H. Camp(2)
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296,821
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29,940
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*
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S. R. Mills
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319,785
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107,586
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*
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J. D. Rice
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293,557
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59,790
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*
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D. J. Schmalz(3)
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290,366
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25,904
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*
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L. W. Batchelder
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223,903
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39,854
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*
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* |
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Less than 1% of outstanding shares |
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(1) |
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Includes shares allocated to the accounts of the named
individuals under our 401(k) and Employee Stock Ownership Plan. |
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(2) |
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Mr. Camp retired effective December 15, 2007. |
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(3) |
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Mr. Schmalz retired effective March 1, 2008. |
5
Common stock beneficially owned as of September 12, 2008 by
all directors and executive officers as a group, numbering
29 persons including those listed above except for
Messrs. Camp and Schmalz, is 14,944,409 shares
representing 2.33% of the outstanding shares, of which
680,953 shares are unissued but are subject to stock
options exercisable within 60 days from the date of this
proxy statement.
Independence
of Directors
NYSE
Independence
The listing standards of the New York Stock Exchange, or NYSE,
require companies listed on the NYSE to have a majority of
independent directors. Subject to certain exceptions
and transition provisions, the NYSE standards generally provide
that a director will qualify as independent if the
board affirmatively determines that he or she has no material
relationship with our company other than as a director, and will
not be considered independent if:
(1) the director or a member of the directors
immediate family is, or in the past three years has been, one of
our executive officers or, in the case of the director, one of
our employees;
(2) the director or a member of the directors
immediate family has received during any
12-month
period within the last three years more than $120,000 per year
in direct compensation from us other than for service as a
director, provided that compensation received by an immediate
family member for service as a non-executive officer employee is
not considered in determining independence;
(3) the director or an immediate family member is a current
partner of one of our independent auditors, the director is
employed by one of our independent auditors, a member of the
directors immediate family is employed by one of our
independent auditors and personally works on our audits, or the
director or a member of the directors immediate family was
within the last three years an employee of one of our
independent auditors and personally worked on one of our audits;
(4) the director or a member of the directors
immediate family is, or in the past three years has been,
employed as an executive officer of a company where one of our
executive officers at the same time serves or served on the
compensation committee; or
(5) the director is a current employee of, or a member of
the directors immediate family is an executive officer of,
a company that makes payments to, or receives payments from, us
in an amount which, in any of the last three fiscal years,
exceeds the greater of $1 million or 2% of such other
companys consolidated gross revenues.
Bylaw
Independence
Section 2.8 of our bylaws also provides that a majority of
the board of directors be comprised of independent directors.
Under our bylaws, an independent director means a
director who
(1) is not a current employee or a former member of our
senior management or the senior management of one of our
affiliates,
(2) is not employed by one of our professional services
providers,
(3) does not have any business relationship with us, either
personally or through a company of which the director is an
officer or a controlling shareholder, that is material to us or
to the director,
(4) does not have a close family relationship, by blood,
marriage, or otherwise, with any member of our senior management
or the senior management of one of our affiliates,
(5) is not an officer of a company of which our Chairman or
Chief Executive Officer is also a board member,
(6) is not personally receiving compensation from us in any
capacity other than as a director, and
6
(7) does not personally receive or is not an employee of a
foundation, university, or other institution that receives
grants or endowments from us, that are material to us, the
recipient, or the foundation/university/institution.
The board of directors has reviewed business and charitable
relationships between us and each non-employee director,
including those described below in the Certain Relationships and
Related Transactions section, to determine compliance with the
NYSE and bylaw standards described above and to evaluate whether
there are any other facts or circumstances that might impair a
directors or nominees independence. Based on that
review, the board has determined that eight of its ten current
members, Messrs. Boeckmann, Buckley, Maciel, Moore,
ONeill, and Westbrook, Dr. Haynes and
Ms. Carter, are independent. Ms. Woertz is not
independent under the NYSE or bylaw standards because of her
employment with us. Mr. Mulroney is not independent under
our bylaw standards because he is the senior partner of a law
firm that provides professional services to us.
In determining that Mr. Moore is independent, the board
considered that, in the ordinary course of business,
Smurfit-Stone Container Corporation, of which Mr. Moore is
Chairman and Chief Executive Officer, purchased approximately
$14.3 million worth of certain commodity products from our
company, and sold approximately $6.2 million worth of
certain products to our company, on an arms-length basis during
the fiscal year ended June 30, 2008. The board determined
that this arrangement did not exceed the NYSEs threshold
of 2% of Smurfit-Stone Container Corporations consolidated
gross revenues, that Mr. Moore does not have a direct or
indirect material interest in such transactions, and that such
transactions do not otherwise impair Mr. Moores
independence.
In determining that Ms. Carter is independent, the board
considered that, during all or a portion of the fiscal year
ended June 30, 2008, Ms. Carters brother was
employed by our company as a warehouse shipping manager and that
Ms. Carters
brother-in-law
was employed by our company as a pilot. Each of such individuals
was employed in a non-executive officer capacity and the salary
of each for services during fiscal 2008 was less than $120,000.
The board determined that Ms. Carter does not have a direct
or indirect material interest in such employment relationships
and that such employment relationships do not otherwise impair
Ms. Carters independence.
Also in determining that Ms. Carter is independent, the
board considered that, during the fiscal year ended
June 30, 2008, the company purchased from Westar Energy
Inc. approximately $2.3 million of utility services in the
ordinary course of business and on an arms-length basis.
Ms. Carter is a director of Westar Energy Inc. The board
determined that this arrangement did not exceed the NYSEs
threshold of 2% of Westar Energy Inc.s consolidated gross
revenues, that Ms. Carter does not have a direct or
indirect material interest in such utility transactions, and
that such utility transactions do not otherwise impair
Ms. Carters independence.
In determining that Dr. Haynes is independent, the board
considered that Dr. Haynes is President and Chief Executive
Officer of RTI International, a company to which we propose to
provide certain services having a value we estimate to be
$375,000, in connection with RTIs applying for a grant
from the U.S. Department of Energy. The board determined
that Dr. Haynes does not have a direct or indirect material
interest in such transaction and that such transaction does not
otherwise impair Dr. Haynes independence.
Corporate
Governance Guidelines
The board has adopted corporate governance guidelines that
govern the structure and functioning of the board and set out
the boards policies on governance issues. The guidelines,
along with the written charters of each of the committees of the
board and our bylaws, are posted on our internet site,
www.admworld.com, and are available free of charge on
written request to Secretary, Archer-Daniels-Midland Company,
4666 Faries Parkway, Decatur, Illinois
62526-5666.
7
Executive
Sessions
In accordance with our corporate governance guidelines, the
non-management directors meet in executive session at least
annually. If the non-management directors include any directors
who are not independent pursuant to the boards
determination of independence, at least one executive session
includes only independent directors. The lead director, or in
his or her absence, the chairperson of the Nominating/Corporate
Governance Committee, presides at such meetings.
Board
Meetings and Attendance at Annual Meetings of
Stockholders
During the last fiscal year, our board of directors held five
regularly scheduled meetings and three special meetings. All
incumbent directors attended 75% or more of the combined total
meetings of the board and the committees on which they served
during the last fiscal year. We expect all director nominees to
attend the annual stockholders meeting. All director
nominees standing for election at our last annual
stockholders meeting held on November 8, 2007
attended that meeting.
Information
Concerning Committees and Meetings
The boards standing committees are the Audit,
Compensation/Succession, Nominating/Corporate Governance, and
Executive Committees. Each committee operates pursuant to a
written charter adopted by the board, available on our internet
site, www.admworld.com.
Audit
Committee
The Audit Committee consists of Mr. ONeill,
Chairperson, Messrs. Boeckmann, Buckley, and Moore,
Dr. Haynes, and Ms. Carter. The Audit Committee met
nine times during the most recent fiscal year. All of the
members of the Audit Committee were determined by the board to
be independent directors, as that term is defined in our bylaws,
in the NYSE listing standards and in Section 10A of the
Securities Exchange Act. No director may serve as a member of
the Audit Committee if such director serves on the audit
committees of more than two other public companies unless the
board determines that such service would not impair such
directors ability to serve effectively on the Audit
Committee. The Audit Committee reviews:
(1) the overall plan of the annual independent audit;
(2) financial statements;
(3) the scope of audit procedures;
(4) the performance of our independent auditors and
internal auditors;
(5) the auditors evaluation of internal controls;
(6) matters of legal compliance; and
(7) certain relationships and related transactions.
Compensation/Succession
Committee
The Compensation/Succession Committee consists of
Mr. Boeckmann, Chairperson, Dr. Haynes, and
Messrs. Maciel, ONeill, and Westbrook. The
Compensation/Succession Committee met five times during the most
recent fiscal year. All of the members of the
Compensation/Succession Committee were determined by the board
to be independent directors, as that term is defined in our
bylaws and in the NYSE listing standards. The
Compensation/Succession Committee:
(1) establishes and administers a compensation policy for
senior management;
(2) reviews and approves the compensation policy for all of
our employees and our subsidiaries other than senior management;
8
(3) approves all compensation elements with respect to our
executive officers and all employees with a base salary of
$500,000 or more;
(4) reviews and monitors our financial performance as it
affects our compensation policies or the administration of those
policies;
(5) establishes and reviews a compensation policy for
non-employee directors;
(6) reviews and monitors our succession plans;
(7) approves awards to employees pursuant to our incentive
compensation plans; and
(8) approves modifications in the employee benefit plans
with respect to the benefits salaried employees receive under
such plans.
All of the committees actions are reported to the board of
directors and, where appropriate, submitted to the board of
directors for ratification. Members of management attend
meetings of the committee and make recommendations to the
committee regarding compensation for officers other than the
Chief Executive Officer. In determining the Chief Executive
Officers compensation, the committee considers evaluations
prepared by the non-management directors.
In accordance with the General Corporation Law of Delaware, the
committee may delegate to one or more officers the authority to
grant stock options to other officers and employees who are not
directors or executive officers, provided that the resolution
authorizing this delegation specify the total number of options
that the officer or officers can award. The charter for the
Compensation/Succession Committee also provides that the
committee may form subcommittees and delegate tasks to them.
The Compensation/Succession Committee regularly consults with
compensation experts from nationally-recognized firms on matters
such as executive compensation philosophy, compensation and
benefit plan design, market information and analyses regarding
executive compensation, the amount and forms of compensation
awarded, and committee processes. These firms are directly
engaged by the Compensation/Succession Committee. In this
regard, the Compensation/Succession Committee met with
representatives of Mercer Human Resource Consulting and Towers
Perrin during fiscal 2008 in connection with matters that
included:
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Analyses of the elements and aggregate value of compensation
paid by our comparator companies to their executive
officers; and
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The philosophy behind and structure of revised annual and
long-term incentive arrangements for executive officers (see
Compensation Discussion and Analysis below).
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For additional information on the responsibilities and
activities of the Compensation/Succession Committee, including
the committees processes for determining executive
compensation, see the section of this proxy statement entitled
Compensation Discussion and Analysis.
Nominating/Corporate
Governance Committee
The Nominating/Corporate Governance Committee consists of
Mr. Westbrook, Chairperson, Ms. Carter, and
Messrs. Buckley, Maciel, and Moore. The
Nominating/Corporate Governance Committee met four times during
the most recent fiscal year. All of the members of the
Nominating/Corporate Governance Committee were determined by the
board to be independent directors, as that term is defined in
our bylaws and in the NYSE listing standards. The
Nominating/Corporate Governance Committee:
(1) identifies individuals qualified to become members of
the board, including evaluating individuals appropriately
suggested by stockholders in accordance with our bylaws;
(2) recommends individuals to the board for nomination as
members of the board and board committees;
9
(3) develops and recommends to the board a set of corporate
governance principles applicable to the company; and
(4) leads the evaluation of the directors, the board and
board committees.
In assessing an individuals qualifications to become a
member of the board, the Nominating/Corporate Governance
Committee may consider various factors including education,
experience, judgment, independence, integrity, availability, and
other factors that the Nominating/Corporate Governance Committee
deems appropriate. The Nominating/Corporate Governance Committee
strives to recommend candidates that complement the current
board members and other proposed nominees so as to further the
objective of having a board that reflects a diversity of
background and experience with the necessary skills to
effectively perform the functions of the board and its
committees. The Nominating/Corporate Governance Committee will
consider nominees recommended by a stockholder provided the
stockholder submits the nominees name in a written notice
delivered to our Secretary at our principal executive offices
not less than 60 nor more than 90 days prior to the
anniversary date of the immediately preceding annual
stockholders meeting. However, if the annual meeting is
called for a date that is not within 30 days before or
after such anniversary date, the notice must be received at our
principal executive offices not later than the close of business
on the tenth day following the day on which such notice of the
date of the annual meeting was mailed or public disclosure of
the date of the annual meeting was made (whichever first
occurs). Different notice delivery requirements may apply if the
number of directors to be elected at an annual meeting is being
increased, and we do not make a public announcement naming all
of the nominees or specifying the size of the increased board at
least 100 days prior to the first anniversary of the
preceding years annual meeting. Any notice of a
stockholder nomination must set forth the information required
by Section 1.4(c) of our bylaws, and must be accompanied by
a written consent from the proposed nominee to being named as a
nominee and to serve as a director if elected, and a written
statement from the proposed nominee as to whether he or she
intends, if elected, to tender the contingent, irrevocable
resignation that would become effective should the individual
fail to receive the required vote for re-election at the next
meeting of stockholders. All candidates, regardless of the
source of their recommendation, are evaluated using the same
criteria.
Executive
Committee
The Executive Committee consists of Ms. Woertz,
Chairperson, Mr. Moore, Lead Director, and
Messrs. Mulroney and Westbrook. The Executive Committee did
not meet during the most recent fiscal year. The Executive
Committee acts on behalf of the board to determine matters
which, in the judgment of the Chairman of the board, do not
warrant convening a special board meeting but should not be
postponed until the next scheduled board meeting. The Executive
Committee exercises all the power and authority of the board in
the management and direction of our business and affairs except
for matters which are expressly delegated to another board
committee and matters that cannot be delegated by the board
under applicable law, our certificate of incorporation, or our
bylaws.
Communications
with Directors
We have approved procedures for stockholders and other
interested parties to send communications to individual
directors or the non-employee directors as a group. You should
send any such communications in writing addressed to the
applicable director or directors in care of the Secretary,
Archer-Daniels-Midland Company, 4666 Faries Parkway, Decatur,
Illinois
62526-5666.
All correspondence will be forwarded to the intended
recipient(s).
Code of
Conduct
The board has adopted a Business Code of Conduct and Ethics that
sets forth standards regarding matters such as honest and
ethical conduct, compliance with law, and full, fair, accurate,
and timely disclosure in reports and documents that we file with
the SEC and in other public communications. The Business Code of
Conduct and Ethics applies to all of our employees, officers,
and directors, including our principal executive officer,
principal financial officer, and principal accounting officer.
The Business Code of Conduct and Ethics
10
is available at our internet site, www.admworld.com, and
is available free of charge on written request to Secretary,
Archer-Daniels-Midland Company, 4666 Faries Parkway, Decatur,
Illinois
62526-5666.
Any amendments to certain provisions of the Business Code of
Conduct and Ethics or waivers of such provisions granted to
certain executive officers will be promptly disclosed on our
internet site.
Compensation
Discussion and Analysis
Overview
The executive compensation program of the Company is designed to
attract, retain, and motivate highly-talented individuals to
lead the Company and to be competitive with the total
compensation provided by a comparator group of companies for
positions involving similar duties and responsibilities. In
seeking to provide a competitive total compensation package, the
Compensation/Succession Committee (the Committee)
uses comparator company compensation data, both with respect to
total compensation and compensation elements, as a reference
framework to inform its compensation decisions, but does not
establish specific compensation parameters based on such data.
This approach reflects considerations such as the inherent
difficulties in identifying comparator companies that are
sufficiently comparable to the Company and the differing
responsibilities of the Companys named executive officers
as compared to executives in comparator companies with similar
titles.
For these purposes, the Committee defines competitiveness as
providing targeted total compensation (total cash and
equity-based awards) between the 40th and
60th percentile levels of total compensation provided by
the comparator group of companies. The Committee first derives
from the comparator company data a middle quintile total
compensation range for positions most comparable to those of the
Companys named executive officers, then uses that range as
a reference point in determining total compensation for each of
the named executive officers. The ultimate determination of the
Committee may or may not fall within the middle quintile range
identified depending on assessments by the Committee of factors
such as the scope and responsibilities of the Company position
compared to those of the comparator group composite position as
well as the experience and performance of the individual holding
each such position at the Company.
The comparator group of companies used in connection with
compensation decisions affecting fiscal year 2008 was selected
by the Committee with input from management and compensation
consultants retained by the Committee. The primary factors
considered in compiling this comparator group of companies
included the nature and scope of business(es), size and
location. The companies included in the comparator group were:
Altria Group Inc.; Anheuser-Busch Company Inc.; Bunge Ltd.;
Caterpillar Inc.; Conagra Foods, Inc.; Deere & Co.;
Dow Chemical; Du Pont (EI) De Nemours; General Mills Inc.; Hess
Corp.; International Paper Company; Kraft Foods Inc.; Lyondell
Chemical Co.; Marathon Oil Corp.; PepsiCo Inc.; Sara Lee Corp.;
Sunoco Inc.; Tesoro Corp.; Tyson Foods Inc.; Valero Energy
Corp.; and Weyerhaeuser.
The executive compensation program related to fiscal year 2008
performance consisted of both annual and long-term components,
which were considered together in assessing whether the program
is achieving the objectives. The annual component of the
executive compensation program included both base salary and
annual cash incentive payments, while the long-term component
included equity-based incentives (restricted stock and stock
options). The Committee has allocated total compensation between
annual and long-term components based upon a desire to provide
each executive with annual cash compensation that is both
competitive and provides a meaningful incentive to achieve
short-term Company operational and financial objectives, and
with long-term compensation that will align an executives
interests with those of the stockholders and appropriately
reward and encourage long-term service with the Company. The
Committee monitors and evaluates the various components and the
allocation of compensation between these components by reference
to a detailed written summary of all compensation paid to
executives that is updated annually.
The members of the Committee familiarize themselves with
compensation trends and competitive conditions through periodic
consultations with compensation experts from
nationally-recognized firms and by reviewing publicly-filed
documents. During fiscal year 2007, the Committee re-examined
the structure of the executive compensation program and retained
Mercer Human Resource Consulting to provide advice,
recommendations, market information and analyses to facilitate
this review. Historically, base salary had been
11
the only material annual component of the compensation program;
the long-term component had been stock option and restricted
stock awards granted pursuant to personal and Company-based
performance criteria, as well as participation in the deferred
compensation and retirement plans. Through meetings and other
communications with representatives of Mercer Human Resource
Consulting, the Committee received general information regarding
trends in executive compensation and a detailed analysis of the
elements and aggregate value of the executive compensation
programs of the comparator group of companies. As a result of
this review, the Committee recommended to the Board of Directors
and the Board of Directors approved the following changes to the
executive compensation program that were implemented for all
executive officers and other key employees for performance in
fiscal year 2008 with the associated payments, grants and awards
to be made in August 2008 (fiscal year 2009):
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An annual cash incentive award was introduced for executive
officers and other key employees based upon Company financial
performance as measured by return on net assets and Company-wide
performance relating to safety and personnel development;
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The portion of the annual equity-based incentive awards that
were based on the achievement of individual performance
objectives was discontinued;
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Return on net assets rather than total business return was used
as the financial metric for determining both the size of annual
equity-based incentive awards and payouts under annual cash
incentive awards;
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The mix of equity-based incentive awards was modified so that
participants received stock options and restricted stock in
equal portions as valued utilizing Black-Scholes; and
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Restricted stock units were granted in lieu of restricted stock
for
non-U.S. based
participants.
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These changes were designed to increase the performance-based
portion of both annual cash compensation and total compensation,
to increase the portion of performance-based compensation for
executives that is based on Company rather than on individual
performance, and to better align the Companys compensation
structure with prevailing market practices. The decision to
introduce a metric based on the return on net assets reflects a
belief that, given the capital intensive nature of the business
of the Company, a metric which measures the efficiency of the
use of assets focusing on operating effectiveness from a total
capital perspective (both fixed assets as well as working
capital) is preferable to a metric based upon total business
return (change in equity value calculated as a multiple of
EBITDA (earnings before interest, taxes, depreciation and
amortization) less debt, plus dividends), because it more
directly reflects the impact of managements decisions on
the Companys financial performance. The Committee also
believes that the equal allocation between stock options and
restricted stock, which places greater emphasis on stock options
than had previously been the case, more appropriately balances
the differing incentives provided by stock options, which reward
only future increases in the stock price, and restricted stock,
which provides an ownership interest the value of which will
rise or fall in tandem with the holdings of the stockholders.
Finally, the introduction of restricted stock units was intended
to address situations in which the award of restricted stock
would be uneconomical because of tax or other regulatory
restrictions outside of the U.S.
In the case of all executive officers except Ms. Woertz,
the Committee considers the recommendations of Ms. Woertz
and the individuals immediate supervisor in establishing
each persons compensation. Ms. Woertz attends
Committee meetings, other than executive sessions of the
Committee and sessions when her performance or compensation is
being considered, to provide the Committee her assessment of
each executives performance, both as an individual and
with respect to the functions or business units he or she
oversees, and also to provide specific recommendations as to the
amount of each element of compensation that should be paid to
the executive. The non-management directors evaluate the
performance of Ms. Woertz, which is considered by the
Committee in establishing the compensation for Ms. Woertz.
For additional information regarding the Committees role
and authority in determining executive compensation, see the
discussion under the caption Compensation/Succession
Committee on page 8 of this proxy statement.
The compensation for Ms. Woertz, who joined the Company in
May 2006 as President and Chief Executive Officer, has been
determined to a significant degree by the Terms of Employment
which were negotiated in connection with Ms. Woertz joining
the Company. At that time, the Committee retained Frederic
12
W. Cook & Co., Inc., an outside compensation expert,
specifically to advise it with respect to Ms. Woertzs
compensation. Prior to approving the Terms of Employment, the
Committee considered the advice of this expert, analyzed
information regarding the total compensation provided to the
chief executive officers of other public companies of a
comparable size, and considered the attributes Ms. Woertz
would bring to the positions of President and Chief Executive
Officer in the context of the competitive marketplace and the
greater responsibilities of the President and Chief Executive
Officer relative to other Company executives. The Committee
believes the terms of Ms. Woertzs employment are
consistent with the above-stated objectives.
Annual
Compensation
The base salary for each executive is established based upon the
objectives described above. Each year, the Committee approves a
percentage range within which base salaries for executives may
be increased, with the range established based on factors such
as inflation, labor agreements, and Company performance. From
time-to-time, an increase in base salary outside of this range
will be approved if an executive is promoted or if it is
determined, based on updated market data, that the base salary
for a particular position is no longer competitive. Other than
increases related to promotions or market adjustments, annual
increases in base salary for executives have not typically, nor
did they in fiscal year 2008, exceed 5%. The base salaries of
the named executive officers, except Ms. Woertz and
Mr. Mills, were not changed in fiscal year 2008. An
increase in base salary for a particular executive within the
established range is primarily based upon an assessment of that
executives individual performance against written
objectives and various competencies and behaviors exhibited
during the most recently completed fiscal year. These objectives
vary from person to person, and generally involve factors such
as cost management, performance management, safety, achievement
of position specific financial or other objectives. The
competencies and behaviors vary from person to person, and
generally include factors such as strategic thinking, problem
solving, analytical ability, the extent to which the individual
is a team player, leadership, the extent to which the individual
is results oriented, performance orientation and intellectual
curiosity and agility.
As noted above, performance-based annual cash incentives were
introduced for executive officers and other key employees
beginning in fiscal year 2008. For fiscal year 2008, the
opportunity to receive annual cash incentive payments was based
upon performance against the following criteria:
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the Companys return on net assets (RONA) for fiscal year
2008 (60% weighting);
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the Companys achievement of workplace safety objectives
(20% weighting); and
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the Companys achievement of personnel development
objectives (20% weighting).
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For these purposes, RONA is defined as total adjusted four
quarter trailing Net Earnings expressed as a percentage of four
quarter average adjusted Net Assets. Net Earnings is adjusted to
exclude the after-tax effect of investment income (interest
income and dividends received), interest expense and gains and
losses on securities. Net Assets (current assets plus
investments and other assets plus net property, plant and
equipment (total assets) less current and long-term
liabilities) are adjusted to exclude cash and cash equivalents,
long and short-term marketable securities, segregated cash and
investments and long and short-term debt. The workplace safety
objectives involved achieving improvement in employee,
contractor, process and vehicle safety as measured by various
metrics, while the personnel development objective involved a
requirement that written personal development plans meeting
criteria established by the Companys human resources
function must be established and in place by the end of fiscal
year 2008 for all participants in the annual incentive program.
The amount of each annual cash incentive payment relating to
performance in fiscal year 2008 was based on the
participants base salary and the Companys
performance against the criteria listed above. Executive
officers, other than Ms. Woertz, had the opportunity to
receive annual cash incentive payments ranging from 0% to 102%
of their respective base salaries, while Ms. Woertz had the
opportunity to receive an annual cash incentive payment ranging
from 0% to 262% of her base salary. The Committee retains the
discretion to adjust payments under this program up or down for
any given year in order to minimize the possibility that
participants will be rewarded or penalized for fluctuations in
RONA attributable to extraordinary factors.
13
The performance objectives established by the Committee for
fiscal year 2008, which were based upon the Companys
annual business plan, and the Companys performance against
those objectives is summarized in the following table:
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FY 2008
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Possible
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Actual
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Performance
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Component
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Performance
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Component
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FY 2008
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Component
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Components
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Weighting
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Range
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Payout
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Performance
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Payout
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RONA
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60
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%
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9-13%
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0-200
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%
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10.2%
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80
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%
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Safety
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20
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%
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Employee/contractor - minimum of 10% improvement from FY2007
Process/vehicle - improvement in January - June period from
July - December period
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0-170
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%
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80%
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80
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%
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Personnel Development
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20
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%
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100% development plans completed
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0-100
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%
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100%
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100
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%
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The Committee took particular note of the significant
accomplishments of the management team in fiscal year 2008, most
notably, the Companys record segment operating profit, use
of working capital to fund record segment operating profit, and
relative performance against both comparator companies and
S&P 500 indices. After significant discussion, and in
consideration of quantitative and qualitative factors, the
Committee determined to exclude the impact of LIFO from the
calculation of RONA thereby increasing RONA to 11.8% (Actual
Component Payout of 140%) and then increased the cash incentive
by 30%.
As a result of this performance, in August 2008, the
Companys named executive officers received annual cash
incentive payments equal to the following percentages of their
annual base salaries and in the following dollar amounts
(Messrs. Schmalz and Camp did not receive cash incentive
payments due to their retirement):
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FY 2008
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Annual
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FY 2008
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Incentive
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Annual
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Officer
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as % of Salary
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Incentive ($)
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P.A. Woertz
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234
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%
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$
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3,042,000
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S. R. Mills
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92
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%
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$
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686,400
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D.J. Smith
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92
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%
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$
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826,800
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J.D. Rice
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92
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%
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$
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811,200
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L.W. Batchelder
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92
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%
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$
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702,000
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For fiscal year 2009, the performance-based annual cash
incentive for executive officers and an expanded group of
employees will be based upon performance against the following
criteria:
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RONA (excluding LIFO) for fiscal year 2009 (25% weighting);
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Net Earnings (excluding LIFO) for fiscal year 2009 (25%
weighting);
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the Companys achievement of performance development
objectives (10% weighting);
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the Companys achievement of safety objectives (10%
weighting); and
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the Committees informed judgment regarding the overall
performance of the Company (30% weighting).
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The performance objectives were established by the Committee
based upon the Companys annual business plan. The
Committee added net earnings as a second financial metric to
reduce reliance on a single financial measure and eliminated
LIFO (regardless of whether the impact is positive or negative)
in the financial metric calculations due to the Companys
relative lack of control and potential material impact of this
factor. The performance development component will focus upon
achievement of objectives regarding the establishment and
performance related to goals, feedback and development plans.
The safety component will
14
focus on achieving improvement objectives in employee,
contractor and process safety as measured by various metrics and
the enhancement of behavioral-based safety at the Companys
facilities and offices. The informed judgment component will
entail a review by the Committee of the Companys overall
performance considering absolute and relative financial
performance utilizing various metrics including, without
limitation, total shareholder return, return on equity and
earnings per share growth, operational performance, and
performance relative to actions contemplated in the annual
business plan and other Company-wide initiatives. For the
executive officers and other key employees, the Committee may
increase or decrease the annual cash incentive by up to 20% in
consideration of individual and group performance.
Prior to the payments made in August 2008 relating to
performance in fiscal year 2008, the Company had paid annual
cash incentives only in limited situations, such as the bonuses
paid to Ms. Woertz pursuant to her Terms of Employment
agreement. The Committee agreed to include an annual cash
incentive in the Terms of Employment because it was considered
more efficient and desirable to provide Ms. Woertz with a
compensation element from the commencement of her employment
that the Committee expected to extend to other senior executives
at a later time.
Certain perquisites are provided to the executives on an annual
basis as well as matching contributions under our broad-based
Employee Stock Ownership and 401(k) Plans. The Company has a
broad-based defined benefit pension plan and a supplemental
employee retirement plan in which the executives are
participants. The Committee does not believe these elements of
compensation are financially material to the Company,
individually or in the aggregate, but are important in making
the overall compensation program competitive.
Long-Term
Compensation
The Companys long-term incentive compensation program (the
LTI Program) provides equity-based incentive awards
to executive officers and other participating employees to align
the interests of the participants with those of the stockholders
by linking the awards to the Companys performance. The
actual size of an equity award made under the LTI Program during
any fiscal year is a function of the degree to which the Company
met specified performance objectives over a three fiscal year
performance period prior to the fiscal year in which the equity
award is made. Under the LTI Program in effect for fiscal 2007
with the associated grants and awards made in fiscal year 2008,
executive officers and certain employees had the opportunity to
receive annual incentive compensation awards in the form of
stock options and restricted stock granted under the stock-based
award plans which have been approved by the stockholders. For
each participant in the LTI Program, except Ms. Woertz, a
target award amount was determined as a percentage of that
individuals base salary. The percentages varied from 35%
to 135%, with percentages increasing for more senior
participants. The target award for the named executive officers,
except Ms. Woertz, was 135%. Ms. Woertz had a target
award of 200% of her base salary and cash bonus. The target
award amount was split between personal performance and Company
performance, with the Company performance component being more
heavily weighted at higher levels of responsibility with more
direct influence over the Companys performance. For the
named executive officers 70% was allocated to Company
performance, and 30% to individual performance. Individual
performance was measured over a one-year performance period,
while Company performance was measured over a three-year period.
The individual performance, which gives rise to stock option
awards under the LTI Program, is assessed by the
individuals supervisor. The Company performance
objectives, the achievement of which gives rise to restricted
stock awards under the LTI Program, were based upon the Company
achieving specified levels of total business return, based on
change in equity value calculated as a multiple of EBITDA
(earnings before interest, taxes, depreciation and amortization)
less debt, plus dividends, measured on a three-year rolling
15
average. For restricted stock awarded in fiscal year 2008, the
total business return objectives for fiscal
2005-2007
are summarized as follows:
|
|
|
|
|
|
|
Compound Annual
|
|
Incentive Earned As
|
TBR Over 3 Years
|
|
% of Target
|
|
|
3
|
%
|
|
|
0
|
%
|
|
6
|
%
|
|
|
50
|
%
|
|
9
|
%
|
|
|
100
|
%
|
|
12
|
%
|
|
|
150
|
%
|
|
15
|
%
|
|
|
200
|
%
|
Payouts between percentages listed above are interpolated
|
The stock options are granted at an exercise price equal to fair
market value (as determined in accordance with the applicable
plan) on the date of grant, vest incrementally over five years,
and are exercisable over a period of ten years. The awards of
restricted stock vest three years after the date of grant. All
awards granted under the LTI Program vest immediately upon a
change in control of the Company or the death of the executive
and continue vesting in accordance with their terms if the
executives employment terminates by reason of disability
or retirement. The Committee believes that these are appropriate
provisions to provide the executives with some assurance that
they will not be disadvantaged with respect to their equity
awards in the event of a sale of the Company or certain personal
circumstances. This assurance increases the value of these
awards to the executives which in turn enhances retention.
For purposes of LTI Program awards made in fiscal year 2008,
compound annual TBR performance during fiscal years
2005-2007
was determined to be 36.46%, resulting in an incentive earned
percentage equal to 200%.
As a result of this performance, the Companys named
executive officers received annual equity incentive awards
during fiscal year 2008 under the LTI Program summarized as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2008
|
|
|
|
FY 2008
|
|
|
FY 2008
|
|
|
Restricted
|
|
|
|
LTI Program
|
|
|
Stock Option
|
|
|
Stock Award
|
|
Officer
|
|
Award Value ($)
|
|
|
Award (# Shares)
|
|
|
(# Shares)
|
|
|
P.A. Woertz
|
|
|
9,315,000
|
|
|
|
103,669
|
|
|
|
266,360
|
|
S. R. Mills
|
|
|
1,425,936
|
|
|
|
16,846
|
|
|
|
40,398
|
|
D.J. Schmalz
|
|
|
1,671,199
|
|
|
|
19,744
|
|
|
|
47,346
|
|
D.J. Smith
|
|
|
2,032,206
|
|
|
|
28,034
|
|
|
|
56,023
|
|
W.H. Camp
|
|
|
1,888,558
|
|
|
|
18,358
|
|
|
|
55,028
|
|
J.D. Rice
|
|
|
1,942,346
|
|
|
|
22,947
|
|
|
|
55,028
|
|
L. W. Batchelder
|
|
|
1,684,800
|
|
|
|
19,904
|
|
|
|
47,732
|
|
The FY 2008 LTI Program Award Value shown above represents the
aggregate grant date fair value of the awards of stock options
and restricted stock to each of the named executive officers as
determined using Black-Scholes.
In connection with the introduction of an annual cash incentive
for performance in fiscal year 2008, the Committee eliminated
the individual performance element of the LTI Program for all
bonus-eligible participants. In addition, for LTI Program awards
beginning with those related to fiscal year 2008, the metric for
the Company performance element was changed from a three-year
rolling total business return to a three-year weighted average
RONA with more weight being given to the most recent fiscal
years results (25% 25% 50%) with
the awards paid-out in equal portions of stock options and
restricted stock (or restricted stock units where appropriate
for
non-U.S. based
participants) based on the grant date fair value of the
different types of awards as determined utilizing Black-Scholes.
16
For equity awards relating to performance in fiscal years
2006 2008, the following table summarizes the
performance objectives established by the Committee for the
fiscal year 2006 2008 performance period and the LTI
Program payout that would be earned as a percentage at each
performance level:
|
|
|
|
|
|
|
Weighted Average
|
|
Incentive Earned
|
RONA Over 3 Years
|
|
As %
|
|
|
9
|
%
|
|
|
50
|
%
|
|
10
|
%
|
|
|
75
|
%
|
|
11
|
%
|
|
|
100
|
%
|
|
12
|
%
|
|
|
150
|
%
|
|
13
|
%
|
|
|
200
|
%
|
For purposes of LTI Program awards made in August 2008 relating
to performance in fiscal years 2006 2008, weighted
average RONA performance during fiscal years 2006
2008 was determined to be 13.35%, resulting in an incentive
earned percentage equal to 200%.
As a result of this performance, in August 2008, the
Companys named executive officers received annual equity
incentive awards under the LTI Program as follows
(Messrs. Schmalz and Camp did not receive equity incentive
awards due to their retirement):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTI Program Award
|
|
|
Stock Option Award
|
|
|
Restricted Stock
|
|
Officer
|
|
Value ($)
|
|
|
(# Shares)
|
|
|
Award (# Shares)
|
|
|
P.A. Woertz
|
|
$
|
9,200,000
|
|
|
|
517,664
|
|
|
|
185,714
|
|
S. R. Mills
|
|
$
|
1,500,000
|
|
|
|
88,737
|
|
|
|
31,837
|
|
D.J. Smith
|
|
$
|
1,870,000
|
|
|
|
106,371
|
|
|
|
38,163
|
|
J.D. Rice
|
|
$
|
1,840,000
|
|
|
|
104,664
|
|
|
|
37,551
|
|
L. W. Batchelder
|
|
$
|
1,600,000
|
|
|
|
91,013
|
|
|
|
32,653
|
|
In addition to participating in the LTI Program as described
above for performance in fiscal year 2008, with a target amount
equal to 350% of her base salary, Ms. Woertz was eligible
to receive an additional performance-based equity award related
to performance in fiscal year 2008 in the form of stock options
with a potential payout value ranging from 0% to 300% of her
base salary (the Supplemental Incentive Plan). The
determination of the actual payout was based upon the
Committees discretionary evaluation of
Ms. Woertz performance in fiscal year 2008 that has
enhanced or is expected to enhance shareholder value. As a
result of this evaluation, the Committee determined that
Ms. Woertz was entitled to an award with a value equal to
208% of her base salary, and granted stock options covering
307,137 shares with an exercise price of $26.03 per
share.
For fiscal year 2009, the long-term incentive compensation
program will be comprised of a base award to adjust total
compensation to competitive levels as determined by the
Committee utilizing the factors described above and an
additional performance award based upon the Committees
informed judgment as described above placing the performance of
the Company into one of four performance categories relative to
a comparative group of companies and various broad-based
indices. Each performance level will have a range to enable the
use of discretion to recognize individual performance with the
ranges established to deliver total compensation at the level of
performance.
The Board of Directors has adopted guidelines for the retention
of equity in the Company by executives that require these
individuals to own shares of the common stock of the Company
with a fair market value within a range of one to five times
that individuals base salary.
In addition to the LTI Program, the executives who meet
eligibility criteria (which include all of the named executive
officers) may participate in the Employee Stock Ownership and
401(k) Plans, which are defined contribution plans including a
Company match component, and the qualified Retirement Plan for
Salaried Employees, a defined benefit plan. The non-qualified
supplemental retirement plan ensures that certain participants
in the Retirement Plan for Salaried Employees, including all of
the named executive officers, receive an aggregate retirement
benefit equal to that which would have been received under the
17
qualified retirement plan if not for certain limitations under
applicable tax law. The Employee Stock Ownership and 401(k)
Plans provide a tax-deferred vehicle for executives to save cash
compensation for retirement while the Retirement Plan for
Salaried Employees, together with the supplemental retirement
plan, provides a specific benefit to executives upon retirement
based on years of service and calculated by reference to base
salary during the later stages of their employment with the
Company. Executives, including the named executive officers, are
also eligible to defer up to 75% of their annual base salary and
up to 100% of their annual cash incentive until specified future
dates in accordance with the Companys non-qualified
deferred compensation plans. Under these plans, earnings credits
are added to deferred compensation account balances based upon
hypothetical investment elections available under these plans
and chosen by the executive. These hypothetical investment
options correspond with the investment options (other than
Company common stock) available under the 401(k) Plan. The
Committee believes these deferred compensation plans provide the
executives with an appropriate vehicle to reduce their current
income for tax purposes and save for the future at limited cost
to the Company. The Company does not take prior or potential
gains from equity awards into account in determining these
retirement benefits due to the speculative nature of equity
awards and the belief in the need to establish retirement
programs with determinable benefits for the executives and other
salaried employees.
Other than the awards and plans described above, the Company
does not have any agreements with the named executive officers
that provide for payment upon termination of employment or upon
a change in control. However, the Terms of Employment with
Ms. Woertz provide for varying levels of cash and non-cash
benefits following a covered termination (as defined
in the Terms of Employment) within and outside of the
change-in-control
context. These arrangements are discussed on page 31 of
this proxy statement under the caption Termination of
Employment and Change in Control Arrangements. These
arrangements resulted from the negotiation of terms necessary to
recruit Ms. Woertz to the Company in May 2006.
Practices
with Respect to Grants of Equity Awards
Annual equity awards granted to executive officers under the
stock-based award plans are granted promptly following the date
of the Committees meeting during the first fiscal quarter.
In addition to annual awards, the executives may receive awards
in connection with joining the Company or changes in their
status, including promotions or an agreement to provide
continued service to the Company following retirement. One-time
awards granted in connection with an executive joining the
Company are typically granted on the first day of employment.
Other one-time awards are granted when the relevant change in
status takes effect. All equity awards to executive officers are
granted by the Committee and no attempt is made to time the
granting of these awards in relation to the release of material,
non-public information. The exercise price of all stock options
granted to the executive officers is set at fair market value
(as determined in accordance with the applicable plan) on the
date of grant. Under these plans, fair market value is the
closing market price on the last trading day prior to the date
of grant.
Certain
Significant Tax and Accounting Issues
Section 162(m) of the Internal Revenue Code, as currently
interpreted by the Internal Revenue Service, generally disallows
a tax deduction to public corporations for compensation paid in
excess of $1,000,000 annually to each of the chief executive
officer, the chief financial officer, and the three other most
highly-compensated executive officers except for qualifying
performance-based compensation. A portion of the
compensation paid to Ms. Woertz will be subject to the
deduction limitation. In order to retain the flexibility to
compensate the executive officers in a competitive environment
in accordance with the principles discussed above, the Committee
believes that it would be inadvisable to adopt a strict policy
of compliance with the performance-based compensation exception
to Section 162(m). The maximum cash incentive payments and
restricted stock awards are eligible to be paid if fiscal year
2009 net income (as reported in accordance with GAAP)
exceeds the sum of after-tax interest expense and dividends paid
in fiscal year 2009; provided, however, the Committee may
exercise negative discretion such that the actual payments and
awards are determined on the basis of the programs described
above. The Committee will continue to consider future
opportunities for compliance with this exception to
Section 162(m) that it feels are in the best interests of
the
18
Company and its stockholders. The Committee believes that the
amount of any expected loss of a tax deduction under
Section 162(m) will be insignificant to the Companys
overall tax position.
The Committee is mindful that the non-qualified deferred
compensation and supplemental retirement plans create financial
statement liabilities and, therefore, the Company attempts to
hedge the deferred compensation plan liabilities by directing
elective deferrals made by participants into a separate account
and investing such account in a manner consistent with the
hypothetical investments elected by participants. The Company
does not set amounts aside in a rabbi trust for the
benefit of participants in the deferred compensation or
supplemental retirement plans. However, the deferred
compensation plans have rabbi trust funding triggers
in the event of a potential change in control of the Company to
provide some measure of assurance to employees that amounts they
have chosen to defer from their current compensation will be
held for their benefit, subject to creditor claims as required
under the applicable tax law. In maintaining the non-qualified
plans, the Committee has duly considered that the federal income
tax deduction available to the Company occurs at the same time
that participants are paid benefits from the applicable plan.
The Company is required to fund its qualified pension plans in a
manner consistent with the minimum funding requirements of the
Internal Revenue Code and the Employee Retirement Income
Security Act (ERISA). Historically, the Company has
made contributions in excess of the minimum to maintain its
plans at or near a full funding level relative to the accrued
benefit obligation. The Pension Protection Act of 2006
(PPA) has significantly changed the minimum funding
requirements of the Internal Revenue Code and ERISA. The Company
has made an analysis of the additional funding commitment
resulting from the PPA and estimates that the funding to its
pension plans will increase in the short term to anticipate and
comply with the PPA.
Compensation/Succession
Committee Report
The Compensation/Succession Committee has reviewed and discussed
the Compensation Discussion and Analysis with management. Based
upon this review and discussion, the Compensation/Succession
Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this proxy
statement.
A. L. Boeckmann, Chairperson
V. F. Haynes
A. Maciel
T. F. ONeill
K. R. Westbrook
Compensation/Succession
Committee Interlocks and Insider Participation
None of the members of the Compensation/Succession Committee is
or has been an employee of our company or any of our
subsidiaries. There are no interlocking relationships between
our company and other entities that might affect the
determination of the compensation of our executive officers.
19
Summary
Compensation Table
The following table summarizes the compensation for the fiscal
years ended June 30, 2008 and June 30, 2007, of our
principal executive officer, current principal financial
officer, our three other most highly-compensated executive
officers who were serving as executive officers on June 30,
2008, an individual who served as principal financial officer
for a portion of the fiscal year ended June 30, 2008, and
an individual who would have been included among the three most
highly compensated executive officers, other than the principal
executive officer and principal financial officer, but for the
fact that he was no longer serving as an executive officer on
June 30, 2008 (collectively, the named executive
officers).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Compensation
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Earnings
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($) (1)
|
|
($) (1)
|
|
($)
|
|
($)
|
|
($)
|
|
P. A. Woertz
|
|
|
2008
|
|
|
|
1,291,867
|
|
|
|
3,042,000
|
(2)
|
|
|
10,665,984
|
|
|
|
2,079,191
|
|
|
|
288,946
|
(3)
|
|
|
166,375
|
(5)
|
|
|
17,534,363
|
|
Chairman, CEO and President
|
|
|
2007
|
|
|
|
1,200,000
|
|
|
|
2,000,000
|
|
|
|
3,639,586
|
|
|
|
985,267
|
|
|
|
|
(4)
|
|
|
312,442
|
|
|
|
8,137,295
|
|
S. R. Mills(6)
|
|
|
2008
|
|
|
|
683,533
|
|
|
|
686,400
|
(2)
|
|
|
1,020,997
|
|
|
|
221,551
|
|
|
|
78,546
|
(3)
|
|
|
40,954
|
(7)
|
|
|
2,731,981
|
|
Executive Vice President and CFO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D. J. Schmalz(6)
|
|
|
2008
|
|
|
|
508,067
|
|
|
|
0
|
|
|
|
1,666,962
|
|
|
|
492,043
|
|
|
|
140,670
|
(3)
|
|
|
2,124,121
|
(8)
|
|
|
4,931,863
|
|
Senior Vice President and CFO
|
|
|
2007
|
|
|
|
759,770
|
|
|
|
0
|
|
|
|
2,129,739
|
|
|
|
358,048
|
|
|
|
428,527
|
(4)
|
|
|
29,844
|
|
|
|
3,705,928
|
|
D. J. Smith
|
|
|
2008
|
|
|
|
901,600
|
|
|
|
826,800
|
(2)
|
|
|
1,778,829
|
|
|
|
345,923
|
|
|
|
39,997
|
(3)
|
|
|
54,292
|
(9)
|
|
|
3,947,441
|
|
Executive Vice President, Secretary and General Counsel
|
|
|
2007
|
|
|
|
897,959
|
|
|
|
0
|
|
|
|
1,754,587
|
|
|
|
275,876
|
|
|
|
394,283
|
(4)
|
|
|
30,301
|
|
|
|
3,353,006
|
|
W. H. Camp(10)
|
|
|
2008
|
|
|
|
406,791
|
|
|
|
0
|
|
|
|
1,931,485
|
|
|
|
399,672
|
|
|
|
56,006
|
(3)
|
|
|
2,682,181
|
(11)
|
|
|
5,476,135
|
|
Executive Vice President
|
|
|
2007
|
|
|
|
882,017
|
|
|
|
0
|
|
|
|
2,397,088
|
|
|
|
449,028
|
|
|
|
620,355
|
(4)
|
|
|
28,739
|
|
|
|
4,377,227
|
|
J. D. Rice
|
|
|
2008
|
|
|
|
885,600
|
|
|
|
811,200
|
(2)
|
|
|
2,016,236
|
|
|
|
429,703
|
|
|
|
3,493
|
(3)
|
|
|
53,189
|
(12)
|
|
|
4,199,421
|
|
Executive Vice President
|
|
|
2007
|
|
|
|
882,017
|
|
|
|
0
|
|
|
|
1,675,202
|
|
|
|
308,412
|
|
|
|
402,418
|
(4)
|
|
|
29,548
|
|
|
|
3,297,597
|
|
L. W. Batchelder
|
|
|
2008
|
|
|
|
768,200
|
|
|
|
702,000
|
(2)
|
|
|
1,679,602
|
|
|
|
408,880
|
|
|
|
161,943
|
(3)
|
|
|
642,878
|
(13)
|
|
|
4,363,503
|
|
Senior Vice President
|
|
|
2007
|
|
|
|
765,065
|
|
|
|
0
|
|
|
|
2,116,676
|
|
|
|
399,186
|
|
|
|
602,680
|
(4)
|
|
|
29,594
|
|
|
|
3,913,201
|
|
|
|
|
(1) |
|
The amounts shown for stock and option awards represent the
dollar amount of compensation expense recognized for financial
statement reporting purposes during fiscal years 2008 and 2007,
respectively, plus the reduction for risk of forfeiture, in
connection with all outstanding grants of options and restricted
stock (including grants made in prior fiscal years) to each of
the listed officers. We calculated these amounts in accordance
with the provisions of SFAS No. 123(R) based on the
grant date fair value of the awards utilizing the assumptions
discussed in Note 8 to our financial statements for the fiscal
years ended June 30, 2008 and 2007, respectively. We
recognize compensation expense over the service period
applicable to a particular grant, which is typically the period
over which the grant vests and/or becomes exercisable, and do
not adjust the expense based on actual experience; however, for
retirement-eligible executive officers, commencing in fiscal
year 2006 the stock and option awards have been fully-expensed
during the fiscal year in which the awards are made. This
difference in accounting for stock and option awards under
SFAS No. 123(R) results in substantial variability in
the amounts shown in these columns between retirement-eligible
executive officers and nonretirement-eligible executive officers
in the Summary Compensation Table. The amount of compensation
expense is not affected by subsequent changes in the price of
our common stock. |
|
(2) |
|
Represents cash bonus related to fiscal year 2008, paid in
August 2008. |
20
|
|
|
(3) |
|
Each amount shown represents only the aggregate change in
actuarial present value of the named executive officers
benefit under all defined benefit and actuarial pension plans
from the pension plan measurement date for plan year 2007 (March
31) to the measurement date for plan year 2008 (March
31) using the same assumptions used for financial reporting
purposes except that retirement age is assumed to be the normal
retirement age (65) specified in the plans.
Mr. Schmalz and Mr. Camp retired and commenced early
retirement benefits on March 1, 2008 and January 1,
2008, respectively, as described below under captions
Pension Benefits and Termination of Employment
and Change in Control Arrangements. No named executive
officer received above market or preferential earnings on
deferred compensation. To derive the change in pension value for
financial reporting purposes, the assumptions used to value
pension liabilities on March 31, 2007 were interest of
6.00% and mortality determined under RP2000CH projected to 2014
using Scale AA; and the assumptions used to value pension
liabilities on March 31, 2008 were interest of 6.75% and
mortality determined under RP2000CH projected to 2015 using
Scale AA. |
|
(4) |
|
Each amount shown represents only the aggregate change in
actuarial present value of the named executive officers
benefit under all defined benefit and actuarial pension plans
from the pension plan measurement date for plan year 2006 (March
31) to the measurement date for plan year 2007 (March 31).
Ms. Woertz became eligible to participate in these plans on
May 1, 2007. No named executive officer received above
market or preferential earnings on deferred compensation. |
|
(5) |
|
Includes the following items for Ms. Woertz: |
|
|
|
|
|
$23,128 for reimbursement of taxes in connection with the
companys payment of expenses related to personal financial
planning advice; |
|
|
|
$11,500 in matching contributions under our 401(k) and Employee
Stock Ownership Plan; and |
|
|
|
Perquisites and personal benefits whose aggregate incremental
cost to us totaled $131,747, which included: |
|
|
|
|
|
$80,514 for personal use of company-owned aircraft; |
|
|
|
$40,310 for expenses related to personal financial planning
advice; and |
|
|
|
Amounts related to personal use of company-owned automobile, and
reimbursement of expenses related to home telephone, internet
service and security systems. |
|
|
|
(6) |
|
Mr. Schmalz retired as Senior Vice President and Chief
Financial Officer effective March 1, 2008, and
Mr. Mills was appointed Executive Vice President and Chief
Financial Officer effective that same date. |
|
(7) |
|
Includes the following items for Mr. Mills: |
|
|
|
|
|
$10,047 for reimbursement of taxes in connection with the
companys payment of expenses related to personal financial
planning advice; |
|
|
|
$11,500 in matching contributions under our 401(k) and Employee
Stock Ownership Plan; and |
|
|
|
Perquisites and personal benefits whose aggregate incremental
cost to us totaled $19,408, which included expenses related to
personal financial planning advice and personal use of
company-owned automobile. |
|
|
|
(8) |
|
Includes the following items for Mr. Schmalz: |
|
|
|
|
|
$2,078,809 paid to Mr. Schmalz in connection with his
retirement and termination of employment in March, 2008; |
|
|
|
$14,765 for reimbursement of taxes in connection with the
companys payment of expenses related to personal financial
planning advice; |
|
|
|
$6,348 in matching contributions under our 401(k) and Employee
Stock Ownership Plan; and |
|
|
|
Perquisites and personal benefits whose aggregate incremental
cost to us totaled $24,198, which included expenses related to
personal financial planning advice, personal use of
company-owned automobile, and reimbursement of expenses related
to home telephone system. |
|
|
|
(9) |
|
Includes the following items for Mr. Smith: |
|
|
|
|
|
$14,044 for reimbursement of taxes in connection with the
companys payment of expenses related to personal financial
planning advice; |
|
|
|
$11,500 in matching contributions under our 401(k) and Employee
Stock Ownership Plan; and |
21
|
|
|
|
|
Perquisites and personal benefits whose aggregate incremental
cost to us totaled $28,748, which included expenses related to
personal financial planning advice, personal use of
company-owned automobile, and reimbursement of expenses related
to home telephone system. |
|
|
|
(10) |
|
Mr. Camp retired as Executive Vice President effective
December 15, 2007. |
|
(11) |
|
Includes the following items for Mr. Camp: |
|
|
|
|
|
$2,645,823 paid to Mr. Camp in connection with his
retirement and termination of employment in December, 2007. |
|
|
|
$12,929 for reimbursement of taxes in connection with the
companys payment of expenses related to personal financial
planning advice; and |
|
|
|
Perquisites and personal benefits whose aggregate incremental
cost to us totaled $23,430, which included expenses related to
personal financial planning advice, personal use of
company-owned automobile, and reimbursement of expenses related
to home telephone system. |
|
|
|
(12) |
|
Includes the following items for Mr. Rice: |
|
|
|
|
|
$14,013 for reimbursement of taxes in connection with the
companys payment of expenses related to personal financial
planning advice; |
|
|
|
$11,500 in matching contributions under our 401(k) and Employee
Stock Ownership Plan; and |
|
|
|
Perquisites and personal benefits whose aggregate incremental
cost to us totaled $27,677, which included expenses related to
personal financial planning advice, personal use of
company-owned automobile, and reimbursement of expenses related
to home telephone system. |
|
|
|
(13) |
|
Includes the following items for Mr. Batchelder: |
|
|
|
|
|
$356 for reimbursement of taxes in connection with the
companys payment of expenses related to personal financial
planning advice, $286,074 for reimbursement of certain foreign
taxes, and $9,961 for reimbursement of taxes in connection with
the companys payment of certain relocation expenses; |
|
|
|
Perquisites and personal benefits whose aggregate incremental
cost to us totaled $24,953 which included expenses related to
personal financial planning advice, personal use of
company-owned automobile, and reimbursement of expenses related
to home telephone, and security systems; and |
|
|
|
Amounts payable pursuant to our expatriate policy which totaled
$321,534 and included a $117,250 goods and services
differential, $76,800 mobility premium, $64,000 relocation
allowance, $37,951 housing allowance, $18,161 foreign language
education assistance and amounts relating to travel allowance
and payment of home utilities. |
Aggregate incremental cost to our company of perquisites and
personal benefits is determined as follows. In the case of
relocation expenses and reimbursement of expenses related to
utilities, home phone, internet service and security system,
incremental cost is determined by the amounts paid to
third-party providers. In the case of personal use of
company-owned aircraft, incremental cost is based solely on the
cost per hour to the company to operate the aircraft, and does
not include fixed costs that do not change based on usage, such
as purchase costs of the aircraft and non-trip-related hangar
expenses. Our direct operating cost per hour of an aircraft is
based on the annual costs of fuel, on-board catering, aircraft
maintenance, landing fees, trip-related hangar and parking
costs, and smaller variable costs, divided by the number of
hours the aircraft was operated during the year. In the case of
personal use of company-owned automobiles, incremental cost is
based on the direct costs to operate the vehicle, such as
maintenance, fuel, registration and parking fees, and does not
include fixed costs to acquire or lease the vehicle. In the case
of personal financial planning advice, foreign language
education assistance and travel expenses, incremental cost is
the amount paid to the service providers.
Employment
Agreements
In connection with the election of Ms. Woertz as our
President and Chief Executive Officer, we and Ms. Woertz
entered into Terms of Employment dated as of April 27,
2006. Pursuant to the Terms of Employment, the board approved an
initial annual salary for Ms. Woertz of $1,200,000 and
approved a target annual bonus of at least 125% of her annual
salary. Pursuant to the Terms of Employment, there shall be no
22
reduction in Ms. Woertzs initial $1,200,000 annual
salary as a result of subsequent salary reviews. Payment of a
target bonus to Ms. Woertz was guaranteed for fiscal 2007.
Ms. Woertz is also entitled to receive, pursuant to the
Terms of Employment, other benefits and perquisites comparable
to those received by her predecessor as Chief Executive Officer
or, if more favorable, other ADM senior officers. Provisions of
Ms. Woertzs Terms of Employment relating to
termination of her employment and change of control of our
company are described below in the Termination and
Change-of-Control Arrangements section.
Total
Compensation for Named Executive Officers
Given our companys use of equity-based compensation as a
major form of compensation for our named executive officers and
because the SEC requires equity-based compensation to be
reported in the Summary Compensation Table above based on what
is expensed in our financial statements, we provide the table
below to facilitate understanding of compensation to our named
executive officers in fiscal year 2008. The table summarizes all
compensation to our named executive officers in the fiscal year
and reconciles amounts shown in the table to amounts shown in
the Summary Compensation Table above. Inclusion of this table is
not required by SEC rules and this table is not designed to
replace the Summary Compensation Table.
ACTUAL COMPENSATION AWARDED FOR
FISCAL YEAR ENDED JUNE 30, 2008
|
|
Actual
Compensation Awarded |
Adjustments Required for Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus
|
|
|
Plus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior
|
|
|
Prior
|
|
|
Less
|
|
|
Less
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Restricted
|
|
|
Stock
|
|
|
Restricted
|
|
|
|
|
|
Plus Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
Stock
|
|
|
Options
|
|
|
Stock
|
|
|
Plus
|
|
|
and Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Grants
|
|
|
Grants
|
|
|
to be
|
|
|
to be
|
|
|
Change
|
|
|
Payments
|
|
|
|
|
|
Total in
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
Total
|
|
|
|
Expensed
|
|
|
Expensed
|
|
|
Expensed
|
|
|
Expensed
|
|
|
in
|
|
|
for
|
|
|
|
|
|
Summary
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Award
|
|
|
Award
|
|
|
Other
|
|
|
Compensation
|
|
|
|
this
|
|
|
this
|
|
|
in Future
|
|
|
in Future
|
|
|
Pension
|
|
|
Expatriate
|
|
|
Net
|
|
|
Compensation
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)(1)
|
|
|
Compensation(2)
|
|
|
Awarded
|
|
|
|
FY(3)
|
|
|
FY(4)
|
|
|
Years(5)
|
|
|
Years(6)
|
|
|
Value
|
|
|
Assignment(7)
|
|
|
Difference
|
|
|
Table
|
|
P. A. Woertz
|
|
|
1,291,867
|
|
|
|
3,042,000
|
|
|
|
9,154,793
|
|
|
|
1,306,229
|
|
|
|
166,375
|
|
|
|
14,961,264
|
|
|
|
|
881,814
|
|
|
|
2,274,090
|
|
|
|
(108,852
|
)
|
|
|
(762,900
|
)
|
|
|
288,946
|
|
|
|
|
|
|
|
2,573,099
|
|
|
|
17,534,363
|
|
S. R. Mills
|
|
|
683,533
|
|
|
|
686,400
|
|
|
|
1,388,479
|
|
|
|
212,260
|
|
|
|
40,954
|
|
|
|
3,011,626
|
|
|
|
|
182,636
|
|
|
|
596,740
|
|
|
|
(173,346
|
)
|
|
|
(964,221
|
)
|
|
|
78,546
|
|
|
|
|
|
|
|
279,645
|
|
|
|
2,731,981
|
|
D. J. Schmalz
|
|
|
508,067
|
|
|
|
|
|
|
|
1,627,282
|
|
|
|
248,774
|
|
|
|
2,124,121
|
|
|
|
4,508,244
|
|
|
|
|
243,269
|
|
|
|
39,680
|
|
|
|
|
|
|
|
|
|
|
|
140,670
|
|
|
|
|
|
|
|
423,619
|
|
|
|
4,931,863
|
|
D. J. Smith
|
|
|
901,600
|
|
|
|
826,800
|
|
|
|
1,925,511
|
|
|
|
353,228
|
|
|
|
54,292
|
|
|
|
4,061,431
|
|
|
|
|
281,164
|
|
|
|
1,190,478
|
|
|
|
(288,469
|
)
|
|
|
(1,337,161
|
)
|
|
|
39,997
|
|
|
|
|
|
|
|
68,990
|
|
|
|
3,947,441
|
|
W. H. Camp
|
|
|
406,791
|
|
|
|
|
|
|
|
1,891,312
|
|
|
|
231,311
|
|
|
|
2,682,181
|
|
|
|
5,211,595
|
|
|
|
|
168,361
|
|
|
|
40,173
|
|
|
|
|
|
|
|
|
|
|
|
56,006
|
|
|
|
|
|
|
|
264,540
|
|
|
|
5,476,135
|
|
J. D. Rice
|
|
|
885,600
|
|
|
|
811,200
|
|
|
|
1,891,312
|
|
|
|
289,132
|
|
|
|
53,189
|
|
|
|
3,930,433
|
|
|
|
|
297,185
|
|
|
|
1,149,384
|
|
|
|
(156,613
|
)
|
|
|
(1,024,461
|
)
|
|
|
3,493
|
|
|
|
|
|
|
|
268,988
|
|
|
|
4,199,421
|
|
L. W. Batchelder
|
|
|
768,200
|
|
|
|
702,000
|
|
|
|
1,640,549
|
|
|
|
250,790
|
|
|
|
25,392
|
|
|
|
3,386,931
|
|
|
|
|
158,090
|
|
|
|
39,054
|
|
|
|
|
|
|
|
|
|
|
|
161,943
|
|
|
|
617,569
|
|
|
|
976,655
|
|
|
|
4,363,586
|
|
|
|
|
(1) |
|
Represents the grant date fair value of the award determined in
accordance with SFAS 123(r). |
|
(2) |
|
Represents total of 401(k) matching contribution, perquisites
and other executive benefits. |
|
(3) |
|
Those portions of prior year stock options that were expensed
during fiscal year 2008. Includes a reduction for risk of
forfeiture. |
|
(4) |
|
Those portions of prior year restricted stock awards that were
expensed during fiscal year 2008. Includes a reduction for risk
of forfeiture. |
|
(5) |
|
Those portions of fiscal year 2008 stock option awards that will
be expensed in future years. |
|
(6) |
|
Those portions of fiscal year 2008 restricted stock awards that
will be expensed in future years. |
|
(7) |
|
Tax and other payments related to Mr. Batchelders
expatriate assignment during fiscal year 2008. |
Grants of
Plan-Based Awards During Fiscal 2008
The following table summarizes the grants of plan-based awards
made to our named executive officers during the fiscal year
ended June 30, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
Exercise
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
Number
|
|
|
Number of
|
|
|
or Base
|
|
|
Closing
|
|
|
Fair Value
|
|
|
|
|
|
|
of Shares
|
|
|
Securities
|
|
|
Price of
|
|
|
Market
|
|
|
of Stock
|
|
|
|
|
|
|
of Stock
|
|
|
Underlying
|
|
|
Option
|
|
|
Price on the
|
|
|
and
|
|
|
|
|
|
|
or Units
|
|
|
Options
|
|
|
Awards
|
|
|
Date of
|
|
|
Option
|
|
Name
|
|
Grant Date
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh) (1)
|
|
|
Grant ($)
|
|
|
Awards ($) (2)
|
|
|
P. A. Woertz
|
|
|
8/3/07
|
|
|
|
266,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/3/07
|
|
|
|
|
|
|
|
103,669
|
|
|
|
34.37
|
|
|
|
33.46
|
|
|
|
10,461,023
|
|
S. R. Mills
|
|
|
8/3/07
|
|
|
|
40,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/3/07
|
|
|
|
|
|
|
|
16,846
|
|
|
|
34.37
|
|
|
|
33.46
|
|
|
|
1,600,739
|
|
D. J. Schmalz
|
|
|
8/3/07
|
|
|
|
47,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/3/07
|
|
|
|
|
|
|
|
19,744
|
|
|
|
34.37
|
|
|
|
33.46
|
|
|
|
1,876,056
|
|
D. J. Smith
|
|
|
8/3/07
|
|
|
|
56,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/3/07
|
|
|
|
|
|
|
|
28,034
|
|
|
|
34.37
|
|
|
|
33.46
|
|
|
|
2,278,739
|
|
W. H. Camp
|
|
|
8/3/07
|
|
|
|
55,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/3/07
|
|
|
|
|
|
|
|
18,358
|
|
|
|
34.37
|
|
|
|
33.46
|
|
|
|
2,122,623
|
|
J. D. Rice
|
|
|
8/3/07
|
|
|
|
55,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/3/07
|
|
|
|
|
|
|
|
22,947
|
|
|
|
34.37
|
|
|
|
33.46
|
|
|
|
2,180,445
|
|
L.W. Batchelder
|
|
|
8/3/07
|
|
|
|
47,732
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/3/07
|
|
|
|
|
|
|
|
19,904
|
|
|
|
34.37
|
|
|
|
33.46
|
|
|
|
1,891,339
|
|
|
|
|
(1) |
|
Exercise price was determined by using the closing market price
of a share of our common stock on the New York Stock Exchange on
the trading day immediately prior to the grant date. |
|
(2) |
|
The grant date fair value is generally the amount the company
would expense in its financial statements over the awards
service period under SFAS No. 123(R). |
All of the awards in the table above were granted under our 2002
Incentive Compensation Plan. All of the awards shown in the
All Other Stock Awards column in the table above are
restricted stock awards, and all of these awards vest in full
three years after the date of grant. Under the terms of the
restricted stock award agreement pertaining to each of these
awards, the recipient of the award may vote and receive cash
dividends on restricted shares prior to their vesting date, but
may not transfer or pledge the shares in any manner prior to
vesting. Dividends on restricted shares are paid at the same
rate as dividends to our stockholders generally. Vesting
accelerates upon the death of the award recipient or a change in
control of our company, and continues in accordance with the
original vesting schedule if employment ends as a result of
disability or retirement. If employment ends for other reasons,
unvested shares are forfeited. In addition, if an award
recipients employment is terminated for cause, or if the
recipient breaches a non-competition or confidentiality
restriction or participates in an activity deemed by us to be
detrimental to our company, the recipients unvested shares
will be forfeited, and any shares that have already vested must
be returned to us or the recipient must pay us the amount of the
shares fair market value as of the date they vested.
All of the awards shown in the All Other Option
Awards column in the table above are non-qualified stock
option awards, vest and become exercisable in five equal annual
installments commencing on the first anniversary of the grant
date, and must be exercised within ten years after the grant
date. The exercise price may be paid in cash or by delivering
shares of our common stock that are already owned by the award
recipient and that have been held for at least six months. Tax
withholding obligations resulting from the exercise may be paid
by surrendering a portion of the shares being acquired, subject
to certain conditions. Under the terms of the stock option
agreement pertaining to each of these awards, vesting and
exercisability accelerate upon the death of the recipient or
change in control of our company, and continue in accordance
with the original vesting schedule if employment ends as a
result of disability or retirement. If employment ends for other
reasons, a recipient forfeits any interest in the unvested
portion of any option, but retains the right to exercise the
previously vested portion of any option for a period of three
months. In addition, if an award recipients employment is
terminated for cause, or if the recipient breaches a
non-competition or confidentiality restriction or participates
in an activity deemed by us to be detrimental to our company,
the recipients right to exercise any unexercised options
will terminate, the recipients right to receive option
shares will terminate,
24
and any shares already issued upon exercise of the option must
be returned to us in exchange for the lesser of the shares
then-current fair market value or the price paid for the shares,
or the recipient must pay us cash in the amount of the gain
realized by the recipient from the exercise of the option.
The impact of a termination of employment or change in control
of our company on restricted stock and stock option awards held
by our named executive officers is quantified in the
Termination of Employment and
Change-in-Control
Arrangements section below.
Outstanding
Equity Awards at Fiscal 2008 Year-End
The following table summarizes information regarding unexercised
stock options and unvested restricted stock awards for the named
executive officers as of June 30, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Stock that
|
|
|
Stock that
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
have not
|
|
|
have not
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)(1)
|
|
|
P. A. Woertz
|
|
|
|
|
|
|
103,669
|
(2)
|
|
|
34.37
|
|
|
|
8-3-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
55,508
|
|
|
|
83,262
|
(3)
|
|
|
36.34
|
|
|
|
5-1-2016
|
|
|
|
418,561
|
(10)
|
|
|
14,126,434
|
|
S. R. Mills
|
|
|
|
|
|
|
16,846
|
(2)
|
|
|
34.37
|
|
|
|
8-3-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
1,981
|
|
|
|
7,924
|
(4)
|
|
|
41.81
|
|
|
|
8-10-2016
|
|
|
|
|
|
|
|
|
|
|
|
|
10,704
|
|
|
|
16,057
|
(5)
|
|
|
20.90
|
|
|
|
8-8-2015
|
|
|
|
|
|
|
|
|
|
|
|
|
17,145
|
|
|
|
11,431
|
(6)
|
|
|
15.73
|
|
|
|
8-19-2014
|
|
|
|
|
|
|
|
|
|
|
|
|
5,419
|
|
|
|
13,552
|
(7)
|
|
|
13.65
|
|
|
|
10-14-2013
|
|
|
|
|
|
|
|
|
|
|
|
|
5,252
|
|
|
|
10,506
|
(8)
|
|
|
11.30
|
|
|
|
8-8-2012
|
|
|
|
|
|
|
|
|
|
|
|
|
11,482
|
|
|
|
6,891
|
(9)
|
|
|
13.6054
|
|
|
|
5-1-2010
|
|
|
|
|
|
|
|
|
|
|
|
|
15,469
|
|
|
|
|
|
|
|
11.3379
|
|
|
|
5-1-2010
|
|
|
|
|
|
|
|
|
|
|
|
|
1,494
|
|
|
|
|
|
|
|
9.0703
|
|
|
|
5-1-2010
|
|
|
|
|
|
|
|
|
|
|
|
|
16,887
|
|
|
|
|
|
|
|
13.5246
|
|
|
|
5-3-2009
|
|
|
|
106,720
|
(11)
|
|
|
3,601,800
|
|
D.J. Schmalz
|
|
|
|
|
|
|
19,744
|
(2)
|
|
|
34.37
|
|
|
|
8-3-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
2,853
|
|
|
|
11,413
|
(4)
|
|
|
41.81
|
|
|
|
8-10-2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,935
|
(5)
|
|
|
20.90
|
|
|
|
8-8-2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,545
|
(6)
|
|
|
15.73
|
|
|
|
8-19-2014
|
|
|
|
157,830
|
(12)
|
|
|
5,326,763
|
|
D. J. Smith
|
|
|
|
|
|
|
28,034
|
(2)
|
|
|
34.37
|
|
|
|
8-3-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
4,041
|
|
|
|
16,164
|
(4)
|
|
|
41.81
|
|
|
|
8-10-2016
|
|
|
|
|
|
|
|
|
|
|
|
|
19,373
|
|
|
|
29,060
|
(5)
|
|
|
20.90
|
|
|
|
8-8-2015
|
|
|
|
|
|
|
|
|
|
|
|
|
26,091
|
|
|
|
26,092
|
(6)
|
|
|
15.73
|
|
|
|
8-19-2014
|
|
|
|
|
|
|
|
|
|
|
|
|
12,702
|
|
|
|
31,761
|
(7)
|
|
|
13.65
|
|
|
|
10-14-2013
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
22,762
|
(8)
|
|
|
11.30
|
|
|
|
8-8-2012
|
|
|
|
|
|
|
|
|
|
|
|
|
12,404
|
|
|
|
12,401
|
(9)
|
|
|
13.6054
|
|
|
|
5-1-2010
|
|
|
|
|
|
|
|
|
|
|
|
|
2,575
|
|
|
|
|
|
|
|
13.5246
|
|
|
|
5-3-2009
|
|
|
|
183,198
|
(13)
|
|
|
6,182,933
|
|
W. H. Camp
|
|
|
|
|
|
|
18,358
|
(2)
|
|
|
34.37
|
|
|
|
8-3-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
3,969
|
|
|
|
15,876
|
(4)
|
|
|
41.81
|
|
|
|
8-10-2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,185
|
(5)
|
|
|
20.90
|
|
|
|
8-8-2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,872
|
(6)
|
|
|
15.73
|
|
|
|
8-19-2014
|
|
|
|
179,939
|
(14)
|
|
|
6,072,941
|
|
J. D. Rice
|
|
|
|
|
|
|
22,947
|
(2)
|
|
|
34.37
|
|
|
|
8-3-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
3,969
|
|
|
|
15,876
|
(4)
|
|
|
41.81
|
|
|
|
8-10-2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,185
|
(5)
|
|
|
20.90
|
|
|
|
8-8-2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,167
|
(6)
|
|
|
15.73
|
|
|
|
8-19-2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,712
|
(7)
|
|
|
13.65
|
|
|
|
10-14-2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,762
|
(8)
|
|
|
11.30
|
|
|
|
8-8-2012
|
|
|
|
|
|
|
|
|
|
|
|
|
13,782
|
|
|
|
13,779
|
(9)
|
|
|
13.6054
|
|
|
|
5-1-2010
|
|
|
|
|
|
|
|
|
|
|
|
|
2,573
|
|
|
|
|
|
|
|
13.5246
|
|
|
|
5-3-2009
|
|
|
|
179,939
|
(15)
|
|
|
6,072,941
|
|
L.W. Batchelder
|
|
|
|
|
|
|
19,904
|
(2)
|
|
|
34.37
|
|
|
|
8-3-2017
|
|
|
|
|
|
|
|
|
|
|
|
|
3,442
|
|
|
|
13,772
|
(4)
|
|
|
41.81
|
|
|
|
8-10-2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,803
|
(5)
|
|
|
20.90
|
|
|
|
8-8-2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,263
|
(6)
|
|
|
15.73
|
|
|
|
8-19-2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,682
|
(7)
|
|
|
13.65
|
|
|
|
10-14-2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,762
|
(8)
|
|
|
11.30
|
|
|
|
8-8-2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,891
|
(9)
|
|
|
13.6054
|
|
|
|
5-1-2010
|
|
|
|
157,518
|
(16)
|
|
|
5,316,233
|
|
25
|
|
|
(1) |
|
Calculated by multiplying the closing market price of a share of
our common stock on the New York Stock Exchange on June 30,
2008, which was $33.75, by the number of shares or units that
have not vested. |
|
(2) |
|
Stock options vest at the rate of 20% of the initial grant per
year, with remaining vesting dates on August 3 of 2008,
2009, 2010, 2011 and 2012. |
|
(3) |
|
Stock options vest at the rate of 20% of the initial grant per
year, with remaining vesting dates on May 1 of 2009, 2010, and
2011. |
|
(4) |
|
Stock options vest at the rate of 20% of the initial grant per
year, with remaining vesting dates on August 10 of 2008,
2009, 2010, and 2011. |
|
(5) |
|
Stock options vest at the rate of 20% of the initial grant per
year, with remaining vesting dates on August 8 of 2008,
2009, and 2010. |
|
(6) |
|
Stock options vest at the rate of 20% of the initial grant per
year, with remaining vesting dates on August 19 of 2008 and
2009. |
|
(7) |
|
Stock options vest at the rate of 11.1% of the initial grant per
year, with remaining vesting dates on October 14 of 2008,
2009, 2010, 2011, and 2012. |
|
(8) |
|
Stock options vest at the rate of 11.1% of the initial grant per
year, with remaining vesting dates on August 8 of 2008, 2009,
2010, and 2011. |
|
(9) |
|
Stock options vest at the rate of 37.5% of the initial grant on
May 1 of 2009. |
|
(10) |
|
Restricted share awards vest as to 152,201 shares on
May 1, 2009 and 266,360 shares on August 3, 2010. |
|
(11) |
|
Restricted share awards vest as to 43,431 shares on
August 8, 2008, 22,891 shares on August 10, 2009
and 40,398 shares on August 3, 2010. |
|
(12) |
|
Restricted share awards vest as to 72,804 shares on
August 8, 2008, 37,680 shares on August 10, 2009
and 47,346 shares on August 3, 2010. |
|
(13) |
|
Restricted share awards vest as to 83,227 shares on
August 8, 2008, 43,948 shares on August 10, 2009
and 56,023 shares on August 3, 2010. |
|
(14) |
|
Restricted share awards vest as to 81,745 shares on
August 8, 2008, 43,166 shares on August 10, 2009
and 55,028 shares on August 3, 2010. |
|
(15) |
|
Restricted share awards vest as to 81,745 shares on
August 8, 2008, 43,166 shares on August 10, 2009
and 55,028 shares on August 3, 2010. |
|
(16) |
|
Restricted share awards vest as to 72,344 shares on
August 8, 2008, 37,442 shares on August 10, 2009
and 47,732 shares on August 3, 2010. |
Option
Exercises and Stock Vested During Fiscal 2008
The following table summarizes information regarding stock
options exercised by the named executive officers during the
fiscal year that ended June 30, 2008, and restricted stock
awards to the named executive officers that vested during that
same fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Value
|
|
|
Number of
|
|
|
Value
|
|
|
|
Acquired
|
|
|
Realized
|
|
|
Shares
|
|
|
Realized
|
|
|
|
on
|
|
|
on
|
|
|
Acquired
|
|
|
on
|
|
|
|
Exercise
|
|
|
Exercise
|
|
|
Upon
|
|
|
Vesting
|
|
Name
|
|
(#)
|
|
|
($) (1)
|
|
|
Vesting (#)
|
|
|
($) (2)
|
|
|
P. A. Woertz
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
S. R. Mills
|
|
|
0
|
|
|
|
0
|
|
|
|
31,143
|
|
|
|
1,012,770
|
|
D. J. Schmalz
|
|
|
53,187
|
|
|
|
1,461,378
|
|
|
|
96,733
|
|
|
|
3,145,757
|
|
D. J. Smith
|
|
|
26,351
|
|
|
|
660,098
|
|
|
|
110,581
|
|
|
|
3,596,094
|
|
W. H. Camp
|
|
|
44,348
|
|
|
|
932,939
|
|
|
|
103,657
|
|
|
|
3,370,926
|
|
J. D. Rice
|
|
|
47,263
|
|
|
|
1,048,981
|
|
|
|
100,209
|
|
|
|
3,258,797
|
|
L.W. Batchelder
|
|
|
36,525
|
|
|
|
884,606
|
|
|
|
96,122
|
|
|
|
3,125,887
|
|
26
|
|
|
(1) |
|
Represents the difference between the market value of the shares
acquired upon exercise (calculated using the average of the high
and low sale prices reported on the New York Stock Exchange on
the exercise date) and the aggregate exercise price of the
shares acquired. |
|
(2) |
|
Represents the market value of the shares that vested,
calculated using the average of the high and low sale prices
reported on the New York Stock Exchange on the vesting date. |
Pension
Benefits
The following table summarizes information regarding the
participation of each of the named executive officers in our
defined benefit retirement plans as of the pension plan
measurement date for the fiscal year ended June 30, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments
|
|
|
|
|
Number
|
|
Present
|
|
During
|
|
|
|
|
of Years
|
|
Value of
|
|
Last
|
|
|
|
|
Credited
|
|
Accumulated
|
|
Fiscal
|
|
|
|
|
Service
|
|
Benefit
|
|
Year
|
Name
|
|
Plan Name
|
|
(#) (1)
|
|
($) (1)
|
|
($) (2)
|
|
P. A. Woertz
|
|
ADM Retirement Plan for Salaried Employees
|
|
|
2
|
|
|
|
39,181
|
|
|
|
0
|
|
|
|
ADM Supplemental Retirement Plan II
|
|
|
2
|
|
|
|
249,765
|
|
|
|
0
|
|
S. R. Mills
|
|
ADM Retirement Plan for Salaried Employees
|
|
|
29
|
|
|
|
414,084
|
|
|
|
0
|
|
|
|
ADM Supplemental Retirement Plan II
|
|
|
29
|
|
|
|
600,778
|
|
|
|
0
|
|
D. J. Schmalz
|
|
ADM Retirement Plan for Salaried Employees
|
|
|
23
|
|
|
|
671,898
|
|
|
|
21,576
|
|
|
|
ADM Supplemental Retirement Plan II
|
|
|
23
|
|
|
|
1,731,334
|
|
|
|
57,303
|
|
D. J. Smith
|
|
ADM Retirement Plan for Salaried Employees
|
|
|
26
|
|
|
|
386,516
|
|
|
|
0
|
|
|
|
ADM Supplemental Retirement Plan II
|
|
|
26
|
|
|
|
1,302,716
|
|
|
|
0
|
|
W. H. Camp
|
|
ADM Retirement Plan for Salaried Employees
|
|
|
31
|
|
|
|
522,368
|
|
|
|
25,830
|
|
|
|
ADM Supplemental Retirement Plan II
|
|
|
31
|
|
|
|
2,060,621
|
|
|
|
104,831
|
|
J. D. Rice
|
|
ADM Retirement Plan for Salaried Employees
|
|
|
32
|
|
|
|
487,359
|
|
|
|
0
|
|
|
|
ADM Supplemental Retirement Plan II
|
|
|
32
|
|
|
|
1,524,934
|
|
|
|
0
|
|
L.W. Batchelder
|
|
ADM Retirement Plan for Salaried Employees
|
|
|
37
|
|
|
|
620,766
|
(3)
|
|
|
0
|
|
|
|
ADM Supplemental Retirement Plan II
|
|
|
37
|
|
|
|
2,187,125
|
(3)
|
|
|
0
|
|
|
|
|
(1) |
|
Calculated as of the pension plan measurement date used for
financial statement reporting purposes, which was March 31,
2008. The assumptions used to value pension liabilities on such
date were interest of 6.75% and mortality determined under
RP2000CH projected to 2015 using Scale AA. |
|
(2) |
|
Mr. Schmalz retired and started pension distributions on
March 1, 2008, and Mr. Camp retired and started
pension distributions on January 1, 2008. Both were
eligible for and commenced early retirement benefits from the
Retirement Plan and the Supplemental Retirement Plan. As noted
below, the pension payable at early retirement is subsidized
relative to the normal retirement benefit, and the value of the
early retirement subsidy provided to each of these individuals
is described below under the caption Termination of
Employment and
Change-in-Control
Arrangements. The accumulated benefit used to derive the
referenced present value in this table is the full accumulated
benefit, and does not reflect a reduction to account for the
pension distributions actually made during the year. |
|
(3) |
|
Mr. Batchelder is eligible for early retirement under the
terms of the Retirement Plan. If Mr. Batchelder had retired
on March 31, 2008, the total value of his Retirement Plan
and Supplemental Plan benefit would be $3,150,206 instead of
$2,807,891, the difference reflecting an early retirement
subsidy. |
Qualified
Retirement Plan
We sponsor the ADM Retirement Plan for Salaried Employees, which
is a qualified defined benefit plan under Section 401(a) of
the Internal Revenue Code. The Retirement Plan covers salaried
employees of our company and its participating affiliates who
have completed one year of service with our company or an
affiliate. A participant becomes vested in a benefit under the
Retirement Plan after five years of service. The
27
Retirement Plan pension formula calculates a life annuity
payable at a normal retirement age of 65 based upon a
participants highest average earnings over 5 consecutive
of the last 15 years of employment. Earnings for purposes
of the pension formula generally include amounts reflected as
pay on
Form W-2,
increased by 401(k) Plan deferrals and elective cafeteria
plan contributions, and decreased by bonuses, expense
allowances/reimbursements, severance pay, income from stock
option and restricted stock awards or cash payments in lieu
thereof, merchandise or service discounts, amounts paid in a
form other than cash, and other fringe benefits. Annual earnings
are limited as required under Section 401(a)(17) of the
Internal Revenue Code.
The Retirement Plan pension formula provides a benefit of 36% of
a participants final average earnings, plus 16.5% of the
participants final average earnings in excess of Social
Security covered compensation. This benefit accrues
ratably over 30 years of service. A participant accrues an
additional benefit of 1/2% of final average earnings for years
of service in excess of 30. Early retirement is available at
age 55 with 10 years of service. The life annuity
payable at early retirement is subsidized relative to the normal
retirement benefit. The payment amount in life annuity form is
97% of the full benefit amount at age 64, and 50% at
age 55, with adjustments between those two ages.
Mr. Schmalz and Mr. Camp retired and commenced early
retirement benefits during the fiscal year ended June 30,
2008. Mr. Batchelder is currently eligible for early
retirement.
When a participant is eligible for a pension, the participant
has a choice of a life annuity, a joint and 50% survivor
annuity, a joint and 75% survivor annuity, or a joint and 100%
survivor annuity. Each joint and survivor annuity form is the
actuarial equivalent of the life annuity payable at the same
age, with actuarial equivalence determined using the IRS
prescribed mortality table under Section 417(e) of the
Internal Revenue Code and an interest rate assumption of 6%. A
lump-sum payment option is not available under the plan.
Supplemental
Retirement Plan
We also sponsor the ADM Supplemental Retirement Plan, which is a
non-qualified deferred compensation plan under Section 409A
of the Internal Revenue Code. The Supplemental Plan covers
participants in the Retirement Plan whose benefit under such
plan is limited by the benefit limits of Section 415 or the
compensation limit of Section 401(a)(17) of the Internal
Revenue Code. The Supplemental Plan also covers any employee
whose qualified plan benefit is reduced by participation in the
ADM Deferred Compensation Plan. Participation by those employees
who otherwise qualify for coverage is at the discretion of the
board, Compensation/Succession Committee or, in the case of
employees other than executive officers, the Chief Executive
Officer. The Supplemental Plan provides the additional benefit
that would have been provided under the Retirement Plan but for
the limits of Section 415 or 401(a)(17) of the Internal
Revenue Code, and but for the fact that elective contributions
made by the participant under the ADM Deferred Compensation Plan
are not included in the compensation base for the Retirement
Plan. A participant is not vested in a benefit under the
Supplemental Plan unless and until the participant is vested in
a benefit under the Retirement Plan, which requires five years
of service for vesting. While benefit payments under the
Supplemental Plan currently are linked to the Retirement Plan,
starting in 2009 (at the expiration of certain transitional
periods available under Section 409A of the Internal
Revenue Code), a separate payment form election will be allowed
with respect to the Supplemental Plan benefit from among the
same options available under the Retirement Plan. Except as
noted below for Ms. Woertz, it has not been our practice to
grant additional service credit under the Supplemental Plan
beyond what is earned under the Retirement Plan.
Ms. Woertz entered the Supplemental Plan when she satisfied
the one year of service requirement for entry into the
Retirement Plan on May 1, 2007. Ms. Woertzs
Terms of Employment provide that, once a participant, her
Supplemental Plan benefit will be fully-vested, will be
calculated after including bonuses in the compensation base, and
will be payable in a lump sum six months following her
separation from service. The severance provisions of such Terms
of Employment also provide for the additional benefit that would
derive from two years of pension coverage (or three years of
pension coverage in the event of a termination within two years
following a change in control).
28
Nonqualified
Deferred Compensation
The following table summarizes information with respect to the
participation of the named executive officers in our
non-qualified deferred compensation plans for the fiscal year
ended June 30, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Executive
|
|
|
Earnings
|
|
|
Balance
|
|
|
|
Contributions
|
|
|
in Last
|
|
|
at Last
|
|
|
|
in Last FY
|
|
|
FY
|
|
|
FYE
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
P. A. Woertz
|
|
|
63,190
|
|
|
|
(10,446
|
)
|
|
|
84,098
|
|
S. R. Mills
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
D. J. Schmalz
|
|
|
0
|
|
|
|
(53,089
|
)
|
|
|
1,771,843
|
|
D. J. Smith
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
W. H. Camp
|
|
|
0
|
|
|
|
(37,959
|
)
|
|
|
635,250
|
|
J. D. Rice
|
|
|
0
|
|
|
|
(121,850
|
)
|
|
|
1,321,130
|
|
L.W. Batchelder
|
|
|
0
|
|
|
|
(70,100
|
)
|
|
|
761,472
|
|
|
|
|
(1) |
|
The amounts reported in this column were reported in the Summary
Compensation Table on page 20 as part of each
individuals compensation for the fiscal year ended
June 30, 2008. |
|
(2) |
|
The amounts reported in this column were not reported in the
Summary Compensation Table as part of each individuals
compensation for the most recent fiscal year because none of the
earnings is considered to be above market. |
|
(3) |
|
Of the amounts shown in this column, the following amounts were
previously reported as compensation to the respective
individuals in the Summary Compensation Table in previous years: |
|
|
|
|
|
|
|
Amount Reported as
|
|
|
|
Compensation in Previous Years
|
|
Name
|
|
($)
|
|
|
P.A. Woertz
|
|
|
30,000
|
|
D. J. Schmalz
|
|
|
763,468
|
|
W. H. Camp
|
|
|
464,061
|
|
J. D. Rice
|
|
|
879,574
|
|
L.W. Batchelder
|
|
|
0
|
|
We sponsor two nonqualified deferred compensation
plans the ADM Deferred Compensation Plan for
Selected Management Employees I and II (referred to as
Deferred Comp Plan I and Deferred Comp Plan
II). Deferred Comp Plan I was frozen as to new
participants and new deferrals effective January 1, 2005,
and is maintained as a separate grandfathered plan
under Section 409A of the Internal Revenue Code. Deferred
Comp Plan II is structured to comply with
Section 409A. Deferred Comp Plan II covers salaried
employees of our company and its affiliates whose annualized
base salary is $175,000 or more. Participation by those
employees who otherwise qualify for coverage is at the
discretion of the board, Compensation/Succession Committee or,
in the case of employees other than executive officers, the
Chief Executive Officer.
A participant in Deferred Comp Plan II can defer up to 75%
of his or her base salary and bonus. Earnings credits are added
based upon hypothetical investment elections made by
participants. A participant can establish up to five
scheduled distribution accounts that are payable
upon dates specified by the participant, generally in a lump
sum, but with one such account eligible for installment payout
over a period of two to five years. Withdrawals are allowed upon
a showing of hardship by the participant in
accordance with Section 409A. A participant also can
establish a retirement account to be paid six months
following termination of employment. Payment following
termination of employment is in a lump sum, except that a
participant can elect upon initial deferral into the account to
have installments paid over a period of two to twenty years if
termination of employment occurs after retirement eligibility.
Small account balances of $10,000 or less are paid in a lump sum
only. Deferred Comp Plan II provides for
make-whole company matching credits to the extent
that a participants election to defer under the Deferred
Comp Plan II causes a
29
loss of company matching contributions under the 401(k) and
Employee Stock Ownership Plan. No make-whole company
matching credits were made on behalf of the named executive
officers for fiscal year 2008.
A participant with an account balance remaining under Deferred
Comp Plan I continues to receive earnings credits on such
account based upon hypothetical investment elections made by the
participant. A participant can establish up to two
scheduled distribution accounts that are payable
upon dates specified by the participant in either a lump sum or
installments over a period of two to four years. A participant
also can take unscheduled withdrawals of up to 25% of the
balance of his or her accounts, subject to a withdrawal penalty
of 10% of the withdrawn amount. Only one such unscheduled
withdrawal is allowed in any year. Withdrawals also are allowed
upon a showing of hardship by the participant. A
participants account under Deferred Comp Plan I is paid
following termination of employment. Payment following
termination of employment is in a lump sum, except that a
participant can elect to have installments paid over a period of
two to twenty years if termination of employment occurs after
retirement eligibility.
Deferred Comp Plan I and II balances are fully-vested.
Unpaid amounts at death are paid to designated beneficiaries.
The hypothetical investment options available under Deferred
Comp Plans I and II are determined by us and correspond
with the investment options (other than our companys
common stock) that are made available to participants in the
qualified 401(k) and Employee Stock Ownership Plan. These
investment options consist of shares in the publicly-traded,
open-end mutual funds listed below, and the plan earnings
credited to each participants account in these plans
corresponds to the earnings performance of the mutual funds
selected. Participants in the Deferred Comp Plans I and II
may reallocate the amount of new deferrals and existing account
balances among these investment options at any time. We do not
set assets aside for the benefit of plan participants, but we do
maintain investments separately in a company account to hedge
the liabilities created by the plans.
In fiscal 2008, the investment options available under Deferred
Comp Plans I and II and their respective notional rates of
return were as follows:
|
|
|
|
|
|
|
Fiscal 2008 Rate of Return
|
|
Investment Option
|
|
(7/1/07 to 6/30/08)
|
|
|
Invesco IRT Stable Value Fund
|
|
|
0.65
|
%(1)
|
Galliard Stable Value Fund
|
|
|
1.08
|
%(2)
|
PIMCO Total Return Fund
|
|
|
10.77
|
%
|
Vanguard Wellington Fund
|
|
|
-3.42
|
%
|
Dodge & Cox Stock Fund
|
|
|
-21.33
|
%
|
Vanguard Institutional Index Fund
|
|
|
-13.06
|
%
|
TCW Select Equities Fund
|
|
|
-6.22
|
%(1)
|
Vanguard Morgan Growth Fund
|
|
|
0.38
|
%(2)
|
T. Rowe Price Mid-Cap Growth Fund
|
|
|
-4.58
|
%
|
Frontegra IronBridge Small-Cap Fund
|
|
|
-6.04
|
%
|
BlackRock International Value Fund
|
|
|
-12.17
|
%
|
Vanguard LifeStrategy Income Fund
|
|
|
0.89
|
%
|
Vanguard LifeStrategy Conservative Growth Fund
|
|
|
-2.83
|
%
|
Vanguard LifeStrategy Moderate Growth Fund
|
|
|
-6.08
|
%
|
Vanguard LifeStrategy Growth Fund
|
|
|
-9.71
|
%
|
|
|
|
(1) |
|
Investment option was discontinued as of 1/31/08. Rate of return
reflects cumulative return for the period 6/29/07
1/31/08. |
|
(2) |
|
Investment option was offered beginning as of 2/1/08. Rate of
return reflects cumulative return for the period
2/1/08 6/30/08. |
30
Termination
of Employment and
Change-in-Control
Arrangements
We have entered into certain agreements and maintain certain
plans that will require us to provide compensation to named
executive officers of our company in the event of a termination
of employment or a change in control of our company. See the
tabular disclosure and narrative description under the Pension
Benefits and Nonqualified Deferred Compensation sections above
for detail regarding payments that would result from a
termination of employment or change in control of our company
under our pension and nonqualified deferred compensation plans.
The individual agreement we have with Ms. Woertz related to
termination of employment and change in control of our company
is discussed below.
Under the terms of the restricted stock award agreements
pertaining to the awards held by named executive officers,
vesting accelerates upon the death of the award recipient or a
change in control of our company, and continues in accordance
with the original vesting schedule if employment ends as a
result of disability or retirement. If employment ends for other
reasons, unvested shares are forfeited. In addition, if an award
recipients employment is terminated for cause, or if the
recipient breaches a non-competition or confidentiality
restriction or participates in an activity deemed by us to be
detrimental to our company, the recipients unvested shares
will be forfeited, and any shares that have already vested must
be returned to us or the recipient must pay us the amount of the
shares fair market value as of the date they vested. Under
the terms of the stock option agreements pertaining to the
awards held by named executive officers, vesting and
exercisability accelerate upon the death of the recipient or
change in control of our company, and continue in accordance
with the original vesting schedule if employment ends as a
result of disability or retirement. If employment ends for other
reasons, a recipient forfeits any interest in the unvested
portion of any option, but retains the right to exercise the
previously vested portion of any option for a period of three
months. In addition, if an award recipients employment is
terminated for cause, or if the recipient breaches a
non-competition or confidentiality restriction or participates
in an activity deemed by us to be detrimental to our company,
the recipients right to exercise any unexercised options
will terminate, the recipients right to receive option
shares will terminate, and any shares already issued upon
exercise of the option must be returned to us in exchange for
the lesser of the shares then-current fair market value or
the price paid for the shares, or the recipient must pay us cash
in the amount of the gain realized by the recipient from the
exercise of the option.
The amount of compensation payable to each named executive
officer in various termination and change in control scenarios
is listed in the tables below. The amounts listed are calculated
based on the assumption that the named executive officers
employment was terminated or that a change in control occurred
on June 30, 2008.
P. A.
Woertz
The following table lists the potential payments and benefits
upon termination of employment or change in control of our
company for Ms. Woertz, our Chairman, President and Chief
Executive Officer. We entered into Terms of Employment with
Ms. Woertz when she joined our company. The payments and
benefits provided in the Terms of Employment are described in
detail below the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
without Cause
|
|
|
without Good
|
|
|
|
|
|
|
|
|
|
|
|
|
or Voluntary
|
|
|
Reason or
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Involuntary
|
|
|
Related to a
|
|
|
|
|
|
|
|
|
|
for Good
|
|
|
Termination
|
|
|
Change in
|
|
|
|
|
|
|
|
Benefits and Payments
|
|
Reason
|
|
|
with Cause
|
|
|
Control
|
|
|
Disability
|
|
|
Death
|
|
upon Termination
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Salary
|
|
|
2,583,734
|
|
|
|
0
|
|
|
|
3,875,601
|
|
|
|
0
|
|
|
|
0
|
|
Bonus
|
|
|
4,000,000
|
|
|
|
0
|
|
|
|
6,000,000
|
|
|
|
0
|
|
|
|
0
|
|
Health benefits
|
|
|
13,427
|
(1)
|
|
|
0
|
|
|
|
20,599
|
(4)
|
|
|
0
|
|
|
|
0
|
|
Vesting of nonvested stock options
|
|
|
0
|
(2)
|
|
|
0
|
|
|
|
0
|
(5)
|
|
|
|
(7)
|
|
|
0
|
(5)
|
Vesting of nonvested restricted stock awards
|
|
|
14,126,434
|
(2)
|
|
|
0
|
|
|
|
14,126,434
|
(5)
|
|
|
|
(7)
|
|
|
14,126,434
|
(5)
|
Severance
|
|
|
789,788
|
(3)
|
|
|
0
|
|
|
|
1,184,682
|
(6)
|
|
|
0
|
|
|
|
0
|
|
Gross-up for
excise tax
|
|
|
0
|
|
|
|
0
|
|
|
|
4,305,917
|
|
|
|
0
|
|
|
|
0
|
|
31
|
|
|
(1) |
|
Represents the discounted present value of two years of extended
health coverage granted pursuant to Ms. Woertzs Terms
of Employment, using a discount rate of 6.75%. |
|
(2) |
|
Represents the value of two years of accelerated vesting of
stock options and restricted stock pursuant to
Ms. Woertzs Terms of Employment. No value is ascribed
to the acceleration of stock options because the exercise price
of all such options was in excess of the fair market value of a
share of our common stock on June 30, 2008. The amount
shown with respect to restricted stock was calculated by
multiplying the number of shares as to which accelerated vesting
occurs by the fair market value of a share of our common stock
on June 30, 2008. |
|
(3) |
|
Severance payment granted pursuant to Ms. Woertzs
Terms of Employment. Represents two years credit with
respect to age, service and covered compensation for purposes of
calculating pension benefits. The Terms of Employment call for
the benefit derived from the additional years of pension
coverage to be paid in a lump sum calculated using the interest
and mortality assumptions in effect under Section 417(e) of
the Internal Revenue Code. These interest rates in effect as of
June 30, 2008, are 4.75% for the first 5 years, 5.08%
for the next 15 years, and 5.14% for payments in years 20
and beyond. From the scheduled payment date of December 31,
2008 (assuming a termination as of June 30, 2008), the
value of this lump-sum is discounted to a present value as of
June 30, 2008, using interest of 6.75% and mortality
determined under RP2000CH projected to 2015 using Scale AA. |
|
(4) |
|
Represents discounted present value of three years of extended
health coverage granted pursuant to Ms. Woertzs Terms
of Employment, using a discount rate of 6.75% per annum. |
|
(5) |
|
Pursuant to Ms. Woertzs Terms of Employment, vesting
and exercisability of all equity awards is accelerated in full.
Values shown were calculated in the same manner as described in
note (2) to this table. |
|
(6) |
|
Severance payment granted pursuant to Ms. Woertzs
Terms of Employment. Represents three years credit with
respect to age, service and covered compensation for purposes of
calculating pension benefits. Amount calculated in the same
manner as described in note (3) to this table. |
|
(7) |
|
Pursuant to the terms of the stock option and restricted stock
agreements under the 2002 Incentive Compensation Plan, vesting
of all equity awards continues after termination of employment. |
Upon an involuntary termination of Ms. Woertzs
employment by the board without cause or the voluntary
termination by Ms. Woertz of her employment for good reason
in circumstances that are unrelated to a change in control of
our company, Ms. Woertz shall receive payments equal to two
years base salary plus target annual bonus paid in equal
installments on the regular payroll schedule, two years of
continuation coverage under the companys benefit plans,
two years of accelerated vesting of equity awards, and two
years credit with respect to age, service and covered
compensation for purposes of calculating pension benefits.
Ms. Woertzs Terms of Employment generally provide
that a termination is for cause if it is as a result
of her indictment for or conviction of a felony or any crime
involving dishonesty, fraud, theft or financial impropriety, or
a determination by the board that she has (i) willfully and
continuously failed to substantially perform her duties,
(ii) engaged in a material act of dishonesty or gross
misconduct in employment that is injurious to the company, or
(iii) willfully violated a material requirement of the
companys code of conduct or her fiduciary duty to the
company. The Terms of Employment also generally provide that a
termination by Ms. Woertz is for good reason if
it results from (i) an adverse change in her status or
positions as President and CEO of the company, or removal from
such positions, (ii) any reduction in her base salary or
target bonus, (iii) requiring her to relocate to a place of
employment more than 50 miles from the companys
headquarters, (iv) the failure to re-elect her as a
director or her removal as a director, or (v) the
companys failure to obtain agreement from any successor to
the companys business to assume and perform the Terms of
Agreement.
Upon an involuntary termination of Ms. Woertzs
employment by the board of directors without cause or the
voluntary termination by Ms. Woertz of her employment for
good reason that occurs prior to and in connection with, or
within two years following, a change in control of our company,
Ms. Woertz shall receive a lump-sum payment equal to three
years base salary plus target annual bonus, accelerated
vesting of all outstanding equity awards, three years of
continuation coverage under our benefit plans, three years
credit with respect to age, service and covered compensation for
purposes of calculating pension benefits,
gross-up
32
for any excise tax payable under Internal Revenue Code
Section 280G, and other terms and provisions to be
developed with the board. A change in control would
generally include for these purposes (i) a person or group
acquiring 30% or more of our voting securities,
(ii) approval by our stockholders of the dissolution or
liquidation of the company or the sale of all or substantially
all of its assets, (iii) the consummation of certain
mergers or other business combinations, (iv) a majority of
our directors are replaced under certain circumstances, or
(v) the board determines that a person or group has
acquired effective control of the companys business and
affairs.
As a condition to receiving severance payments and benefits,
Ms. Woertz agreed in the Terms of Employment to release us
from all claims and to abide by reasonable post-employment
restrictive covenants, such as non-competition with principal
competitors, non-solicitation of employees, customers and
suppliers, and non-disparagement of our company and board of
directors, for two years following termination of employment.
S. R.
Mills, D. J. Smith, J.D. Rice, and L.W.
Batchelder
The following table lists the potential payments and benefits
upon termination of employment or change in control of our
company for our current named executive officers other than P.
A. Woertz under the terms of agreements involving stock option
and restricted stock awards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Benefits and
|
|
|
|
Termination
|
|
|
|
Related to a
|
|
|
|
|
|
|
|
|
Payments
|
|
Voluntary
|
|
without
|
|
Termination
|
|
Change in
|
|
|
|
|
|
|
|
|
upon
|
|
Termination
|
|
Cause
|
|
for Cause
|
|
Control
|
|
Disability
|
|
Death
|
|
Retirement
|
Name
|
|
Termination
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
S. R. Mills
|
|
Vesting of nonvested stock options
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,059,390
|
(1)
|
|
|
|
(2)
|
|
|
1,059,390
|
(1)
|
|
|
|
(2)
|
|
|
Vesting of nonvested restricted stock awards
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
3,601,800
|
(1)
|
|
|
|
(2)
|
|
|
3,601,800
|
(1)
|
|
|
|
(2)
|
D. J. Smith
|
|
Vesting of nonvested stock options
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,242,815
|
(1)
|
|
|
|
(2)
|
|
|
2,242,815
|
(1)
|
|
|
0
|
(3)
|
|
|
Vesting of nonvested restricted stock awards
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
6,182,933
|
(1)
|
|
|
|
(2)
|
|
|
6,182,933
|
(1)
|
|
|
0
|
(3)
|
J. D. Rice
|
|
Vesting of nonvested stock options
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
2,088,767
|
(1)
|
|
|
|
(2)
|
|
|
2,088,767
|
(1)
|
|
|
0
|
(3)
|
|
|
Vesting of nonvested restricted stock awards
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
6,072,941
|
(1)
|
|
|
|
(2)
|
|
|
6,072,941
|
(1)
|
|
|
0
|
(3)
|
L.W. Batchelder(4)
|
|
Vesting of nonvested stock options
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
1,876,809
|
(1)
|
|
|
|
(2)
|
|
|
1,876,809
|
(1)
|
|
|
|
(2)
|
|
|
Vesting of nonvested restricted stock awards
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
5,316,233
|
(1)
|
|
|
|
(2)
|
|
|
5,316,233
|
(1)
|
|
|
|
(2)
|
|
|
|
(1) |
|
Vesting and exercisability of all equity awards is accelerated
in full. The amount shown with respect to stock options was
calculated with respect to options that were in the
money as of June 30, 2008 and was determined by
multiplying the number of shares subject to those options as to
which accelerated vesting occurs by the difference between the
fair market value of a share of our common stock on
June 30, 2008 and the exercise price of the stock option.
The amount shown with respect to restricted stock was calculated
by multiplying the number of shares as to which accelerated
vesting occurs by the fair market value of a share of our common
stock on June 30, 2008. |
33
|
|
|
(2) |
|
Pursuant to the terms of the stock option and restricted stock
agreements under the 1996 Incentive Compensation Plan, 1999
Incentive Compensation Plan, and 2002 Incentive Compensation
Plan, vesting of all equity awards continues on the same
schedule after termination of employment. |
|
(3) |
|
Because this named executive officer is not yet eligible for
retirement under the terms of the ADM Retirement Plan for
Salaried Employees, no current termination of employment would
be considered retirement under any of the applicable
equity-based compensation plans. |
|
(4) |
|
Mr. Batchelder is eligible for early retirement under the
Retirement Plan. The subsidized early retirement benefit that is
available in the event of retirement is described in the
footnotes to the table under the caption Pension
Benefits. |
D. J.
Schmalz and W. H. Camp
Mr. Schmalz and Mr. Camp are not included in the table
above because their employment with our company ended before
June 30, 2008. The table below summarizes the payments and
benefits provided to each of them in connection with the
March 1, 2008 retirement of Mr. Schmalz and the
December 15, 2007 retirement of Mr. Camp.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting of Nonvested
|
|
Vesting of Nonvested
|
|
Retirement Benefits
|
Name
|
|
Stock Options
|
|
Restricted Stock Awards
|
|
($) (1)
|
|
D. J. Schmalz
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
338,771
|
|
W. H. Camp
|
|
|
|
(2)
|
|
|
|
(2)
|
|
|
650,302
|
|
|
|
|
(1) |
|
Mr. Schmalz and Mr. Camp each commenced an early
retirement benefit under the ADM Retirement Plan and ADM
Supplemental Retirement Plan. The amounts shown represent the
excess of the present value of the subsidized early retirement
benefit payable to such individuals as an immediate life annuity
over the present value of the deferred normal retirement benefit
reflected above under the caption Pension Benefits.
The total benefit payments that have been made to
Mr. Schmalz and Mr. Camp from benefit commencement to
June 30, 2008 are reflected above under the caption
Pension Benefits. |
|
(2) |
|
Pursuant to the terms of the stock option and restricted stock
agreements under the 1996 Stock Option Plan, 1999 Incentive
Compensation Plan, and 2002 Incentive Compensation Plan, vesting
of equity awards continues on the same schedule after
termination of employment due to retirement. |
Director
Compensation for Fiscal 2008
Our standard compensation for non-employee directors consists of
an annual retainer of $200,000, one-half of which must be paid
in stock units pursuant to our Stock Unit Plan for Non-Employee
Directors. The other half of the annual retainer may be paid in
cash, stock units, or a combination of both, at the election of
each non-employee director. Each stock unit is deemed for
valuation and bookkeeping purposes to be the equivalent of a
share of our common stock. We do not pay fees for attendance at
board and committee meetings, nor do we pay supplemental
retainers for service as committee chairpersons. Directors are
reimbursed for out-of-pocket traveling expenses incurred in
attending board and committee meetings. Directors may also be
provided with certain perquisites from time-to-time.
Stock units are credited to the account of each non-employee
director on a quarterly basis in an amount determined by
dividing the quarterly amount of the retainer to be paid in
stock units by the fair market value of a share of our common
stock on the last business day of that quarter, and are
fully-vested at all times. As of any date on which cash
dividends are paid on our common stock, each directors
stock unit account is also credited with stock units in an
amount determined by dividing the dollar value of the dividends
that would have been paid on the stock units in that
directors account had those units been actual shares by
the fair market value of a share of our stock on the dividend
payment date. For purposes of this plan, the fair market
value of a share of our common stock on any date is the
average of the high and low reported sales prices for our stock
on the New York Stock Exchange on that date. Each stock unit is
paid out in cash on the first business day following the earlier
of (i) five years after the end of the calendar year that
includes the quarter for which that stock unit was credited to
the directors account, and (ii) when the director
ceases to be a
34
member of our board. The amount to be paid will equal the number
of stock units credited to a directors account multiplied
by the fair market value of a share of our stock on the payout
date. A director may elect to defer the receipt of these
payments in accordance with the plan.
The following table summarizes compensation provided to each
non-employee director for services provided during fiscal 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
|
Stock
|
|
|
All Other
|
|
|
|
|
|
|
Cash
|
|
|
Awards
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)
|
|
|
A. L. Boeckmann
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
0
|
|
|
|
200,000
|
|
G. W. Buckley(3)
|
|
|
15,110
|
|
|
|
15,110
|
|
|
|
0
|
|
|
|
30,220
|
|
M. H. Carter
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
0
|
|
|
|
200,000
|
|
V. F. Haynes(4)
|
|
|
64,674
|
|
|
|
39,674
|
|
|
|
0
|
|
|
|
104,348
|
|
A. Maciel
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
0
|
|
|
|
200,000
|
|
P. J. Moore
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
0
|
|
|
|
200,000
|
|
M. B. Mulroney
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
3,000
|
(5)
|
|
|
203,000
|
|
T. F. ONeill
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
82,200
|
(5)
|
|
|
282,200
|
|
K. R. Westbrook
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
0
|
|
|
|
200,000
|
|
|
|
|
(1) |
|
As described above, one-half of the annual retainer of $200,000
is paid in stock units, which are reported in the Stock
Awards column. In addition, the directors may elect to
receive the other half of the annual retainer in the form of
cash, stock units or a combination of both. For fiscal 2008, the
directors elected to receive the following portions of the fees
shown in this column in the form of stock units:
Messrs. Buckley and Mulroney and Ms. Carter, each
100%; and Mr. Westbrook, 50%. |
|
(2) |
|
The amounts set forth in this column represent the dollar amount
of compensation expense recognized for financial statement
reporting purposes during fiscal year 2008 in connection with
mandatory stock unit grants to each of the listed directors.
Each stock unit is deemed for valuation and bookkeeping purposes
to be the equivalent of a share of our common stock. Because
these stock units are fully-vested when granted, we immediately
expense the full grant date fair value in accordance with the
provisions of SFAS No. 123(R). Each of the listed
directors is a nonemployee director and the fair value of
services provided by each director has been used to calculate
the number of stock units credited to each director by dividing
the quarterly fair value of the services provided by the fair
market value of a share of our companys common stock on
the last business day of the quarter. For purposes of this plan,
the fair market value of a share of our common stock
on any date is the average of the high and low reported sales
prices for our stock on the New York Stock Exchange on that
date. The fair value of services provided by each of the
directors has been determined to be $50,000 per quarter. The
aggregate number of stock units credited to the account of each
non-employee director as of June 30, 2008 (including
mandatory stock unit grants, voluntary elections to receive
stock units and the deemed reinvestment of dividends) was as
follows: |
|
|
|
|
|
|
|
Number of Stock
|
Name
|
|
Units at 6/30/08
|
|
A. L. Boeckmann
|
|
|
15,660
|
|
G. W. Buckley
|
|
|
735
|
|
M. H. Carter
|
|
|
85,426
|
|
V. F. Haynes
|
|
|
925
|
|
A. Maciel
|
|
|
5,893
|
|
P. J. Moore
|
|
|
31,924
|
|
M. B. Mulroney
|
|
|
89,815
|
|
T. F. ONeill
|
|
|
11,292
|
|
K. R. Westbrook
|
|
|
28,976
|
|
|
|
|
(3) |
|
Mr. Buckley was appointed as a director effective
February 5, 2008. |
35
|
|
|
(4) |
|
Dr. Haynes was elected as a director on November 8,
2007. |
|
(5) |
|
Represents the aggregate incremental cost to us for personal use
of company-owned aircraft. Incremental cost is based solely on
the cost per hour to our company to operate the aircraft, and
does not include fixed costs that do not change based on usage,
such as purchase costs of the aircraft and non-trip-related
hangar expenses. Our direct operating cost per hour of an
aircraft is based on the annual costs of fuel, on-board
catering, aircraft maintenance, landing fees, trip-related
hangar and parking costs, and smaller variable costs, divided by
the number of hours the aircraft was operated during the year. |
Equity
Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
Number of Securities
|
|
|
|
|
|
Remaining Available for
|
|
|
|
to be Issued Upon
|
|
|
Weighted-average
|
|
|
Future Issuance Under
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Equity Compensation
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Plans (Excluding
|
|
|
|
Warrants and
|
|
|
Warrants and
|
|
|
Securities Reflected in
|
|
Plan Category
|
|
Rights(a)
|
|
|
Rights(b)
|
|
|
Column (a))(c)
|
|
|
Equity Compensation Plans Approved by Security Holders
|
|
|
9,440,515
|
(1)
|
|
$
|
23.77
|
|
|
|
13,747,401
|
(2)
|
Equity Compensation Plans Not Approved by Security Holders
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total
|
|
|
9,440,515
|
(1)
|
|
$
|
23.77
|
|
|
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13,747,401
|
(2)
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(1) |
|
Consists of 28,950 shares to be issued upon exercise of
outstanding options pursuant to our 1991 Stock Option Plan,
137,317 shares to be issued upon exercise of outstanding
options pursuant to our 1996 Stock Option Plan,
1,445,253 shares to be issued upon exercise of outstanding
options pursuant to our 1999 Incentive Compensation Plan,
7,337,842 shares to be issued upon exercise of outstanding
options pursuant to our 2002 Incentive Compensation Plan and
491,153 shares to be issued upon exercise of outstanding
options pursuant to the ADM International Limited
Savings-Related Share Option Scheme, all as of June 30,
2008. |
|
(2) |
|
Consists of 1,460,344 shares available for issuance
pursuant to our 1999 Incentive Compensation Plan,
7,905,205 shares available for issuance pursuant to our
2002 Incentive Compensation Plan, and 4,381,852 shares
available for issuance pursuant to the ADM International Limited
Savings-Related Share Option Scheme, all as of June 30,
2008. Benefits which may be granted under the 1999 Incentive
Compensation Plan and 2002 Incentive Compensation Plan are
options, stock appreciation rights, restricted stock,
performance shares, performance units and cash-based awards.
Only options can currently be granted under the ADM
International Limited Savings-Related Share Option Scheme. |
Our company does not have any equity compensation plans that
have not been approved by our stockholders.
Report of
the Audit Committee
The Audit Committee provides assistance to the Board of
Directors in fulfilling its oversight responsibility to the
stockholders relating to the Companys (i) financial
statements and the financial reporting process,
(ii) preparation of the financial reports and other
financial information provided by the Company to any
governmental or regulatory body, (iii) systems of internal
accounting and financial controls, (iv) internal audit
function, (v) annual independent audit of the
Companys financial statements, (vi) legal compliance
and ethics programs as established by management and the Board,
and (vii) related-party transactions.
The Audit Committee assures that the corporate information
gathering and reporting systems developed by management
represent a good faith attempt to provide senior management and
the Board of Directors with information regarding material acts,
events, and conditions within the Company. In addition, the
Audit Committee is directly responsible for the appointment,
compensation, and oversight of the independent auditors. The
Audit Committee ensures that the Company establishes, resources,
and maintains a professional internal auditing function and that
there are no unjustified restrictions or limitations imposed on
such function.
36
The Audit Committee reviews the effectiveness of the internal
audit function and reviews and approves the actions relating to
the General Auditor, including performance approvals related to
base and incentive compensation. The Audit Committee is
comprised of six independent directors, all of whom are
financially literate and two of whom (T. F. ONeill, the
Chairperson of the Audit Committee, and P. J. Moore) have been
determined by the Board of Directors to be financial
experts as defined by the Securities and Exchange
Commission (SEC).
Management has the primary responsibility for the financial
statements and the reporting process, including the systems of
internal controls. In fulfilling its oversight responsibilities,
the Audit Committee reviewed and discussed the audited financial
statements in the annual report with management, including a
discussion of the quality not just the
acceptability of the accounting principles, the
reasonableness of significant judgments, the development and
selection of the critical accounting estimates, and the clarity
of disclosures in the financial statements. Also, the Audit
Committee discussed with management education regarding
compliance with the policies and procedures of the Company as
well as federal and state laws.
The Audit Committee reviewed and discussed with the independent
auditors, who are responsible for expressing an opinion on the
conformity of those audited financial statements with generally
accepted accounting principles, the effectiveness of our
internal control over financial reporting, and the matters
required to be discussed by the Statement on Auditing Standards
No. 61 (Communication with Audit Committees, AU
Section 380), including their judgment as to the
quality not just the acceptability of
the Companys accounting principles, the reasonableness of
significant judgments and the clarity of disclosures in the
financial statements. In addition, the Audit Committee received
the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit
Committees) and has discussed with the independent auditors
the auditors independence from management and the Company.
The Audit Committee has adopted an Audit and Non-audit Services
Pre-Approval Policy and considered the compatibility of
non-audit services with the independent auditors
independence. The Audit Committee recommended to the Board of
Directors (and the Board of Directors approved) a hiring policy
related to current and former employees of the independent
auditor.
The Audit Committee discussed with the internal and independent
auditors the overall scope and plans for their respective
audits. The Audit Committee meets with the internal and
independent auditors, with and without management present, to
discuss the results of their examinations, their evaluations of
the accounting and financial controls, and the overall quality
of the Companys financial reporting. The Audit Committee
meets individually with members of management in executive
session. The Audit Committee held nine meetings during fiscal
year 2008.
In reliance on the reviews and discussions referred to above,
the Audit Committee recommended to the Board of Directors (and
the Board of Directors approved) that the audited financial
statements be included in the Annual Report on
Form 10-K
for the year ended June 30, 2008 for filing with the SEC.
The Audit Committee has appointed, subject to ratification by
the stockholders of the Company, Ernst & Young LLP as
independent auditor for the fiscal year ending June 30,
2009.
T. F. ONeill, Chairperson
A. L. Boeckmann
G. W. Buckley
M. H. Carter
V. F. Haynes
P. J. Moore
Certain
Relationships and Related Transactions
The spouse of L. W. Batchelder (an executive officer) owns and
operates a company which acts as a reseller of crystalline
fructose and xanthan gum that we manufacture and sell. During
the fiscal year ended June 30, 2008, such company purchased
approximately $1.2 million of those products from us in the
ordinary course of business and on an arms-length basis. We also
purchased Mr. Batchelders home during the fiscal year
ended June 30, 2008, at a purchase price of $349,000
pursuant to our standard company relocation policy.
37
We determined that the price paid for Mr. Batchelders
home approximated fair market value, based on the average of two
third-party appraisals.
Review
and Approval of Certain Relationships and Related
Transactions
Various policies and procedures of our company, including our
Business Code of Conduct and Ethics, our bylaws, the charter of
the Nominating/Corporate Governance Committee and annual
questionnaires completed by all of our directors and executive
officers, require disclosure of and otherwise identify to the
company transactions or relationships that may constitute
conflicts of interest or otherwise require disclosure under
applicable SEC rules as related person transactions
between our company or its subsidiaries and related persons. For
these purposes, a related person is a director, executive
officer, nominee for director, or 5% stockholder of the company
since the beginning of the last fiscal year and their immediate
family members.
Although the companys processes vary with the particular
transaction or relationship, in accordance with our Business
Code of Conduct and Ethics, directors, executive officers and
other company employees are directed to inform appropriate
supervisory personnel as to the existence or potential existence
of such a transaction or relationship. To the extent a related
person is involved in the relationship or has a material
interest in the transaction, the companys practice,
although not part of a written policy, is to refer consideration
of the matter to the board or the Audit Committee. The
transaction or relationship will be evaluated by the board or
the committee, which will approve or ratify it if it is
determined that the transaction or relationship is fair and in
the best interests of the company. Generally, transactions and
series of related transactions of less than $120,000 are
approved or ratified by appropriate company supervisory
personnel and are not approved or ratified by the board or a
committee thereof.
The transactions described in the preceding section were
considered and ratified by our board upon the recommendation of
the Audit Committee.
Proposal No. 2
Ratification of Appointment of Independent Registered Public
Accounting Firm
The Audit Committee has appointed Ernst & Young LLP as
our companys independent registered public accounting firm
for the fiscal year ending June 30, 2009. We are asking our
stockholders to ratify the selection of Ernst & Young
LLP as our independent registered public accounting firm.
Although ratification is not required by our bylaws or
otherwise, our board is submitting the selection of
Ernst & Young LLP to our stockholders as a matter of
good corporate practice. Representatives of Ernst &
Young LLP will attend the annual meeting, will have the
opportunity to make a statement if they desire to do so, and
will be available to respond to appropriate questions.
The Board recommends a vote FOR ratification of the
appointment of Ernst & Young LLP as our companys
independent registered public accounting firm for the fiscal
year ending June 30, 2009.
Fees Paid
to Independent Auditors
The following table shows the aggregate fees paid to
Ernst & Young LLP by us for the services it rendered
during the fiscal years ended June 30, 2008 and 2007:
|
|
|
|
|
|
|
|
|
|
|
Amount($)
|
|
Description of Fees
|
|
2008
|
|
|
2007
|
|
|
Audit Fees(1)
|
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$
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13,152,000
|
|
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$
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12,601,000
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Audit-Related Fees(2)
|
|
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204,000
|
|
|
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141,000
|
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Tax Fees(3)
|
|
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599,000
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|
|
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1,071,000
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
13,955,000
|
|
|
$
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13,813,000
|
|
|
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|
|
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38
|
|
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(1) |
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Includes fees for audit of annual financial statements, reviews
of the related quarterly financial statements, audit of the
effectiveness of our companys internal control over
financial reporting, certain statutory audits, and SEC filings. |
|
(2) |
|
Includes fees for accounting and reporting assistance and
audit-related work in connection with employee benefit plans of
our company. |
|
(3) |
|
Includes fees related to tax planning advice, tax return
preparation, and expatriate tax services. |
Audit
Committee Pre-Approval Policies
The Audit Committee has adopted an Audit and Non-audit Services
Pre-Approval Policy. This policy provides that audit services
engagement terms and fees, and any changes in such terms or
fees, are subject to the specific pre-approval of the Audit
Committee. The policy further provides that all other audit
services, audit-related services, tax services, and permitted
non-audit services are subject to pre-approval by the Audit
Committee. All of the services Ernst & Young LLP
performed for us during the last two fiscal years were
pre-approved by the Audit Committee.
Proposal No. 3
Stockholders Proposal Regarding Global Human Rights
Standards
The Office of the Comptroller of New York City, 1 Centre Street,
New York, New York 10007, has notified the Company that it
intends to present the following resolution at the annual
meeting, as custodian and trustee of the New York City
Employees Retirement System, beneficial owners of
744,721 shares of Common Stock of the Company, the New York
City Teachers Retirement System, beneficial owners of
630,428 shares of Common Stock of the Company, the New York
City Police Pension Fund, beneficial owners of
301,757 shares of Common Stock of the Company, the New York
City Fire Department Pension Fund, beneficial owners of
92,451 shares of Common Stock of the Company, and as
custodian of the New York City Board of Education Retirement
System, beneficial owners of 45,772 shares of Common Stock
of the Company. The Board of Directors and the Company accept no
responsibility for the proposed resolution and supporting
statement. The Board of Directors recommends a vote
AGAINST this stockholder proposal. As required by
Securities and Exchange Commission rules, the resolution and
supporting statement are printed below.
ARCHER
DANIELS MIDLAND COMPANY GLOBAL HUMAN RIGHTS
STANDARDS
Submitted
by William C. Thompson, Jr., Comptroller, City of New York, on
behalf of the Boards of Trustees of the New York City Pension
Funds
Whereas, Archer Daniels Midland Company, currently has
overseas operations, and
Whereas, reports of human rights abuses in the overseas
subsidiaries and suppliers of
U.S.-based
corporations has led to an increased public awareness of the
problems of child labor, sweatshop conditions, and
the denial of labor rights in U.S. corporate overseas
operations, and
Whereas, corporate violations of human rights in these
overseas operations can lead to negative publicity, public
protests, and a loss of consumer confidence which can have a
negative impact on shareholder value, and
Whereas, a number of corporations have implemented
independent monitoring programs with respected human rights and
religious organizations to strengthen compliance with
international human rights norms in subsidiary and supplier
factories, and
Whereas, many of these programs incorporate the
conventions of the International Labor Organization (ILO) on
workplace human rights, which include the following principles:
1. All workers have the right to form and join trade unions
and to bargain collectively. (ILO Conventions 87 and 98;
39
2. Workers representatives shall not be the subject of
discrimination and shall have access to all workplaces necessary
to enable them to carry out their representation functions. (ILO
Convention 135);
3. There shall be no discrimination or intimidation in
employment. Equality of opportunity and treatment shall be
provided regardless of race, color, sex, religion, political
opinion, age, nationality, social origin or other distinguishing
characteristics. (ILO Conventions 100 and 111);
4. Employment shall be freely chosen. There shall be no use
of force, including bonded or prison labor. (ILO Conventions 29
and 105);
5. There shall be no use of child labor. (ILO Convention
138) and,
Whereas, independent monitoring of corporate adherence to
these internationally recognized principles is essential if
consumer and investor confidence in our companys
commitment to human rights is to be maintained,
Therefore, be it resolved that the shareholders request
that the company commit itself to the implementation of a code
of conduct based on the aforementioned ILO human rights
standards and United Nations Norms on the Responsibilities
of Transnational Corporations with Regard to Human Rights, by
its international suppliers and in its own international
production facilities, and commit to a program of outside,
independent monitoring of compliance with these standards.
Recommendation
of the Board of Directors AGAINST the Proposal
Throughout our history, it has been our objective to maintain
operating standards that incorporate the highest ideals of
character and business conduct. Our companys current
Business Code of Conduct and Ethics, adopted in 2003, is a
statement of the values to be recognized in the conduct of our
business by employees, officers, directors and other agents. The
Business Code of Conduct and Ethics is available on our internet
site, www.admworld.com and is available free of charge on
written request to Secretary, Archer-Daniels-Midland Company,
4666 Faries Parkway, Decatur, Illinois
62526-5666.
The Business Code of Conduct and Ethics sets forth standards
regarding, among other things, fair employment, health and
safety, and child labor. Those standards are summarized below.
Our company is committed to the fair and equitable treatment of
all its employees and applicants for employment. We evaluate
applicants and employees by their qualifications, demonstrated
skills and achievements. Our company shall provide a work
environment free from verbal or physical conduct which
intimidates and harasses. We will not employ legally underage
workers or forced labor. We will provide a safe and healthy
workplace at each of our locations. Our company supports
business partners who treat employees with dignity and respect
and follow local employment laws. Our company will not condone
the employment or exploitation of legally underage workers or
forced labor and will not knowingly use suppliers who employ
such workers or labor.
Our board believes that our companys Business Code of
Conduct and Ethics and our existing business practices address
the substantive areas covered by the proposal. For these
reasons, our board does not believe that adoption of this
proposal is necessary or in furtherance of the best interests of
our stockholders.
Accordingly, the Board recommends that stockholders vote
AGAINST this stockholder proposal. Proxies solicited by
the Board will be so voted unless stockholders specify a
different choice.
Deadline
for Submission of Stockholder Proposals
Proposals of stockholders intended to be presented at the next
annual meeting and desired to be included in our proxy statement
for that meeting must be received by the Secretary,
Archer-Daniels-Midland Company, 4666 Faries Parkway, Decatur,
Illinois
62526-5666,
no later than May 28, 2009 in order to be included in such
proxy statement. Generally, if written notice of any stockholder
proposal intended to be presented at the next annual meeting,
and not included in our proxy statement for that meeting, is not
delivered to the Secretary at the above address between
August 8, 2009 and September 7, 2009 (or, if the next
annual meeting is called for a date that is not within the
period from October 7, 2009 to December 6, 2009, if
such notice is not so delivered by the close of business on the
tenth day following the earlier of the date on which notice of
the
40
date of such annual meeting is mailed or public disclosure of
the date of such annual meeting is made), or if such notice does
not contain the information required by Section 1.4(c) of
our bylaws, the chair of the annual meeting may declare that
such stockholder proposal be disregarded.
Stockholders
with the Same Address
Individual stockholders sharing an address with one or more
other stockholders may elect to household the
mailing of the proxy statement and our annual report. This means
that only one annual report and proxy statement will be
sent to that address unless one or more stockholders at that
address specifically elect to receive separate mailings.
Stockholders who participate in householding will continue to
receive separate proxy cards. Also, householding will not affect
dividend check mailings. We will promptly send a separate annual
report and proxy statement to a stockholder at a shared address
on request. Stockholders with a shared address may also request
us to send separate annual reports and proxy statements in the
future, or to send a single copy in the future if we are
currently sending multiple copies to the same address.
Requests related to householding should be made by writing
Shareholder Relations, Archer-Daniels-Midland Company, 4666
Faries Parkway, Decatur, Illinois
62526-5666
or by calling our Shareholder Relations at 217/424-5656. If you
are a stockholder whose shares are held by a bank, broker or
other nominee, you can request information about householding
from your bank, broker or other nominee.
Other
Matters
It is not contemplated or expected that any business other than
that pertaining to the subjects referred to in this proxy
statement will be brought up for action at the meeting, but in
the event that other business does properly come before the
meeting calling for a stockholders vote, the named proxies
will vote thereon according to their best judgment in the
interest of our company.
By Order of the Board of Directors
ARCHER-DANIELS-MIDLAND COMPANY
D. J. Smith, Secretary
September 25, 2008
41
Annual
Meeting of Stockholders
Thursday,
November 6, 2008
10:30 a.m. C.S.T.
James R. Randall Research Center
1001 Brush College Road
Decatur, IL 62526
2008 ANNUAL MEETING
ADMISSION TICKET
Please present this ticket for admittance of the stockholder(s) named above. Admittance will be
based upon availability of seating.
Instructions for Voting Your Proxy
This proxy covers all Archer-Daniels-Midland
Company shares you own in any of the following
ways (provided the registrations are identical):
Shares held of record
ADM Dividend Reinvestment Plan
ADM Stock Purchase Plan
ADM 401(k)/ESOP for Salaried Employees
ADM 401(k)/ESOP for Hourly Employees
ADM Stock Purchase Plan for Salaried
Employees (Canada)
ADM Stock Purchase Plan for Hourly
Employees (Canada)
We are now offering stockholders three alternative
ways of voting this proxy:
By Telephone (using a touch tone telephone)
Through the Internet (using a browser)
By Mail (traditional method)
Your telephone or Internet vote
authorizes the named proxies to vote
your shares in the same manner as if
you had returned your proxy card. We
encourage you to use these cost
effective and convenient ways of
voting, 24 hours a day, 7 days a week.
TELEPHONE VOTING Available only until
5:00 p.m. Eastern time on November 5,
2008
This method of voting is available for residents of the U.S. and Canada
On a
touch tone telephone, call TOLL FREE
1-800-850-5909, 24 hours a day, 7 days a week
You will be asked to enter ONLY the CONTROL NUMBER shown below
Have your proxy card ready, then follow the prerecorded instructions
Your vote will be confirmed and cast as you directed
INTERNET VOTING Available only until
5:00 p.m. Eastern time on November 5,
2008
Visit the Internet voting website at http://proxy.georgeson.com
Enter the COMPANY NUMBER and CONTROL NUMBER shown below and follow the instructions on your screen
You will incur only your usual Internet charges
VOTING BY MAIL Simply mark, sign and
date your proxy card and return it in
the postage-paid envelope
If you are voting by telephone or the Internet, please do not mail your proxy card
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COMPANY NUMBER
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CONTROL NUMBER |
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TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
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Please mark
votes as in
this example.
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This proxy, when properly executed, will be voted in the manner directed below. If no direction is
made, this proxy will be voted FOR Items 1 and 2 and AGAINST Item 3.
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Archer-Daniels-Midland Companys Board of
Directors recommends a vote FOR Items 1
and 2.
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Archer-Daniels-Midland Companys Board of
Directors recommends a vote AGAINST Item
3.
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1.
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Election of Directors |
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WITHHOLD |
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all nominees
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AUTHORITY |
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listed (except
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to vote all |
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as indicated)
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nominees listed |
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G.W. Buckley, M.H. Carter, V.F. Haynes, A. Maciel, P.J. Moore, M.B. Mulroney, T.F. ONeill, K.R. Westbrook, P.A. Woertz |
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(INSTRUCTIONS: To withhold authority to vote for any individual nominee
strike a line through the nominees name in the list above.) |
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FOR
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AGAINST
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ABSTAIN |
2.
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Ratify the appointment of Ernst & Young LLP as independent accountants for the fiscal year ending June 30, 2009.
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FOR
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AGAINST
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3.
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Adopt Stockholders
Proposal Regarding Global
Human Rights Standards.
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4.
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In their discretion, upon any other
business that may properly come before the
meeting. |
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DATE:
, 2008 |
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SIGNATURE(S) |
IMPORTANT: Please sign exactly as
your name(s) appear(s) below. When
shares are held by joint tenants,
both should sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation,
please sign in full corporate name by
President or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
PLEASE DETACH PROXY CARD HERE
ARCHER-DANIELS-MIDLAND COMPANY
This Proxy is Solicited on Behalf of the Board of Directors
for the Annual Meeting of Stockholders on November 6, 2008
This proxy when properly executed will be voted in the manner directed herein by the undersigned
Stockholder. If no direction is made, this Proxy will be voted FOR Items 1 and 2 and AGAINST
Item 3. The undersigned hereby appoints P. J. Moore, K. R. Westbrook and P. A. Woertz as Proxies,
with the power of substitution, to represent and to vote, as designated below, all the shares of
the undersigned held of record on September 12, 2008, at the Annual Meeting of Stockholders to be
held on November 6, 2008 and any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2
AND AGAINST ITEM 3.
(Important To be signed and dated on reverse side)