AUDIT COMMITTEE REPORT

The Audit Committee assists the Board of Directors in its oversight of the integrity of Church & Dwight’s financial statements, compliance with legal and regulatory requirements and the performance of the internal audit function. Management has primary responsibility for preparing the financial statements and for the financial reporting process. In addition, management has the responsibility to assess the effectiveness of Church & Dwight’s internal control over financial reporting. Deloitte & Touche LLP, Church & Dwight’s independent registered public accounting firm, is responsible for (i) expressing an opinion on the conformity of Church & Dwight’s audited financial statements to generally accepted accounting principles and on whether the financial statements present fairly in all material respects the financial position and results of operations of Church & Dwight, and (ii) expressing an opinion on the effectiveness of Church & Dwight’s internal control over financial reporting.

In this context, the Audit Committee hereby reports as follows:

Based on the review and discussion referred to in paragraphs (1) through (3) above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in Church & Dwight’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, for filing with the Securities and Exchange Commission.

Respectfully submitted,

Robert K. Shearer, Chairperson

José B. Alvarez

Arthur B. Winkleblack

Dated: March 14, 2013

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PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES

The Audit Committee pre-approved all audit and non-audit services provided by Deloitte & Touche LLP during 2012 in accordance with our policy described below.

The Audit Committee pre-approves all permitted non-audit services to be provided by our independent registered public accounting firm. However, the Audit Committee has delegated to Mr. Shearer, as Chairperson of the Audit Committee, authority to pre-approve permitted non-audit services, provided that any such pre-approved non-audit services are reported to the full Audit Committee at its next scheduled meeting.

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COMPENSATION DISCUSSION AND ANALYSIS

INTRODUCTION

In this Compensation Discussion and Analysis, we address the compensation paid or awarded for 2012 to our executive officers listed in the Summary Compensation Table that follows this discussion. We sometimes refer to these executive officers as our “named executive officers.”

2012 COMPENSATION

Compensation Objectives

For the past several years, we have focused on the following objectives in making compensation determinations:

The principal components of 2012 compensation that we paid to the named executive officers to meet these objectives are as follows:

Determination of Competitive Compensation

In making executive compensation determinations for 2012, we referenced data provided by Steven Hall & Partners to gauge the comparability of our compensation to the compensation of executives of other companies with generally corresponding responsibilities. Steven Hall & Partners has served as an independent consultant to the Compensation & Organization Committee, or “Committee,” for several years, and assists the Committee in its review of compensation for executive and non-executive officers. Steven Hall & Partners does not perform any other services for us.

With respect to our Chief Executive Officer and our Chief Financial Officer, the compensation consultant provided data focused on compensation paid by a comparator group of consumer packaged goods companies, other than tobacco and spirits companies, that had revenues in the range of approximately 50 to 200 percent of our revenues. Within this classification, Steven Hall & Partners referenced companies with similar distribution channels

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and with a focus on brand recognition. We believe there is a strong likelihood that an executive officer’s skills will be transferable among these companies, so we would expect to compete with these companies for executive officer talent. The comparator companies were the following:

We removed from our list of comparator companies Del Monte Foods Company, because it was acquired by another entity; Jarden Corporation, because its revenues increased to exceed our range of comparator companies; and United Natural Foods, Inc., because we believe it is more accurately characterized as a distributor instead of a traditional consumer packaged goods company.

In providing comparative data regarding compensation of executives of the comparator companies, Steven Hall & Partners aged the data to January 1, 2012, using an update factor of three percent per annum. Steven Hall & Partners excluded companies if their executives earned more than twice as much or less than half as much as our corresponding executive. Steven Hall & Partners also excluded data relating to executives who have not held their position for at least two years and, as it deemed appropriate, excluded data relating to one-time and promotional awards.

Steven Hall & Partners utilized proxy statement data with respect to the comparator companies only with respect to our Chief Executive Officer and Chief Financial Officer. Steven Hall & Partners did not use this data for our other named executive officers because it believed the data did not provide a sufficient comparative sampling or otherwise was not appropriate. Therefore, in making a comparative evaluation with respect to our named executive officers other than our Chief Executive Officer and Chief Financial Officer, we relied on an analysis prepared by Steven Hall & Partners of data derived from published surveys. This analysis provided information on compensation for executive officers serving in positions comparable to those of our other named executive officers. Where possible, Steven Hall & Partners focused its comparative data on surveys relating to non-durable goods manufacturing companies and consumer products companies. In addition, the survey data was adjusted based on Steven Hall & Partners’ judgment as to reliability and validity of the data. The survey data also was used by Steven Hall & Partners as a reference point in addition to the comparator companies’ publicly filed proxy statement data it used in providing a comparative analysis of compensation for our Chief Executive Officer and Chief Financial Officer.

In determining a 2012 competitive market guideline with respect to total direct compensation, namely base salary, Annual Incentive Plan payout at target and long-term incentives, we referenced a level that approximates the 50th percentile of the comparator companies or the survey companies, as applicable. However, we did not follow this guideline rigidly, and the Committee made determinations that represent a departure from this general guideline. In addition, because a majority of our compensation is performance-based, actual cash compensation paid to our named executive officers could further vary from that paid to executive officers in the comparator companies or the survey companies, based on achievement of performance targets.

For our executive officers other than our Chief Executive Officer, Chief Financial Officer and General Counsel, we seek to provide essentially uniform amounts of salaries and target incentive compensation, which we believe enhances an environment of teamwork and cooperation among our executives in working towards our continued success. In addition, as described below under “Annual Incentive Plan,” and as has been the case since 2007, the

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Committee determined to set 2012 payout amounts for target level achievement under our Annual Incentive Plan at amounts higher than would be suggested by the guidelines because the Committee viewed the 2012 target goals as aggressive. The 2012 performance goals were designed to reflect budgeted earnings per share growth of nine percent.

The analysis performed by Steven Hall & Partners highlighted that our compensation mix between base salary, short term incentives and long term incentives was more heavily weighted toward base salary when compared to the marketplace. In response, the Committee decided not to grant any salary increases to our named executive officers in 2012, and, instead granted increases in long term incentives to our named executive officers (other than our Chief Executive Officer for the reasons described below) to reflect (i) increases in the marketplace in total remuneration, and (ii) the elimination in 2012 of our practice of providing restricted shares based on accumulation of company stock. In addition, as described below under “Long Term Incentives—Stock Options,” in 2012, the Committee determined to increase, by 25 percent, the dollar amount used to determine the number of shares underlying options issuable to our named executive officers (based on our performance as compared to a selected group of consumer products companies), and provided additional option grants to some executives whose performance during 2011 was considered exceptional.

Also in response to the Steven Hall & Partners market data, the Committee decided to increase our General Counsel’s annual incentive compensation award target to 60 percent of his annual base salary, and his percentage of salary used to compute the value of options to be granted to him annually under our long-term incentive plan to 95 percent.

As previously disclosed in our filings with the Securities and Exchange Commission, we determined that our Chairman and Chief Executive Officer would receive no salary increase for 2012 from the prior year and no increase in the value of stock options granted to him in 2012 from the prior year (determined in accordance with generally accepted accounting principles), regardless of any increase in option grants that were provided to our other employees. The foregoing decision was made by our Board of Directors after our investigation, with assistance from our outside counsel, concluded that Mr. Craigie violated Company policy by deleting emails that were required to be preserved in connection with allegations made by Mayer Laboratories, Inc. (“Mayer”), a competitor in the condom business, in a lawsuit and a related non-public Federal Trade Commission (“FTC”) investigation, in each case primarily regarding our condom sales and marketing practices. We were able to retrieve substantially all of the deleted emails and concluded that Mr. Craigie did not delete the emails with the intent to impede, impair or obstruct the litigation or related investigation. Subsequently, the United States District Court, before which the lawsuit was pending, issued an order dismissing Mayer’s claims concerning our sales and marketing practices, and the parties entered into a settlement agreement dismissing all remaining claims. The FTC closed its investigation and indicated that no further FTC action was warranted. In the Court-approved stipulation dismissing all claims, Mayer stated the following:

“Of the thousands of emails sent or received by James Craigie that were produced by Church & Dwight in this litigation, not one was cited, referenced or included with the summary judgment papers filed by the parties or referenced at oral argument on the summary judgment motion.

“In turn, Mayer did not identify in its summary judgment papers any specific emails deleted by Mr. Craigie that were relevant to the issues before Judge Chen [the Judge who issued the summary judgment ruling] in the determination of summary judgment and the Court’s resulting Order.”

Additional information regarding these matters is included in the Current Reports on Form 8-K that we filed with the Securities and Exchange Commission on January 10, 2012, March 2, 2012 and April 10, 2012, and in our Form 10-Q for the quarter ended June 30, 2012 filed with the Securities and Exchange Commission on August 7, 2012.

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Salaries

As described above, in 2012, none of our named executive officers received a salary increase. We believe our salary structure enhances teamwork among our executives in working towards our continued success. In addition, we believe our salaries reflect the fact that, unlike some other companies, all of our executive officers report directly to our Chief Executive Officer rather than to an intermediate executive, such as a Chief Operating Officer.

Annual Incentive Plan

The principal objective of our Annual Incentive Plan is to align executive and stockholder interests by providing an incentive to our named executive officers to achieve annual performance goals that also support long-term stockholder return. The performance goals are established each year to reflect specific objectives set in our annual budget. We also consider competitive factors, including total cash compensation, which includes salary and annual incentive bonus, in determining the amount of annual incentive award opportunities.

As noted above, in structuring total direct compensation, we have referenced the median level of the comparator and survey companies in determining a competitive market guideline. This guideline has influenced our target award levels, but, since 2007, we have set target payouts above the median level because we believed the performance goals have represented aggressive targets. Moreover, actual payouts to the named executive officers can vary significantly based on actual performance.

We use a numerical rating system with a range from 0.0 to 2.0 to determine the payout amounts under our Annual Incentive Plan. A rating of 1.0 would normally represent achievement level for target performance with payout based on each participant’s annual incentive compensation award target percentage of his or her annual base salary. An award payment at a 1.0 rating is consistent with our guideline described in the preceding paragraph in setting total direct compensation at the median level. The 2012 annual incentive compensation award target percentages for our named executive officers (other than our General Counsel) did not change from the prior year. However, as described in the preceding paragraph, since 2007, we have set target payouts above the median level because we believe the performance targets established by the Committee have been aggressive. For 2012, as was the case in 2011, we set payout amounts for performance at target levels that were 20 percent above the amounts that would be paid with respect to a 1.0 rating. As a result, if target level performance were achieved, the participant would receive an award payout representing a 1.2 rating. This adjustment was made with respect to 2012 because the performance goals were designed to reflect budgeted earnings per share growth of nine percent, which the Committee believed would be an outstanding achievement. The following table indicates the percentage of salary payable at a 1.0 rating, and the target award opportunity for 2012, based on a 1.2 rating:

As described above, the Committee references the competitive compensation data provided by Steven Hall & Partners in setting the percentage levels. Mr. Craigie’s and Mr. Farrell’s percentages reflect their respective responsibilities as our Chief Executive Officer and Chief Financial Officer. As previously noted, Mr. de Maynadier’s percentage was increased to 60 percent based on the Steven Hall & Partners data. We set the percentage for all other then-serving executive officers at the same level, which we believe unifies the commitment of the affected executive officers towards achievement of our annual performance goals.

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For named executive officers who did not have division responsibilities (all except Mr. Tursi), all of their target awards were based on corporate performance. However, the award that is earned and payable may be reduced (but not increased) at the discretion of the Committee or the independent members of the Board of Directors, based on individual considerations. The 2012 corporate performance metrics and their weightings were the following:

For Mr. Tursi, who has responsibilities for the Consumer Domestic division, 60 percent of his 2012 target award was based on corporate performance, comprised of the same measures as set forth above, and 40 percent was based on division performance. As is the case with other executive officers, the award that is earned and payable is subject to reduction (but may not be increased) at the discretion of the Committee or the independent members of the Board of Directors, based on individual considerations. Effective starting with the 2013 fiscal year, target awards for all executive officers with division responsibilities, including Mr. Tursi, will be based 100 percent on corporate performance in recognition of their ability to impact the results of their division and the entire organization (subject to reduction at the discretion of the Committee or the independent members of the Board of Directors, based on individual considerations).

The metrics and weightings in 2012 for our Consumer Domestic division, which were unchanged from 2011, are indicated in the table below:

The corporate results used to compute performance in 2012 reflect adjustments approved by the Committee to eliminate the effect of items such as foreign exchange rates that differed from budgeted amounts; the acquisition of Avid Health, Inc.; and the cash impact of a delayed tax payment. We do not believe that these items reflect management performance for purposes of the Annual Incentive Plan because they generally do not reflect our day-to-day operations. These adjustments both positively and negatively impacted our Annual Incentive Plan payout.

We selected net sales as a measure of corporate and divisional performance because it is a key metric used in our industry. We believe that in a mature industry subject to intense competition, net sales are a fundamental measure of our ability to compete effectively and grow.

We selected gross margin as a measure of corporate and divisional performance because we believe that our ability to control cost of sales and trade spending are critical components of our operations. The effect of raw material and energy costs on our margins has underscored the need for effective management of both our product pricing and cost of sales.

We selected Earnings per Share because it is a key metric affecting our share price that is closely followed by analysts, investors and our employees. It also is commonly used by our peer group companies.

In 2012, we replaced free cash flow with cash from operations as a measure of corporate performance. These measures are the same except that cash from operations excludes capital expenditures. We changed this metric because we believe that spending budgeted capital expenditures is important to the long term success of the business and management should not be rewarded for under spending. We selected cash from operations as a measure of our corporate performance, including our company’s working capital utilization because we believe cash from operations is a standard performance metric used by investors. It also is a tool used by our

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management. We believe that cash from operations provides a useful indication of our ability to pay dividends, service indebtedness and pursue acquisitions. Moreover, cash from operations is affected by net income and working capital factors relevant to assessing the management of our business.

We used an additional metric for Consumer Domestic divisional performance. We selected operating margin as a measure of performance because, in addition to considerations relating to gross margin, our profitability is dependent on our ability to effectively manage discretionary promotional and marketing expenditures and control selling, general, and administrative expenses in a manner that will enable us to realize a meaningful return from the sale of our products.

With respect to performance goals established for each metric, we apply a scale of 0.0 to 2.0 to determine a performance rating. As noted above, payout amounts for achieving the performance targets in 2012 were set at a rating of 1.2. A rating of 2.0 indicates that the maximum performance level has been achieved or exceeded. A rating of 0.0 indicates that performance is below the level at which any payment would be made under the Annual Incentive Plan. In determining the annual incentive payout, we multiplied the amount payable for a 1.0 performance rating by the actual performance rating.

The following table indicates, with respect to each corporate performance measure, the threshold level of performance for which a payout could be made, the target performance level and the maximum performance level. To the extent applicable, the amounts and percentages in the following table and in the actual performance column in the next table reflect the adjustments described above.

With respect to corporate performance in 2012, the actual performance (adjusted as described above) and ratings were as follows (in millions, except per share data):

The corporate performance rating for 2012 was equal to the weighted average number of these factors, or 1.43. The division performance rating for 2012 for Consumer Domestic was 1.40.

The final performance rating applicable to each named executive officer reflected the weighted average performance rating achieved for corporate performance and division performance applicable to the executive.

Based on their respective performance ratings and the discretionary adjustment, the named executive officers received award payments under our Annual Incentive Plan for 2012 as shown in the table below:

The award payments are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.

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Long-Term Incentives—Stock Options

Prior to 2012, we calculated the number of shares underlying options granted to the named executive officers by designating an amount equal to a multiple of the named executive officer’s salary, and dividing that amount by the closing price of a share of our common stock on the grant date. In recent years, based on that methodology and changes to the per share valuation of our options, determined in accordance with U.S. generally accepted accounting principles, the value of our equity compensation has lagged behind the value of equity compensation provided to comparable executives, as indicated in survey and comparator company data provided by Steven Hall & Partners.

To enhance the competitiveness of our long-term compensation, Steven Hall & Partners recommended that we adopt the prevailing methodology in the market for determining the number of option shares. Under this methodology, the number of shares underlying options granted to the named executive officers are calculated by designating an amount equal to a percentage of the named executive officer’s salary, and dividing that amount by the grant date fair value of the share underlying the option, in accordance with U.S. generally accepted accounting principles. In making this recommendation, Steven Hall & Partners noted that, in addition to reflecting market practices, use of this methodology would achieve consistency between the dollar amount we designate for an executive’s option grant and the grant date fair value of the option for accounting purposes (which is reflected in the Summary Compensation Table).

Effective in 2012 and in future years, we will use this methodology to calculate the number of shares underlying options that are granted to our named executive officers. As a result, except as noted below, the percentage of salary used for each executive officer will be a smaller amount when compared with the multiple used in recent years, and the number of options granted to our executives may increase. The new methodology has not been applied to Mr. Craigie for his 2012 option grants, because, for the reasons set forth above, the value of options granted to him in 2012 is no greater than the value of stock options granted to him in 2011 (determined in accordance with generally accepted accounting principles).

In 2012, we continued to utilize options on our common stock as our principal form of long-term compensation. Stock options granted in 2012:

In addition, as has been the case since 2007, our stock options granted in 2012 include provisions enabling a three-year post-termination vesting and exercise period. The provisions apply if (i) the option holder’s employment terminates due to retirement, as defined in the grant agreement, or is terminated by us without cause; (ii) the option holder is at least 55 years old and has completed at least five years of service with us; (iii) the sum of the option holder’s age and years of service is at least 65; and (iv) pursuant to our request, the option holder has signed a waiver and release agreement. We believe that these provisions enable us to attract and retain seasoned executives who have considerable experience. Moreover, we believe these post-termination provisions offset the effect of the three-year cliff vesting provisions of our stock options, which we believe are less favorable than vesting provisions used by many of the comparator companies. Many of those companies provide for incremental vesting of stock options during the vesting period, while our options do not vest until they have been held for three years. We believe our vesting provisions encourage our employees to maintain employment with us.

We believe that stock options provide a strong incentive to increase stockholder value, because the value of the stock options is dependent on the market performance of our common stock following the date of grant.

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Under our long-term incentive program, we grant stock options to each of our named executive officers on an annual basis, based on a percentage of the executive officer’s salary. In connection with our 2012 grants, we initially used the following percentages of salary for our named executive officers:

As was the case in 2011, we increased by 25 percent the dollar amount initially computed based on the salary percentages set forth above. We took this action after comparing the total stockholder return (based on the increase in stock price plus dividends paid) of our common stock for the one and three year periods ended December 31, 2011 against the total stockholder return for a selected group of consumer products companies utilized by management for internal analysis purposes (Alberto-Culver Company; Avon Products, Inc.; Colgate-Palmolive Company; The Clorox Company; Energizer Holdings, Inc.; Kimberly-Clark Corporation; The Procter & Gamble Company; Reckitt Benckiser Group PLC; and Unilever). We also generally referenced this group for comparison purposes in 2011. For the three year period, our total stockholder return was among the top 25 percent of the selected group. The 25 percent increase in dollar amount was made to reflect our company’s superior performance as compared to the companies in this group. The determination to increase the grant by 25 percent was not based on the application of any formula.

In determining the number of shares underlying options for each of the named executive officers, we divided the dollar amount of value to be received by each officer by the fair market value of one stock option to determine the number of stock options granted to the executive officer. We multiplied that amount by 1.25 and rounded the resulting number of shares to the nearest 10 shares. The number of shares underlying stock options granted to the named executive officers are set forth below in the Grants of Plan-Based Awards table under the column heading, “All Other Option Awards: Number of Securities Underlying Options.” For additional information regarding stock option terms, see the narrative accompanying the Grants of Plan-Based Awards table.

In addition, we increased the number of options granted to Messrs. Farrell, Conish and Tursi by approximately 8.2 percent (in the case of Mr. Farrell) and 8.0 percent (in the case of Messrs. Conish and Tursi), of the standard grant (before the 25 percent increase), based on Mr. Craigie’s recommendation, in recognition of performance he deemed exceptional during 2011. There were no specific performance criteria utilized to arrive at this determination. We rounded the number of shares underlying this supplemental grant to the nearest 10 shares.

We have applied special provisions to Mr. Craigie’s options granted to him during 2005 or thereafter. These provisions became effective in July 2009, the fifth anniversary of his employment with us. Under these provisions, if his employment with us terminates for any reason other than for cause, his options will remain exercisable until the end of their stated term and will continue to vest in accordance with the terms of the grant. We adopted this provision in 2005 to encourage Mr. Craigie to maintain a long-term focus on our strategy and a long-term interest in our securities, and to remove requirements and incentives to exercise options and sell underlying shares within a short time following a termination of his employment.

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The Compensation & Organization Committee has, from time to time, considered the structure of our long-term incentive compensation, which continues to consist almost entirely of stock options. While the Compensation & Organization Committee continues to believe that stock options are an appropriate form of long-term incentive compensation, it will review with management, on an ongoing basis, the advisability of adopting alternative forms of long-term incentive compensation that are tied to, and provide incentives for, the long-term increase in stockholder value.

Restricted Stock Award Program

Under our restricted stock award program, which was terminated in 2012 following our March grant, we awarded restricted stock to officers when they acquired our common stock. Specifically, we awarded shares of restricted stock to an officer who, during a calendar year,

We awarded the restricted stock on the first Monday in March of the succeeding calendar year. The number of shares awarded had a fair market value equal to 20 percent of the value of the acquired notional investment in our common stock and the otherwise purchased common stock. For this purpose, the value of the acquired notional investment and otherwise purchased common stock must not have exceeded 50 percent of the officer’s target Annual Incentive Plan award in the year preceding the year in which we awarded the restricted stock. Restricted shares awarded under the program vest on the third anniversary of the date of award. In addition to encouraging share ownership, we believed the vesting terms of the restricted stock provided a meaningful incentive for continued employment. Restricted shares issued to the named executive officers under this program in 2012 are set forth below in the Grants of Plan-Based Awards Table under the column heading, “All Other Stock Awards: Number of Shares of Stock or Units.” Grants shown are based on share accumulation in 2011 with the grant date of March 2012.

The restricted stock award program was not intended to provide an incentive to purchase our common stock in plans that are available to a broad base of our employees. Therefore, we did not provide restricted stock awards for purchases of our common stock under our employee stock purchase plan or under our savings and profit sharing plan.

No further grants will be made under this program, although we may decide to grant restricted shares under another program or as otherwise warranted in the future.

Perquisites and Charitable Contributions

We provide very limited perquisites to our executive officers. Our executives may receive a comprehensive physical examination through a provider selected by the executive from among three providers that we have approved. We believe it is in our interest to ensure that our executives’ health is monitored so that any health-related issues pertaining to an executive can be identified and addressed promptly. The annual cost to us for providing this benefit is approximately $2,000 per executive.

Except as noted above, we currently do not have programs for providing personal benefit perquisites to executive officers. Although we do not participate in any programs under which we agree to make donations to charitable or other non-profit institutions in the name of any of our executive officers or directors, from time to time, we do make such donations as requested by our executive officers and directors. The aggregate amount of all such donations with respect to named executive officers was $55,000 in 2012.

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STOCK OPTION GRANT PRACTICES

For the past several years, our Compensation & Organization Committee has followed a practice of making our annual stock option grants to executive officers and other employees effective on the Monday falling most closely to the midpoint between the dates of the first and second quarter earnings releases. A grant to a new employee is effective on the date the employee commences employment with us, and special grants made to employees at times other than the time of the annual grant are effective on the first trading day of the month following approval of the grant. The per share exercise price of stock options is equal to the closing price of a share of our common stock on the date of grant. We believe that our stock option grant practices are appropriate and eliminate any questions regarding “timing” of grants in anticipation of material events, since grants become effective in accordance with a long-standing schedule.

Our Compensation & Organization Committee delegates to our Executive Vice President, Human Resources the ability to approve stock option grants for employees who are not executive officers. The grants may be made at times other than the time of annual grant and are utilized for new hires and for performance recognition purposes. The Compensation & Organization Committee approved options to purchase 116,000 shares for these purposes in 2012. The timing and pricing of the option grants in 2012 conformed to the Compensation & Organization Committee practices described in the preceding paragraph.

We do not permit repricing of options without prior stockholder approval.

STOCK OWNERSHIP AND OTHER TRADING GUIDELINES

Our executive officer stock ownership guidelines are designed to further align the interests of executive officers with the interests of our stockholders. As applied to our named executive officers, the guidelines generally specified the minimum number of shares of our common stock that our executive officers were required to hold at the end of 2012 (or, if later, five years following appointment to an executive officer position) and continue to hold thereafter. The minimum number of shares requirement in effect in 2012 was based on salary levels on January 1, 2011 and the average closing price of our common stock during 2011. An executive officer who becomes subject to the guidelines after January 1, 2011 has stock ownership requirements computed based on a multiple of his or her salary at the time the executive officer became subject to the guidelines and the average closing price of our common stock for the prior 365-day period. In each case, the number of shares resulting from the calculation is rounded to the nearest 1,000 shares. Every three years, we recalibrate the stock ownership requirements based on the then current base salaries and the average closing stock price of our common stock over the preceding 12 months. The stock ownership requirements will next be recalibrated on January 1, 2014. The Compensation & Organization Committee reviews the executive officers’ progress towards compliance with the guidelines semi-annually.

Our insider trading guidelines prohibit our executive officers from (i) engaging in short sales of our securities, (ii) buying or selling puts or calls or other derivative securities on our securities, (iii) entering into hedging or monetizing transactions or similar arrangements with respect to our securities, and (iv) holding our securities in a margin account or pledging our securities as collateral for a loan.

The stock ownership guidelines applicable to each of the named executive officers in 2012, and the named executive officer’s actual stock ownership levels, are shown on the following table:

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ONGOING AND POST-EMPLOYMENT COMPENSATION

We have plans and agreements addressing compensation for our named executive officers that accrue value as the executive officer continues to work for us, provide special benefits upon certain types of termination events or provide retirement benefits. These plans and agreements were designed to be part of a competitive compensation package, in some cases not only for executive officers, but for other employees as well.

Savings and Profit Sharing Plan for Salaried Employees

This plan, which we sometimes refer to below as the “savings and profit sharing plan,” is a tax-qualified defined contribution plan available to all of our domestic salaried employees. All of our named executive officers participate in the plan. Under the plan, an employee may contribute, subject to Internal Revenue Code limitations, up to a maximum of 70 percent of his or her eligible compensation (approximately 15 percent for highly compensated employees in 2012), which includes salary and payments under the Annual Incentive Plan, on a pre-tax or post-tax basis (post-tax contributions are limited to six percent of eligible compensation). For this purpose, Roth contributions, although made on a post-tax basis, are treated as if they were made on a pre-tax basis. We provide a matching contribution equal to 50 percent of the first six percent of eligible compensation that an employee contributes in any year. In addition, the plan provides a profit-sharing feature under which we make an annual contribution to the account of each employee based on our performance in the preceding year. The performance measures and results used to calculate the annual contribution level are identical to the company-wide measures described above under “2012 Compensation—Annual Incentive Plan.” Achievement of the target performance rating would have resulted in a contribution of 7.3 percent of a participant’s eligible compensation in 2012. In respect of 2012 performance results, the Compensation & Organization Committee approved a contribution in 2012 equal to 8.58 percent of a participant’s eligible compensation. Amounts credited to an employee’s account in the plan may be invested among a number of funds, including a company stock fund. A participant’s account is adjusted to reflect the rate of return, positive or negative, on the investments. Employee contributions and compensation on which our profit sharing contributions may be based cannot exceed limits under the Internal Revenue Code (the eligible compensation limit was $250,000 in 2012).

Employee Stock Purchase Plan

This plan is a tax qualified employee stock purchase plan generally available to our domestic employees who work at least 20 hours per week. Mr. Craigie, Mr. Farrell and Mr. de Maynadier participate in this plan. Under the plan, a participant may contribute up to 10 percent of his or her salary and wages towards the purchase of our common stock on the last business day of a calendar month. However, as a result of Internal Revenue Code limits, no participant may purchase more than $25,000 worth of common stock in any calendar year. The purchase price generally is equal to 85 percent of the closing price of our common stock on the second Friday of the month.

Executive Deferred Compensation Plan (“EDCP”)

This plan and its predecessors collectively have been in effect for over 20 years. The plan is a nonqualified deferred compensation plan that provides tax benefits for executive officers. Under the EDCP as currently in effect, an executive officer can defer up to 85 percent of his or her salary and up to 85 percent of amounts paid to the

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executive officer under our Annual Incentive Plan. In addition, an executive can make a separate deferral, which we refer to below as the “Excess Compensation Deferral,” of up to six percent of compensation that exceeds Internal Revenue Code limits on eligible contributions under our savings and profit sharing plan. We provide a contribution equal to (i) 50 percent of the Excess Contribution Deferral; (ii) three percent of other salary and Annual Incentive Plan deferrals; and (iii) the profit sharing contributions we would have made to the participant’s account under our savings and profit sharing plan were it not for the Internal Revenue Code limit on the amount of eligible compensation under that plan and the participant’s deferrals into the EDCP.

Amounts deferred under the EDCP generally are not subject to federal, and in many cases state, income taxes until they are distributed. An executive officer can choose to have his or her contributions allocated to one or more of several notional investments, including a notional investment in our common stock. A participant may not initially allocate more than 50 percent of his or her contributions to our common stock, although the participant can increase the notional common stock amount through intra-plan transfers of notional investments previously made. A participant’s account is adjusted to reflect the deemed rate of return, positive or negative, on the notional investments. An executive officer may choose to receive a payout following retirement, either in a lump sum or in annual installments, in accordance with the terms of the EDCP. The EDCP also includes provisions for payment upon death or disability. See the Deferred Compensation table and accompanying narrative for additional information.

Change in Control and Severance Agreements

In 2006, we adopted change in control and severance agreements for our executive officers. We believe that these agreements can create management stability during a period of uncertainty. Absent such agreements, there is an increased risk that executive officers may be encouraged to seek other employment opportunities if they became concerned about their employment security following a change in control. We believe that the agreements provide financial security to an executive officer in the event the executive officer is terminated without cause following a change in control by providing a meaningful payment to the executive officer. The agreements also provide clear statements of the rights of the executive officers and protect against a change in employment and other terms by an acquirer that would be unfavorable to the executive officer. In determining, at the time we adopted the agreements, to provide a higher level of benefits to Mr. Craigie than to our other named executive officers; we referenced data from a study prepared by the Compensation & Organization Committee’s compensation consultant indicating that a higher level of benefits for a chief executive officer was in line with marketplace practices. We also determined to provide benefits to our executive officers, although at a lower level, for certain types of employment terminations that do not follow a change in control. We believe these severance obligations provide a competitive benefit that enhances our ability to retain capable executive officers.

The change in control and severance agreements provide for payments and other benefits if an executive officer’s employment is terminated without cause, or if an executive officer terminates employment for “good reason,” within two years following a change in control. These provisions require what is sometimes called a “double trigger,” namely both a change in control and a specified termination event, before payment is made. The agreements also provide for lesser payments if these types of terminations occur outside of the context of a change in control. In March 2010, we and the participating executives amended the agreements to eliminate the tax gross-up provisions under the agreements. These provisions called for additional payments to an executive officer if the executive officer became liable for payment of any excise tax under Internal Revenue Code Section 4999 with respect to any payment to be received under an agreement in connection with a change in control. In the event that payments to be made to an executive under the change in control and severance agreements in connection with a change in control would result in the imposition of the excise tax under Internal Revenue Code Section 4999, the payments will be reduced to the highest amount that could be paid without triggering the excise tax if, following the reduction, the executive would retain a greater amount of net after-tax payments than if no reduction were made. If no reduction is made, the executive officer will pay any applicable excise tax.

See “Potential Payments Upon Termination or Change in Control” for further information regarding benefits under the change in control and severance agreements.

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TAX CONSIDERATIONS

Internal Revenue Code Section 162(m) limits to $1 million the deductibility for federal income tax purposes of annual compensation paid by a publicly held company to its chief executive officer and other specified highest paid executive officers, unless certain conditions are met. We have structured certain portions of our executive compensation program to preserve deductibility for federal income tax purposes. Nevertheless, we believe that, in certain circumstances, factors other than tax deductibility take precedence in determining the forms and amount of compensation, and we retain the flexibility to authorize compensation that may not be deductible if we believe it is in the best interests of our company.

SAY-ON-PAY VOTE

At our 2012 Annual Meeting of Stockholders, we asked our stockholders to vote to approve, on an advisory basis, the 2011 compensation paid to our named executive officers, commonly referred to as a say-on-pay vote. Our stockholders overwhelmingly approved compensation to our named executive officers, with over 98 percent of votes cast in favor of our say-on-pay resolution. We value this positive endorsement by our stockholders of our executive compensation policies. As we evaluated our compensation practices in fiscal 2012, we were mindful of the strong support our stockholders expressed for our pay-for-performance philosophy. As a result, the Compensation & Organization Committee continued our general approach to executive compensation for 2012. We believe our programs are effectively designed, are working well, and are aligned with the interests of our stockholders. The Compensation & Organization Committee will continue to seek and consider stockholder feedback in the future.