UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by
the Registrant
x
Filed by a Party other than the Registrant
o
Check the appropriate box:
o
Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a- 6(e)(2))
x
Definitive Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material under Rule 14a-12
UNITED STATIONERS INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x
No fee required.
o
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1
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Title of each class of securities to which transaction applies:
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(2
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Aggregate number of securities to which transaction applies:
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(3
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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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(4
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Proposed maximum aggregate value of transaction:
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(5
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Total fee paid:
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o
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Fee paid previously 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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(1
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Amount Previously Paid:
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(2
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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United Stationers Inc.
One Parkway North Boulevard, Suite 100
Deerfield, Illinois 60015
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March 30, 2011
Dear Stockholder:
On behalf of the Board of Directors and management of United
Stationers Inc., I cordially invite you to attend the 2011
Annual Meeting of Stockholders. The Annual Meeting will be held
on Wednesday, May 11, 2011, at 2:00 p.m. Central Time,
at the Companys offices located at One Parkway North
Boulevard, Deerfield, Illinois.
At this years Annual Meeting, the matters to be considered
by stockholders are the election of three directors each to
serve for a three-year term expiring in 2014, the ratification
of the selection of the Companys independent registered
public accountants for 2011, the approval of the Amended and
Restated 2004 Long-Term Incentive Plan, an advisory vote on
executive compensation, an advisory vote on the frequency of
advisory votes on executive compensation and the transaction of
such other business as may properly come before the meeting. The
Board of Directors has unanimously recommended a vote
FOR election of the nominees named in the
accompanying Proxy Statement, FOR ratification of
the selection of independent registered public accountants,
FOR approval of the Amended and Restated 2004
Long-Term Incentive Plan, FOR approval of our
executive compensation and for every year as the frequency of
advisory votes on executive compensation.
Whether or not you plan to attend the Annual Meeting, we
encourage you to read the accompanying Proxy Statement and vote
promptly. To ensure that your shares are represented at the
meeting, we recommend that you submit a proxy to vote your
shares through the Internet by following the instructions set
forth in the Notice of Internet Availability of Proxy Materials.
You may also vote by telephone or mail by requesting a paper
copy of the proxy materials, which will include a proxy card
with instructions on how to vote. The Notice of Internet
Availability of Proxy Materials contains instructions on how to
request paper copies of the proxy materials. This way, your
shares will be voted even if you are unable to attend the
meeting. This will not, of course, limit your right to attend
the meeting or prevent you from voting in person at the meeting
if you wish to do so.
Your Directors and management look forward to personally meeting
those of you who are able to attend.
Sincerely yours,
Frederick B. Hegi, Jr.
Chairman of the Board
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United Stationers Inc.
One Parkway North Boulevard, Suite 100
Deerfield, Illinois 60015
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NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
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MAY 11, 2011
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE
STOCKHOLDER MEETING TO BE HELD ON MAY 11, 2011
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The proxy statement and
Form 10-K
to security holders are available at
www.unitedstationers.com/investor/annualmeeting
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The 2011 Annual Meeting of Stockholders of United Stationers
Inc. will be held on Wednesday, May 11, 2011, at
2:00 p.m. Central Time, at the Companys offices
located at One Parkway North Boulevard, Deerfield, Illinois for
the following purposes:
1. To elect three Class I directors each to serve for
a three-year term expiring in 2014;
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2.
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To ratify the selection of Ernst & Young LLP as the
Companys independent registered public accountants for
2011;
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3. To approve the Amended and Restated 2004 Long-Term
Incentive Plan;
4. To cast an advisory vote on executive compensation;
5 To cast an advisory vote on the frequency of advisory
votes on executive compensation; and
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6.
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To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
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The Board of Directors has unanimously recommended a vote
FOR election of these nominees, FOR
ratification of the selection of independent registered public
accountants, FOR approval of the Amended and
Restated 2004 Long-Term Incentive Plan, FOR approval
of executive compensation and for every year as the frequency of
advisory votes on executive compensation.
The record date for the Annual Meeting is the close of business
on Monday, March 14, 2011. Only stockholders of record as
of that time and date are entitled to notice of, and to vote at,
the meeting. Record holders of the Companys Common Stock
as of the record date may submit their proxies by following the
voting instructions set forth in the Notice of Internet
Availability of Proxy Materials.
By Order of the Board of Directors,
Eric A. Blanchard
Secretary
March 30, 2011
TABLE OF
CONTENTS
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Executive Summary
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A-1
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United Stationers
Inc.
One Parkway North Boulevard, Suite 100
Deerfield, Illinois 60015
PROXY STATEMENT
March 30, 2011
PROXY AND VOTING
INFORMATION
The Board of Directors of United Stationers Inc. (referred to as
we or the Company in this Proxy
Statement) is soliciting your proxy for use at our 2011 Annual
Meeting of Stockholders and any adjournments or postponements
thereof (the Annual Meeting).
What is a Notice
of Internet Availability of Proxy Materials
Under rules of the Securities and Exchange Commission, we are
furnishing proxy materials to our stockholders on the Internet,
rather than mailing printed copies to our stockholders. If you
received a Notice of Internet Availability of Proxy Materials by
mail, you will not receive a printed copy of the proxy materials
unless you request one as instructed in that notice. Instead,
the Notice of Internet Availability of Proxy Materials will
instruct you as to how you may access and review the proxy
materials on the Internet as well as vote your shares online.
You may also vote by telephone or mail by requesting a paper
copy of the proxy materials, which will include a proxy card
with instructions on how to vote. The Notice of Internet
Availability of Proxy Materials contains instructions on how to
request paper copies of the proxy materials. We expect to
commence mailing the Notice of Internet Availability of Proxy
Materials to our stockholders on or about March 30, 2011.
Who May
Vote
Holders of record of our Common Stock at the close of business
on Monday, March 14, 2011 (the Record Date) may
vote at the Annual Meeting. On that date, 23,162,519 shares
of our Common Stock were issued and outstanding. Each share
entitles the holder to one vote.
How to
Vote
If you are a holder of record of our Common Stock (that is, the
shares are registered by our transfer agent directly in your own
name) on the Record Date, you may submit a proxy with your
voting instructions, by the respective applicable deadline shown
on the Notice of Internet Availability of Proxy Materials or
proxy card, using any of the following methods:
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Through the Internet:
Go to the website
http://www.proxyvote.com
and follow the instructions on the Notice of Internet
Availability of Proxy Materials to view the proxy materials
online and vote your shares through the Internet.
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By Telephone:
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You must request a paper copy of the proxy materials, which will
include a proxy card with instructions on how to vote by
telephone.
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Please review the Notice of Internet Availability of Proxy
Materials for instructions on how to order paper copies of the
proxy materials.
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You must request a paper copy of the proxy materials, which will
include a proxy card with instructions on how to vote by mail.
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Please review the Notice of Internet Availability of Proxy
Materials for instructions on how to order paper copies of the
proxy materials.
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If you choose to submit your proxy with voting instructions by
telephone or through the Internet, you will be required to
provide your assigned control number shown on the Notice of
Internet Availability of Proxy Materials or proxy card before
your proxy and voting instructions will be accepted. Once you
have indicated how you want to vote in accordance with those
instructions, you will receive confirmation that your proxy has
been submitted successfully by telephone or through the Internet.
If you hold your shares of our Common Stock in street
name through a broker, bank, custodian, fiduciary or other
nominee, you should review the separate Notice of Internet
Availability of Proxy Materials supplied by that firm to
determine whether and how you may vote by mail, telephone or
through the Internet. To vote these shares, you must use the
appropriate voting instruction form or toll-free telephone
number or website address specified on that firms voting
instruction form for beneficial owners.
How Proxies
Work
Giving your proxy means that you authorize the persons named as
proxies to vote your shares at the Annual Meeting in the manner
you direct. If you hold any shares in the Companys
Employee Stock Purchase Plan (ESPP), your proxy
(whether given by mailing the proxy card or voting by telephone
or through the Internet) will also serve as voting instructions
to Computershare Trust Company, as nominee holder under the
ESPP, with respect to the shares allocated to your account in
the ESPP.
If you sign and return a proxy card, or use telephone or
Internet voting, but do not specify how you want to vote your
shares, the proxies will vote your shares FOR the
election of each of the three director nominees, FOR
the ratification of Ernst & Young LLP as the
Companys independent registered public accountants for
2011, FOR approval of the Amended and Restated 2004
Long-Term Incentive Plan, FOR approval of executive
compensation and for every year as the frequency of advisory
votes on executive compensation. If you specify how you want to
vote your shares on some matters but not others, the proxies
will vote your shares as directed on the matters that you
specify and as indicated above on the other matters described in
this proxy statement. However, if you hold shares in the ESPP,
Computershare Trust Company, as nominee holder under the
ESPP, will not vote shares allocated to your ESPP account unless
you indicate your voting instructions. The proxies will also
vote your shares in their discretion on any other business that
may properly come before the meeting.
Revocation of
Proxies
If you have voted by submitting a proxy, you may revoke your
proxy at any time before it is exercised at the Annual Meeting
by any of the following methods:
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Requesting and submitting a new proxy card that is properly
signed with a later date;
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Voting again at a later date by telephone or through the
Internet your latest voting instructions submitted
before the deadline for telephone or Internet voting,
11:59 p.m. Eastern Time on May 10, 2011, will be
counted and your earlier instructions revoked;
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Sending a properly signed written notice of your revocation to
the Secretary of the Company at United Stationers Inc., One
Parkway North Boulevard, Suite 100, Deerfield, Illinois
60015-2559; or
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Voting in person at the Annual Meeting. Attendance at
the Annual Meeting will not itself revoke an earlier submitted
proxy.
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A proxy card with a later date or written notice of revocation
shall not constitute a revocation of a previously submitted
proxy unless it is received by the Secretary of United
Stationers Inc. before the previously submitted proxy is
exercised at the Annual Meeting.
Quorum
To conduct the business of the Annual Meeting, we must have a
quorum. Under our current Bylaws, a quorum for the Annual
Meeting requires the presence, in person or by proxy, of the
holders of a majority of the 23,162,519 shares of our
Common Stock issued and outstanding on the Record Date.
2
In general, a broker who holds securities as a nominee in street
name has limited authority to vote on matters submitted at a
stockholders meeting in the absence of specific
instructions from the beneficial owner. In the absence of
instructions from the beneficial owner or authorization from the
regulatory agency of which the broker is a member to vote on
specific matters without the need to obtain instructions from
the beneficial owner, a broker will specify a
non-vote on those matters. Brokers are typically
permitted to vote for the ratification of the selection of
independent registered public accountants if they have not
received instructions from the beneficial owner; however,
brokers may not vote on the other matters described in this
Proxy Statement without specific instructions from the
beneficial owner. Under Delaware law and our Bylaws, we count
instructions to withhold voting authority for director nominees,
any abstentions and broker non-votes as present at meetings of
our stockholders for the purpose of determining the presence of
a quorum.
Required
Votes
The nominees for director will be elected by a plurality of the
votes cast at the Annual Meeting. This means that the three
nominees who receive the greatest number of votes will be
elected as directors. Broker non-votes and instructions to
withhold authority to vote for one or more nominees are not
counted for this purpose and will not affect the outcome of this
election.
Ratification of the selection of Ernst & Young LLP as
the Companys independent registered public accountants
will require the affirmative vote of a majority of the shares of
Common Stock represented at the Annual Meeting and entitled to
vote on such matter. Abstentions will be counted as represented
and entitled to vote for purposes of determining the total
number of shares that are represented and entitled to vote with
respect to this proposal. As a result, an abstention from voting
on this proposal will have the same effect as a vote
AGAINST the matter. Broker non-votes will not be
considered as represented and entitled to vote with respect to
this proposal and will have no effect on the voting on this
matter.
Approval of the Amended and Restated 2004 Long-Term Incentive
Plan will require the affirmative vote of a majority of the
shares of Common Stock represented at the Annual Meeting and
entitled to vote on such matter. Abstentions will be counted as
represented and entitled to vote for purposes of determining the
total number of shares that are represented and entitled to vote
with respect to this proposal. As a result, an abstention from
voting on this proposal will have the same effect as a vote
AGAINST the matter. Broker non-votes will not be
considered as represented and entitled to vote with respect to
this proposal and will have no effect on the voting on this
matter.
The vote on the approval of our executive compensation is
advisory and non-binding. However, we will consider our
stockholders to have approved our executive compensation if the
number of votes FOR this proposal exceeds the number
of votes AGAINST this proposal. Accordingly,
abstentions and broker non-votes will not affect the outcome of
this advisory vote.
The vote on frequency of advisory votes on executive
compensation is advisory and non-binding. However, we will
consider our stockholders to have selected the frequency option
that receives the most votes. Accordingly, abstentions and
broker non-votes will not affect the outcome of this advisory
vote.
We do not know of any other matters to be submitted for
stockholder action at the Annual Meeting.
Costs of Proxy
Solicitation
We will bear the costs of soliciting proxies for the Annual
Meeting. In addition to the solicitation by mail, proxies may be
solicited personally or by telephone, facsimile or electronic
communication by our directors, officers and other employees.
Directors, officers and other employees of the Company who
participate in soliciting proxies will not receive any
additional compensation from the Company for doing so. Upon
request, we will reimburse brokers, banks, custodians and other
nominee record holders for their
out-of-pocket
expenses in forwarding proxy materials to their principals who
are the beneficial owners of our Common Stock as of the Record
Date.
3
PROPOSAL 1:
ELECTION OF DIRECTORS
General
The Companys business and affairs are managed under the
direction of our Board of Directors. The Board has
responsibility for establishing broad corporate policies
relating to the Companys overall performance rather than
day-to-day
operating details.
Our Board of Directors currently consists of ten members. The
Board is divided into three classes, each of which is elected
for a three-year term. The terms of the four current
Class I Directors expire in 2011. Richard W. Gochnauer
and Daniel J. Good, who have served on the Board since 2002 and
1995, respectively, and currently serve as Class I
Directors are both retiring from the Board and will not stand
for reelection at the Annual Meeting. Robert B. Aiken, Jr.,
who was appointed to the Board of Directors as a Class I
Director in December 2010 will be a nominee as a Class I
Director at the Annual Meeting for election to a three-year term
expiring in 2014. P. Cody Phipps, who will be elected to the
position of Chief Executive Officer effective as of the Annual
Meeting, is also a nominee as a Class I Director at the
Annual Meeting for election to a three-year term expiring in
2014. Jean S. Blackwell, who is a current Class I Director,
is standing as a nominee at the Annual Meeting for reelection to
a three-year term expiring in 2014.
The nominees have indicated that they are willing and able to
serve as Company Directors. If any nominee becomes unavailable
for election for any reason, the persons named as proxies in the
enclosed proxy card will have discretionary authority to vote
the shares they represent for any substitute nominee designated
by the Board of Directors, upon recommendation of the Governance
Committee.
Information regarding each of the Director nominees and the
Directors continuing in office, including his or her age,
principal occupation, other business experience during at least
the last five years, directorships in other publicly held
companies during the last five years and period of service as a
Company Director, is set forth below. Also included below is a
discussion of the specific experience, qualifications,
attributes and skills that led to the conclusion that the
Director nominee or Director should serve on the Board.
Director
Nominees
The nominees for election as Class I Directors at this
years Annual Meeting, each to serve for a three-year term
expiring in 2014, are set forth below:
Robert B. Aiken, Jr.
(48) was elected by the
Companys Board of Directors to join the Board in December
2010. Mr. Aiken has not yet been appointed to serve on
Board committees. Mr. Aiken is Managing Director of Capwell
Partners LLC, a private-equity firm focused on companies
offering health and wellness products and services.
Mr. Aiken has been in the private-equity business since
February 2010. Prior to that time, Mr. Aiken was the
President and Chief Executive Officer of U.S. Foodservice,
one of the countrys premier foodservice distributors.
Mr. Aiken joined U.S. Foodservice in 2004 and held
several senior executive positions including President and Chief
Operating Officer and Executive Vice President of Strategy and
Governance, before being named Chief Executive Officer in 2007.
From 2000 until 2004, Mr. Aiken also served as President
and Principal of Milwaukee Sign Co., a privately-held
manufacturing firm. From 1994 to 2000, Mr. Aiken was an
executive with Specialty Foods Corporation, where he held
several positions, including President and Chief Executive
Officer of Metz Baking Company. Early in Mr. Aikens
career, he worked as a business lawyer. Since February 2010,
Mr. Aiken has served as a Director of Red Robin Gourmet
Burgers, where he is Chair of the Nominating &
Governance Committee. Mr. Aiken brings to the Board of
Directors experience as a chief executive officer of a
corporation with significant operations and a large,
labor-intensive workforce. He has in-depth experience in
operations, sales force effectiveness, supply chain and private
label products. Mr. Aiken also holds accounting and law
degrees.
Jean S. Blackwell
(56) was elected to the
Companys Board of Directors in May 2007.
Ms. Blackwell serves as Chair of the Human Resources
Committee and is a member of the Audit Committee.
Ms. Blackwell is the Chief Executive Officer of the Cummins
Foundation and Executive Vice President, Corporate
Responsibility of Cummins Inc. (Cummins). From 2003
until her appointment in 2008 to her current position,
Ms. Blackwell served as the Executive Vice President and
Chief Financial Officer for Cummins. Ms. Blackwell also
served as Vice President and General Counsel; Vice President,
Human Resources; and Vice President, Cummins Business Services.
Ms. Blackwell was appointed as Executive Vice President of
Cummins in 2005. Prior to
4
joining Cummins, Ms. Blackwell was a partner in the
Indianapolis law firm of Bose McKinney & Evans and
also worked for the State of Indiana as Budget Director and for
the State Lottery Commission as Executive Director. She has also
served as a director of The Phoenix Companies, a life insurance
company. Ms. Blackwell has an in-depth knowledge of the
business operations of a publicly-traded company from her long
tenure at Cummins and a strong financial acumen from her senior
management experience. Through her experiences, as well as
serving on our Audit Committee and her previous service as Chair
of the audit committee of The Phoenix Companies, she has a
thorough understanding of financial reporting of a public
company and is well-versed in internal controls.
Ms. Blackwell also brings significant knowledge of Human
Resource practices to her position as Chair of the
Companys Human Resource Committee, having served as Vice
President of Human Resources at Cummins.
P. Cody Phipps
(49) will be promoted to President
and Chief Executive Officer effective as of the 2011 Annual
Meeting. He currently serves as President and Chief Operating
Officer, a position he has held since September, 2010.
Mr. Phipps served as the Companys President, United
Stationers Supply from October 2006 to September 2010. He joined
the Company in August 2003 as its Senior Vice President,
Operations. From 1990 until joining the Company, Mr. Phipps
was a partner at McKinsey & Company, Inc., a global
management consulting firm. During his tenure at McKinsey, he
became a leader in the firms North American Operations
Effectiveness Practice. He co-founded and led its Service
Strategy and Operations Initiative, which focused on driving
significant operational improvements in complex service and
logistics environments. Prior to joining McKinsey,
Mr. Phipps worked as a consultant with The Information
Consulting Group, a systems consulting firm, and prior to that
time, as an IBM account marketing representative. At the
Company, as well as in his prior positions, Mr. Phipps has
demonstrated his ability to build high performance teams,
develop and execute growth strategies, drive operational
excellence, lead improvements and new developments in service
capabilities, and increase customer satisfaction. In addition,
as President and Chief Executive Officer of the Company, he will
be uniquely positioned to understand our business and contribute
to the Boards strategic guidance to management.
THE COMPANYS BOARD UNANIMOUSLY RECOMMENDS A VOTE
FOR THE ELECTION OF EACH OF THE INDIVIDUALS
NOMINATED TO SERVE AS A CLASS I DIRECTOR.
Continuing
Directors
The other Directors, whose terms will continue after this
years Annual Meeting, are as follows:
Class II
Directors Continuing in Office until 2012 Annual
Meeting
Daniel J. Connors
(52) was elected to the
Companys Board of Directors in July 2008. Mr. Connors
is a member of the Finance and Governance Committees.
Mr. Connors is the Chief Executive Officer of Physiotherapy
Associates, a leading provider of outpatient physical therapy
services. Prior to this appointment in 2007, Mr. Connors
served as the Chief Executive Officer of Wire One
Communications, Inc., a leading provider of videoconferencing
solutions. He left the company after selling it to British
Telecom in May 2008. Prior to Wire One, Mr. Connors served
as the Executive Vice President and Chief Administrative Officer
of Kinkos, Inc. until its sale to FedEx Corporation.
Mr. Connors also spent a number of years with
Bain & Company, working in the firms Dallas,
London and Munich offices, where he assisted clients with growth
strategies, restructuring and turnaround situations.
Mr. Connors began his career as a Captain in the
U.S. Air Force, serving at the Pentagon in Washington
D.C. Mr. Connors has significant knowledge in the areas of
retailing and
business-to-business
services, with functional expertise in technology solutions,
marketing, sales, distribution, logistics, offshore sourcing and
customer service. Mr. Connors holds two law degrees and an
MBA.
Charles K. Crovitz
(57) was elected to the
Companys Board of Directors in October 2005.
Mr. Crovitz serves as Chair of the Technology Advisory
Committee and is a member of the Human Resources Committee. In
September 2007, Mr. Crovitz was appointed as the Interim
Chief Executive Officer of The Childrens Place Retail
Stores, Inc., a childrens clothing and accessories
retailer, which position he held until January, 2010. Prior to
this appointment, Mr. Crovitz was a member of the executive
leadership team of Gap Inc. from 1993 until 2003, most recently
serving as Executive Vice President and Chief Supply Chain
Officer. During his
10-year
career with Gap, Mr. Crovitz was also Executive Vice
President, Supply Chain and Technology and Senior Vice
President, Strategy and Business Development. Prior to that, he
held various positions with Safeway Inc., including serving as a
member of the operating committee, Senior Vice President and
Chief
5
Information Officer, and Vice President, Director of Marketing
for Safeway Manufacturing Group. Mr. Crovitz also spent
several years with McKinsey & Company where he was an
Engagement Manager, leading client service teams in retailing,
forest products, steel, and personal computer industries. He
currently is, and has over the past five years served as, a
board member for The Childrens Place Retail Stores, Inc.
Mr. Crovitz responsibility for information technology
during his tenure at Gap and his experience in supply chain
management are particularly relevant to the strategic direction
of the Company. His extensive operating experience allows him to
make significant contributions to the Companys continuing
efforts to pursue growth strategies, increase productivity and
reduce its cost structure. Mr. Crovitz also holds an MBA
and a law degree.
Frederick B. Hegi, Jr.
(67) was elected to the
Companys Board of Directors in March 1995 and has served
as its Chairman since November 1996. Mr. Hegi serves as
Chair of the Executive Committee and is a member of the
Governance and Finance Committees. Mr. Hegi is a founding
partner of Wingate Partners, a private investment firm,
including the indirect general partner of Wingate Partners II,
L.P., positions he has held since 1987. Mr. Hegi is
currently and has over the past five years served as a director
of Drew Industries Incorporated, a company that produces a broad
array of components for manufactured housing and recreational
vehicle industries, and as a director of Texas Capital
Bancshares, Inc., a bank holding company. During
Mr. Hegis tenure on the Board, he has acquired an
in-depth knowledge of the operations of the Company. His broad
experiences in managing operating companies, corporate financing
and transactions and strategic planning make him an effective
Chairman of the Board.
Class III
Directors Continuing in Office until 2013 Annual
Meeting
Roy W. Haley
(64) was elected to the Companys
Board of Directors in March 1998. Mr. Haley serves as Chair
of the Audit Committee. Mr. Haley is the Executive Chairman
and, until September, 2009, was the Chief Executive Officer of
WESCO International, Inc., a wholesale supplier of electrical
and other industrial supplies and services. Prior to joining
WESCO in February 1994, he was President and Chief Operating
Officer of American General Corporation, one of the
nations largest consumer financial services organizations.
In addition to his service as a director of WESCO,
Mr. Haley served as a director of Cambrex Corporation, a
supplier of pharmaceutical and life science industry products
and services, for twelve years until his retirement in April
2010. He also served as a director of the Federal Reserve Bank
of Cleveland until his retirement in December 2010.
Mr. Haley has a history of public company leadership with
significant knowledge and operating experience in a distribution
company as Chairman and Chief Executive Officer of WESCO
International, Inc. This experience allows him to provide highly
informed guidance and counsel regarding the operations and value
proposition of a wholesale supplier supplemented with his direct
knowledge of the Companys lines of products.
Mr. Haley serves as the Chair of the Companys Audit
Committee, which position he has held at the pleasure of the
Board for the past 11 years, and as the Chair of the Audit
Committee of Cambrex Corporation. Mr. Haley is also
designated as one of the financial experts on the Audit
Committee. Through his present and past business experiences,
Mr. Haley has acquired significant understanding and
experience in financial matters of a publicly traded company,
internal controls and the functions of an Audit Committee.
Benson P. Shapiro
(69) was elected to the
Companys Board of Directors in November 1997.
Dr. Shapiro serves as Chair of the Governance Committee and
is a member of the Executive Committee. Dr. Shapiro has
served on the faculty of Harvard University for 39 years.
He currently is
The Malcolm P. McNair Professor of Marketing
Emeritus
at the Harvard Business School and the President of
B.P. Shapiro, Inc., a business consulting firm that he founded
in 1972. He has served as a consultant to over
300 companies including startups, medium-size firms and
large international corporations. He has taught a wide variety
of MBA courses including Industrial Marketing, Sales Management,
Creative Marketing Strategy and Integrated Product Line
Management. Leveraging his academic and consulting experiences,
Dr. Shapiro brings a significant understanding of marketing
strategy and sales management to the Boards deliberations
with particular strengths in pricing, product line planning and
marketing organizations. Dr. Shapiros experience as a
consultant and long service as a Company director contributes to
his engagement on governance and compliance matters, making him
an effective Chair of the Governance Committee.
Alex D. Zoghlin
(41) was re-elected to the
Companys Board of Directors in May 2008. Mr. Zoghlin
serves as a member of the Human Resources and Technology
Advisory Committees. Mr. Zoghlin is the Chief Executive
Officer of VHT, Inc., a marketing services provider for the real
estate industry, a position he has held since
6
2009. He previously served on the Board from November of 2000
until May 2006. He resigned at that time to focus primarily on
building G2 Switchworks, a Chicago-based travel/technology firm,
where he was President and Chief Executive Officer until its
change of ownership in 2008. He previously served as Chairman,
President and Chief Executive Officer of neoVentures Inc., a
venture capital investment company for emerging technology
companies. Prior to that, he was Chief Technology Officer of
Orbitz, LLC, a consumer-oriented travel industry portal backed
by major airline companies. Mr. Zoghlin has a history of
demonstrated leadership in
e-commerce
and technology. His experience in programming, developing and
implementing web-based solutions makes Mr. Zoghlin a
particularly effective member of our Technology Advisory
Committee, which provides critical guidance on the
Companys portfolio of information technology assets and
systems.
GOVERNANCE AND
BOARD MATTERS
Corporate
Governance Principles
The Company is committed to the use of sound corporate
governance principles and practices in the conduct of its
business. The Companys Board has adopted the United
Stationers Inc. Corporate Governance Principles (the
Governance Principles) to address certain
fundamental corporate governance issues. The Governance
Principles provide a framework for Company governance activities
and initiatives and cover, among other topics, Director
independence and qualifications, Board and Committee composition
and evaluation, Board access to members of management and
independent outside advisors, Board meetings (including meetings
in executive session without management present) and succession
planning. These principles also provide for the separation of
the position of Chairman of the Board, who would normally serve
as the Companys lead independent Director, from that of
Chief Executive Officer. The Governance Principles are included
under Corporate Governance as part of the
Investor Information section available through the
Companys website at
http://www.unitedstationers.com.
Neither the Governance Principles nor any other information
contained on or available through the Companys website and
referred to in this Proxy Statement is incorporated by reference
in, or considered to be part of, this Proxy Statement.
Code of
Conduct
The Companys Board of Directors also has adopted the
United Stationers Inc. Code of Business Conduct (the Code
of Conduct). The Code of Conduct applies to all Directors,
officers and employees, and covers topics such as compliance
with laws and regulations, proper use of the Companys
assets, treatment of confidential information, ethical handling
of actual or apparent conflicts of interest, accurate and timely
public disclosures, prompt internal reporting of violations and
accountability for adherence to its guidelines. A copy of the
Code of Conduct is included under Corporate
Governance as part of the Investor Information
section available through the Companys website at
http://www.unitedstationers.com.
Board
Independence
The Companys Board of Directors has affirmatively
determined that all of its members and the nominees, other than
Mr. Gochnauer, the Companys current Chief Executive
Officer, and Mr. Phipps, who will serve as the
Companys President and Chief Executive Officer as of the
2011 Annual Meeting, are independent within the meaning of the
Companys independence standards set forth in its
Governance Principles. The Companys Governance Principles
incorporate the director independence standards of The NASDAQ
Stock Market, Inc. (NASDAQ), and reflect the
Boards policy that a substantial majority of the Directors
who serve on the Companys Board should be independent
Directors. Indeed, for a number of years, a substantial majority
of the Companys Board of Directors has been comprised of
independent Directors. In determining that Mr. Haley is
independent, the Board considered that Mr. Haley is the
Executive Chairman of WESCO International, Inc.
(WESCO) and that WESCO purchased $1.1 million
of products from ORS Nasco, Inc. and Lagasse, Inc., each
wholly-owned subsidiaries of the Company, during 2010. The
amount of purchases was less than 5% of gross revenues of each
of ORS Nasco, Inc. and Lagasse, Inc. The Board concluded that
such transactions constituted an insignificant percentage of
WESCOs purchases and the Companys sales, that
Mr. Haley had no direct involvement in such transactions
and that such transactions, therefore, did not affect
Mr. Haleys independence. Based on the same
information and the representations from the Companys
management that such transactions were in the ordinary course of
business at the same prices and on the same terms as are
available to customers of the Company generally, the Audit
Committee of the Board, with
7
Mr. Haley abstaining, concluded that such transactions were
exempt under the Companys related person transaction
approval policy.
Board Leadership
Structure
The Companys Bylaws call for the Chairman of the Board to
be elected by the Board from among its members and to have the
powers and duties customarily associated with the position of a
non-executive Chairman. Consistent with the Companys
Corporate Governance Principles, the Board expects that in most
circumstances the only member of the Companys management
who would be invited to serve on the Board would be the
Companys chief executive officer. However, the
Companys Bylaws also provide that, while the Chairman may
hold an officer position, under no circumstances may the
Chairman also serve as the President or Chief Executive Officer
of the Company. The Chairman of the Board normally will serve as
the Companys lead independent Director and chairs
executive sessions of the Board. Since 1996, Frederick B.
Hegi, Jr. has served as the Companys independent
Chairman.
These principles are further enhanced in the Companys
Corporate Governance Principles which assist the Board in the
exercise of its responsibilities and in serving the best
interests of the Company and its stockholders. This structure is
intended to serve as a framework within which the Board may
conduct its business in accordance with applicable laws,
regulations and other corporate governance requirements.
Board
Diversity
The Governance Committee is responsible for evaluating potential
candidates for Board membership. In its evaluation process, the
Committee considers such factors as the experience, background,
skill sets, gender, and racial makeup of the current Board as
well as candidates individual qualities in these areas.
The Committee does not have a separate policy on diversity.
However, pursuant to the Companys Corporate Governance
Principles, diversity is one of the criteria to be considered
for board membership. For this purpose, the Committee considers
diversity broadly as set forth above. The Governance Committee
believes we have attracted directors representing a diverse base
of experience, skills and perspectives.
The Boards
Role in Risk Management
The Board of Directors takes an active role in risk oversight of
the Company both as a full Board and through its Committees.
Strategic risk, which relates to the Company properly defining
and achieving its high-level goals and mission, as well as
operating risk, the effective and efficient use of resources and
pursuit of opportunities, are regularly monitored and managed by
the full Board through the Boards regular and consistent
review of the Companys operating performance and strategic
plan. For example, at each of the Boards five regularly
scheduled meetings throughout the year, management provides the
Board presentations on the Companys various business units
as well as the Companys performance as a whole. In
addition, the Board discusses risks related to the
Companys business strategy at the Boards strategic
planning meetings every year in July and October and at other
meetings as appropriate. Similarly, significant transactions,
such as acquisitions and financings, are brought to the Board
and Finance Committee for approval.
Reporting risk and compliance risk are primarily overseen by the
Audit Committee. Reporting risk relates to the reliability of
the Companys financial reporting, and compliance risk
relates to the Companys compliance with applicable laws
and regulations. The Audit Committee meets at least four times
per year and, pursuant to its charter and established processes,
receives input directly from management as well as the
Companys independent registered public accounting firm,
Ernst & Young LLP, regarding the Companys
financial reporting process, internal controls and public
filings. The Companys internal audit function performs an
annual risk assessment to refresh its ongoing risk-based work
plan which includes coverage of financial, operational and
compliance risks, reporting results to the Audit Committee on a
regular basis. The Companys Compliance Committee and
Enterprise Risk Management Committee, both consisting of senior
level staff from the legal, finance, human resources and
information technology departments, as well as each business
unit, meet regularly to address compliance issues and other
enterprise-wide risks and identify any additional actions
required to mitigate these risks. Both of these management
committees report their results to the Audit Committee. The
Audit Committee also receives regular updates from the
Companys in-house attorneys regarding any Hotline reports,
Code of Conduct issues or other legal compliance concerns. See
Board
8
Committees Audit Committee below for further
information on how the Audit Committee fulfills, and assists the
Board of Directors oversight of, reporting and compliance
risks.
Additionally, the Finance Committee, Technology Advisory
Committee and Human Resources Committee each provides risk
oversight and monitoring with respect to the Companys
capital structure and corporate finance, deployment of
technology and structure of compensation programs, respectively.
See the individual descriptions of these committees for further
information regarding their roles.
Executive
Sessions
Non-management Directors meet regularly in executive sessions
without management. In accordance with the Companys
Governance Principles, executive sessions are held at least four
times a year. The Companys independent Chairman of the
Board presides at such sessions.
Self-Evaluation
The Board and each of the Audit, Governance, Human Resources,
Finance and Technology Advisory Committees conduct an annual
self-evaluation, as contemplated by the Companys
Governance Principles and the charters of such Board committees.
The Board also obtains peer evaluations of individual Director
performance in the course of its self-evaluation process.
Board Meetings
and Attendance
The Board of Directors held seven meetings during 2010. During
this period, each Director attended more than 75% of the
aggregate number of meetings of the Board of Directors and of
the Board Committees on which he or she served.
Board
Committees
General
The Board of Directors has established six standing
committees an Audit Committee, a Governance
Committee, a Human Resources Committee, a Finance Committee, a
Technology Advisory Committee and an Executive Committee. The
Governance Committee serves as and performs the functions of a
Board nominating committee. Each of the standing committees
operates under a written charter adopted by the Board. The
charters for the committees are included under Corporate
Governance as part of the Investor Information
section available through the Companys website at
http://www.unitedstationers.com.
The membership of and number of meetings held by each such
standing committee during 2010 are as follows:
|
|
|
Audit Committee 12 meetings
|
|
Governance Committee 13 meetings
|
Roy W. Haley Chair
|
|
Benson P. Shapiro Chair
|
Jean S. Blackwell
|
|
Daniel J. Connors
|
Daniel J. Good
|
|
Frederick B. Hegi, Jr.
|
Human Resources Committee 7 meetings
|
|
Executive Committee 0 meetings
|
Jean S. Blackwell Chair
|
|
Frederick B. Hegi, Jr. Chair
|
Charles K. Crovitz
|
|
Richard W. Gochnauer
|
Alex D. Zoghlin
|
|
Benson P. Shapiro
|
Finance Committee 11 meetings
|
|
Technology Advisory Committee 5 meetings
|
Daniel J. Good Chair
|
|
Charles K. Crovitz Chair
|
Daniel J. Connors
|
|
Alex D. Zoghlin
|
Frederick B. Hegi, Jr.
|
|
Noah T. Maffitt (1)
|
|
|
|
(1)
|
|
On February 23, 2010, Noah T. Maffitt became a member of
the Technology Advisory Committee. He resigned from the Board of
Directors on October 20, 2010.
|
9
Audit
Committee
The Board has determined that all of the above members of the
Audit Committee are independent pursuant to NASDAQs
current listing standards and
Rule 10A-3
of the Securities Exchange Act of 1934 (the Exchange
Act). No member of the Audit Committee received any
compensation from the Company during 2010 other than for
services as a member of the Board or one or more of its
committees. The Board also has determined that all Audit
Committee members are financially literate and at least two
members have financial management expertise, in accordance with
NASDAQ listing standards. In addition, the Board of Directors
has determined that Robert B. Aiken, Jr., Roy W. Haley and
Jean S. Blackwell qualify as audit committee financial
experts within the meaning of applicable Securities and
Exchange Commission (SEC) regulations.
The principal functions of the Audit Committee involve assisting
the Companys Board of Directors in fulfilling its
oversight responsibilities relating to: (1) the integrity
of the Companys financial statements; (2) the
soundness of the Companys internal control systems;
(3) assessment of the independence, qualifications and
performance of the Companys independent registered public
accountants; (4) performance of the internal audit
function; and (5) the Companys legal, regulatory and
ethical compliance programs. The Audit Committees twelve
meetings during 2010 included reviews with management and the
Companys independent registered public accountants
regarding the Companys financial statements before their
inclusion in the Companys annual and quarterly reports
filed with the SEC. For additional information, see Report
of the Audit Committee.
The Audit Committee operates under a written charter most
recently amended as of July 13, 2010. The charter was last
reviewed by the Committee in July 2010. The charter is included
under Corporate Governance as part of the
Investor Information section available through our
website at
http://www.unitedstationers.com.
Governance
Committee
The Governance Committee evaluates corporate governance
principles and makes recommendations to the full Board regarding
governance matters, including evaluating and recommending
Director compensation, overseeing the evaluation by the Board of
Directors of the performance of the Companys Chief
Executive Officer and the Board and reviewing succession
planning with respect to the Chief Executive Officer. The
Companys Board has determined that all of the members of
the Governance Committee are independent pursuant to current
NASDAQ listing standards. In performing the functions of a
nominating committee, the Governance Committee reviews and makes
recommendations to the full Board concerning the qualifications
and selection of Director candidates, including any candidates
that may be recommended by Company stockholders.
The Governance Committee operates under a written charter most
recently amended as of May 15, 2003. The charter was last
reviewed by the Committee in December 2010. The charter is
included under Corporate Governance as part of the
Investor Information section available through our
website at
http://www.unitedstationers.com.
Human
Resources Committee
The Human Resources Committee of the Board of Directors
generally acts as a Board compensation committee. It reviews and
approves or makes recommendations to management and the Board of
Directors with respect to compensation, employment agreements
and benefits applicable to executive officers. The Human
Resources Committee also oversees the development and
administration of compensation and benefits.
The Human Resources Committee operates under a written charter
most recently amended as of July 13, 2010. The charter was
last reviewed by the Committee in July 2010. The charter is
included under Corporate Governance as part of the
Investor Information section available through our
website at
http://www.unitedstationers.com.
The Human Resources Committee is required by its charter to meet
at least three times per year. During 2010, the Human Resources
Committee had seven meetings and met in executive session when
necessary with only the independent committee members and the
independent Chairman of the Board present during executive
session. The agendas, meetings and calendar are developed and
set by the Chair of the Human
10
Resources Committee with input from the Human Resources
Department and the Chief Executive Officer. The Chairman, Chief
Executive Officer, other members of management and outside
advisors may be invited to attend all or a portion of a Human
Resources Committee meeting, other than an executive session of
the Human Resources Committee members, depending on the nature
of the agenda items. Neither the Chief Executive Officer nor any
other member of management votes on items before the Human
Resources Committee; however, the Human Resources Committee and
the Board of Directors solicit the views of the Chief Executive
Officer on compensation matters, including the compensation of
our executive officers.
Among its executive compensation oversight responsibilities, the
Human Resources Committee approves the base salaries, annual
incentive compensation targets, benefits and perquisites of our
executive officers, other than the Chief Executive Officer whose
compensation is approved by the Governance Committee with input
from the Human Resources Committee. The Human Resources
Committee generally oversees the development and administration
of our compensation and benefits plans, programs and practices,
and reviews and makes determinations based on applicable data
and analysis. Recommendations are made by the Committee to the
Board on overall compensation and benefits objectives. With
respect to our annual incentive programs, the Human Resources
Committee approves performance targets under our Amended and
Restated 2004 Long-Term Incentive Plan or criteria applicable to
other executive officer bonuses and reviews attainment of such
targets or satisfaction of other relevant criteria. The Human
Resources Committee also administers and approves equity grants
to our executive officers under our Amended and Restated 2004
Long-Term Incentive Plan. The Committee also advises and
consults with the Governance Committee and the Board on
non-employee director compensation.
In 2010, at the request of the Board, management conducted a
risk analysis of compensation policies and practices. The Human
Resources Committee received a report from management regarding
its analysis of whether the Companys compensation policies
and practices for all employees, including executive officers,
are reasonably likely to incentivize employees to take excessive
risks or other actions inconsistent with Company policy that
would result in a material adverse effect on the Company.
Management identified all compensation policies and practices,
analyzed whether they might motivate employees to take
inappropriate risks and also considered internal controls that
mitigate any such risks. After completion of this analysis,
management reported to the Committee its conclusion that none of
the Companys compensation policies and practices is
reasonably likely to incentivize employees to take excessive
risks that would result in a material adverse effect on the
Company, and the Committee concurred with management.
The Human Resources Committee may establish its own procedural
rules except as otherwise prescribed by the Companys
Bylaws, applicable law or the NASDAQ listing standards. The
Human Resources Committee may delegate any of its
responsibilities to a subcommittee comprised of one or more
members of the Human Resources Committee, subject to such terms
and conditions (including required reporting back to the full
Committee) as the Human Resources Committee may prescribe.
The Human Resources Committee has the authority to retain
directly (and terminate the engagement of) any outside
compensation consultants, outside counsel or other advisors that
the Human Resources Committee in its discretion deems
appropriate to assist it in the performance of its functions,
with the sole authority to approve related retention terms and
fees for any such advisors. We will provide for appropriate
funding, as determined by the Human Resources Committee, for
payment of compensation to such outside advisors the Human
Resources Committee retains.
The Human Resources Committee has engaged the services of an
independent consultant, Frederic W. Cook & Co., Inc.
(F.W. Cook). During the last fiscal year, F.W. Cook
provided the Human Resources and Governance Committees with
updates on compensation trends and regulatory developments,
advice on proxy disclosures with regard to compensation matters
and other assistance in related items as requested by the
Committees including review of various materials prepared for
the Committee by management. In completing its work, F.W. Cook
was engaged directly on behalf of the Committees, did no other
work for the Company or any of its senior executives, and had no
other ties to the Company.
For additional information, see Executive
Compensation Compensation Discussion and
Analysis Use of Consultants.
11
Executive
Committee
The Executive Committee has the authority to act upon any
corporate matters that require Board approval, except where
Delaware law requires action by the full Board or where the
matter is required to be approved by a committee of independent
Directors in accordance with applicable regulatory requirements.
Finance
Committee
The purpose of the Finance Committee is to review and provide
guidance to the Companys Board of Directors and management
with respect to the Companys present and future capital
structure, requirements and opportunities, as well as plans,
strategies, policies, proposals and transactions related to
corporate finance, including potential acquisitions and
divestitures.
Technology
Advisory Committee
The purpose of the Technology Advisory Committee is to assist
the Companys Board of Directors in fulfilling its
oversight responsibilities relating to: (1) assessment and
management of the Companys portfolio of information
technology (IT) assets and systems;
(2) promotion of an effective, efficient, scalable,
flexible, secure and reliable IT infrastructure that enables the
Company to execute against goals and plans to achieve business
success, position the company for competitive advantage and
enhance the Companys interactions with all of its
customers; (3) consideration of the impact of emerging IT
developments that may affect the Companys IT systems or
business; (4) evaluation and oversight of the
Companys eBusiness strategy and technology-based marketing
efforts; and (5) alignment of the Companys IT
strategic direction, investment needs and priorities with its
overall business visions, goals and strategies.
Consideration of
Director Nominees
Mr. Robert B. Aiken, Jr. is a nominee for Director at
the 2011 Annual Meeting of Stockholders. During 2010 the Board
obtained recommendations from the Board members for possible
candidates to join the Board. Mr. Aiken was one of the
candidates recommended and thereafter joined the Board of
Directors in December 2010. Mr. Aiken was elected as a
Class I Director in order that, as a matter of good
governance, he would stand for reelection before the
stockholders at the 2011 Annual Meeting.
Mr. P. Cody Phipps is a nominee for Director at the 2011
Annual Meeting of Stockholders. Effective as of the 2011 Annual
Meeting, Mr. Phipps will assume the role of Chief Executive
Officer for the Company and as such has been nominated as a
candidate for the Board.
The Governance Committee periodically assesses the Boards
size and composition and whether there may be any near-term
vacancies on the Board due to retirement or otherwise. The
Governance Committee uses a variety of methods to identify and
evaluate potential Director nominees when the need for a new or
additional Director is identified. It may seek or receive
candidate recommendations from other Board members, members of
the Companys senior management, stockholders or other
persons. In addition, if and when it deems appropriate, the
Governance Committee may retain an independent executive search
firm to assist it in identifying potential Director candidates.
Any such candidates may be evaluated at regular or special
meetings of the Governance Committee and the Governance
Committee may solicit input from other Directors.
In evaluating any identified or submitted candidates for the
Board, the Governance Committee seeks to achieve a balance of
knowledge, skills, experience and capability on the Board and to
address the Board membership criteria set forth in the
Companys Governance Principles. In addition, the
Governance Committee believes that candidates must have high
personal and professional ethics and integrity, with values
compatible with those of the Company; broad and substantial
experience at a senior managerial or policy-making level as a
basis for contributing wisdom and practical insights; the
ability to make significant contributions to the Companys
success; and sufficient time to devote to their duties as a
Director. In addition, the Governance Committee believes it is
important that each Director represent the interests of all
stockholders.
The Governance Committees policy is to consider properly
submitted stockholder nominations for Director candidates in the
same manner as a committee-recommended nominee. To recommend any
qualified candidate for consideration by the Governance
Committee, a stockholder should submit a supporting written
statement to the Companys Secretary at United Stationers
Inc., One Parkway North Boulevard, Deerfield,
12
Illinois
60015-2559
in accordance with the procedures described later in this Proxy
Statement under the heading Stockholder Proposals.
This written statement must contain: (i) as to each
nominee, his or her name and all such other information as would
be required to be disclosed in a proxy statement with respect to
the election of such person as a Director pursuant to the
Exchange Act; (ii) the name and address of the stockholder
providing such recommendation, a representation that the
stockholder is the record owner of shares entitled to vote at
the meeting, the number of shares owned, the period of such
ownership and a representation that the stockholder intends to
appear in person or by proxy to nominate the person specified in
the statement; (iii) whether the nominee meets the
objective criteria for independence of directors under
applicable NASDAQ listing standards and the Companys
Governance Principles; (iv) a description of all
arrangements or understandings, and any relationships, between
the stockholder and the nominee or any other person or persons
(naming such person(s)) pursuant to which the nomination is to
be made by the stockholder; and (v) the written consent of
each nominee to serve as a Director if so elected.
Communications
with the Board and Annual Meeting Attendance
Any stockholder who desires to contact the Companys
Chairman of the Board, who serves as its lead independent
Director, or the other members of the Board of Directors may do
so by writing to: Chairman of the Board, or Board of Directors,
United Stationers Inc., One Parkway North Boulevard, Deerfield,
Illinois
60015-2559.
All such written communications will be forwarded to and
collected by the Companys Secretary and delivered in the
form received to the Chairman of the Board or, if so addressed
or deemed appropriate based on the facts and circumstances
outlined in the communication, to another member of the Board or
a chair of one of its standing committees. However, unsolicited
advertisements, invitations or promotional materials may not be
forwarded to Directors, in the discretion of the Secretary.
Directors are encouraged to attend annual meetings of the
Companys stockholders. All of the Companys Directors
then serving on the Board of Directors attended the 2010 Annual
Meeting of Stockholders.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
This section discusses the background and objectives of our
compensation programs for senior management and the material
elements of the compensation of each of the executive officers
identified in the following table, to whom we refer as our named
executive officers:
|
|
|
Name
|
|
Title
|
|
Richard W. Gochnauer
|
|
Chief Executive Officer
|
Victoria J. Reich
|
|
Senior Vice President and Chief Financial Officer
|
P. Cody Phipps
|
|
President and Chief Operating Officer
|
Stephen A. Schultz
|
|
Group President, Lagasse and ORS Nasco
|
Todd A. Shelton
|
|
President, United Stationers Supply
|
Executive
Summary
The main elements of our compensation program are base salary,
annual cash bonus and long-term equity incentive awards. We
target base salary at the fiftieth percentile for comparable
positions at companies in our peer group and general industry.
When we deliver targeted financial results, we aim to provide
total compensation (including base salary, cash bonus, equity
awards and other compensation) at or slightly above the fiftieth
percentile of our peer group and general industry. We seek to
pay our executives fairly while challenging them to achieve
incentive performance targets that exceed industry performance
expectations. In fiscal year 2010, incentive compensation
(annual cash bonus and equity awards) accounted for
approximately 74% of the total compensation of
Mr. Gochnauer and 62% of the average total compensation of
our other named executive officers, consistent with the Human
Resources Committees objective of promoting a pay
for performance culture by putting a greater percentage of
executives compensation at risk.
Despite a challenging economic environment, we delivered a
strong financial performance in fiscal year 2010. Our net income
and return on invested capital, adjusted to exclude items
discussed in more detail below,
13
grew 12%, and 44 basis points (bps),
respectively, Our total cost as a percentage of net sales (Total
Cost Factor), adjusted to exclude items discussed in more detail
below, improved by 12 bps. Our earnings per share grew 12%,
and we generated cash flow of $114.8 million from
operations. In addition, our total annual shareholder returns
for the fiscal years 2010, 2009 and 2008 were 12%, 40% and
(28%), respectively. This compares to total shareholder returns
of the S&P 500 Index of 13.1%, (6.5%) and (23%) over the
same periods. Our Human Resources Committee took into
consideration several factors to determine 2010 compensation,
including our financial and business results, individual
performance and competitive data. We review our compensation
programs annually and make changes as appropriate to further
align our executive compensation structure with our
stockholders interests and current market practices. The
Human Resources Committee made the following executive
compensation decisions in or with respect to 2010:
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|
|
Approved 2010 performance goals for our annual cash bonus plan,
including adjusted net income of $103.7 million, adjusted
ROIC of 10.47% and adjusted Total Cost Factor of 15.29% at the
corporate level, consistent with our Board-approved business
plan.
|
|
|
Approved target incentives for 2010 cash bonuses ranging from
50% to 80% of base salary for Mr. Gochnauer and the other
named executive officers.
|
|
|
Approved merit pay increases to our named executive officers
that reflected an assessment of individual performance and, in
some cases, increased responsibilities associated with job
promotions or a desire to bring the executives salary more
in line with our compensation philosophy.
|
|
|
Approved fiscal year 2010 cash bonus payouts that were paid at
100.48% of target for corporate level metrics, consistent with
the design and goals of our bonus plan.
|
|
|
Certified that the Companys economic profit in 2010
resulted in all restricted stock units granted in March 2009
being earned and approximately one-third of the target
restricted shares granted in March 2010 being vested.
|
|
|
Granted annual equity incentives to our named executive officers
that were consistent with our compensation philosophy and an
assessment of individual performance and expected future
contributions.
|
|
|
Eliminated the officer healthcare expense reimbursement program
and made modest adjustments to base salaries to reflect the
average value of such benefit to the participants, effective
January 1, 2011.
|
|
|
Updated the Companys stock ownership guidelines for
Directors and executive officers to increase the retention
guideline and to revise to market levels the equity ownership
values.
|
|
|
Approved amendments to the Executive Employment Agreements of
all named executive officers (other than Mr. Gochnauer and
Ms. Reich who have announced plans to leave the Company in
2011) to eliminate the
gross-up
payment to cover any excise tax in the event of a Change of
Control and provide that the Company may recover any cash or
equity awarded to the executive under certain circumstances in
connection with an accounting restatement by the Company.
|
We believe our executive pay is reasonable and provides
appropriate incentives to our executives to achieve our
financial and strategic goals without encouraging them to take
excessive risks in their business decisions. We evaluate
annually the major risks to our business, including how risks
taken by management could impact the value of executive
compensation. The changes we made to our compensation program
build upon our solid compensation governance framework and pay
for performance philosophy, which are demonstrated by the
following:
|
|
|
Significant stock ownership guidelines that are met or exceeded
by each of our named executive officers and Directors (other
than Mr. Aiken, who recently joined the Board of Directors).
|
|
|
A prohibition in the Companys insider trading policy
against hedging the economic risk of ownership of our stock by
executives and Directors.
|
|
|
Absence of any executive perquisites other than an annual cash
allowance and modestly enhanced insurance benefits.
|
|
|
Review of both the external marketplace and internal comparisons
among the executive team in order to factor in internal equity
considerations when making compensation determinations.
|
14
|
|
|
The Human Resources Committees engagement of its own
independent consultant that does not provide any services to
management and had no prior relationship with any of our named
executive officers.
|
|
|
A strong risk management program with specific responsibilities
assigned to management, the Board of Directors and its
committees.
|
Objectives and
Design of Our Compensation Program
The Companys executive compensation is designed to attract
talented executives, to reward them fairly for their
contributions to the Company, and to retain those individuals
who perform at or above our expectations. In addition, our
executive compensation program is intended to support our
strategic objectives and align the interests of our executives
and our stockholders. Our executive compensation program
consists of base salary, annual cash incentives, and long-term
equity incentives, as well as benefits that are generally
available to our salaried employees and certain perquisites. We
believe that spreading compensation across three primary
components annual base salary, annual cash incentive
that is tied to operating and financial performance, and
long-term incentives that reward our executives based on our
stock price performance provides a desirable balance
of fixed and at-risk compensation, balances short-term and
long-term goals, aligns the interests of management and
stockholders, and allows us to offer a compensation package that
is competitive in the marketplace.
The Companys management has retained Aon Hewitt
Associates, a human resources consulting firm (Aon
Hewitt), to provide management with information and advise
management on executive compensation matters. Aon Hewitt has
provided information, which management has validated and updated
through additional sources, about the total
compensation including base salary, annual incentive
compensation and long-term incentive compensation
paid to executives performing comparable jobs at companies
included in a comparator group of companies or those generally
included in Aon Hewitts general industry database
(collectively, the Compensation Data). The Human
Resources Committee has separately retained an independent
consultant, F. W. Cook, to advise the Committee on compensation
matters. For additional information about consulting services
provided by F. W. Cook and Aon Hewitt, see Use
of Consultants.
To determine what similar companies are paying for similar
positions in the outside labor market, management has reviewed
the Compensation Data relating to a comparator group consisting
of companies that are comparable to us in revenue or number of
employees, companies that are in similar industries to ours, and
other wholesalers. The Board of Directors reviewed the
recommendations of management and selected the following
seventeen companies for our 2010 comparator group:
|
|
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|
|
|
|
|
|
|
|
Comparator Company
|
|
Revenue
|
|
|
Type of Industry
|
|
Employee Count
|
|
|
Anixter International Inc.
|
|
$
|
5,500,000,000
|
|
|
Distribution communication products
|
|
|
7,811
|
|
Avnet Inc.
|
|
$
|
19,200,000,000
|
|
|
Distribution electronic components and computer
products
|
|
|
14,200
|
|
Brightpoint, Inc.
|
|
$
|
3,600,000,000
|
|
|
Distribution mobile phones and other wireless
products
|
|
|
2,705
|
|
Cardinal Health, Inc.
|
|
$
|
98,500,000,000
|
|
|
Distribution pharmaceuticals and other medical
supplies
|
|
|
31,200
|
|
CDW Corporation
|
|
$
|
8,100,000,000
|
|
|
Retail technology products
|
|
|
6,850
|
|
Fastenal Company
|
|
$
|
2,300,000,000
|
|
|
Distribution fasteners and other products
|
|
|
13,285
|
|
Genuine Parts Co.
|
|
$
|
10,100,000,000
|
|
|
Retail auto parts
|
|
|
29,000
|
|
Ingram Micro Inc.
|
|
$
|
34,600,000,000
|
|
|
Distribution computer products
|
|
|
13,750
|
|
Insight Enterprises, Inc.
|
|
$
|
4,800,000,000
|
|
|
Distribution computer hardware and software
|
|
|
4,898
|
|
Office Depot, Inc.
|
|
$
|
12,100,000,000
|
|
|
Retail office products
|
|
|
41,000
|
|
OfficeMax
|
|
$
|
7,200,000,000
|
|
|
Retail office products
|
|
|
31,000
|
|
Patterson Companies, Inc.
|
|
$
|
3,200,000,000
|
|
|
Distribution dental products
|
|
|
6,890
|
|
Staples, Inc.
|
|
$
|
24,300,000,000
|
|
|
Retail office products
|
|
|
91,095
|
|
15
|
|
|
|
|
|
|
|
|
|
|
Comparator Company
|
|
Revenue
|
|
|
Type of Industry
|
|
Employee Count
|
|
|
Sysco Corporation
|
|
$
|
37,200,000,000
|
|
|
Distribution food service
|
|
|
46,000
|
|
Tech Data Corporation
|
|
$
|
22,100,000,000
|
|
|
Distribution computer products
|
|
|
7,600
|
|
W. W. Grainger, Inc.
|
|
$
|
7,200,000,000
|
|
|
Distribution facilities maintenance and other
products
|
|
|
18,000
|
|
WESCO International, Inc.
|
|
$
|
5,100,000,000
|
|
|
Distribution electrical products
|
|
|
6,100
|
|
50
th
Percentile:
|
|
$
|
8,100,000,000
|
|
|
|
|
|
13,750
|
|
United Stationers Inc.
|
|
$
|
4,800,000,000
|
|
|
|
|
|
5,700
|
|
Because of the large variances in revenue among the Company, the
companies in our comparator group, and the other companies in
Aon Hewitts general industry database, regression
analysis a statistical technique for investigating
and modeling the relationship between variables is
used to estimate the effect that revenue variances have on
executive compensation and to adjust the Compensation Data for
such variances among the companies. This adjusted data is used
to create marketplace compensation profiles for our executives.
Our total compensation mix is targeted at setting base salary at
the fiftieth percentile of these marketplace compensation
profiles and setting short-term and long-term target incentives
at or slightly above the fiftieth percentile. We may depart from
these targets when appropriate based on the experience level of
an individual, his or her contributions to the Company, market
factors, or other considerations. No significant departures from
these targets were made for any of the named executive officers
in 2010. In general, we believe our targets allow us to recruit,
motivate, and retain the executive talent necessary to develop
and execute our strategy.
Elements of
Compensation
The primary elements of executive compensation are base salary,
annual cash incentive awards and long-term equity incentive
awards under our Amended and Restated 2004 Long-Term Incentive
Plan (LTIP). The Governance Committee of our Board
of Directors oversees the annual evaluation of
Mr. Gochnauers performance and determines his annual
base salary adjustments and annual cash and long-term incentive
targets with input from the Human Resources Committee.
Mr. Gochnauer annually reviews the performance of all other
executive officers and makes recommendations to the Human
Resources Committee with respect to their base salary
adjustments and annual cash and long-term incentive targets. The
Human Resources Committee approves the final base salary
adjustments and incentive targets of the other named executive
officers and exercises its discretion in modifying any
recommended adjustments or incentive targets.
The following table summarizes each element of our executive
compensation program, its purpose and role within our total
compensation program, and how the element is designed and
compensation levels are determined:
Base
Salary
|
|
|
Purpose and Role within Total
|
|
|
Compensation Package
|
|
Design and Determination
|
|
Provide fixed compensation to attract, motivate and retain
executive talent.
|
|
Base salaries are reviewed annually based on the following
factors:
|
Must generally be competitive and internally equitable to attract and retain talent.
Foundation of total pay, as annual and long-term incentive targets are established as a percentage of base salary.
|
|
The
median base salaries for executives with similar
responsibilities based on the Compensation Data
Adjustments
to reflect an individual executives responsibilities,
experience, job performance and contribution to overall business
goals
The
median merit (annual) increase percentage projected to be made
in the current year by comparator companies and by general
industry
Internal
equity among company
executives
|
16
Annual Cash
Incentive Awards
|
|
|
Purpose and Role within Total
|
|
|
Compensation Package
|
|
Design and Determination
|
|
Reward performance against established business goals and accomplishments in a given year.
Motivate executives to achieve financial and strategic annual objectives.
Focus executives appropriately on those short-term results that are closely tied to long-term stockholder value creation.
|
|
Each named executive officers annual cash incentive award
target is set as a percentage of his or her base salary. Each
executives annual cash incentive award payout is
determined by multiplying the dollar value of his or her
incentive target by the actual award payout percentage.
Target percentages are generally set at or slightly above the
median for annual cash incentives awarded to similar level
positions based on the Compensation Data, subject to adjustment
by the Human Resources Committee to reflect the executives
responsibilities, job performance, experience and contribution
to overall business goals. Mr. Phipps target incentive
was increased from 65% to 80% upon his promotion to President
and Chief Operating Officer as of September 1, 2010. Mr.
Sheltons target incentive was increased from 50% to 65%
upon his promotion to President, United Stationers Supply,
effective September 1, 2010. No other adjustments were made in
2010.
|
|
|
|
|
|
The Human Resources Committee approved five 2010 performance
objectives, including Company adjusted net income, total cost as
a percentage of sales, adjusted return on invested capital, OSHA
recordable index, and lost time severity index.
|
|
|
|
|
|
The 2010 target financial performance factors were established
at levels that were consistent with our expectation that our
long-term diluted earnings per share percentage growth rate will
be in the mid-teens. The 2010 target safety performance factors
were selected to encourage continuous safety improvement and to
foster a strong safety culture. The threshold, target and
maximum levels of each performance factor are set each year with
the following objectives: the relative difficulty of achieving
each level is consistent from year to year; the target level is
both challenging and achievable, reflects the midpoint of
planned Company performance and generally exceeds industry
performance expectations; the performance ranges within which
minimum and maximum incentive payouts can be earned are
consistent with the range of financial results within which
performance is expected to occur; and a minimum payment is made
to reward partial achievement of the targets and a maximum
payment rewards attainment of an aggressive, but potentially
achievable, level of performance. For a description of the
performance factors and the threshold, target and maximum goals
established by the Committee for 2010, see
2010 Annual Cash Incentive Objectives and Payout.
|
17
|
|
|
Purpose and Role within Total
|
|
|
Compensation Package
|
|
Design and Determination
|
|
|
|
If the Human Resources Committee determines that external
changes or other unanticipated business conditions materially
affected the fairness of the performance factors or unduly
influenced our ability to meet them, the Committee retains the
discretion to increase or decrease the performance objectives,
except no adjustment by the Committee may increase the annual
incentive paid to a named executive officer if the award is
intended to qualify as performance-based compensation under
Section 162(m) of the Internal Revenue Code (Code).
The Committee adjusted the 2010 performance factors to eliminate
the net positive impact on net income, Total Cost Factor and
ROIC of several non-recurring events, including the reversal of
liabilities related to a change in the Companys vacation
pay policy, the elimination of a post-retirement medical plan
and the charge for an early retirement program and workforce
realignment.
|
Long Term
Equity Incentive Awards
|
|
|
Purpose and Role within Total
|
|
|
Compensation Package
|
|
Design and Determination
|
|
Reward stockholder value creation as reflected in stock price appreciation. Vesting provisions and terms of non-qualified stock options, restricted stock and restricted stock units are consistent with promoting a long-term management perspective.
Create direct link between compensation of executives and interests of stockholders with awards that derive value based on our stock price.
Reward performance against long-term financial objectives.
Encourage long-term planning.
Retain executives during the vesting period.
|
|
Two equity grants, each of which was targeted to provide 50% of
the 2010 LTIP economic value target approved for each executive,
were made to the named executive officers in 2010. The first
grant, effective March 1, 2010, was a restricted stock unit
award which vests in three annual increments targeted at 1/3 of
the number of units granted, but ranging from (i) 0 to 50% of
the number of units granted based on the Companys
achievement of economic profit within a projected range for
2010; (ii) 0 to 100% of the number of units granted (less any
previously-vested units) based on the Companys achievement
of cumulative economic profit within a projected range for the
years 2010 and 2011; and (iii) 0 to 150% of the number of units
granted (less any previously-vested units) based on the
Companys achievement of economic profit within a projected
range for the years 2010 through 2012. The second grant,
effective September 1, 2010, was a restricted stock award which
vests in three substantially equal annual increments, except
that if the aggregate diluted earnings per share of the Company
for the four quarters preceding a vesting date do not exceed
$1.00, the restricted stock scheduled to vest on that date will
be forfeited. (The $1.00 earnings per share requirement is
designed to assure tax deductibility as described below. See
Tax Deductibility.) To convert the
economic value of the restricted stock unit awards or restricted
stock awards into the target number of restricted stock units or
the number of restricted shares granted, respectively, the
economic value of the award was divided by the closing price of
our common stock on the effective date of the grant.
|
|
|
The economic values of named executive officers total LTIP
awards are generally targeted at or slightly above the median
value of equity awards to executives in similar positions based
on comparator group and general industry compensation data,
subject to adjustment by the Committee to reflect the
executives responsibilities, job performance and
contribution to overall business goals, as well as the
Companys desire to retain executives. The economic profit
performance target for the March 1, 2010 restricted stock unit
award reflected the midpoint of planned Company performance,
which exceeded industry performance expectations.
|
18
|
|
|
Purpose and Role within Total
|
|
|
Compensation Package
|
|
Design and Determination
|
|
|
|
In addition to granting stock-based awards annually to existing
executives and upon the hiring of new executives, management may
recommend and the Committee may grant special stock-based awards
to retain or reward executives. No such grants to named
executive officers were made in 2010.
|
Perquisities
and Other Benefits
|
|
|
Purpose and Role within Total
|
|
|
Compensation Package
|
|
Design and Determination
|
|
Provide a complete and competitive compensation package that
supports our goal of attracting and retaining key executive
talent.
|
|
Cash allowances are provided in lieu of separate perquisite
programs such as auto allowances, financial planning
reimbursements, physical examination reimbursements, and
supplemental liability insurance. The Chief Executive Officer
recommends, and the Committee approves, perquisite allowances
based on the Compensation Data.
|
Provide competitive benefits to promote the health, well-being,
and financial security of our executives.
|
|
Other executive benefits include:
Officer
healthcare expense reimbursement program, which allows
executives to be reimbursed for 100% of eligible covered
healthcare expenses not paid by the general employee health
plan this benefit was terminated as of January 1,
2011
Group
life insurance and accidental death and dismemberment insurance
equal to
2
1
/
2
times the executives base salary, up to a maximum benefit
of $1.2 million
$300,000
of business travel insurance and long-term disability insurance
equal to 60% of executives annual base salary, up to a
maximum of $15,000 per month this benefit was
reduced to 40% of the executives annual base salary as of
January 1, 2011
|
|
|
Our executives are eligible to participate in all of our other
employee benefit plans, such as medical, dental, vision and
401(k) plan. Executives hired prior to January 1, 2008 are also
eligible to receive a pension benefit from our frozen pension
plan. Mr. Gochnauer will be provided a non-qualified retirement
benefit equal to the additional pension benefit from five years
of additional age and service credits. See Executive
Compensation Retirement Benefits.
|
Employment
Contracts
|
|
|
Purpose and Role within Total
|
|
|
Compensation Package
|
|
Design and Determination
|
|
Contractually set forth the compensation, benefits and duties,
including restrictive covenants, of executives.
|
|
These Agreements set forth each executives initial annual
salary, benefits during employment and post-termination
benefits, including in the event of a Change of Control.
|
Help assure retention of executive experience, skills,
knowledge, and background for the benefit of the Company, and
the efficient achievement of the long-term strategy of the
Company.
|
|
The benefit levels and triggering events have been established
to be competitive with the general industry based on publicly
available data.
|
Based on its evaluation of the factors listed above
including base salaries and annual and long-term incentive
compensation at comparator companies; each named executive
officers individual responsibilities, job performance and
contribution to achievement of business objectives; alignment of
executives and stockholders interests; and
attracting, motivating and retaining executive
talent the Human Resources
19
Committee believes the amounts paid to each named executive
officer and the targets established for each named executive
officer for 2010 were appropriate.
2010 Base Salary
Adjustments
In providing input to the Governance Committee to establish
Mr. Gochnauers new base salary as of April 1,
2010, the Human Resources Committee reviewed the Compensation
Data, as well as benchmark data compiled from other external
sources, relating to the Chief Executive Officer position. Such
information reflected that Mr. Gochnauers base salary
was at the median. After consideration of the report and the
performance of objectives by Mr. Gochnauer during the
previous year, the Governance Committee approved a 1.7% increase
in Mr. Gochanuers base salary as of April 1,
2010.
The Human Resources Committee set the 2010 base salary increases
of the other named executive officers based on recommendations
from Mr. Gochnauer. In making his salary evaluations,
Mr. Gochnauer assessed each executives
responsibilities, job performance and contributions to overall
business goals, including evaluating the executives in relation
to the entire executive team. Based on these factors,
Mr. Gochnauer recommended to the Human Resources Committee
salary increases for the other named executive officers that
ranged from 2.0% to 3.0%. After considering
Mr. Gochnauers recommendations, the Human Resources
Committee approved his proposed merit increases for the named
executive officers. On September 1, 2010, in connection
with his promotion to President, Supply Division,
Mr. Sheltons base salary was increased by 29.8% to
reflect his additional responsibilities. Also on
September 1, 2010, Mr. Phipps base salary was
increased by 21.7% to reflect his new responsibilities as
President and Chief Operating Officer of the Company. The
resulting base salaries were generally consistent with the
median base salaries for executives with similar
responsibilities based on the Compensation Data.
2010 Annual Cash
Incentive Awards
Under the 2010 Management Cash Incentive Plan (MIP)
established pursuant to the LTIP, executives are eligible to
receive annual cash bonuses based on the Companys
achievement of specific performance objectives. During the first
quarter of 2010, the Human Resources Committee established the
following threshold, target, and maximum levels, as well as the
actual performance level, and the percentage of target payout
for each of the 2010 MIP performance objectives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 Performance Objectives
|
|
Weight
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Actual
|
|
% Achievement
|
|
Adjusted Net Income
|
|
|
45.0
|
%
|
|
$
|
88,100,000
|
|
|
$
|
103,700,000
|
|
|
$
|
114,100,000
|
|
|
$
|
105,567,000
|
|
|
|
117.95
|
%
|
Total Cost as a % of Net Sales
|
|
|
25.0
|
%
|
|
|
15.77
|
%
|
|
|
15.29
|
%
|
|
|
15.05
|
%
|
|
|
15.41
|
%
|
|
|
74.88
|
%
|
Adjusted Return on Invested Capital
|
|
|
25.0
|
%
|
|
|
9.74
|
%
|
|
|
10.47
|
%
|
|
|
10.95
|
%
|
|
|
10.54
|
%
|
|
|
114.71
|
%
|
OSHA Recordable Index
|
|
|
3.5
|
%
|
|
|
2.26
|
|
|
|
2.15
|
|
|
|
1.95
|
|
|
|
2.27
|
|
|
|
0.00
|
%
|
Lost-Time Severity Index
|
|
|
1.5
|
%
|
|
|
N/A
|
|
|
|
15.00
|
|
|
|
9.00
|
|
|
|
22.00
|
|
|
|
0.00
|
%
|
Total
|
|
|
100.0
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
100.48
|
%
|
|
|
|
(1)
|
|
Mr. Phipps 2010 MIP payout was based 70% on Company
performance against MIP objectives and 30% on United Stationers
Supply Division performance against comparable objectives for
United Stationers Supply Division from January through August,
2010, except that, with respect to United Stationers Supply
Division performance objectives, the adjusted net income
objective was replaced by United Stationers Supply Division
earnings before interest and taxes, defined as net sales minus
total cost of sales minus operating expenses, as derived from
the Companys reported earnings and adjusted for the same
items as affected adjusted net income. From September through
December, 2010, Mr. Phipps 2010 MIP payout was based
solely on Company performance against MIP objectives.
|
|
(2)
|
|
Mr. Schultz 2010 MIP payout was based 50% on Company
performance against MIP objectives, 25% on Lagasse, Inc.
performance against its objectives and 25% on ORS Nasco
performance against its objectives. The Lagasse, Inc. and ORS
Nasco performance objectives were comparable to Company
objectives, except that the adjusted net income Company
objective was replaced by earnings before interest and taxes of
Lagasse, Inc. or ORS Nasco, as the case may be, with earnings
before interest and
|
20
|
|
|
|
|
taxes being defined as net sales minus total cost of sales minus
operating expenses, as derived from the Companys reported
earnings and adjusted for the same items as affected adjusted
net income.
|
|
(3)
|
|
Mr. Sheltons 2010 MIP payout was based 30% on Company
performance against MIP objectives and 70% on Lagasse, Inc.
performance against comparable objectives for Lagasse, Inc. from
January through August, 2010, except that, with respect to the
Lagasse, Inc. performance objectives, the adjusted net income
objective was replaced by Lagasse, Inc. earnings before interest
and taxes, defined as net sales minus total cost of sales minus
operating expenses, as derived from the Companys reported
earnings and adjusted for the same items as affected adjusted
net income. From September through December, 2010,
Mr. Sheltons 2010 MIP payout was based 70% on Company
performance against MIP objectives and 30% on United Stationers
Supply Division performance against comparable objectives for
United Stationers Supply Division, except that, with respect to
United Stationers Supply Division performance objectives, the
adjusted net income objective was replaced by United Stationers
Supply Division earnings before interest and taxes, defined as
net sales minus total cost of sales minus operating expenses, as
derived from the Companys reported earnings and adjusted
for the same items as affected adjusted net income.
|
For purposes of the 2010 MIP, adjusted net income was defined by
the Human Resources Committee to mean net income as reported in
our audited financial statements, adjusted for the following
(net of tax): the vacation pay policy change, the early
retirement/workforce realignment and post-retirement medical
plan termination. Total cost was defined as operating expenses
plus cost components of gross margin covering occupancy,
advertising materials, distress loss, net delivery freight and
net advertising freight (excluding the vacation pay policy
change, early retirement/workforce realignment and
post-retirement medical plan termination). Adjusted return on
invested capital was determined by dividing adjusted after-tax
earnings from continuing operations by our twelve-month average
of total assets (excluding cash) minus current liabilities
(excluding debt), deferred taxes and long-term liabilities
(adjusted for the carrying value within the Companys Other
Comprehensive Income of the assets and liabilities associated
with pension plans, post-retirement benefit plans and interest
rate swap agreements and excluding the impact of the vacation
pay policy change, early retirement/workforce realignment and
post-retirement medical plan termination). The last two MIP
performance objectives reflected our safety performance, as
measured by the frequency of reportable incidents (as defined by
Occupational Health and Safety Administration (OSHA)
guidelines) and the number of lost time days, from which the
Lost Time Severity Index is calculated. We believe this mix of
performance measures encourages employees to focus appropriately
on the Companys key financial and strategic objectives.
Payment of awards under the 2010 MIP was based upon the level of
achievement of each objective. The payout on each performance
objective could range from 0% to 200% of the target award
related to that objective, depending on whether our performance
on that objective is below threshold (payout of 0%); between
threshold and target (payout greater than 0% but less than
100%); between target and maximum (payout between 100% and
200%); or at or above maximum (payout of 200%).
Each named executive officers 2010 annual incentive target
was set as a percentage of his or her base salary that generally
reflected the median award target for executives with similar
responsibilities based on the Compensation Data. Each
executives actual incentive payout was determined by
multiplying the dollar value of his or her incentive target by
the actual award payout percentage. The 2010 targets for the
named executive officers and the actual incentives paid to the
executives are listed in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
|
2010
|
|
2010
|
|
Incentive Award
|
|
2010
|
|
|
Incentive Target
|
|
Incentive
|
|
as a Percent of
|
|
Incentive
|
Name
|
|
(% of Base Salary)
|
|
Target ($)
|
|
Target (%)
|
|
Paid ($)
|
|
Richard W. Gochnauer
|
|
|
80
|
|
|
|
729,000
|
|
|
|
100.48
|
|
|
|
732,499
|
|
Victoria J. Reich
|
|
|
65
|
|
|
|
274,641
|
|
|
|
100.48
|
|
|
|
275,960
|
|
P. Cody Phipps
|
|
|
65/80
|
(1)
|
|
|
371,278
|
|
|
|
106.11
|
(2)
|
|
|
393,956
|
|
Stephen A. Schultz
|
|
|
65
|
|
|
|
250,705
|
|
|
|
105.99
|
|
|
|
265,722
|
|
Todd A. Shelton
|
|
|
50/65
|
(1)
|
|
|
188,385
|
|
|
|
81.48
|
(2)
|
|
|
153,491
|
|
|
|
|
(1)
|
|
On September 1, 2010, in connection with his promotion to
President and Chief Operating Officer, Mr. Phipps
2010 incentive target was increased from 65% to 80% of his base
salary on a pro-rated basis for the year. On September 1,
2010, in connection with his promotion to President, United
Stationers
|
21
|
|
|
|
|
Supply, Mr. Sheltons 2010 incentive target was
increased from 50% to 65% of his base salary on a pro-rated
basis for the year.
|
|
(2)
|
|
2010 Incentive Target ($) is a calculation which reflects
pro-ration of the various base salaries and annual incentive
targets for these executives based on mid-year position changes.
|
The annual cash incentive award payout has been at or above the
overall target level twice in the last five years, but during
that period we have never achieved the maximum performance
level. The annual incentive payout percentage over the past five
years has ranged from approximately 20% to 164% of
participants target award opportunity. The Committee
generally attempts to set the minimum, target and maximum levels
so the relative difficulty of achieving the target level is
consistent from year to year, based on our financial plan for
the year.
2010 Long Term
Incentive Equity Awards
The Human Resources Committee approved the following long term
incentive equity award grants to all executive officers,
effective on the dates indicated during 2010:
|
|
|
March 1, 2010 Restricted Stock Unit Awards, approved at the
February 2010 meeting of the Committee, were designed to provide
economic value equal to 50% of the 2010 LTIP economic value
target approved for each executive; and
|
|
|
September 1, 2010 Restricted Stock Awards, approved at the
July 2010 meeting of the Committee, were designed to deliver 50%
of the 2010 LTIP economic value target approved for each
executive.
|
In addition to granting stock-based awards annually to existing
executives and upon the hiring of new executives, management may
recommend and the Committee may grant special stock-based awards
to retain or reward executives. No such grants were made in 2010
to named executive officers.
For 2010, the LTIP economic value targets were generally set at
the median amounts for executives with similar responsibilities
based on the Compensation Data. The consistent grant level among
the executive officers other than Mr. Gochnauer was
intended to create internal pay equity among our executive
officers.
2011 Compensation
Program
The Committee approved the following aspects of the 2011
compensation program for executive officers:
|
|
|
Annual salary adjustments as of April 1, 2011 based on a
2.5% budget guideline, including .5% provided only to high
performers, and generally consistent with the design features
and determination processes used in 2010;
|
|
|
Annual cash incentive awards reflecting individual incentive
targets, performance objectives and other design features
generally consistent with those provided in the 2010 MIP, except
for the elimination of the safety metric and the increase of the
weighting of the ROIC metric from 25% to 30% in the 2011
MIP; and
|
|
|
March 1, 2011 Restricted Stock Unit Awards designed to
deliver 50% of the 2011 economic value target approved for each
executive and having terms generally the same as those set forth
in the March 1, 2010 grant, each such award to vest
annually up to 50% of the target units (with a maximum payout of
150% of the target units) to the extent earned based on the
Companys cumulative economic profit during the
3-year
performance period beginning January 1, 2011.
|
Stock
Ownership Guidelines
We believe that the Company and its stockholders are best served
by managing the business with a long-term perspective while
delivering strong annual results. We believe that stock
ownership is an important tool to strengthen the alignment of
interests of stockholders, Directors, and executive officers.
Accordingly, in 2007 the Board of Directors adopted stock
ownership guidelines for Directors and for all executive
officers. The guidelines, as amended in 2010 after a review of
peer practices, specify that each Director and executive officer
should retain 100 percent of any shares of Company common
stock acquired through equity-based grants made by the Company
after May 1, 2004 under our incentive plans, until he or
she attains and continues to maintain stock, restricted stock,
restricted stock units and vested stock option ownership having
a value equal to at least the multiple of cash retainer or
annual base salary set forth in the table below. As of
22
March 1, 2011, all of the Directors and executive officers
had attained such ownership (other than Mr. Aiken, who
recently joined the Board of Directors). All Directors and
executive officers fully complied with the retention aspects of
the stock ownership guidelines in 2010.
|
|
|
|
|
Name
|
|
Salary Multiple
|
|
Directors
|
|
|
Five x annual cash retainer
|
|
Richard W. Gochnauer
|
|
|
Five x base salary
|
|
Victoria J, Reich
|
|
|
Three x base salary
|
|
P. Cody Phipps
|
|
|
Three x base salary
|
|
Stephen A. Schultz
|
|
|
Three x base salary
|
|
Todd A. Shelton
|
|
|
Three x base salary
|
|
The value of all of the following types of Company stock, stock
units or stock options owned by or granted to the participant
qualifies toward the participants attainment of the target
multiple of pay:
|
|
|
Vested and unvested restricted stock/stock units
|
|
|
Shares owned outright/shares beneficially owned
|
|
|
Shares owned through the Companys employee stock purchase
plan or 401(k) plan
|
|
|
Shares attained through a deferred stock unit plan
|
|
|
Vested
in-the-money
stock options reflecting the gross value equal to the spread
between the strike price (closing stock price on the date of
grant) and the fair market value
|
The Board and the Committee may reduce future long-term
incentive grants or other compensation provided to executives
who do not comply with the guidelines. Under our insider trading
policy, Directors and executive officers, as well as other
employees, are prohibited from selling short or trading or
purchasing put or call options on our
common stock.
Employment
Contracts
We have entered into employment agreements with each of the
named executive officers. The named executive officers
benefits in the event of a change of control have a double
trigger, meaning the executives are not automatically
entitled to any benefits upon a change of control. Rather, they
are entitled to receive severance following a change of control
only if, within the period of time specified in their respective
employment contracts, their employment is terminated by the
Company without cause or by the executive for good reason. We
believe these change of control severance terms help maintain
the named executive officers objectivity in
decision-making and provide another vehicle to align the
interests of the named executive officers with the interests of
our stockholders. We also believe that the double-trigger for
severance in the case of a change of control encourages
executives to remain with us through the closing of a change of
control transaction, providing stability at a critical time. We
amended the employment agreement with each named executive
officer, except Mr. Gochnauer and Ms. Reich, to among
other things conform them to a consistent form, eliminate the
excise tax
gross-up
payment to cover any excise tax imposed on the executive by
Section 4999 of the Code in the event of a Change of
Control, and provide that the Company may recover any cash or
equity awarded to the executive under certain circumstances in
connection with an accounting restatement by the Company.
Tax
Deductibility
Section 162(m) of the Code generally limits the corporate
tax deduction for compensation paid to the chief executive
officer and the four other most highly compensated executives to
$1 million annually, unless certain requirements are
satisfied. To maximize the corporate tax deduction, our MIP and
our LTIP are designed to comply with the requirements of
Section 162(m) of the Code and were approved by our
stockholders. As the $1 million limit does not apply to
compensatory amounts that qualify as performance-based
compensation under Section 162(m), performance-based awards
made pursuant to these plans are intended to qualify for
corporate tax deductibility.
23
We intend to use performance-based compensation to minimize the
effect of the limits imposed by Section 162(m) to the
extent that compliance with Code requirements does not conflict
with our compensation objectives. In some cases, however, we
believe the loss of some portion of a corporate tax deduction
may be necessary and appropriate in order to attract and retain
qualified executives.
Use of
Consultants
Management retained Aon Hewitt Associates in 2010 to provide
industry and comparator group compensation market data and
analysis. In addition, Aon Hewitt Associates provided consulting
services to management, including consulting on compensation and
benefits plan design, individual job compensation analysis,
pension calculations, long-term incentive calculations including
fair value calculations using Aon Hewitts proprietary
method, and annual Chief Executive Officer compensation.
The Human Resources Committee retained the services of F.W. Cook
in 2010 to advise the Committee in connection with its review of
management recommendations with respect to base salary
adjustments, annual cash incentive awards and long-term
incentive equity awards for executive officers, and inform the
Committee of regulatory developments and implications.
Other
Matters
In October 2010, the Human Resources Committee adopted
amendments to the LTIP and amended and restated the
Companys Deferred Compensation Plan and the Governance
Committee adopted amendments to the Nonemployee Directors
Deferred Stock Compensation Plan in order to conform those plans
with guidance issued by the Internal Revenue Service with
respect to Section 409A under the Code.
Human Resources
Committee Report
The Human Resources Committee of the Board of Directors has
reviewed and discussed the Compensation Discussion and Analysis
with management and, based on such review and discussions, the
Human Resources Committee recommended to the Board that the
Compensation Discussion and Analysis be included in this Proxy
Statement and incorporated by reference in the Companys
Annual Report on
Form 10-K.
The Human Resources Committee:
Jean S. Blackwell, Chair
Charles K. Crovitz
Alex D. Zoghlin
24
Summary
Compensation Table
The following table summarizes the compensation of the principal
executive officer (CEO), principal financial officer (CFO), and
the next three highest compensated executive officers who were
serving as such at December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Incentive Plan
|
|
Compensation
|
|
All Other
|
|
|
Name and Principal
|
|
|
|
Salary(1)
|
|
Awards(2)
|
|
Compensation(3)
|
|
Earnings(4)
|
|
Compensation(5)
|
|
Total
|
Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Compensation ($)
|
|
Richard W. Gochnauer
|
|
|
2010
|
|
|
|
911,250
|
|
|
|
2,050,026
|
|
|
|
732,499
|
|
|
|
17,620
|
|
|
|
32,290
|
|
|
|
3,743,685
|
|
Chief Executive Officer
|
|
|
2009
|
|
|
|
882,001
|
|
|
|
2,305,091
|
|
|
|
|
|
|
|
29,534
|
|
|
|
34,224
|
|
|
|
3,250,850
|
|
|
|
|
2008
|
|
|
|
890,500
|
|
|
|
967,504
|
|
|
|
161,765
|
|
|
|
28,823
|
|
|
|
32,548
|
|
|
|
2,081,140
|
|
Victoria J. Reich
|
|
|
2010
|
|
|
|
422,525
|
|
|
|
510,033
|
|
|
|
275,960
|
|
|
|
9,866
|
|
|
|
28,458
|
|
|
|
1,246,842
|
|
Senior Vice President
|
|
|
2009
|
|
|
|
407,680
|
|
|
|
614,636
|
|
|
|
|
|
|
|
8,116
|
|
|
|
25,106
|
|
|
|
1,055,538
|
|
And Chief Financial
|
|
|
2008
|
|
|
|
412,000
|
|
|
|
247,503
|
|
|
|
56,132
|
|
|
|
20,700
|
|
|
|
30,010
|
|
|
|
766,345
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. Cody Phipps
|
|
|
2010
|
|
|
|
504,504
|
|
|
|
622,043
|
|
|
|
393,956
|
|
|
|
12,579
|
|
|
|
28,967
|
|
|
|
1,562,049
|
|
President and Chief Operating Officer
|
|
|
2009
|
|
|
|
469,018
|
|
|
|
725,929
|
|
|
|
|
|
|
|
12,065
|
|
|
|
25,714
|
|
|
|
1,232,726
|
|
|
|
|
2008
|
|
|
|
471,816
|
|
|
|
288,010
|
|
|
|
69,638
|
|
|
|
12,308
|
|
|
|
29,954
|
|
|
|
871,726
|
|
Stephen A. Schultz
|
|
|
2010
|
|
|
|
385,700
|
|
|
|
467,529
|
|
|
|
265,722
|
|
|
|
6,270
|
|
|
|
30,520
|
|
|
|
1,155,741
|
|
Group President,
|
|
|
2009
|
|
|
|
372,399
|
|
|
|
481,227
|
|
|
|
|
|
|
|
7,777
|
|
|
|
28,421
|
|
|
|
889,824
|
|
Lagasse and ORS Nasco
|
|
|
2008
|
|
|
|
331,975
|
|
|
|
254,539
|
|
|
|
195,477
|
|
|
|
6,836
|
|
|
|
31,973
|
|
|
|
820,800
|
|
Todd A. Shelton
|
|
|
2010
|
|
|
|
336,771
|
|
|
|
282,536
|
|
|
|
153,491
|
|
|
|
|
|
|
|
27,499
|
|
|
|
800,297
|
|
President, United Stationers Supply
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects base salary amounts earned during 2010, including any
portions deferred under the 401(k) Savings Plan and the Deferred
Compensation Plan of the Companys wholly owned subsidiary,
United Stationers Supply Co. (USSC).
|
|
(2)
|
|
Amounts shown are based upon the grant date fair value of equity
awards computed in accordance with Financial Standards Board
Accounting Standards Codification (ASC) Topic 718,
Compensation Stock Compensation and represent the
maximum value assuming the highest level of performance. See
Note 3, Share-Based Compensation, to the
Companys audited financial statements contained in our
annual reports on
Form 10-K
for the years ended December 31, 2010, 2009, and 2008, for
a discussion of the assumptions used in calculating these values.
|
|
(3)
|
|
The amounts shown represent annual cash incentives earned based
on 2010 performance and paid in March of 2011. These amounts
were paid under the MIP pursuant to the Companys LTIP: see
Compensation Discussion and
Analysis Elements of Compensation Annual
Incentive Awards: 2010 Annual Cash Incentive Awards.
|
|
(4)
|
|
This amount represents the change in value under the
Companys Pension Plan, except for Mr. Shelton who is
not eligible for the Plan. Earnings on deferred compensation are
not reflected in this column because the investment options
under the non-qualified Deferred Compensation Plan are the same
choices available to all employees under the 401(k) Savings Plan
and the named executive officers do not receive preferential
earnings on their investments.
|
|
(5)
|
|
The amounts shown for 2010 include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer Health Care
|
|
|
|
|
|
|
|
|
|
|
Benefits and Other
|
|
Total All Other
|
|
|
|
|
401(k) Match
|
|
Cash Perquisite
|
|
Perquisites
|
|
Compensation
|
|
|
Name
|
|
($)
|
|
Allowance ($)
|
|
($)
|
|
($)
|
|
|
|
Richard W. Gochnauer
|
|
|
7,350
|
|
|
|
24,000
|
|
|
|
940
|
|
|
|
32,290
|
|
|
|
|
|
Victoria J. Reich
|
|
|
7,350
|
|
|
|
20,000
|
|
|
|
1,108
|
|
|
|
28,458
|
|
|
|
|
|
P. Cody Phipps
|
|
|
7,350
|
|
|
|
20,000
|
|
|
|
1,617
|
|
|
|
28,967
|
|
|
|
|
|
Stephen A. Schultz
|
|
|
7,350
|
|
|
|
20,000
|
|
|
|
3,170
|
|
|
|
30,520
|
|
|
|
|
|
Todd A. Shelton
|
|
|
7,350
|
|
|
|
18,000
|
|
|
|
2,149
|
|
|
|
27,499
|
|
|
|
|
|
25
Grants of
Plan-Based Awards During 2010
The compensation plans under which the grants in the following
table were made are described under
Compensation Discussion and
Analysis Elements of Compensation Long
Term Equity Incentive Awards and
Compensation Discussion and
Analysis Elements of Compensation 2010
Long Term Incentive Equity Awards. The LTIP permits
different types of awards, including but not limited to stock
options, restricted stock awards, stock appreciation rights,
cash incentives awards, and performance based awards. The LTIP
requires that in the event of a corporate transaction involving
the Company (including without limitation, any stock dividend,
stock split, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation,
split-up,
spin-off, combination or exchange of shares), outstanding equity
awards (including outstanding awards under the Prior Equity
Plans) will be proportionately adjusted.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Committee
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of the
|
|
Estimated Future Payouts Under
|
|
Estimated Future Payouts
|
|
|
|
|
|
|
Board of
|
|
Non-Equity Incentive Plan
|
|
Under Equity Incentive Plan
|
|
Grant Date Fair Value
|
|
|
|
|
Directors
|
|
Awards(1)
|
|
Awards(2)(3)
|
|
of Stock and Option
|
|
|
Grant
|
|
Action
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Awards
|
Name
|
|
Date
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
($)
|
|
Richard W. Gochnauer
|
|
|
3/1/2010
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,855
|
|
|
|
25,283
|
|
|
|
1,000,007
|
|
|
|
|
9/1/2010
|
|
|
|
7/13/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,839
|
|
|
|
21,839
|
|
|
|
1,050,019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
729,000
|
|
|
|
1,458,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victoria J. Reich
|
|
|
3/1/2010
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,214
|
|
|
|
6,321
|
|
|
|
250,017
|
|
|
|
|
9/1/2010
|
|
|
|
7/13/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,408
|
|
|
|
5,408
|
|
|
|
260,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
274,641
|
|
|
|
549,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. Cody Phipps
|
|
|
3/1/2010
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,922
|
|
|
|
7,383
|
|
|
|
292,022
|
|
|
|
|
9/1/2010
|
|
|
|
7/13/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,864
|
|
|
|
6,864
|
|
|
|
330,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
371,278
|
|
|
|
742,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen A. Schultz
|
|
|
3/1/2010
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,919
|
|
|
|
5,879
|
|
|
|
232,514
|
|
|
|
|
9/1/2010
|
|
|
|
7/13/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,888
|
|
|
|
4,888
|
|
|
|
235,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,705
|
|
|
|
501,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Todd A. Shelton
|
|
|
3/1/2010
|
|
|
|
2/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,318
|
|
|
|
3,477
|
|
|
|
137,527
|
|
|
|
|
9/1/2010
|
|
|
|
7/13/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,016
|
|
|
|
3,016
|
|
|
|
145,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
188,385
|
|
|
|
376,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
These columns indicate the range of payouts targeted for 2010
performance under the Companys MIP as described in
Compensation Discussion and
Analysis Elements of Compensation 2010
Annual Cash Incentive Awards. The 2011 bonus payments for
2010 performance were made pursuant to the metrics described in
Compensation Discussion and
Analysis Elements of Compensation 2010
Annual Cash Incentive Awards and are disclosed in the
Summary Compensation Table in the column titled Non-Equity
Incentive Plan Compensation.
|
|
(2)
|
|
Restricted stock unit (RSU) awards granted pursuant
to the Companys LTIP on March 1, 2010 vest in three
annual increments on each December 31st to the extent the
Company achieves its cumulative economic profit goal for the
period ending on such date each year. Participants may earn a
threshold of zero to a maximum of 150% of their target equity
incentive award over the three-year period. See
Compensation Discussion and
Analysis Elements of Compensation Long
Term Equity Incentive Awards for more information.
|
|
(3)
|
|
Restricted stock awards granted pursuant to the Companys
LTIP on September 1, 2010 vest in three substantially equal
annual increments, except that if the aggregate diluted earnings
per share for the four quarters preceding a vesting date do not
exceed $1.00, the stock award scheduled to vest on that date
will be forfeited. See Compensation Discussion
and Analysis Elements of Compensation
Long Term Equity Incentive Awards for more information.
|
26
Outstanding
Equity Awards at December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
Number of
|
|
|
|
|
|
Equity Incentive Plan
|
|
Plan Awards:
|
|
|
|
|
Securities
|
|
|
|
|
|
Awards: Number of
|
|
Market or Payout
|
|
|
|
|
Underlying
|
|
|
|
|
|
Unearned Shares,
|
|
Value of Unearned
|
|
|
|
|
Unexercised
|
|
|
|
|
|
Units or Other
|
|
Shares, Units or
|
|
|
|
|
Options
|
|
Option
|
|
Option
|
|
Rights That Have
|
|
Other Rights That
|
|
|
Grant
|
|
Exercisable
|
|
Exercise
|
|
Expiration
|
|
Not Vested
|
|
Have Not Vested
|
Name
|
|
Date
|
|
(#)
|
|
Price ($)
|
|
Date
|
|
(2)(#)
|
|
(3)($)
|
|
Richard W. Gochnauer
|
|
|
9/1/2005
|
|
|
|
79,845
|
|
|
|
46.59
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2006
|
|
|
|
84,802
|
|
|
|
45.98
|
|
|
|
9/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2007
|
|
|
|
59,565
|
|
|
|
59.02
|
|
|
|
9/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,505
|
|
|
|
415,084
|
|
|
|
|
1/1/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,260
|
|
|
|
1,228,981
|
|
|
|
|
3/2/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,567
|
|
|
|
1,057,140
|
|
|
|
|
9/1/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,692
|
|
|
|
937,497
|
|
|
|
|
3/1/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,237
|
|
|
|
717,033
|
|
|
|
|
9/1/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,839
|
|
|
|
1,393,547
|
|
Victoria J. Reich
|
|
|
7/24/2007
|
|
|
|
50,000
|
|
|
|
66.17
|
|
|
|
7/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2007
|
|
|
|
14,477
|
|
|
|
59.02
|
|
|
|
9/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,664
|
|
|
|
106,180
|
|
|
|
|
1/1/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,928
|
|
|
|
314,456
|
|
|
|
|
3/2/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,744
|
|
|
|
366,525
|
|
|
|
|
9/1/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,674
|
|
|
|
234,438
|
|
|
|
|
3/1/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,810
|
|
|
|
179,306
|
|
|
|
|
9/1/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,408
|
|
|
|
345,084
|
|
P. Cody Phipps
|
|
|
8/18/2003
|
|
|
|
32,000
|
|
|
|
40.00
|
|
|
|
8/18/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2004
|
|
|
|
23,000
|
|
|
|
41.38
|
|
|
|
9/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2005
|
|
|
|
20,283
|
|
|
|
46.59
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2006
|
|
|
|
26,093
|
|
|
|
45.98
|
|
|
|
9/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2007
|
|
|
|
17,794
|
|
|
|
59.02
|
|
|
|
9/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,937
|
|
|
|
123,600
|
|
|
|
|
1/1/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,734
|
|
|
|
365,887
|
|
|
|
|
3/2/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,158
|
|
|
|
456,752
|
|
|
|
|
9/1/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,290
|
|
|
|
273,745
|
|
|
|
|
3/1/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,282
|
|
|
|
209,424
|
|
|
|
|
9/1/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,864
|
|
|
|
437,992
|
|
Stephen A. Schultz
|
|
|
9/1/2007
|
|
|
|
8,747
|
|
|
|
59.02
|
|
|
|
9/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
3/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
750
|
|
|
|
47,858
|
|
|
|
|
9/1/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
954
|
|
|
|
60,875
|
|
|
|
|
1/1/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,822
|
|
|
|
180,072
|
|
|
|
|
3/2/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,247
|
|
|
|
334,811
|
|
|
|
|
9/1/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,416
|
|
|
|
217,975
|
|
|
|
|
3/1/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,613
|
|
|
|
166,736
|
|
|
|
|
9/1/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,888
|
|
|
|
311,903
|
|
Todd A. Shelton
|
|
|
9/1/2004
|
|
|
|
7,000
|
|
|
|
41.38
|
|
|
|
9/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2005
|
|
|
|
7,791
|
|
|
|
46.59
|
|
|
|
9/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2006
|
|
|
|
10,496
|
|
|
|
45.98
|
|
|
|
9/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/2007
|
|
|
|
4,784
|
|
|
|
59.02
|
|
|
|
9/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
3/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250
|
|
|
|
15,953
|
|
|
|
|
9/1/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
646
|
|
|
|
41,221
|
|
|
|
|
1/1/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,912
|
|
|
|
122,005
|
|
|
|
|
3/2/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,452
|
|
|
|
220,272
|
|
|
|
|
9/1/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,020
|
|
|
|
128,896
|
|
|
|
|
3/1/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,546
|
|
|
|
98,650
|
|
|
|
|
9/1/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,016
|
|
|
|
192,451
|
|
|
|
|
(1)
|
|
Holders of shares of restricted stock are entitled to vote such
shares and to receive dividends if declared.
|
|
(2)
|
|
The market value of restricted stock and RSU awards is equal to
the number of shares awarded multiplied by the closing market
price of the Companys Common Stock on December 31,
2010, which was $63.81.
|
27
|
|
|
(3)
|
|
Restricted stock granted January 1, 2009 and
September 1, 2010, 2009 and 2008, vest in three
substantially equal annual increments, except that if the
aggregate diluted earnings per share for the four quarters
preceding a vesting date do not exceed $1.00, the stock award
scheduled to vest on that date will be forfeited.
|
|
|
|
RSUs granted March 2, 2009 vest on the third anniversary of
the grant date to the extent that the Companys cumulative
economic profit for the three-year period beginning
January 1, 2009 achieves the Companys targeted
economic profit for such period, provided that up to one-half of
the RSUs may be earned (although not vested) after the first
year and all of such units may be earned after the second year
if the high end of the range of projected economic profit
(significantly higher than the target) for such one-year or
two-year period, respectively, is met or exceeded. The RSUs,
which were fully earned based on the Companys economic
profit in 2010 and 2009, are scheduled to vest on
December 31, 2011.
|
|
|
|
RSUs granted pursuant to the Companys LTIP on
March 1, 2010, vest in three annual increments on each
December 31st to the extent the Company achieves its
cumulative economic profit goal for the period ending on such
date each year. Participants may earn a threshold of zero to a
maximum of 150% of their target equity incentive award over the
three-year period.
|
Option Exercises
and Stock Vested in 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of Shares
|
|
Value Realized on
|
|
Number of Shares
|
|
Value Realized on
|
|
|
Acquired on Exercise
|
|
Exercise(1)
|
|
Acquired on Vesting
|
|
Vesting(2)
|
Name
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
Richard W. Gochnauer
|
|
|
291,954
|
|
|
|
7,733,703
|
|
|
|
29,058
|
|
|
|
1,419,877
|
|
Victoria J. Reich
|
|
|
|
|
|
|
|
|
|
|
14,819
|
|
|
|
768,256
|
|
P. Cody Phipps
|
|
|
37,000
|
|
|
|
809,143
|
|
|
|
8,614
|
|
|
|
421,046
|
|
Stephen A. Schultz
|
|
|
45,311
|
|
|
|
606,075
|
|
|
|
4,891
|
|
|
|
236,475
|
|
Todd A. Shelton
|
|
|
8,000
|
|
|
|
196,960
|
|
|
|
3,059
|
|
|
|
148,769
|
|
|
|
|
(1)
|
|
The value realized is equal to the difference between the option
exercise prices and the Companys common stock price on the
date of exercise multiplied by the number of options exercised.
|
|
(2)
|
|
The value realized under stock awards is equal to the
Companys common stock price on the date the shares vested
multiplied by the number of shares.
|
Retirement
Benefits
The Company maintains the following two programs to provide
retirement benefits to eligible employees, including executive
officers:
|
|
|
The United Stationers 401(k) Savings Plan (Plan) is a defined
contribution plan qualified under sections 401(a) and
401(k) of the Code. Eligible employees may elect to contribute
pretax amounts up to 25% of their eligible compensation
(generally, base pay), limited to the cap under the Code on
pretax deferrals. In addition, participants may make after-tax
contributions ranging from 1% to 10% of eligible compensation,
whereby the total pretax and after-tax contribution may not
exceed 35% of eligible compensation. The Plan provides for a
discretionary matching contribution by the Company.
Historically, employee contributions that qualify for matching
contributions by the Company have been limited to 6% of annual
compensation. Qualifying contributions for exempt associates
during 2010 were matched by the Company at a rate of 25% and
non-exempt associate contributions were matched at a rate of
50%. The Plan also provides for discretionary profit-sharing
contributions on behalf of each eligible participant. A
discretionary matching contribution was made in 2011 for those
exempt associates actively employed by the Company as of
December 31, 2010 and who participated in the Plan during
2010. The amount of the discretionary matching contribution was
equal to 25% of the associates qualifying contributions in
2010.
|
|
|
The Company maintains a frozen noncontributory
pension plan (the Pension Plan) covering over 50% of
its employees, including all of the named executive officers
other than Mr. Shelton. The Pension Plan provides an annual
benefit at age 65 equal to 1% of an employees
career-average annual compensation (generally, base salary,
commissions and bonus), multiplied by the number of years of
credited service up to a maximum of 40 years, provided that
no additional service credits may be earned after March 1,
2009.
|
28
|
|
|
|
|
However, an employees annual compensation for each year of
service prior to September 1989 is deemed to be the compensation
earned by such employee during the 12 months ending on
August 31, 1989. The Code limits the amount of annual
compensation that is considered in calculating an
employees benefits, which is adjusted annually for
inflation. An employees pension rights fully vest after
five years of service. These benefits are in addition to normal
Social Security retirement benefits. Alternative benefit options
of early retirement, joint and survivor annuity and disability
are also available. Participants may select early retirement
payments if the participant has obtained the age of 55 and
completed 10 years of service. Early retirement benefits
are actuarially reduced for early commencement using a 7.5%
annual interest rate and the Unisex Pension 1984 Mortality Table
set forward one year. The normal retirement age under the
Pension Plan is 65. No employee first hired by the Company after
December 31, 2007 is eligible to participate in the Pension
Plan. As of March 1, 2009, the Company stopped providing
additional service benefits to participants under the Pension
Plan.
|
Pension Benefits
in 2010
The table below shows the annual retirement benefits that are
estimated to be payable at normal retirement
(age 65) under the Pension Plan to the named executive
officers. The benefits for the named executive officers are
calculated on the basis of estimated years of service at
retirement age and current levels of compensation, with assumed
annual compensation level increases and assumed increases in
plan limits based on an inflation rate of 3%.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments
|
|
|
|
|
|
Number of Years
|
|
|
Present Value of
|
|
|
During Last
|
|
|
|
|
|
Credited Service
|
|
|
Accumulated
|
|
|
Fiscal Year
|
|
Name
|
|
Plan Name
|
|
(#)
|
|
|
Benefit(1) ($)
|
|
|
($)
|
|
|
Richard W. Gochnauer(2)
|
|
Tax-qualified plan
|
|
|
6.6
|
|
|
|
139,549
|
|
|
|
|
|
|
|
Non-qualified plan
|
|
|
5.0
|
|
|
|
73,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
213,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victoria J. Reich(2)
|
|
Tax-qualified plan
|
|
|
1.7
|
|
|
|
24,607
|
|
|
|
|
|
|
|
Non-qualified plan
|
|
|
5.0
|
|
|
|
62,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
87,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P. Cody Phipps
|
|
Tax-qualified plan
|
|
|
5.5
|
|
|
|
58,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen A. Schultz
|
|
Tax-qualified plan
|
|
|
6.3
|
|
|
|
41,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Todd A. Shelton(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The calculation of the present value of accumulated benefit
assumes a discount rate of 5.75%. In addition, the benefits were
assumed to be paid as a lump sum at age 65, which is the
earliest time a participant may retire under the plan without
any benefit reduction due to age. The assumed lump sum interest
rate was 5.5%. Additional information about the Companys
pension plan and assumptions may be found in
Managements Discussion and Analysis of Financial
Condition and Results of Operations and in Note 12,
Pension Plans and Defined Contribution Plan, in the
Companys 2010 Annual Report on
Form 10-K.
|
|
(2)
|
|
Pursuant to their Executive Employment Agreements with the
Company, Mr. Gochnauer and Ms. Reich are entitled to a
non-qualified retirement benefit equal to the additional pension
benefit for five years of additional age and service credits.
Such credits are calculated for each executive based on the
annual service credit and the executives eligible
compensation under the Pension Plan as of, or during the five
years immediately preceding, the executives hire date.
|
|
(3)
|
|
Mr. Shelton is not eligible for participation in the
Companys Pension Plan.
|
Non-qualified
Deferred Compensation in 2010
The United Stationers Supply Co. Deferred Compensation Plan (the
Deferred Compensation Plan) is a non-qualified
deferred compensation plan that provides named executive
officers, other executive officers and certain other employees
the opportunity to defer salary and annual incentive payments
under the MIP.
Each participant may elect to defer any percentage of future
compensation, consisting of base salary
and/or
bonus. The elections must be made on or before December 31 of
the year prior to the year in which the
29
participant will earn the compensation. Deferred amounts may be
invested in any one or all of 25 mutual funds managed by
Fidelity Investments. Participants may change their investment
election at any time. Earnings on deferred compensation are
determined based on the performance of the mutual fund selected
by the participant. The mutual funds offered currently include
one money market fund, two bond funds, 13 blended funds,
and nine stock funds. Investment elections may be changed daily.
Distribution of deferred amounts will be made in cash. Payment
options include a lump sum or a series of periodic installments
(monthly, quarterly, semi-annually, annually) that may be paid
over a period of time not less than 12 months and not to
exceed ten years. Payment to certain key employees, payable by
reason of a separation from service, may not be made until six
months after separation. The Deferred Compensation Plan is
subject to forfeiture in the event of bankruptcy.
The following table sets forth certain information regarding
non-qualified deferred compensation of the named executive
officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
|
Registrant
|
|
|
|
Earnings
|
|
Aggregate
|
|
|
Executive
|
|
Contributions
|
|
Aggregate
|
|
in Last
|
|
Balance at
|
|
|
Contributions
|
|
in Last Fiscal
|
|
Withdrawals/
|
|
Fiscal Year
|
|
Last Fiscal
|
Name(1)
|
|
in Last Fiscal Year(2) ($)
|
|
Year ($)
|
|
Distributions ($)
|
|
(3) ($)
|
|
Year-End(4) ($)
|
|
Stephen A. Schultz
|
|
|
7,391
|
|
|
|
|
|
|
|
|
|
|
|
7,557
|
|
|
|
251,450
|
|
Todd A. Shelton
|
|
|
9,030
|
|
|
|
|
|
|
|
|
|
|
|
46,290
|
|
|
|
327,391
|
|
|
|
|
(1)
|
|
Messrs. Gochnauer and Phipps and Ms. Reich did not
participate in the Deferred Compensation Plan.
|
|
(2)
|
|
Messrs. Schultz and Shelton deferred $7,391 and $9,030,
respectively, of their 2010 base salary.
|
|
(3)
|
|
The Fidelity mutual funds selected by Messrs. Schultz and
Shelton incurred gains of 7,557, or 3.1%, and $46,290, or 16.7%,
respectively.
|
|
(4)
|
|
The following aggregate amounts have been included in the
Summary Compensation Table above (as 2008, 2009
and/or 2010) or in previous years for each named executive
officer: Mr. Schultz $33,548 and
Mr. Shelton $9,030.
|
Employment
Contracts and Employment Termination and Change of Control
Arrangements
CEO Employment
Agreement
The Company and USSC have entered into an Executive Employment
Agreement with Mr. Gochnauer, which was amended and
restated as of December 31, 2008 (the CEO
Agreement). Under the CEO Agreement, Mr. Gochnauer is
employed to serve as the Companys President and Chief
Executive Officer. Mr. Gochnauer has announced his
resignation as Chief Executive Officer effective as of the
Annual Meeting and his retirement on May 31, 2011.
General Terms
The CEO Agreement
establishes Mr. Gochnauers annual salary as of
December 31, 2008 and provides for
Mr. Gochnauers participation in all stock option,
incentive, savings and retirement plans, welfare benefit plans
and programs, executive fringe benefits and perquisites
programs, and other benefit practices, policies and programs
generally available to the Companys other senior
executives. In addition to his participation in USSCs
qualified pension plan, the benefits under which have been
frozen effective March 1, 2009, the CEO Agreement entitles
Mr. Gochnauer to a non-qualified retirement benefit equal
to the additional pension benefit from five years of additional
age and service credits.
Post-Termination Payments and Benefits
If Mr. Gochnauers employment is terminated
during the employment term by Mr. Gochnauer for Good Reason
or by the Company without Cause (as such terms are defined
below), Mr. Gochnauer will be entitled to receive:
(a) all earned and unpaid amounts and benefits; (b) an
amount equal to two times his base salary payable over
24 months following termination (or three times his base
salary payable in a lump sum in the event such termination
occurs within two years of a Change of Control (as defined
below)); (c) an amount equal to two times the actual
incentive compensation award which would otherwise be payable to
him for the year in which termination occurs payable at such
time as the incentive award would otherwise be paid (or, in the
event such termination occurs within two years of a Change of
Control, three times the greater of (i) his target
incentive compensation award for such year or (ii) his
average annual incentive for the prior three years, payable in a
lump sum); (d) a pro rata portion of his actual incentive
compensation award (or target award in the event such
termination occurs within two years of
30
a Change of Control) for the year in which termination occurs
payable in a lump sum; (e) continued medical
and/or
dental insurance coverage until the earlier of 24 months
from the date of termination (or three years in the event such
termination occurs within two years of a Change of Control) or
the date he receives substantially equivalent coverage from a
subsequent employer; (f) a lump sum payment equal to the
amount the Company would otherwise expend for
24 months life and disability coverage for him (or
three years coverage in the event such termination occurs
within two years of a Change of Control); (g) continued
vesting of option awards if permitted under the Prior Equity
Plan and provided for in his option agreements; and
(h) career transition assistance services. In the event of
termination within two years of a Change of Control,
Mr. Gochnauer also will be entitled to a non-qualified
retirement benefit equal to the additional pension benefit from
three additional years of age and service credits and
reimbursement for reasonable attorneys fees incurred in
conjunction with any disputes regarding the benefits he is
entitled to under the CEO Agreement. The CEO Agreement also
provides that Mr. Gochnauer will receive a
gross-up
payment in an amount such that, after satisfaction by him of all
taxes imposed upon such payment, he retains that portion of the
gross-up
payment equal to any excise tax imposed by Section 4999 of
the Code upon any amount paid or payable to him by the Company;
provided, however, that all cash payments and other benefits to
which Mr. Gochnauer may become entitled due to a change of
control shall be reduced to the largest aggregate amount as will
result in no portion thereof being subject to the excise tax or
being non-deductible to the Company for federal income tax
purposes, provided that no such reduction shall occur if the
amount thereof would be more than 10% of the aggregate value of
such payments and benefits. In addition, the CEO Agreement
prohibits Mr. Gochnauer from competing against the Company
in the United States and Canada or soliciting any of the
Companys customers or employees for a period of two years
following his employment termination.
Definitions
The Executive Employment
Agreements signed by the named executive officers have
definitions that differ slightly from each other, including
slight variations in the definitions of Cause,
Good Reason, and Change of Control. As a
result, the circumstances that trigger the executives
severance benefits are slightly different. Generally, however,
when used in connection with a named executive officers
rights under his or her employment agreement, the terms
Cause, Good Reason, and Change of
Control have the following definitions:
|
|
|
Cause means (i) conviction of, or plea of no
contest to, a felony; (ii) theft or embezzlement from the
Company; (iii) illegal use of drugs; (iv) material
breach of the employment agreement; (v) gross negligence or
willful misconduct in the performance of the executives
duties; (vi) breach of any fiduciary duty owed to the
Company; or (vii) the executives willful refusal to
perform the assigned duties for which the executive is qualified
as directed by his or her supervisor or by the Board. Generally,
in the case of an event constituting Cause that is curable by
the executive, the executive must fail to cure the event within
thirty days after receipt of notice of the event from the
Company.
|
|
|
Good Reason means (i) any material breach by
the Company of the executives employment agreement without
the executives written consent, (ii) any material
reduction, without the executives consent, in the
executives duties, responsibilities or authority; or
(iii) without Executives written consent: (a) a
material reduction in the executives base salary,
(b) the relocation of the executives principal place
of employment more than fifty (50) miles from its location
on the date of a Change of Control (or, in
Mr. Gochnauers employment agreement, fifty
(50) miles from Deerfield, IL), or (c) the relocation
of the Companys corporate headquarters office outside of
the metropolitan area in which it is located on the date of a
Change of Control (or, in Mr. Gochnauers employment
agreement, outside of the Chicago metropolitan area).
|
|
|
Change of Control is generally defined to mean
(i) acquisition by a person or group of beneficial
ownership of 30% or more of the combined voting power of the
Companys then outstanding voting securities entitled to
vote generally in the election of directors; (ii) at any
time during a period of two consecutive years, the individuals
who at the beginning of such period constituted the Board cease
for any reason to constitute more than 50% of the Board unless
the new directors were approved by a vote of more than 50% of
the Directors then comprising the incumbent Board;
(iii) consummation of a merger, consolidation or
reorganization or approval by the Companys stockholders of
a liquidation or dissolution of the Company or the occurrence of
a liquidation or dissolution of the Company, unless, following
such business combination, the Companys stockholders
continue to hold more than 50% of the voting power of the
successor entity or other conditions are satisfied; and
(iv) approval by the Companys stockholders of an
agreement for the
|
31
|
|
|
assignment, sale, conveyance, transfer, lease or other
disposition of all or substantially all of the assets of the
Company to any Person.
|
Other Named
Executive Officer Agreements
General Terms
The Company and USSC
have entered into Executive Employment Agreements with Victoria
J. Reich, Senior Vice President and Chief Financial Officer; P.
Cody Phipps, President and Chief Operating Officer; Stephen A.
Schultz, Group President, Lagasse and ORS Nasco; and Todd A.
Shelton, President, United Stationers Supply, each of which was
last amended and restated as of December 31, 2010, except
for Ms. Reichs Agreement which was amended and
restated as of December 31, 2008. Each of these Agreements
establishes the executives annual salary as of its
effective date and provides that the Board shall review the
executives base salary from time to time and may, at the
Boards discretion, increase the base salary. Each of these
Agreements further provides for the executives
participation in all stock option, equity award, incentive,
savings and retirement plans, welfare benefit plans and
programs, executive fringe benefits and perquisites programs,
and other benefit practices, policies and programs generally
available to the Companys other executives at the same
grade level. In addition to her participation in USSCs
qualified pension plan, Ms. Reichs Agreement entitles
her to a non-qualified retirement benefit equal to the
additional pension benefit from five years of additional age and
service credits.
Pursuant to Ms. Reichs Agreement she was granted
7,500 shares of restricted stock as of her hire date, which
restricted shares vested on June 11, 2010. Under her
Agreement, Ms. Reich was also granted 50,000 non-qualified
options to purchase shares of the Companys Common Stock at
an exercise price of $66.17. The options became exercisable in
three substantially equal annual installments, beginning on
July 24, 2008.
The Company and Ms. Reich have agreed that Ms. Reich
will remain as a full-time employee of the Company after we hire
a new Chief Financial Officer for a period to be determined to
support the transition of her responsibilities. Thereafter and
until January 2, 2012, she will provide transition services
on a part-time basis for which she will receive compensation of
$7,500 per month. The specific terms of Ms. Reichs
transition services will be reflected in a letter agreement at a
later date.
Post-Termination Payments and Benefits
Under the Executive Employment Agreements with
Messrs. Phipps, Schultz and Shelton and Ms. Reich, if
the executives employment is terminated during the
employment term by the Company without Cause (as
defined above), or, by the executive for Good Reason
(as defined above), the executive will be entitled to receive
all accrued benefits, including any earned but unpaid salary and
any accrued but unpaid incentive awards for the prior year and,
subject to execution and non-rescission of a release of claims
against the Company: (a) an amount equal to one and
one-half times
his/her
then
existing base salary payable over 18 months following
termination (or two times
his/her
base
salary generally payable in a lump sum within 90 days
following the date of termination in the event such termination
occurs within two years of a Change of Control (as defined
above)), except that in either case any amounts in excess of the
amount that would cause the payments to constitute deferred
compensation under Code Section 409A shall be paid in a
lump sum on the first regular payroll date of the Company to
occur following the date that is six months after the
termination date; (b) an amount equal to one and one-half
times
his/her
actual incentive compensation award for the year in which
termination occurs payable at such time as the incentive award
would otherwise be paid (or two times
his/her
target incentive compensation award for such year generally
payable in a lump sum within 90 days following the date of
termination in the event such termination occurs within two
years of a Change of Control); (c) a pro rata portion of
his/her
actual incentive compensation award for the year in which
termination occurs payable at such time as the incentive award
would otherwise be paid (or, in the event such termination
occurs within two years of a Change of Control,
his/her
target incentive compensation award for the year in which
termination occurs payable in a lump sum within 90 days
following the date of termination); (d) continued medical
and/or
dental insurance coverage until the earlier of 18 months
from the date of termination (or two years in the event such
termination occurs within two years of a Change of Control) or
the date
he/she
receives substantially equivalent coverage from a subsequent
employer; (e) a lump sum payment equal to the amount the
Company would otherwise expend for 18 months life and
disability coverage for the executives (or two years
coverage in the event such termination occurs within two years
of a Change of Control); (f) continued vesting of equity
awards if permitted under the Companys LTIP or Prior
Equity Plan (as defined below) and provided for in
his/her
equity award agreement; and (g) career transition
assistance services until December 31 of the year after the year
when the termination occurs. Mr. Gochnauer is entitled to
receive executive level career transition assistance services in
32
an amount not to exceed twenty percent of the sum of
(i) his then existing base salary and (ii) his target
incentive compensation award for the calendar year during which
the termination date occurs. Ms. Reich and
Messrs. Phipps, Schultz and Shelton are entitled to receive
executive level career transition assistance services in an
amount not to exceed ten percent of the executives then
existing base salary. The executive cannot receive cash in lieu
of these services. In the event of termination within two years
of a Change of Control, such executive also will be entitled to
a lump sum cash payment equal to the additional pension benefit
value that would be payable to the executive if
he/she
had
two additional years of age and service credits and
reimbursement for reasonable attorneys fees incurred in
conjunction with any disputes regarding the benefits provided
for under the agreement in which the executive prevails in any
material respect. Ms. Reichs Executive Employment
Agreement provides that she will receive a
gross-up
payment in an amount such that, after satisfaction by her of all
taxes imposed upon such payment, she retains that portion of the
gross-up
payment equal to any excise tax imposed by Section 4999 of
the Code upon any amount paid or payable to her by the Company;
provided however, that all cash payments and other benefits to
which she may become entitled due to a Change of Control shall
be reduced to the largest aggregate amount as will result in no
portion thereof being subject to the excise tax or being
non-deductible to the Company for federal income tax purposes,
provided that no such reduction shall occur if the amount
thereof would be more than 10% of the aggregate value of such
payments and benefits. Any severance payments to which
Ms. Reich will be entitled will be offset by compensation
that she earns during the eighteen-month period following the
date her employment with the Company ends.
The Executive Employment Agreements with Messrs. Phipps,
Schultz and Shelton and Ms. Reich prohibit the executive
from competing against the Company or soliciting any of the
Companys customers or employees for a period of
18 months following
his/her
employment termination.
Change of
Control Terms under the Long-Term Incentive Plan
The LTIP, which was adopted by the Company and approved by
stockholders in 2004, permits the Human Resources Committee to
grant different types of awards, including options, stock
appreciation rights, full value awards (including restricted
stock) and cash incentive awards. The named executive officers
have received grants of various awards under the LTIP. Vesting
of equity awards under the LTIP will accelerate under certain
circumstances related to a Change of Control and the termination
of the named executive officers employment either by the
Company without Cause (as defined in the LTIP) or by
the executive for Good Reason (as defined in the LTIP). The
definition of Change of Control under the LTIP is
similar to the definition of the same term described under
CEO Employment Agreement, above.
Under the LTIP, in the event of a Change of Control the
Affected Portion of all outstanding awards held by
each named executive officer will become vested. See
Approval of Amended and Restated 2004 Long-Term Incentive
Plan Change of Control for a detailed
description of the Affected Portion. In addition, if
a named executive officers employment is terminated by the
named executive officer for Good Reason, as defined in the LTIP,
or by the Company without Cause, as defined in the LTIP, during
the two-year period following a Change of Control, all awards
granted prior to the Change of Control that have not vested
prior to the named executive officers date of termination
will become immediately vested as of such date.
Also under the LTIP, if (i) a named executive
officers employment is terminated during an Anticipated
Change of Control by the executive for Good Reason or by the
Company without Cause and (ii) within two years of the
named executive officers termination a Change of Control
occurs, then all outstanding awards held by the named executive
officer on the date of termination will become vested as of the
date of the Change of Control. An Anticipated Change of Control
is generally defined under the LTIP as the Company entering into
an agreement that would result in a Change of Control or any
person publicly announcing an intention to take or consider
taking actions the consummation of which would constitute a
Change of Control.
The stockholders are being asked to vote at the Annual Meeting
on certain amendments to the LTIP that will, among other things,
(a) modify the definition of Change of Control
under the LTIP and (b) eliminate the provisions described
above regarding vesting of LTIP awards held by a named executive
officer whose employment is terminated during an Anticipated
Change of Control. See Approval of Amended and Restated
2004 Long-Term Incentive Plan. These changes, however,
will only apply to awards granted under the LTIP after
stockholder approval of the amendments and will not affect any
awards that have been granted under the LTIP prior to the Annual
Meeting.
33
Change of
Control Terms under the Prior Equity Plan
Messrs. Gochnauer and Phipps have options to acquire shares
of the Companys Common Stock that were granted prior to
the effective date of the LTIP. These options are eligible for
accelerated vesting in connection with a Change of Control of
the Company, as defined in the United Stationers Inc. 2000
Management Equity Plan, as amended and restated as of
July 31, 2002 (collectively, the Prior Equity
Plan). One-half of the shares covered by a
participants options that are outstanding, but not yet
exercisable, immediately prior to a Change of Control generally
become exercisable immediately as of the date of such a Change
of Control, provided that the participants employment did
not terminate prior to such Change of Control date. In addition,
if a participants employment is terminated by the Company
or any of its subsidiaries without Cause or by the
participant in circumstances constituting Good
Reason (as such terms are defined in the Prior Equity
Plan) after the date of the Change of Control but within one
year thereafter, any options granted before the date of the
Change of Control that are not then fully vested will become
fully vested and immediately exercisable as of such employment
termination date.
The Prior Equity Plan also provides that, in specified
situations in which (1) a participants termination of
employment by the Company or any of its subsidiaries without
Cause or by the participant for Good Reason occurs during an
Anticipated Change of Control (as defined), and
(2) a Change of Control occurs within one year after such
employment termination, the participants options
outstanding and unvested as of the employment termination date
will become fully vested and exercisable.
The definitions of Cause, Good Reason,
Change of Control and Anticipated Change of
Control under the Prior Equity Plan are similar to the
definitions under the Executive Employment Agreements described
above.
Change of
Control Terms under the Management Incentive Plan
The MIP provides that if the plan terminates upon or after a
Change of Control (as defined in the MIP) during the plan year
in which the Change of Control occurs, participants will be
entitled to their target incentive award for such plan year. The
definition of Change of Control in the MIP is similar to the
definition under the LTIP.
Potential
Post-Employment Payments
As described above in the summaries of the employment
agreements, our executive officers are eligible to receive
benefits in the event their employment is terminated (1) by
the Company without Cause, (2) in certain circumstances
following a Change of Control or (3) by the executive in
the event he or she resigns for Good Reason. The amount of
benefits will vary based on the reason for the termination.
The following sections present calculations as of
December 31, 2010 of the estimated benefits our executive
officers would have received had a triggering event occurred as
of that date under the amended and restated Executive Employment
Agreements. Although the calculations are intended to provide
reasonable estimates of the potential benefits, they are based
on numerous assumptions and may not represent the actual amount
an executive would receive if a triggering event were to occur.
In addition to the amounts disclosed in the following sections,
each executive officer would retain the amounts which he or she
has earned or accrued over the course of his or her employment
prior to the termination event, such as the executives
balances under our deferred compensation plans, accrued
retirement benefits and previously vested stock options
(Accrued Benefits). For further information about
previously earned and accrued amounts, see Executive
Compensation Summary Compensation Table,
Executive Compensation Outstanding Equity
Awards at December 31, 2010, Executive
Compensation Option Exercises and Stock Vested
Table, Executive Compensation Pension
Benefits in 2010, and Executive
Compensation Non-Qualified Deferred Compensation in
2010.
Severance
Benefits
If the employment of Messrs. Gochnauer, Phipps, Schultz or
Shelton or Ms. Reich is terminated by the Company for any
reason other than Cause or the executives permanent
disability (as defined in the Companys Board-approved
disability plan or policy as in effect from time to time) and
other than within two years following a Change of Control and,
if the executives employment is terminated by the
executive for
34
Good Reason, then
he/she
will
be entitled to receive benefits pursuant to the executives
Executive Employment Agreement described above.
Severance-related benefits are provided only if the executive
executes and does not rescind the Companys then current
standard release agreement as a condition to receiving any of
the payments and benefits.
The following table presents the estimated separation benefits
the Company would have been required to pay to each named
executive officer if
his/her
employment had been terminated as described above as of
December 31, 2010.
Estimated
Severance Pay
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Compensation
|
|
|
Benefits
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Welfare
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Compensation
|
|
|
Benefits
|
|
|
Outplacement
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Richard W. Gochnauer
|
|
|
1,830,000
|
|
|
|
2,199,270
|
|
|
|
33,150
|
|
|
|
328,800
|
|
|
|
4,391,220
|
|
Victoria J. Reich
|
|
|
637,050
|
|
|
|
414,273
|
|
|
|
27,468
|
|
|
|
42,470
|
|
|
|
1,121,261
|
|
P. Cody Phipps
|
|
|
900,000
|
|
|
|
591,798
|
|
|
|
27,717
|
|
|
|
60,000
|
|
|
|
1,579,515
|
|
Stephen A. Schultz
|
|
|
581,400
|
|
|
|
409,178
|
|
|
|
24,448
|
|
|
|
38,760
|
|
|
|
1,053,786
|
|
Todd A. Shelton
|
|
|
600,000
|
|
|
|
241,515
|
|
|
|
27,357
|
|
|
|
40,000
|
|
|
|
908,872
|
|
Retirement,
Disability and Death
If employment is terminated as a result of the executives
death, disability, or retirement, then the executive shall be
entitled to (i) his/her Accrued Benefits, (ii) any
benefits that may be payable to the executive under any
applicable Board-approved disability, life insurance or
retirement plan or policy in accordance with the terms of such
plan or policy, and (iii) a lump sum payment in an amount
equal to the pro-rata target incentive compensation award for
the calendar year during which the termination date occurs by
reason of the executives death or disability, or a lump
sum payment in an amount equal to the pro-rata actual incentive
compensation award for the calendar year during which the
termination date occurs by reason of the executives
retirement.
Potential
Change of Control Payments
Under the Companys LTIP and the Companys Prior
Equity Plan, 50% of each named executive officers unvested
equity awards automatically vest following a Change of Control,
unless the award recipients employment is terminated after
the Change of Control, in which case 100% of the
recipients unvested equity awards automatically vest. If
the executives date of termination occurs during an
Anticipated Change of Control and a Change of Control then
occurs within two years following his or her date of
termination, the number of restricted shares that were forfeited
on the date of termination will be granted to him or her on a
fully vested basis as of the date of the Change of Control and
the option shares, including options that may have expired on or
after the date of termination and prior to the Change of
Control, will be fully vested and exercisable on the date of
Change of Control.
If the employment of a named executive officer is terminated
after a Change of Control, the executive will be entitled to the
benefits described above pursuant to his or her Executive
Employment Agreement. Both the vesting of equity awards and the
receipt of the benefits described above assume the
executives employment is terminated either (i) by the
Company for any reason other than Cause or disability or
(ii) by the executive for Good Reason.
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|
|
Payments
Triggered Upon a Change of Control
|
Upon a Change of Control, 50% of any outstanding unvested equity
awards would vest. For each named executive officer who remains
employed on the date of this Proxy Statement, the following
table shows the
35
value of unvested equity awards that would vest if a Change of
Control had occurred on December 31, 2010, based on the
closing price of the Companys common stock on
December 31, 2010, which was $63.81.
|
|
|
|
|
Vesting of Unvested Equity Awards
|
|
Restricted Stock/Units in $s
|
|
Richard W. Gochnauer
|
|
|
2,874,641
|
|
Victoria J. Reich
|
|
|
772,994
|
|
P. Cody Phipps
|
|
|
933,700
|
|
Stephen A. Schultz
|
|
|
660,114
|
|
Todd A. Shelton
|
|
|
409,724
|
|
|
|
|
Payments
Triggered Upon a Termination Following a Change of
Control
|
The following table assumes that each executive is terminated
after a Change of Control for reasons other than for Cause,
retirement, disability or death. These values are estimated as
of December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Compensation
|
|
Benefits
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
Health
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
Excise Tax
|
|
|
|
|
|
|
|
|
Incentive
|
|
Welfare
|
|
|
|
|
|
Vesting of
|
|
And
|
|
|
|
|
|
|
Salary
|
|
Compensation
|
|
Benefits
|
|
Pension
|
|
Outplacement
|
|
Unvested
|
|
Gross-up(1)
|
|
|
|
|
Name
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Equity ($)
|
|
($)
|
|
Total ($)
|
|
|
|
Richard W. Gochnauer
|
|
|
2,745,000
|
|
|
|
2,916,000
|
|
|
|
49,725
|
|
|
|
114,163
|
|
|
|
328,800
|
|
|
|
5,749,281
|
|
|
|
0
|
|
|
|
11,902,969
|
|
|
|
|
|
Victoria J. Reich
|
|
|
849,400
|
|
|
|
823,924
|
|
|
|
36,623
|
|
|
|
87,505
|
|
|
|
42,470
|
|
|
|
1,545,989
|
|
|
|
634,671
|
|
|
|
4,020,582
|
|
|
|
|
|
P. Cody Phipps
|
|
|
1,200,000
|
|
|
|
1,113,834
|
|
|
|
36,955
|
|
|
|
52,250
|
|
|
|
60,000
|
|
|
|
1,867,400
|
|
|
|
|
|
|
|
4,330,439
|
|
|
|
|
|
Stephen A. Schultz
|
|
|
775,200
|
|
|
|
752,115
|
|
|
|
32,596
|
|
|
|
12,495
|
|
|
|
38,760
|
|
|
|
1,320,229
|
|
|
|
|
|
|
|
2,931,395
|
|
|
|
|
|
Todd A. Shelton
|
|
|
800,000
|
|
|
|
565,156
|
|
|
|
36,475
|
|
|
|
|
|
|
|
40,000
|
|
|
|
819,448
|
|
|
|
|
|
|
|
2,261,079
|
|
|
|
|
|
|
|
|
(1)
|
|
The Company will reimburse Mr. Gochnauer and Ms. Reich
for any excise tax imposed by Section 4999 on payments
subject to Section 280G of the Code and for any income tax
payable by him or her as a result of any reimbursement for the
excise tax, subject to limitation as set forth in each
executives Executive Employment Agreement. The amounts in
this column are based on a Section 4999 tax rate of 20%, a
statutory 35% federal income tax rate, a 1.45% Medicare tax rate
and a 3% state income tax rate.
|
DIRECTOR
COMPENSATION
General
During 2010, the Governance Committee of the Companys
Board of Directors undertook one of its periodic reviews of the
compensation paid to the Companys non-employee Directors.
The Governance Committee evaluated the current and recent
historical cash, equity and total compensation paid by the
Company to its non-employee Directors in light of benchmark data
from a comparator group of companies (consistent with that used
by the Human Resources Committee in its management compensation
reviews) and established a total target compensation level based
on the benchmark data. As a result of this review, no
adjustments were
36
made to the cash and equity compensation payable to the
Companys non-employee Directors in 2010. The following
table summarizes the total compensation paid to the
Companys non-employee Directors for 2010:
|
|
|
Retainer
|
|
$60,000
|
Board Attendance Fees
|
|
|
In person
|
|
$4,000 per meeting
|
By teleconference
|
|
$1,000 per meeting
|
Committee Attendance Fees
|
|
|
In connection with a Board meeting or by
teleconference
|
|
|
- Audit Committee Chair
|
|
$2,500 per meeting
|
- Other Committee Chairs
|
|
$2,000 per meeting
|
- Other non-employee Directors
|
|
$500 per meeting
|
Not in connection with a Board meeting
|
|
|
- Audit Committee Chair
|
|
$2,500 per meeting
|
- Other Committee Chairs
|
|
$2,000 per meeting
|
- Other non-employee Directors
|
|
$1,000 per meeting
|
2010 Restricted Stock Unit Grant
(1)
|
|
|
Chairman of the Board
|
|
2,496 restricted shares
|
All other non-employee Directors
|
|
2,288 restricted shares
|
|
|
|
(1)
|
|
The restricted stock unit grant to the Chairman of the Board on
September 1, 2010 was for the number of shares having an
economic value of $120,000 based on the closing price of the
Companys Common Stock on September 1, 2010, which was
$48.08 per share. The restricted stock unit grant to the other
non-employee Directors on September 1, 2010 was for the
number of shares having an economic value of $110,000 based on
the closing price of the Companys Common Stock on
September 1, 2010, which was $48.08. The economic value in
each case was converted into the number of shares issuable in
the manner described in Compensation Discussion and
Analysis 2010 Long Term Incentive Equity
Awards. The restricted stock units vest in substantially
equal installments over 3 years.
|
Cash
Compensation
As a result of the Governance Committees review of
Director Compensation, no changes to meeting attendance fees
were made in 2010. Board members also were reimbursed for
reasonable travel and other business expenses incurred in
connection with their attendance at Board and Committee meetings
and other Company-requested functions and their performance of
other responsibilities as Directors of the Company.
Deferred
Compensation
Pursuant to the United Stationers Inc. Nonemployee
Directors Deferred Stock Compensation Plan (the
Directors Deferred Compensation Plan),
non-employee Directors may defer receipt of 50% or more of their
retainer and meeting fees. Deferred fees are credited quarterly
to each participating Director in the form of stock units, based
on the fair market value of the Companys Common Stock on
the quarterly deferral date. Deferred stock unit accounts are
eligible for additional dividend equivalent credits, if the
Company declares and pays any dividends on the Companys
Common Stock during the relevant period.
Each stock unit account generally is distributed and settled in
whole shares of the Companys Common Stock on a
one-for-one
basis, with a cash-out of any fractional stock unit interests,
after the participant ceases to serve as a Company Director.
Participants in the Directors Deferred Compensation Plan
may elect to receive settlement of their stock unit accounts
either by delivery of the aggregate whole shares in their
respective accounts after the cessation of their service as
Directors or in substantially equal installments over a period
of not more than five years thereafter. If a participating
Director dies before the distribution of his or her entire stock
unit account, the balance remaining in the account becomes
payable in cash in a lump sum to the Directors designated
beneficiary.
37
Equity
Compensation
The economic value of equity compensation provided annually to
Directors remained unchanged in 2010. Such economic value was
$110,000 for each non-employee Director other than the Chairman
of the Board whose equity compensation economic value was
$120,000. The Board approved the grant to each non-employee
Director of restricted stock or restricted stock units of the
Companys Common Stock. Each non-employee Director other
than the Chairman of the Board received 2,288 restricted stock
units. In consideration of his additional responsibilities as
the lead independent director, the Chairman of the Board
received 2,496 restricted stock units. All restricted stock
units vest in substantially equal installments over three years
and will be settled upon the Directors separation from
service or in substantially equal installments over a period of
not more than five years thereafter. The Company expects to make
similar grants to its non-employee Directors on an annual basis.
2010 Director
Compensation Table
In 2010, the Company provided the following annual compensation
to Directors who are not employees. Mr. Gochnauer is an
employee Director who receives no additional compensation for
serving on the Board of Directors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
Stock
|
|
|
|
|
|
|
or Paid
|
|
Awards(2)
|
|
|
|
|
Name
|
|
in Cash(1) ($)
|
|
($)
|
|
Total ($)
|
|
|
|
Frederick B. Hegi, Jr.
|
|
|
97,000
|
|
|
|
120,000
|
|
|
|
217,000
|
|
|
|
|
|
Jean S. Blackwell
|
|
|
102,000
|
|
|
|
110,000
|
|
|
|
212,000
|
|
|
|
|
|
Daniel J. Connors
|
|
|
94,000
|
|
|
|
110,000
|
|
|
|
204,000
|
|
|
|
|
|
Charles K. Crovitz
|
|
|
93,000
|
|
|
|
110,000
|
|
|
|
203,000
|
|
|
|
|
|
Daniel J. Good
|
|
|
110,500
|
|
|
|
110,000
|
|
|
|
220,500
|
|
|
|
|
|
Roy W. Haley
|
|
|
108,500
|
|
|
|
110,000
|
|
|
|
218,500
|
|
|
|
|
|
Noah T. Maffitt(3)
|
|
|
66,428
|
|
|
|
184,034
|
|
|
|
250,462
|
|
|
|
|
|
Benson P. Shapiro
|
|
|
107,500
|
|
|
|
110,000
|
|
|
|
217,500
|
|
|
|
|
|
Alex D. Zoghlin
|
|
|
87,500
|
|
|
|
110,000
|
|
|
|
197,500
|
|
|
|
|
|
|
|
|
(1)
|
|
The following directors deferred 2010 cash compensation under
the United Stationers Inc. Nonemployee Directors Deferred
Stock Compensation Plan (as described above under Director
Compensation Deferred Compensation).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Shares Added
|
|
|
Name
|
|
2010 Cash Deferred ($)
|
|
to Account (#)
|
|
|
|
Ms. Blackwell
|
|
|
102,000
|
|
|
|
1,770
|
|
|
|
|
|
Mr. Maffitt
|
|
|
33,214
|
|
|
|
590
|
|
|
|
|
|
|
|
|
(2)
|
|
Amounts shown are based upon the grant date fair value of equity
awards computed in accordance with ASC Topic 718. During 2010,
each non-employee Director other than the Chairman of the Board
received a grant of 2,288 restricted stock units. In
consideration of his role the Chairman received a grant of 2,496
restricted stock units. The Directors outstanding stock
options and restricted stock units granted as of
December 31, 2010 are shown below. See Director
Compensation Equity Compensation for more
information.
|
|
(3)
|
|
Mr. Maffitt, resigned from the Companys Board of
Directors on October 20, 2010 and as a result forfeited all
of the 3,576 shares of restricted stock which were granted
to him in 2010.
|
38
Directors
Outstanding Option and Stock Awards at December 31,
2010
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
Aggregate
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Outstanding
|
|
Outstanding
|
|
|
as of
|
|
as of
|
|
|
December 31,
|
|
December 31,
|
|
|
2010 (#)
|
|
2010 (#)
|
|
Frederick B. Hegi, Jr.
|
|
|
33,534
|
|
|
|
8,410
|
|
Jean S. Blackwell
|
|
|
3,838
|
|
|
|
7,694
|
|
Daniel J. Connors
|
|
|
|
|
|
|
6,931
|
|
Charles K. Crovitz
|
|
|
12,437
|
|
|
|
7,694
|
|
Daniel J. Good
|
|
|
28,937
|
|
|
|
7,694
|
|
Roy W. Haley
|
|
|
28,937
|
|
|
|
7,694
|
|
Benson P. Shapiro
|
|
|
22,937
|
|
|
|
7,694
|
|
Alex D. Zoghlin
|
|
|
|
|
|
|
6,931
|
|
EQUITY
COMPENSATION PLAN INFORMATION
Overview
The following table provides information about the
Companys Common Stock that may be issued upon the exercise
of stock options and the settlement of stock units outstanding
under the Companys equity compensation plans as of
December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining
|
|
|
|
|
|
|
Weighted
|
|
|
Available for
|
|
|
|
Number of
|
|
|
Average
|
|
|
Future Issuance
|
|
|
|
Securities to be
|
|
|
Exercise
|
|
|
under Equity
|
|
|
|
Issued upon
|
|
|
Price of
|
|
|
Compensation
|
|
|
|
Exercise of
|
|
|
Outstanding
|
|
|
Plans (Excluding
|
|
|
|
Outstanding
|
|
|
Options,
|
|
|
Securities
|
|
|
|
Options, Warrants
|
|
|
Warrants and
|
|
|
Reflected in
|
|
|
|
and Rights
|
|
|
Rights
|
|
|
Column (a))
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by security holders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amended and Restated 2004 Long-Term Incentive Plan
|
|
|
1,523,775
|
|
|
$
|
50.64
|
|
|
|
485,707
|
|
2000 Management Equity Plan
|
|
|
117,000
|
|
|
$
|
35.51
|
|
|
|
|
|
1992 Management Equity Plan
|
|
|
65,968
|
|
|
$
|
33.09
|
|
|
|
|
|
Nonemployee Directors Deferred Compensation Plan
|
|
|
41,927
|
|
|
|
|
|
|
|
27,994
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,748,670
|
|
|
$
|
48.35
|
|
|
|
513,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of our executive officers serves as a member of the board
of directors or compensation committee of any entity that has
one or more of its executive officers serving as a member of the
Human Resources Committee of our Board of Directors. In
addition, none of our executive officers serves as a member of
the compensation committee of any entity that has one or more of
its executive officers serving as a member of our Board of
Directors.
39
The following table sets forth information as of the dates
indicated with respect to the beneficial ownership of Common
Stock by each person or group who is known by the Company to own
beneficially more than five percent of its outstanding Common
Stock.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
of Common Stock
|
|
|
Name and Address of Beneficial Owner
|
|
Beneficially Owned
|
|
Percent of Class
|
|
FMR LLC, and various affiliated entities(1)
|
|
|
3,499,976
|
|
|
|
15.12
|
%
|
82 Devonshire Street, Boston, MA 02109
|
|
|
|
|
|
|
|
|
Blackrock, Inc. and various affiliated entities(2)
|
|
|
2,031,753
|
|
|
|
8.78
|
%
|
55 East
52
nd
Street, New York, NY 10055
|
|
|
|
|
|
|
|
|
Neuberger Berman Group, LLC and various affiliated entities(3)
|
|
|
1,554,616
|
|
|
|
6.72
|
%
|
605 Third Avenue,
41
st
Floor, New York, New York 10158
|
|
|
|
|
|
|
|
|
Vanguard Group, Inc. and various affiliated entities(4)
|
|
|
1,408,759
|
|
|
|
6.08
|
%
|
100 Vanguard Blvd., Malvern, PA 19355
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
This information is based on a Schedule 13G filed with the
SEC on February 14, 2011, reporting the shares of the
Companys Common Stock that FMR LLC (FMR) may
be deemed to beneficially own, as of December 31, 2010, in
its capacity as investment adviser. FMR reported that it may be
deemed to have beneficial ownership of 3,499,976 shares.
FMR has sole voting power with respect to 398,540 shares
and sole dispositive power with respect to 3,499,976
beneficially owned shares.
|
|
(2)
|
|
This information is based on a Schedule 13G Amendment filed
with the SEC on February 9, 2011, reporting the shares of
the Companys Common Stock that may be deemed to be
beneficially owned, as of December 31, 2010, by Blackrock,
Inc. Blackrock, Inc. has sole voting and sole dispositive power
with respect to all of the 2,031,753 shares reported as
beneficially owned.
|
|
(3)
|
|
This information is based on a Schedule 13G filed with the
SEC on February 14, 2011, reporting the shares of the
Companys Common Stock that may be deemed to be
beneficially owned, as of December 31, 2010, by Neuberger
Berman Group, LLC (Neuberger) and various affiliated
entities. Of the shares set forth above, Neuberger reported
shared dispositive power with respect to 1,554,616 shares
and shared voting power with respect to 1,348,436 shares.
Neuberger Berman, LLC (Neuberger LLC) and Neuberger
Berman Management, Inc. (Neuberger Management) serve
as
sub-advisor
and investment manager, respectively, of Neubergers
various investment funds. As such, Neuberger LLC has shared
voting power with respect to 1,348,436 shares and shared
dispositive power with respect to 1,554,616 shares.
Neuberger Management has shared voting and shared dispositive
power with respect to 1,207,209 shares. Neuberger Berman
Equity Funds has shared voting power and shared dispositive
power with respect to 1,201,775 shares. Many unrelated
clients of Neuberger LLC have the sole right to receive and the
power to direct the receipt of dividends or proceeds from the
sale of such shares. Neuberger is the parent holding company
that owns 100% of Neuberger LLC and Neuberger Management.
|
|
(4)
|
|
This information is based on a Schedule 13G Amendment filed
with the SEC on February 10, 2011, reporting the shares of
the Companys Common Stock that may be deemed to be
beneficially owned as of December 31, 2010, by the Vanguard
Group, Inc. (Vanguard). Vanguard reported that it
may be deemed to have beneficial ownership of
1,408,759 shares. Vanguard has sole voting power with
respect to 33,519 shares and sole dispositive power with
respect to 1,375,240 shares and shared dispositive power
with respect to 33,519 shares. Vanguard Fiduciary
Trust Company (VFTC), a wholly-owned subsidiary
of Vanguard, is the beneficial owner of 33,519 shares as a
result of its serving as investment manager of collective trust
accounts. VFTC directs the voting of these shares.
|
40
Security
Ownership of Management
To the Companys knowledge, the following table reflects
the beneficial ownership of the Companys Common Stock as
of March 14, 2011 by each Company Director, each named
executive officer and all of the Companys Directors and
executive officers as a group. Unless otherwise indicated, each
beneficial owner listed in the table holds sole voting and
investment power over the shares listed as beneficially owned by
him or her.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
of Common Stock
|
|
|
Name of Beneficial Owner
|
|
Beneficially Owned(1)
|
|
Percent of Class
|
|
Frederick B. Hegi, Jr.
|
|
|
550,130
|
(3)(4)
|
|
|
2.4
|
%
|
Robert B. Aiken, Jr.
|
|
|
1,000
|
|
|
|
|
|
Jean S. Blackwell
|
|
|
12,247
|
(3)
|
|
|
|
*
|
Daniel J. Connors
|
|
|
|
|
|
|
|
|
Charles K. Crovitz
|
|
|
12,437
|
|
|
|
|
*
|
Daniel J. Good
|
|
|
85,823
|
(2)
|
|
|
|
*
|
Roy W. Haley
|
|
|
32,137
|
|
|
|
|
*
|
Benson P. Shapiro
|
|
|
26,137
|
(3)
|
|
|
|
*
|
Alex D. Zoghlin
|
|
|
|
|
|
|
|
*
|
Richard W. Gochnauer
|
|
|
235,006
|
|
|
|
1.0
|
%
|
P. Cody Phipps
|
|
|
143,960
|
|
|
|
|
*
|
Victoria J. Reich
|
|
|
89,017
|
|
|
|
|
*
|
Stephen A. Schultz
|
|
|
26,792
|
|
|
|
|
*
|
Todd A. Shelton
|
|
|
41,926
|
|
|
|
|
*
|
All current Directors and executive officers as a group
(18 persons)
|
|
|
1,377,468
|
|
|
|
5.9
|
%
|
|
|
|
*
|
|
Represents less than 1%
|
|
(1)
|
|
In accordance with applicable SEC beneficial ownership rules,
includes shares of the Companys Common Stock that may be
acquired within 60 days after March 14, 2011 through
the exercise of stock options, as follows: Mr. Hegi,
33,534 shares; Ms. Blackwell, 3,838 shares;
Mr. Crovitz, 12,437 shares; Mr. Good,
28,937 shares; Mr. Haley, 28,937 shares;
Dr. Shapiro, 22,937 shares; Mr. Gochnauer,
139,410 shares; Ms. Reich 64,477 shares;
Mr. Phipps, 119,170 shares; Mr. Schultz,
8,747 shares; Mr. Shelton, 30,071 shares and all
current Directors and executive officers as a group,
554,180 shares.
|
|
(2)
|
|
Includes 24,798 shares owned by Good Capital Co., Inc.
(Good Capital). Mr. Good is Chairman and a
controlling stockholder of Good Capital and, accordingly, may be
deemed to share voting and dispositive power and therefore
beneficially own such shares. Mr. Good disclaims beneficial
ownership of the shares owned by Good Capital except to the
extent of his beneficial interest therein.
|
|
(3)
|
|
Includes shares issuable shortly after the participants
cessation of service as a Director on a
one-for-one
basis in satisfaction of fully vested deferred stock units
credited under the Directors Deferred Compensation Plan,
as follows: Ms. Blackwell, 7,409 shares and
Mr. Hegi, 17,250 shares. Does not include the
16,679 shares issuable in settlement of fully vested
deferred stock units credited to Dr. Shapiro under the same
plan, as he has elected to defer receipt of such shares over a
two-year period following termination of his service as a
Director.
|
|
(4)
|
|
In addition to the shares referenced in Notes 1 and 4,
includes: (i) 317,223 shares held of record by
Mr. Hegi; (ii) 32,312 shares held of record by a
family company of which he is managing partner;
(iii) 500 shares held in the Hegi Family Foundation;
and (iv) 149,311 shares held in trust for his benefit
and for which he serves as trustee.
|
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the
Companys Directors and executive officers and persons who
own more than 10% of the Companys Common Stock to file
with the SEC reports of holdings and transactions in the
Companys Common Stock. Based on its review of such reports
furnished to the Company and on written representations from the
Companys Directors and executive officers, the Company
believes that there was only one late filing in 2010 for
Victoria J. Reich.
41
REPORT OF THE
AUDIT COMMITTEE
The Audit
Committee
The Audit Committee of the Companys Board of Directors
consists of the three non-employee Directors named below. Each
member of the Audit Committee is independent, as defined by the
current NASDAQ listing standards and
Rule 10A-3
of the Exchange Act. No member of the Audit Committee received
any compensation from the Company during 2010 other than for
services as a member of the Board or one or more of its
Committees.
The Board of Directors has determined that all Audit Committee
members are financially literate and at least two members have
financial management expertise, in accordance with NASDAQ
listing standards. In addition, the Board of Directors has
determined that Roy W. Haley and Jean S. Blackwell each qualify
as an audit committee financial expert within the
meaning of applicable SEC regulations.
Audit Committee
Charter and Responsibilities
The Audit Committee operates under and regularly reviews a
written charter originally adopted by the Board of Directors in
February 2000, and amended as of July 13, 2010. The Audit
Committee charter may be found under Corporate
Governance as part of the Investor Information
section available through the Companys website at
http://www.unitedstationers.com.
The Audit Committee assists the Companys Board of
Directors in fulfilling its responsibilities for oversight of:
(1) the integrity of the Companys financial
statements; (2) the soundness of the Companys
internal control systems; (3) assessment of the
independence, qualifications and performance of the
Companys independent registered public accountants;
(4) performance of the internal audit function; and
(5) the Companys legal, regulatory and ethical
compliance programs.
The Companys management has primary responsibility for
preparing the Companys financial statements and for
establishing and maintaining its financial reporting processes
and internal controls. The Companys independent registered
public accountants are responsible for performing an independent
audit of the Companys consolidated financial statements in
accordance with the standards of the Public Company Accounting
Oversight Board (United States) (PCAOB) and
expressing an opinion on the conformity of such financial
statements with U.S. generally accepted accounting
principles. In addition, the Companys independent
registered public accountants are responsible for auditing and
expressing an opinion on the effectiveness of the Companys
internal control over financial reporting as well as
managements assessment of the effectiveness of the
Companys internal control over financial reporting in
accordance with the standards of the PCAOB.
The Audit Committee has the sole authority to select, appoint
and, if appropriate, terminate the engagement of the independent
registered public accountants. As described under
Proposal 4: Ratification of the Selection of
Independent Registered Public Accountants Audit
Committee Pre-Approval Policy, the Audit Committee adopted
guidelines requiring review and pre-approval by the Audit
Committee of all audit and permitted non-audit services
performed for the Company by its independent registered public
accountants.
Audit Committee
Report
In this context, the Audit Committee reports as follows with
respect to the Companys audited financial statements and
managements assessment of the effectiveness of the
Companys internal control over financial reporting for the
year ended December 31, 2010:
The Audit Committee has reviewed and discussed the
Companys audited financial statements, managements
assessment of the effectiveness of the Companys internal
control over financial reporting, the independent registered
public accountants evaluation of the Companys
internal control over financial reporting and the related
reports of the independent registered public accountants with
the Companys management, its chief internal auditor and
its independent registered public accountants, with and without
management present.
The Audit Committee has discussed with the independent
registered public accountants matters relating to the
independent registered public accountants judgment about
the quality, as well as the acceptability, of the Companys
accounting principles as applied in its financial reporting, the
reasonableness of significant judgments and the clarity of
financial statement disclosures, as required to be discussed by
Statement on Auditing Standards No. 114 (The Auditors
Communication With Those Charged With Governance).
42
The Audit Committee has received the written disclosures and the
letter from the independent registered public accounting firm
required by the PCAOB regarding the independent registered
public accounting firms communications with the Audit
Committee concerning independence, and has discussed with the
independent registered public accounting firm its independence.
The Audit Committee has reviewed with the independent registered
public accountants and the Companys internal auditors
their respective audit plans, audit scope and identification of
audit risks. It has discussed the internal audit functions
organization, responsibilities and activities with the
Companys management, its internal auditors and the
independent registered public accountants. The Audit Committee
periodically met with both the internal auditors and the
independent registered public accountants, with and without
management present, to discuss the results of their respective
evaluations of the Companys internal controls and the
overall quality of the Companys financial reporting. It
also met periodically to discuss such matters in executive
session.
Based upon the reviews and discussions referred to above, the
Audit Committee recommended to the Board of Directors (and the
Board subsequently approved the recommendation) that the
Companys audited consolidated financial statements be
included in the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 for filing with
the SEC.
Members of the Audit Committee:
Roy W. Haley, Chair
Jean S. Blackwell
Daniel J. Good
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
No relationships
and/or
related party transactions have been identified for disclosure.
Related Person
Transaction Approval Policy
In March 2008, our Board of Directors adopted a written related
person transaction approval policy, which sets forth the
Companys policies and procedures for the review, approval
or ratification of any transaction required to be reported in
the Companys filings with the Securities and Exchange
Commission. Our policy applies to any transaction, arrangement
or relationship or any series of similar transactions,
arrangements or relationships in which the Company (including
any subsidiaries) is or will be a participant and in which a
related person (as defined in Item 404 of
Regulation S-K)
has a direct or indirect interest, but exempts the following:
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payment of compensation by the Company to a related person for
the related persons service to the Company as a director,
officer or employee;
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transactions available to all employees or all shareholders of
the Company on the same terms;
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transactions, which when aggregated with the amount of all other
transactions between the Company and a related person (or any
entity in which the related person has an interest), involve
less than $120,000 in a fiscal year; and
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transactions in the ordinary course of business at the same
prices and on the same terms as are made available to customers
of the Company generally.
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The Audit Committee of our Board of Directors must approve any
related person transaction subject to this policy before
commencement of the related person transaction. If such a
transaction is not identified until after it has commenced, it
must then be brought to the Audit Committee, which will consider
all options, including approval, ratification, amendment,
denial, termination or, if the transaction is completed,
rescission. The Audit Committee will analyze the following
factors, in addition to any other factors the Committee deems
appropriate, in determining whether to approve or ratify a
related person transaction:
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whether the terms are fair to the Company;
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whether the transaction is material to the Company;
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the role the related person has played in arranging the related
person transaction;
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43
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the structure of the related person transaction; and
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the interests of all related persons in the related person
transaction.
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The Audit Committee may, in its sole discretion, approve or deny
any related person transaction. Approval of a related person
transaction may be conditioned upon the Company and the related
person taking any actions that the Audit Committee deems
appropriate. The Audit Committee has delegated to its
chairperson authority to approve or take any other action with
respect to a related person transaction that the Committee
itself would be authorized to take pursuant to this policy.
PROPOSAL 2:
RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
General
The Company has selected Ernst & Young LLP
(E&Y) as the Companys independent
registered public accountants for 2011, as it has done since
1995. Although action by the stockholders in this matter is not
required, the Audit Committee believes that it is appropriate to
seek stockholder ratification of this appointment in light of
the critical role played by independent registered public
accountants in maintaining the integrity of Company financial
controls and reporting. Representatives of E&Y are expected
to be present at the Annual Meeting to respond to appropriate
questions and to make a statement, should they choose to do so.
The following proposal will be presented for action at the
Annual Meeting by direction of the Board of Directors:
RESOLVED, that action by the Audit Committee appointing
Ernst & Young LLP as the Companys independent
registered public accountants to conduct the annual audit of the
financial statements of the Company and its subsidiaries for the
fiscal year ending December 31, 2011 is hereby ratified,
confirmed and approved.
THE COMPANYS BOARD UNANIMOUSLY RECOMMENDS A VOTE
FOR THE RATIFICATION OF THE SELECTION OF
ERNST & YOUNG LLP AS THE COMPANYS INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS.
Fee
Information
General.
The following table presents
information with respect to fees incurred for the indicated
professional services rendered by E&Y during each of the
last two years (dollars in thousands).
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Type of Fees
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2010
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2009
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Audit Fees
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$
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1,257
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$
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1,378
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Audit-Related Fees
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91
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56
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Tax Fees
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23
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54
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All Other Fees
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Total
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$
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1,371
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$
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1,488
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Audit Fees.
Audit Fees
included fees for professional services rendered for the 2010
and 2009 audits of the consolidated financial statements of the
Company included in the Companys Annual Reports on
Form 10-K,
reviews of the quarterly condensed consolidated financial
statements included in the Companys Quarterly Reports on
Form 10-Q,
statutory audits, regulatory filings or engagements and
accounting consultations on matters related to the annual audits
or interim reviews. Audit fees for 2010 and 2009 also included
the audit of managements report on the effectiveness of
the Companys internal control over financial reporting as
of December 31, 2010 and 2009, as required by
Section 404 of the Sarbanes-Oxley Act of 2002.
Audit-Related Fees.
Audit-Related
Fees are fees for assurance and related services that are
reasonably related to the performance of the audit or review of
the Companys financial statements. For 2010 and 2009
44
these fees included employee benefit plan audits and accounting
consultations. In addition, Audit-Related Fees in 2010 included
acquisition-related due diligence services.
Tax Fees.
Tax Fees are fees
for professional services performed by E&Y with respect to
tax compliance, tax advice and tax planning. For 2010 and 2009,
the fees consisted of tax consulting services.
All Other Fees.
All Other
Fees are fees for any services not included in the first
three categories.
Audit Committee
Pre-Approval Policy
Under applicable SEC rules, the Audit Committee is required to
pre-approve audit and non-audit services performed by the
independent registered public accountants, subject to certain
de minimis
exceptions and prohibitions against the
provision of certain types of non-audit services. The Audit
Committee pre-approved all services and fees described above.
These SEC rules are designed to assure that the provision of
services by the independent registered public accountants does
not impair its independence from the Company.
Consistent with applicable SEC rules, the Audit Committee has
adopted an Audit and Non-Audit Services
Pre-Approval
Policy (the Pre-Approval Policy). The Pre-Approval
Policy sets forth the procedures and conditions pursuant to
which the Audit Committee may pre-approve audit and permissible
non-audit services proposed to be performed by the independent
registered public accountants.
Pursuant to the Pre-Approval Policy, the Audit Committee will
consider annually and, if appropriate, approve the provision of
all audit services to the Company by the independent registered
public accountants. Any changes to any previously approved audit
services, terms or fees require the further specific
pre-approval of the Audit Committee.
Under the Pre-Approval Policy, the Audit Committee also will
consider and, if appropriate, pre-approve the provision by the
independent registered public accountants of permitted
audit-related, tax or other non-audit services. The term of any
such pre-approval is twelve months from the date of
pre-approval, unless the Audit Committee provides for a
different period or earlier terminates such services. Any such
pre-approval will be subject to a dollar limit specified by the
Audit Committee. The Audit Committee periodically reviews, and
from
time-to-time
may revise, the list of general pre-approved services. Any
proposed new services, and any previously approved services
anticipated to exceed the respective fee limits previously
established for such services, must be separately approved.
The Pre-Approval Policy authorizes the Audit Committee to
delegate to one or more of its members pre-approval authority
for permitted non-audit services. The member to whom such
authority is delegated must report any pre-approval decisions,
for informational purposes, to the Audit Committee at its next
regularly scheduled meeting.
The Companys Vice President, Controller and Chief
Accounting Officer monitors the performance of all services
provided by the independent registered public accountants for
compliance with the Pre-Approval Policy. The Audit Committee
periodically reviews reports summarizing all services and
related fees and expenses being provided to the Company by the
independent registered public accountants.
PROPOSAL 3:
APPROVAL OF AMENDED AND RESTATED 2004 LONG-TERM
INCENTIVE PLAN
Introduction
The Companys stockholders are asked to approve certain
amendments to and the restatement of the United Stationers
Inc. Amended and Restated 2004 Long-Term Incentive Plan (the
LTIP). The LTIP was originally adopted by the
Companys stockholders on May 6, 2004, with an
effective date of May 1, 2004. The stockholders approved
certain amendments to the LTIP on May 10, 2006. Subsequent
to that time, the Board adopted certain amendments to and
restatement of the LTIP that did not require stockholder
approval.
On February 23, 2011, the Board of Directors approved
certain amendments to and the restatement of (the
Amendments) the LTIP (as amended and restated, the
Amended 2004 Plan), to be effective as of
May 11,
45
2011, subject to stockholder approval at the Annual Meeting. The
Amendments will modify the LTIP as follows:
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Modify Section 5.2(b)(i) of the LTIP to increase the
maximum number of shares available for issuance under the
Amended 2004 Plan from 4,625,000 to 6,425,000 shares of
Common Stock;
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Modify Section 5.2(f) of the LTIP to clarify that the
Committee shall have the authority to adjust the number and type
of shares available for awards under the Amended 2004 Plan in
the event of a corporate transaction involving any capital
adjustment (e.g. stock splits);
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Modify Section 5.2(g) of the LTIP to increase the number of
shares that can be delivered with respect to incentive stock
options granted under the Amended 2004 Plan from 4,625,000 to
6,425,000 shares;
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Modify Section 5.6 of the LTIP to provide that dividends
and dividend equivalents will not be paid unless and until the
awards to which such rights relate are vested, exercised,
settled, earned, or otherwise paid in accordance with the terms
and conditions of such awards;
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Delete Sections 6.1(h), 6.3, and 9(b) in their entirety and
modify Section 6.2(d) to eliminate references to an
Anticipated Change of Control;
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Modify the definition of Change of Control in
Section 6.2 and the definitions of Cause,
Fair Market Value, and Good Reason in
Section 9; and
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Amend and restate the LTIP in its entirety to make other
conforming changes and to make one cohesive and integrated
document to avoid confusion.
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A summary of the Amendments as well as the other material terms
of the Amended 2004 Plan is contained below. This summary should
be read with and is subject to the specific provisions of the
Amended 2004 Plan, the full text of which is attached as
Appendix A to this Proxy Statement.
THE COMPANYS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR APPROVAL OF THE AMENDED 2004 PLAN.
Plan
Highlights
The Amended 2004 Plan contains features that the Companys
Board believes are consistent with the interests of stockholders
and sound governance principles. These include the following:
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Authorization of Restricted Stock and Other Equity Awards
Beyond Stock Options.
In the past, stock
options served as the principal form of long-term incentive
compensation for Company employees and were the only form of
equity awards permitted under the Companys 2000 Management
Equity Plan and 1992 Management Equity Plan (the Prior
Equity Plans). The Amended 2004 Plan provides the Company
with the ability to make use of restricted stock and other
so-called full value awards.
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Enhanced Flexibility and Performance
Ties.
The variety of equity or cash awards
permitted under the Amended 2004 Plan affords the Human
Resources Committee and Company management flexibility in
designing long-term incentives that are responsive to evolving
regulatory changes and compensation best practices and that can
incorporate tailored, performance-based measures.
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Platform for Reduced Future Stock Usage
Rates.
As the Amended 2004 Plan permits the
use of full value share awards in combination with or in lieu of
options, it positions the Company to manage effectively its
future stock usage rates.
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Limitations on Shares Available for
Awards.
A maximum of 6,425,000 shares of
Common Stock will be available to be awarded under the Amended
2004 Plan through its expiration date, subject to equitable
adjustment, plus any additional shares made available through
forfeiture, expiration or cancellation of any options
outstanding under the Prior Equity Plans as of the original
effective date of the LTIP. There are no evergreen or reload
terms applicable to the Amended 2004 Plan. Full value awards
will count as 1.85 shares for each full value share issued
and will reduce the number of shares remaining for grant by that
amount.
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No Discount Options.
Stock options (or
stock appreciation rights) generally may not be granted or
awarded with a then-established exercise price (or reference
price) of less than the fair market value of the Companys
Common Stock on the date of grant or award.
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No Repricings.
The repricing of stock
options and stock appreciation rights is prohibited without the
approval of stockholders. This prohibition applies to both
direct repricings (lowering the exercise price of a stock option
or stock appreciation right or canceling such awards and
replacing them with lower priced awards) and indirect repricings
(canceling an outstanding stock option or stock appreciation
right and granting a replacement full-value award).
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Independent Committee Oversight.
The
Amended 2004 Plan is administered by the Companys Human
Resources Committee, which is comprised solely of non-employee,
independent Directors.
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Reasons for and
Effects of the Amendments
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Increase in
Authorized Shares
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Prior to the adoption of the Amendments, an aggregate of
4,625,000 shares of Common Stock were authorized for
issuance under the LTIP (excluding shares added upon the
forfeiture, expiration or cancellation of awards granted under
the Prior Equity Plans). As of February 23, 2011, there
were 502,127 shares of Common Stock remaining authorized
for issuance under the LTIP. The Amendments will authorize an
additional 1,800,000 shares of Common Stock. As a result,
approval of the Amendments will increase the total number of
shares authorized for issuance under the Amended 2004 Plan to
6,425,000 shares (excluding shares added upon the
forfeiture, expiration or cancellation of awards granted under
the Prior Equity Plans). The Board believes that the LTIP is an
important element in the Companys overall compensation
program, as described under Compensation Discussion and
Analysis Objectives and Design of Our Compensation
Program and Compensation Discussion and
Analysis Elements of Compensation. The Board
further believes that increasing the number of shares authorized
for issuance under the Amended 2004 Plan is necessary to enable
the Company to continue to make grants of awards as the
long-term equity incentive portion of our overall executive
compensation program.
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Amendments to
Change of Control Provisions
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The Amendments eliminate all references in the LTIP to an
Anticipated Change of Control. Under the deleted
provisions, if a Participants employment with the Company
was terminated without Cause or for Good Reason during an
Anticipated Change of Control and Change of Control actually
occurred within two years after such termination, then all
awards held by the Participant at the time of his or her
termination of employment would become vested and, in the case
of options and SARs, exercisable. The Board has determined that
these provisions are not consistent with current best
practices for executive compensation and, therefore,
decided to eliminate these provisions so that grants made under
the Amended 2004 Plan in the future will not include these
provisions. Awards outstanding under the LTIP prior to
stockholder approval of the Amended 2004 Plan, however, will
continue to be subject to these provisions.
The Amendments also modify one aspect of the definition of
Change of Control. Under the existing definition, a
Change of Control will be deemed to have occurred
upon approval by the Companys stockholders
of an
agreement for the assignment, sale, conveyance, transfer, lease
or other disposition of all or substantially all of the assets
of the Company to any person (with certain exceptions), or the
occurrence of the same. The Amendments change this provision to
define a Change of Control as occurring upon
the closing
of an agreement for the assignment, sale, conveyance,
transfer, lease or other disposition of all or substantially all
of the assets of the Company to any person (with certain
exceptions), or the occurrence of the same. The Board has
determined that this aspect of the original definition is not
consistent with current best practices for executive
compensation and, therefore, decided to amend this part of the
definition of Change of Control so that grants made under the
Amended 2004 Plan in the future will be subject to the amended
definition. Awards outstanding under the LTIP prior to
stockholder approval of the Amended 2004 Plan, however, will
continue to be subject to the original definition.
In addition, the Amendments provide that for any awards that
include a provision for payment of dividends or dividend
equivalents with respect to the underlying shares, such
dividends and dividend equivalents will not be
47
paid unless and until the awards to which such rights relate are
vested, exercised, settled, earned, or otherwise paid in
accordance with the terms and conditions of such awards.
The Amendments also:
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Clarify the Committees authority to adjust the number and
type of shares available for awards under the Amended 2004 Plan
in the event of a corporate transaction involving any capital
adjustment;
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Modify the definitions of Cause and Good
Reason to substantially conform to the definitions of such
terms included in the Executive Employment Agreements that
Messrs. Phipps, Schultz and Shelton entered into with the
Company effective December 31, 2010;
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Modify the definition of Fair Market Value to delete
references to the Nasdaq National Market and the Nasdaq SmallCap
Market, which no longer exist; and
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Amend and restate the LTIP in its entirety to make other
conforming changes and to make one cohesive and integrated
document to avoid confusion.
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In general, all other provisions of the LTIP will remain in
effect, with the only material amendments being those described
above.
Purpose of the
Amended 2004 Plan
The purpose of the Amended 2004 Plan is to: (i) attract and
retain individuals with excellent managerial talent upon whom,
in large measure, the sustained progress, growth and
profitability of the Company depend; (ii) motivate those
selected as participants, by means of appropriate
performance-based incentives, to achieve long-term performance
goals; (iii) further align the interests of selected
employee participants and non-employee Director participants
with those of the Companys other stockholders and provide
them with an effective means to acquire and maintain equity
interests in the Company; and (iv) provide incentive
compensation opportunities that are competitive with those of
similar companies. As a result, the Amended 2004 Plan is
designed to promote the long-term growth and financial success
of the Company and the interests of its stockholders.
Eligibility and
Amended 2004 Plan Benefits
All employees and non-employee Directors of the Company and its
subsidiaries are eligible to become Participants in the Amended
2004 Plan, except that non-employee Directors may not be granted
incentive stock options. As of March 14, 2011, the Company
and its subsidiaries had approximately 5,900 employees. The
specific individuals who will be granted awards under the
Amended 2004 Plan and the type and amount of any such awards
will be determined by the Committee (as defined below), subject
to annual limits on the maximum amounts that may be awarded to
any individual, as described below. Accordingly, future awards
to be received by or allocated to particular participants under
the Amended 2004 Plan are not presently determinable.
Information about awards currently outstanding under the LTIP
may be found in the Equity Compensation Plan
Information section of this Proxy Statement.
Administration
The Amended 2004 Plan is administered by a committee (the
Committee) selected by the Board of Directors of the
Company. The Human Resources Committee will administer the
Amended 2004 Plan unless otherwise determined by the Board. The
Committee selects from eligible individuals those persons to
whom awards under the Plan will be granted
(Participants), the types of awards to be granted
and the applicable terms, conditions, performance criteria,
restrictions and other provisions of such awards. The Board
itself may take any action under the Amended 2004 Plan that
would otherwise be the responsibility of the Committee. The
Board also may delegate to the Governance Committee the
authority to administer awards granted to non-employee
Directors. Except to the extent prohibited by applicable law or
the rules of any stock exchange or automated quotation system on
which the Common Stock is then listed, the Committee may either
allocate its responsibilities under the Amended 2004 Plan to one
or more of its members or delegate its responsibilities to other
persons selected by it.
48
Shares Subject
to the Amended 2004 Plan; Limits on Awards
In making or settling equity awards under the Amended 2004 Plan,
the Company may use shares of Common Stock currently authorized
but unissued or currently held or, to the extent permitted by
applicable law, subsequently acquired by the Company as treasury
shares, including shares purchased in the open market or in
private transactions. At the discretion of the Committee, an
award under the Amended 2004 Plan may be settled in cash rather
than Common Stock.
The maximum number of shares that may be delivered to
Participants and their beneficiaries under the Amended 2004 Plan
may not exceed the sum of (i) 6,425,000 shares of
Common Stock (provided that each share of Common Stock issued
for full value awards, as described below, will count as
covering 1.85 shares of Common Stock and will reduce the
number of shares of Common Stock available for delivery by
1.85 shares); plus (ii) shares of Common Stock that
are represented by awards granted under the Prior Equity Plans
that are forfeited, expire or are canceled after May 1,
2004 (the initial effective date of the LTIP)
without delivery of shares of Common Stock or which result in
the forfeiture of the shares of Common Stock back to the Company
to the extent that such shares would have been added back to the
reserve under the terms of the applicable Prior Equity Plans.
The following additional limits apply to awards under the
Amended 2004 Plan:
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A maximum of 6,425,000 shares of Common Stock may be
delivered to Participants and their beneficiaries with respect
to incentive stock options granted under the Amended 2004 Plan;
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A maximum of 500,000 shares of Common Stock may be covered
by options and stock appreciation rights granted to any one
Participant in any one calendar year;
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A maximum of 300,000 shares of Common stock may be
delivered pursuant to full value awards intended to be
performance-based compensation (as described below)
granted to any one Participant during any one calendar-year
period, regardless of whether settlement of the award is to
occur prior to, at the time of, or after the time of
vesting; and
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The maximum amount of cash incentive awards intended to be
performance-based compensation payable to any one
Participant for performance periods beginning in any one
calendar year will be $2,000,000 regardless of whether the
applicable performance period during which the award is earned
ends in the same year in which it begins or in a later calendar
year.
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The closing price with respect to the Common Stock on
March 14, 2011 was $67.32 per share.
Types of
Awards
The Amended 2004 Plan permits the award by the Committee of
different types of awards, including but not limited to options,
stock appreciation rights, full value awards and cash incentive
awards. These types of awards are further described below.
The Committee may grant an incentive stock option or
non-qualified stock option to purchase Common Stock at an
exercise price determined under the option. Except as described
below, the exercise price for an option will not be less than
the fair market value of the shares of Common Stock at the time
the option is granted. The Committee, however, may grant options
with an exercise price lower than the fair market value of the
Common Stock at the time of grant in replacement for awards
under other plans assumed in connection with business
combinations if the Committee determines that doing so is
appropriate to preserve the benefit of the awards being replaced.
Options granted under the Amended 2004 Plan will be exercisable
in accordance with the terms established by the Committee.
Except as otherwise determined by the Committee, the purchase
price of an option will be payable in cash, in Common Stock
(valued at fair market value as of the day of exercise), or a
combination thereof, and must be paid in full in connection with
its exercise. The Committee also may permit a Participant to
elect to pay the exercise price upon the exercise of an option
by irrevocably authorizing a third party to sell shares of
Common Stock (or a sufficient portion of the shares) acquired
upon exercise of the option and remit to the Company a
sufficient portion of the sale proceeds to pay the entire
exercise price and any tax withholding obligations resulting
from such exercise. The Committee, in its discretion, may impose
such
49
conditions, restrictions and contingencies on Common Stock
acquired pursuant to the exercise of an option as the Committee
determines to be desirable. In no event will an option expire
more than ten years after the grant date.
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Stock
Appreciation Rights
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A stock appreciation right (SAR) entitles the
Participant to receive the amount (in cash or stock) by which
the fair market value of a specified number of shares on the
exercise date exceeds an exercise price established by the
Committee. Except as described below, the exercise price for an
SAR shall not be less than the fair market value of the Common
Stock at the time the SAR is granted. The Committee, however,
may grant SARs with an exercise price lower than the fair market
value of the Common Stock at the time of grant in replacement
for awards under other plans assumed in connection with business
combinations if the Committee determines that doing so is
appropriate to preserve the benefit of the awards being
replaced. The Committee may grant SARs independent of any option
grant and may grant an option and an SAR in tandem with each
other, and SARs and options granted in tandem may be granted on
different dates but may have the same exercise price.
SARs shall be exercisable in accordance with the terms
established by the Committee. The Committee, in its discretion,
may impose such conditions, restrictions, and contingencies on
Common Stock acquired pursuant to the exercise of SARs as the
Committee determines to be desirable. In no event will an SAR
expire more than ten years after the grant date.
The following types of full value awards may be
granted, as determined by the Committee:
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The Committee may grant shares of Common Stock in return for
previously performed services or in return for the Participant
surrendering other compensation that may be due. These awards
may include, without limitation, bonus stock. Generally,
bonus stock is the grant of stock in return for
previously performed services or the surrender of other
compensation that may be due.
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The Committee may grant shares of Common Stock that are
contingent on the achievement of performance or other objectives
during a specified period. These awards may include, without
limitation, performance shares and performance units. Generally,
performance shares are grants of actual shares of
Common Stock whose payment is contingent on performance as
measured against predetermined objectives over a one-year or
multi-year period of time. Generally, performance
units are grants of stock units whose payment is
contingent on performance as measured against predetermined
objectives over a one-year or multi-year period of time and
whose value fluctuates with stock price changes and performance
against objectives.
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The Committee may grant shares of Common Stock subject to a risk
of forfeiture or other restrictions that lapse upon the
achievement of one or more goals relating to completion of
service by the Participant or the achievement of performance or
other objectives. These awards may include, without limitation,
restricted stock and restricted stock units. Generally,
restricted stock and restricted stock
units are grants of actual shares of Common Stock or stock
units subject to restrictions and risk of forfeiture until
vested by continued employment
and/or
attainment of specified performance objectives.
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Any such full value awards may be subject to such conditions,
restrictions and contingencies as the Committee determines. If
the right to become vested in a full value award is conditioned
on the completion of a specified period of service with the
Company or its subsidiaries, without achievement of performance
measures (as described below) or other performance objectives
being required as a condition of vesting, and without it being
granted in lieu of other compensation, then the required period
of service for full vesting must not be less than three years
(subject to accelerated vesting, to the extent provided by the
Committee, in the event of the Participants death,
disability, retirement, change of control or termination).
The Committee may grant cash incentive awards (including the
right to receive payment of cash or Common Stock having the
value equivalent to the cash otherwise payable) that may be
contingent on achievement of a Participants performance
objectives over a specified period established by the Committee.
The grant of cash
50
incentive awards may also be subject to such other conditions,
restrictions and contingencies as determined by the Committee.
Performance
Measures
An income tax deduction for the Company will generally be
unavailable for annual compensation in excess of $1 million
paid to any of the five most highly compensated officers of a
public corporation. However, amounts that constitute
performance-based compensation are not counted
toward the $1 million limit. It is expected that options
and SARs granted under the Amended 2004 Plan will satisfy the
requirements for performance-based compensation. The
Committee may designate whether any full value awards or cash
incentive awards being granted to any Participant are intended
to be performance-based compensation as that term is
used in Section 162(m) of the Code. Any such awards
designated as intended to be performance-based
compensation shall be conditioned on the achievement of
one or more performance measures, to the extent required by
Section 162(m) of the Code. The performance measures that
may be used by the Committee for such awards shall be based on
any one or more of the following, as selected by the Committee:
(a) earnings per share (EPS); (b) net
earnings/income; (c) net operating earnings/income;
(d) net operating earnings/income after taxes; (e) net
operating earnings/income per share; (f) EPS from
continuing operations; (g) earnings before interest and
taxes; (h) stock price appreciation; (i) total
shareholder return; (j) relative total shareholder return
(for example, as compared to peer group performance);
(k) sales/revenues, or any component thereof;
(l) sales/revenue growth; (m) unit volume;
(n) gross or operating margins/margin contribution;
(o) economic value added or economic profit;
(p) return on assets (net assets or operating assets);
(q) return on equity; (r) return on invested capital
or invested capital efficiency; (s) working capital or
working capital efficiency; (t) cash flow/free cash flow;
(u) net cash provided by operating activities;
(v) cash return on assets; (w) waste recovery, cost
control
and/or
operating efficiency targets; (x) expense targets; and
(y) safety goals. Each goal may be expressed on an absolute
and/or
relative basis, may be based on or otherwise employ comparisons
based on internal targets, the past performance of the Company
and/or
the
past or current performance of other companies, and in the case
of earnings-based measures, may use or employ comparisons
relating to capital, stockholders equity
and/or
shares outstanding, investments or assets or net assets. For
awards intended to be performance-based
compensation, the grant of the awards and the
establishment of the performance measures shall be made during
the period required under Section 162(m) of the Code.
A vote to approve the Amended 2004 Plan also will serve as a
vote to re-approve the performance measures listed above, as
required by Section 162(m) of the Code.
Dividends and
Dividend Equivalents
Awards may provide for payment of dividends or dividend
equivalents with respect to the underlying shares, provided that
any dividend or dividend equivalent shall be subject to the
following:
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Except as otherwise provided by the Committee, payment of any
dividend or dividend equivalent shall be subject to the same
conditions, restrictions and contingencies (including vesting)
as the underlying shares of Common Stock;
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No payments of dividends or dividend equivalents will be made
with respect to awards granted in the form of options, SARs, or
similar awards unless and until the shares of stock underlying
such awards are actually issued upon exercise, vesting or
settlement of the award; and
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All payments of dividends or dividend equivalents with respect
to awards granted in the form of Full Value Awards, including
performance shares, performance units, shares of restricted
stock, restricted stock units, or similar awards shall be
deferred and shall not be paid unless and until such Awards vest
or otherwise are earned or settled in accordance with the terms
and conditions of the applicable Award Agreement.
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No
Repricing
Except as approved by the Companys stockholders or as
adjusted for corporate transactions described below,
(i) the exercise price of an option or SAR may not be
decreased after the date of grant nor may an option or SAR be
surrendered to the Company as consideration for the grant of a
replacement option or SAR with a lower exercise price, and
(ii) any other action with respect to awards that is
treated as a repricing under
51
accounting principles generally accepted in the United States is
prohibited under the Amended 2004 Plan. In no event may the
exercise price of any option, as reduced or otherwise adjusted,
be lower than the fair market value of a share of Common Stock
on the date of grant of such option.
Adjustments
In the event of a corporate transaction involving the Company
(including, without limitation, any stock dividend, stock split,
extraordinary cash dividend, recapitalization, reorganization,
merger, consolidation,
split-up,
spin-off, combination or exchange of shares), the Committee
(a) shall have the authority to proportionately adjust the
aggregate number of and type of shares available for awards
under the Amended 2004 Plan, and (b) shall proportionally
adjust outstanding awards to preserve the benefits or potential
benefits of the awards. Action by the Committee may include:
(i) adjustment of the number and kind of shares or other
securities which may be delivered under the Amended 2004 Plan;
(ii) adjustment of the number and kind of shares or other
securities subject to outstanding awards; (iii) adjustment
of the exercise price of outstanding options and SARs; and
(iv) any other adjustments to outstanding awards that the
Committee determines to be equitable, which may include, without
limitation, (A) replacement of awards with other awards
which the Committee determines have comparable value and which
are based on stock of a company resulting from or involved in
the transaction, (B) cancellation of the award in return
for cash payment of the current value of the award, determined
as though the award is fully vested at the time of payment,
provided that in the case of an option, the amount of such
payment may be the excess of value of the Common Stock subject
to the option at the time of the transaction over the exercise
price, and (C) replacement with other types of awards.
Change of
Control
Unless otherwise provided by the Committee and in the award
agreement, upon the occurrence of a Change of Control of the
Company , the Affected Portion (as described below)
of all outstanding awards held by Participants will become
vested. Under the Amended 2004 Plan, the Affected
Portion is described as follows:
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The Affected Portion of any option, SAR, or other award
(excluding a cash incentive award) will be 50% of the shares
covered by the award as to which the award is not vested
immediately prior to the Change of Control. If, however, the
vesting of any of these awards is contingent on the achievement
of performance objectives (that is, objectives other than the
completion of service, and referred to as
Performance-Contingent Vesting), the Affected
Portion of the award will be the number of shares that would be
delivered to the Participant if the target level of performance
objectives were achieved for the applicable performance period
multiplied by a fraction, the numerator of which is the number
of days during the period beginning on the first day of the
performance period and ending on the date of the Change of
Control and the denominator of which is the number of days in
the total performance period.
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The Affected Portion of a cash incentive award will be 50% of
the amount covered by the award that is not vested immediately
prior to the Change of Control. If, however, the vesting of the
Cash Incentive Award is Performance-Contingent Vesting, the
Affected Portion of such cash incentive award will be the amount
that would be earned by the Participant if the target level of
performance objectives were achieved for the applicable
performance period multiplied by a fraction, the numerator of
which is the number of days during the period beginning on the
first day of the performance period and ending on the date of
the Change of Control (but not less than 365 days or, if
the performance period is less than 365 days, the number of
days in the total performance period) and the denominator of
which is the number of days in the total performance period.
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In addition, if a Participants employment is terminated by
the Participant for Good Reason (as defined in the Amended 2004
Plan) or by the Company without Cause (as defined in the Amended
2004 Plan) during the two-year period following a Change of
Control, all awards granted prior to the Change of Control that
have not vested prior to the Participants date of
termination will become immediately vested as of such date.
See Executive Compensation Employment
Contracts and Employment Termination and Change of Control
Arrangements CEO Employment Agreement for a
description of the definition of Change of Control
under the Amended 2004 Plan. See Reasons for and Effects
of the Amendments Amendment of Change of Control
Provisions above, for a description of how the Amendments
will affect this definition.
52
Amendments and
Termination
The Amended 2004 Plan may be amended or terminated at any time
by the Board, and the Board or the Committee may amend any award
granted under the Amended 2004 Plan, provided that no amendment
or termination may adversely affect the rights of any
Participant without the Participants written consent. The
Board may not amend the provision of the Amended 2004 Plan
related to repricing without stockholder approval. The Amended
2004 Plan will remain in effect as long as any awards remain
outstanding, but no new awards may be granted after May 1,
2014.
Transferability
Except as otherwise provided by the Committee, awards under the
Amended 2004 Plan are not transferable except as designated by
the Participant by will or by laws of descent and distribution.
United States
Federal Income Tax Consequences
The following discussion is based on Federal tax laws and
regulations presently in effect, which are subject to change,
and it does not purport to be a complete description of the
Federal income tax aspects of the Amended 2004 Plan. A
Participant may also be subject to state and local taxes in
connection with the grant of awards under the Amended 2004 Plan.
The Company recommends that Participants consult with their
individual tax advisors to determine the applicability of the
tax rules to the awards granted to them in their personal
circumstances.
Certain awards under the Amended 2004 Plan may be subject to tax
rules that apply to nonqualified deferred compensation plans. If
an award is subject to those rules, and fails to conform to
them, the recipient may have accelerated recognition of taxable
income, and may also become liable for interest and tax
penalties. Failure to satisfy these rules will not have an
adverse tax effect on the Company. The Company intends that, to
the extent that awards are subject to these deferred
compensation rules, the awards will be structured to satisfy
those rules.
Under present Federal income tax laws, awards granted under the
Amended 2004 Plan will have the following tax consequences:
Non-Qualified
Options
The grant of a non-qualified option (NQO) will not
result in taxable income to the Participant. Except as described
below, the Participant will realize ordinary income at the time
of exercise in an amount equal to the excess of the fair market
value of the shares acquired over the exercise price for those
shares, and the Company will be entitled to a corresponding
deduction. Gains or losses realized by the Participant upon
disposition of such shares will be treated as capital gains and
losses, with the basis in such shares equal to the fair market
value of the shares at the time of exercise.
The exercise of an NQO through the delivery of previously
acquired stock will generally be treated as a non-taxable,
like-kind exchange as to the number of shares surrendered and
the identical number of shares received under the option. That
number of shares will take the same basis and, for capital gains
purposes, the same holding period as the shares that are given
up. The value of the shares received upon such an exchange that
are in excess of the number given up will be includible as
ordinary income to the Participant at the time of the exercise.
The excess shares will have a new holding period for capital
gain purposes and a basis equal to the value of such shares
determined at the time of exercise. The holding period for
determining long-term or short-term capital gains treatment will
commence on the exercise date.
Incentive
Stock Options
The grant of an incentive stock option (ISO) will
not result in taxable income to the Participant. The exercise of
an ISO will not result in taxable income to the Participant
provided that the Participant was, without a break in service,
an employee of the Company or a subsidiary during the period
beginning on the date of the grant of the option and ending on
the date three months prior to the date of exercise (one year
prior to the date of exercise if the Participant is disabled, as
that term is defined in the Code).
53
The excess of the fair market value of the shares at the time of
the exercise of an ISO over the exercise price is an adjustment
that is included in the calculation of the Participants
alternative minimum taxable income for the tax year in which the
ISO is exercised. For purposes of determining the
Participants alternative minimum tax liability for the
year of disposition of the shares acquired pursuant to the ISO
exercise, the Participant will have a basis in those shares
equal to the fair market value of the shares at the time of
exercise.
If the Participant does not sell or otherwise dispose of the
stock within two years from the date of the grant of the ISO and
within one year after the ISO exercise, then, upon disposition
of such shares, any amount realized in excess of the exercise
price will be taxed to the Participant as long-term capital
gain, and the Company will not be entitled to any deduction for
Federal income tax purposes. A capital loss will be recognized
to the extent that the amount realized is less than the exercise
price.
If the foregoing holding period requirements are not met, the
Participant will generally realize ordinary income, and a
corresponding deduction will be allowed to the Company, at the
time of the disposition of the shares, in an amount equal to the
lesser of (i) the excess of the fair market value of the
shares on the date of exercise over the exercise price, or
(ii) the excess, if any, of the amount realized upon
disposition of the shares over the exercise price. If the amount
realized exceeds the value of the shares on the date of
exercise, any additional amount will be capital gain. If the
amount realized is less than the exercise price, the Participant
will recognize no income and a capital loss will be recognized
equal to the excess of the exercise price over the amount
realized upon the disposition of the shares. The holding period
for determining long-term or short-term capital gains treatment
will commence on the exercise date.
The exercise of an ISO through the exchange of previously
acquired stock will generally be treated in the same manner as
such an exchange would be treated in connection with the
exercise of an NQO; that is, as a non-taxable, like-kind
exchange as to the number of shares given up and the identical
number of shares received under the option. That number of
shares will take the same basis and, for capital gain purposes,
the same holding period as the shares that are given up.
However, such holding period will not be credited for purposes
of the one-year holding period required for the new shares to
receive ISO treatment. Shares received in excess of the number
of shares given up will have a new holding period and will have
a basis of zero or, if any cash was paid as part of the exercise
price, the excess shares received will have a basis equal to the
amount of the cash. If a disqualifying disposition (a
disposition before the end of the applicable holding period)
occurs with respect to any of the shares received from the
exchange, it will be treated as a disqualifying disposition of
the shares with the lowest basis.
If the exercise price of an ISO is paid with shares of Common
Stock of the Company acquired through a prior exercise of an
ISO, gain will be realized on the shares given up (and will be
taxed as ordinary income) if those shares have not been held for
the minimum ISO holding period (two years from the date of grant
and one year from the date of exercise), but the exchange will
not affect the tax treatment, as described in the immediately
preceding paragraph, of the shares received.
Stock
Appreciation Rights
The grant of an SAR will not result in taxable income to the
Participant. Upon exercise of an SAR, the amount of cash or the
fair market value of shares received will be taxable to the
Participant as ordinary income, and a corresponding deduction
will be allowed to the Company. If the Participant receives
shares of Common Stock upon exercise of an SAR and later sell
such shares, then the gains or losses realized by the
Participant upon disposition of such shares will be treated as
capital gains and losses, with the basis in such shares equal to
the fair market value of the shares at the time of exercise. The
holding period for determining long-term or short-term capital
gains treatment will commence on the SAR exercise date.
Full Value
Awards
A Participant who has been granted a full value award will not
realize taxable income at the time of grant, and the Company
will not be entitled to a deduction at that time, if
(i) the award is subject to a risk of forfeiture or other
restrictions that will lapse upon the achievement of one or more
goals relating to completion of service by the participant or
achievement of other objectives, and (ii) the restrictions
constitute a substantial risk of forfeiture for
Federal income tax purposes. Upon the vesting of shares subject
to an award, the holder will realize ordinary income in an
amount equal to the then fair market value of those shares, and
the Company will be entitled to a corresponding deduction. Gains
or losses realized by the Participant upon disposition of
54
such shares will be treated as capital gains and losses, with
the basis in such shares equal to the fair market value of the
shares at the time of vesting. The holding period for
determining long-term or short-term capital gains treatment will
commence on the date on which the substantial risk of forfeiture
lapses. Dividends paid to the holder during the restriction
period will also be compensation income to the Participant and
deductible as such by the Company.
Alternatively, for a full value award that is subject to a
substantial risk of forfeiture, the Committee may
(i) permit the Participant to make an election to
accelerate the recognition of income from the award to the date
of grant by properly filing an election under Section 83(b)
of the Code; (ii) prohibit the Participant from making such
an election; or (iii) require the Participant to make such
an election as a condition of receiving such award. In the
absence of a provision in the award agreement to the contrary,
such an award will be deemed to permit the Participant to make
such election.
Cash Incentive
Awards
A Participant will realize taxable income at the time the cash
incentive award is distributed, and the Company will be entitled
to a corresponding deduction.
Change of
Control
Any acceleration of the vesting or payment of awards under the
Amended 2004 Plan in the event of a Change of Control in the
Company may cause part or all of the consideration involved to
be treated as an excess parachute payment under the
Code, which may subject the Participant to a 20% excise tax and
which may not be deductible by the Company.
Required
Vote
The affirmative vote of the holders of a majority of the shares
of Common Stock represented at the Annual Meeting and entitled
to vote on such matter is required for approval of the Amended
and Restated 2004 Long-Term Incentive Plan. If the stockholders
do not approve the Amended 2004 Plan, then the LTIP as currently
in effect will remain in effect and the Company will continue to
grant awards pursuant to that plan.
THE COMPANYS BOARD UNANIMOUSLY RECOMMENDS A VOTE
FOR APPROVAL OF THE AMENDED AND RESTATED 2004
LONG-TERM INCENTIVE PLAN.
PROPOSAL 4
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The recently enacted Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010, or the
Dodd-Frank
Act, enables our stockholders to vote to approve, on an advisory
(nonbinding) basis, the compensation of our named executive
officers as disclosed in this Proxy Statement in accordance with
the SECs rules.
As described in detail under the heading Executive
Compensation Compensation Discussion and
Analysis, our executive compensation programs are designed
to attract, motivate, and retain our named executive officers,
who are critical to our success. Under these programs, our named
executive officers are rewarded for the achievement of specific
annual, long-term and strategic goals, corporate goals, and the
realization of increased stockholder value. Please read the
Compensation Discussion and Analysis for additional
details about our executive compensation programs, including
information about the fiscal year 2010 compensation of our named
executive officers.
The Human Resources Committee continually reviews the
compensation programs for our named executive officers to ensure
they achieve the desired goals of aligning our executive
compensation structure with our stockholders interests and
current market practices. Please read the Executive
Summary under Compensation Discussion and
Analysis for details of changes made to our executive
compensation practices during 2010.
We are asking our stockholders to indicate their support for our
named executive officer compensation as described in this Proxy
Statement. This proposal, commonly known as a
say-on-pay
proposal, gives our stockholders the opportunity to express
their views on our named executive officers compensation.
This vote is not intended to address any specific item of
compensation, but rather the overall compensation of our
55
named executive officers and the philosophy, policies and
practices described in this Proxy Statement. Accordingly, we
will ask our stockholders to vote FOR the following
resolution at the Annual Meeting:
RESOLVED, that the stockholders approve the compensation of the
Companys executives as disclosed in the Compensation
Discussion and Analysis, the accompanying compensation tables
and the related narrative disclosure presented in this Proxy
Statement.
The
say-on-pay
vote is advisory, and therefore not binding on the Company, the
Human Resources Committee or our Board of Directors. Our Board
of Directors and our Human Resources Committee value the
opinions of our stockholders and to the extent there is any
significant vote against the named executive officer
compensation as disclosed in this Proxy Statement, we will
consider our stockholders concerns and the Human Resources
Committee will evaluate whether any actions are necessary to
address those concerns.
THE BOARD OF DIRECTORS, UPON RECOMMENDATION OF OUR HUMAN
RESOURCES COMMITTEE, UNANIMOUSLY RECOMMENDS A VOTE
FOR THE APPROVAL OF THE COMPENSATION OF OUR NAMED
EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT.
PROPOSAL 5:
ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE
ON EXECUTIVE COMPENSATION
The Dodd-Frank Act also enables our stockholders to indicate how
frequently we should seek an advisory vote on the compensation
of our named executive officers, as disclosed pursuant to the
SECs compensation disclosure rules, such as
Proposal 4 included above in this Proxy Statement. By
voting on this Proposal 5, stockholders may indicate
whether they would prefer an advisory vote on named executive
officer compensation once every one, two or three years.
After careful consideration of this Proposal, our Board of
Directors has determined that an advisory vote on executive
compensation that occurs annually is the most appropriate
alternative for our Company, and therefore our Board of
Directors recommends that you vote for a one year interval for
the advisory vote on executive compensation.
In formulating its recommendation, our Board of Directors
considered that an annual advisory vote on executive
compensation will allow our stockholders to provide us with
their direct input on our compensation philosophy, policies and
practices as disclosed in the proxy statement every year.
Additionally, an annual advisory vote on executive compensation
is consistent with our policy of seeking input from, and
engaging in discussion with, our stockholders on corporate
governance matters and our executive compensation philosophy,
policies and practices. We understand that our stockholders may
have different views as to what is the best approach for our
Company, and we look forward to hearing from our stockholders on
this Proposal.
The option of one year, two years or three years that receives
the highest number of votes cast by stockholders will be the
frequency for the advisory vote on executive compensation that
has been selected by stockholders. However, because this vote is
advisory and not binding on our Board of Directors or the
Company in any way, the Board may decide that it is in the best
interests of our stockholders and the Company to hold an
advisory vote on executive compensation more or less frequently
than the option approved by our stockholders.
THE BOARD OF DIRECTORS, UPON RECOMMENDATION OF OUR HUMAN
RESOURCES COMMITTEE, UNANIMOUSLY RECOMMENDS A VOTE FOR THE
OPTION OF ONE YEAR (ANNUAL) AS THE FREQUENCY WITH WHICH
STOCKHOLDERS ARE PROVIDED AN ADVISORY VOTE ON EXECUTIVE
COMPENSATION.
STOCKHOLDER
PROPOSALS
Deadline for
Inclusion in Proxy Statement
Any proposal that a stockholder wants the Company to consider
including in its Proxy Statement and form of proxy relating to
the Companys 2012 Annual Meeting of Stockholders must be
received by the Secretary of the Company,
c/o United
Stationers Inc., One Parkway North Boulevard, Deerfield,
Illinois 60015, not later than December 1, 2011 and must
otherwise satisfy the requirements of applicable SEC rules.
56
Deadline for
Notice of Other Stockholder Proposals/Director
Nominations
Any stockholder proposal that the stockholder does not want the
Company to consider including in its proxy statement for an
annual meeting of stockholders, but does intend to introduce at
the meeting, as well as any proposed stockholder nomination for
the election of directors at an annual meeting, must comply with
the advance notice procedures set forth in the Companys
current Restated Certificate of Incorporation in order to be
properly brought before that annual meeting. To comply with
those procedures, a director nomination can be submitted only by
a stockholder entitled to vote in the election of directors
generally and written notice of such a stockholders intent
to make such nomination at the Companys 2012 Annual
Meeting must be given to the Companys Secretary at the
address in the preceding paragraph not later than
February 11, 2012. Our Restated Certificate of
Incorporation also includes advance notice requirements
applicable to special meetings of stockholders. Any other
stockholder proposals must be submitted in writing to the
Secretary of the Company at the address given in the prior
paragraph not later than the close of business on the tenth day
after notice of the Companys 2012 Annual Meeting of
Stockholders is first given to stockholders.
In addition to these timing requirements, the Companys
Restated Certificate of Incorporation also prescribes
informational content requirements for director nominations and
other proposals by stockholders. See Governance and Board
Matters Consideration of Director Nominees
above for more information about the informational content
requirements for stockholder notices relating to intended
director nominations. Any other stockholder proposal notice
generally must set forth a brief description of the matter
proposed to be brought before the annual meeting, the name and
address of the stockholder making the proposal, the number of
shares beneficially owned by the stockholder and any material
interest of the stockholder in such proposed matter.
OTHER
BUSINESS
The Company does not know of any other matters to be presented
or acted upon by stockholders at the Annual Meeting. If any
matter is presented at the meeting on which a vote may properly
be taken, the persons named as proxies in the proxy card will
vote the shares they represent in accordance with their judgment
as to the best interests of the Company.
Your vote is important. Please vote your shares as instructed in
the Notice of Internet Availability.
By Order of the Board of Directors,
Eric A. Blanchard
Secretary
57
APPENDIX A
UNITED STATIONERS
INC.
2004 LONG-TERM INCENTIVE PLAN
(As amended and restated effective May 11, 2011)
SECTION 1
GENERAL
1.1.
Purpose.
The United Stationers
Inc. 2004 Long-Term Incentive Plan (the Plan) has
been established by United Stationers Inc. (the
Company) to promote the long-term growth and
financial success of the Company and the interests of its
stockholders by: (i) attracting and retaining individuals
with excellent managerial talent upon whom, in large measure,
the sustained progress, growth and profitability of the Company
depend; (ii) motivating those selected as participants, by
means of appropriate performance-based incentives, to achieve
long-term performance goals; (iii) further aligning the
interests of selected employee and Director participants with
those of the Companys other stockholders and providing
them with an effective means to acquire and maintain equity
interests in the Company; and (iv) providing incentive
compensation opportunities that are competitive with those of
other similar companies.
1.2.
Participation.
Subject to the
terms and conditions of the Plan, the Committee shall determine
and designate, from time to time, from among the Eligible
Individuals, those persons who will be granted one or more
Awards, and thereby become Participants in the Plan.
1.3.
Operation, Administration, and
Definitions.
The operation and administration of
the Plan, including the Awards made under the Plan, shall be
subject to the provisions of Section 5 (relating to
operation and administration). Capitalized terms in the Plan
shall be defined as set forth in Section 9.
SECTION 2
OPTIONS AND SARS
2.1.
Options.
The grant of an
Option entitles the Participant to purchase shares
of Stock at an Exercise Price established by the Committee. Any
Option granted under this Section 2 may be either a
non-qualified option (an NQO) or an incentive stock
option (an ISO), as determined in the discretion of
the Committee.
(a) An NQO is an Option that is not intended to
be an incentive stock option as that term is
described in section 422(b) of the Code.
(b) An ISO is an Option that is intended to
satisfy the requirements applicable to an incentive stock
option described in section 422(b) of the Code and
shall be subject to the following conditions, limitations and
restrictions:
(i) ISOs may be granted only to employees of the Company or
a Subsidiary that is a subsidiary or parent corporation of the
Company, within the meaning of section 424 of the Code.
(ii) ISOs shall not be granted under the Plan after the
10-year
anniversary of the date on which the Plan is adopted by the
Board or, if earlier, the date on which the Plan is approved by
the Companys stockholders.
(iii) To the extent required by applicable law, if the
Committee permits an ISO to be exercised by a Participant more
than three months after the Participant has ceased being an
employee of the Company or a subsidiary as that term is defined
in Code section 424(f), or more than 12 months if the
Participant is permanently and totally disabled, within the
meaning of section 22(e) of the Code, the ISO shall
thereafter be treated as an NQO.
(iv) To the extent required by applicable law, the
Committee shall not permit an ISO to be transferred by an
employee other than by will or the laws of descent and
distribution, and any ISO granted under this Plan shall be
exercisable only by the employee during the employees
lifetime.
A-1
2.2.
Stock Appreciation Rights.
A
stock appreciation right (an SAR) entitles the
Participant to receive, in cash or Stock (as determined in
accordance with Subsection 5.7), value equal to (or otherwise
based on) the excess of: (a) the Fair Market Value of a
specified number of shares of Stock at the time of exercise;
over (b) an Exercise Price established by the Committee.
2.3.
Exercise Price.
The
Exercise Price of each Option and SAR granted under
this Section 2 shall be established by the Committee or
shall be determined by a method established by the Committee at
the time the Option or SAR is granted; provided, that the
Exercise Price shall not be less than 100% of the Fair Market
Value of a share of Stock on the date of grant (or, if greater,
the par value of a share of Stock).
2.4.
Exercise.
An Option and an SAR
shall be exercisable in accordance with such terms and
conditions and during such periods as may be established by the
Committee. In no event, however, shall an Option or SAR expire
later than ten years after the date of its grant.
2.5.
Payment of Option Exercise
Price.
The payment of the Exercise Price of an
Option granted under this Section 2 shall be subject to the
following:
(a) Subject to the following provisions of this Subsection
2.5, the full Exercise Price for shares of Stock purchased upon
the exercise of any Option shall be paid at the time of such
exercise (except that, in the case of an exercise arrangement
approved by the Committee and described in Subsection 2.5(c),
payment may be made as soon as practicable after the exercise).
(b) The Exercise Price shall be payable in cash, or by
tendering, by either actual delivery of shares or by
attestation, shares of Stock acceptable to the Committee, and
valued at the then current value as of the day of exercise, or
in any combination thereof, all as determined by the Committee.
The Committee may limit payments made with shares of Stock
pursuant to this Subsection 2.5(b) to shares held by the
Participant for not less than six months prior to the payment
date.
(c) The Committee may permit a Participant to elect to pay
the Exercise Price upon the exercise of an Option by irrevocably
authorizing a third party to sell shares of Stock (or a
sufficient portion of the shares) acquired upon exercise of the
Option and remit to the Company a sufficient portion of the sale
proceeds to pay the entire Exercise Price and any tax
withholding resulting from such exercise.
(d) The Committee, in its sole discretion, may permit the
Participant to elect to pay the Exercise Price by any other
method.
2.6.
Repricing.
Except for either
adjustments pursuant to Subsection 5.2(f) (relating to the
adjustment of shares), or reductions in the Exercise Price
approved by the Companys stockholders, (i) the
Exercise Price for any outstanding Option or SAR previously
granted under the Plan may not be decreased after the date of
grant nor may an outstanding Option or SAR previously granted
under the Plan be surrendered to the Company as consideration
for the grant of a replacement Option or SAR with a lower
exercise price, and (ii) any other action with respect to
Awards that is treated as a repricing under accounting
principles generally accepted in the United States is
prohibited. Notwithstanding anything in this Subsection 2.6 to
the contrary, in no event shall the Exercise Price of any
Option, as reduced or otherwise adjusted, be less than the Fair
Market Value of a share of Stock on the date of grant of such
Option.
2.7.
Grants of Options and SARs.
An
Option may, but need not be, granted in tandem with an SAR, and
an SAR may, but need not be, granted in tandem with an Option.
Except as otherwise provided by the Committee, if an Option is
in tandem with an SAR, the exercise price of both the Option and
SAR shall be the same, and the exercise of the Option or SAR
with respect to a share of Stock shall cancel the corresponding
tandem SAR or Option right with respect to such share. If an SAR
is in tandem with an Option but is granted after the grant of
the Option, or if an Option is in tandem with an SAR but is
granted after the grant of the SAR, the later granted tandem
Award shall have the same exercise price as the earlier granted
Award; provided, however, that the exercise price for the later
granted Award shall not be less than the Fair Market Value of
the Stock at the time of such grant.
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SECTION 3
FULL VALUE AWARDS
3.1.
Full Value Awards.
A
Full Value Award is a grant of one or more shares of
Stock or a right to receive one or more shares of Stock in the
future, with such grant subject to one or more of the following,
as determined by the Committee:
(a) The grant shall be in return for the Participants
previously performed services, or in return for the Participant
surrendering other compensation that may be due. Awards under
this Subsection 3.1(a) may include, without limitation, bonus
stock. Generally, bonus stock is the grant of stock
in return for previously performed services or the surrender of
other compensation that may be due.
(b) The grant shall be contingent on the achievement of
performance or other objectives during a specified period.
Awards under this Subsection 3.1(b) may include, without
limitation, performance shares and performance units. Generally,
performance shares are grants of actual shares of
stock whose payment is contingent on performance as measured
against predetermined objectives over a one-year or multi-year
period of time. Generally, performance units are
grants of stock units whose payment is contingent on performance
as measured against predetermined objectives over a one-year or
multi-year period of time and whose value fluctuates with stock
price changes and performance against objectives.
(c) The grant shall be subject to a risk of forfeiture or
other restrictions that will lapse upon the achievement of one
or more goals relating to completion of service by the
Participant or achievement of performance or other objectives.
Awards under this Subsection 3.1(c) may include, without
limitation, restricted stock and restricted stock units.
Generally, restricted stock and restricted
stock units are grants of actual shares of stock or stock
units subject to restrictions and risk of forfeiture until
vested by continued employment
and/or
attainment of specified performance objectives.
The grant of Full Value Awards may also be subject to such other
conditions, restrictions and contingencies as determined by the
Committee.
3.2.
Performance-Based
Compensation.
The Committee may designate a Full
Value Award being granted to a Participant as intended to be
performance-based compensation as that term is used
in section 162(m) of the Code. Any such Award designated as
intended to be performance-based compensation shall
be conditioned on the achievement of one or more Performance
Measures, to the extent required by Code section 162(m).
For Awards under this Section 3 intended to be
performance-based compensation, the grant of the
Awards and the establishment of the Performance Measures shall
be made during the period required under Code
section 162(m).
3.3.
Restrictions on Awards.
If the
right to become vested in a Full Value Award granted under this
Section 3 is conditioned on the completion of a specified
period of service with the Company or the Subsidiaries, without
achievement of Performance Measures or other performance
objectives being required as a condition of vesting, and without
it being granted in lieu of other compensation, then the
required period of service for full vesting shall be not less
than three years (subject to acceleration of vesting, to the
extent provided by the Committee, in the event of the
Participants death, disability, retirement, Change of
Control or termination of employment).
SECTION 4
CASH INCENTIVE AWARD
A Cash Incentive Award is the grant of a right to
receive a payment of cash (or in the discretion of the
Committee, Stock having value equivalent to the cash otherwise
payable) that is contingent on achievement of performance
objectives over a specified period established by the Committee.
The grant of Cash Incentive Awards may also be subject to such
other conditions, restrictions and contingencies, as determined
by the Committee. The Committee may designate a Cash Incentive
Award granted to any Participant as performance-based
compensation as that term is used in section 162(m)
of the Code. To the extent required by Code section 162(m),
any such Award so designated shall be conditioned on the
achievement of one or more performance objectives. The
performance objectives shall be based on Performance Measures as
selected by the Committee. For Awards under this Section 4
intended to be performance-based
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compensation, the grant of the Awards and the
establishment of the performance objectives shall be made during
the period required under Code section 162(m). Except as
otherwise provided in the applicable plan, arrangement or
agreement, distribution of any Cash Incentive Awards by the
Company or its Subsidiaries (whether granted under this Plan or
otherwise), for a performance period ending in a calendar year,
shall be made to the Participant not later than March 15 of the
following calendar year; provided, however, that for purposes of
determining compliance with Code section 409A, a payment
will be considered to satisfy the requirement of this sentence
if distribution is made no later than the end of the calendar
year following the end of the applicable performance period.
SECTION 5
OPERATION AND
ADMINISTRATION
5.1.
Effective Date.
The Plan
became effective on May 1, 2004 (the Effective
Date). In the event of Plan termination, the Plan shall
remain in effect as long as any Awards under it are outstanding;
provided, however, that no Awards may be granted under the Plan
after the ten-year anniversary of the Effective Date.
5.2.
Shares Subject to
Plan.
The shares of Stock for which Awards may be
granted under the Plan shall be subject to the following:
(a) The shares of Stock with respect to which Awards may be
made under the Plan shall be shares currently authorized but
unissued or currently held or to the extent permitted by
applicable law, subsequently acquired by the Company as treasury
shares, including shares purchased in the open market or in
private transactions.
(b) Subject to the following provisions of this Subsection
5.2, the maximum number of shares of Stock that may be delivered
to Participants and their beneficiaries under the Plan shall be
equal to the sum of Subsections 5.2(b)(i) and (ii) below:
(i) 6,425,000 shares of Stock; provided, however, that
for purposes of applying the limitations of this Subsection
5.2(b), each share of Stock delivered pursuant to Section 3
(relating to Full Value Awards), shall be counted as covering
1.85 shares of Stock, and shall reduce the number of shares
of Stock available for delivery under this Subsection 5.2(b) by
1.85 shares.
(ii) Any shares of Stock that are represented by awards
granted under the Companys 2000 Management Equity Plan and
1992 Management Equity Plan (the Prior Equity Plans)
that are forfeited, expire or are canceled after the Effective
Date without delivery of shares of Stock or which result in the
forfeiture of the shares of Stock back to the Company to the
extent that such shares would have been added back to the
reserve under the terms of the applicable Prior Equity Plan.
(c) To the extent provided by the Committee pursuant to
Subsection 5.7, any Award may be settled in cash rather than
Stock.
(d) Any shares of Stock subject to an Award which for any
reason expires or terminates unexercised or is not earned in
full may again be made subject to an Award under the Plan. The
following shares of Stock may not again be made available for
issuance as Awards under the Plan: (i) shares of Stock not
issued or delivered as a result of the net settlement of an
outstanding SAR, (ii) shares of Stock used to pay the
exercise price or withholding taxes related to an outstanding
Award, or (iii) shares of Stock repurchased on the open
market with the proceeds of the option exercise price.
(e) Subject to Subsection 5.2(f), the following additional
maximums are imposed under the Plan:
(i) The maximum number of shares that may be covered by
Awards granted to any one Participant pursuant to Section 2
(relating to Options and SARs) shall be 500,000 shares
during any one-calendar-year period. If an Option is in tandem
with an SAR, such that the exercise of the Option or SAR with
respect to a share of Stock cancels the tandem SAR or Option
right, respectively, with respect to such share, the tandem
Option and SAR rights with respect to each share of Stock shall
be counted as covering but one share of Stock for purposes of
applying the limitations of this Subsection 5.2(e)(i).
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(ii) To the extent required by applicable law, the
aggregate Fair Market Value (as of the date of grant) of the
shares of Stock with respect to which the ISOs granted to any
employee first become exercisable during any calendar year may
not exceed $100,000. For purposes of this $100,000 limit, the
employees ISOs under this Plan and all other plans
maintained by the Company and its Subsidiaries will be
aggregated. To the extent any ISOs would exceed the $100,000
limit, the ISO shall thereafter be treated as an NQO.
(iii) For Full Value Awards that are intended to be
performance-based compensation (as that term is used
for purposes of Code section 162(m)), no more than
300,000 shares of Stock may be delivered pursuant to such
Awards granted to any one Participant during any
one-calendar-year period (regardless of whether settlement of
the Award is to occur prior to, at the time of, or after the
time of vesting); provided that Awards described in this
Subsection 5.2(e)(iii) shall be subject to the following:
(A) If the Awards are denominated in Stock but an
equivalent amount of cash is delivered in lieu of delivery of
shares of Stock, the foregoing limit shall be applied based on
the methodology used by the Committee to convert the number of
shares of Stock into cash.
(B) If delivery of Stock or cash is deferred until after
shares of Stock have been earned, any adjustment in the amount
delivered to reflect actual or deemed investment experience
after the date the shares are earned shall be disregarded.
(iv) For Cash Incentive Awards that are intended to be
performance-based compensation (as that term is used
for purposes of Code section 162(m)), no more than
$2,000,000 may be paid to any one Participant for performance
periods beginning in any one calendar year, regardless of
whether the applicable performance period during which the Award
is earned ends in the same year in which it begins or in a later
calendar year; provided that Awards described in this Subsection
5.2(e)(iv) shall be subject to the following:
(A) If the Awards are denominated in cash but an equivalent
amount of Stock is delivered in lieu of delivery of cash, the
foregoing limit shall be applied to the cash based on the
methodology used by the Committee to convert the cash into
shares of Stock.
(B) If delivery of Stock or cash is deferred until after
cash has been earned, any adjustment in the amount delivered to
reflect actual or deemed investment experience after the date
the cash is earned shall be disregarded.
(f) In the event of a corporate transaction involving the
Company (including, without limitation, any stock dividend,
stock split, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation,
split-up,
spin-off, combination or exchange of shares or any other capital
adjustment), the Committee (i) shall have the authority, in
its absolute discretion, to proportionately adjust the aggregate
number and type of shares available for Awards under the Plan,
and (ii) shall proportionally adjust outstanding Awards to
preserve the benefits or potential benefits of the Awards.
Action by the Committee may include: (A) adjustment of the
number and kind of shares (or other securities) which may be
delivered under the Plan; (B) adjustment of the number and
kind of shares (or other securities) subject to outstanding
Awards; (C) adjustment of the Exercise Price per share (but
not the total price) of outstanding Options and SARs; and
(D) any other adjustments to outstanding Awards that the
Committee determines to be equitable, which may include, without
limitation, (1) replacement of Awards with other Awards
which the Committee determines have comparable value and which
are based on stock of a company resulting from or involved in
the transaction, (2) cancellation of the Award in return
for cash payment of the current value of the Award, determined
as though the Award is fully vested at the time of payment,
provided that in the case of an Option, the amount of such
payment may be the excess of value of the Stock subject to the
Option at the time of the transaction over the exercise price;
and (3) replacement with other types of Awards. In no event
shall this Subsection 5.2(f) be construed to permit an
adjustment (including a replacement) of an Option, SAR or other
Award if such modification either: (x) would result in
accelerated recognition of income or imposition of additional
tax under Code section 409A; or (y) would cause the
Option, SAR or other Award subject to the adjustment (or cause a
replacement Option, SAR or other award) to be subject to Code
section 409A, provided that the restriction of this
clause (y) shall not apply
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to any Option, SAR or other Award that, at the time it is
granted or otherwise, is designated as being deferred
compensation subject to Code section 409A.
(g) The maximum number of shares of Stock that may be
delivered to Participants and their beneficiaries with respect
to ISOs granted under the Plan shall be 6,425,000 shares;
provided, however, that to the extent that shares not delivered
must be counted against this limit as a condition of satisfying
the rules applicable to ISOs, such rules shall apply to the
limit on ISOs granted under the Plan.
5.3.
General Restrictions.
Delivery
of shares of Stock or other amounts under the Plan shall be
subject to the following:
(a) Notwithstanding any other provision of the Plan, the
Company shall have no obligation to deliver any shares of Stock
or make any other distribution of benefits under the Plan unless
such delivery or distribution would comply with all applicable
laws (including, without limitation, the requirements of the
Securities Act of 1933), and the applicable requirements of any
securities exchange or similar entity.
(b) To the extent that the Plan provides for issuance of
stock certificates to reflect the issuance of shares of Stock,
the issuance may be effected on a non-certificated basis, to the
extent not prohibited by applicable law or the applicable rules
of any stock exchange.
5.4.
Tax Withholding.
All
distributions under the Plan are subject to withholding of all
applicable taxes, and the Committee may condition the delivery
of any shares or other benefits under the Plan on satisfaction
of the applicable withholding obligations.
Except as otherwise provided by the Committee, such withholding
obligations may be satisfied (i) through cash payment by
the Participant, (ii) through the surrender of shares of
Stock which the Participant already owns (provided, however,
that to the extent shares described in this clause (ii) are
used to satisfy more than the minimum statutory withholding
obligation, as described below, then, except as otherwise
provided by the Committee, payments made with shares of Stock in
accordance with this clause (ii) shall be limited to shares
held by the Participant for not less than six months prior to
the payment date), or (iii) through the surrender of shares
of Stock to which the Participant is otherwise entitled under
the Plan; provided, however, that such shares under this
clause (iii) may be used to satisfy not more than the
Companys minimum statutory withholding obligation (based
on minimum statutory withholding rates for Federal, state and
local tax purposes, including payroll taxes, that are applicable
to such supplemental taxable income).
5.5.
Grant and Use of Awards.
In
the discretion of the Committee, a Participant may be granted
any Award permitted under the provisions of the Plan, and more
than one Award may be granted to a Participant. Subject to
Subsection 2.6 (relating to repricing), Awards may be granted as
alternatives to or replacement of awards granted or outstanding
under the Plan or any other plan or arrangement of the Company
or a Subsidiary (including a plan or arrangement of a business
or entity, all or a portion of which is acquired by the Company
or a Subsidiary). Subject to the overall limitation on the
number of shares of Stock that may be delivered under the Plan,
the Committee may use available shares of Stock as the form of
payment for compensation, grants or rights earned or due under
any other compensation plans or arrangements of the Company or a
Subsidiary, including the plans and arrangements of the Company
or a Subsidiary assumed in business combinations.
Notwithstanding the provisions of Subsection 2.3, Options and
SARs granted under the Plan in replacement for awards under
plans and arrangements of the Company or a Subsidiary assumed in
business combinations may be adjusted by the Committee to
preserve the benefit of the award. The provisions of this
Subsection 5.5 shall be subject to the provisions of Subsection
5.18.
5.6.
Dividends and Dividend
Equivalents.
An Award (including without
limitation an Option or SAR Award) may provide the Participant
with the right to receive dividend payments or dividend
equivalent payments with respect to Stock subject to the Award,
provided that any dividend or dividend equivalent shall be
subject to the following:
(a) Except as otherwise provided by the Committee, payment
of any dividend or dividend equivalent shall be subject to the
same conditions, restrictions and contingencies (including
vesting) as the underlying shares of Stock;
(b) No payments of dividends or dividend equivalents will
be made with respect to Awards granted in the form of Options,
SARs, or similar Awards unless and until the shares of Stock
underlying such Awards are actually issued upon exercise,
vesting, or settlement of the Award;
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(c) All payments of dividends or dividend equivalents with
respect to Awards granted in the form of Full Value Awards,
including performance shares, performance units, shares of
restricted stock, restricted stock units, or similar Awards
shall be deferred and shall not be paid unless and until such
Awards vest or otherwise are earned or settled in accordance
with the terms and conditions of the applicable Award Agreement;
(d) Any such dividend and dividend equivalent payments
shall be subject to adjustment by the Committee pursuant to
Subsection 5.2(f) (relating to the adjustment of
shares); and
(e) The provisions of this Subsection 5.6 shall be subject
to the provisions of Subsection 5.18.
5.7.
Settlement of Awards.
The
settlement of Awards under the Plan shall be subject to the
following:
(a) The obligation to make payments and distributions with
respect to Awards may be satisfied through cash payments, the
delivery of shares of Stock, the granting of replacement Awards,
or combination thereof as the Committee shall determine.
Satisfaction of any such obligations under an Award, which is
sometimes referred to as settlement of the Award,
may be subject to such conditions, restrictions and
contingencies as the Committee shall determine. The Committee
may permit or require the deferral of any Award payment, subject
to such rules and procedures as it may establish, which may
include provisions for the payment or crediting of interest or
dividend equivalents, and may include converting such credits
into deferred Stock equivalents.
(b) Each Subsidiary shall be liable for payment of cash due
under the Plan with respect to any Participant to the extent
that such benefits are attributable to the services rendered for
that Subsidiary by the Participant. Any disputes relating to
liability of a Subsidiary for cash payments shall be resolved by
the Committee; provided, however, that no such dispute shall
result in a delay in payment to a Participant beyond the latest
date by which such payment is due under the terms of the
applicable Award.
(c) Except for Options and SARs designated at the time of
grant or otherwise as intended to be subject to Code
section 409A, this Subsection 5.7 shall not be construed to
permit the deferred settlement of Options or SARs, if such
settlement would result in deferral of compensation under Treas.
Reg. §1.409A-1(b)(5)(i)(A)(3) (except as permitted in
paragraphs (i) and (ii) of that section).
(d) The provisions of this Subsection 5.7 shall be subject
to the provisions of Subsection 5.18.
5.8.
Transferability.
Except as
otherwise provided by the Committee (subject to Subsection
2.1(b)(iv)), Awards under the Plan are not transferable except
as designated by the Participant by will or by the laws of
descent and distribution.
5.9.
Form and Time of
Elections.
Unless otherwise specified herein,
each election required or permitted to be made by any
Participant or other person entitled to benefits under the Plan,
and any permitted modification, or revocation thereof, shall be
in writing filed with the Committee at such times, in such form,
and subject to such restrictions and limitations, not
inconsistent with the terms of the Plan, as the Committee shall
require.
5.10.
Agreement With Company.
An
Award under the Plan shall be subject to such terms and
conditions, not inconsistent with the Plan, as the Committee
shall, in its sole discretion, prescribe. The terms and
conditions of any Award to any Participant shall be reflected in
such form of written document as is determined by the Committee.
A copy of such document shall be provided to the Participant,
and the Committee may, but need not require that the Participant
sign a copy of such document. Such document is referred to in
the Plan as an Award Agreement regardless of whether
any Participant signature is required. Except for Awards
designated at the time of grant or otherwise as intended to be
deferred compensation subject to Code section 409A, this
Subsection 5.10 shall not be construed to permit the grant of an
Award if such action would cause the Award being granted to be
subject to Code section 409A.
5.11.
Action by Company or
Subsidiary.
Any action required or permitted to
be taken by the Company or any Subsidiary shall be by resolution
of its board of directors, or by action of one or more members
of its board of directors (including a committee of the board)
who are duly authorized to act for the board, or (except to the
extent prohibited by applicable law or applicable rules of any
stock exchange) by a duly authorized officer of the Company or
Subsidiary.
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5.12.
Gender and Number.
Where the
context admits, words in any gender shall include any other
gender, words in the singular shall include the plural and the
plural shall include the singular.
5.13.
Limitation of Implied Rights.
(a) Neither a Participant nor any other person shall, by
reason of participation in the Plan, acquire any right in or
title to any assets, funds or property of the Company or any
Subsidiary whatsoever, including, without limitation, any
specific funds, assets, or other property which the Company or
any Subsidiary, in its sole discretion, may set aside in
anticipation of a liability under the Plan. A Participant shall
have only a contractual right to the Stock or amounts, if any,
payable under the Plan, unsecured by any assets of the Company
or any Subsidiary, and nothing contained in the Plan shall
constitute a guarantee that the assets of the Company or any
Subsidiary shall be sufficient to pay any benefits to any person.
(b) The Plan does not constitute a contract of employment,
and selection as a Participant will not give any participating
employee or other individual the right to be retained in the
employ of the Company or any Subsidiary or the right to continue
to provide services to the Company or any Subsidiary, nor any
right or claim to any benefit under the Plan, unless such right
or claim has specifically accrued under the terms of the Plan.
Except as otherwise expressly provided in an Award Agreement or
the Plan, no Award under the Plan shall confer upon the holder
thereof any rights as a stockholder of the Company prior to the
date on which the individual fulfills all conditions for receipt
of such rights or any rights to receive any additional Awards
under the Plan or any other Plan or arrangement of the Company
or any Subsidiary.
5.14.
Evidence.
Evidence required
of anyone under the Plan may be by certificate, affidavit,
document or other information which the person acting on it
considers pertinent and reliable, and signed, made or presented
by the proper party or parties.
5.15.
Section 83(b)
Election.
For an Award of Stock that is subject
to a substantial risk of forfeiture, the Committee may:
(a) permit the Participant to make an election to
accelerate the recognition of income from the Award to the date
of grant by properly filing an election under section 83(b)
of the Code; (ii) prohibit the Participant from making such
an election; or (iii) require the Participant to make such
an election as a condition of receiving such Award. In the
absence of a provision in the Award Agreement to the contrary,
such an Award of Stock shall be deemed to permit the Participant
to make such election.
5.16.
Registration.
If the
Committee determines that registration of Awards under the Plan
is necessary or appropriate, it may use a
Form S-8
or, in the event that such a form is unavailable because the
Awards are granted to employees of companies which are not at
least 50% owned by the Company or for any other reason, the
Committee may direct the Company to use such other registration
procedures as it deems appropriate.
5.17.
Governing Law.
The Plan and
the rights and obligations hereunder shall be governed by and
construed in accordance with the laws of the State of Delaware,
without regard to principles of conflicts of law of Delaware or
any other jurisdiction.
5.18
Limitations under Code Section 409A
.
The provisions of the Plan shall be subject to the following:
(a) No provision of the Plan shall be construed to permit
the grant of an Option or SAR if such action would cause the
Option or SAR being granted or the option or stock appreciation
right being replaced to be subject to Code section 409A,
provided that this Subsection 5.18(a) shall not apply to any
Option or SAR (or option or stock appreciation right granted
under another plan) being replaced that, at the time it is
granted or otherwise, is designated as being deferred
compensation subject to Code section 409A.
(b) Except with respect to an Option or SAR that, at the
time it is granted or otherwise, is designated as being deferred
compensation subject to Code section 409A, no Option or SAR
shall condition the receipt of dividends with respect to an
Option or SAR on the exercise of such Award, or otherwise
provide for payment of such dividends in a manner that would
cause the payment to be treated as an offset to or reduction of
the exercise price of the Option or SAR pursuant Treas. Reg.
§1.409A-1(b)(5)(i)(E).
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(c) The Plan shall not be construed to permit a
modification of an Award, or to permit the payment of a dividend
or dividend equivalent, if such actions would result in
accelerated recognition of taxable income or imposition of
additional tax under Code section 409A.
SECTION 6
CHANGE OF CONTROL
6.1.
Effect of Change of
Control.
Notwithstanding any provision in the
Plan (including, without limitation, Subsection 5.2(f)) and
unless otherwise indicated in the Award Agreement, upon the
occurrence of a Change of Control:
(a) If (i) a Participants Date of Termination
does not occur between the date of grant of an Option or SAR and
the date of a Change of Control; and (ii) as of the Change
of Control, the Participant is not vested in all of such Option
or SAR, then, as of the date of the Change of Control, the
Participant shall become vested in the Affected Portion of such
Option or SAR.
(b) If (i) a Participants Date of Termination
does not occur between the date of grant of a Full Value Award
and the date of a Change of Control (regardless of whether
settlement of the Award is to occur prior to, at the time of, or
after vesting); and (ii) as of the Change of Control, the
Participant is not vested in all of such Award, then, as of the
date of the Change of Control, the Participant shall become
vested in the Affected Portion of such Award. If (i) a
Participants Date of Termination does not occur between
the date of grant of a Cash Incentive Award and the date of a
Change of Control (regardless of whether settlement of the Award
is to occur at the time of or after vesting); and (ii) as
of the Change of Control, the Participant is not vested in all
of such Award, then, as of the date of the Change of Control,
the Participant shall become vested in the Affected Portion of
such Award.
(c) For purposes of this Subsection 6.1, the Affected
Portion of any Option or SAR or other Award (excluding a
Cash Incentive Award) shall be 50% of the shares covered by the
Award as to which the Award is not vested immediately prior to
the Change of Control; provided that if the vesting of the Award
is contingent on the achievement of performance objectives (that
is, objectives other than the completion of service, and
referred to as Performance-Contingent Vesting), the
Affected Portion of the Award shall be the number of shares that
would be delivered to the Participant if the target level of
performance objectives were achieved for the applicable
performance period multiplied by a fraction, the numerator of
which is the number of days during the period beginning on the
first day of the performance period and ending on the date of
the Change of Control and the denominator of which is the number
of days in the total performance period. For purposes of this
Subsection 6.1, the Affected Portion of a Cash
Incentive Award shall be 50% of the amount covered by the Award
which is not vested immediately prior to the Change of Control;
provided that if the vesting of the Cash Incentive Award is
Performance-Contingent Vesting, the Affected Portion
of such Cash Incentive Award shall be the amount that would be
earned by the Participant if the target level of performance
objectives were achieved for the applicable performance period
multiplied by a fraction, the numerator of which is the number
of days during the period beginning on the first day of the
performance period and ending on the date of the Change of
Control (but not less than 365 days or, if the performance
period is less than 365 days, the number of days in the
total performance period) and the denominator of which is the
number of days in the total performance period.
(d) If different portions of any Award that are not vested
on the date of a Change of Control are scheduled to vest on
different dates, then the provisions of this Subsection 6.1
shall be applied to each such portion as though it were a
separate Award.
(e) Subject to Subsection 6.1(f) below, the vesting of the
portion of any Award that is not the Affected Portion of the
Award shall vest without regard to the acceleration effected by
reason of this Subsection 6.1.
(f) Except as otherwise provided by the Committee, if the
Performance-Contingent Vesting of any Award is accelerated by
reason of this Subsection 6.1, then at the end of the applicable
performance period for such Award, the Participant shall become
vested in the number of shares or cash amount in which the
Participant would have become vested in accordance with the
terms of the Award, if any
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(without regard to the acceleration under this Subsection 6.1)
reduced by the number of shares or cash amount vested under the
Award by reason of the acceleration under this Subsection 6.1.
(g) If (i) during the two-year period following the
date of the Change of Control, a Participants Date of
Termination occurs by the Company or its Subsidiaries without
Cause or by the Participant for Good Reason, and (ii) at
the Date of Termination, any Award granted before the Change of
Control is not fully vested, then any and all such Awards
granted before the Change of Control held by the Participant
shall become fully vested (and, in the case of Options or SARs,
exercisable) on the Date of Termination.
6.2.
Definition of Change of
Control.
For purposes of the Plan, the term
Change of Control shall mean:
(a) Any Person (having the meaning ascribed to
such term in Section 3(a)(9) of the Exchange Act and used
in Sections 13(d) and 14(d) thereof, including a
group within the meaning of Section 13(d)(3))
has or acquires Beneficial Ownership (within the
meaning of
Rule 13d-3
under the Exchange Act) of 30% or more of the combined voting
power of the Companys then outstanding voting securities
entitled to vote generally in the election of directors
(Voting Securities); provided, however, that the
acquisition or holding of Voting Securities by (i) the
Company or any of its Subsidiaries, or (ii) an employee
benefit plan (or a trust forming a part thereof) maintained by
the Company or any of its Subsidiaries shall not constitute a
change of control; and provided further that the acquisition or
holding of Voting Securities by any Person in which a
Participant has a substantial equity interest shall not
constitute a Change of Control with respect to such Participant.
Notwithstanding the foregoing, a Change of Control shall not be
deemed to occur solely because any Person acquired Beneficial
Ownership of more than the permitted amount of Voting Securities
as a result of (A) the issuance of Voting Securities by the
Company in exchange for assets (including equity interests) or
funds with a fair value equal to the fair value of the Voting
Securities so issued or (B) the acquisition of Voting
Securities by the Company which, by reducing the number of
Voting Securities outstanding, increases the proportional number
of shares Beneficially Owned by such Person; provided that if a
Change of Control would occur (but for the operation of this
sentence) as a result of the issuance of Voting Securities or
the acquisition of Voting Securities by the Company, and after
such issuance or acquisition such Person becomes the Beneficial
Owner of any additional Voting Securities which increases the
percentage of the Voting Securities Beneficially Owned by such
Person to more than 50% of the Voting Securities of the Company,
then a Change of Control shall occur.
(b) At any time during a period of two consecutive years,
the individuals who at the beginning of such period constituted
the Board (the Incumbent Board) cease for any reason
to constitute more than 50% of the Board; provided, however,
that if the election, or nomination for election by the
Companys stockholders, of any new director was approved by
a vote of more than 50% of the directors then comprising the
Incumbent Board, such new director shall, for purposes of this
Subsection 6.2(b), be considered as though such person were a
member of the Incumbent Board; provided, further, however, that
no individual shall be considered a member of the Incumbent
Board if such individual initially assumed office as a result of
(i) either an actual Election Contest (as
described in
Rule 14a-11
promulgated under the Exchange Act) or other actual solicitation
of proxies or contest by or on behalf of a Person other than the
Incumbent Board (a Proxy Contest), or (ii) by
reason of an agreement intended to avoid or settle any actual or
threatened Election Contest or Proxy Contest.
(c) Consummation of a merger, consolidation or
reorganization or approval by the Companys stockholders of
a liquidation or dissolution of the Company or the occurrence of
a liquidation or dissolution of the Company (Business
Combination), unless, following such Business Combination:
(i) the Persons with Beneficial Ownership of the Company,
immediately before such Business Combination, have Beneficial
Ownership of more than 50% of the combined voting power of the
then-outstanding voting securities entitled to vote generally in
the election of directors of the corporation (or in the election
of a comparable governing body of any other type of entity)
resulting from such Business Combination (including, without
limitation, an entity which as a result of such transaction owns
the Company or all or substantially all of the Companys
assets either directly or through one or more subsidiaries) (the
Surviving Company) in substantially the same
proportions as their Beneficial Ownership of the Voting
Securities immediately before such Business Combination;
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(ii) the individuals who were members of the Incumbent
Board immediately prior to the execution of the initial
agreement providing for such Business Combination constitute
more than 50% of the members of the board of directors (or
comparable governing body of a noncorporate entity) of the
Surviving Company; and
(iii) no Person (other than the Company, any of its
Subsidiaries or any employee benefit plan (or any trust forming
a part thereof) maintained by the Company, the Surviving Company
or any Person who immediately prior to such Business Combination
had Beneficial Ownership of 30% or more of the then Voting
Securities) has Beneficial Ownership of 30% or more of the then
combined voting power of the Surviving Companys then
outstanding voting securities; provided, that notwithstanding
this clause (iii), a Change of Control shall not be deemed to
occur solely because any Person acquired Beneficial Ownership of
more than 30% of Voting Securities as a result of the issuance
of Voting Securities by the Company in exchange for assets
(including equity interests) or funds with a fair value equal to
the fair value of the Voting Securities so issued; provided,
however that a Business Combination with a Person in which a
Participant has a substantial equity interest shall not
constitute a Change of Control with respect to such Participant.
(d) The closing of any assignment, sale, conveyance,
transfer, lease or other disposition of all or substantially all
of the assets of the Company to any Person (other than a Person
in which a Participant has a substantial equity interest (in
which case there shall not be a Change of Control with respect
to such Participant) and other than a Subsidiary of the Company
or other entity, the Persons with Beneficial Ownership of which
are the same Persons with Beneficial Ownership of the Company
and such Beneficial Ownership is in substantially the same
proportions), or the occurrence of the same.
Notwithstanding this Subsection 6.2, if any Award under the Plan
constitutes Deferred Compensation (as defined in Subsection
9(m)(vi) below) and becomes payable upon a Change of Control, a
change of control event that otherwise is a Change of Control
under the Plan shall be a Change of Control for purposes of the
Plan only if such event also satisfies the requirements of
Treas. Reg. §1.409A-3(i)(5).
SECTION 7
COMMITTEE
7.1.
Administration.
The authority
to control and manage the operation and administration of the
Plan shall be vested in a committee (the Committee)
in accordance with this Section 7. The Committee shall be
selected by the Board, and shall consist solely of two or more
members of the Board who are outside directors within the
meaning of section 162(m)(4)(C)(i) of the Code and the
applicable regulations and nonemployee directors within the
meaning of
Rule 16b-3
under the Exchange Act. The Human Resources Committee shall
administer the Plan unless otherwise determined by the Board.
The Board may delegate the authority to grant and administer
non-employee director compensation to the Governance Committee.
If the Committee does not exist, or for any other reason
determined by the Board, the Board may take any action under the
Plan that would otherwise be the responsibility of the Committee.
7.2.
Powers of Committee.
The
Committees administration of the Plan shall be subject to
the following:
(a) Subject to the provisions of the Plan, the Committee
will have the authority and discretion to select from among the
Eligible Individuals those persons who shall receive Awards, to
determine the time or times of receipt, to determine the types
of Awards and the number of shares covered by the Awards, to
establish the terms, conditions, performance criteria,
restrictions, and other provisions of such Awards, and (subject
to the restrictions imposed by Section 8) to amend,
cancel or suspend Awards.
(b) To the extent that the Committee determines that the
restrictions imposed by the Plan preclude the achievement of the
material purposes of the Awards in jurisdictions outside the
United States, the Committee will have the authority and
discretion to modify those restrictions as the Committee
determines to be necessary or appropriate to conform to
applicable requirements or practices of jurisdictions outside of
the United States.
(c) The Committee will have the authority and discretion to
interpret the Plan, to establish, amend, and rescind any rules
and regulations relating to the Plan, to determine the terms and
provisions of any
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Award Agreement made pursuant to the Plan, and to make all other
determinations that may be necessary or advisable for the
administration of the Plan.
(d) Any interpretation of the Plan by the Committee and any
decision made by it under the Plan is final and binding on all
persons.
(e) In controlling and managing the operation and
administration of the Plan, the Committee shall take action in a
manner that conforms to the articles and by-laws of the Company,
and applicable state corporate law.
7.3.
Delegation by
Committee.
Except to the extent prohibited by
applicable law or the applicable rules of a stock exchange or
automated quotation system on which the Stock is listed, the
Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members
and may delegate all or any part of its responsibilities and
powers to any person or persons selected by it. Any such
allocation or delegation may be revoked by the Committee at any
time.
7.4.
Information to be Furnished to
Committee.
The Company and Subsidiaries shall
furnish the Committee with such data and information as it
determines may be required for it to discharge its duties. The
records of the Company and Subsidiaries as to an employees
or Participants employment (or other provision of
services), termination of employment (or cessation of the
provision of services), leave of absence, reemployment and
compensation shall be conclusive on all persons unless
determined to be incorrect. Participants and other persons
entitled to benefits under the Plan must furnish the Committee
such evidence, data or information as the Committee considers
desirable to carry out the terms of the Plan.
SECTION 8
AMENDMENT AND
TERMINATION
The Board may, at any time, amend or terminate the Plan, and the
Board or the Committee may amend any Award Agreement, provided
that no amendment or termination may, in the absence of written
consent to the change by the affected Participant (or, if the
Participant is not then living, the affected beneficiary),
adversely affect the rights of any Participant or beneficiary
under any Award granted under the Plan prior to the date such
amendment is adopted by the Board or the Committee (if
applicable); and further provided that adjustments pursuant to
Subsection 5.2(f) shall not be subject to the foregoing
limitations of this Section 8; and further provided that
the provisions of Subsection 2.7 (relating to repricing) cannot
be amended unless the amendment is approved by the
Companys stockholders. No amendment or termination of the
Plan shall be adopted or effective if it would result in
accelerated recognition of income or imposition of additional
tax under Code section 409A or, except as otherwise
provided in the amendment, would cause amounts that were not
otherwise subject to Code section 409A to become subject to
Code section 409A.
SECTION 9
DEFINED TERMS
In addition to the other definitions contained herein, the
following definitions shall apply:
(a) Affected Portion.
The term
Affected Portion shall have the meaning set forth in
Subsection 6.1(c).
(b) Award.
The term Award
means any award or benefit granted under the Plan, including,
without limitation, the grant of Options, SARs, Full Value
Awards and Cash Incentive Awards.
(c) Award Agreement.
The term Award
Agreement shall have the meaning set forth in Subsection
5.10.
(d) Board.
The term Board
means the Board of Directors of the Company.
(e) Bonus Stock.
The term bonus
stock shall have the meaning set forth in Subsection
3.1(a).
(f) Cash Incentive Award.
The term
Cash Incentive Award shall have the meaning set
forth in Section 4.
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(g) Cause.
Except as otherwise provided
by the Committee, and subject to the last sentence of this
definition, Cause shall mean (i) conviction of,
or plea of
nolo contendere
to, a felony (excluding motor
vehicle violations); (ii) theft or embezzlement, or
attempted theft or embezzlement, of money or property or assets
of the Company or any of its Subsidiaries; (iii) illegal
use of drugs; (iv) material breach of any
employment-related undertakings provided in a writing signed by
the Participant prior to or concurrently with an Award
Agreement; (v) gross negligence or willful misconduct in
the performance of the Participants duties to the Company
or any of its Subsidiaries; (vi) breach of any fiduciary
duty owed to the Company or any of its Subsidiaries including,
without limitation, engaging in competitive acts while employed
by the Company or any of its Subsidiaries; or (vii) the
Participants willful refusal to perform the assigned
duties for which the Participant is qualified as directed by the
Participants Supervising Officer (as hereinafter defined)
or the Board; provided, that in the case of any event
constituting Cause within clauses (iv) through
(vii) that is curable by the Participant, the Participant
has been given written notice by the Company or one of its
Subsidiaries of such event said to constitute Cause, describing
such event in reasonable detail, and has not cured such action
within thirty (30) days of such written notice as
reasonably determined by the Committee. For purposes of this
definition of Cause, action or inaction by the Participant shall
not be considered willful unless done or omitted by
the Participant (A) intentionally or not in good faith and
(B) without reasonable belief that the Participants
action or inaction was in the best interests of the Company and
its Subsidiaries, and shall not include failure to act by reason
of total or partial incapacity due to physical or mental
illness. If a non-employee director ceases to be a member of the
Board, he or she shall be treated as having been terminated by
the Company without Cause on the date of such cessation unless
the director is removed from the Board for cause (as that term
is defined in Article Fifth, Section 5 of the
Companys Second Restated Certificate of Incorporation as
in effect on the Effective Date).
(h) Change of Control.
The term
Change of Control shall have the meaning set forth
in Subsection 6.2.
(i) Code.
The term Code means
the Internal Revenue Code of 1986, as amended. A reference to
any provision of the Code shall include reference to any
successor provision of the Code.
(j) Committee.
The term
Committee shall have the meaning set forth in
Subsection 7.1.
(k) Company.
The term Company
shall have the meaning set forth in Subsection 1.1.
(l) Date of Termination.
The term
Date of Termination with respect to an Award granted
to any Participant shall mean the first day occurring on or
after the grant date of the Award on which the Participant is
not employed by the Company or any Subsidiary, regardless of the
reason for the termination of employment; provided that a
termination of employment shall not be deemed to occur by reason
of a transfer of the Participant between the Company and a
Subsidiary or between two Subsidiaries; and further provided
that the Participants employment shall not be considered
terminated while the Participant is on a leave of absence from
the Company or a Subsidiary approved by the Participants
employer. If, as a result of a sale or other transaction, the
Participants employer ceases to be a Subsidiary (and the
Participants employer is or becomes an entity that is
separate from the Company), and the Participant is not, at the
end of the
30-day
period following the transaction, employed by the Company or an
entity that is then a Subsidiary, then the occurrence of such
transaction shall be treated as the Date of Termination caused
by the Participant being discharged by the employer. For
purposes of applying the foregoing definition of Date of
Termination, a Participant shall be deemed to be employed by the
Company or Subsidiary during any period in which he or she is a
member of the Board of Directors of the Company or a Subsidiary.
With respect to Awards that constitute Deferred Compensation,
references to the Participants termination of employment
(including references to the Participants employment
termination, and to the Participant terminating employment, a
Participants separation from service, and other similar
reference) and references to a Participants termination as
a director (including separation from service and other similar
references) shall mean, respectively, the Participant ceasing to
be employed by, or ceasing to perform director services for, the
Company and the Affiliates, subject to the following:
(i) With respect to any Deferred Compensation attributable
to services as an employee, the employment relationship will be
deemed to have ended at the time the Participant and the
applicable company reasonably anticipate that a level of bona
fide services the Participant would perform for
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the Company and the Affiliates after such date would permanently
decrease to no more than 20% of the average level of bona fide
services performed over the immediately preceding 36 month
period (or the full period of service to the Company and the
Affiliates if the Participant has performed services for the
Company and the Affiliates for less than 36 months,
disregarding any services performed in a director relationship.
With respect to any Deferred Compensation attributable to
services as a director, the director relationship will have
ended when the Participant ceases to be a director, disregarding
any services performed in an employment relationship with the
Company or any Affiliate.
(ii) The employment or director relationship will be
treated as continuing intact while the Participant is on a bona
fide leave of absence (determined in accordance with Treas. Reg.
§409A-1(h)).
(iii) The determination of a Participants termination
of employment or termination as a director by reason of a sale
of assets, sale of stock, spin-off, or other similar transaction
of the Company or an Affiliate will be made in accordance with
Treas. Reg. §1.409A-1(h).
(iv) If a Participant performs services both as an employee
of the Company or an Affiliate, and a member of the board of
directors of the Company or an Affiliate, the determination of
whether termination of employment or termination of service as a
director shall be made in accordance with Treas. Reg.
§1.409A-1(h)(5) (relating to dual status service providers).
(v) For purposes of this Subsection 9(l), the term
Affiliates means all persons with whom the Company
is considered to be a single employer under Code
section 414(b) and all persons with whom the Company would
be considered a single employer under Code section 414(c)
thereof.
(vi) For purposes of this Subsection 9(l), the term
Deferred Compensation means payments or benefits
that would be considered to be provided under a nonqualified
deferred compensation plan as that term is defined in Treas.
Reg. §1.409A-1.
(vii) Notwithstanding the foregoing, a Participant shall
not be deemed to have had a termination of employment or
separation of the director relationship unless that termination
of employment or separation of the director relationship
constitutes a separation for service as defined in
Treas. Reg. §1.409A-1(h).
(m) Effective Date.
The term
Effective Date shall have the meaning set forth in
Subsection 5.1.
(n) Eligible Individual.
Subject to the
provisions of Subsection 2.1(b) (relating to ISOs), the term
Eligible Individual means any employee of the
Company or a Subsidiary, and any non-employee member of the
Board of Directors of the Company or the Board of Directors of
any Subsidiary.
(o) Exchange Act.
The term Exchange
Act means the Securities Exchange Act of 1934, as amended.
(p) Exercise Price.
The term
Exercise Price shall have the meaning set forth in
Subsection 2.3.
(q) Fair Market Value.
Except as
otherwise provided by the Committee, Fair Market
Value for a share of Stock for a day shall be the closing
price per share on such day on the principal securities exchange
or trading market on which shares of Stock are listed or
admitted to trading (or the closing bid if no sales were
reported); provided that if shares of Stock are listed or
admitted to trading on an exchange or trading market but such
day is not a trading day, Fair Market Value shall be determined
as of the last preceding trading day. If the preceding sentence
is not applicable, Fair Market Value shall be determined in good
faith by the Committee in accordance with Treas. Reg.
1.409A-1(b)(5)(iv).
(r) Full Value Award.
The term Full
Value Award shall have the meaning set forth in Subsection
3.1.
(s) Good Reason.
Except as otherwise
provided by the Committee, Good Reason shall exist
upon the occurrence of any of the following events: (i) any
material reduction, without the Participants written
consent, in the Participants duties, responsibilities or
authority; provided, however, that for purposes of this clause,
neither (A) a change in the Participants supervisor
or the number or identity of the Participants direct
reports, nor (B) a change in the Participants title,
duties, responsibilities or authority as a result of a
realignment or restructuring of the
Companys
executive organizational chart, nor
A-14
(C) a change in the Participants title, duties,
responsibilities or authority as a result of a realignment or
restructuring of the Company shall be deemed by itself to
materially reduce Participants duties, responsibilities or
authority, as long as, in the case of either (B) or (C),
Participant continues to report to either the supervisor to whom
he or she reported immediately prior to the Change of Control or
a supervisor of equivalent responsibility and authority; or
(ii) without Participants written consent: (A) a
material reduction in the Participants base salary, or
(B) the relocation of the Participants principal
place of employment more than fifty (50) miles from its
location on the date of a Change in Control. For purposes of
this Plan, a Change of Control, alone, does not constitute Good
Reason. Furthermore, notwithstanding the above, the occurrence
of any of the events described above will not constitute Good
Reason unless the Participant gives the Company written notice
within thirty (30) days after the initial occurrence of any
of such events that the Participant believes that such event
constitutes Good Reason, and the Company thereafter fails to
cure any such event within sixty (60) days after receipt of
such notice.
(t) ISO.
The term ISO shall
have the meaning set forth in Subsection 2.1.
(u) NQO.
The term NQO shall
have the meaning set forth in Subsection 2.1.
(v) Option.
The term Option
shall have the meaning set forth in Subsection 2.1.
(w) Participant.
The term
Participant shall have the meaning set forth in
Subsection 1.2.
(x)
Performance-Based Compensation.
The
term Performance-Based Compensation shall have the
meaning ascribed to it under section 162(m) of the Code.
(y)
Performance-Contingent Vesting.
The
term Performance-Contingent Vesting shall have the
meaning set forth in Subsection 6.1(c).
(z)
Performance Measures.
The
Performance Measures may be based on any one or more
of the following, as selected by the Committee:
(a) earnings per share; (b) net earnings/income;
(c) net operating earnings/income; (d) net operating
earnings/income after taxes; (e) net operating
earnings/income per share; (f) EPS from continuing
operations; (g) EBIT; (h) stock price appreciation;
(i) total shareholder return; (j) relative total
shareholder return (for example, as compared to peer group
performance); (k) sales/revenues, or any component thereof;
(l) sales/revenue growth; (m) unit volume;
(n) gross or operating margins/margin contribution;
(o) economic value added or economic profit;
(p) return on assets (net assets or operating assets);
(q) return on equity; (r) return on invested capital
or invested capital efficiency; (s) working capital or
working capital efficiency; (t) cash flow/free cash flow;
(u) net cash provided by operating activities;
(v) cash return on assets; (w) waste recovery, cost
control
and/or
operating efficiency targets; (x) expense targets; and
(y) safety goals. Each goal may be expressed on an absolute
and/or
relative basis, may be based on or otherwise employ comparisons
based on internal targets, the past performance of the Company
and/or
the
past or current performance of other companies, and in the case
of earnings-based measures, may use or employ comparisons
relating to capital, shareholders equity
and/or
shares outstanding, investments or assets or net assets.
(aa)
Performance Shares.
The
term performance shares shall have the meaning set
forth in Subsection 3.1(b).
(bb)
Performance Units.
The term
performance units shall have the meaning set forth
in Subsection 3.1(b).
(cc)
Plan.
The Plan means the
United Stationers Inc. 2004 Long-Term Incentive Plan, as amended
and restated effective May 11, 2011.
(dd)
Prior Equity Plans.
The term
Prior Equity Plans shall have the meaning set forth
in Subsection 5.2(b)(ii).
(ee)
Restricted Stock.
The term
restricted stock shall have the meaning set forth in
Subsection 3.1(c).
(ff)
Restricted Stock Units.
The term
restricted stock units shall have the meaning set
forth in Subsection 3.1(c).
(gg)
SAR.
The term SAR shall
have the meaning set forth in Subsection 2.2.
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(hh)
Stock.
The term Stock
means Common Stock of the Company.
(ii)
Subsidiary.
For purposes of the Plan
and subject to Subsection 2.1(b) (relating to ISOs), the term
Subsidiary means any corporation, partnership, joint
venture or other entity during any period in which at least a
fifty percent voting or profits interest is owned, directly or
indirectly, by the Company (or by any entity that is a successor
to the Company), and any other business venture designated by
the Committee in which the Company (or any entity that is a
successor to the Company) has a significant interest.
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UNITED STATIONERS INC.
CORRINE KASSITAS
ONE PARKWAY NORTH BOULEVARD
DEERFIELD, IL 60015
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Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or
return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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M32888-P06587
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KEEP THIS PORTION FOR YOUR RECORDS
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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DETACH AND RETURN THIS PORTION ONLY
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UNITED STATIONERS INC.
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For
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Withhold
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For All
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All
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All
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Except
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The Board of
Directors recommends you vote FOR each of the nominees listed below:
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1.
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Election of Directors to serve for a three-year term expiring in 2014.
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o
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o
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o
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Nominees:
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01) Robert B. Aiken, Jr.
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02) Jean S. Blackwell
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03) Paul Cody Phipps
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To withhold authority to vote for any individual
nominee(s), mark For All Except and write the
number(s) of the nominee(s) on the line below.
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The Board of Directors recommends you vote FOR proposals 2., 3. and 4.
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For
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Against
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Abstain
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2.
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Ratification of the selection of Ernst & Young LLP as the Companys independent registered public accounting firm for 2011.
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3.
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Approval of the Amended and Restated 2004 Long-Term Incentive Plan.
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4.
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Approval of advisory vote on executive compensation.
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The Board of Directors recommends that you vote for 1 YEAR on the following proposal:
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1 Year
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2 Years
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3 Years
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Abstain
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5.
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Advisory vote on
frequency of advisory vote on executive compensation.
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o
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NOTE:
In their discretion, the proxies may vote upon any other
business as may properly
come before the meeting or any adjournment thereof.
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Please indicate if you plan to attend this meeting.
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o
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Yes
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No
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Please sign exactly as your name(s) appear(s) hereon. When signing
as attorney, executor, administrator, or other fiduciary, please
give full title as such. Joint owners should each sign personally.
All holders must sign. If a corporation or partnership, please sign
in full corporate or partnership name, by authorized officer.
This proxy is solicited on behalf of the Board of Directors of United
Stationers Inc.
This proxy will be voted as directed by the
undersigned. If no direction is given, this proxy will be voted as
recommended by the Board of Directors on each of the proposals listed
below.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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YOUR VOTE IS IMPORTANT!
If you do not vote by telephone or Internet, please sign and date this proxy card and return it
promptly in the enclosed postage-paid envelope so the shares may be represented at the Annual
Meeting.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
UNITED STATIONERS INC.
Annual Meeting of Stockholders
May 11, 2011 2:00 PM
This proxy is solicited by the Board of Directors
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UNITED STATIONERS, INC.
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PROXY/VOTING INSTRUCTION CARD
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The undersigned hereby appoints Richard W. Gochnauer, Victoria J. Reich and Eric A. Blanchard, or
either of them, as proxies, with full power of substitution and with all the powers the undersigned
would possess if present, to vote all the shares of common stock of UNITED STATIONERS INC. (the
Company) which the undersigned is entitled to vote, on all matters that may properly come before
the Annual Meeting of Stockholders to be held at the Companys offices located at One Parkway North
Boulevard, Deerfield, Illinois on Wednesday, May 11, 2011 at 2:00 p.m., Central Time, and at any
adjournment thereof. This card also serves as voting instructions to Computershare Trust Company,
as Plan Agent of the United Stationers Inc. Employee Stock Purchase Plan. The Plan Agent will vote
the shares of the Companys common stock allocated to the stockholders account at the Annual
Meeting of Stockholders as directed by the stockholder on the reverse side. If voting by mail, your
vote must be received by 11:59 p.m., Eastern Time, on May 9, 2011 to ensure that your Employee
Stock Purchase Plan shares are voted at the meeting.
This proxy, when properly executed, will be voted in the manner directed herein. If no such
direction is made, this proxy will be voted in accordance with the Board of Directors
recommendations.
Continued and to be signed on reverse side