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
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box: |
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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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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
VCA ANTECH, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No Fee Required |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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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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Proposed maximum aggregate value of transaction: |
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Fee paid with preliminary materials: |
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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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Amount previously paid: |
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Form, Schedule or Registration Statement No.: |
VCA Antech, Inc.
12401 West Olympic Boulevard
Los Angeles, California
90064-1022
www.vcaantech.com
April 25, 2008
Dear Fellow Stockholder:
Our 2008 Annual Meeting will be held on Wednesday, June 4,
2008 at our corporate offices located at 12401 West Olympic
Boulevard, Los Angeles, California
90064-1022.
Details regarding the meeting and the business to be conducted
are more fully described in the accompanying Notice of 2008
Annual Meeting of Stockholders and Proxy Statement.
Your vote is important. Whether or not you plan to attend the
meeting, I urge you to vote your shares as soon as possible.
Instructions on the proxy card will tell you how to cast your
vote. The Proxy Statement explains more about proxy voting.
Please read it carefully.
Thank you for your continued support of our company.
Sincerely,
Robert L. Antin
Chairman of the Board, Chief Executive Officer
and President
VCA
ANTECH, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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TIME
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10:00 a.m. Pacific Time on Wednesday, June 4, 2008
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PLACE
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12401 West Olympic Boulevard Los Angeles, California
90064-1022
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ITEMS OF BUSINESS
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(1) To elect two Class III members of the Board of
Directors for a term of three years.
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(2) To ratify the appointment of KPMG LLP as our
independent registered public accounting firm for the year
ending December 31, 2008.
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(3) To transact any other business as may properly come
before the Annual Meeting and any adjournment or postponement.
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RECORD DATE
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You can vote if, at the close of business on April 21,
2008, you were a holder of record of our common stock.
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PROXY VOTING
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All stockholders are cordially invited to attend the Annual
Meeting in person. However, to ensure your representation at the
Annual Meeting, you are urged to vote promptly by signing and
returning the enclosed proxy card. If you hold your shares in
street name, you may also access the World Wide Web site
indicated on your voting instruction card to vote via the
Internet.
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IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE STOCKHOLDER MEETING TO BE HELD ON JUNE 4, 2008
The Notice of Annual Meeting, the Proxy Statement and our
2007 Annual Report are available at
http://ww3.ics.adp.com/streetlink/WOOF.
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April 25, 2008
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Tomas
W. Fuller
Chief Financial Officer, Vice President and
Secretary
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ii
VCA
ANTECH, INC.
12401 West Olympic Boulevard
Los Angeles, California
90064-1022
PROXY
STATEMENT
Our Board of Directors is soliciting proxies to be voted at the
2008 Annual Meeting of Stockholders, which we refer to as the
Annual Meeting, to be held on June 4, 2008.
Your vote is very important. For this reason, our Board of
Directors is requesting that you permit your common stock to be
represented at the Annual Meeting by the proxies named on the
enclosed proxy card. This Proxy Statement contains important
information for you to consider when deciding how to vote on the
matters brought before the Annual Meeting. Please read it
carefully.
Proxy materials, which include the Proxy Statement, proxy card,
notice of the 2008 Annual Meeting of Stockholders, which we
refer to as the Notice of 2008 Annual Meeting, and
the Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007, which we refer
to as the 2007 Annual Report, were mailed by us to
our stockholders beginning April 25, 2008. In this Proxy
Statement, VCA Antech, Inc. is referred to as the
Company, VCA, we,
us and our.
QUESTIONS
AND ANSWERS
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Who may vote at the Annual Meeting? |
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You may vote your VCA common stock at the Annual Meeting if our
records show that you owned your shares of common stock at the
close of business on April 21, 2008, which we refer to as
the Record Date. At that time, there were
85,114,059 shares of common stock outstanding, and
approximately 202 holders of record. Each share of common stock
is entitled to one vote on each matter properly brought before
the Annual Meeting. |
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What items of business will be voted on at the Annual
Meeting? |
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There are two items of business scheduled to be voted on at the
Annual Meeting: |
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Election of two members to the Board of
Directors; and
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Ratification of the appointment of KPMG LLP as
our independent registered public accounting firm for the year
ending December 31, 2008.
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We will also consider other business that comes properly before
the Annual Meeting.
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How does the Board of Directors recommend that I vote? |
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Our Board of Directors recommends that you vote: |
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FOR the election of its nominees
to the Board of Directors; and
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FOR ratification of the
appointment of KPMG LLP as our independent registered public
accounting firm for the year ending December 31, 2008.
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How can I vote my shares in person at the Annual Meeting? |
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If your shares are registered directly in your name with U.S.
Stock Transfer Corporation, our Transfer Agent, you
are considered the stockholder of record with respect to those
shares and the proxy materials, including the proxy card, are
being sent directly to you by VCA. As the stockholder of record,
you have the right to vote in person at the meeting. If you
choose to do so, you can bring the enclosed proxy card or vote
using the ballot provided at the Annual Meeting. Even if you
plan to attend the Annual Meeting, we recommend that you vote
your shares in advance as described below so that your vote will
be counted if you decide later not to attend the Annual Meeting. |
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Most stockholders of VCA hold their shares in street name
through a broker, bank or other nominee rather than directly in
their own name. In that case, you are considered the beneficial
owner of shares held in street name, and the proxy materials are
being forwarded to you together with a voting instruction card.
As the beneficial owner, you are also invited to attend the
Annual Meeting. Because a beneficial owner is not the
stockholder of record, you may not vote these shares in person
at the Annual Meeting unless you obtain a legal
proxy from the broker, trustee or nominee that holds your
shares, giving you the right to vote the shares at the meeting.
You will need to contact your broker, trustee or nominee to
obtain a legal proxy, and you will need to bring it to the
Annual Meeting in order to vote in person. |
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How can I vote my shares without attending the Annual
Meeting? |
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Whether you hold shares in your name or through a broker, bank
or other nominee, you may vote without attending the Annual
Meeting. You may vote by granting a proxy or, for shares held
through a broker, bank or other nominee, by submitting voting
instructions to that nominee. For shares held through a broker,
bank or other nominee, follow the instructions on the voting
instruction card included with your voting materials. If you
provide specific voting instructions, your shares will be voted
as you have instructed and as the proxy holders may determine
within their discretion with respect to any other matters that
properly come before the Annual Meeting. |
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A number of brokerage firms and banks offer Internet voting
options. Specific instructions to be followed by owners of
shares of common stock held in street name are set forth on the
voting instruction card accompanying your proxy card. The
Internet voting procedures are designed to authenticate
stockholders identities, to allow stockholders to give
their voting instructions and to confirm that stockholders
instructions have been recorded properly. Stockholders voting
via the Internet should understand that there may be costs
associated with electronic access, such as usage charges from
telephone companies and Internet access providers that must be
borne by the stockholder. |
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What happens if additional matters are presented at the
Annual Meeting? |
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Other than the two items of business described in this Proxy
Statement, we are not aware of any other business to be acted
upon at the Annual Meeting. If you grant a proxy, the persons
named as proxies, Robert L. Antin and Tomas W. Fuller, will have
the discretion to vote your shares on any additional matters
properly presented for a vote at the Annual Meeting. |
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Do I have appraisal rights in connection with the matters to
be voted upon at the Annual Meeting? |
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No. Our stockholders do not have a right under Delaware
law, our Amended and Restated Certificate of Incorporation or
our Bylaws to exercise dissenters rights of appraisal with
respect to any of the matters to be voted upon at the Annual
Meeting. |
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What happens if I do not give specific voting
instructions? |
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If you hold shares in your name, and you sign and return a proxy
card without giving specific voting instructions, the proxy
holders will vote your shares in the manner recommended by our
Board of Directors on all matters presented in this Proxy
Statement, and, with respect to any other matters that properly
come before the Annual Meeting, as the proxy holders may
determine in their discretion. |
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If you hold your shares through a broker, bank or other nominee
and you do not provide your broker with specific voting
instructions, your broker may vote your shares on routine
matters, but not on non-routine matters. As a result: |
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Your broker may vote your shares with respect
to Item 1 (election of directors) and Item 2
(ratification of independent registered public accounting firm)
because these matters are considered routine.
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As the items of business to be acted upon at the Annual Meeting
are routine matters, the broker may turn in a proxy card for
uninstructed shares that votes FOR the election of
the Board of Directors nominees to the Board of Directors
and ratification of VCAs independent registered public
accounting firm. |
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If non-routine matters where to be acted upon at the Annual
Meeting, the broker would not be able to vote your shares
without your instructions. This is referred to as a broker
non-vote. In tabulating the voting result for any
particular item, broker non-votes are not considered votes cast
affirmatively or negatively on that item. |
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What happens if I abstain? |
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For purposes of determining whether the stockholders have
approved matters other than the election of directors,
abstentions are treated as shares present or represented and
voting, so abstaining has the same effect as a negative vote. |
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What is the quorum requirement for the Annual Meeting? |
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A majority of VCAs outstanding shares as of the Record
Date must be present at the Annual Meeting in order to hold the
Annual Meeting and conduct business. This is called a quorum.
Your shares will be counted for purposes of determining if there
is a quorum, whether representing votes for, against, withheld
or abstained, if you: |
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are present and vote at the Annual Meeting; or
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properly submit a proxy card or vote over the
Internet.
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Broker non-votes also are counted as present for the purpose of
determining the existence of a quorum at the Annual Meeting. |
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How can I change my vote after I return my proxy card? |
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You can revoke your proxy and change your vote at any time
before the final vote at the Annual Meeting. You may do this by: |
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written notice to the Secretary of the Company;
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timely delivery of a valid, later-dated proxy
or a later-dated vote on the Internet; or
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if you are a record holder, voting by ballot
at the Annual Meeting.
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What is the voting requirement to approve each of the
items? |
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Item 1Election of directors
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The persons receiving the highest number of FOR
votes at the Annual Meeting will be elected
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Item 2Ratification of appointment of independent
registered public accounting firm
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To be approved by the stockholders, this item must receive the
affirmative FOR vote of a majority of the votes
casts on this item at the Annual Meeting
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Where can I find the voting results of the Annual Meeting? |
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The preliminary voting results will be announced at the Annual
Meeting. The final voting results will be tallied by our
Transfer Agent and Inspector of Elections and published in our
Quarterly Report on
Form 10-Q
for the fiscal quarter ending June 30, 2008. |
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Can I access the Notice of Annual Meeting, Proxy Statement
and 2007 Annual Report on the internet? |
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The Notice of 2008 Annual Meeting, Proxy Statement and the 2007
Annual Report are available
http://ww3.ics.adp.com/streetlink/WOOF. |
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How can I obtain a separate set of proxy materials? |
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To reduce the expense of delivering duplicate proxy materials to
our stockholders who may have more than one VCA common stock
account, we are delivering only one set of the 2007 Annual
Report and the Proxy Statement to certain stockholders who share
an address, unless otherwise requested. A separate proxy card is
included in the proxy materials for each of these stockholders.
If you share an address with another stockholder and have
received only one set of proxy materials, you may write or call
us to request to receive a separate copy of these materials at
no cost to you. Similarly, if you share an address with another
stockholder and have received multiple copies of our proxy
materials, you may write or call us to request future delivery
of a single copy of these materials. You may contact us
regarding these matters by writing or calling us at: |
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VCA Antech, Inc.
Attention: Investor Relations
12401 West Olympic Boulevard
Los Angeles, California
90064-1022
(310) 571-6500 |
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Who pays for the cost of this proxy solicitation? |
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We will pay the costs of the solicitation of proxies. We may
reimburse brokerage firms and other persons representing
beneficial owners of shares for expenses incurred in forwarding
the voting materials to their customers who are beneficial
owners and obtaining their voting instructions. In addition to
soliciting proxies by mail, our board members, officers and
employees may solicit proxies on our behalf, without additional
compensation, personally or by telephone. |
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Is there a list of stockholders entitled to vote at the
Annual Meeting? |
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The names of stockholders of record entitled to vote at the
Annual Meeting will be available at the Annual Meeting and for
ten days prior to the Annual Meeting for any purpose relevant to
the Annual Meeting, between the hours of 9:00 a.m. and
5:00 p.m., at our principal executive offices by contacting
the Secretary of the Company. |
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What is the deadline to propose actions for consideration at
next years annual meeting? |
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Any stockholder who intends to present a proposal at the 2009
Annual Meeting for inclusion in our Proxy Statement and proxy
card relating to our 2009 Annual Meeting must submit his, her or
its proposal to VCA Antech, Inc.,
c/o Office
of Secretary, 12401 West Olympic Boulevard, Los Angeles,
California 90064 by December 26, 2008. The rules and
regulations of the U.S. Securities and Exchange Commission,
which we refer to as the SEC, provide that if the
date of the Companys 2009 Annual Meeting is advanced or
delayed more than 30 days from the date of the 2008 Annual
Meeting, stockholder proposals intended to be included in the
proxy materials for the 2009 Annual Meeting must be received by
the Company within a reasonable time before the Company begins
to print and mail the proxy materials for the 2009 Annual
Meeting. Upon determination by the Company that the date of the
2009 Annual Meeting will be advanced or delayed by more than
30 days from the date of the 2008 Annual Meeting, the
Company will disclose that change in the earliest possible
Quarterly Report on
Form 10-Q. |
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If a stockholder intends to present a proposal at our 2009
Annual Meeting, but does not intend to have it included in our
Proxy Statement, the proposal must be delivered to our Secretary
no earlier than March 6, 2009 and no later than
April 5, 2009. If the date of our 2009 Annual Meeting is
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or delayed by more than 30 days from the date of the 2008
Annual Meeting, the proposal must be delivered by the close of
business on the tenth day following the day we publicly announce
the date of our 2009 Annual Meeting. Furthermore, if a
stockholder who presents a proposal (or a qualified
representative of that stockholder) does not appear at the
annual meeting of stockholders to present the proposal, the
proposal will be disregarded, notwithstanding that proxies in
respect of the proposal may have been received by the Company. |
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How do I recommend a candidate for election as a director? |
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Stockholders who wish to recommend a candidate for election as a
director at our 2009 Annual Meeting must submit their
recommendations no earlier than March 6, 2009 and no later
than April 5, 2009. Stockholders may recommend candidates
for consideration by the Board of Directors Nominating and
Corporate Governance Committee by providing written notice to
VCA Antech, Inc.,
c/o Office
of Secretary, 12401 West Olympic Boulevard, Los Angeles,
California 90064. The written notice must provide the
candidates name, age, business and residence addresses,
biographical data, including principal occupation,
qualifications, the number and class of our shares, if any,
beneficially owned by the candidate, and all other information
regarding candidates required by Section 14 of the
Securities Exchange Act of 1934, as amended, which we refer to
as the Exchange Act, and the rules and regulations
promulgated thereunder. A written statement from the candidate
consenting to be named as a candidate and, if nominated and
elected, to serve as a director should accompany any stockholder
recommendation. Any stockholder who wishes to recommend a
nominee for election as director must also provide his, her or
its name and address, the number and class of shares
beneficially owned by the stockholder, a description of all
arrangements or understandings relating to the nomination among
the stockholder making the nomination, the proposed nominee and
any other person or persons (including their names), and all
other information regarding the stockholder required by
Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder. |
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The Company will include a candidate recommended by a
stockholder in its Proxy Statement only if the Nominating and
Corporate Governance Committee, after evaluating the candidate,
decides to propose the candidate to the Board, and the Board
nominates the candidate. Furthermore, if a stockholder who
recommends a nominee (or a qualified representative of that
stockholder) does not appear at the annual meeting of
stockholders to present the nomination, the nomination will be
disregarded, notwithstanding that proxies in respect of the
nomination may have been received by the Company. |
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How can I communicate with the Board of Directors? |
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Stockholders may communicate with the Board of Directors by
sending a letter to the Board of Directors of VCA Antech, Inc.,
c/o Office
of the Secretary, 12401 West Olympic Boulevard,
Los Angeles, California 90064. Each communication must
contain a clear notation indicating that it is a
Stockholder Board Communication or
Stockholder Director Communication, and
each communication must identify the author as a stockholder.
The office of the Secretary will receive the correspondence and
forward it to the Chairman of the Board or to any individual
director or directors to whom the communication is directed,
unless the communication is unduly hostile, threatening,
illegal, does not reasonably relate to us or our business, or is
similarly inappropriate. The office of the Secretary has
authority to discard any inappropriate communications or to take
other appropriate actions with respect to any inappropriate
communications. |
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CORPORATE
GOVERNANCE
Our business is managed by our employees under the direction and
oversight of the Board of Directors. Except for Robert Antin,
none of the members of our Board of Directors is an employee of
VCA. We keep the members of our Board of Directors informed of
our business through discussions with management, materials we
provide to them, visits to our offices and their participation
in Board of Directors and committee meetings.
We believe transparent, effective, and accountable corporate
governance practices are key elements of our relationship with
our stockholders. To help our stockholders understand our
commitment to this relationship and our governance practices,
several of our key governance initiatives are summarized below.
Corporate
Governance Guidelines
Our Board of Directors has adopted Corporate Governance
Guidelines which govern, among other things, criteria for
membership on the Board of Directors, vacancies on the Board of
Directors, director responsibilities, director education, and
committee composition and charters. You can access these
Corporate Governance Guidelines, along with other materials such
as committee charters, on our website at
http://investor.vcaantech.com.
Code of
Ethics
We have adopted a Code of Ethics and Business Conduct applicable
to all of our employees as well as our directors and executive
officers. Our Code of Ethics and Business Conduct is designed to
set the standards of business conduct and ethics and to help
directors and employees resolve ethical issues. Our Code of
Ethics and Business Conduct applies to our Chief Executive
Officer, Chief Financial Officer, all other senior financial
executives, our directors when acting in their capacity as
directors and to all of our employees. The purpose of our Code
of Ethics and Business Conduct is to ensure to the greatest
possible extent that our business is conducted in a consistently
legal and ethical manner. Employees may submit concerns or
complaints regarding audit, accounting, internal controls or
other ethical issues on a confidential basis by means of an
anonymous toll-free telephone call or email. We investigate all
concerns and complaints. Our Code of Ethics and Business Conduct
is posted on our website at http://investor.vcaantech.com.
We intend to disclose on our website amendments to, or waivers
from, any provision of our Code of Ethics and Business Conduct
which applies to our Chief Executive Officer, Chief Financial
Officer, Principal Accounting Officer/Controller and persons
performing similar functions and amendments to, or waivers from,
any provision which relates to any element of our Code of Ethics
and Business Conduct described in Item 406(b) of
Regulation S-K.
Committee
responsibilities
VCA has three committees of the Board of Directors: the Audit
Committee, the Compensation Committee and the Nominating and
Corporate Governance Committee. Each committee meets regularly
and has a written charter approved by the Board of Directors.
See Further Information Regarding Board of Directors
Meetings and Committees contained elsewhere in
this Proxy Statement.
Independence
NASDAQ rules require listed companies to have a board of
directors with at least a majority of independent directors. Our
Board of Directors has determined that four of our five current
directors are independent under the NASDAQ Global Select Market
listing standards. Our independent directors are: John M.
Baumer, John B. Chickering, Jr., John Heil and
Frank Reddick. In addition, all of the directors currently
serving on the Audit Committee, the Compensation Committee and
the Nominating and Corporate Governance Committee are
independent under the NASDAQ Global Select Market listing
standards.
6
Stockholder
communication
Stockholders may communicate with the Board of Directors by
sending a letter to the Board of Directors of VCA Antech, Inc.,
c/o Office
of the Secretary, 12401 West Olympic Boulevard, Los
Angeles, California 90064. Each communication must contain
a clear notation indicating that it is a
Stockholder Board Communication or
Stockholder Director Communication, and
each communication must identify the author as a stockholder.
The office of the Secretary will receive the correspondence and
forward it to the Chairman of the Board or to any individual
director or directors to whom the communication is directed,
unless the communication is unduly hostile, threatening,
illegal, does not reasonably relate to us or our business, or is
similarly inappropriate. The Office of the Secretary has
authority to discard any inappropriate communications or to take
other appropriate actions with respect to any inappropriate
communications.
Director
attendance at Annual Meetings
All directors are encouraged to attend VCAs Annual
Meetings of stockholders. Three of our directors attended our
2007 Annual Meeting of Stockholders.
Executive
sessions
VCAs independent directors regularly meet in executive
session without management present.
Outside
advisors
The Board of Directors, the Audit Committee, the Compensation
Committee and the Nominating and Corporate Governance Committee
may each retain outside advisors and consultants of their
choosing at VCAs expense.
Director
education
Frank Reddick routinely participates in continuing legal
education programs on corporate governance, and board and board
committee functions.
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ITEM 1:
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ELECTION
OF DIRECTORS
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We have five members on our Board of Directors. Four of the five
members of our Board of Directors have been determined by our
Board of Directors to meet the independence requirements of the
NASDAQ Global Select Market listing standards.
As provided in our Amended and Restated Certificate of
Incorporation, the Board of Directors has been grouped into
three classes, as nearly equal in number as possible, which are
elected for staggered terms. Our Class III directors will
be elected at this Annual Meeting and will hold office for three
years until the 2011 Annual Meeting and thereafter until their
successors are duly elected and qualified. The terms of our
Class I directors expire at our 2009 Annual Meeting. The
term of our Class II director expires at our 2010 Annual
Meeting. In accordance with our Corporate Governance Guidelines,
any director appointed to fill a vacant seat in a class other
than the class of directors whose terms expire at the next
annual meeting of stockholders will stand for re-election at the
next annual meeting of stockholders.
Although we know of no reason why these nominees would not be
able to serve, if any nominee is unavailable for election, the
proxies will vote your common stock to approve the election of
any substitute nominee proposed by our Nominating and Corporate
Governance Committee. The Board of Directors may choose to
reduce the size of the Board, as permitted by our Bylaws,
provided we maintain the number of independent directors
required by the listing standards of the NASDAQ Global Select
Market. The Board of Directors has no reason to believe that
VCAs nominees will be unwilling or unable to serve if
elected as director.
Nominees
Our nominees for election as Class III directors, John B.
Chickering, Jr. and John Heil, are currently directors and
have agreed to be named in this Proxy Statement and to serve if
elected.
The Board of Directors proposes the following candidates for
election as Class III directors:
Class III
Director Nominees
John B. Chickering, Jr.
John Heil
The principal occupation and certain other information about the
nominees, our other directors and our executive officers are set
forth on the following pages.
A plurality of the votes cast is required for election as a
director. All proxies will be voted to approve the election of
the nominees listed above unless a contrary vote is indicated on
the enclosed proxy card.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR THE ELECTION OF THE NOMINEES IDENTIFIED
ABOVE.
8
MANAGEMENT
Directors
and Executive Officers
The following persons serve as our directors:
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Directors
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Age
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Present Position
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Class I Directors
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John M. Baumer
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40
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Director
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Frank Reddick
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55
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Director
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Class II Director
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Robert L. Antin
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58
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Chairman of the Board
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Class III Directors
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John B. Chickering, Jr.
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59
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Director
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John Heil
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55
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Director
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The following persons serve as our executive officers:
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Executive Officers
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Age
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Present Position
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Robert L. Antin
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58
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Chief Executive Officer and President
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Arthur J. Antin
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61
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Chief Operating Officer and Senior Vice President
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Neil Tauber
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Senior Vice President of Development
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Tomas W. Fuller
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50
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Chief Financial Officer, Vice President and Secretary
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Dawn R. Olsen
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49
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Principal Accounting Officer, Vice President and Controller
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Josh Drake
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40
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President of laboratory division, Antech Diagnostics
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Our executive officers are appointed by and serve at the
discretion of our Board of Directors. Robert L. Antin and Arthur
J. Antin are brothers. There are no other family relationships
between any director
and/or any
executive officer.
Robert L. Antin, one of our founders, has served as our
Chairman of the Board, Chief Executive Officer and President
since our inception in 1986. From September 1983 to 1985,
Mr. Antin was President, Chief Executive Officer, a
director and co-founder of AlternaCare Corp., a publicly held
company that owned, operated and developed freestanding
out-patient surgical centers. From July 1978 until September
1983, Mr. Antin was an officer of American Medical
International, Inc., an owner and operator of health care
facilities. Mr. Antin received his MBA with a certification
in hospital and health administration from Cornell University.
John M. Baumer has served as our director since September
2000. Mr. Baumer is a partner of Leonard Green &
Partners, LP, where he has been employed since May 1999. Prior
to joining Leonard Green & Partners, LP, he served as
a Vice President in the Corporate Finance Division of Donaldson,
Lufkin & Jenrette Securities Corporation, or DLJ, in
Los Angeles. Prior to joining DLJ in 1995, Mr. Baumer
worked at Fidelity Investments and Arthur Andersen LLP.
Mr. Baumer currently serves on the boards of directors of
FTD, Inc. and Leslies Poolmart, Inc. Mr. Baumer is a
1990 graduate of the University of Notre Dame. He received his
MBA from the Wharton School at the University of Pennsylvania.
John B. Chickering, Jr. has served as one of our
directors since April 2004 and previously served as a director
from 1988 to 2000. Mr. Chickering is a certified public
accountant. Mr. Chickering is currently a private investor
and independent consultant. Mr. Chickering served in a
variety of executive positions within Time Warner, Inc. and
Warner Bros., Inc., most recently as the Vice
PresidentFinancial Administration for Warner
9
Bros. International Television Distribution until February 1996.
Prior to his employment at Warner Bros., Mr. Chickering
served as a staff accountant at KPMG Peat Marwick from August
1975 to June 1977. Mr. Chickering holds an MBA degree with
emphasis in accounting and finance from Cornell University.
John Heil has served as one of our directors since
February 2002 and previously served as a director from 1995 to
2000. Mr. Heil currently serves as President of United Pet
Group, Inc., a global manufacturer and marketer of pet supplies
and subsidiary of Spectrum Brands, Inc. Mr. Heil also
serves on Spectrum Brands Executive Committee as Chief
Operating Officer. Prior to joining United Pet Group,
Mr. Heil spent twenty-five years with the H. J. Heinz
Company in various executive and general management positions
including President and Managing Director of Heinz Pet Products
and President of Heinz Specialty Pet Foods. Mr. Heil holds
a BA degree in economics from Lycoming College.
Frank Reddick has served as one of our directors since
February 2002. For more than the past five years,
Mr. Reddick has been a partner in Akin Gump Strauss
Hauer & Feld LLP, a global, full service law firm.
Mr. Reddick serves on the firms management committee
and its national steering committee for the Corporate
Finance & Mergers and Acquisitions section.
Mr. Reddick is principally engaged in the practice of
corporate and securities law, with a concentration on corporate
finance, mergers and acquisitions, joint ventures and other
strategic alliances. Mr. Reddick holds a JD from the
University of California, Hastings College of the Law.
Arthur J. Antin, one of our founders, has served as our
Chief Operating Officer and Senior Vice President since our
inception. From 1986 until June 2004, Mr. Antin also served
as our Secretary and as a director. From October 1983 to
September 1986, Mr. Antin served as Director of
Marketing/Investor Relations of AlternaCare Corp. At AlternaCare
Corp., Mr. Antin developed and implemented marketing
strategies for a network of outpatient surgical centers.
Mr. Antin received an MA in Community Health from New York
University.
Neil Tauber, one of our founders, has served as our
Senior Vice President of Development since our inception. From
1984 to 1986, Mr. Tauber served as the Director of
Corporate Development at AlternaCare Corp. At AlternaCare Corp.,
Mr. Tauber was responsible for the acquisition of new
businesses and syndication to hospitals and physician groups.
From 1981 to 1984, Mr. Tauber served as Chief Operating
Officer of MDM Services, a wholly owned subsidiary of Mediq, a
publicly held health care company, where he was responsible for
operating and developing a network of retail dental centers and
industrial medical clinics. Mr. Tauber holds an MBA from
Wagner College.
Tomas W. Fuller joined us in January 1988 and served as
Vice President and Controller until November 1990 when he became
Chief Financial Officer. In June 2004, Mr. Fuller became
Secretary. From 1980 to 1987, Mr. Fuller worked at Arthur
Andersen LLP, the last two years of which he served as audit
manager. Mr. Fuller received his BA in business/economics
from the University of California at Los Angeles.
Dawn R. Olsen joined us in January 1997 as Vice
President, Controller. In March 2004, Ms. Olsen became
Principal Accounting Officer. From 1993 to 1996, Ms. Olsen
served as Senior Vice President, Controller of Optel, Inc., a
privately held telecommunications company. From 1987 to 1993,
Ms. Olsen served as Assistant Controller and later as Vice
President, Controller of Qintex Entertainment, Inc., a publicly
held television film distribution and production company. From
1981 to 1987, Ms. Olsen worked at Arthur Andersen LLP, the
last year of which she served as audit manager. Ms. Olsen
currently serves on the board of the Womens Leadership
Council in Los Angeles. Ms. Olsen is a certified public
accountant and received her BS in business/accounting from
California State University, Northridge.
Josh Drake joined us in 1992. In February 2008,
Mr. Drake became President of our laboratory division,
Antech Diagnostics. Over the past five years, Josh Drake has
held various positions at VCA Antech, including, Group Vice
President of our animal hospital division, Group Vice President
of Antech Diagnostics and Senior Vice President of Antech
Diagnostics. Mr. Drake received his BS in economics from
the University of California at Santa Barbara.
10
FURTHER
INFORMATION REGARDING THE BOARD OF DIRECTORS
Composition
Four of the five members of our Board of Directors have been
determined by our Board of Directors to meet the independence
requirements of the NASDAQ Global Select Market listing
standards. We refer to each of these directors as an
independent director.
Meetings &
Committees
During fiscal 2007, the Board of Directors held four meetings
and acted one time by unanimous written consent. VCAs
independent directors regularly meet in executive session
without management present.
The Board of Directors has an Audit Committee, a Compensation
Committee and a Nominating and Corporate Governance Committee,
all of which are constituted solely of independent directors.
Audit
Committee
The Audit Committee consists of John M. Baumer, John B.
Chickering, Jr. (Chairman) and John Heil, each an
independent director and each financially literate as required
by the NASDAQ Global Select Market listing standards. Our Board
of Directors has determined that Messrs. Baumer, Chickering
and Heil qualify as audit committee financial
expert[s] as that term is defined in
Item 407(d)(5)(ii) of
Regulation S-K
of the Exchange Act. During fiscal 2007, the Audit Committee
held eight meetings.
Among other matters, the Audit Committee:
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engages and replaces the independent registered public
accounting firm as appropriate;
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evaluates the performance of, independence of and pre-approves
all services provided by the independent registered public
accounting firm;
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discusses with management, internal auditor and the independent
registered public accounting firm the quality of our accounting
principles and financial reporting; and
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oversees our internal controls.
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Our Audit Committee charter is posted on our website at
http://investor.vcaantech.com.
Compensation
Committee
The Compensation Committee consists of John M. Baumer, John B.
Chickering, Jr. and Frank Reddick (Chairman), each an
independent director. During fiscal 2007, the Compensation
Committee held six meetings and acted one time by unanimous
written consent. The Compensation Committee:
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assists the Board of Directors in ensuring a proper system of
long-term and short-term compensation is in place to provide
performance-oriented incentives to management, and compensation
plans are appropriate and competitive and properly reflect the
objectives and performance of management and the Company;
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establishes the compensation of all of our executive
officers; and
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administers the Companys equity incentive programs,
including the VCA Antech Inc. 2006 Equity Incentive Plan and the
VCA Antech Inc. 2007 Annual Cash Incentive Plan, which we refer
to collectively as the Plans.
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The Compensation Committee is responsible for overseeing the
determination, implementation and administration of
remuneration, including compensation, benefits and perquisites,
of all executive officers and other members of senior management
whose remuneration is the responsibility of the Board of
Directors. The Compensation Committee seeks the views of our
Chief Executive Officer with respect to establishing appropriate
compensation packages for the executive officers (other than the
Chief Executive Officer). The Compensation Committee also has
the authority to delegate its responsibilities to subcommittees
of the Compensation Committee if it determines such delegation
would be in the best interest of the Company. On
October 23, 2007, the Compensation Committee established
the 162(m) subcommittee, which consists of the two outside
directors (as such term is defined in Treasury
Regulation 1.162-27(e)(3))
of the Compensation
11
Committee, John M. Baumer and John B. Chickering, Jr. The
162(m) subcommittee has the power and authority, to the same
extent as would the Compensation Committee, to act, in the name
of and on behalf of the Company, with respect to the
administration of the Plans, including (i) granting equity
awards to the Companys executive officers pursuant to the
terms of the VCA Antech Inc. 2006 Equity Incentive Plan,
(ii) granting performance awards consisting of equity
and/or cash
to the Companys executive officers under the Plans and
(iii) establishing the performance goals underlying the
performance awards and determining whether these performance
goals have been met. Our Compensation Committee charter is
posted on our website at http://investor.vcaantech.com.
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance Committee consists of
John M. Baumer, John B. Chickering, Jr. and Frank Reddick
(Chairman), each an independent director. During fiscal 2007,
the Nominating and Corporate Governance Committee held one
meeting. The principal responsibilities of the Nominating and
Corporate Governance Committee are to propose to the Board of
Directors a slate of nominees for election by the stockholders
at our Annual Meetings and to review and reassess the adequacy
of the Corporate Governance Guidelines and recommend any
proposed changes to the Board of Directors.
In considering director candidates, the Nominating and Corporate
Governance Committee considers the entirety of each
candidates credentials and does not have any specific
minimum qualifications that must be met in order to be
recommended as a nominee. The Nominating and Corporate
Governance Committee does believe, however, that all members of
the Board of Directors should have high personal and
professional ethics, integrity, practical wisdom and mature
judgment, no conflict of interest that would interfere with
their performance as a director of a public corporation, a
commitment to serve on the Board of Directors over a period of
several years, a willingness to represent the best interests of
all stockholders and objectively appraise management performance
and sufficient time to devote to matters of the Board of
Directors. Our Nominating and Corporate Governance Committee may
employ a variety of methods for identifying and evaluating
nominees for director, including stockholder recommendations.
The Nominating and Corporate Governance Committee will consider
candidates recommended by our stockholders, provided that the
recommendations are made in accordance with the procedures
required under our Bylaws, as summarized in the Questions
and Answers section of this Proxy Statement. The
Nominating and Corporate Governance Committee will not evaluate
candidates differently based on who made the recommendation for
consideration. Our Nominating and Corporate Governance Committee
charter is posted on our website at
http://investor.vcaantech.com.
Director
Attendance
All directors attended 75% or more of all the meetings of the
Board of Directors in fiscal 2007. All directors attended 75% or
more of all the meetings of those committees on which they
served in fiscal 2007. The Company encourages, but does not
require, all directors and director nominees to attend our
Annual Meetings of stockholders. Three of our directors attended
our 2007 Annual Meeting of Stockholders.
Compensation
Committee Interlocks and Insider Participation
During fiscal 2007, the Compensation Committee of our Board of
Directors consisted of John B. Chickering, Jr., John M.
Baumer and Frank Reddick. None of these individuals was one of
our officers or employees at any time during fiscal 2007.
Mr. Reddick is a partner at Akin Gump Strauss
Hauer & Feld LLP, which provided legal services to us
during fiscal 2007 and is providing legal services to us in
fiscal 2008. In 2007, the Company paid Akin Gump Strauss
Hauer & Feld LLP $1.2 million for legal services.
Nevertheless, Mr. Reddick is not disqualified from serving
as an independent director on our Board of Directors under the
NASDAQ Global Select Market listing standards because of the
relatively small amount of fees we paid to Akin Gump Strauss
Hauer & Feld LLP in fiscal years 2007, 2006 and 2005
in relation to our total revenues and the total revenues of Akin
Gump Strauss Hauer & Feld LLP for those same periods.
None of our executive officers served as a member of the board
of directors or compensation committee of any entity that has or
has had one or more executive officers serving as a member of
our Board of Directors or Compensation Committee.
12
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ITEM 2:
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RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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The Audit Committee has engaged the firm of KPMG LLP to continue
to serve as our independent registered public accounting firm
for the current fiscal year ending December 31, 2008. KPMG
LLP has served as VCAs principal independent registered
public accounting firm since June 14, 2002.
We are asking the stockholders to ratify the appointment of KPMG
LLP as our independent public accounting firm for the fiscal
year ending December 31, 2008. The ratification of KPMG LLP
as the Companys independent registered public accounting
firm for the fiscal year ending December 31, 2008, will
require the affirmative vote of a majority of the shares of
common stock present or represented and entitled to vote at the
Annual Meeting. All proxies will be voted to approve the
appointment unless a contrary vote is indicated on the enclosed
proxy card.
We anticipate that a representative of KPMG LLP will attend the
Annual Meeting for the purpose of responding to appropriate
questions. The representative of KPMG LLP will be afforded an
opportunity to make a statement if he or she so desires at the
Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP
AS THE COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM.
13
AUDIT
AND NON-AUDIT FEES
The following table sets forth the aggregate fees billed to us
by KPMG LLP, our independent registered public accounting firm,
for professional services rendered during the fiscal years ended
December 31, 2007 and 2006.
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2007
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2006
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Audit Fees
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$
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1,693,651
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$
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1,716,724
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Audit Related Fees (1)
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21,792
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--
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Tax Fees (2)
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53,513
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29,500
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All Other Fees (3)
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20,706
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6,567
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Total
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$
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1,789,662
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$
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1,752,791
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(1) |
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Consists of $21,792 for due diligence work related to
acquisitions. |
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(2) |
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Consists of (a) $53,513 for consultation on the tax impact
of certain transactions in 2007 and (b) $25,000 for
consultation on the tax impact of certain transactions and
$4,500 for review of corporate tax returns in 2006. |
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(3) |
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Consists of miscellaneous consulting services provided by KPMG
LLP in each of 2007 and
2006. |
Policy on
Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services
The Audit Committee has established a policy with respect to the
pre-approval of audit and permissible non-audit services and
fees provided by the independent registered public accounting
firm. The Audit Committees pre-approval policy requires
that all audit and permissible non-audit services and fees be
pre-approved by the Audit Committee. Specific pre-approval is
not required for permissible non-audit services provided that
they:
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do not, in the aggregate, amount to more than five percent of
total revenues paid by the Company to the independent registered
public accounting firm in the fiscal year in which the services
are provided;
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were not recognized by the Company as non-audit services at the
time of the relevant engagement; and
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are promptly brought to the attention of the Audit Committee and
approved by the Audit Committee (or its designated
representatives) prior to the completion of the annual audit.
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Pursuant to the pre-approval policy, the Audit Committees
Chairman is delegated the authority to pre-approve audit
services and fees, provided he reports those approvals at the
next meeting of the Audit Committee. The term of any
pre-approval granted by the Audit Committee with respect to a
given service is twelve months. All fees in excess of
pre-approved levels require specific pre-approval by the Audit
Committee. All audit and permissible non-audit services provided
to us in connection to fiscal 2007 were approved by the Audit
Committee.
14
REPORT
OF AUDIT COMMITTEE
The Audit Committee Report does not constitute
soliciting material, and shall not be deemed
filed with the Securities and Exchange Commission or
to be subject to Regulation 14A or 14C as promulgated by
the Securities and Exchange Commission, or to the liabilities of
Section 18 of the Securities Exchange Act of 1934.
The Committee is responsible for overseeing, on behalf of the
Board of Directors, the Companys accounting and financial
reporting process and the audits of VCAs financial
statements. The Committee acts only in an oversight capacity and
relies on the work and assurances of management, which has the
primary responsibility for the financial reporting process,
including the system of internal controls, and the financial
statements.
The Committee has:
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reviewed and discussed the audited financial statements with
management and the independent registered public accounting firm;
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discussed with the independent registered public accounting firm
the matters required to be discussed by the Statement on
Auditing Standards No. 61 (Communication With Audit
Committees); and
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received and reviewed the written disclosures and the letter
from the independent registered public accounting firm required
by the Independence Standards Board Standard No. 1
(Independence Discussions With Audit Committees) and discussed
with the independent registered public accounting firm the
independent accountants independence from the Company and
its management.
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The Committee also has considered whether the independent
registered public accounting firms provision of non-audit
services to the Company is compatible with the accountants
independence. The Committee has concluded that the independent
registered public accounting firm is independent from the
Company and its management.
In reliance on the reviews and discussions referred to above,
the Committee recommended to the Board of Directors, and the
Board of Directors approved, that the audited financial
statements be included in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2007, for filing with the
Securities and Exchange Commission.
Audit Committee
John M. Baumer
John B. Chickering, Jr.
John Heil
15
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Overview
of Compensation Program
We believe that compensation of our executive and other officers
and senior managers should be directly and materially linked to
operating performance. The fundamental objective of our
compensation program is to attract, retain and motivate top
quality executive and other officers through compensation and
incentives which are competitive with the market and industry in
which we compete for talent and which align the interests of our
officers and senior management with the interests of our
stockholders. We seek to promote individual service longevity
and to provide our executives with long-term wealth accumulation
opportunities, assuming that we are able to maintain a
high-level of financial performance. The Compensation Committee
evaluates both performance and compensation annually to ensure
that we maintain our ability to attract and retain superior
employees in key positions and that compensation provided to key
employees remains competitive relative to the compensation paid
to similarly situated executives of our Comparison Group (as
discussed below). To achieve these objectives, we believe
executive compensation packages should include both cash and
equity-based compensation that rewards performance as measured
against established goals.
Overall, we have designed our compensation program to:
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support our business strategy and business plan by clearly
communicating what is expected of executives with respect to
goals and results and by rewarding achievement;
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recruit, motivate and retain executive talent; and
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create a strong performance alignment with stockholders.
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We seek to achieve these objectives through a variety of
compensation elements:
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annual base salary;
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an annual cash performance award, the payment of which is based
on meeting pre-established performance goals;
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long-term incentive compensation, delivered in the form of stock
options grants and restricted stock awards that are awarded
based on the factors described below and that are designed to
align executive officers interests with those of
stockholders by rewarding outstanding performance and providing
long-term incentives; and
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other executive benefits and perquisites.
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Governance
The Compensation Committee oversees our executive compensation
and benefit plans and practices, while establishing management
compensation policies and procedures to be reflected in the
compensation program offered to our executive officers.
The Compensation Committee is comprised of three directors,
Messrs. Baumer, Chickering and Reddick, each of whom served
throughout 2007. The members of the Compensation Committee are
appointed by our Board of Directors, and Mr. Reddick serves
as the chairman of the Compensation Committee. Each member of
the Compensation Committee is independent as defined in the
listing standards of the NASDAQ Global Select Market. The
Compensation Committee has established a Section 162(m)
subcommittee, consisting of Messrs. Baumer and Chickering,
each of whom meet the definition of Outside Director
for purposes of Section 162(m) of the Internal Revenue
Code. The Section 162(m) subcommittee administers our 2006
Equity Incentive Plan and 2007 Annual Cash Incentive Plan,
grants performance awards and establishes performance goals.
16
The Compensation Committee operates under a written charter
approved by the entire Board of Directors, a copy of which is
available on our website at http://investor.vcaantech.com. When
necessary, the Compensation Committee recommends amendments to
its charter to the Board of Directors for approval. The charter
was last reviewed by the Compensation Committee in April 2008.
The Chairman of the Compensation Committee develops the meeting
calendar for the year based on member availability and other
relevant events within our corporate calendar. The Compensation
Committee meeting agendas are generally developed by our
Compensation Committee Chairman. The Compensation Committee
generally meets in executive session, with no member of
management being present at the meetings.
The Compensation Committee has the authority to retain
independent counsel, consultants or other advisers as it deems
necessary in connection with its responsibilities at our
expense; however, the Compensation Committee did not engage an
outside compensation consultant in 2007. The Compensation
Committee may request that any of our directors, officers or
employees, or other persons attend its meetings to provide
advice, counsel or pertinent information as the Compensation
Committee requests.
Role of
Executive Officers in Compensation Decisions
Our Chief Executive Officer and Chief Financial Officer are
involved in the design and implementation of our executive
compensation programs. They typically provide their input
through consultation with the Chairman of the Compensation
Committee and typically are not present at Compensation
Committee meetings. The Chief Executive Officer annually reviews
the performance of each executive officer (other than the Chief
Executive Officer whose performance is reviewed by the
Compensation Committee) and presents his conclusions and
recommendations regarding base salary and incentive award
amounts to the Compensation Committee for its consideration and
approval. The Compensation Committee can exercise its discretion
in accepting, rejecting
and/or
modifying any such executive compensation recommendations;
however, executive compensation matters are generally delegated
to the Chief Executive Officer for development and execution.
Compensation
Practices
The Compensation Committee sets base salary and incentive
compensation for our executives following a review of
company-wide performance, individual performance, salary and
incentive compensation practices among our Comparison Group,
internal equity considerations and other factors.
Notwithstanding the foregoing, our 162(m) subcommittee sets
incentive compensation for our covered employees (as
such term is defined in the Internal Revenue Code of 1986, as
amended (the Code)). Individual performance targets
are set based on the stated financial goals for the year,
typically tied to our publicly announced earnings and EBITDA
guidance. In addition, the Compensation Committee reviews the
Chief Executive Officers recommendations with regard to
base salary and incentive compensation.
Our executive officers base salary is typically reviewed
and adjusted effective on July 1 of each year. The
Committees approval generally occurs during the third
quarter of the year, which occurred on December 27, 2007
for
2007-2008
base compensation.
Equity awards are typically reviewed and granted during the
first quarter of each year. All equity awards are granted on the
date the Compensation Committee approves the awards using the
fair market value of the Companys common stock at the
close of that business day.
Cash incentive compensation for a fiscal year is awarded during
the first quarter, once audited results for the preceding fiscal
year are available. Performance targets and incentive awards are
then set for the current fiscal year, typically tied to our
publicly announced earnings and EBITDA guidance. For 2007, the
key performance indicators for the Company included achieving an
adjusted EBITDA target and an adjusted earnings per share target.
In making decisions with respect to any element of executive
compensation, the Compensation Committee considers the total
compensation that may be awarded to an executive officer,
including salary, annual cash
17
performance award or bonus and long-term incentive compensation.
Multiple factors are considered in determining the amount of
total compensation (the sum of base salary, annual cash
performance award or bonus and long-term compensation delivered
through stock option grants and restricted stock awards) to
award to executive officers each year. Among these factors are:
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how proposed amounts of total compensation to our executive
officers compare to amounts paid to similar executives by our
Comparison Group both for the prior year and over a multi-year
period;
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internal pay equity considerations;
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the longevity of the executive officers tenure with the
Company;
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the financial performance of the Company and the long-term value
achieved by our stockholders through stock appreciation; and
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broad trends in executive compensation generally.
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In addition, in reviewing and approving employment agreements
for executive officers, the Compensation Committee considers the
other benefits to which the officer is entitled by the
agreement, including compensation payable upon termination of
the agreement under a variety of circumstances.
The Compensation Committee applies essentially the same
compensation policies to all executive officers. The difference
in the amount of base salary and annual cash performance award
awarded to our Chief Executive Officer relative to the amount of
base salary and annual cash performance award or bonus awarded
to each other executive officer is generally attributable to
differences in the Compensation Committees assessment in
relative contribution to the performance of the Company,
benchmarking data for the positions held by them and general
trends in executive compensation. The base salary and annual
cash performance awards provided to the chief executive officer
position are almost always higher than for the other executive
officers at companies in our Comparison Group and other public
companies generally. The differences between the Chief Executive
Officers base salary and annual cash performance award and
the other executive officers reflects: the larger scope of the
Chief Executive Officers responsibilities and authority;
and the Chief Executive Officers individual contributions
to the success of the Company. The internal relationship of
total compensation awarded to our executive officers has
remained generally consistent over the last three years.
Components
of 2007 Executive Compensation
For the fiscal year ended December 31, 2007, the principal
components of compensation for the executive officers were:
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base salary;
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annual cash bonus under the 2007 Annual Cash Incentive Plan;
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grants of restricted stock; and
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perquisites and other personal benefits.
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Base
Salary
Base salaries for our executive officers are established based
on individual qualifications and job responsibilities, while
taking into account compensation levels at similarly situated
companies for similar positions referred to as benchmarking. We
use benchmarking as a point of reference for measurement, and
the Compensation Committee has discretion in determining how
much weight to place on the benchmarking analysis. Benchmarking
helps the Compensation Committee assess whether our level of
executive pay is appropriate when compared to industry
standards. In setting 2007 compensation, the Compensation
Committee established a comparison group of companies, which we
refer to as the Comparison Group: Idexx
18
Laboratories, Inc., Patterson Companies, Inc., Pediatrix Medical
Group, Inc., PetSmart, Inc. and Stericycle, Inc. We believe that
this Comparison Group is representative of companies within our
industry, companies of similar size and complexity to us or
companies within our geographic proximity with whom we compete
for talented employees. The information gathered from this
Comparison Group included base salary, cash incentive
compensation and equity incentive compensation.
In addition to benchmarking, the Compensation Committee reviews
the executive officers historical compensation, the
executive officers compensation in relation to other
officers, individual performance of the executive officer and
corporate performance. Salary levels are also considered upon a
promotion or other change in job responsibility. Salary
adjustment recommendations are based on our overall performance
and an analysis of compensation levels necessary to maintain and
attract quality personnel. While the Compensation Committee sets
the base salary for the Chief Executive Officer, the base
salaries for all other executive officers are established after
a review of the recommendations of the Chief Executive Officer.
Base salaries for each of our executive officers were increased
commencing July 1, 2007 by 3.5%. Salary increases were
limited to this percentage amount in order to be consistent with
compensation awards made to non-executive officers of the
Company for fiscal 2007. A review of the compensation of the
companies in our Comparison Group indicated that our Chief
Executive Officer ranked in the second quartile, and our other
Named Executive Officers ranked in the second and third
quartiles, with regard to base salary and total compensation.
Annual
Cash Performance Awards
We grant cash performance awards that are designed to create a
direct link between performance and compensation for the
executive officers. Under the 2007 Annual Cash Incentive Plan,
the 162(m) subcommittee has the authority to grant performance
awards in amounts determined in its sole discretion and to
reduce the amount of performance awards in its sole discretion.
Performance awards provide participants with the right to an
award based upon the achievement of one or more levels of
performance required to be attained with respect to one or more
performance criteria, which we refer to as performance
goals.
Our stockholders adopted the 2007 Annual Cash Incentive Plan at
the 2007 annual meeting of stockholders. The 162(m) subcommittee
established an Adjusted EBITDA target and an Adjusted Earnings
per Diluted Share target for the award of cash incentive
compensation for the three months ended December 31, 2007
at levels which, when added to actual performance during prior
periods during the year, would be tied to the mid-point of the
Companys guidance announced to the financial community at
the beginning of 2007.
We define Adjusted EBITDA and Adjusted Earnings per Diluted
Share as the reported items, adjusted to exclude certain
significant items. The 162(m) subcommittee uses Adjusted EBITDA
and Adjusted Earnings per Diluted Share because they exclude the
effect of significant items that we believe are not
representative of our core operations for the periods presented.
The only amounts excluded for purposes of determining whether
the targets were met in 2007 was the positive impact of the
decrease in the Companys workers compensation
insurance liability for policy periods prior to 2007.
The annual targets for 2007 were as follows:
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Performance Criteria
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Targets
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Adjusted EBITDA
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$250,347,000
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Adjusted Earnings per Diluted Share
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$1.32
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19
The maximum performance award for each executive officer is a
percentage of such executive officers base salary
determined by reference to the average of the percentages by
which the actual Adjusted EBITDA and Adjusted Earnings per
Diluted Share exceed the Performance Goals as follows:
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Executive Officer
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Average Percent of Actual Over
Performance Goals
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100%
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103%
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In Excess of 103%
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Robert L. Antin
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50% of Base Salary
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100% of Base Salary
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150% of Base Salary
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Arthur Antin
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45% of Base Salary
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90% of Base Salary
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135% of Base Salary
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Neil Tauber
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35% of Base Salary
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70% of Base Salary
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100% of Base Salary
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Tomas Fuller
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35% of Base Salary
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70% of Base Salary
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100% of Base Salary
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In determining the performance awards earned by each eligible
executive officer, the 162(m) subcommittee compared the actual
results for Adjusted EBITDA and Adjusted Earnings per Diluted
Share to the performance targets. The actual Adjusted EBITDA and
Adjusted Earnings per Diluted Shares exceeded the performance
targets by more than 103%. As a result, the 162(m) subcommittee
certified that each executive officer earned his performance
award in full. However, as permitted by the terms of the 2007
Annual Cash Incentive Plan, the 162(m) subcommittee reduced the
amount of the performance awards paid to each executive officer
by approximately 40%. The annual cash performance award awarded
to each executive officer under the 2007 Annual Cash Incentive
Plan for performance in fiscal year 2007 is reflected in the
column titled Non-Equity Incentive Plan Compensation
of the Summary Compensation Table on page 22 of this Proxy
Statement.
In determining the cash bonus for Dawn Olsen for fiscal year
2007, the Compensation Committee compared the actual Adjusted
EBITDA and adjusted net income per common share for fiscal year
2007 to the Companys targets for these metrics for the
year and took into account the increase in the price of the
Companys common stock over fiscal 2006 and the performance
of Dawn Olsen in the discharge of her particular duties. The
Compensation Committee also considered the recommendations of
the Chief Executive Officer.
The cash bonus awarded on April 22, 2008 to Dawn Olsen at
the discretion of the Compensation Committee for her performance
in fiscal year 2007 is reflected in the column titled
Bonus of the Summary Compensation Table on
page 22 of this Proxy Statement.
Restricted
Stock Awards
The long-term incentive compensation element provides a periodic
award (typically during the first quarter of each fiscal year)
that in most instances will be performance based. The objective
of the program is to align compensation for executive officers
over a multi-year period directly with the interests of our
stockholders by motivating and rewarding creation and
preservation of long-term stockholder value. The level of
long-term incentive compensation is determined based on an
evaluation of competitive factors in conjunction with total
compensation provided to executive officers and the overall
goals of the compensation program described above.
At December 31, 2007, 135 employees held stock option
grants and 148 employees held restricted stock awards under
our equity incentive plans. Equity ownership for all executive
officers, our other officers and senior managers is important
for purposes of incentive, retention and alignment with
stockholders.
Historically, the Compensation Committee has granted stock
options to its executive officers. At a Compensation Committee
meeting held in December 2006, the Compensation Committee
discussed the relative tax and accounting treatment of
restricted stock awards and stock option grants and the dilutive
impact of the two forms of compensation on existing
stockholders. In January 2007, the Compensation Committee
20
decided to adopt grants of restricted stock as the primary form
of long-term equity based awards in lieu of stock options.
Although there is no specified grant date for equity awards, at
the Compensation Committee meeting held in December 2006, the
Compensation Committee adopted a policy pursuant to which it
will, at a regularly scheduled Compensation Committee meeting,
set in advance of the meeting date, consider the grant of equity
awards to the executive officers. The Compensation Committee
adopted this policy to mitigate against the perception that
grant dates are set to achieve any benefits for the executive
officers.
On January 5, 2007, the Compensation Committee made a
restricted stock award to each executive officer under the 2006
Equity Incentive Plan. These restricted stock awards are
reflected in the column titled Stock Awards of the
Summary Compensation Table on page 22 of this Proxy
Statement.
Perquisites
and Other Personal Benefits
In order to better enable us to attract and retain highly
skilled executive officers and to round out a competitive
compensation package for our executive officers, we provide our
executive officers with perquisites and other personal benefits
that we believe are reasonable and consistent with our overall
compensation philosophy and objectives. The Compensation
Committee periodically reviews the levels of perquisites and
other personal benefits provided to executive officers.
The executive officers, among other things, are provided use of
automobiles, are reimbursed for their out-of-pocket medical
expenses and participate in the plans and programs described
above.
The attributed costs and a more detailed description of the
perquisites and other personal benefits received by each
executive officer for fiscal year 2007 are included in column
titled All Other Compensation, and the footnotes
thereto, of the Summary Compensation Table on page 22 of
this Proxy Statement.
Termination
and Change in Control Payments
We have entered into employment agreements with three of our
executive officers and into a severance agreement with another
executive officer. These employment agreements and severance
agreement, which are designed to promote stability and
continuity of senior management, provide for termination and
change in control payments. On April 25, 2008, we entered
into an amended severance agreement with Mr. Tauber, which
amends and restates his severance agreement, dated March 3,
2003. The Compensation Committee approved the amendment on
April 22, 2008. On February 25, 2008, we also entered
into post-retirement medical benefits coverage agreements with
four of our executive officers, effective as of
December 27, 2007. We entered into post-retirement medical
benefits agreements with certain of our executive officers as a
recognition of each such executive officers extended
service to the Company. A summary of these severance payments
and post-termination benefits is set forth under the heading
Employment Agreements; Post-Retirement Medical Benefits
Coverage Agreements; Payment Upon Termination and Change in
Control on page 25 of this Proxy Statement.
Tax
and Accounting Implications
Deductibility
of Executive Compensation
The Compensation Committee reviews and considers the
deductibility of executive compensation under
Section 162(m) of the Code, which provides that the Company
may not deduct non-performance based compensation of more than
$1,000,000 that is paid to certain executive officers. Except
with respect to a portion of the compensation paid to our Chief
Executive Officer, all compensation paid to the executive
officers for fiscal year 2007 will be fully deductible. In order
to maintain flexibility in compensating our executive officers
in a manner designed to promote varying corporate goals, we have
not adopted a policy that all compensation must be deductible.
However, the Compensation Committee established performance
goals
21
for the 2008 restricted stock awards to the executive officers,
which will result in all compensation contemplated to be paid in
2008 to the executive officers being deductible.
On April 24, 2007, the Board of Directors adopted the 2007
Annual Cash Incentive Plan. The Company designed the 2007 Annual
Cash Incentive Plan so that the payments made under the Plan are
eligible for deduction under Section 162(m) of the Code.
Accounting
for Stock-Based Compensation
Beginning on January 1, 2006, the Company began accounting
for stock-based payments to employees, including stock options,
in accordance with the requirements of Statement of Financial
Accounting Standard No. 123 (revised 2004), Share-Based
Payment (SFAS No. 123R).
Summary
Compensation Table
The following table sets forth all compensation paid or earned
by our Chief Executive Officer, Chief Financial Officer and each
of our other three most highly compensated executive officers
(whose compensation exceeded $100,000 during the last fiscal
year) for services rendered to us for the years ended
December 31, 2007 and 2006. We refer to these officers as
the Named Executive Officers.
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Change in
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Non-Equity
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Pension Value
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Incentive
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and Nonquali-
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Plan
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fied Deferred
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All Other
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Name and
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Stock
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Option
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Compensa-
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Compensation
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Compensa-
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Principal Position
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Year
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Salary
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Bonus
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Awards
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Awards
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tion
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Earnings
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tion
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Total
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(1)
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(2)
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(3)
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(4)
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(5)
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($)
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($)
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($)
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($)
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($)
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($)
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($)
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($)
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Robert L. Antin,
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2007
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$841,500
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$--
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$359,750
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$--
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$765,004
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$--
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$61,459
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$2,027,713
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Chairman of the
Board, Chief
Executive Officer
and President
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2006
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$683,617
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$825,000
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$--
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$19,333
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|
$--
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|
$--
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$81,800
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$1,609,750
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Arthur J. Antin,
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2007
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$535,500
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$--
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$239,833
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$--
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$438,139
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$--
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$56,627
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$1,270,099
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Chief Operating
Officer and Senior
Vice President
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2006
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$508,846
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$472,500
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$--
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$15,333
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$--
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$--
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$56,451
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$1,053,130
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Neil Tauber,
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2007
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$362,100
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$--
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$239,833
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$--
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$230,429
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$--
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$69,377
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$901,739
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Senior Vice
President of
Development
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2006
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$346,923
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$248,500
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$--
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$6,667
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$--
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$--
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$60,117
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$662,207
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Tomas W. Fuller,
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2007
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$362,100
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$--
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$239,833
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$--
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$230,429
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$--
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$23,530
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$855,892
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Chief Financial
Officer, Vice
President and
Secretary
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2006
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$346,923
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$248,500
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$--
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$11,333
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$--
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$--
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$21,229
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$627,985
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Dawn R. Olsen,
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2007
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$229,500
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$41,000
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$35,975
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$49,128
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$--
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$--
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$5,930
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$361,533
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Principal
Accounting Officer,
Vice President and
Controller
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2006
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$219,615
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$50,625
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$--
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$76,629
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$--
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$--
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$3,916
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$350,785
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(1)
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The amount in the Bonus
column for the fiscal year ended December 31, 2007 for Dawn
R. Olsen was determined by the Compensation Committee at its
April 22, 2008 meeting, as more fully described on
page 20 of the Proxy Statement. The amounts in the
Bonus column for the fiscal year ended
December 31, 2006 were determined by the Compensation
Committee at its April 24, 2007 meeting in accordance with
the Companys discretionary cash bonus program, which was
discussed in further detail on page 23 of the 2007 proxy
statement, and were paid shortly thereafter.
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(2)
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The amounts in this column
represent the dollar amount recognized for financial statement
reporting purposes for the fiscal year ended December 31,
2007 in accordance with SFAS 123R. For the assumptions used
in the calculation of these amounts for fiscal year 2007 see
Note 9 to the Companys audited financial statements in the
Companys Annual Report for the fiscal year ended
December 31, 2007.
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22
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(3)
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The amounts in this column
represent the dollar amount recognized for financial statement
reporting purposes for the applicable year in accordance with
SFAS 123R, and include amounts from options granted prior
to each applicable year. For the assumptions used in the
calculation of these amounts see Note 9 to the
Companys audited financial statements in the
Companys Annual Report for the fiscal year ended
December 31, 2007 and Note 8 to the Companys
audited financial statements in the Companys Annual Report
for the fiscal year ended December 31, 2006.
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(4)
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The amounts in this column
represent the cash awards paid for fiscal year 2007 to the Named
Executive Officers under the 2007 Annual Cash Incentive Plan,
which is discussed in further detail on page 19 of this
Proxy Statement. In determining the amounts in this column the
162(m) subcommittee compared the actual results for Adjusted
EBITDA and Adjusted Earnings per Diluted Share to the
performance goals established by the 162(m) subcommittee for the
three months ended to December 31, 2007, as more fully
described on pages
19-20 of
this Proxy Statement, and then, in its sole discretion, reduced
the performance awards earned by each Named Executive Officer
set forth above by approximately 40%.
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(5)
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All Other Compensation for the
fiscal year ended December 31, 2007 consists of the
following:
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Robert L. Antin
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Arthur J. Antin
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Neil Tauber
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Tomas W. Fuller
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Dawn R. Olsen
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Automobile lease and
auto insurance (a)
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$
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38,442
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$
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33,458
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$
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29,787
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$
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9,066
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$
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--
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Medical insurance premiums and reimbursement of out-
of-pocket medical expenses
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21,217
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21,369
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37,790
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12,664
|
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4,130
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401(k) Company contribution
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1,800
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|
1,800
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1,800
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|
|
|
1,800
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|
1,800
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Total
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$
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61,459
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$
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56,627
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$
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69,377
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$
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23,530
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|
$
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5,930
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(a)
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For disclosure purposes, the annual
cost of the Company leased automobile was determined based on
the Annual Lease Value as provided in the Code.
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Grants of
Plan-Based Awards in Fiscal 2007
The following table sets forth certain information regarding the
grant of plan-based awards made during the fiscal year ended
December 31, 2007, to each Named Executive Officer.
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Name
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Grant
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Estimated Future Payouts Under
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Estimated Future Payouts Under
|
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All Other
|
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All Other
|
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Exercise
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Grant Date
|
|
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Date
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Non-Equity Incentive Plan Awards
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Equity Incentive Plan Awards
|
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Stock
|
|
Option
|
|
or Base
|
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Fair Value
|
|
|
|
|
|
|
|
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Awards:
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Awards:
|
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Price of
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of 2007
|
|
|
|
|
|
|
|
|
Number of
|
|
Number of
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|
Option
|
|
Equity
|
|
|
|
|
|
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|
|
Shares of
|
|
Securities
|
|
Awards
|
|
Awards
|
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|
|
|
|
|
Stock or
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|
Underlying
|
|
|
|
|
|
|
|
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|
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Units
|
|
Options
|
|
|
|
|
|
|
|
|
|
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|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
($/Sh)
|
|
|
|
Robert L. Antin
|
|
|
1/5/2007
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
45,000
|
|
|
--
|
|
|
|
--
|
|
|
$1,455,300
|
Arthur J. Antin
|
|
|
1/5/2007
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
30,000
|
|
|
--
|
|
|
|
--
|
|
|
$970,200
|
Neil Tauber
|
|
|
1/5/2007
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
30,000
|
|
|
--
|
|
|
|
--
|
|
|
$970,200
|
Tomas W. Fuller
|
|
|
1/5/2007
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
30,000
|
|
|
--
|
|
|
|
--
|
|
|
$970,200
|
Dawn R. Olsen
|
|
|
1/5/2007
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
4,500
|
|
|
--
|
|
|
|
--
|
|
|
$145,530
|
|
|
|
(1)
|
|
The Compensation Committee made the
restricted stock awards set forth in this column to the Named
Executive Officers on January 5, 2007. The restricted stock
awards will vest in three installments: 25% (rounded up to the
nearest whole share) on January 5, 2009; 50% (rounded up to
the nearest whole share) on January 5, 2010; and the
remainder on January 5, 2011.
|
23
Outstanding
Equity Awards at Fiscal Year-End
The following table sets forth the number of securities
underlying outstanding plan awards for each Named Executive
Officer as of December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Plan
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Awards:
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Market or
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
Number
|
|
Market
|
|
Awards:
|
|
Payout Value
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
of Shares
|
|
Value of
|
|
Number of
|
|
of Unearned
|
|
|
Number of
|
|
Number of
|
|
Securities
|
|
|
|
|
|
|
|
or Units of
|
|
Shares or
|
|
Unearned
|
|
Shares, Units
|
|
|
Securities
|
|
Securities
|
|
Underlying
|
|
|
|
|
|
|
|
Stock
|
|
Units of
|
|
Shares, Units
|
|
or Other
|
|
|
Underlying
|
|
Underlying
|
|
Unexercised
|
|
Option
|
|
|
Option
|
|
|
That Have
|
|
Stock That
|
|
or Other
|
|
Rights That
|
|
|
Unexercised
|
|
Unexercised
|
|
Unearned
|
|
Exercise
|
|
|
Expiration
|
|
|
Not
|
|
Have Not
|
|
Rights That
|
|
Have Not
|
Name
|
|
Options
|
|
Options
|
|
Options
|
|
Price
|
|
|
Date
|
|
|
Vested
|
|
Vested
|
|
Have Not
|
|
Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
|
|
|
|
|
|
(#)
|
|
(#)
|
|
(#)
|
|
($)
|
|
|
|
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
|
Exercisable
|
|
Unexercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Antin
|
|
290,000
|
|
--
|
|
--
|
|
$
|
7.00
|
|
|
|
12/17/2012
|
|
|
45,000
|
|
1,990,350
|
|
--
|
|
--
|
|
|
425,000
|
|
--
|
|
--
|
|
$
|
19.40
|
|
|
|
10/19/2010
|
|
|
--
|
|
--
|
|
--
|
|
--
|
Arthur J. Antin
|
|
45,690
|
|
--
|
|
--
|
|
$
|
0.50
|
|
|
|
9/20/2010
|
|
|
30,000
|
|
1,326,900
|
|
--
|
|
--
|
|
|
230,000
|
|
--
|
|
--
|
|
$
|
7.00
|
|
|
|
12/17/2012
|
|
|
--
|
|
--
|
|
--
|
|
--
|
|
|
175,000
|
|
--
|
|
--
|
|
$
|
19.40
|
|
|
|
10/19/2010
|
|
|
--
|
|
--
|
|
--
|
|
--
|
Neil Tauber
|
|
--
|
|
--
|
|
--
|
|
|
--
|
|
|
|
--
|
|
|
30,000
|
|
1,326,900
|
|
--
|
|
--
|
|
|
175,000
|
|
--
|
|
--
|
|
$
|
19.40
|
|
|
|
10/19/2010
|
|
|
--
|
|
--
|
|
--
|
|
--
|
Tomas W. Fuller
|
|
40,000
|
|
--
|
|
--
|
|
$
|
0.50
|
|
|
|
9/20/2010
|
|
|
30,000
|
|
1,326,900
|
|
--
|
|
--
|
|
|
170,000
|
|
--
|
|
--
|
|
$
|
7.00
|
|
|
|
12/17/2012
|
|
|
--
|
|
--
|
|
--
|
|
--
|
|
|
175,000
|
|
--
|
|
--
|
|
$
|
19.40
|
|
|
|
10/19/2010
|
|
|
--
|
|
--
|
|
--
|
|
--
|
Dawn R. Olsen
|
|
18,000
|
|
--
|
|
--
|
|
$
|
7.00
|
|
|
|
12/17/2012
|
|
|
4,500
|
|
199,035
|
|
--
|
|
--
|
|
|
24,000
|
|
16,000(2)
|
|
--
|
|
$
|
16.11
|
|
|
|
3/11/2010
|
|
|
--
|
|
--
|
|
--
|
|
--
|
|
|
30,000
|
|
--
|
|
--
|
|
$
|
23.68
|
|
|
|
10/31/2012
|
|
|
--
|
|
--
|
|
--
|
|
--
|
|
|
|
(1)
|
|
The restricted stock awards will
vest in three installments: 25% (rounded up to the nearest whole
share) on January 5, 2009; 50% (rounded up to the nearest
whole share) on January 5, 2010; and the remainder on
January 5, 2011.
|
|
(2)
|
|
Unvested options vest in one
installment of 16,000 on September 1, 2008.
|
Options
Exercised and Stock Vested
The following table sets forth information regarding the stock
option awards that were exercised by each of our Named Executive
Officers during the fiscal year ended December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
|
|
Number of Shares
|
|
|
|
|
Shares Acquired
|
|
Value Realized
|
|
Acquired
|
|
Value Realized on
|
Name
|
|
on Exercise
|
|
on Exercise
|
|
on Vesting
|
|
Vesting
|
|
|
(#)
|
|
($) (1)
|
|
(#)
|
|
($)
|
|
Robert L. Antin
|
|
--
|
|
--
|
|
--
|
|
--
|
Arthur J. Antin
|
|
--
|
|
--
|
|
--
|
|
--
|
Neil. Tauber
|
|
42,500
|
|
$1,411,714
|
|
--
|
|
--
|
Tomas W. Fuller
|
|
--
|
|
--
|
|
--
|
|
--
|
Dawn R. Olsen
|
|
30,000
|
|
$1,049,060
|
|
--
|
|
--
|
|
|
|
(1)
|
|
The dollar amount represents the
difference between the aggregate market price of the shares of
common stock underlying the options at exercise and the
aggregate exercise price of the options.
|
24
Summary
of Equity Compensation Plan
The following table sets forth information concerning all equity
compensation plans and individual compensation arrangements in
effect during the fiscal year ended December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
Number of Securities to Be
|
|
Weighted Average
|
|
Remaining Available for
|
|
|
Issued Upon Exercise of
|
|
Exercise Price of
|
|
Future Issuance Under
|
Plan Category
|
|
Outstanding Options
|
|
Outstanding Options
|
|
Equity Compensation Plans
|
|
Equity Compensation Plans
Approved by Security Holders
|
|
4,431,713
|
|
$16.57
|
|
6,220,603
|
Equity Compensation Plans Not
Approved By Security Holders
|
|
--
|
|
--
|
|
--
|
|
|
|
|
|
|
|
Total
|
|
4,431,713
|
|
$16.57
|
|
6,220,603
|
|
|
|
|
|
|
|
Employment
Agreements; Post-Retirement Medical Benefits Coverage
Agreements; Payments Upon Termination and Change in
Control
We have employment agreements with Robert L. Antin, Arthur J.
Antin and Tomas W. Fuller, and a severance agreement with Neil
Tauber. Each of these agreements provide for certain payments
upon termination or Change in Control. For purposes of this
proxy statement, a Change in Control shall be deemed
to have occurred if (a) there shall be consummated
(x) any consolidation or merger of the Company into or with
another person (as such term is used in
Sections 13(d)(3) and 14(d)(2) of Exchange Act) pursuant to
which shares of the Companys common stock would be
converted into cash, securities or other property, other than
any consolidation or merger of the Company in which the persons
who were stockholders of the Company immediately prior to the
consummation of such consolidation or merger are the beneficial
owners (within the meaning of
Rule 13d-3
under the Exchange Act), immediately following the consummation
of such consolidation or merger, of 62.5% or more of the
combined voting power of the then outstanding voting securities
of the person surviving or resulting from such consolidation or
merger, or (y) any sale, lease or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company, or (b) the
stockholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company, or (c) any
person who is not, immediately following the occurrence of a
Public Offering Event (as defined in the Stockholders Agreement,
dated as of September 20, 2000, by and among the Company,
certain officers of the Company and the other signatories
thereto, as amended), the beneficial owner of 10% or more of the
Companys outstanding common stock (or any person who is
not an affiliate or related party of such a beneficial owner of
10% or more of the Companys outstanding common stock)
shall become the beneficial owner of 25% or more of the
Companys outstanding common stock, or (d) during any
period of two consecutive years, individuals who at the
beginning of such period constitute the entire board of
directors of the Company cease for any reason to constitute a
majority thereof unless the election, or the nomination for
election by the Companys stockholders, of each new
director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the
beginning of the period).
In addition, we have post-retirement medical benefits coverage
agreements with Robert L. Antin, Arthur J. Antin, Tomas W.
Fuller and Neil Tauber.
Robert
L. Antin
Mr. Antins employment agreement, dated as of
November 27, 2001, provides for Mr. Antin to serve as
our Chairman of the Board, Chief Executive Officer and President
for a term of five years from any given date, such that there
shall always be a minimum of at least five years remaining under
his employment agreement. The employment agreement provides for
Mr. Antin to receive an annual base salary of $520,000,
subject to annual increase based on comparable compensation
packages provided to executives in similarly situated
25
companies, and to participate in a bonus plan based on annual
performance standards to be established by the compensation
committee. Mr. Antin also is entitled to specified
perquisites.
If Mr. Antins employment is terminated due to his
death, the employment agreement provides that we will pay
Mr. Antins estate his accrued and unpaid salary, his
accrued and unused vacation and sick pay, his base salary during
the scheduled term of the employment agreement, accelerate the
vesting of his equity awards that would have vested during the
24 months following the date of termination and continue to
provide family medical benefits. If Mr. Antins
employment is terminated due to his disability, the employment
agreement provides that we will pay Mr. Antin his accrued
and unpaid salary, his accrued and unused vacation and sick pay,
his remaining base salary during the remaining scheduled term of
the employment agreement (reduced by any amounts paid under
long-term disability insurance policy maintained by us for the
benefit of Mr. Antin), accelerate the vesting of his equity
awards that would have vested during the 24 months
following the date of termination and continue to provide
specified benefits and perquisites. In the case of termination
due to death or disability, any options that accelerate on the
date of termination will remain exercisable for the full term.
If Mr. Antin terminates the employment agreement for
cause, if we terminate the employment agreement
without cause or in the event of a Change in Control, in which
event the employment of Mr. Antin terminates automatically,
we will pay Mr. Antin his accrued and unpaid salary, his
accrued and unused vacation and sick pay, his remaining base
salary during the remaining scheduled term of the employment
agreement and an amount equal to five times the greater of
Mr. Antins last annual bonus or the average of all
bonuses paid to Mr. Antin under the employment agreement.
In addition, we will accelerate the vesting of his equity awards
and continue to provide specified benefits and perquisites. In
these circumstances, Mr. Antin may exercise his options,
which are accelerated on the date of termination, immediately
upon termination and thereafter during the term of the option.
For purposes of this paragraph, cause means as the
result of (x) a willful breach of any of the material
obligations of the Company to Mr. Antin under the
employment agreement following written notice delivered to the
Company and a reasonable cure period not to exceed 30 days;
(y) the Companys chief executive offices moving to a
location outside of Los Angeles County, California; or
(z) Mr. Antin failing to be reelected to, or being
removed from, the Board of Directors.
If Mr. Antin terminates the employment agreement without
cause or we terminate the employment agreement for
cause, Mr. Antin is entitled to receive all
accrued and unpaid salary and other compensation and all accrued
and unused vacation and sick pay. For purposes of this
paragraph, for cause means for a conviction
(including any plea of guilty or no contest) of (x) any
felony involving the embezzlement, theft or misappropriation of
monies or other property, of the Company or otherwise, or
(y) any crime of moral turpitude.
If any of the payments due Mr. Antin upon termination
qualify as excess parachute payments under the Code,
Mr. Antin also is entitled to an additional payment to
cover the tax consequences associated with excess parachute
payments.
In the event of a Change in Control and at our request,
Mr. Antin is obligated to continue to serve under the same
terms and conditions of his employment agreement for a period of
up to 180 days following the termination date at his
then-current base salary.
Mr. Antins post-retirement medical benefits coverage
agreement, effective as of December 27, 2007, provides that
Mr. Antin and his family will continue to receive medical
benefits coverage from the date employment is terminated until
the last to occur of Mr. Antins death, the death of
Mr. Antins spouse, or the end of the year in which
each of Mr. Antins children has a
25th birthday.
The medical benefits coverage afforded to Mr. Antin and his
family after the termination of his employment will be at least
as favorable as the most favorable level, type and basis of
medical coverage provided to Mr. Antin and his family at
any time during the five years prior to termination. Upon
Mr. Antins eligibility for Medicare or a similar
program, Mr. Antin will have the option to enroll in
Medicare or such similar program. If Mr. Antin or any
eligible family member elects to enroll in such program, the
Companys obligation under the post-retirement medical
benefits coverage agreement will be limited to providing
Medicare supplementary coverage and Executive Edge Medical
Reimbursement Insurance or a substantially similar policy. If
the continuation of medical benefits coverage is
26
subject to taxation under Section 409A(a)(1) of the Code as
a result of the failure of the post-retirement medical benefits
coverage agreement to comply with Section 409A, the Company
will make a payment to Mr. Antin equal to all federal,
state and local taxes incurred by Mr. Antin as a result
thereof.
The
following table describes the potential payments to
Mr. Robert L. Antin upon termination or Change in
Control.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By
|
|
|
|
|
Payments &
|
|
|
|
|
|
|
|
By Officer
|
|
Company
|
|
By
|
|
|
Benefits Upon
|
|
|
|
|
|
By Officer
|
|
Without
|
|
Without
|
|
Company
|
|
Change in
|
Termination (1)
|
|
Death
|
|
Disability
|
|
for Cause
|
|
Cause
|
|
Cause
|
|
for Cause
|
|
Control
|
|
Accrued &
Unpaid Salary (2)
|
|
$ 36,300
|
|
$ 36,300
|
|
$ 36,300
|
|
$ 36,300
|
|
$ 36,300
|
|
$ 36,300
|
|
$ 36,300
|
Accrued Vacation (3)
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
Cash Severance
|
|
4,290,000
|
|
4,280,500
|
|
8,115,020
|
|
--
|
|
8,115,020
|
|
--
|
|
8,115,020
|
Acceleration of
Equity Awards (4)
|
|
497,588
|
|
497,588
|
|
1,990,350
|
|
--
|
|
1,990,350
|
|
--
|
|
1,990,350
|
Automobile
|
|
--
|
|
232,314
|
|
232,314
|
|
--
|
|
232,314
|
|
--
|
|
232,314
|
Club
Membership
|
|
--
|
|
139,952
|
|
139,952
|
|
--
|
|
139,952
|
|
--
|
|
139,952
|
Group Life and
Other Company
Insurance Plans (5)
|
|
1,204
|
|
11,049
|
|
11,049
|
|
--
|
|
11,049
|
|
--
|
|
11,049
|
Post-Retirement
Medical Benefits (6)
|
|
1,191,289
|
|
1,191,289
|
|
1,191,289
|
|
1,191,289
|
|
1,191,289
|
|
1,191,289
|
|
1,191,289
|
Excise Tax /
Gross-Up (7)
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
4,377,524
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ 6,016,381
|
|
$ 6,388,992
|
|
$ 11,716,274
|
|
$ 1,227,589
|
|
$ 11,716,274
|
|
$ 1,227,589
|
|
$ 16,093,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Upon the termination of
Mr. Antins employment or a Change in Control,
Mr. Antin will receive a lump sum payment consisting of
(a) accrued and unpaid salary, (b) cash severance and
(c) an additional amount to cover the tax consequences
associated with excess parachute payments under the
Code, if any. All other payments set forth above, other than
those set forth in the Post-Retirement Medical
Benefits row, will be paid over a five year period. For
example, during such five year period, Mr. Antin will
receive an average annual payment of $46,463 towards the cost of
an automobile.
|
|
(2)
|
|
Reflects Mr. Antins
accrued and unpaid salary as of December 31, 2007. Assumes
cash bonus for fiscal 2007 was paid to Mr. Antin prior to
termination.
|
|
(3)
|
|
As of December 31, 2007,
Mr. Antin had no accrued vacation.
|
|
(4)
|
|
As of December 31, 2007, all
shares of restricted stock held by Mr. Antin were unvested.
|
|
(5)
|
|
Consists of payment of insurance
premiums for Mr. Antin.
|
|
(6)
|
|
Includes payment of insurance
premiums for Mr. Antin of approximately $9,200 per year for
executive medical excess claims insurance coverage. The average
annual premium expense was calculated by dividing the sum of the
premium expenses paid by the Company on behalf of Mr. Antin
for the last five fiscal years
(2003-2007)
by five. In accordance with the terms of the executive medical
excess claims insurance plan maintained by the Company,
Mr. Antin is entitled to a maximum annual reimbursement for
out-of-pocket medical expenses of $200,000. If Mr. Antin
was reimbursed the maximum amount per year during the period
during which he is entitled to such benefits (assuming a life
expectancy of 27 years as of December 31, 2007), we
estimate that the amount set forth in the Post-Retirement
Medical Benefits row would increase by $5,450,638.
|
|
(7)
|
|
If the receipt by Mr. Antin of
the executive medical excess claims insurance coverage described
in footnote 6 above is treated as an excess parachute
payment, we estimate that the amount set forth in the
Excise
Tax/Gross-Up
row would increase by $646,473.
|
27
Arthur
J. Antin
Mr. Antins employment agreement, dated as of
November 27, 2001, provides for Mr. Antin to serve as
our Chief Operating Officer, Senior Vice President and Secretary
for a term equal to three years from any given date, such that
there shall always be a minimum of at least three years
remaining under his employment agreement. (Mr. Antin no
longer serves as the Companys Secretary.) The employment
agreement provides for Mr. Antin to receive an annual base
salary of $416,000, subject to annual increase based on
comparable compensation packages provided to executives in
similarly situated companies, and to participate in a bonus plan
based on annual performance standards to be established by the
compensation committee. Mr. Antin also is entitled to
specified perquisites.
If Mr. Antins employment is terminated due to his
death, the employment agreement provides that we will pay
Mr. Antins estate his accrued and unpaid salary, his
accrued and unused vacation and sick pay, his base salary during
the scheduled term of the employment agreement, accelerate the
vesting of his equity awards that would have vested during the
24 months following the date of termination and continue to
provide family medical benefits. If Mr. Antins
employment is terminated due to his disability, the employment
agreement provides that we will pay Mr. Antin his accrued
and unpaid salary, his accrued and unused vacation and sick pay,
his remaining base salary during the remaining scheduled term of
the employment agreement (reduced by any amounts paid under
long-term disability insurance policy maintained by us for the
benefit of Mr. Antin), accelerate the vesting of his equity
awards that would have vested during the 24 months
following the date of termination and continue to provide
specified benefits and perquisites. In the case of termination
due to death or disability, any options that is accelerated on
the date of termination will remain exercisable for the full
term.
If Mr. Antin terminates the employment agreement for
cause, if we terminate the employment agreement
without cause or in the event of a Change in Control, in which
event the employment of Mr. Antin terminates automatically,
we will pay Mr. Antin his accrued and unpaid salary, his
accrued and unused vacation and sick pay, his remaining base
salary during the remaining scheduled term of the employment
agreement and an amount equal to three times the greater of
Mr. Antins last annual bonus or the average of all
bonuses paid to Mr. Antin under the employment agreement.
In addition, we will accelerate the vesting of his equity awards
and continue to provide specified benefits and perquisites. In
these circumstances, Mr. Antin may exercise his options
that are accelerated on the date of termination during the full
term of the option. For purposes of this paragraph, for
cause means as the result of (x) a willful
breach of any of the material obligations of the Company to
Mr. Antin under the employment agreement following written
notice delivered to the Company and a reasonable cure period not
to exceed 30 days; or (y) the Companys chief
executive offices moving to a location outside of Los Angeles
County, California.
If Mr. Antin terminates the employment agreement without
cause or we terminate the employment agreement for
cause, Mr. Antin is entitled to receive all
accrued and unpaid salary and other compensation and all accrued
and unused vacation and sick pay. For purposes of this
paragraph, for cause means for a conviction
(including any plea of guilty or no contest) of (x) any
felony involving the embezzlement, theft or misappropriation of
monies or other property, of the Company or otherwise, or
(y) any crime of moral turpitude.
If any of the payments due Mr. Antin upon termination
qualify as excess parachute payments under the Code,
Mr. Antin also is entitled to an additional payment to
cover the tax consequences associated with excess parachute
payments.
In the event of a Change in Control and at our request,
Mr. Antin is obligated to continue to serve under the same
terms and conditions of his employment agreement for a period of
up to 180 days following the termination date at his
then-current base salary.
Mr. Antins post-retirement medical benefits coverage
agreement, effective as of December 27, 2007, provides that
Mr. Antin and his family will continue to receive medical
benefits coverage commencing on or after the date that
Mr. Antin attains age 60 until the last to occur of
Mr. Antins death, the death of Mr. Antins
spouse,
28
or the end of the year in which each of Mr. Antins
children has a
25th birthday.
The medical benefits coverage afforded to Mr. Antin and his
family after the termination of his employment will be at least
as favorable as the most favorable level, type and basis of
medical coverage provided to Mr. Antin and his family at
any time during the five years prior to termination. Upon
Mr. Antins eligibility for Medicare or a similar
program, Mr. Antin will have the option to enroll in
Medicare or such similar program. If Mr. Antin or any
eligible family member elects to enroll in such program, the
Companys obligation under the post-retirement medical
benefits coverage agreement will be limited to providing
Medicare supplementary coverage and Executive Edge Medical
Reimbursement Insurance or a substantially similar policy. The
coverage provided by the Company is secondary to any
employers group medical plan in which Mr. Antin or an
eligible family member participates as an active employee, any
employers group medical plan in which Mr. Antin is
covered as the spouse or dependent or an active employee, any
individual medical benefits coverage under which Mr. Antin
or an eligible family member is covered, or Medicare coverage.
If the continuation of medical benefits coverage is subject to
taxation under Section 409A(a)(1) of the Code as a result
of the failure of the post-retirement medical benefits coverage
agreement to comply with Section 409A, the Company will
make a payment to Mr. Antin equal to all federal, state and
local taxes incurred by Mr. Antin as a result thereof.
Furthermore, the Companys obligation to provide
post-retirement medical benefits coverage to Mr. Antin will
cease if he causes any person or entity controlled by him to
induce or attempt to induce (a) any employee of the Company
or any of its affiliates to leave the Company or any of its
affiliates or (b) any customer, supplier, vendor, licensee,
distributor, contractor or other business relation of the
Company or any of its affiliates to cease doing business with,
or knowingly adversely alter its business relationship with, the
Company or any of its affiliates.
The
following table describes the potential payments to
Mr. Arthur J. Antin upon termination or Change in
Control.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By
|
|
|
|
|
Payments &
|
|
|
|
|
|
|
|
By Officer
|
|
Company
|
|
By
|
|
|
Benefits Upon
|
|
|
|
|
|
By Officer
|
|
Without
|
|
Without
|
|
Company
|
|
Change in
|
Termination (1)
|
|
Death
|
|
Disability
|
|
for Cause
|
|
Cause
|
|
Cause
|
|
for Cause
|
|
Control
|
|
Accrued &
Unpaid Salary (2)
|
|
$ 23,100
|
|
$ 23,100
|
|
$ 23,100
|
|
$ 23,100
|
|
$ 23,100
|
|
$ 23,100
|
|
$ 23,100
|
Accrued Vacation (3)
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
Cash Severance
|
|
1,638,000
|
|
1,632,900
|
|
2,952,417
|
|
--
|
|
2,952,417
|
|
--
|
|
2,952,417
|
Acceleration of
Equity Awards (4)
|
|
331,725
|
|
331,725
|
|
1,326,900
|
|
--
|
|
1,326,900
|
|
--
|
|
1,326,900
|
Automobile
|
|
--
|
|
105,458
|
|
105,458
|
|
--
|
|
105,458
|
|
--
|
|
105,458
|
Club
Membership
|
|
--
|
|
53,229
|
|
53,229
|
|
--
|
|
53,229
|
|
--
|
|
53,229
|
Group Life and
Other Company
Insurance Plans (5)
|
|
723
|
|
6,030
|
|
6,030
|
|
--
|
|
6,030
|
|
--
|
|
6,030
|
Post- Retirement
Medical Benefits (6)
|
|
921,893
|
|
921,893
|
|
921,893
|
|
921,893
|
|
921,893
|
|
921,893
|
|
921,893
|
Excise Tax /
Gross-Up (7)
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
1,488,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ 2,915,441
|
|
$ 3,074,335
|
|
$ 5,389,027
|
|
$ 944,993
|
|
$ 5,389,027
|
|
$ 944,993
|
|
$ 6,877,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Upon the termination of
Mr. Antins employment or a Change in Control,
Mr. Antin will receive a lump sum payment consisting of
(a) accrued and unpaid salary, (b) cash severance and
(c) an additional amount to cover the tax consequences
associated with excess parachute payments under the
Code, if any. All other payments set forth above, other than
those set forth in the Post-Retirement Medical
Benefits row, will be paid over a three year period. For
example, during such three year period, Mr. Antin will
receive an average annual payment of $35,153 towards the cost of
an automobile.
|
|
(2)
|
|
Reflects Mr. Antins
accrued and unpaid salary as of December 31, 2007. Assumes
cash bonus for fiscal 2007 was paid to Mr. Antin prior to
termination.
|
29
|
|
|
(3)
|
|
As of December 31, 2007
Mr. Antin had no accrued vacation.
|
|
(4)
|
|
As of December 31, 2007, all
shares of restricted stock held by Mr. Antin were unvested.
|
|
(5)
|
|
Consists of payment of insurance
premiums for Mr. Antin.
|
|
(6)
|
|
Includes payment of insurance
premiums for Mr. Antin of approximately $9,500 per year for
executive medical excess claims insurance coverage. The average
annual premium expense was calculated by dividing the sum of the
premium expenses paid by the Company on behalf of Mr. Antin
for the last five fiscal years
(2003-2007)
by five. In accordance with the terms of the executive medical
excess claims insurance plan maintained by the Company,
Mr. Antin is entitled to a maximum annual reimbursement for
out-of-pocket medical expenses of $200,000. If Mr. Antin
was reimbursed the maximum amount per year during the period
during which he is entitled to such benefits (assuming a life
expectancy of 24 years as of December 31, 2007), we
estimate that the amount set forth in the Post-Retirement
Medical Benefits row would increase by $4,837,201.
|
|
(7)
|
|
If the receipt by Mr. Antin of
the executive medical excess claims insurance coverage described
in footnote 6 above is treated as an excess parachute
payment, we estimate that the amount set forth in the
Excise
Tax/Gross-Up
row would increase by $500,281.
|
Tomas
W. Fuller
Mr. Fullers employment agreement dated as of
November 27, 2001, provides for Mr. Fuller to serve as
our Chief Financial Officer, Vice President and Assistant
Secretary for a term equal to two years from any given date,
such that there shall always be a minimum of at least two years
remaining under his employment agreement. (Mr. Fuller
currently serves as the Companys Secretary.) The
employment agreement provides for Mr. Fuller to receive an
annual base salary of not less than $244,000, subject to annual
increase based on comparable compensation packages provided to
executives in similarly situated companies, and to participate
in a bonus plan based on annual performance standards to be
established by the compensation committee.
If Mr. Fullers employment is terminated due to his
death, the employment agreement provides that we will pay
Mr. Fullers estate his accrued and unpaid salary, his
accrued and unused vacation and sick pay, his base salary during
the scheduled term of the employment agreement, accelerate the
vesting of his equity awards that would have vested during the
24 months following the date of termination and continue to
provide family medical benefits. If Mr. Fullers
employment is terminated due to his disability, the employment
agreement provides that we will pay Mr. Fuller his accrued
and unpaid salary, his accrued and unused vacation and sick pay,
his remaining base salary during the remaining scheduled term of
the employment agreement (reduced by any amounts paid under
long-term disability insurance policy maintained by us for the
benefit of Mr. Fuller), accelerate the vesting of his
equity awards that would have vested during the 24 months
following the date of termination and continue to provide
specified benefits and perquisites. In the case of termination
due to death or disability, any options that are accelerated on
the date of termination will remain exercisable for the full
term.
If Mr. Fuller terminates the employment agreement for
cause, if we terminate the employment agreement
without cause or in the event of a Change in Control, in which
event the employment of Mr. Fuller terminates
automatically, we will pay Mr. Fuller his accrued and
unpaid salary, his accrued and unused vacation and sick pay, his
remaining base salary during the remaining scheduled term of the
employment agreement and an amount equal to two times the
greater of Mr. Fullers last annual bonus or the
average of all bonuses paid to Mr. Fuller under the
employment agreement. In addition, we will accelerate the
vesting of his equity awards and continue to provide specified
benefits and perquisites; provided, however, that if we
terminate Mr. Fullers employment agreement without
cause, we will only accelerate the vesting of his equity awards
that would have vested during the 24 months following the
date of termination. In these circumstances, Mr. Fuller may
exercise his options that are accelerated on the date of
termination for the full term of the option. For purposes of
this paragraph, for cause means as the result of
(x) a willful breach of any of the material obligations of
the Company to Mr. Fuller under the employment agreement
following written notice delivered to the Company and a
reasonable cure period not to exceed 30 days; or
(y) the Companys chief executive offices moving to a
location outside of Los Angeles County, California.
If Mr. Fuller terminates the employment agreement without
cause or we terminate the employment agreement for
cause, Mr. Fuller is entitled to receive all
accrued and unpaid salary and other compensation and all
30
accrued and unused vacation and sick pay. For purposes of this
paragraph, for cause means for a conviction
(including any plea of guilty or no contest) of (x) any
felony involving the embezzlement, theft or misappropriation of
monies or other property, of the Company or otherwise, or
(y) any crime of moral turpitude.
If any of the payments due Mr. Fuller upon termination
qualify as excess parachute payments under the Code,
Mr. Fuller also is entitled to an additional payment to
cover the tax consequences associated with excess parachute
payments.
In the event of a Change in Control and at our request,
Mr. Fuller is obligated to continue to serve under the same
terms and conditions of his employment agreement for a period of
up to 180 days following the termination date at his
then-current base salary.
Mr. Fullers post-retirement medical benefits coverage
agreement, effective as of December 27, 2007, provides that
Mr. Fuller and his family will continue to receive medical
benefits coverage commencing on or after the date that
Mr. Fuller attains age 53 until the last to occur of
Mr. Fullers death, the death of
Mr. Fullers spouse, or the end of the year in which
each of Mr. Fullers children has a
25th birthday.
The medical benefits coverage afforded to Mr. Fuller and
his family after the termination of his employment will be at
least as favorable as the most favorable level, type and basis
of medical coverage provided to Mr. Fuller and his family
at any time during the five years prior to termination. Upon
Mr. Fullers eligibility for Medicare or a similar
program, Mr. Fuller will have the option to enroll in
Medicare or such similar program. If Mr. Fuller or any
eligible family member elects to enroll in such program, the
Companys obligation under the post-retirement medical
benefits coverage agreement will be limited to providing
Medicare supplementary coverage and Executive Edge Medical
Reimbursement Insurance or a substantially similar policy. The
coverage provided by the Company is secondary to any
employers group medical plan in which Mr. Fuller or
an eligible family member participates as an active employee,
any employers group medical plan in which Mr. Fuller
is covered as the spouse or dependent or an active employee, any
individual medical benefits coverage under which Mr. Fuller
or an eligible family member is covered, or Medicare coverage.
If the continuation of medical benefits coverage is subject to
taxation under Section 409A(a)(1) of the Code as a result
of the failure of the post-retirement medical benefits coverage
agreement to comply with Section 409A, the
Company will make a payment to Mr. Fuller equal to all
federal, state and local taxes incurred by Mr. Fuller as a
result thereof. Furthermore, the Companys obligation to
provide post-retirement medical benefits coverage to
Mr. Fuller will cease if he causes any person or entity
controlled by him to induce or attempt to induce (a) any
employee of the Company or any of its affiliates to leave the
Company or any of its affiliates or (b) any customer,
supplier, vendor, licensee, distributor, contractor or other
business relation of the Company or any of its affiliates to
cease doing business with, or knowingly adversely alter its
business relationship with, the Company or any of its affiliates.
31
The following table describes the potential payments to
Mr. Tomas W. Fuller upon termination or Change in
Control.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By
|
|
|
|
|
Payments &
|
|
|
|
|
|
|
|
By Officer
|
|
Company
|
|
By
|
|
|
Benefits Upon
|
|
|
|
|
|
By Officer
|
|
Without
|
|
Without
|
|
Company
|
|
Change in
|
Termination (1)
|
|
Death
|
|
Disability
|
|
for Cause
|
|
Cause
|
|
Cause
|
|
for Cause
|
|
Control
|
|
Accrued &
Unpaid Salary (2)
|
|
$ 15,620
|
|
$ 15,620
|
|
$ 15,620
|
|
$ 15,620
|
|
$ 15,620
|
|
$ 15,620
|
|
$ 15,620
|
Accrued Vacation (3)
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
Cash Severance
|
|
738,400
|
|
736,120
|
|
1,199,258
|
|
--
|
|
1,199,258
|
|
--
|
|
1,199,258
|
Acceleration of
Equity Awards (4)
|
|
331,725
|
|
331,725
|
|
1,326,900
|
|
--
|
|
331,725
|
|
--
|
|
1,326,900
|
Automobile
|
|
--
|
|
19,514
|
|
19,514
|
|
--
|
|
19,514
|
|
--
|
|
19,514
|
Group Life,
Medical and
Other Company
Insurance Plans (5)
|
|
39,121
|
|
41,539
|
|
41,539
|
|
--
|
|
41,539
|
|
--
|
|
41,539
|
Post-Retirement
Medical Benefits (6)
|
|
1,467,674
|
|
1,467,674
|
|
1,467,674
|
|
1,467,674
|
|
1,467,674
|
|
1,467,674
|
|
1,467,674
|
Excise Tax /
Gross-Up (7)
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
680,922
|
|
|
|
|
|
|
Total
|
|
$ 2,592,540
|
|
$ 2,612,192
|
|
$ 4,070,505
|
|
$ 1,483,294
|
|
$ 3,075,330
|
|
$ 1,483,294
|
|
$ 4,751,427
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Upon the termination of
Mr. Fullers employment or a Change in Control,
Mr. Fuller will receive a lump sum payment consisting of
(a) accrued and unpaid salary, (b) cash severance and
(c) an additional amount to cover the tax consequences
associated with excess parachute payments under the
Code, if any. All other payments set forth above, other than
those set forth in the Post-Retirement Medical
Benefits row, will be paid over a two year period. For
example, during such two year period, Mr. Fuller will
receive an average annual payment of $9,757 towards the cost of
an automobile.
|
|
(2)
|
|
Reflects Mr. Fullers
accrued and unpaid salary as of December 31, 2007. Assumes
cash bonus for fiscal 2007 was paid to Mr. Fuller prior to
termination.
|
|
(3)
|
|
As of December 31, 2007,
Mr. Fuller had no accrued vacation.
|
|
(4)
|
|
As of December 31, 2007, all
shares of restricted stock held by Mr. Fuller were unvested.
|
|
(5)
|
|
Includes payment of insurance
premiums for Mr. Fuller of approximately $1,600 per year
for executive medical excess claims insurance coverage (for a
total of approximately $3,200 for the two year period during
which Mr. Fuller is entitled to such coverage under the
terms of his employment agreement). The average annual premium
expense was calculated by dividing the sum of the premium
expenses paid by the Company on behalf of Mr. Fuller for
the last five fiscal years
(2003-2007)
by five. In accordance with the terms of the executive medical
excess claims insurance plan maintained by the Company,
Mr. Fuller is entitled to a maximum annual reimbursement
for out-of-pocket medical expenses of $200,000. If
Mr. Fuller was reimbursed the maximum amount per year
during the two year period during which he is entitled to such
benefits, we estimate that the amount set forth in the
Group Life, Medical and Other Company Insurance
Plans row would increase by $420,478.
|
|
(6)
|
|
Includes payment of insurance
premiums for Mr. Fuller of approximately $1,600 per year
for executive medical excess claims insurance coverage. The
average annual premium expense was calculated by dividing the
sum of the premium expenses paid by the Company on behalf of
Mr. Fuller for the last five fiscal years
(2003-2007)
by five. In accordance with the terms of the executive medical
excess claims insurance plan maintained by the Company,
Mr. Fuller is entitled to a maximum annual reimbursement
for out-of-pocket medical expenses of $200,000. If
Mr. Fuller was reimbursed the maximum amount per year
during the period during which he is entitled to such benefits
(assuming a life expectancy of 30 years as of
December 31, 2010), we estimate that the amount set forth
in the Post-Retirement Medical Benefits row would
increase by $6,307,171.
|
|
(7)
|
|
If the receipt by Mr. Fuller
of the executive medical excess claims insurance coverage
described in footnote 6 above is treated as an excess
parachute payment, we estimate that the amount set forth
in the Excise
Tax/Gross-Up
row would increase by $796,459.
|
32
Neil
Tauber
On April 25, 2008, we entered into an amended severance
agreement with Mr. Tauber, which amends and restates his
severance agreement, dated March 3, 2003.
If Mr. Taubers employment with us terminates due to
his death or disability, the amended severance agreement
provides that we will pay Mr. Tauber (or his estate in the
case of termination due to death) a lump sum payment equal to
his accrued and unpaid salary and other compensation and his
accrued and unused vacation and sick pay and, within
30 days of the date of termination, a lump sum payment
equal to the amount he would have earned as base salary during
the two years following the termination date (reduced by any
amounts paid under any long-term disability insurance policy
maintained by us for the benefit of Mr. Tauber in the case
of termination due to disability), and we will continue to
provide specified benefits and perquisites. We will also
accelerate the vesting of equity awards held by Mr. Tauber
that would have vested during the two years following the date
of termination solely as a result of his continued service to
the Company and any option or stock appreciation right that is
accelerated on the date of termination will remain exercisable
for the full term of the award. In addition, all equity-based
performance awards granted to Mr. Tauber, to the extent
they would have become vested after the date of his termination
upon the attainment of one or more specified performance goals,
will vest as provided by such performance award but without
regard to Mr. Taubers termination, conditioned on and
to the extent that such performance goal or goals are attained.
If Mr. Tauber terminates his employment for Good
Reason, if we terminate his employment without
Cause or in the event of a Change in Control, in
which event the employment of Mr. Tauber terminates
automatically, we will pay Mr. Tauber a lump sum payment
equal to his accrued and unpaid salary and other compensation
and his accrued and unused vacation and sick pay and, within
30 days of the date of termination, a lump sum payment
equal to the sum of the amount he would have earned as base
salary during the two years following the termination date and
an amount equal to two times Mr. Taubers average
annual bonus based on the annual bonuses paid or payable to
Mr. Tauber for the last three fiscal years, and we will
continue to provide specified benefits and perquisites. We will
also accelerate the vesting of equity awards held by
Mr. Tauber that would have vested following the date of
termination solely as a result of his continued service to the
Company and any option or stock appreciation right that is
accelerated on the date of termination will remain exercisable
for the full term of the award; provided, however, that if we
terminate Mr. Taubers employment without Cause, we
will only accelerate the vesting of his equity awards that would
have vested during the two years following the date of
termination. In addition, all equity-based performance awards
granted to Mr. Tauber, to the extent they would have become
vested after the date of his termination upon the attainment of
one or more specified performance goals, will vest as provided
by such performance award but without regard to
Mr. Taubers termination, conditioned on and to the
extent that such performance goal or goals are attained. For
purposes of this paragraph, the termination by Mr. Tauber
of his employment will be for Good Reason if the
termination occurs within two years following the initial
existence of one or more of the following conditions without
Mr. Taubers consent (i) a material diminution in
Mr. Taubers authority, duties or responsibilities,
(ii) a material diminution in Mr. Taubers annual
base salary or (iii) the relocation of the office where
Mr. Tauber is required to perform his duties to the Company
to a location outside of Los Angeles County, California;
provided Mr. Tauber delivers written notice to the Company
of the existence of such condition within 90 days of the
initial existence of the condition and the Company does not
remedy such condition within 30 days of the receipt of such
notice; and for Cause means for a conviction
(including any plea of guilty or no contest) of (x) any
felony involving the embezzlement, theft or misappropriation of
monies or other property, of the Company or otherwise, or
(y) any crime of moral turpitude.
If any of the payments due Mr. Tauber upon termination
qualify as excess parachute payments under the Code,
Mr. Tauber also is entitled to an additional payment to
cover the tax consequences associated with excess parachute
payments.
33
If Mr. Tauber terminates his employment without Good Reason
or we terminate his employment for Cause, Mr. Tauber is
entitled by law to receive all accrued, earned and unpaid salary
and all accrued and unused vacation and sick pay.
Mr. Taubers post-retirement medical benefits coverage
agreement, effective as of December 27, 2007, provides that
Mr. Tauber and his family will continue to receive medical
benefits coverage commencing on or after the date that
Mr. Tauber attains age 60 until the last to occur of
Mr. Taubers death, the death of
Mr. Taubers spouse, or the end of the year in which
each of Mr. Taubers children has a
25th birthday.
The medical benefits coverage afforded to Mr. Tauber and
his family after the termination of his employment will be at
least as favorable as the most favorable level, type and basis
of medical coverage provided to Mr. Tauber and his family
at any time during the five years prior to termination. Upon
Mr. Taubers eligibility for Medicare or a similar
program, Mr. Tauber will have the option to enroll in
Medicare or such similar program. If Mr. Tauber or any
eligible family member elects to enroll in such program, the
Companys obligation under the post-retirement medical
benefits coverage agreement will be limited to providing
Medicare supplementary coverage and Executive Edge Medical
Reimbursement Insurance or a substantially similar policy. The
coverage provided by the Company is secondary to any
employers group medical plan in which Mr. Tauber or
an eligible family member participates as an active employee,
any employers group medical plan in which Mr. Tauber
is covered as the spouse or dependent or an active employee, any
individual medical benefits coverage under which Mr. Tauber
or an eligible family member is covered, or Medicare coverage.
If the continuation of medical benefits coverage is subject to
taxation under Section 409A(a)(1) of the Code as a result
of the failure of the post-retirement medical benefits coverage
agreement to comply with Section 409A, the Company will
make a payment to Mr. Tauber equal to all federal, state
and local taxes incurred by Mr. Tauber as a result thereof.
Furthermore, the Companys obligation to provide
post-retirement medical benefits coverage to Mr. Tauber
cease if he causes any person or entity controlled by him to
induce or attempt to induce (a) any employee of the Company
or any of its affiliates to leave the Company or any of its
affiliates or (b) any customer, supplier, vendor, licensee,
distributor, contractor or other business relation of the
Company or any of its affiliates to cease doing business with,
or knowingly adversely alter its business relationship with, the
Company or any of its affiliates.
The following table describes the potential payments to
Mr. Neil Tauber upon termination.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By Officer
|
|
By
|
|
|
|
|
Payments &
|
|
|
|
|
|
By Officer
|
|
Without
|
|
Company
|
|
By
|
|
|
Benefits Upon
|
|
|
|
|
|
for Good
|
|
Good
|
|
Without
|
|
Company
|
|
Change in
|
Termination (1)
|
|
Death
|
|
Disability
|
|
Reason
|
|
Reason
|
|
Cause
|
|
for Cause
|
|
Control
|
|
Accrued &
Unpaid Salary (2)
|
|
$ 15,620
|
|
$ 15,620
|
|
$ 15,620
|
|
$ 15,620
|
|
$ 15,620
|
|
$ 15,620
|
|
$ 15,620
|
Accrued Vacation (3)
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
Cash Severance
|
|
738,400
|
|
742,200
|
|
1,216,353
|
|
--
|
|
1,216,353
|
|
--
|
|
1,216,353
|
Acceleration of
Equity Awards (4)
|
|
331,725
|
|
331,725
|
|
1,326,900
|
|
--
|
|
331,725
|
|
--
|
|
1,326,900
|
Automobile
|
|
--
|
|
64,116
|
|
64,116
|
|
--
|
|
64,116
|
|
--
|
|
64,116
|
Group Life,
Medical and
Other Company
Insurance Plans (5)
|
|
56,144
|
|
60,082
|
|
60,082
|
|
--
|
|
60,082
|
|
--
|
|
60,082
|
Post-Retirement
Medical Benefits(6)
|
|
1,542,211
|
|
1,542,211
|
|
1,542,211
|
|
1,542,211
|
|
1,542,211
|
|
1,542,211
|
|
1,542,211
|
Excise Tax /
Gross-Up (7)
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
|
|
|
|
|
Total
|
|
$ 2,684,100
|
|
$ 2,755,954
|
|
$ 4,225,282
|
|
$ 1,557,831
|
|
$ 3,230,107
|
|
$ 1,557,831
|
|
$ 4,225,282
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Upon the termination of
Mr. Taubers employment, Mr. Tauber will receive
a lump sum payment consisting of accrued and unpaid salary and,
within 30 days of the date of termination, a lump sum
payment consisting of cash severance, if any.
|
34
|
|
|
(2)
|
|
Reflects Mr. Taubers
accrued and unpaid salary as of December 31, 2007. Assumes
cash bonus for fiscal 2007 was paid to Mr. Tauber prior to
termination.
|
|
(3)
|
|
As of December 31, 2007,
Mr. Tauber had no accrued vacation.
|
|
(4)
|
|
As of December 31, 2007, all
shares of restricted stock held by Mr. Tauber were unvested.
|
|
(5)
|
|
Includes payment of insurance
premiums for Mr. Tauber of approximately $18,900 per year
for executive medical excess claims insurance coverage (for a
total of approximately $37,800 for the two year period during
which Mr. Tauber is entitled to such coverage under the
terms of his severance agreement). The average annual premium
expense was calculated by dividing the sum of the premium
expenses paid by the Company on behalf of Mr. Tauber for
the last five fiscal years
(2003-2007)
by five. In accordance with the terms of the executive medical
excess claims insurance plan maintained by the Company,
Mr. Tauber is entitled to a maximum annual reimbursement
for out-of-pocket medical expenses of $200,000. If
Mr. Tauber was reimbursed the maximum amount per year
during the two year period during which he is entitled to such
benefits, we estimate that the amount set forth in the
Group Life, Medical and Other Company Insurance
Plans row would increase by $382,435.
|
|
(6)
|
|
Includes payment of insurance
premiums for Mr. Tauber of approximately $18,900 per year
for executive medical excess claims insurance coverage. The
average annual premium expense was calculated by dividing the
sum of the premium expenses paid by the Company on behalf of
Mr. Tauber for the last five fiscal years
(2003-2007)
by five. In accordance with the terms of the executive medical
excess claims insurance plan maintained by the Company,
Mr. Tauber is entitled to a maximum annual reimbursement
for out-of-pocket medical expenses of $200,000. If
Mr. Tauber was reimbursed the maximum amount per year
during the period during which he is entitled to such benefits
(assuming a life expectancy of 24 years as of
December 31, 2010), we estimate that the amount set forth
in the Post-Retirement Medical Benefits row would
increase by $4,589,221.
|
|
(7)
|
|
If the receipt by Mr. Tauber
of the executive medical excess claims insurance coverage
described in footnote 6 above is treated as an excess
parachute payment, we estimate that the amount set forth
in the Excise
Tax/Gross-Up
row would increase by $1,436,951.
|
35
REPORT
OF COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed with
management the Compensation Discussion and Analysis. Based on
such review and discussions, the Compensation Committee
recommended to the Board that the Compensation Discussion and
Analysis be included in this Proxy Statement.
The Compensation Committee
John M. Baumer
John B. Chickering, Jr.
Frank Reddick
36
DIRECTOR
COMPENSATION
The following table and related footnotes summarize the
compensation paid by the Company to each non-employee director
for the fiscal year ended December 31, 2007. Non-employee
director compensation during fiscal 2007 consisted of
(i) an annual retainer of $10,000 payable in four equal
quarterly installments, (ii) fees for attending meetings of
the Board of Directors and its committees in person ($2,000) or
telephonically ($1,000), (iii) an annual audit committee
chair fee of $10,000 payable in four equal quarterly
installments and (iv) an annual option grant to purchase
8,000 shares of the Companys common stock (as
adjusted based on whether the last option grant to each
non-employee director was more or less than 12 months from
the date of the 2007 annual meeting of stockholders).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
Name (1)
|
|
Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
|
|
($)
|
|
|
($) (2)
|
|
|
($) (3)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
John M. Baumer
|
|
$
|
22,500
|
|
|
$
|
11,674 (4
|
)
|
|
$
|
62,402
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
96,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John B. Chickering, Jr.
|
|
$
|
38,000
|
|
|
$
|
11,674 (5
|
)
|
|
$
|
32,856
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
82,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Heil
|
|
$
|
17,500
|
|
|
$
|
11,674 (6
|
)
|
|
$
|
37,824
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
66,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank Reddick
|
|
$
|
25,000
|
|
|
$
|
11,674 (7
|
)
|
|
$
|
37,824
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
$
|
74,498
|
|
|
|
|
(1)
|
|
Mr. Robert L. Antin, the
Chairman of the Board, Chief Executive Officer and President of
the Company, has been omitted from this table since he is an
employee director and does not receive any compensation for
serving on the Board of Directors. Mr. Antins
compensation is set forth on the Summary Compensation Table on
page 22 of this Proxy Statement.
|
|
(2)
|
|
The amounts in this column
represent the dollar amount recognized for financial statement
reporting purposes for the fiscal year ended December 31,
2007 in accordance with SFAS 123R. For the assumptions used
in the calculation of these amounts for fiscal year 2007 see
Note 9 to the Companys audited financial statements in the
Companys Annual Report for the fiscal year ended
December 31, 2007.
|
|
(3)
|
|
The amounts in this column
represent the dollar amount recognized for financial statement
reporting purposes for the fiscal year ended December 31,
2007 in accordance with SFAS 123R, and include amounts from
options granted prior to 2007. For the assumptions used in the
calculation of these amounts see Note 9 to the
Companys audited financial statements in the
Companys Annual Report for the fiscal year ended
December 31, 2007.
|
|
(4)
|
|
The grant date fair value of the
stock awards to Mr. Baumer in fiscal year 2007 was $81,180.
At December 31, 2007, Mr. Baumer held 2000 unvested
shares of the Companys common stock.
|
|
(5)
|
|
The grant date fair value of the
stock award to Mr. Chickering in fiscal year 2007 was
$81,180. At December 31, 2007, Mr. Chickering held
2000 unvested shares of the Companys common stock.
|
|
(6)
|
|
The grant date fair value of the
stock award to Mr. Heil in fiscal year 2007 was $81,180. At
December 31, 2007, Mr. Heil held 2000 unvested shares
of the Companys common stock.
|
|
(7)
|
|
The grant date fair value of the
stock award to Mr. Reddick in fiscal year 2007 was $81,180.
At December 31, 2007, Mr. Reddick held 2000 unvested
shares of the Companys common stock.
|
The Compensation Committee reviews director compensation on an
annual basis. On January 5, 2007, the Compensation
Committee adopted a new compensation program for its
non-employee directors, which it subsequently amended on
February 28, 2007. Our current non-employee director
compensation program is as follows:
Annual
retainer
We pay our non-employee directors $10,000 per year, paid
quarterly in arrears, $2,000 for each Board of Directors meeting
attended in person or committee meeting attended in person which
is not held on the same
37
day as a Board of Directors meeting, including reimbursement for
out-of-pocket expenses incurred in attending, and $1,000 for
each Board of Directors meeting attended telephonically or
committee meeting attended telephonically which is not held on
the same day as a Board of Directors meeting. We pay the
Chairman of our Audit Committee an additional $10,000 per year,
paid quarterly in arrears. No employee director receives
compensation for his or her service as a member of our Board of
Directors.
Restricted
shares
Upon appointment to the Board of Directors, each non-employee
director receives an initial grant, under our 2006 Equity
Incentive Plan, of 2,000 restricted shares of stock. These
restricted shares will vest in three equal annual installments,
in each of the three
12-month
periods, each an annual period, following the date
of grant on that day during such annual period which is the
earlier to occur of (a) the day immediately preceding the
date of an annual meeting of the Companys stockholders
occurring during such annual period and (b) on the
anniversary of the date of grant.
If the date of grant is fewer than 12 months prior to the
date of the next annual meeting of stockholders, the number of
shares granted will be reduced on a pro-rata basis, based upon
the number of months until the next annual meeting of
stockholders (e.g., if a non-employee director is appointed
January 1 and the next annual meeting of stockholders is
April 1, such non-employee director will receive 500
restricted shares).
In addition, each non-employee director receives an annual
automatic grant of 2,000 restricted shares on the date of the
annual meeting. These restricted shares will vest in three equal
annual installments, in each of the three annual periods
following the date of grant on that day during such annual
period which is the earlier to occur of (a) the day
immediately preceding the date of an annual meeting of the
Companys stockholders occurring during such annual period
and (b) on the anniversary of the date of grant.
38
CERTAIN
TRANSACTIONS WITH RELATED PERSONS
In accordance with its charter, our Audit Committee is
responsible for reviewing and approving all related party
transactions. At least once a year, the Audit Committee reviews
a summary of all related party transactions, including the
Companys transactions with our executive officers and
directors and with the firms that employ the directors.
Except as disclosed below, neither our directors or executive
officers, nor any stockholder owning more than five percent of
our issued shares, nor any of their respective associates or
affiliates, had any material interest, direct or indirect, in
any material transaction to which we were a party during fiscal
2007, or which is presently proposed.
We believe, based on our reasonable judgment, but without
further investigation, that the terms of each of the following
transactions or arrangements between us and our affiliates,
officers, directors or stockholders which were parties to the
transactions were, on an overall basis, at least as favorable to
us as could then have been obtained from unrelated parties.
Transactions
with Zoasis Corporation
We incurred marketing expenses for vaccine reminders and other
direct mail services provided by Zoasis, a company that is
majority owned by Robert Antin, our Chief Executive Officer and
Chairman. We purchased services of $1.8 million,
$1.9 million and $1.1 million for 2007, 2006 and 2005,
respectively. Arthur J. Antin, our Chief Operating Officer, owns
a 10% interest in Zoasis. We believe the pricing of these
services is comparable to prices paid by us to independent third
parties for similar services. Beginning in late 2006, in
connection with a sublease for office space located in the
Zoasis corporate office, we paid rent to Zoasis of $54,000 and
$18,000 in 2007 and 2006, respectively. The lease expired in
August 2007 and continues on a month-to-month basis until the
completion of a software development project. The rent under
this sublease is comparable to the rent we pay for similar
spaces.
In 2003, we entered into an agreement with Zoasis pursuant to
which we acquired all of Zoasis right, title and interest
in and to certain software in exchange for all our preferred
stock of Zoasis then held by us. Concurrent with the purchase of
the software, we granted to Zoasis a limited royalty-free,
non-exclusive license to this software in exchange for Zoasis
providing certain support for the software. Both we and Zoasis
have a right to make modifications to the software, but all
modifications and derivative works are owned by us. The software
is hosted at our expense at a third-party hosting facility for
the benefit of both parties.
Legal
Services
Frank Reddick, who joined us as a director in February 2002, is
a partner in the law firm of Akin Gump Strauss
Hauer & Feld LLP. Akin Gump Strauss Hauer &
Feld LLP currently provides, and provided during fiscal year
2007, legal services to us. In 2007, we paid Akin Gump Strauss
Hauer & Feld LLP $1.2 million for legal services.
39
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that our
executive officers, directors and persons who own more than ten
percent of a registered class of our equity securities file
reports of ownership and changes in ownership with the SEC.
Executive officers, directors and greater-than-ten percent
stockholders are required by SEC regulations to furnish us with
all Section 16(a) forms that they file. Based solely upon
our review of copies of the forms received by us and written
representations from certain reporting persons that they have
complied or not complied with the relevant filings requirements,
we believe that, during the year ended December 31, 2007,
all of our executive officers, directors and greater-than-ten
percent stockholders complied with all Section 16(a) filing
requirements, except for one Form 4 filed by each of John
M. Baumer, John B. Chickering, Jr., John Heil and Frank
Reddick. Each of Messrs. Baumer, Chickering, Heil and
Reddick should have filed a Form 4 by June 6, 2007 in
connection with his receipt of a grant of 2,000 shares of
restricted stock on June 4, 2007 for his services as a
non-employee director. Each of Messrs. Baumer, Chickering,
Heil and Reddick filed his Form 4 on July 13, 2007.
40
PRINCIPAL
STOCKHOLDERS
The following table sets forth information regarding beneficial
ownership of our common stock as of March 31, 2008, by:
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each of our directors;
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each of our Named Executive Officers;
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all of our directors and Named Executive Officers as a
group; and
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all other stockholders known by us to beneficially own more than
5% of our outstanding common stock.
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Beneficial ownership is determined in accordance with the rules
of the SEC. In computing the number of shares beneficially owned
by a person and the percentage ownership of that person, shares
of common stock subject to options held by that person that are
currently exercisable or exercisable within 60 days of the
date as of which this information is provided, and not subject
to repurchase as of that date, are deemed outstanding. These
shares, however, are not deemed outstanding for the purposes of
computing the percentage ownership of any other person.
Except as indicated in the notes to this table, and except
pursuant to applicable community property laws, each stockholder
named in the table has sole voting and investment power with
respect to the shares shown as beneficially owned by them.
Percentage ownership is based on 85,112,059 shares of
common stock outstanding on March 31, 2008. Unless
otherwise indicated, the address for each of the stockholders
listed below is
c/o VCA
Antech, Inc., 12401 West Olympic Boulevard, Los Angeles,
California 90064.
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Number of Shares
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of Common Stock
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Percent of
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Beneficially
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Common Stock
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Owned
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Outstanding
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Baillie Gifford & Co (1)
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8,668,724
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10.2
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%
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Select Equity Group, Inc. & Select Offshore Advisors, LLC
(2)
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6,369,902
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7.5
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%
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FMR LLC (3)
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6,105,442
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7.2
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%
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Robert L. Antin (4)
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2,309,279
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2.7
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%
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Arthur J. Antin (5)
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635,185
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*
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Tomas W. Fuller (6)
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476,120
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*
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Neil Tauber (7)
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235,000
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*
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Dawn R. Olsen (8)
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80,200
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*
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John M. Baumer (9)
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38,175
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*
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John B. Chickering, Jr. (10)
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3,997
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*
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John A. Heil (11)
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38,609
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*
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Frank Reddick (12)
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71,109
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*
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All directors and executive officers as a group
(9 persons) (13)
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3,887,674
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4.5
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%
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* Indicates
less than one percent
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(1)
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Information based on a Schedule 13G/A filed on
March 6, 2008 with the SEC by Baillie Gifford &
Co. According to the Schedule 13G/A, Baillie
Gifford & Co has sole voting power over
7,062,741 shares and sole dispositive power over
8,668,724 shares. The address of the stockholder is Calton
Square, 1 Greenside Row, Edinburgh EH1 3AN, Scotland, UK.
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(2)
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Information based on a Schedule 13G/A filed on
February 15, 2008 with the SEC by Select Equity Group, Inc.
and certain related entities. According to the
Schedule 13G/A: (a) Select Equity Group, Inc. has sole
voting and sole dispositive power over 4,681,510 shares;
and (b) Select Offshore Advisors, LLC has sole voting and
sole dispositive power over 1,688,392 shares. George
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S. Loening is the controlling
stockholder of each of these stockholders. The address for each
stockholder and George S. Loening is 380 Lafayette Street,
6th
Floor, New York, New York 10003.
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(3)
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Information based on Schedule 13G/A filed on
February 14, 2008 with the SEC by FMR Corp. and certain
related entities. According to the Schedule 13G/A:
(a) Fidelity Management & Research Company
beneficially owns 5,772,851 shares as a result of acting as
an investment adviser to various investment companies registered
under Section 203 of the Investment Advisors Act of 1940;
(b) Fidelity International Limited beneficially owns
331,597 shares as a result of serving as investment advisor
and manager of a number of
non-U.S.
investment companies and certain institutional investors; and
(c) Strategic Advisers, Inc. beneficially owns
994 shares as a result of providing investment advisory
services to certain individuals. FMR LLC is the parent company
of these entities and has sole voting power over
332,591 shares and sole dispositive power over
6,105,442 shares. Edward C. Johnson 3d and certain members
of his family, collectively, may form a controlling group with
respect to FMR LLC. The address of FMR LLC, Fidelity
Management & Research Company, Strategic Advisers,
Inc. and Edward C. Johnson 3d is 82 Devonshire Street, Boston,
Massachusetts 02109. The address of Fidelity International
Limited is Pembroke Hall, 42 Crow Lane, Hamilton, Bermuda.
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(4)
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Includes (a) 114,000 shares of restricted stock of the
Company subject to future vesting conditions (restricted
stock) and (b) 715,000 shares of common stock
reserved for issuance upon exercise of stock options that are or
will be exercisable on or before May 30, 2008.
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(5)
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Includes (a) 72,000 shares of restricted stock and
(b) 450,690 shares of common stock reserved for
issuance upon exercise of stock options which are or will become
exercisable on or before May 30, 2008.
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(6)
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Includes (a) 66,000 shares of restricted stock and
(b) 385,000 shares of common stock reserved for
issuance upon exercise of stock options which are or will become
exercisable on or before May 30, 2008.
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(7)
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Consists of (a) 60,000 shares of restricted stock and
(b) 175,000 shares of common stock reserved for
issuance upon exercise of stock options which are or will become
exercisable on or before May 30, 2008.
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(8)
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Consists of (a) 8,200 shares of restricted stock and
(b) 72,000 shares of common stock reserved for
issuance upon exercise of stock options which are or will become
exercisable on or before May 30, 2008.
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(9)
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Consists of (a) 2,000 shares of restricted stock and
(b) 36,175 shares of common stock reserved for
issuance upon exercise of stock options which are or will become
exercisable on or before May 30, 2008.
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(10)
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Consists of (a) 2,000 shares of restricted stock and
(b) 1,997 shares of common stock reserved for issuance
upon exercise of stock options which are or will become
exercisable on or before May 30, 2008.
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(11)
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Consists of (a) 2,000 shares of restricted stock and
(b) 36,609 shares of common stock reserved for
issuance upon exercise of stock options which are or will become
exercisable on or before May 30, 2008.
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(12)
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Consists of (a) 2,000 shares of restricted stock and
(b) 69,109 shares of common stock reserved for
issuance upon exercise of stock options which are or will become
exercisable on or before May 30, 2008.
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(13)
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Includes (a) 328,200 shares of restricted stock and
(b) 1,941,580 shares of common stock reserved for
issuance upon exercise of stock options which are or will become
exercisable on or before May 30, 2008.
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ON BEHALF OF THE BOARD OF DIRECTORS
Tomas W. Fuller
Chief Financial Officer, Vice President and Secretary
12401 West Olympic Boulevard
Los Angeles, California
90064-1022
April 25, 2008
42
VCA ANTECH, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a stockholder of VCA Antech, Inc., a Delaware corporation, which we refer to as
the Company, hereby nominates, constitutes and appoints Robert L. Antin and Tomas W. Fuller, or
either one of them, as proxy of the undersigned, each with full power of substitution, to attend,
vote and act for the undersigned at the Annual Meeting of Stockholders of the Company, to be held
on Wednesday, June 4, 2008, which we refer to as the Annual Meeting, and any postponements or
adjournments thereof, and in connection therewith, to vote and represent all of the shares of the
Company which the undersigned would be entitled to vote with the same effect as if the undersigned
were present, as follows:
A VOTE FOR ALL ITEMS IS RECOMMENDED BY THE BOARD OF DIRECTORS:
Item 1. To elect the nominees as Class III directors:
CLASS III
John B. Chickering, Jr.
John Heil
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FOR THE NOMINEES LISTED ABOVE |
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WITHHELD for the nominees listed above |
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The undersigned hereby confer(s) upon the proxies and each of them discretionary
authority with respect to the election of directors in the event that the above nominees
are unable or unwilling to serve. |
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Item 2. |
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To ratify the appointment of KPMG LLP as the Companys independent registered public
accounting firm. |
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o FOR
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o AGAINST
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o ABSTAIN |
The undersigned hereby revokes any other proxy to vote at the Annual Meeting, and hereby ratifies
and confirms all that said attorneys and proxies, and each of them, may lawfully do by virtue
hereof. With respect to matters not known at the time of the solicitation hereof, said proxies are
authorized to vote in accordance with their best judgment.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS SET FORTH ABOVE OR, TO THE EXTENT NO
CONTRARY DIRECTION IS INDICATED, WILL BE TREATED AS A GRANT OF AUTHORITY TO VOTE FOR THE ITEMS. IF
ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, THIS PROXY CONFERS AUTHORITY TO AND SHALL BE
VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE PROXIES.
1
The undersigned acknowledges receipt of a copy of the Notice of Annual Meeting dated April 25, 2008
and the accompanying Proxy Statement relating to the Annual Meeting.
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Dated:
, 2008 |
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Signature:
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Signature:
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Signature(s) of Stockholder(s)
(See Instructions Below) |
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The signature(s) hereon should correspond exactly
with the name(s) of the Stockholder(s) appearing on
the Share Certificate. If stock is held jointly, all
joint owners should sign. When signing as attorney,
executor, administrator, trustee or guardian, please
give full title as such. If signer is a corporation,
please sign the full corporation name, and give title
of signing officer. |
o Please indicate by checking this box if you anticipate attending the Annual Meeting.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE
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