pre14a
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
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
þ Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
TREEHOUSE FOODS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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TREEHOUSE
FOODS, INC.
2021 SPRING ROAD
SUITE 600
OAK BROOK, ILLINOIS 60523
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
ON APRIL 28, 2011
You are cordially invited to attend the Annual Meeting of
Stockholders of TreeHouse Foods, Inc. (TreeHouse or
the Company) that will be held at 2015 Spring Road,
Lower Level, Conference Room B, Oak Brook, Illinois 60523,
on Thursday, April 28, 2011 at 9:00 a.m., local time.
Once again, we are pleased to take advantage of the Securities
and Exchange Commission rule allowing companies to furnish proxy
materials to their stockholders over the Internet. We believe
that this
e-proxy
process expedites stockholders receipt of proxy materials,
while also lowering the costs and reducing the environmental
impact of our Annual Meeting. On or about March 2011, we will
mail to our stockholders who have not already requested paper
material, a Notice containing instructions on how to access our
2011 Proxy Statement and annual report and vote online. All
stockholders who have elected to continue to receive paper
material will receive a copy of the Proxy Statement and annual
report by mail. The Proxy Statement contains instructions on how
you can (i) receive a paper copy of the Proxy Statement and
annual report, if you only received a Notice by mail, or
(ii) elect to receive your Proxy Statement and annual
report over the Internet, if you received them by mail this year.
At the Annual Meeting you will be asked to vote on the following
matters:
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1.
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To elect three directors to hold office until the 2014 Annual
Meeting of Stockholders;
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2.
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To ratify the selection of Deloitte & Touche LLP as
our independent registered public accounting firm for fiscal
year 2011;
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3.
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To amend our Restated Certificate of Incorporation to provide
stockholders the right to call special meetings of stockholders;
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4.
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To amend our Restated Certificate of Incorporation to reduce the
stockholder vote required to remove a director for cause;
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5.
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To provide an advisory approval vote on executive compensation;
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6.
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To provide an advisory approval vote on the frequency of future
advisory votes on executive compensation; and
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7.
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To consider any other business that may properly come before the
meeting.
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The matters listed above are fully discussed in the Proxy
Statement accompanying this Notice. A copy of our 2010 Annual
Report is also enclosed.
The record date for the Annual Meeting is March 7, 2011.
Only stockholders of record as of March 7, 2011 are
entitled to notice of and to vote at the Annual Meeting.
Whether or not you attend the Annual Meeting, it is important
that your shares be represented and voted at the meeting.
Therefore, I urge you to promptly vote and submit your proxy by
phone, via the Internet, or by completing, signing, dating and
returning the enclosed proxy card in the enclosed envelope. If
you decide to attend the Annual Meeting, you will be able to
vote in person, even if you have previously submitted your proxy.
Thomas E. ONeill
Corporate Secretary
March , 2011
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 28,
2011
This communication presents only an overview of the more
complete proxy materials that are available to you on the
Internet. We encourage you to access and review all of the
important information contained in the proxy materials before
voting.
Our Proxy Statement and our annual report are available at
http://bnymellon.mobular.net/bnymellon/ths/.
Our Proxy Statement includes information on the following
matters, among other things:
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The date, time and location of the Annual Meeting;
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A list of the matters being submitted to the stockholders for
approval; and
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Information concerning voting in person at the Annual Meeting.
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If you want to receive a paper copy or
e-mail of
these documents, you must request one. There is no charge to you
for requesting a copy. Please make your request for a copy to
BNY Mellon Shareowner Services by telephone at 1-888-313-0164,
by email at shrrelations@bnymellon.com or online at
http://www.proxyvoting.com
or contact the Companys Investor Relations Department
directly at our principal executive office: TreeHouse Foods,
Inc., 2021 Spring Road, Suite 600, Oak Brook, Illinois
60523, telephone
(708) 483-1300.
Please make your request on or before April 16, 2011 to
facilitate timely delivery.
TABLE OF
CONTENTS
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A-1
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iii
TREEHOUSE
FOODS, INC.
2021 SPRING ROAD
SUITE 600
OAK BROOK, ILLINOIS 60523
PROXY STATEMENT
We are furnishing this Proxy Statement in connection with the
solicitation of proxies by the Board of Directors (the
Board) of TreeHouse Foods, Inc.
(TreeHouse or the Company) for use in
voting at the Annual Meeting of Stockholders (the
Meeting). The Meeting will be held at 2015 Spring
Road, Lower Level, Conference Room B, Oak Brook, Illinois
60523, on Thursday, April 28, 2011, at 9:00 a.m.
(Central Time). This Proxy Statement is being sent to
stockholders on or about March 2011.
The solicitation of proxies from the stockholders is being made
by the Board of Directors and management of the Company. The
cost of this solicitation, including the cost of preparing and
making the Proxy Statement, the proxy card, notice of Annual
Meeting and annual report, are all being paid for by the Company.
Who May
Vote
If you are a stockholder of record on March 7, 2011, you
are entitled to vote at the Meeting. As of that date, there were
shares of the Companys common stock (Common
Stock) outstanding, the only class of voting securities
outstanding. You are entitled to one vote for each share of
common stock you own, without cumulation, on each matter to be
voted upon at the Meeting.
How
Proxies Work
Only votes cast in person at the Meeting or received by proxy
before the beginning of the Meeting will be counted at the
Meeting. Giving us your proxy means you authorize us to vote
your shares at the Meeting in the manner you direct. If your
shares are held in your name, you can vote by proxy in three
convenient ways:
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By Internet: Go to
http://www.proxyvoting.com/ths
and follow the instructions.
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By Telephone: Call toll-free 1-866-540-5760
and follow the instructions.
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By Mail: Complete, sign, date and return your
proxy card in the enclosed envelope.
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Telephone and Internet voting facilities for stockholders of
record will be available 24 hours a day and will close at
11:59 p.m. (Central Time) on April 27, 2011.
As permitted by Securities and Exchange Commission
(SEC) rules, TreeHouse is making this Proxy
Statement and its annual report available to its stockholders
electronically via the Internet. On or about March 2011, we will
mail our stockholders a Notice containing instructions on how to
access this Proxy Statement and our annual report and vote
online. If you receive a Notice by mail, you will not receive a
printed copy of the proxy materials in the mail. Instead, the
Notice instructs you on how to access and review all of the
important information contained in the Proxy Statement and
annual report. The Notice also instructs you on how you may
submit your proxy over the Internet. If you receive a Notice by
mail and would like to receive a printed copy of our proxy
materials, you should follow the instructions for requesting
such materials contained in the Notice.
If your proxy is properly returned, the shares it represents
will be voted at the Meeting in accordance with your
instructions. If you execute and return your proxy but do not
give specific instructions, your shares will be voted as follows:
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FOR the election of each of the three nominees for director set
forth herein;
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FOR the ratification of the selection of Deloitte &
Touche LLP as our independent registered public accounting firm
for 2011;
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FOR the amendment of our Restated Certificate of Incorporation
(the Certificate) to provide stockholders the right
to call special meetings of stockholders;
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FOR the amendment of our Certificate to reduce the stockholder
vote required to remove a director for cause;
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FOR the advisory approval of the compensation of the
Companys named executive officers as described in this
Proxy Statement under Compensation Discussion and
Analysis and Executive Compensation;
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FOR the advisory approval of an advisory vote on the
compensation of the Companys named executive officers to
occur every year; and
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with respect to any other matter that may properly come before
the Meeting, at the discretion of the persons voting the
respective proxies.
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The Board does not intend to bring any matters before the
Meeting except those indicated in the Notice. If any other
matters properly come before the Meeting, however, the persons
named in the enclosed proxy, or their duly constituted
substitutes acting at the Meeting, will be authorized to vote or
otherwise act thereon in accordance with their judgment on such
matters.
Shares Held
Through a Bank, Broker or Other Nominee
If you are the beneficial owner of shares held in street
name through a bank, broker or other nominee, such bank,
broker or nominee, as the record holder of the shares, must vote
those shares in accordance with your instructions. If you do not
give instructions to your broker, your broker can vote your
shares with respect to discretionary items but not
with respect to non-discretionary items. On
non-discretionary items, for which you do not give instructions,
the shares will be treated as broker non-votes. A
discretionary item is a proposal that is considered routine
under the rules of the New York Stock Exchange. Shares held in
street name may be voted by your broker on discretionary items
in the absence of voting instructions given by you. The proposal
concerning the ratification of the independent registered public
accounting firm (Proposal 2) is discretionary. Since
2010, brokers are no longer permitted to vote your shares for
the election of directors (Proposal 1), and Proposal 1
is considered non-discretionary. Additionally, all other
proposals to be voted on at the Meeting are non-discretionary.
Quorum
Stockholders of record may vote their proxies by telephone,
internet or mail. By using your proxy to vote in one of these
ways, you authorize the three officers whose names are listed on
the front of the proxy card accompanying this Proxy Statement to
represent you and vote your shares. Holders of a majority of the
shares entitled to vote at the Meeting must be present in person
or represented by proxy to constitute a quorum. Of course, if
you attend the Meeting, you may vote by ballot. If you are not
present, your shares can be voted only when represented by a
properly submitted proxy. Abstentions and broker non-votes (as
described below under the heading Required
Vote) are counted for purposes of determining whether a
quorum is met.
Revoking
a Proxy
Submitting your proxy now will not prevent you from voting your
shares at the Meeting if you desire to do so, as your proxy is
revocable at your option. You may revoke your proxy at any time
before it is voted at the Meeting by:
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delivering to Thomas E. ONeill, our Senior Vice President,
General Counsel, Chief Administrative Officer and Corporate
Secretary, a signed written revocation letter dated later than
the date of your proxy;
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submitting a proxy to the Company with a later date; or
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attending the Meeting and voting in person (your attendance at
the Meeting will not, by itself, revoke your proxy; you must
also vote in person at the Meeting).
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Required
Vote
The election of the nominees for director
(Proposal 1) in an uncontested election will become
effective only upon the affirmative vote of shares of common
stock representing a majority of the votes cast for
or against such nominee. The ratification of the
selection of our independent registered public accounting firm
(Proposal 2), the advisory vote on executive compensation
(Proposal 5) and the approval of any other matter that
may properly come before the Meeting will become effective only
upon the affirmative vote of shares of common stock representing
a majority of the votes cast for or
against such proposal. The amendments of the
Certificate (Proposals 3 and 4) will become effective
only upon the affirmative vote of shares of common stock
representing 75% of the votes entitled to vote at the Meeting.
On the advisory vote on the frequency of the advisory approval
vote on executive compensation (Proposal 6), the frequency
alternative that receives the most votes will be the choice of
stockholders. Votes cast as for or
against are counted as a vote, while votes cast as
abstentions will not be counted as a vote but will be counted
for purposes of determining a quorum. Accordingly, abstentions
will have the effect of a negative vote. So-called broker
non-votes (brokers failing to vote by proxy shares of the
common stock held in nominee name for customers on any
non-discretionary matters) will not be counted as a vote at the
Meeting and will not have a direct impact on any
non-discretionary proposal.
Resignation
Policy
Our Corporate Governance Guidelines utilize a resignation policy
in the election of directors. Accordingly, if an incumbent
director nominee receives a greater number of votes marked
against his or her election than votes marked
for his or her election, that nominee is required to
tender his or her resignation following certification of the
stockholder vote. The Nominating and Corporate Governance
Committee is required to make recommendations to the Board with
respect to any such resignation. The Board is required to take
action with respect to this recommendation and to disclose its
decision-making process.
ELECTION
OF DIRECTORS (PROPOSAL 1)
We have a classified Board consisting of three classes. At each
annual meeting a class of directors is elected for a term of
three years to succeed any directors whose terms are expiring.
We believe this classified board structure is appropriate for
the Company. Given the size of the Company, we may experience
difficulty in identifying and recruiting individuals to serve as
directors. Obtaining a three-year commitment from our directors
assists us in retaining highly qualified directors who have
experience and familiarity with our business and the markets in
which we operate. The Board believes that such long-term
institutional knowledge benefits TreeHouse and enables the Board
to better consider and provide long-term strategic planning.
At the Meeting, you will elect a total of three directors to
hold office, subject to the provisions of the Companys
By-laws, until the annual meeting of stockholders in 2014 and
until their successors are duly elected and qualified. Unless
you indicate otherwise, the shares represented by your proxy
will be voted FOR the election of Ms. Ann M. Sardini and
Messrs Dennis F. OBrien and Sam K. Reed, the nominees set
forth below. The affirmative vote of a majority of the votes
cast is required to elect each director. In other words, the
number of votes for a director must exceed the
number of votes against a director in order to elect
such director. For information regarding our resignation policy,
see Summary of the Annual Meeting Resignation
Policy in this Proxy Statement.
Ms. Sardini and Messrs. OBrien and Reed have
each agreed to be nominated and to serve as a director if
elected. However, if any nominee at the time of his or her
election is unable or unwilling to serve, or is otherwise
unavailable for election, and as a result, another nominee is
designated by the Board, then you or your designee will have
discretion and authority to vote or refrain from voting for such
nominee.
4
Proposal 1
Election of Directors
Election
of Ann M. Sardini
Continuing
in office Term expiring 2014
The Nominating and Corporate Governance Committee and the Board
have recommended Ms. Sardini for nomination for re-election
to the Companys Board. Certain information about
Ms. Sardini is contained below.
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(PHOTO)
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ANN M. SARDINI was elected as a Director on May 1, 2008.
Since April 2002, Ms. Sardini has served as the Chief
Financial Officer of Weight Watchers International, Inc. She
served as Chief Financial Officer of Vitamin Shoppe.com, Inc., a
seller of vitamins and nutritional supplements, from September
1999 to December 2001, and from March 1995 to August 1999 she
served as Executive Vice President and Chief Financial Officer
for the Childrens Television Workshop. In addition, Ms.
Sardini has held finance positions at QVC, Inc., Chris Craft
Industries and the National Broadcasting Company. In addition to
our Board, Ms. Sardini currently serves on or has
previously served on the boards of directors of Weight Watchers
Danone China Co. Ltd. and Venaca Inc. Ms. Sardini holds a
B.A. from Boston College and an M.B.A from Simmons College
Graduate School of Management. Ms. Sardini is Chairman of
the Audit Committee of our Board of Directors. Ms. Sardini has
over 20 years of experience in senior financial management
positions in branded media and consumer products companies. She
provides independent guidance to the Board on a wide variety of
general corporate and strategic matters based on her extensive
executive experience, financial experience as chief financial
officer of a public company, and broad business background.
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Election
of Dennis F. OBrien
Continuing
in office Term expiring 2014
The Nominating and Corporate Governance Committee and the Board
have recommended Mr. OBrien for nomination for
re-election to the Companys Board. Certain information
about Mr. OBrien is contained below.
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(PHOTO)
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DENNIS F. OBRIEN was elected as a Director on
August 6, 2009. Since April 2008, Mr. OBrien has
served as a partner of Gryphon Investors, Inc., a private equity
firm. Prior to joining Gryphon, Mr. OBrien was the Chief
Executive Officer of Penta Water Company, a maker of bottled
water, from April 2007 to April 2008. Mr. OBrien held a
series of executive positions with ConAgra Foods, Inc.,
including President and Chief Operating Officer, Retail Products
from 2004-2006, President and Chief Operating Officer, Grocery
Foods from 2002 through 2004, Executive Vice President, Grocery
Foods from 2001 to 2002 and President, ConAgra Store Brands from
2000 through 2001. In addition, Mr. OBrien previously held
executive and marketing positions at Armstrong World Industries,
Campbells Soup Company, Nestle S.A. and Procter &
Gamble. Mr. OBrien holds a Bachelor of Science degree
in marketing from the University of Connecticut. Mr.
OBrien is a member of the Audit and Nominating and
Corporate Governance Committees of our Board of Directors. Mr.
OBrien provides insight and perspective on strategic,
marketing and food industry matters stemming in part from his
significant food industry experience.
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5
Election
of Sam K. Reed
Continuing
in office Term expiring 2014
The Nominating and Corporate Governance Committee and the Board
have recommended Mr. Reed for nomination for re-election to
the Companys Board. Certain information about
Mr. Reed is contained below.
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(PHOTO)
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SAM K. REED is the Chairman of our Board. Mr. Reed has
served as our Chief Executive Officer since January 27, 2005.
Prior to joining us, Mr. Reed was a principal in TreeHouse LLC,
an entity unrelated to the Company that was formed to pursue
investment opportunities in consumer packaged goods businesses.
From March 2001 to April 2002, Mr. Reed served as Vice Chairman
of Kellogg Company. From January 1996 to March 2001, Mr. Reed
served as the President and Chief Executive Officer, and as a
director of Keebler Foods Company. Prior to joining Keebler, Mr.
Reed served as Chief Executive Officer of Specialty Foods
Corporations (unrelated to Dean Foods) Western Bakery
Group division from 1994 to 1995. Mr. Reed has also served as
President and Chief Executive Officer of Mothers Cake and
Cookie Co. and has held Executive Vice President positions at
Wyndham Bakery Products and Murray Bakery Products. In addition
to our Board, Mr. Reed has previously served on the Board of
Directors of Weight Watchers International, Inc. and Tractor
Supply Company. Mr. Reed holds a B.A. from Rice University and
an M.B.A. from Stanford University. Mr. Reed has led a
transformation of the Company focused on increasing value for
customers and stockholders. With Mr. Reeds broad
experience and deep understanding of the Company and the food
industry, and as Chief Executive Officer, he provides leadership
and industry experience to the Board and to the Company.
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RECOMMENDATION:
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF ALL
DIRECTOR NOMINEES TO SERVE ON THE COMPANYS BOARD
6
RATIFICATION
OF THE SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM (PROPOSAL 2)
Deloitte & Touche LLP audited our financial statements
for fiscal year 2010 and has been selected by the Audit
Committee of our Board to audit our financial statements for
fiscal year 2011. A representative of Deloitte &
Touche LLP will attend our annual meeting, where he or she will
have the opportunity to make a statement, if he or she desires,
and will be available to respond to appropriate stockholder
questions.
Stockholder ratification of the selection of
Deloitte & Touche LLP is not required by our By-laws.
However, our Board is submitting the selection of
Deloitte & Touche LLP to you for ratification as a
matter of good corporate practice. If our stockholders fail to
ratify the selection, our Audit Committee will reconsider
whether or not to retain Deloitte & Touche LLP. Even
if the selection is ratified, the Audit Committee in its
discretion may direct the appointment of a different independent
registered public accounting firm if they determine such a
change would be in the best interests of the Company and our
stockholders.
The affirmative vote of a majority of the votes cast is required
to approve this Proposal 2.
For information regarding audit and other fees billed by
Deloitte & Touche LLP for services rendered in fiscal
years 2009 and 2010, see Fees Billed by Independent
Registered Public Accounting Firm in this Proxy Statement.
RECOMMENDATION:
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE
RATIFICATION OF THE SELECTION OF OUR INDEPENDENT REGISTERED
PUBLIC
ACCOUNTING FIRM
CORPORATE
GOVERNANCE
Current
Board Members
The members of the Board on the date of this Proxy Statement,
and the committees of the Board on which they serve, are
identified below.
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Nominating
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and Corporate
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Compensation
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Audit
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Governance
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Director
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Committee
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Committee
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Committee
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Sam K. Reed
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George V. Bayly
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*
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*
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Diana S. Ferguson
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*
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*
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Dennis F. OBrien
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*
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*
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Frank J. OConnell
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**
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Ann M. Sardini
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**
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Gary D. Smith
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*
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Terdema L. Ussery, II
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**
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*
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David B. Vermylen
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Corporate
Governance Guidelines and Code of Ethics
We are committed to the highest standards of business integrity
and corporate governance. All of our directors, executives and
employees must act ethically and in accordance with our Code of
Ethics. All of the Companys corporate governance
materials, including the Corporate Governance Guidelines,
committee charters and the Code of Ethics are published on the
Companys website at www.treehousefoods.com in the
investor relations information
7
section and are also available upon request from the Corporate
Secretary. The Board regularly reviews corporate governance
developments and modifies the Companys corporate
governance materials as warranted. We will post any
modifications of our corporate governance materials on our
Companys website.
Director
Independence
The New York Stock Exchange listing rules require that a
majority of the Companys directors be independent. The
Board determined that (i) Messrs. Bayly, OBrien,
OConnell, Smith and Ussery and Ms. Ferguson and
Ms. Sardini have no direct or indirect material
relationships with management, and that they satisfy the New
York Stock Exchanges independence guidelines and are
independent and (ii) that Messrs. Reed and Vermylen
are not independent.
All members of our Audit, Compensation and Nominating and
Corporate Governance Committees are independent directors. The
Board has determined that all of the members of our Audit
Committee also satisfy the additional SEC independence
requirement, which provides that they may not accept directly or
indirectly any consulting, advisory or other compensatory fee
from the Company or any of its subsidiaries other than their
directors compensation. The portion of the Corporate
Governance Guidelines addressing director independence is
attached to this Proxy Statement as Appendix A.
Nomination
of Directors
The Board is responsible for approving candidates for Board
membership and has delegated the process of screening and
recruiting potential director nominees to the Nominating and
Corporate Governance Committee in consultation with the Chairman
of the Board and Chief Executive Officer. The Nominating and
Corporate Governance Committee seeks candidates who have a
reputation for integrity, honesty and adherence to high ethical
standards and who have demonstrated business acumen, experience
and ability to exercise sound judgment in matters that relate to
the current and long-term objectives of the Company. The
Nominating and Corporate Governance Committee considers
diversity as one of a number of factors in identifying nominees
for director. The Committee views diversity broadly to include
diversity of experience, skills and viewpoint as well as
traditional diversity concepts such as race and gender. When the
Committee reviews a candidate for Board membership, the
Committee looks specifically at the candidates background
and qualifications in light of the needs of the Board and the
Company at that time, given the then-current composition of the
Board. The aim is to assemble a Board that provides a
significant breadth of experience, knowledge and abilities that
assist the Board in fulfilling its responsibilities. The members
of the Board hold or have held senior executive positions in
large, complex organizations and have operating experience that
meets this objective. In these positions, they have also gained
experience in core management skills, such as strategic and
financial planning, public company financial reporting,
compliance, risk management and leadership development. Each of
our directors also has experience serving on boards of directors
and board committees of other public companies and has an
understanding of corporate governance practices and trends.
The Nominating and Corporate Governance Committee receives
suggestions for new directors from a number of sources,
including Board members. It also may, in its discretion, employ
a third party search firm to assist in identifying candidates
for director.
BOARD
LEADERSHIP STRUCTURE
Board
Chairman and CEO Roles
The Board has determined that the appropriate leadership
structure for the Board at this time is for Mr. Reed, our
Chief Executive Officer, to serve as Chairman of the Board,
while also selecting an independent, non-management director to
serve as a lead director (Lead Independent Director)
to provide independent leadership. Mr. Reed possesses
detailed and in-depth knowledge of the issues, opportunities and
challenges facing the Company and its businesses and is thus
best positioned to develop agendas that ensure that the
Boards time and attention are focused on the most critical
matters.
8
His combined role enables decisive leadership, ensures clear
accountability, and enhances the Companys ability to
communicate its message and strategy clearly and consistently to
the Companys stockholders, employees, customers and
suppliers, particularly during times of turbulent economic and
industry conditions.
With the exception of Messrs. Reed and Vermylen, each of
the directors is independent and the Board believes that the
independent directors provide effective oversight of management.
We do not have a formal policy that requires the Chief Executive
Officer or any other member of management to serve as Chairman
of the Board and the Board, in its discretion may subsequently
decide, to change our leadership structure.
Lead
Independent Director
The Company has chosen to combine the Chairman and Chief
Executive Officer roles, and as a result the Board appointed the
Lead Independent Director to coordinate the activities of the
other non-management directors, and to perform such other duties
and responsibilities as the Board may from
time-to-time
determine.
Currently, the Lead Independent Director is Gary D. Smith.
Mr. Smith has over 40 years of relevant experience
including senior management roles with Safeway Inc. The role of
the Lead Independent Director includes:
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Conducting and presiding at executive sessions of the Board;
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Serving as a liaison to and acting as a regular communication
channel between the non-employee members of the Board and the
Chief Executive Officer of the Company;
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In the event of the unavailability or incapacity of the Chairman
of the Board, calling and conducting special meetings of the
Board; and
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Consulting with the Chairman and Chief Executive Officer about
the concerns of the Board.
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While serving as Lead Independent Director, Mr. Smith has
followed governance practices established by the Board that
support effective communication and effective Board performance.
The Lead Independent Director role fosters a Board culture of
open discussion and deliberation, with thoughtful evaluation of
risk, to support sound decision-making.
In addition, our directors undergo an annual Board
self-evaluation to determine whether it and its committees are
functioning effectively. As part of the self-evaluation process,
directors provide feedback evaluating Board effectiveness and
committee effectiveness on multiple criteria. The Nominating and
Corporate Governance Committee receives comments from all
directors and reports annually to the Board with an assessment
of the Boards performance. Each committee also conducts a
self evaluation and reports its assessment of effectiveness to
the Board. The assessments are discussed with the full Board
each year.
Determination
That Current Board Leadership Structure is Appropriate
The Board has determined that the current Board Leadership
Structure is appropriate for TreeHouse for the following reasons:
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The current structure is working well and the Lead Independent
Director is highly effective in his role;
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There is strong evidence that the Board is acting independently;
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There are effectiveness and efficiency advantages of having a
Chairman of the Board with the Chief Executive Officers
significant food industry strategy, marketing, and operations
knowledge and experience;
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The Board has open discussions and thoughtful deliberations,
especially in the evaluation of risk and in support of sound
decision-making;
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The current size, food industry focus, and relatively
straightforward organization structure of the Company allows
these roles to be effectively combined; and
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The non-management directors meet regularly in private sessions
to discuss issues regarding the Company.
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9
The
Boards Role in Risk Oversight
Together with the Boards standing committees, the Board is
responsible for ensuring that material risks are identified and
managed appropriately. The Board and its committees regularly
review material operational, financial, compensation and
compliance risks with senior management. As part of its
responsibilities as set forth in its charter, the Audit
Committee is responsible for discussing with management the
Companys policies and guidelines to govern the process by
which risk assessment and risk management are undertaken by
management, including guidelines and policies to identify the
Companys major financial risk exposures, and the steps
management has taken to monitor and control such exposures. For
example, our Vice President of Internal Audit reports to the
Audit Committee on a regular basis with respect to compliance
with our risk management policies. The Audit Committee also
performs a central oversight role with respect to financial and
compliance risks, and reports on its findings at each regularly
scheduled meeting of the Board after meeting with our Vice
President of Internal Audit and our independent auditor,
Deloitte & Touche LLP. The Compensation Committee
considers risk in connection with its design of compensation
programs for our executives. The Nominating and Corporate
Governance Committee annually reviews the Companys
corporate governance guidelines and their implementation. Each
committee regularly reports to the Board.
Meetings
of the Board of Directors
The Board met six times during 2010. Each of the members of the
Board participated in over 90% of the meetings of the Board and
committees that took place while such person was a member of the
Board and the applicable committee. Members of the Board are
expected to attend each meeting, as set forth in the
Companys Corporate Governance Guidelines, and
substantially all of the members of the Board participated in
100% of the Board and committee meetings during 2010. It is the
Boards policy that all of our directors attend the Annual
Meeting of Stockholders absent exceptional cause. All of our
directors attended the Annual Meeting of Stockholders in 2010.
The non-management directors of the Company meet regularly (at
least quarterly) in executive session of the Board without
management present. The Lead Independent Director presides over
non-management sessions.
The Board has established standing Audit, Compensation, and
Nominating and Corporate Governance Committees. The Board
determines the membership of each of these committees from time
to time, and only outside directors have served on these
committees.
COMMITTEE
MEETINGS/ROLE OF COMMITTEES
Audit Committee: The Audit Committee held six
meetings during 2010. The Audit Committee presently consists of
Ms. Sardini, Ms. Ferguson and
Messrs. OBrien and Ussery. The Audit Committee is
composed entirely of independent directors (in accordance with
the New York Stock Exchange listing standards and SEC rules). In
addition, the Board has determined that Ms. Ferguson,
Ms. Sardini and Messrs. OBrien and Ussery are
each qualified as an audit committee financial expert within the
meaning of SEC regulations, and the Board has determined that
each of them has accounting and related financial management
expertise within the meaning of the listing standards of the New
York Stock Exchange. The Audit Committee reviews and approves
the scope and cost of all audit services (including non-audit
services) provided by the firm selected to conduct the audit.
The Audit Committee also monitors the effectiveness of the audit
effort and financial reporting, and inquires into the adequacy
of financial and operating controls. The report of the Audit
Committee is set forth later in this Proxy Statement.
Nominating and Corporate Governance
Committee: The Nominating and Corporate
Governance Committee held three meetings in 2010. The Nominating
and Corporate Governance Committee presently consists of
Messrs. Bayly, OConnell and OBrien. The
Nominating and Corporate Governance Committee is composed
entirely of independent directors and operates pursuant to a
written charter. The purposes of the Nominating and Corporate
Governance Committee are (i) to identify individuals
qualified to become members of the Board, (ii) to recommend
to the Board the persons to be nominated for election as
directors at any meeting of the stockholders, (iii) in the
event of a vacancy on or increase in the size of the Board, to
recommend to the Board the persons to be nominated to fill such
vacancy or additional Board seat, (iv) to recommend to the
Board the persons to be nominated for each committee of the
Board, (v) to develop and recommend to the Board a set of
corporate governance
10
guidelines applicable to the Company, including the
Companys Code of Ethics, and (vi) to oversee the
evaluation of the Board. The Nominating and Corporate Governance
Committee will consider nominees who are recommended by
stockholders, provided such recommendations are made in
accordance with the nominating procedures set forth in the
Companys By-laws. The report of the Nominating and
Corporate Governance Committee is set forth later in this Proxy
Statement.
Compensation Committee: The Compensation
Committee held seven meetings in 2010. The Compensation
Committee presently consists of Ms. Ferguson and
Messrs. Bayly, Smith and Ussery. The Compensation Committee
is composed entirely of independent directors. The Compensation
Committee reviews and approves salaries and other matters
relating to compensation of the senior officers of the Company,
including the administration of the TreeHouse Foods, Inc. Equity
and Incentive Plan. The Compensation Committee also reviews the
Companys general compensation and benefit policies and
programs, administers the Companys 401(k) plan, and
recommends director compensation programs to the Board. The
report of the Compensation Committee is set forth later in this
Proxy Statement.
Role of
Compensation Consultants
Committee
Consultant
Beginning in 2005, the Compensation Committee engaged an outside
independent executive compensation consultant, Hewitt Associates
(Hewitt) for advice and counsel regarding executive
compensation matters. In January 2010, Hewitt effected a
reorganization of its business by spinning-off Meridian
Compensation Partners LLC (Meridian) as a separate,
independent executive compensation consulting business. After
reviewing relevant credentials, in February 2010, the
Compensation Committee elected to engage Meridian as the
Compensation Committees on-going independent executive
compensation consultant. Meridian does not provide any
consulting services to the Company other than the services
provided directly to the Compensation Committee. Meridian
provides a review of the competitiveness and appropriateness of
all elements of compensation for the Chief Executive Officer,
Chief Financial Officer and three most highly compensated
executive officers of the Company other than the Chief Executive
Officer (collectively, the Named Executive Officers
or NEOs) and advice on new and existing executive
compensation programs and other related matters. Meridian is the
exclusive consultant to the Compensation Committee regarding
executive compensation matters and Hewitt will continue to
provide actuarial and broad-based employee compensation and
other non-executive compensation consultation to the management
of the Company.
At the Compensation Committees direction, management
provides all executive compensation materials to the independent
consultant and discusses all such materials and recommendations
with the independent consultant. The independent consultant
considers the information and provides independent data to the
Compensation Committee to facilitate its decision-making
process. The independent consultant regularly meets with the
Compensation Committee in executive session without members of
management present.
Management
Consultant
Since 2005, management has retained Hewitt to provide consulting
services regarding the review and design of executive
compensation plans (base salary, annual incentive, and long-term
incentive plans), competitive assessments of executive officers
compensation, general executive compensation practices and
issues, broad-based employee compensation practices and pension
administration and actuarial services. In the future, Hewitt
will continue to work with Company management regarding broad
based employee compensation, pension administration and
actuarial services, but will not consult with regard to
executive compensation matters.
Fees for
Compensation Committee and Management Consultant
In 2010, management and the Compensation Committee engaged
Hewitt and Meridian to provide both executive and broad-based
compensation consulting services that totaled $103,000.
Effective February 2010, the Compensation Committee engaged a
separate compensation consulting firm, Meridian, to provide the
types of executive compensation consulting services that Hewitt
provided in the past.
11
Hewitt provided the Company with pension and actuarial services
worth approximately $271,000. Management has recommended to the
Compensation Committee that Hewitt continue to provide the
Company with broad-based employee compensation consulting as
well as pension administration and actuarial services. The
Compensation Committee was informed of the decision to use
Hewitt to provide these services. Additionally, In 2011, Hewitt
will continue to provide pension services for the Company.
STOCK
OWNERSHIP
Holdings
of Management
The executive officers and directors of the Company own shares,
and exercisable rights to acquire shares, representing an
aggregate of 2,576,897 shares of Common Stock or
approximately 7.2% of the outstanding shares of Common Stock
(see Security Ownership of Certain Beneficial Owners and
Management). Such officers and directors have indicated an
intention to vote in favor of each Proposal.
Security
Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of the close of business on
February 18, 2011, certain information with respect to the
beneficial ownership of common stock beneficially owned by
(i) each director of the Company, (ii) the NEOs,
(iii) all executive officers and directors as a group and
(iv) each stockholder who is known to the Company to be the
beneficial owner, as defined in
Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the
Exchange Act), of more than 5% of the outstanding
Common Stock. Each of the persons listed below has sole voting
and investment power with respect to such shares, unless
otherwise indicated. The address of the directors and officers
listed below is
c/o TreeHouse
Foods, Inc., 2021 Spring Road, Suite 600, Oak Brook,
Illinois 60523.
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Common Stock
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Percent of
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Name of Beneficial Owner
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Beneficially Owned
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Class(1)
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Directors and Named Officers:
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Sam K. Reed
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982,904
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(2)
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2.8
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%
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George V. Bayly
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30,299
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(3)
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*
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Diana S. Ferguson
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11,100
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(4)
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*
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Dennis F. OBrien
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3,500
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(5)
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*
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Frank J. OConnell
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30,099
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(6)
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*
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Ann M. Sardini
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8,467
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(7)
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*
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Gary D. Smith
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31,099
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(8)
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*
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Terdema L. Ussery, II
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30,099
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(9)
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*
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David B. Vermylen
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457,737
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(10)
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1.3
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%
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Dennis F. Riordan
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171,668
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(11)
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*
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Thomas E. ONeill
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355,035
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(12)
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1.0
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%
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Harry J. Walsh
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335,486
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(13)
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*
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All directors and executive officers as a group (15 persons)
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2,576,897
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7.2
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%
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Principal Stockholders:
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BlackRock, Inc.
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2,732,578
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(14)
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7.6
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%
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FMR LLC
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5,224,078
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(15)
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14.6
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%
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Except as otherwise noted, the directors and executive officers,
and all directors and executive officers as a group, have sole
voting power and sole investment power over the shares listed.
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(1) |
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An asterisk indicates that the percentage of common stock
projected to be beneficially owned by the named individual does
not exceed one percent of our common stock outstanding at
February 18, 2011. |
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(2) |
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Includes 486,911 shares of Common Stock issued under
options currently exercisable within 60 days of
February 18, 2011 and 495,993 shares jointly held in
family trusts. |
12
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(3) |
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Includes 22,499 shares of Common Stock issued under options
currently exercisable within 60 days of February 18,
2011 and 7,600 vested restricted stock units, deferred until
termination of service from the Board. |
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(4) |
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Includes 3,500 shares of Common Stock issued under options
currently exercisable within 60 days of February 18,
2011 and 3,900 vested restricted stock units, deferred until
termination of service from the Board. |
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(5) |
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Includes 3,500 vested restricted stock units, deferred until
termination of service from the Board. |
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(6) |
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Includes 22,499 shares of Common Stock issued under options
currently exercisable within 60 days of February 18,
2011 and 7,600 vested restricted stock units, deferred until
termination of service from the Board. |
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(7) |
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Includes 867 shares of Common Stock issued under options
currently exercisable within 60 days of February 18,
2011 and 7,600 vested restricted stock units, deferred until
termination of service from the Board. |
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(8) |
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Includes 22,499 shares of Common Stock issued under options
currently exercisable within 60 days of February 18,
2011 and 7,600 vested restricted stock units, deferred until
termination of service from the Board and 1,000 shares held
jointly in a family trust. |
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(9) |
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Includes 22,499 shares of Common Stock issued under options
currently exercisable within 60 days of February 18,
2011 and 7,600 vested restricted stock units, deferred until
termination of service from the Board. |
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(10) |
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Includes 307,985 shares of Common Stock issued under
options currently exercisable within 60 days of
February 18, 2011 and 60,671 shares jointly held in a
family trust. |
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(11) |
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Includes 164,100 shares of Common Stock issued under
options currently exercisable within 60 days of
February 18, 2011. |
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(12) |
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Includes 210,601 shares of Common Stock issued under
options currently exercisable within 60 days of
February 18, 2011. |
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(13) |
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Includes 210,601 shares of Common Stock issued under
options currently exercisable within 60 days of
February 18, 2011. |
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(14) |
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We have been informed pursuant to the Schedule 13G filed
with the SEC on February 9, 2011 that (i) BlackRock,
Inc. may be deemed to beneficially own 2,732,578 shares of
our Common Stock; (ii) BlackRock, Inc. has (A) sole
voting power as to 2,732,578 shares and (B) sole
dispositive power as 2,732,578 shares; (iii) the
principal business address of BlackRock, Inc. is 40 East 52nd
Street, New York, NY 10022. |
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(15) |
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We have been informed pursuant to the Schedule 13G filed
with the SEC on February 14, 2011 by FMR LLC
(FMR), that (i) Fidelity Management &
Research Company, a wholly owned subsidiary of FMR and a
registered investment adviser, is the beneficial owner of
5,224,078 shares of our Common Stock as a result of acting
as investment adviser to various investment companies registered
under Section 8 of the Investment Company Act of 1940;
(ii) the ownership of one investment company, Fidelity
Contrafund, amounted to 3,408,796 shares of our Common
Stock; (iii) neither FMR nor Edward C. Johnson 3d in his
capacity as Chairman of FMR have sole voting power over any of
the shares owned directly by Fidelity Contrafund; and
(iv) Edward C. Johnson 3d. and FMR have sole dispositive
power as to 5,224,078 shares. The principal business
address of FMR and Fidelity Contrafund is 82 Devonshire Street,
Boston, Massachusetts 02109. |
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the
Companys executive officers and directors and persons who
own more than ten percent of a registered class of the
Companys equity securities (collectively, the
reporting persons) to file reports of ownership and
changes in ownership with the SEC and to furnish the Company
with copies of these reports. Based on the Companys review
of the copies of these reports received by it, and written
representations, if any, received from reporting persons with
respect to such filings, except that a sale of Common Stock by
Gary D. Smith on November 22, 2010 was inadvertently
reported late on a Form 4 filed on December 7, 2010.
13
DIRECTORS
AND MANAGEMENT
Directors
and Executive Officers
The following table sets forth the names and ages of the
Companys directors and executive officers. In addition,
biographies of Companys directors and officers are also
provided below, with the exception of Ms. Sardini and
Messrs. OBrien and Reed, whose biographies are set
forth in Election of Directors Proposal 1 in
this Proxy Statement.
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Name
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Age
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Position
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Sam K. Reed
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64
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Chief Executive Officer and Chairman of the Board
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George V. Bayly
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68
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(b)
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Director
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Diana S. Ferguson
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47
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(b)
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Director
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Dennis F. OBrien
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53
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Director
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Frank J. OConnell
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67
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(a)
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Director
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Ann M. Sardini
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61
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Director
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Gary D. Smith
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68
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(b)
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Director
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Terdema L. Ussery, II
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52
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(a)
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Director
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David B. Vermylen
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60
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(a)
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Director, President and Chief Operating Officer
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Dennis F. Riordan
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53
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Senior Vice President and Chief Financial Officer
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Thomas E. ONeill
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56
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|
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Senior Vice President, General Counsel, Chief Administrative
Officer and Corporate Secretary
|
Harry J. Walsh
|
|
|
55
|
|
|
Senior Vice President of TreeHouse Foods, Inc. and President of
Bay Valley Foods, LLC
|
Alan T. Gambrel
|
|
|
56
|
|
|
Senior Vice President of TreeHouse Foods, Inc. and Senior Vice
President and Chief Administrative Officer of Bay Valley Foods,
LLC.
|
Erik T. Kahler
|
|
|
44
|
|
|
Senior Vice President, Corporate Development
|
Sharon M. Flanagan
|
|
|
45
|
|
|
Senior Vice President, Strategy, TreeHouse Foods, Inc. and Bay
Valley Foods, LLC.
|
|
|
|
(a) |
|
Messrs. OConnell, Ussery and Vermylen comprise a
class of directors whose terms expire in 2012. |
|
(b) |
|
Ms. Ferguson and Messrs. Bayly and Smith comprise a
class of directors whose terms expire in 2013. |
14
Directors
|
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(PHOTO)
|
|
GEORGE V. BAYLY was elected as a Director on June 6,
2005. Since August 12, 2008, Mr. Bayly has served as
principal of Whitehall Investors, LLC, a consulting and venture
capital firm. Mr. Bayly served as Chairman and Interim-Chief
Executive Officer of Altivity Packaging LLC, a maker of consumer
packaging products and services, from September 2006 to March
2008. He also served as Co-Chairman of U.S. Can Corporation from
2003 to 2006 and Chief Executive Officer in 2005. In addition,
from January 1991 to December 2002, Mr. Bayly served as
Chairman, President and Chief Executive Officer of Ivex
Packaging Corporation. From 1987 to 1991, Mr. Bayly served as
Chairman, President and Chief Executive Officer of Olympic
Packaging, Inc. Mr. Bayly also held various management
positions with Packaging Corporation of America from 1973 to
1987. Prior to joining Packaging Corporation of America,
Mr. Bayly served as a Lieutenant Commander in the United
States Navy. In addition to our Board, Mr. Bayly currently
serves on, or has previously served on, the boards of directors
of ACCO Brands Corporation, Graphic Packaging Holding Company,
Huhtamaki Oyj and Ryt-Way Industries Inc., General Binding
Corporation, Packaging Dynamics, Inc., U.S. Can Corporation and
Altivity Packaging LLC. Mr. Bayly holds a B.S. from Miami
University and an M.B.A from Northwestern University. Mr. Bayly
is a member of the Compensation and Nominating and Corporate
Governance Committees of our Board. As a former executive of
numerous large companies and a principal of a consulting and
venture capital firm, Mr. Bayly has a broad understanding of the
operational, financial and strategic issues facing public and
private companies. This experience gives him valuable knowledge
and perspective as a member of our Board and the Compensation
and Nominating and Corporate Governance Committees.
|
|
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|
|
(PHOTO)
|
|
DIANA S. FERGUSON was elected as a Director on January
25, 2008. Since February 2010, Ms. Ferguson has served as Chief
Financial Officer of Chicago Public Schools. Previously, Ms.
Ferguson served as Senior Vice President and Chief Financial
Officer of The Folgers Coffee Company, a maker of coffee
products, from April 2008 to November 2008. Prior to joining
Folgers, Ms. Ferguson served as the Executive Vice President and
Chief Financial Officer of Merisant Worldwide, Inc., a maker of
table-top sweeteners and sweetened food products from April 2007
until March 2008. On January 6, 2009, Merisant Worldwide, Inc.
filed for reorganization under Chapter 11 of the U.S. Bankruptcy
Laws. Ms. Ferguson also served as the Chief Financial Officer of
Sara Lee Foodservice, a division of Sara Lee Corporation from
June 2006 to March 2007. She had previously served in a number
of leadership positions at Sara Lee Corporation including Senior
Vice President of Strategy and Corporate Development from
February 2005 to June 2006, as well as Treasurer from January
2001 to February 2005. Earlier, she held treasury management
positions at Fort James Corporation, from 2000 to 2001 and
Eaton Corporation from 1995 to 2000, she also served in various
financial positions at Federal National Mortgage Association
(Fannie Mae) from 1993 to 1995, the First National Bank of
Chicago from 1989 to 1993 and IBM from 1985 to 1989. In addition
to our Board, Ms. Ferguson has previously served on the
board of directors of Integrys Energy Group. Ms. Ferguson holds
a B.A. from Yale University and a Masters degree from
Northwestern University. Ms. Ferguson is a member of the Audit
and Compensation Committees of our Board. Ms. Ferguson has
significant finance, acquisitions and food industry expertise as
evidenced by her leadership roles at Folgers and Sara Lee
Corporation. Given her expertise and financial acumen, Ms.
Ferguson has proven to be an important contributor to Board
deliberations on financial, corporate and strategic matters.
|
|
15
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|
|
(PHOTO)
|
|
FRANK J. OCONNELL was elected as a Director on June
6, 2005. Since June 2004, Mr. OConnell has served as
a senior partner of The Parthenon Group, a consulting firm. From
November 2000 to June 2002, Mr. OConnell served as
President and Chief Executive Officer of Indian Motorcycle
Corporation. From June 2002 to May 2004, Mr. OConnell
served as Chairman of Indian Motorcycle Corporation. Indian
Motorcycle Corporation was liquidated under applicable
California statutory procedures in January 2005. From 1996 to
2000, Mr. OConnell served as Chairman, President and
Chief Executive Officer of Gibson Greetings, Inc. From 1991 to
1995, Mr. OConnell served as President and Chief Operating
Officer of Skybox International. Mr. OConnell has
previously served as President of Reebok Brands, North America,
President of HBO Video and Senior Vice President of
Mattels Electronics Division. Mr. OConnell holds a
B.A. and an M.B.A. from Cornell University. Mr. OConnell
is the Chairman of the Nominating and Corporate Governance
Committee of our Board. As an experienced financial and
operational leader with companies in a variety of industries,
Mr. OConnell brings a broad understanding of the operating
priorities across diverse industries to the Board.
Mr. OConnells strategic consulting experience
has contributed significantly to our strategic acquisition
approach and extensive due diligence of food industry sectors
and target companies.
|
|
|
|
|
(PHOTO)
|
|
GARY D. SMITH was elected as a Director on June 6, 2005.
Since January 2001, Mr. Smith has served as Chief Executive
Officer and Chairman of Encore Associates, Inc., a consulting
firm specializing in serving the national food and retail goods
sectors, and since 2005 he has been a Managing Director of
Encore Consumer Capital. From April 1995 to December 2004, Mr.
Smith served as Senior Vice President Marketing of
Safeway Inc. In addition, Mr. Smith held various management
positions at Safeway Inc. from 1961 to 1995. In addition to our
Board, Mr. Smith currently serves on or has previously served on
the boards of directors of AgriWise, Inc., Altierre Corporation,
Phillys Famous Water Ice, Inc., the Winery Exchange, Inc.,
and Aidells Sausage Company, Inc. Mr. Smith is an experienced
business leader with skills that make him a valuable asset in
his role as our Lead Independent Director and as a member of the
Compensation Committee of our Board. Mr. Smiths deep
understanding of the grocery channel and experience as an
acquirer and investor in businesses adds significantly to
acquisitions and customer insight.
|
|
|
|
|
(PHOTO)
|
|
TERDEMA L. USSERY, II was elected as a Director on
June 6, 2005. Since April 1997, Mr. Ussery has served as
the President and Chief Executive Officer of the Dallas
Mavericks, a professional basketball team. Since September 2001,
Mr. Ussery has also served as Chief Executive Officer of HDNet,
a provider of high definition television programming, From 1993
to 1996, Mr. Ussery served as the President of Nike Sports
Management. From 1991 to 1993, Mr. Ussery served as Commissioner
of the Continental Basketball Association (the CBA).
Prior to becoming Commissioner, Mr. Ussery served as Deputy
Commissioner and General Counsel of the CBA from 1990 to 1991.
From 1987 to 1990, Mr. Ussery was an attorney at Morrison &
Foerster LLP. In addition to our Board, Mr. Ussery currently
serves on, or has previously served on, the boards of directors
of The Timberland Company and Entrust, Inc. He also serves on
the Advisory Board of Wingate Partners, LP and as Chairman of
the Board of Commissioners of the Dallas Housing Authority. Mr.
Ussery holds a B.A. from Princeton University, an M.P.A. from
Harvard University and a J.D. from the University of California
at Berkeley. Mr. Ussery is the Chairman of our Compensation
Committee and he is a member of the Audit Committee of our
Board. As the President and CEO of the Dallas Mavericks and the
CEO of HDNet, Mr. Ussery brings operating, management
experience, leadership capabilities, financial knowledge and
business acumen to the Board. Mr. Usserys experience on
other boards adds significantly to governance, compensation and
public relations matters.
|
|
16
|
|
|
(PHOTO)
|
|
DAVID B. VERMYLEN was elected as a Director on August 6,
2009. Mr. Vermylen is our President and Chief Operating Officer
and has served in that position since January 27, 2005. Prior to
joining us, Mr. Vermylen was a principal in TreeHouse, LLC. From
March 2001 to October 2002, Mr. Vermylen served as President and
Chief Executive Officer of Keebler Foods Company, a division of
Kellogg Company. Prior to becoming Chief Executive Officer of
Keebler, Mr. Vermylen served as the President of Keebler Brands
from January 1996 to February 2001. Mr. Vermylen has also served
as the Chairman, President and Chief Executive Officer of
Brothers Gourmet Coffee, and Vice President of Marketing
and Development and later President and Chief Executive Officer
of Mothers Cake and Cookie Co. His prior experience also
includes three years with the Fobes Group and fourteen years
with General Foods Corporation where he served in various
marketing positions. In addition to our Board, Mr. Vermylen
currently serves on or has previously served on the boards of
directors of Aeropostale, Inc. and Birds Eye Foods, Inc. Mr.
Vermylen holds a B.A. from Georgetown University and an M.B.A.
from New York University. Mr. Vermylen is one of the
Companys newest directors and has proven to be a strong
addition to the Board. Mr. Vermylen has a deep understanding of
the Company and he brings insight and knowledge from his
executive experience at other companies in the food industry and
service on public company boards.
|
|
Executive
Officers
Dennis F. Riordan is our Senior Vice President and Chief
Financial Officer and has served in that position since
January 3, 2006. Prior to joining us, Mr. Riordan was
Senior Vice President and Chief Financial Officer of
Océ-USA Holding, Inc., a manufacturer of printers and
printing supplies and services, where he was responsible for the
companys financial activities in North America.
Mr. Riordan joined Océ-USA, Inc. in 1997 as Vice
President and Chief Financial Officer and was elevated to Chief
Financial Officer of Océ-USA Holding, Inc. in 1999. In
2004, Mr. Riordan was named Senior Vice President and Chief
Financial Officer and assumed the chairmanship of the
companys wholly owned subsidiaries Arkwright, Inc. and
Océ Mexico de S.A. Previously, Mr. Riordan held
positions with Sunbeam Corporation, Wilson Sporting Goods and
Coopers & Lybrand. Mr. Riordan has also served on
the boards of directors of Océ-USA Holdings, Océ North
America, Océ Business Services, Inc. and Arkwright, Inc.,
all of which are wholly owned subsidiaries of Océ NV.
Mr. Riordan is a Certified Public Accountant and holds a
B.A. from Cleveland State University.
Thomas E. ONeill is our Senior Vice President,
General Counsel, Chief Administrative Officer and Corporate
Secretary and has served in those positions since
January 27, 2005. Prior to joining us,
Mr. ONeill was a principal in TreeHouse, LLC. From
February 2000 to March 2001, he served as Senior Vice President,
Secretary and General Counsel of Keebler Foods Company. He
previously served at Keebler as Vice President, Secretary and
General Counsel from December 1996 to February 2000. Prior to
joining Keebler, Mr. ONeill served as Vice President
and Division Counsel for the Worldwide Beverage Division of
the Quaker Oats Company from December 1994 to December 1996;
Vice President and Division Counsel of the Gatorade
Worldwide Division of the Quaker Oats Company from 1991 to 1994;
and Corporate Counsel at Quaker Oats from 1985 to 1991. Prior to
joining Quaker Oats, Mr. ONeill was an attorney at
Winston & Strawn LLP. In 1991, Mr. ONeill
completed the Program for Management Development (PMD) at
Harvard Business School. Mr. ONeill holds a B.A. and
J.D. from the University of Notre Dame.
Harry J. Walsh is a Senior Vice President of TreeHouse
Foods, Inc. and President of Bay Valley Foods, LLC (Bay
Valley Foods) and has served in these positions since
July 24, 2008. TreeHouse is the parent company of Bay
Valley Foods. From January 2005 through July 2008,
Mr. Walsh served in the position of Senior Vice
President Operations of TreeHouse Foods. Prior to
joining us, Mr. Walsh was a principal in TreeHouse, LLC.
From June 1996 to October 2002, Mr. Walsh served as Senior
Vice President of the Specialty Products Division of Keebler
Foods Company. Mr. Walsh was President and Chief Operations
Officer of Bake-Line Products from March 1999 to February 2001;
Vice President-Logistics and Supply Chain Management from April
1997 to February 1999; Vice President-Corporate Planning and
Development from January 1997 to April 1997; and Chief Operating
Officer of Sunshine Biscuits from June 1996 to December 1996.
Prior to joining Keebler, Mr. Walsh served as Vice
President of G.F. Industries, Inc. and President and Chief
Operating Officer and Chief Financial Officer for Granny Goose
17
Foods, Inc. Prior to entering the food industry, Mr. Walsh
was an accountant with Arthur Andersen & Co.
Mr. Walsh holds a B.A. from the University of Notre Dame.
Alan T. Gambrel is our Senior Vice President
Human Resources for TreeHouse Foods, Inc. and, since July 2008,
Senior Vice President and Chief Administrative Officer for Bay
Valley Foods, LLC. Mr. Gambrel has served as Senior Vice
President Human Resources since 2005. Prior to
joining TreeHouse, Mr. Gambrel served as Vice President of
Administration for Bake Line Group from
2001-2004.
From
1999-2001 he
was the Vice President of Human Resources for Keebler Foods
Company. He previously served as Vice President Human Resources
for Stella Foods from
1994-1999.
His prior experience also includes Senior Human Resource
positions at Kraft Foods and Pepsico. Mr. Gambrel served as
President of the Alumni Advisory Board for Michigan States
School of Management from 2004 to 2006. Mr. Gambrel holds a
B.A. from Michigan State University.
Erik T. Kahler is our Senior Vice President Corporate
Development. Prior to joining TreeHouse, Mr. Kahler served
as Managing Director of Dresdner Kleinwort Securities, LLC, a
full service lending global investment bank for public and
private companies, from May 2004 to October 2006. From November
1997 to July 2003, Mr. Kahler held senior investment
banking leadership roles at Citigroup, Inc., as
Director Mergers and Acquisitions Citigroup Global
Markets Holdings Inc. and at Wasserstein Perella &
Company, Inc., where he was Vice President Mergers
and Acquisitions. Prior to joining Wasserstein Perella,
Mr. Kahler worked for Ernst & Young and CIBC in
various financial advisory roles. Mr. Kahler holds a B.A.
from Colorado College and an M.B.A. from J.L. Kellogg Graduate
School of Management at Northwestern University.
Sharon M. Flanagan is our Senior Vice
President Strategy. Prior to joining TreeHouse
Foods, Ms. Flanagan was a partner in McKinsey &
Companys Consumer Packaged Goods and Retail practices from
March 1994 to July 2007. McKinsey & Company is a
preeminent worldwide management consulting firm.
Ms. Flanagan held various leadership roles at McKinsey
including co-leadership of the Consumer and Retail Practice for
the Chicago office. As a strategy, operations and marketing
consultant, Ms. Flanagan served numerous Fortune
100 companies over her tenure. Prior to joining McKinsey,
Ms. Flanagan worked in marketing for General Mills.
Ms. Flanagan serves on the Board of Land O Frost
Foods and is a member of The Chicago Network. Ms. Flanagan
holds a B.A. from Dartmouth College, and an M.B.A. from J.L.
Kellogg Graduate School of Management at Northwestern University.
Compensation
Risk Assessment
Senior human resource executives of the Company have conducted a
risk assessment of our employee compensation programs, including
our executive compensation programs. The Compensation Committee
and its consultant reviewed and discussed the findings of the
assessment and concluded that our employee compensation programs
are designed with the appropriate balance of risk and reward in
relation to our Companys overall business strategy and do
not incentivize executives or other employees to take
unnecessary or excessive risks. As a result, we believe that
risks arising from our employee compensation policies and
practices are not reasonably likely to have a material adverse
effect on the Company. In its discussions, the Compensation
Committee considered the attributes of our programs, including:
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|
|
|
|
The appropriate compensation mix between fixed (base salary) and
variable (annual and long-term incentive) pay opportunities;
|
|
|
|
The assessment of fixed, variable, and total direct compensation
pay opportunities with market data and market practices for the
NEOs;
|
|
|
|
The alignment of annual and long-term incentive award objectives
to ensure that both types of awards encourage consistent
behaviors and sustainable performance results;
|
|
|
|
Performance metrics that are tied to key Company measures of
short- and long-term performance;
|
|
|
|
The alignment of the timing of the achievement and realization
of income from annual and long-term incentive performance and
payouts from these plans;
|
|
|
|
Stretch yet achievable performance targets in the annual and
long-term incentive plans; and
|
|
|
|
The mix of long-term incentive vehicles that encourage value
creation, retention, and stock price appreciation.
|
18
COMPENSATION
DISCUSSION AND ANALYSIS
This section provides information regarding the compensation
program in place for NEOs. This section includes information
regarding, among other things, the overall objectives of our
compensation program and each element of compensation that we
provide.
Objectives
of Our Compensation Program
TreeHouse was formed in 2005 by Dean Foods Company through a
spin-off of the Dean Specialty Foods Group and the subsequent
issuance of TreeHouse common stock to Dean Foods shareholders.
Six months prior to the spin-off, Dean Foods Company recruited
Messrs. Reed, Vermylen, ONeill, Walsh and E. Nichol
McCully (our former CFO who retired in April 2006) to lead
the Company. These individuals collectively invested
$10 million of their own money in Company stock and
received a compensation package that Dean Foods Company
determined was fair and comparable to other spun-off companies.
In connection with the spin-off, on June 28, 2005,
Messrs. Reed, Vermylen, ONeill, Walsh and McCully
received restricted stock and restricted stock units which would
vest only after performance criteria were achieved (referred to
as the Founder Award Grant) as well as pre-approved stock
options.
Since the Companys inception in 2005, our overriding
compensation philosophy, goals and objectives for executive
compensation programs have been:
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To attract, motivate and retain superior leadership talent for
the Company.
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|
To closely link NEO compensation to our performance goals with
particular emphasis on rapid growth, operational excellence and
acquisitions through attractive annual incentive opportunities
based on stretch targets.
|
|
|
|
To support business strategies, plans and initiatives that drive
superior long-term value for shareholders.
|
|
|
|
To link pay to performance by providing a significant majority
of NEOs total compensation opportunity in variable or
pay at risk compensation programs (annual and
long-term incentive plans).
|
|
|
|
To align our NEOs financial interests with those of our
stockholders by delivering a substantial portion of their total
compensation in the form of equity awards and other long-term
incentive vehicles.
|
19
Summary
of 2010 Executive Compensation Program
The following table provides an overview of TreeHouse
compensation programs and program objectives for our Named
Executive Officers.
|
|
|
|
|
Program
|
|
Descriptions
|
|
Program Objectives
|
|
Annual Cash Compensation
|
|
|
Base Salary
|
|
Fixed cash compensation based on size and scope of
individuals role and level of performance
|
|
Retain & attract talented
executives
Motivate individual contribution
|
Annual Cash Incentive
|
|
|
|
|
Plan
|
|
Target annual incentive awards are expressed as percent of base
salary, are payable in cash, and range from 0% - 200% of target
depending on Company performance
|
|
Drive high performance on Operating Net
Income & Cash Flow
Encourage collaboration across teams and
business units
|
Long Term Incentive Compensation
|
|
|
Stock Options
|
|
Equity awards that vest annually in three approximately equal
tranches, beginning one year from grant date; represented 37.5%
of grant value for NEOs in 2010
|
|
Drive long-term share price
appreciation
Increase stock ownership &
alignment with shareholders
|
Cash Long-Term
|
|
|
|
|
Incentive Plan
|
|
Performance-based, overlapping
21/2
year performance cycle, running from 7/1/10-12/31/12;
represented 37.5% of grant value for NEOs in 2010
|
|
Retain talented executives
Drive long-term performance on Operating
Net Income
|
Restricted Stock Units
|
|
Time-based equity awards that vest annually in three
approximately equal tranches, beginning one year from grant
date; represented 25% of grant value for NEOs in 2010
|
|
Retain talented executives
Increase stock ownership &
alignment with shareholders
|
Total
Compensation Pay Mix and
Pay-for-Performance
We believe our key stakeholders, including stockholders and
employees, are best served by having our executives focused and
rewarded based on the long-term results of the Company. In
addition, it is important that a significant portion of NEO pay
be tied to incentive compensation to reinforce our
pay-for-performance
compensation philosophy.
In 2010, at target, NEOs received approximately 50% of their
total compensation opportunity through the long-term incentive
award. In addition, NEOs received approximately
20-25% of
their total compensation opportunity in the form of the annual
incentive award. In total, over two-thirds of NEOs total
direct compensation opportunity is delivered in incentive
compensation, which supports our
pay-for-performance
compensation philosophy.
20
Total
Compensation Pay Mix of NEOs in 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Long-Term
|
|
Executives
|
|
% Base Salary
|
|
|
% Annual Incentive
|
|
|
Incentive
|
|
|
Sam K. Reed
|
|
|
23
|
%
|
|
|
23
|
%
|
|
|
54
|
%
|
David B. Vermylen
|
|
|
29
|
%
|
|
|
23
|
%
|
|
|
48
|
%
|
Thomas E. ONeill
|
|
|
31
|
%
|
|
|
18
|
%
|
|
|
51
|
%
|
Dennis F. Riordan*
|
|
|
18
|
%
|
|
|
11
|
%
|
|
|
71
|
%
|
Harry J. Walsh
|
|
|
31
|
%
|
|
|
18
|
%
|
|
|
51
|
%
|
|
|
|
* |
|
Includes special retention grant of 22,430 restricted stock
units in 2010. |
We have worked with the Compensation Committees
consultant, Meridian, to review our compensation programs to
ensure competitiveness and benchmark these programs with
companies with whom we compete for our management talent. These
companies consist of competitors in one or more of our product
categories and other similar companies in the private label and
general food and beverage industry and
form TreeHouses compensation comparator group (the
Compensation Comparator Group). In 2010, the
Compensation Comparator Group was refined by Meridian and
TreeHouse management, to ensure these peer companies were all
substantively in comparable industries and were similar in
revenue size to TreeHouse. To this end, three companies in the
2009 Compensation Comparator Group (Alberto Culver,
Church & Dwight, and Libbey Inc.) were removed because
they were not principally in the food and beverage industry. In
addition, six new peer companies were added: Corn Products, Hain
Celestial, Lance Incentive., Green Mountain Coffee, J&J
Snack, and American Italian Pasta Company. The refined 2010
Compensation Comparator Group is as follows:
|
|
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|
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|
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|
|
Company
|
|
2009 Annual Revenues
|
|
April 2010 Market Cap
|
|
HORMEL FOODS
|
|
$
|
6,533
|
|
|
$
|
5,530
|
|
HERSHEY
|
|
$
|
5,299
|
|
|
$
|
9,810
|
|
JM SMUCKER CO
|
|
$
|
3,758
|
|
|
$
|
7,120
|
|
RALCORP HOLDINGS
|
|
$
|
3,892
|
|
|
$
|
3,640
|
|
DEL MONTE FOODS
|
|
$
|
3,627
|
|
|
$
|
2,800
|
|
CORN PRODUCTS
|
|
$
|
3,672
|
|
|
$
|
2,560
|
|
CHIQUITA BRANDS
|
|
$
|
3,470
|
|
|
$
|
740
|
|
MCCORMICK AND CO
|
|
$
|
3,192
|
|
|
$
|
5,170
|
|
SANDERSON FARMS
|
|
$
|
1,790
|
|
|
$
|
1,100
|
|
GREEN MOUNTAIN COFFEE
|
|
$
|
803
|
|
|
$
|
4,100
|
|
SENECA FOODS CORP
|
|
$
|
1,280
|
|
|
$
|
305
|
|
LANCASTER COLONY
|
|
$
|
1,051
|
|
|
$
|
1,660
|
|
LANCE INCENTIVE
|
|
$
|
918
|
|
|
$
|
725
|
|
HAIN CELESTIAL GROUP
|
|
$
|
1,135
|
|
|
$
|
714
|
|
J&J SNACK FOODS
|
|
$
|
653
|
|
|
$
|
809
|
|
AMERICAN ITALIAN PASTA CO*
|
|
$
|
628
|
|
|
$
|
809
|
|
PEER GROUP MEDIAN
|
|
$
|
2,491
|
|
|
$
|
2,110
|
|
PEER GROUP AVERAGE
|
|
$
|
2,606
|
|
|
$
|
2,975
|
|
TREEHOUSE FOODS
|
|
$
|
1,511
|
|
|
$
|
1,410
|
|
In addition to the Compensation Comparator Group, Meridian
provides survey data for other companies of similar size to the
Company from both general industry and the packaged foods
sector. We believe that this additional information broadens our
awareness of the practices of companies with whom we compete for
management talent. Meridian then uses a combination of these
sources to help us determine appropriate salary levels, annual
incentive target percentages and metrics used in the annual
incentive plan, and appropriate long-term incentive plan design
and grant values for our Named Executive Officers. The
Compensation Committee also
21
considers recommendations from the Companys Chief
Executive Officer regarding salary, annual incentive and
long-term incentive awards for senior executives.
Once NEO total compensation opportunities have been determined
using the above-mentioned executive compensation data sources,
we reward our management team with respect to annual and
long-term incentives based on how well we perform compared to a
broader food and beverage-focused TreeHouse performance
comparator group (the Performance Comparator Group).
We do this by considering the market expectations of the
Performance Comparator Group in setting our budgets with targets
reflecting performance that exceeds the expected performance of
this group. We believe this provides a clear and objective way
of ensuring our management teams compensation and
incentives are aligned with stockholder interests.
The following companies are included in our Performance
Comparator Group:
|
|
|
|
|
American Italian Pasta Co.*
|
|
Flower Foods, Inc.
|
|
Kraft Foods Inc.
|
Archer Daniels Midland Co.
|
|
General Mills, Inc.
|
|
Lancaster Colony Corp.
|
B&G Foods, Inc.
|
|
Hain Celestial Group, Inc.
|
|
Lance, Inc.
|
Campbell Soup Co.
|
|
H.J. Heinz Company
|
|
McCormick & Co. Inc.
|
ConAgra Foods Inc.
|
|
J&J Snack Foods Corp.
|
|
Peets Coffee and Tea
|
Corn Products Intl
|
|
JM Smucker Co.
|
|
Ralcorp Holdings Inc.
|
Del Monte Foods Co.
|
|
Kellogg Co.
|
|
Sara Lee Corp.
|
Farmer Bros. Inc.
|
|
|
|
|
|
|
|
* |
|
American Italian Pasta Co. (AIPC) will be removed
from both the 2011 Compensation and Performance Comparator
groups as AIPC was acquired by Ralcorp in June 2010. |
Components
of Compensation
There are three primary components to our management
compensation program: base salary, annual cash incentive and
long-term incentive compensation. Our management team has been
assembled to lead a growth company that will expand
significantly in size and complexity over time. We believe that
total compensation (base salary, annual cash incentive and
long-term incentive) should be in the third quartile of our
competitive benchmarks when those benchmarks are size adjusted
(through regression analysis) to our current revenue size. We
seek to have each of these components at levels that are
competitive with our Compensation Comparator Group. The Company
continues to assess the competitive position of each of our
components of compensation in relation to our competitors.
Base Salary: We have positioned the base
salary somewhat above the median for similarly sized businesses,
allowing us to attract talent that has the ability to grow and
lead a much larger business in the near future. For 2010, we
increased the salaries for the executive officers and management
by 3.0% after evaluating market data from several leading survey
sources (including Hewitt, Hay Group and Mercer).
Annual Cash Incentive Plan: Our NEOs
annual incentive opportunity also reflects a third quartile
position. The annual incentive for NEOs is based on attaining
specific annual performance targets such as the operating net
income targets determined by the Board, as adjusted positively
or negatively for one-time items, and cash flow targets. The
operating net income measure has been selected because it aligns
with and helps drive our profitable growth strategy. The
operating cash flow measure has been chosen because substantive
positive cash flow enables us to pay down debt and help fund our
growth through acquisition strategy.
For 2010, the amount of the potential incentive was 80% tied to
the achievement of an operating net income target of
$95.34 million (based on the Companys budgeted
operating net income established by the Compensation Committee),
adjusted (as approved by the Compensation Committee) for
acquisitions (includes 10 months of Sturm Foods, Inc.
targets and results) and one-time items. The remaining 20% of
the potential incentive was tied to the achievement of an
operating cash flow target of $76.73 million. We do not
otherwise use discretion in determining the amount of incentive
paid to NEOs. We consider the market expectations of our stock,
as well as that of the Performance Comparator Group in setting
our budget with targets reflecting performance that exceeds the
expected
22
performance of this group. Our goal is to provide meaningful yet
challenging goals relative to the expected performance of our
Performance Comparator Group. In establishing goals, the
Compensation Committee strives to ensure that the targets are
consistent with the strategic goals set by the Board, and that
the goals set are sufficiently ambitious so as to provide
meaningful results, but with an opportunity to exceed targets if
performance exceeds expectations. We believe the annual
incentive plan keeps management focused on attaining strong near
term financial performance. The 2010 annual incentive
opportunity for the NEOs was awarded as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimum
|
|
|
Target
|
|
|
Maximum
|
|
|
Sam K. Reed
|
|
Chairman and Chief Executive Officer
|
|
$
|
0
|
|
|
$
|
884,000
|
|
|
$
|
1,768,000
|
|
David B. Vermylen
|
|
President and Chief Operating Officer
|
|
$
|
0
|
|
|
$
|
472,800
|
|
|
$
|
945,600
|
|
Dennis F. Riordan
|
|
Senior Vice President and Chief Financial Officer Senior Vice
President, General Counsel, Chief Administrative
|
|
$
|
0
|
|
|
$
|
248,400
|
|
|
$
|
496,800
|
|
Thomas E. ONeill
|
|
Officer and Corporate Secretary
|
|
$
|
0
|
|
|
$
|
248,400
|
|
|
$
|
496,800
|
|
Harry J. Walsh
|
|
Senior Vice President of TreeHouse and President of Bay Valley
Foods
|
|
$
|
0
|
|
|
$
|
248,400
|
|
|
$
|
496,800
|
|
NEOs begin to earn payouts under the plan upon achievement of
90% of the operating net income and operating cash flow targets
ratably up to the achievement of targeted payment upon the full
achievement of 100% of the operating net income and operating
cash flow targets. In addition, a NEO can earn 200% of the
targeted payment if 110% or more of the targeted operating net
income and operating cash flow is achieved. As the table below
illustrates, in 2010, after adjusting for one-time items, we
attained $99.08 million in operating net income or 103.9%
of the operating net income target, which provided a payout of
139.3% on this performance measure. In 2010, TreeHouse achieved
$132.93 million of the operating cash flow or 173.3% of the
cash flow target which resulted in a 200.0% of target payment on
this performance measure.
2010
Annual Incentive Plan Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 Performance
|
|
|
|
2010 Annual Incentive
|
|
Metric
|
|
|
Target
|
|
|
Actual
|
|
|
Percent
|
|
|
Percent
|
|
Financial Metrics
|
|
Weighting
|
|
|
Performance
|
|
|
Performance
|
|
|
Achievement
|
|
|
Payout
|
|
|
|
|
Operating Net Income
|
|
|
80
|
%
|
|
$
|
95.34 M
|
|
|
$
|
99.08 M
|
|
|
|
103.9
|
%
|
|
|
139.3
|
%
|
Operating Cash Flow
|
|
|
20
|
%
|
|
$
|
76.73 M
|
|
|
$
|
132.93 M
|
|
|
|
173.3
|
%
|
|
|
200.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
151.4
|
%
|
Long-Term Incentive Compensation: The
long-term incentive compensation program also reflects a third
quartile position and was established to ensure that our senior
management team is focused on long-term growth, profitability,
and value creation. We believe our key stakeholders, including
stockholders and employees, are best served by having our
executives focused and rewarded based on the longer-term results
of our Company. We accomplish this through five primary programs:
|
|
|
|
|
Stock Options
|
|
|
|
Restricted Stock
|
|
|
|
Restricted Stock Units
|
|
|
|
Performance Units
|
|
|
|
Cash Long-Term Incentive Plan
|
23
2010
Long-Term Incentive Grant
In 2010, TreeHouse management and Meridian undertook a rigorous,
extensive project to redesign the long-term incentive
(LTI) plan. The LTI plan designs of our Compensation
Comparator Group were carefully reviewed for prevalence and mix
of long-term incentive vehicles utilized in their programs.
Balancing the needs of our business strategy, market practices,
and share availability, the following LTI plan was designed,
approved, and implemented:
|
|
|
|
|
For NEOs and TreeHouse Senior Vice Presidents, we utilized three
LTI vehicles to deliver the appropriate value: non-qualified
stock options, restricted stock units and a performance-based
cash LTI plan (Cash LTIP).
|
|
|
|
The non-qualified stock options vest ratably over a three year
period, beginning on the first anniversary of the grant date,
and represented 37.5% of the LTI grant value to NEOs.
|
|
|
|
The restricted stock units vest ratably over a three year
period, beginning on the first anniversary of the grant date,
and represented 25% of the LTI grant value to NEOs.
|
|
|
|
The Cash LTIP pays out on the third anniversary of the date of
grant and is based on achieving operating net income results in
each of the performance periods listed below, and represented
37.5% of the LTI grant value to NEOs. The performance periods of
the Cash LTIP are as follows: July 1, 2010 through
December 31, 2010; calendar year 2011; calendar year 2012,
and the cumulative period July 1, 2010 through
December 31, 2012. For the performance period July 1,
2010 through December 31, 2010, the operating net income
target was $52.1 million. The operating net income targets
for calendar years 2011, 2012 and the cumulative performance
period are 113% of calendar year 2010 operating net income
budget, 113% of the calendar year 2011 target, and the sum of
the three target amounts, respectively. There is no payout below
80% achievement, and payout is up to 200% of target if
achievement meets or exceeds 120% of the operating net income
target.
|
|
|
|
For other TreeHouse and Bay Valley Foods senior leaders, we
delivered the LTI value using two vehicles: restricted stock
units and performance units.
|
|
|
|
The restricted stock units vest ratably over a three year
period, beginning on the first anniversary of the grant date,
and represented 50% of the LTI grant value to other senior
leaders at TreeHouse and Bay Valley Foods.
|
|
|
|
The performance units are earned based on achieving operating
net income goals in each of the performance periods listed below
and represented 50% of the LTI grant value to other senior
leaders. The performance periods of the performance units are as
follows: July 1, 2010 through December 31 2010; calendar
year 2011; calendar year 2012; and the cumulative period
July 1, 2010 through December 31, 2012. The
performance units will be converted to stock or cash at the
discretion of the Compensation Committee on the third
anniversary of the date of grant. The Company expects the
performance units to be settled in stock and has the shares
available to do so. For the performance period July 1, 2010
through December 31, 2010, the operating net income target
was $52.1 million. The operating net income targets for
calendar years 2011, 2012 and the cumulative performance period
are 113% of calendar year 2010 operating net income budget, 113%
of the calendar year 2011 target, and the sum of the three
target amounts, respectively. The number of units that will be
earned is based on the level of achievement relative to the
targets. There is no payout below 80% achievement, and payout is
up to 200% of target if achievement meets or exceeds 120% of the
operating net income target.
|
|
|
|
For all other eligible participants, the LTI value was delivered
through the granting of restricted stock units that vest ratably
over a three year period on the anniversary of the grant date.
|
Stock
Ownership and Holding Policies
At the Companys inception in 2005, the original five Named
Executive Officers invested $10 million of their own money
into the Dean Specialty Foods spin-off. The four remaining
original NEOs all own stock in excess of ten times their base
salary (and the CEO in excess of 25 times). Our newest NEO and
CFO, Mr. Riordan, should exceed stock ownership in excess
of five times his base salary within the next two years. In
addition, the NEO team
24
beneficially owns approximately 6% of TreeHouse shares
outstanding as of February 18, 2011. This is indicative of
a stock ownership culture at TreeHouse and current NEO stock
positions exceed stock ownership guidelines at nearly all
Fortune 500 companies. Therefore, the Compensation
Committee and TreeHouse have not felt the need to implement
stock ownership guidelines for its leadership team.
Based on the practice of significant stock ownership at
TreeHouse and desire to give freedom of choice, we do not have
equity holding policies for employees upon the exercise of stock
options and the vesting of restricted stock or restricted stock
units.
General
Compensation Matters
All matters of our executive compensation programs are reviewed
and approved by the Compensation Committee of the Board. This
includes approving both the amounts of compensation and the
timing of all grants. The Compensation Committee is given full
access to its compensation experts, and has elected to use
Meridian to provide consulting services with respect to the
Companys executive compensation practices including
salary, bonus, perquisites, equity incentive awards, deferred
compensation and other matters. The Compensation Committee
regularly meets with Meridian representatives without the
presence of Company management.
More details regarding the employment agreements of our
management investors are summarized below.
Executive Perquisites: TreeHouse annually
reviews the Companys practices for executive perquisites
with the assistance of Meridian. We believe that the market
trend is moving toward a cash allowance in lieu of various
specific executive benefits such as automobile plans, financial
planning consulting or club fees. We have granted an annual
allowance of $25,000 to Mr. Reed, $15,000 to
Mr. Vermylen and $10,000 to Messrs. ONeill,
Walsh and Riordan to cover these types of benefits. This
approach reduces the administrative burden of such programs and
satisfies the desire to target market practices. These
allowances are not included as eligible compensation for bonus
or other purposes, and do not represent a significant portion of
the executives total compensation. Our Board has also
adopted policies regarding the personal use of the Company-owned
aircraft by our NEOs. Generally, personal use is permitted,
subject to availability. Personal use of the Company aircraft is
principally that of our Chief Executive Officer. Personal use by
other NEOs is infrequent. We calculate compensation for personal
use based on the incremental costs of operating the aircraft.
The largest single component of this cost is fuel. The 2010
Summary Compensation Table beginning on page 27 of this
Proxy Statement contains itemized disclosure of all perquisites
to our NEOs, regardless of amount.
Deferred Compensation Plan: Our Deferred
Compensation Plan allows certain employees, including the NEOs,
to defer receipt of salary
and/or bonus
payments. Deferred amounts are credited with earnings or losses
based on the rate of return of mutual funds selected by the
participants in the plan. We do not match amounts
that are deferred by employees in the Deferred Compensation
Plan. However, to the extent that employees in the Deferred
Compensation Plan have their match in the 401(k) plan limited as
a result of participating in the Deferred Compensation Plan, the
lost match would be credited instead to the Deferred
Compensation Plan. Distributions are paid either upon
termination of employment or at a specified date (at least two
years after the original deferral) in the future, as elected by
the employee. The employee may elect to receive payments in
either a lump sum or a series of installments. Participants may
defer up to 100% of eligible salary and bonus payments. The
Deferred Compensation Plan is not funded by us, and participants
have an unsecured contractual commitment from us to pay the
amounts when due. When such payments are due to employees, the
cash will be distributed from our general assets.
We provide deferred compensation to permit our employees to save
for retirement on a tax-deferred basis. The Deferred
Compensation Plan permits them to do this while also receiving
investment returns on deferred amounts, as described above. We
believe this is important as a retention and recruitment tool,
as many, if not all, of the companies with which we compete for
executive talent provide a similar plan for their senior
employees.
Employment Agreements: We have entered into
employment agreements with Messrs. Reed, Vermylen,
ONeill, Walsh and Riordan. These agreements provide for
payments and other benefits if the officers employment
terminates for a qualifying event or circumstance, such as being
terminated without Cause or leaving employment for
Good Reason, as these terms are defined in the
employment agreements. The agreements also provide for
25
benefits upon a qualifying event or circumstance after there has
been a
Change-in-Control
(as defined in the agreements) of the Company. Additional
information regarding the employment agreements, including a
definition of key terms and a quantification of benefits that
would have been received by our NEOs had termination occurred on
December 31, 2010, is found under the heading
Potential Payments upon Termination or
Change-in-Control.
We believe these severance programs are an important part of our
overall arrangements for our NEOs. We also believe these
agreements will help to secure the continued employment and
dedication of our NEOs prior to or following a change in
control, without concern for their own continued employment. We
also believe it is in the best interest of our stockholders to
have a plan in place that will allow management to pursue all
alternatives for the Company without undue concern for their own
financial security. We also believe these agreements are
important as a recruitment and retention device, as most of the
companies with which we compete for executive talent have
similar agreements in place for their senior employees. We have
received consulting services from Meridian with regard to market
practices in an evaluation of severance programs.
In 2008, we amended the agreements with Messrs. Reed,
Vermylen, ONeill and Walsh to delay payments for six
months in certain circumstances to conform to recently adopted
deferred compensation rules contained in Internal Revenue Code
Section 409A.
On February 10, 2011, we entered into a consulting
agreement with Mr. Vermylen which will become effective on
July 1, 2011 when Mr. Vermylen will transition to a
senior advisor role focusing on strategy, marketing and
acquisitions. Effective July 1, 2011
Mr. Vermylens existing employment agreement will
terminate and he will receive $300,000 per annum as a consultant.
401(k) Savings Plan: Under the TreeHouse Foods
Savings Plan (the Savings Plan), a tax-qualified
retirement savings plan, Company employees, including our NEOs,
may contribute up to 20% of regular earnings on a before-tax
basis into their Savings Plan accounts (subject to IRS limits).
Total contributions may not exceed 20% of regular earnings. In
addition, under the Savings Plan, we match an amount equal to
one dollar for each dollar contributed by participating
employees on the first 2% of their regular earnings and fifty
cents for each additional dollar contributed on the next 4% of
their regular earnings. Amounts held in Savings Plan accounts
may not be withdrawn prior to the employees termination of
employment, or such earlier time as the employee reaches the age
of
591/2,
subject to certain exceptions established by the IRS.
Tax Treatment of Executive
Compensation: Section 162(m) of the Internal
Revenue Code imposes a limitation on the deductibility of
non-performance-based compensation in excess of $1 million
for the Chief Executive Officer of the Company and each of the
three next most highly compensated executive officers (other
than the Chief Financial Officer). Our equity and incentive plan
is designed to allow us to grant awards that qualify for the
performance-based exception to the Section 162(m)
deductibility limit. Many of our key incentive programs are
linked to the financial performance of the Company, and,
therefore, we believe that we will preserve the deductibility of
these executive compensation payments. However, deductibility of
executive compensation is only one important factor considered
by the Compensation Committee when determining compensation and
the Compensation Committee retains the flexibility to award
compensation that may exceed the limitation on deductibility
under Section 162(m) when it believes it is in the
Companys and stockholders best interests.
26
EXECUTIVE
COMPENSATION
The following table sets forth annual and long-term compensation
for the Companys Chief Executive Officer, Chief Financial
Officer and three other most highly compensated officers during
2010, as well as certain other compensation information for NEOs
during the years indicated.
2010
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
Grant Date Fair
|
|
Fair Market
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
Other
|
|
Market Value of
|
|
Value of
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Compensation
|
|
Bonus
|
|
Stock Awards
|
|
Options
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)(a)
|
|
($)
|
|
($)(b)
|
|
($)(c)
|
|
($)(d)
|
|
($)
|
|
Sam K. Reed
|
|
|
2010
|
|
|
|
880,167
|
|
|
|
2,506,884
|
|
|
|
0
|
|
|
|
590,169
|
|
|
|
796,887
|
|
|
|
145,568
|
|
|
|
4,919,675
|
|
Chief Executive Officer
|
|
|
2009
|
|
|
|
856,167
|
|
|
|
2,613,500
|
|
|
|
0
|
|
|
|
522,425
|
|
|
|
0
|
|
|
|
123,932
|
|
|
|
4,116,024
|
|
|
|
|
2008
|
|
|
|
827,250
|
|
|
|
1,045,306
|
|
|
|
0
|
|
|
|
5,557,860
|
|
|
|
928,732
|
|
|
|
123,309
|
|
|
|
8,482,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David B. Vermylen
|
|
|
2010
|
|
|
|
588,333
|
|
|
|
1,262,107
|
|
|
|
0
|
|
|
|
279,749
|
|
|
|
377,423
|
|
|
|
28,554
|
|
|
|
2,536,166
|
|
President and Chief Operating
|
|
|
2009
|
|
|
|
571,667
|
|
|
|
1,335,000
|
|
|
|
0
|
|
|
|
243,419
|
|
|
|
0
|
|
|
|
36,963
|
|
|
|
2,187,049
|
|
Officer
|
|
|
2008
|
|
|
|
551,833
|
|
|
|
557,832
|
|
|
|
0
|
|
|
|
4,162,380
|
|
|
|
417,444
|
|
|
|
40,791
|
|
|
|
5,730,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis F. Riordan
|
|
|
2010
|
|
|
|
412,167
|
|
|
|
759,160
|
|
|
|
0
|
|
|
|
1,235,173
|
|
|
|
260,852
|
|
|
|
19,800
|
|
|
|
2,687,152
|
|
Senior Vice President and
|
|
|
2009
|
|
|
|
400,583
|
|
|
|
776,100
|
|
|
|
0
|
|
|
|
172,244
|
|
|
|
0
|
|
|
|
19,800
|
|
|
|
1,368,727
|
|
Chief Financial Officer
|
|
|
2008
|
|
|
|
384,167
|
|
|
|
292,862
|
|
|
|
0
|
|
|
|
707,364
|
|
|
|
206,295
|
|
|
|
20,504
|
|
|
|
1,611,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas E. ONeill
|
|
|
2010
|
|
|
|
412,167
|
|
|
|
759,160
|
|
|
|
|
|
|
|
192,851
|
|
|
|
260,852
|
|
|
|
30,793
|
|
|
|
1,655,823
|
|
Senior Vice President, General
|
|
|
2009
|
|
|
|
400,583
|
|
|
|
776,100
|
|
|
|
0
|
|
|
|
172,244
|
|
|
|
0
|
|
|
|
19,800
|
|
|
|
1,368,727
|
|
Counsel and Chief Administrative
|
|
|
2008
|
|
|
|
386,250
|
|
|
|
292,862
|
|
|
|
0
|
|
|
|
2,911,260
|
|
|
|
292,049
|
|
|
|
20,516
|
|
|
|
3,902,937
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harry J. Walsh
|
|
|
2010
|
|
|
|
412,167
|
|
|
|
734,430
|
|
|
|
|
|
|
|
192,851
|
|
|
|
260,852
|
|
|
|
21,087
|
|
|
|
1,621,387
|
|
Senior Vice President of Operations
|
|
|
2009
|
|
|
|
400,583
|
|
|
|
776,100
|
|
|
|
0
|
|
|
|
172,244
|
|
|
|
0
|
|
|
|
19,800
|
|
|
|
1,368,727
|
|
President of Bay Valley Foods, LLC
|
|
|
2008
|
|
|
|
386,250
|
|
|
|
292,862
|
|
|
|
0
|
|
|
|
2,911,260
|
|
|
|
292,049
|
|
|
|
20,516
|
|
|
|
3,902,937
|
|
|
|
|
a) |
|
The amounts shown in this column include payments made under our
Annual Incentive Plan (AIP) of $1,338,446 for
Mr. Reed, $715,857 for Mr. Vermylen and $376,097 for
each of Messrs. Riordan and ONeill, and $351,367 for
Mr. Walsh. In addition, the 2010 portion earned but not yet
paid from the
2009-2011
Cash LTIP are also included: $891,500 for Mr. Reed,
$415,000 for Mr. Vermylen, and $292,500 for each of
Messrs. Riordan, ONeill and Walsh. Also included is
the 2010 portion earned but not yet paid from the
2010-2012
Cash LTIP of: $276,938 for Mr. Reed, $131,250 for
Mr. Vermylen and $90,563 for each of Messrs. Riordan,
ONeill and Walsh. |
|
|
|
b) |
|
The awards shown in this column include restricted stock,
restricted stock unit and performance unit grants under the
Equity and Incentive Plan in 2008, 2009, and 2010. The amounts
listed above are based on the grant date fair market value of
the awards computed in accordance with Financial Accounting
Standards Board (FASB) Accounting Standards
Codification (ASC) Topic 718. |
|
|
|
c) |
|
The awards shown in this column include stock options granted in
2008, 2009 and 2010 based on the grant date fair market value of
the awards computed in accordance with FASB ASC Topic 718. No
stock options were granted in 2009. |
|
|
|
d) |
|
The amounts shown in this column include matching contributions
under the Companys 401(k) plan, cash payments in lieu of
perquisites and personal use of the Companys corporate
aircraft. |
DETAILS
BEHIND ALL OTHER COMPENSATION COLUMNS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Registrant
|
|
Cash Payment in
|
|
|
|
|
|
|
Defined Contribution
|
|
Lieu of Perquisites
|
|
Aircraft Usage
|
|
Total
|
Name
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Sam K. Reed
|
|
|
9,800
|
|
|
|
25,000
|
|
|
|
110,768
|
|
|
|
145,568
|
|
David B. Vermylen
|
|
|
9,800
|
|
|
|
15,000
|
|
|
|
3,754
|
|
|
|
28,554
|
|
Dennis F. Riordan
|
|
|
9,800
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
19,800
|
|
Thomas E. ONeill
|
|
|
9,800
|
|
|
|
10,000
|
|
|
|
10,993
|
|
|
|
30,793
|
|
Harry J. Walsh
|
|
|
9,800
|
|
|
|
10,000
|
|
|
|
1,287
|
|
|
|
21,087
|
|
27
2010
Grants of Plan Based Award
The following table sets forth annual and long-term compensation
for the Companys Chief Executive Officer, Chief Financial
Officer and three other most highly compensated officers during
2010, as well as certain other compensation information for NEOs
during the years indicated.
2010
GRANTS OF PLAN BASED AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Future
|
|
Estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payouts
|
|
Future
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
Under
|
|
Payouts
|
|
Stock
|
|
Option
|
|
Exercise
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Under Non-
|
|
Awards:
|
|
Awards:
|
|
or Base
|
|
Grant Date
|
|
|
|
|
|
|
Incentive
|
|
Equity
|
|
Number of
|
|
Number of
|
|
Price of
|
|
Fair Value
|
|
|
|
|
|
|
Plan
|
|
Incentive Plan
|
|
Shares of
|
|
Securities
|
|
Stock
|
|
of Stock
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
Stock or
|
|
Underlying
|
|
and Option
|
|
and Option
|
|
|
|
|
Grant
|
|
Target
|
|
Maximum
|
|
Units
|
|
Options
|
|
Awards
|
|
Awards
|
Name
|
|
|
|
Date
|
|
$(a)
|
|
$(a)
|
|
#(b)
|
|
(#)(c)
|
|
($/Sh)
|
|
$
|
|
Sam K. Reed
|
|
|
AIP
|
|
|
|
1/1/2010
|
|
|
|
884,000
|
|
|
|
1,768,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash LTIP
|
|
|
|
6/28/2010
|
|
|
|
791,250
|
|
|
|
1,582,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU awards
|
|
|
|
6/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
12,700
|
|
|
|
|
|
|
|
|
|
|
|
590,169
|
|
|
|
|
NQ Options
|
|
|
|
6/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,700
|
|
|
|
46.47
|
|
|
|
796,887
|
|
David B. Vermylen
|
|
|
AIP
|
|
|
|
1/1/2010
|
|
|
|
472,000
|
|
|
|
944,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash LTIP
|
|
|
|
6/28/2010
|
|
|
|
375,000
|
|
|
|
750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU awards
|
|
|
|
6/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
6,020
|
|
|
|
|
|
|
|
|
|
|
|
279,749
|
|
|
|
|
NQ Options
|
|
|
|
6/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,750
|
|
|
|
46.47
|
|
|
|
377,423
|
|
Dennis F. Riordan
|
|
|
AIP
|
|
|
|
1/1/2010
|
|
|
|
248,400
|
|
|
|
496,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash LTIP
|
|
|
|
6/28/2010
|
|
|
|
258,750
|
|
|
|
517,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU awards
|
|
|
|
6/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
26,580
|
|
|
|
|
|
|
|
|
|
|
|
1,235,173
|
|
|
|
|
NQ Options
|
|
|
|
6/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,650
|
|
|
|
46.47
|
|
|
|
260,852
|
|
Thomas E. ONeill
|
|
|
AIP
|
|
|
|
1/1/2010
|
|
|
|
248,400
|
|
|
|
496,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash LTIP
|
|
|
|
6/28/2010
|
|
|
|
258,750
|
|
|
|
517,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU awards
|
|
|
|
6/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
4,150
|
|
|
|
|
|
|
|
|
|
|
|
192,851
|
|
|
|
|
NQ Options
|
|
|
|
6/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,650
|
|
|
|
46.47
|
|
|
|
260,852
|
|
Harry J. Walsh
|
|
|
AIP
|
|
|
|
1/1/2010
|
|
|
|
248,400
|
|
|
|
496,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash LTIP
|
|
|
|
6/28/2010
|
|
|
|
258,750
|
|
|
|
517,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU awards
|
|
|
|
6/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
4,150
|
|
|
|
|
|
|
|
|
|
|
|
192,851
|
|
|
|
|
NQ Options
|
|
|
|
6/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,650
|
|
|
|
46.47
|
|
|
|
260,852
|
|
|
|
|
(a) |
|
Consists of awards under our AIP and Cash LTIP programs, which
are granted under our Equity and Incentive Plan. For the AIP,
151.4% of the target amount was earned by Messrs. Reed,
Vermylen, ONeill and Riordan. Mr. Walsh earned
141.45% of his 2010 AIP target. These AIP amounts are reported
as Non-Equity Incentive Plan Compensation in the 2010 Summary
Compensation Table. The Cash LTIP was awarded June 28, 2010
for the performance period July 1, 2010 to
December 31, 2012. For the interim performance period of
July 1, 2010 to December 31, 2010, the performance
measure results earned 105% of target: accordingly, each NEO
earned 105% of the first tranche of the Award. This amount is
reported in the Non-Equity Incentive Plan column in the Summary
Compensation Table. Payouts under the AIP and Cash LTIP may
range from $0 up to the maximum as described above. Therefore,
in accordance with SEC rules, we have omitted the threshold
column. |
|
(b) |
|
Consists of restricted stock units granted under the Equity and
Incentive Plan that vest ratably over three years on the
anniversary of the grant date. |
|
(c) |
|
Consists of non-qualified stock options granted under the Equity
and Incentive Plan that vest ratably over three years on the
anniversary of the grant date. The non-qualified options have a
strike price of $46.47, which was the close price on date of
grant. |
Employment
Agreements
On January 27, 2005, the Company entered into employment
agreements with Messrs. Reed, Vermylen, ONeill and
Walsh. These individuals are referred to as the management
investors. The terms of these employment agreements are
substantially similar, other than the individuals title,
salary, bonus, option, restricted stock and restricted stock
unit entitlements. The employment agreements provided for a
three-year term that ended
28
on June 28, 2008. The employment agreements also provide
for one-year automatic extensions, absent written notice from
either party of its intention not to extend the agreement.
Under the employment agreements, each management investor is
entitled to a base salary at a specified annual rate, plus an
incentive bonus based upon the achievement of certain
performance objectives to be determined by the Board. The
employment agreements also provided that each management
investor received restricted shares and restricted stock units
of our common stock and options to purchase additional shares of
our common stock, subject to certain conditions and restrictions
on transferability. These grants were intended to cover a three
year period, from 2005 through the end of 2007. In 2008, the
management investors began to participate in the Companys
long-term incentive grants as summarized in the tables above.
Each management investor is also entitled to participate in any
benefit plan we maintain for our senior executive officers,
including any life, medical, accident, or disability insurance
plan, and any pension, profit sharing, retirement, deferred
compensation or savings plan for our senior executive officers.
We also will pay the reasonable expenses incurred by each
management investor in the performance of his duties to us and
indemnify the management investor against any loss or liability
suffered in connection with such performance.
We are entitled to terminate each employment agreement with or
without Cause (as defined in the employment
agreements). Each management investor is entitled to terminate
his employment agreement for Good Reason (as defined
in the employment agreements) which includes a reduction in base
salary or a material alteration in duties and responsibilities
or for certain other specified reasons, including the death,
disability or retirement of the management investor. If an
employment agreement is terminated without Cause by us or with
Good Reason by a management investor, the management investor
will be entitled to a severance payment equal to two times (or
three times, in the case of Mr. Reed) the sum of the annual
base salary payable, continuation of all health and welfare
benefits for two years (three years in the case of
Mr. Reed) and the target bonus amount owed to the
management investor immediately prior to the end of the
employment period, plus any incentive bonus the management
investor would have been entitled to receive for the calendar
year, had he remained employed by the Company. If an employment
agreement is terminated under the same circumstances and within
24 months after a change of control of the Company, the
management investor will be entitled to a severance payment
equal to three times the annual base salary and target bonus
amount payable to the management investor immediately prior to
the end of the employment period, plus any incentive bonus the
management investor would have been entitled to receive for the
calendar year had he remained employed by the Company.
In 2008, we amended the agreements with the management investors
to delay payments for six months in certain circumstances to
conform to recently adopted deferred compensation rules
contained in Internal Revenue Code Section 409A.
On November 7, 2008 the Company entered into an employment
agreement with Mr. Riordan. The terms and conditions of
Mr. Riordans employment agreement are similar in
nearly all material respects to the management investor
agreements with regard to salary, bonus, benefits plans and
severance. The exceptions are that there is no payment of excise
taxes in the case of severance and he did not receive the three
year equity grant that was provided to the management investors
in 2005. Mr. Riordan has been receiving long-term incentive
grants, which are summarized in the tables above and described
below, since he joined the Company on January 3, 2006.
On February 10, 2011, we entered into a consulting
agreement with Mr. Vermylen which will become effective on
July 1, 2011 when Mr. Vermylen will transition to a
senior advisor role focusing on strategy, marketing and
acquisitions. Effective July 1, 2011
Mr. Vermylens existing employment agreement will
terminate and he will receive $300,000 per annum as a consultant.
29
Awards
The grant for each NEO is listed in the 2010 Grants of Plan
Based Awards Table on page 28 above. The significant
features of the 2010 equity incentives are as follows:
2010
Non-Qualified Stock Options
The NEOs received an annual stock option grant on June 28,
2010, that vests ratably over a three year period, beginning on
the first anniversary of the grant date.
2010
Restricted Stock Units
The NEOs and other managers of the Company received an annual
restricted stock unit grant on June 28, 2010, that vests
ratably over a three year period, beginning on the first
anniversary of the grant date.
2010 Cash
LTIP
The Cash LTIP pays out based on achieving operating net income
results. The performance periods of the Cash LTIP are as
follows: July 1, 2010 through December 31, 2010;
calendar year 2011; calendar year 2012; and the cumulative
period July 1, 2010 through December 31, 2012. The
Cash LTIP pays out on the third anniversary of the date of grant
and is based on achieving operating net income results in each
of the performance periods. For the performance period
July 1, 2010 through December 31, 2010, the operating
net income target was $52.1 million. The operating net
income targets for calendar years 2011, 2012 and the cumulative
performance period are 113% of calendar year 2010 operating net
income budget, 113% of the calendar year 2011 target, and the
sum of the three target amounts, respectively. There is no
payout below 80% achievement, and payout is up to 200% of target
if achievement meets or exceeds 120% of the operating net income
target.
30
2010
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number
|
|
|
Market
|
|
|
Plan Awards:
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
of Shares
|
|
|
Value of
|
|
|
Number of
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
or Units
|
|
|
Shares or
|
|
|
Unearned
|
|
|
Market Value of
|
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
|
|
|
|
|
|
of Stock
|
|
|
Units of
|
|
|
Shares, Units, or
|
|
|
Unearned Shares,
|
|
|
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Option
|
|
|
Option
|
|
|
That
|
|
|
Stock That
|
|
|
Other Rights
|
|
|
Units, or Other
|
|
|
|
|
|
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Have Not
|
|
|
That Have Not
|
|
|
Rights That Have
|
|
|
|
|
Name
|
|
Grant Date
|
|
|
(#)
|
|
|
(#)(a)
|
|
|
Price ($)
|
|
|
Date
|
|
|
Vested (#)
|
|
|
Vested ($)
|
|
|
Vested (#)
|
|
|
Not Vested ($)
|
|
|
|
|
|
Sam K. Reed
|
|
|
6/28/2005
|
|
|
|
410,377
|
|
|
|
0
|
|
|
|
29.65
|
|
|
|
6/28/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
76,534
|
|
|
|
38,266
|
|
|
|
24.06
|
|
|
|
6/27/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,500
|
(b)
|
|
|
434,265
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
(b)
|
|
|
3,065,400
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,000
|
(c)
|
|
|
2,605,590
|
|
|
|
|
|
|
|
|
6/29/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,233
|
(d)
|
|
|
624,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,700
|
(e)
|
|
|
648,843
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/28/2010
|
|
|
|
0
|
|
|
|
41,700
|
|
|
|
46.47
|
|
|
|
6/28/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David B. Vermylen
|
|
|
6/28/2005
|
|
|
|
273,585
|
|
|
|
0
|
|
|
|
29.65
|
|
|
|
6/28/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
34,400
|
|
|
|
17,200
|
|
|
|
24.06
|
|
|
|
6/27/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,833
|
(b)
|
|
|
195,828
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(b)
|
|
|
2,554,500
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,000
|
(c)
|
|
|
1,175,070
|
|
|
|
|
|
|
|
|
6/29/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,700
|
(d)
|
|
|
291,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,020
|
(e)
|
|
|
307,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/28/2010
|
|
|
|
0
|
|
|
|
19,750
|
|
|
|
46.47
|
|
|
|
6/28/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis F. Riordan
|
|
|
1/3/2006
|
|
|
|
100,000
|
|
|
|
0
|
|
|
|
18.60
|
|
|
|
1/3/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/27/2007
|
|
|
|
47,100
|
|
|
|
0
|
|
|
|
26.48
|
|
|
|
6/27/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,900
|
(b)
|
|
|
97,071
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
(b)
|
|
|
306,540
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,400
|
(c)
|
|
|
582,426
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
17,000
|
|
|
|
8,500
|
|
|
|
24.06
|
|
|
|
6/27/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/29/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,033
|
(d)
|
|
|
206,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,150
|
(e)
|
|
|
212,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,430
|
(f)
|
|
|
1,145,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/28/2010
|
|
|
|
0
|
|
|
|
13,650
|
|
|
|
46.47
|
|
|
|
6/28/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas E. ONeill
|
|
|
6/28/2005
|
|
|
|
186,534
|
|
|
|
0
|
|
|
|
29.65
|
|
|
|
6/28/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
24,067
|
|
|
|
12,033
|
|
|
|
24.06
|
|
|
|
6/27/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,666
|
(b)
|
|
|
136,206
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
(b)
|
|
|
1,788,150
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
(c)
|
|
|
817,440
|
|
|
|
|
|
|
|
|
6/29/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,033
|
(d)
|
|
|
206,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,150
|
(e)
|
|
|
212,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/28/2010
|
|
|
|
0
|
|
|
|
13,650
|
|
|
|
46.47
|
|
|
|
6/28/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harry J. Walsh
|
|
|
6/28/2005
|
|
|
|
186,534
|
|
|
|
0
|
|
|
|
29.65
|
|
|
|
6/28/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
24,067
|
|
|
|
12,033
|
|
|
|
24.06
|
|
|
|
6/27/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,666
|
(b)
|
|
|
136,206
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
(b)
|
|
|
1,788,150
|
|
|
|
|
|
|
|
|
6/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
(c)
|
|
|
817,440
|
|
|
|
|
|
|
|
|
6/29/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,033
|
(d)
|
|
|
206,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/28/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,150
|
(e)
|
|
|
212,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/28/2010
|
|
|
|
0
|
|
|
|
13,650
|
|
|
|
46.47
|
|
|
|
6/28/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
The option award for each NEO will vest in one-third increments
beginning on the anniversary date of the grant, as listed in the
table. |
|
|
|
(b) |
|
Restricted stock granted on June 27, 2008 that vests
annually on the grant date anniversary over a three-year period,
subject to the Company having operating net income greater than
$0. |
|
(c) |
|
Performance units granted on June 27, 2008 that vest on
June 27, 2011 based on achievement of targeted operating
net income of $30.9 million for the six month period from
July 1, 2008 through December 31, 2008,
$53.84 million for fiscal year 2009, $58.14 million
for fiscal year 2010, and $142.96 million cumulatively over
the entire performance period. The number of units is subject to
adjustment based upon achievement of targets, with no payout
below 80% and up to 200%, if achievement meets or exceeds 120%
of these targets. Because |
31
|
|
|
|
|
the Company achieved operating income in excess of target levels
through December 31, 2010, the amounts in the table are
reported, as required under SEC rules, at the next highest level
above target, which is the maximum level (or 200% of target
amounts). |
|
(d) |
|
Restricted stock units granted on June 29, 2009 that vest
annually on the grant date anniversary over a three-year period. |
|
(e) |
|
Restricted stock units granted on June 28, 2010 that vest
annually on grant date anniversary over a three-year period. |
|
(f) |
|
Restricted stock units granted as a special retention grant on
June 28, 2010 that vest annually on grant date anniversary
over a three year period. |
2010
OPTION EXERCISES AND STOCK VESTED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
|
Acquired on Exercise
|
|
|
on Exercise
|
|
|
Acquired on Vesting
|
|
|
on Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
Sam K. Reed
|
|
|
0
|
|
|
|
0
|
|
|
|
8,500
|
(a)
|
|
|
394,485
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
60,000
|
(a)
|
|
|
2,784,600
|
|
|
|
|
|
|
|
|
|
|
|
|
6,117
|
(b)
|
|
|
279,669
|
|
David B. Vermylen
|
|
|
0
|
|
|
|
0
|
|
|
|
3,833
|
(a)
|
|
|
177,890
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
50,000
|
(a)
|
|
|
2,320,500
|
|
|
|
|
|
|
|
|
|
|
|
|
2,850
|
(b)
|
|
|
130,302
|
|
Dennis F. Riordan
|
|
|
0
|
|
|
|
0
|
|
|
|
1900
|
(a)
|
|
|
88,179
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
(a)
|
|
|
278,460
|
|
|
|
|
|
|
|
|
|
|
|
|
2,017
|
(b)
|
|
|
92,217
|
|
Thomas E. ONeill
|
|
|
0
|
|
|
|
0
|
|
|
|
2,667
|
(a)
|
|
|
123,775
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
35,000
|
(a)
|
|
|
1,624,350
|
|
|
|
|
|
|
|
|
|
|
|
|
2,017
|
(b)
|
|
|
92,217
|
|
Harry J. Walsh
|
|
|
0
|
|
|
|
0
|
|
|
|
2,667
|
(a)
|
|
|
123,775
|
|
|
|
|
0
|
|
|
|
0
|
|
|
|
35,000
|
(a)
|
|
|
1,624,350
|
|
|
|
|
|
|
|
|
|
|
|
|
2,017
|
(b)
|
|
|
92,217
|
|
|
|
|
(a) |
|
Represents the vesting of the second of three tranches of
restricted stock awards granted in 2008. |
|
(b) |
|
Represents the vesting of the first tranche of restricted stock
units granted in 2009. |
2010
NON-QUALIFIED DEFERRED COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions
|
|
|
Contributions
|
|
|
Earnings
|
|
|
Withdrawals/
|
|
|
Balance at
|
|
|
|
in Last FY
|
|
|
in Last FY
|
|
|
in Last FY
|
|
|
Distributions
|
|
|
Last FYE
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)(a)
|
|
|
($)(b)
|
|
|
($)
|
|
|
Sam K. Reed
|
|
|
0
|
|
|
|
0
|
|
|
|
1,810,840
|
|
|
|
(9,956,523
|
)
|
|
|
1,345,206
|
|
David B. Vermylen
|
|
|
0
|
|
|
|
0
|
|
|
|
1,285,410
|
|
|
|
(6,637,682
|
)
|
|
|
1,751,328
|
|
Dennis F. Riordan
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Thomas E. ONeill
|
|
|
0
|
|
|
|
0
|
|
|
|
741,138
|
|
|
|
(4,525,713
|
)
|
|
|
0
|
|
Harry J. Walsh
|
|
|
0
|
|
|
|
0
|
|
|
|
741,138
|
|
|
|
(4,525,713
|
)
|
|
|
0
|
|
|
|
|
(a) |
|
Amounts in this column are not included in the 2010 Summary
Compensation Table of this Proxy Statement. |
|
|
|
(b) |
|
Reflects payments of previously-vested restricted stock units,
payment of which was deferred until June 27, 2010. |
32
The 2010 Non-Qualified Deferred Compensation Table presents
amounts previously deferred under our Deferred Compensation Plan
and the deferral of certain vested restricted stock units by Sam
K. Reed, David B. Vermylen, Thomas E. ONeill and Harry J.
Walsh. Participants may defer up to 100% of their base salary
and annual incentive plan payments under the Deferred
Compensation Plan. Deferred amounts are credited with earnings
or losses based on the return of mutual funds selected by the
executive, which the executive may change at any time. We do not
make contributions to participants accounts under the
Deferred Compensation Plan, except to the extent that employees
in the plan have their match in the 401(k) plan limited as a
result of participating in the Deferred Compensation Plan.
Distributions are made in either a lump sum or an annuity as
chosen by the executive at the time of the deferral. During
2009, certain restricted stock units for the NEOs (except for
Mr. Riordan) previously identified vested, and each of
these NEOs elected to defer receipt of these awards until
June 27, 2010. As these awards were deferred until 2010,
they have been included in the table above in the
Aggregate Withdrawals/Distributions column.
The earnings on Mr. Reeds Deferred Compensation Plan
account were measured by reference to a portfolio of publicly
available mutual funds chosen by Mr. Reed in advance and
administered by an outside third party. Earnings shown above for
Mr. Reed also include earnings on restricted stock units
that were deferred, which generated an annual gain of 19.08% in
2010; excluding the impact of the vested and deferred restricted
stock units, Mr. Reeds 2010 annual gain was
approximately 15.48%. The earnings on Mr. Vermylens
Deferred Compensation Plan account were measured by reference to
a portfolio of publicly available mutual funds chosen by
Mr. Vermylen in advance and administered by an outside
third party. Earnings shown above for Mr. Vermylen also
include earnings on vesting of restricted stock units that were
deferred, which generated an annual gain of 18.1% in 2010;
excluding the impact of the vested and deferred restricted stock
units, Mr. Vermylens 2010 annual gain was
approximately 12.78%. Earnings shown above for
Messrs. ONeill and Walsh are earnings on restricted
stock units that were deferred. Messrs. ONeill,
Riordan and Walsh do not participate in the Deferred
Compensation Plan.
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
As noted on page 28 of this Proxy Statement, we have
entered into employment agreements with our NEOs. The employment
agreements provide for payments of certain benefits, as
described below, upon the termination of a NEO. The NEOs
rights upon termination of his employment depend upon the
circumstance of the termination. Central to an understanding of
the rights of each NEO under the employment agreements is an
understanding of the definitions of Cause and
Good Reason that are used in the employment
agreements. For purposes of the employment agreements:
|
|
|
|
|
We have Cause to terminate the NEO if the NEO has engaged in any
of a list of specified activities, including refusing to perform
duties consistent with the scope and nature of his position,
committing an act materially detrimental to the financial
condition
and/or
goodwill of us or our subsidiaries, commission of a felony or
other actions specified in the definition.
|
|
|
|
The NEO is said to have Good Reason to terminate his employment
and thereby gain access to the benefits described below if we
assign the NEO duties that are materially inconsistent with his
position, reduce his compensation, call for relocation, or take
certain other actions specified in the definition.
|
The employment agreements require, as a precondition to the
receipt of these payments, that the NEO sign a standard form of
release in which the NEO waives all claims that the NEO might
have against us and certain associated individuals and entities.
The release also includes non-compete and non-solicit provisions
that would apply for a period of one year following the
NEOS termination of employment and non-disparagement and
confidentiality provisions that would apply for an unlimited
period of time following the NEOS termination of
employment.
The employment agreement for each NEO specifies the payment to
each individual in each of the following situations:
|
|
|
|
|
Involuntary termination without cause or resignation with Good
Reason
|
|
|
|
Retirement
|
33
|
|
|
|
|
Death or disability
|
|
|
|
Termination without Cause or with Good Reason after change-in-
control
|
In the event of an involuntary termination of the employee
without Cause, or resignation by the employee for Good Reason,
the NEO will receive two times the employees base salary
and target bonus (three times in the case of Mr. Reed), and
continuation of all health and welfare benefits for two years
(three years in the case of Mr. Reed). In addition, any
unvested options issued in connection with their employment
agreement, shall become vested and exercisable and any
restricted stock and restricted stock units outstanding and
issued in connection with their employment agreement, shall
continue to vest on the same terms that would have applied if
the NEOs termination had not occurred.
Hewitt has reviewed the existing
change-in-control
severance provisions of our NEOs employment agreements
relative to the current practices of our Compensation Comparator
Group and has found our practices to be within the norms of the
group.
In the event of an involuntary termination of the employee
without Cause, or resignation by the employee for Good Reason
within a 24 month period immediately following a
change in-control of the Company, the NEO will
receive three times the amount of his base salary and target
bonus, and continuation of all health and welfare benefits for
three years. In addition, all unvested options shall become
vested and exercisable and any restricted stock, and restricted
stock units outstanding shall fully vest. The NEOs, with the
exception of Mr. Riordan, are eligible to receive a
gross-up
payment from the Company to the extent they incur excise taxes
under Section 4999 of the Internal Revenue Code.
In the event of death, disability or retirement, the NEO will
receive no additional payments but all unvested options shall
become vested and exercisable and any restricted stock, and
restricted stock units outstanding shall continue to vest on the
same terms that would have applied if the NEOS death,
disability or retirement had not occurred. In the event of
disability, NEOs receive continuation of health and welfare
benefits for three years.
In 2010, the Company issued equity awards to our NEOs that are
only subject to the terms and conditions of the Equity and
Incentive Plan, and include stock options, restricted stock and
performance units. In the event of a
change-in-control,
unvested stock options will become fully vested, the
restrictions on the restricted stock will lapse, and the
restrictions on the greater of the units awarded or accrued will
lapse in full. In the event of death, disability, or retirement,
unvested options will become fully vested, and a pro rata
portion of the restricted stock that would be eligible for lapse
of restrictions on the next anniversary date of the grant will
lapse. No performance units will vest upon death, disability or
retirement. Unvested stock options, restricted stock and
performance units will be forfeited for any other reason of
termination.
34
The tables below illustrate the payouts to each NEO under each
of the various separation situations. The tables assume that the
terminations took place on December 31, 2010.
Name of
Participant: Sam K. Reed
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
without
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
Cause or
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Resignation
|
|
|
|
|
|
|
without
|
|
|
|
|
|
|
|
|
for Good
|
|
|
|
|
|
|
Cause or
|
|
|
|
|
|
|
|
|
Reason
|
|
|
Change in
|
|
|
|
Resignation
|
|
|
|
|
|
|
|
|
Following
|
|
|
Control
|
|
|
|
for Good
|
|
|
Retirement
|
|
|
|
|
|
Change in
|
|
|
Without
|
|
|
|
Reason(1)
|
|
|
or Death
|
|
|
Disability
|
|
|
Control
|
|
|
Termination
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Severance
|
|
$
|
5,304,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
5,304,000
|
|
|
$
|
0
|
|
Interest on Severance
|
|
$
|
10,184
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
10,184
|
|
|
$
|
0
|
|
Pro-rated Annual Incentives
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
884,000
|
|
|
$
|
0
|
|
Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,227,002
|
|
|
$
|
1,227,002
|
|
|
$
|
1,227,002
|
|
Restricted Stock, Restricted Stock Units and Performance Units
|
|
$
|
0
|
|
|
$
|
317,638
|
|
|
$
|
317,638
|
|
|
$
|
6,510,583
|
|
|
$
|
6,510,583
|
|
Cash LTIP
|
|
$
|
1,155,250
|
|
|
$
|
1,155,250
|
|
|
$
|
1,155,250
|
|
|
$
|
2,128,500
|
|
|
$
|
2,128,500
|
|
Welfare Benefits
|
|
$
|
35,200
|
|
|
$
|
0
|
|
|
$
|
35,200
|
|
|
$
|
35,200
|
|
|
$
|
0
|
|
Excise Tax &
Gross-Up
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
2,777,615
|
|
|
$
|
0
|
|
Aggregate Payments
|
|
$
|
6,504,634
|
|
|
$
|
1,472,888
|
|
|
$
|
2,735,090
|
|
|
$
|
18,877,084
|
|
|
$
|
9,866,085
|
|
|
|
|
(1) |
|
Assumes Mr. Reed is acting as CEO at the time of
involuntary or Good Reason termination. If Mr. Reed were
not acting in the capacity of CEO, termination would result in
the full vesting of stock options, basic restricted shares and
the Cash LTIP. |
Name of
Participant: David B. Vermylen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
without
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
Cause or
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Resignation
|
|
|
|
|
|
|
Without
|
|
|
|
|
|
|
|
|
for Good
|
|
|
|
|
|
|
Cause or
|
|
|
|
|
|
|
|
|
Reason
|
|
|
Change in
|
|
|
|
Resignation
|
|
|
|
|
|
|
|
|
Following
|
|
|
Control
|
|
|
|
for Good
|
|
|
Retirement
|
|
|
|
|
|
Change in
|
|
|
Without
|
|
|
|
Reason
|
|
|
or Death
|
|
|
Disability
|
|
|
Control
|
|
|
Termination
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Severance
|
|
$
|
2,127,600
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,191,400
|
|
|
$
|
0
|
|
Interest on Severance
|
|
$
|
6,127
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
6,127
|
|
|
$
|
0
|
|
Pro-rated Annual Incentives
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
472,800
|
|
|
$
|
0
|
|
Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
556,161
|
|
|
$
|
556,161
|
|
|
$
|
556,161
|
|
Restricted Stock, Restricted Stock Units
|
|
$
|
0
|
|
|
$
|
148,001
|
|
|
$
|
148,001
|
|
|
$
|
4,196,985
|
|
|
$
|
4,196,985
|
|
Cash LTIP
|
|
$
|
540,000
|
|
|
$
|
540,000
|
|
|
$
|
540,000
|
|
|
$
|
997,500
|
|
|
$
|
997,500
|
|
Welfare Benefits
|
|
$
|
21,363
|
|
|
$
|
0
|
|
|
$
|
32,044
|
|
|
$
|
32,044
|
|
|
$
|
0
|
|
Excise Tax &
Gross-Up
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,555,439
|
|
|
$
|
0
|
|
Aggregate Payments
|
|
$
|
2,695,090
|
|
|
$
|
688,001
|
|
|
$
|
1,276,206
|
|
|
$
|
11,008,456
|
|
|
$
|
5,750,646
|
|
35
Name of
Participant: Dennis F. Riordan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
without Cause
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
or Resignation
|
|
|
|
|
|
|
Without
|
|
|
|
|
|
|
|
|
for Good
|
|
|
|
|
|
|
Cause or
|
|
|
|
|
|
|
|
|
Reason
|
|
|
Change in
|
|
|
|
Resignation
|
|
|
|
|
|
|
|
|
Following
|
|
|
Control
|
|
|
|
for Good
|
|
|
Retirement
|
|
|
|
|
|
Change in
|
|
|
Without
|
|
|
|
Reason
|
|
|
or Death
|
|
|
Disability
|
|
|
Control
|
|
|
Termination
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Severance
|
|
$
|
1,324,800
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,987,200
|
|
|
$
|
0
|
|
Interest on Severance
|
|
$
|
3,815
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,815
|
|
|
$
|
0
|
|
Pro-rated Annual Incentives
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
248,400
|
|
|
$
|
0
|
|
Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
292,818
|
|
|
$
|
292,818
|
|
|
$
|
292,818
|
|
Restricted Stock, Restricted Stock Units and Performance Units
|
|
$
|
0
|
|
|
$
|
104,726
|
|
|
$
|
104,726
|
|
|
$
|
2,556,206
|
|
|
$
|
2,556,206
|
|
Cash LTIP
|
|
$
|
378,750
|
|
|
$
|
378,750
|
|
|
$
|
378,750
|
|
|
$
|
697,500
|
|
|
$
|
697,500
|
|
Welfare Benefits
|
|
$
|
24,747
|
|
|
$
|
0
|
|
|
$
|
37,120
|
|
|
$
|
37,120
|
|
|
$
|
0
|
|
Excise Tax &
Gross-Up
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate Payments
|
|
$
|
1,732,112
|
|
|
$
|
483,476
|
|
|
$
|
813,414
|
|
|
$
|
5,823,059
|
|
|
$
|
3,546,524
|
|
Name of
Participant: Thomas E. ONeill
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
without
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
Cause or
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Resignation
|
|
|
|
|
|
|
Without
|
|
|
|
|
|
|
|
|
for Good
|
|
|
|
|
|
|
Cause or
|
|
|
|
|
|
|
|
|
Reason
|
|
|
Change in
|
|
|
|
Resignation
|
|
|
|
|
|
|
|
|
Following
|
|
|
Control
|
|
|
|
for Good
|
|
|
Retirement
|
|
|
|
|
|
Change in
|
|
|
Without
|
|
|
|
Reason
|
|
|
or Death
|
|
|
Disability
|
|
|
Control
|
|
|
Termination
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Severance
|
|
$
|
1,324,800
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,987,200
|
|
|
$
|
0
|
|
Interest on Severance
|
|
$
|
3,815
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,815
|
|
|
$
|
0
|
|
Pro-rated Annual Incentives
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
248,400
|
|
|
$
|
0
|
|
Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
388,324
|
|
|
$
|
388,324
|
|
|
$
|
388,324
|
|
Restricted Stock, Restricted Stock Units and Performance Units
|
|
$
|
0
|
|
|
$
|
104,726
|
|
|
$
|
104,726
|
|
|
$
|
2,932,907
|
|
|
$
|
2,932,907
|
|
Cash LTIP
|
|
$
|
378,750
|
|
|
$
|
378,750
|
|
|
$
|
378,750
|
|
|
$
|
697,500
|
|
|
$
|
697,500
|
|
Welfare Benefits
|
|
$
|
24,747
|
|
|
$
|
0
|
|
|
$
|
37,120
|
|
|
$
|
37,120
|
|
|
$
|
0
|
|
Excise Tax &
Gross-Up
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
901,416
|
|
|
$
|
0
|
|
Aggregate Payments
|
|
$
|
1,732,112
|
|
|
$
|
483,476
|
|
|
$
|
908,920
|
|
|
$
|
7,196,682
|
|
|
$
|
4,018,731
|
|
36
Name of
Participant: Harry J. Walsh
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
without
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
Cause or
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
Resignation
|
|
|
|
|
|
|
Without
|
|
|
|
|
|
|
|
|
for Good
|
|
|
|
|
|
|
Cause or
|
|
|
|
|
|
|
|
|
Reason
|
|
|
Change in
|
|
|
|
Resignation
|
|
|
|
|
|
|
|
|
Following
|
|
|
Control
|
|
|
|
for Good
|
|
|
Retirement
|
|
|
|
|
|
Change in
|
|
|
Without
|
|
|
|
Reason
|
|
|
or Death
|
|
|
Disability
|
|
|
Control
|
|
|
Termination
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Severance
|
|
$
|
1,324,800
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,987,200
|
|
|
$
|
0
|
|
Interest on Severance
|
|
$
|
3,815
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,815
|
|
|
$
|
0
|
|
Pro-rated Annual Incentives
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
248,400
|
|
|
$
|
0
|
|
Stock Options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
388,324
|
|
|
$
|
388,324
|
|
|
$
|
388,324
|
|
Restricted Stock, Restricted Stock Units and Performance Units
|
|
$
|
0
|
|
|
$
|
104,726
|
|
|
$
|
104,726
|
|
|
$
|
2,932,907
|
|
|
$
|
2,932,907
|
|
Cash LTIP
|
|
$
|
378,750
|
|
|
$
|
378,750
|
|
|
$
|
378,750
|
|
|
$
|
697,500
|
|
|
$
|
697,500
|
|
Welfare Benefits
|
|
$
|
23,691
|
|
|
$
|
0
|
|
|
$
|
35,536
|
|
|
$
|
35,536
|
|
|
$
|
0
|
|
Excise Tax &
Gross-Up
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
900,441
|
|
|
$
|
0
|
|
Aggregate Payments
|
|
$
|
1,731,056
|
|
|
$
|
483,476
|
|
|
$
|
907,336
|
|
|
$
|
7,194,123
|
|
|
$
|
4,018,731
|
|
2010
DIRECTOR COMPENSATION
Directors who are employees of the Company receive no additional
fee for service as a director. Non-employee directors receive a
combination of cash payments and equity-based compensation as
shown in the table and narrative below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
Restricted
|
|
|
|
|
|
|
or Paid
|
|
|
Stock
|
|
|
|
|
|
|
in Cash
|
|
|
Units
|
|
|
Total
|
|
Name
|
|
($)(a)
|
|
|
($)(b)
|
|
|
($)
|
|
|
George V. Bayly
|
|
|
65,750
|
|
|
|
111,993
|
|
|
|
177,743
|
|
Diana S. Ferguson
|
|
|
74,000
|
|
|
|
111,993
|
|
|
|
185,993
|
|
Dennis F. OBrien
|
|
|
65,000
|
|
|
|
111,993
|
|
|
|
176,993
|
|
Frank J. OConnell
|
|
|
67,000
|
|
|
|
111,993
|
|
|
|
178,993
|
|
Ann M. Sardini
|
|
|
77,250
|
|
|
|
111,993
|
|
|
|
189,243
|
|
Gary D. Smith
|
|
|
71,500
|
|
|
|
111,993
|
|
|
|
183,493
|
|
Terdema L. Ussery, II
|
|
|
73,000
|
|
|
|
111,993
|
|
|
|
184,993
|
|
|
|
|
(a) |
|
Consists of the amounts described below under Cash
Compensation. With respect to Mr. Smith, includes
$5,000 paid for service as Lead Independent Director. With
respect to Ms. Sardini, includes $10,000 paid for service
as Chairman of the Audit Committee. With respect to
Mr. OConnell, includes $5,000 paid for service as
Chairman of the Nominating and Corporate Governance Committee.
With respect to Mr. Ussery, includes $5,000 paid for
service as Chairman of the Compensation Committee. |
|
(b) |
|
In 2010, each director was granted 2,410 restricted stock units
with a grant date fair value of $46.47 per unit As of
December 31, 2010, Mr. Bayly has 22,499 stock options
and 2,410 restricted stock units outstanding and 7,600 vested
restricted stock units deferred until termination of service
from the Board; Ms. Ferguson has 3,500 stock options and
2,410 restricted stock units outstanding and 3,900 restricted
stock units deferred until termination of service from the
Board; Mr. OBrien has 2,410 restricted stock units
outstanding and 3,500 restricted stock units deferred until
termination of service from the Board; Mr. OConnell
has 22,499 stock options and 2,410 restricted stock units
outstanding and 7,600 vested restricted stock units deferred
until termination of service from the Board; Ms. Sardini
has 1,300 stock options and 2,410 restricted stock units
outstanding and 7,600 vested restricted stock units deferred
until termination of service from the Board; Mr. Smith has
22,499 stock options and 2,410 restricted stock units
outstanding and 7,600 vested restricted |
37
|
|
|
|
|
stock units deferred until termination of service from the
Board; and Mr. Ussery has 22,499 stock options and 2,410
restricted stock units outstanding and 7,600 vested restricted
stock units deferred until termination of service from the Board. |
Cash
Compensation
Directors who are not employees of the Company receive a fee of
$50,000 per year plus $1,500 per Board and committee meeting
attended in person, and $750 for meetings attended
telephonically.
Equity-Based
Compensation
To ensure that directors have an ownership interest aligned with
other stockholders, each outside director will be granted
options
and/or
restricted stock units of the Companys stock having a
value determined by the Board.
Board
Stock Ownership and Age Requirements
As TreeHouse does not have stock ownership guidelines for
management, it also does not have ownership guidelines for the
Board. Not only do we feel the need for consistency on this
policy, but TreeHouse wants to choose the best potential
directors, not just those who are independently wealthy and can
afford to hold their stock positions. At the same time, our
directors generally have held their equity grants, and
accordingly, we do not believe formal ownership guidelines are
necessary for TreeHouse.
We have not set an upper age limit for Board members as we feel
that highly experienced directors on our Board have provided and
will provide our management team with great insight and wisdom
into our business. In addition to our experiences, several
corporate boards across the United States benefit greatly from
more seasoned business leaders such as Warren Buffett, who
turned 80 in 2010.
COMPENSATION
COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
No member of the Compensation Committee was, during the year
ended December 31, 2010, an officer, former officer or
employee of the Company or any of its subsidiaries. No executive
officer of the Company served as a member of (i) the
compensation committee of another entity in which one of the
executive officers of such entity served on the Companys
Compensation Committee, (ii) the board of directors of
another entity in which one of the executive officers of such
entity served on the Companys Compensation Committee, or
(iii) the compensation committee of another entity in which
one of the executive officers of such entity served as a member
of the Companys Board of Directors, during the year ended
December 31, 2010.
COMMITTEE
REPORTS
Notwithstanding anything to the contrary set forth in any of
the Companys previous or future filings under the
Securities Act of 1933, as amended or the Securities Exchange
Act of 1934, as amended (the Exchange Act) that
might incorporate by reference this Proxy Statement or future
filings with the SEC, in whole or in part, the following
Committee reports shall not be deemed to be incorporated by
reference into any such filings, except to the extent we
specifically incorporate by reference a specific report into
such filing. Further, the information contained in the
following committee reports shall not be deemed to be
soliciting material or to be filed with
the SEC or subject to Regulation 14A or 14C other than as
set forth in Item 407 of
Regulation S-K,
or subject to the liabilities of Section 18 of the Exchange
Act, except to the extent that we specifically request that the
information contained in any of these reports be treated as
soliciting materials.
The Board has established three committees to help oversee
various matters of the Company. These include the Audit
Committee, the Compensation Committee and the Nominating and
Corporate Governance Committee. Each of these Committees
operates under the guidelines of their specific charters. These
charters may be reviewed on our website at
www.treehousefoods.com.
38
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee is currently composed of four independent
directors, Ms. Ferguson, Ms. Sardini and
Messrs. OBrien and Ussery, and operates pursuant to a
written charter. The Companys management is responsible
for its internal accounting controls and the financial reporting
process. The Companys independent registered public
accounting firm, Deloitte & Touche LLP, is responsible
for performing an independent audit of the Companys
consolidated financial statements and internal controls over
financial reporting in accordance with the standards of the
Public Company Accounting Oversight Board (PCAOB)
and to issue reports thereon. The Audit Committees
responsibility is to monitor and oversee these processes, and
appoint, evaluate, and review the performance of the Audit
Committee, and compensate the independent registered public
accounting firm.
In discharging its oversight responsibility as to the audit
process, the Audit Committee obtained from the independent
registered public accounting firm a formal written statement
describing all relationships between the independent registered
public accounting firm and the Company that might bear on the
independent registered public accounting firms
independence consistent with PCAOB Ethics and Independence
Rule 3526, Communication with Audit Committees Concerning
Independence, and discussed with Deloitte & Touche LLP
any relationships that may impact its objectivity and
independence, and the Audit Committee satisfied itself as to
Deloitte & Touche LLPs independence. The Audit
Committee has reviewed and discussed the financial statements
with management. The Audit Committee also discussed with
management and Deloitte & Touche LLP the quality and
adequacy of the Companys internal controls and the
internal audit departments organization, responsibilities,
budget and staffing. The Audit Committee reviewed both with
Deloitte & Touche LLP and the internal auditors their
audit plans, audit scope, and identification of audit risks.
The Audit Committee discussed and reviewed with
Deloitte & Touche LLP all communications required by
generally accepted auditing standards, including those described
in Statement on Auditing Standards No. 61, as amended,
Communication with Audit Committees, as adopted by
the PCAOB in Rule 3200T, and, with and without management
present, discussed and reviewed the results of
Deloitte & Touche LLPs examination of the
financial statements. The Audit Committee also discussed the
results of the internal audit examinations.
Based on the Audit Committees discussions with management
and Deloitte & Touche LLP and the Audit
Committees review of the representations of management and
the report of the independent registered public accounting firm,
the Audit Committee recommended to the Board that the audited
consolidated financial statements be included in the
Companys Annual Report on
Form 10-K
for the year ended December 31, 2010, for filing with the
SEC.
In order to assure that the provision of audit and non-audit
services provided by Deloitte & Touche LLP, our
independent registered public accounting firm, does not impair
its independence, the Audit Committee is required to pre-approve
all audit services to be provided to the Company by
Deloitte & Touche LLP, and all other services,
including review, attestation and non-audit services, other than
de minimis services that satisfy the requirements of the New
York Stock Exchange and the Exchange Act, pertaining to de
minimis exceptions.
This report is respectfully submitted by the Audit Committee of
the Board of Directors.
Ann M. Sardini, Chairman
Diana S. Ferguson
Dennis F. OBrien
Terdema L. Ussery, II
REPORT OF
THE NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The Nominating and Corporate Governance Committee is currently
comprised of three independent directors, Messrs. Bayly,
OBrien and OConnell. The purposes of the Nominating
and Corporate Governance Committee are (i) to identify
individuals qualified to become members of the Board,
(ii) to recommend to the Board the persons to be nominated
for election as directors at any meeting of the stockholders,
(iii) in the event of a vacancy on or increase in the size
of the Board, to recommend to the Board the persons to be
nominated to fill such vacancy or additional Board seat,
(iv) to recommend to the Board the persons to be nominated
for each committee of the Board,
39
(v) to develop and recommend to the Board a set of
corporate governance guidelines applicable to the Company,
including the Companys Code of Ethics, and (vi) to
oversee the evaluation of the Board. The Nominating and
Corporate Committee will consider nominees who are recommended
by stockholders, provided such nominees are recommended in
accordance with the nominating procedures set forth in the
Companys By-laws. The Board adopted a charter for the
Nominating and Corporate Governance Committee in June 2005.
This report is respectfully submitted by the Nominating and
Corporate Governance Committee of the Board of Directors.
Frank J. OConnell, Chairman
George V. Bayly
Dennis F. OBrien
REPORT OF
THE COMPENSATION COMMITTEE
The Compensation Committee is comprised of Ms. Ferguson and
Messrs. Bayly, Smith and Ussery and operates pursuant to a
written charter. The Compensation Committee oversees the
Companys compensation program on behalf of the Board. In
fulfilling its oversight responsibilities, the Compensation
Committee reviewed and discussed with management the
Compensation Discussion and Analysis set forth in this Proxy
Statement.
In reliance on the review and discussions referred to above, the
Compensation Committee recommended to the Board that the
Compensation Discussion and Analysis be included in the
Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 and the
Companys Proxy Statement to be filed in connection with
the Companys 2011 Annual Meeting of Stockholders, each of
which will be filed with the SEC.
This report is respectfully submitted by the Compensation
Committee of the Board of Directors.
Terdema L. Ussery, II, Chairman
Diana S. Ferguson
George V. Bayly
Gary D. Smith
FEES
BILLED BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The following table presents fees billed for professional
services rendered for the audit of our consolidated financial
statements, audit of our internal controls over financial
reporting and review of our quarterly reports on
Form 10-Q
and fees billed for other services rendered by
Deloitte & Touche LLP for 2009 and 2010:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2010
|
|
|
Audit Fees
|
|
$
|
1,533,626
|
|
|
$
|
1,143,531
|
|
Audit-related Fees
|
|
$
|
0
|
|
|
$
|
0
|
|
Tax Fees
|
|
$
|
167,174
|
|
|
$
|
40,543
|
|
All other Fees(1)
|
|
$
|
204,000
|
|
|
$
|
211,000
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
1,904,800
|
|
|
$
|
1,395,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
All other Fees in 2010 includes accounting consultations and due
diligence in connection with the Companys acquisition of
Sturm Foods, Inc. and S.T. Specialty Foods, Inc. |
Audit fees include fees associated with the annual audit of our
consolidated financial statements and internal controls over
financial reporting and reviews of the Companys quarterly
reports on
Form 10-Q.
Audit-related fees include consultation concerning financial
accounting and SEC reporting standards. Tax fees include
services rendered for tax advice and tax planning. All other
fees are for any other services not included in the first three
categories. The Audit Committee pre-approved all of the audit,
audit-related, tax and other services in accordance with the
pre-approval policies described above under the heading
Committee Reports Report of the Audit
40
Committee and determined that the independent
accountants provision of non-audit services is compatible
with maintaining the independent accountants independence.
AMENDMENT
OF RESTATED CERTIFICATE OF INCORPORATION
In our continuing review and consideration of the Companys
corporate governance practices and policies, we have evaluated
provisions of our Certificate, By-laws and other policies
relating to certain stockholder rights. As a result, the Board
has determined that it is in the best interests of the Company
and its stockholders to modify certain governance provisions and
practices, including those described below in Proposal 3
and Proposal 4. In addition to the actions proposed in this
Proxy Statement, the Board recently approved and adopted an
amendment to the By-laws to provide for majority voting in
uncontested director elections, commencing with this Meeting,
and the Companys stockholder rights plan that became
effective in 2005 in connection with the formation of the
Company expired in June 2010 and was not renewed.
We are proposing two amendments to the Certificate in our
ongoing effort to balance the roles of stockholders and
directors in governing our Company, as well as other business
considerations of the Company. If adopted by stockholders, these
amendments would (i) provide stockholders with the right to
call special meetings of stockholders and (ii) reduce the
stockholder vote required for stockholders to remove a director
for cause.
The summaries of the amendments contained in this Proxy
Statement are qualified in their entirety by reference to the
full text of the proposed amendments set forth below. If
stockholders approve the amendments to the Certificate at the
Meeting, corresponding changes to the Companys By-laws
also will become effective.
AMENDMENT
OF RESTATED CERTIFICATE OF INCORPORATION RELATED TO
STOCKHOLDERS RIGHT TO CALL
SPECIAL MEETINGS (PROPOSAL 3)
The Board recommends that stockholders approve an amendment to
our Certificate in order to provide stockholders with the right
to call special meetings of stockholders. The ability of
stockholders to call special meetings of stockholders is
increasingly considered an important corporate governance
practice for United States public companies. The Board is
proposing an amendment to our Certificate to provide
stockholders representing at least a majority of the votes which
all stockholders would be entitled to cast in any annual
election of directors or class of directors the right to call
special meetings of stockholders. The Certificate currently
provided that only the Board, Chairman of the Board, Chief
Executive Officer and President may call special meetings of
stockholders.
We believe the proposed stockholder right to call special
meetings as set forth in this Proposal 3 appropriately
balances the roles of shareholders and directors in governing
the Company. The Board, upon the recommendation of the
Nominating and Corporate Governance Committee, has unanimously
adopted resolutions approving this amendment to the Certificate
and recommending approval of this amendment to our stockholders.
The Board also has adopted a corresponding amendment to the
By-laws that would become effective upon stockholder approval of
this Proposal 3.
The text of the proposed amendment to Article Eleventh of
the Certificate is set forth below (with deletions indicated by
strikethrough and additions indicated by underline):
ELEVENTH: Special meetings of stockholders for any
purpose or purposes may be called at any time by the Board of
Directors, the Chairman of the Board or the President,
but such, the President or upon request of
stockholders representing at least a majority of the votes which
all stockholders would be entitled to cast in any annual
election of directors or class of directors. Such special
meetings may not be called by any other person or persons.
Business transacted at any special meeting of stockholders shall
be limited to matters relating to the purpose or purposes stated
in the notice of meeting. Notwithstanding any other provision of
applicable law, this Restated Certificate of Incorporation or
the By-laws of the Corporation, and notwithstanding the fact
that a lesser percentage may be specified by law, the
affirmative vote of the holders of at least seventy-five percent
(75%) of the votes which all the stockholders would be entitled
to cast in any annual election of directors or class of
directors represented at a meeting of stockholders at which a
quorum is present (as
41
provided in the By-laws of the Corporation) shall be required
to amend or repeal, or to adopt any provision inconsistent with,
this Article ELEVENTH.
The affirmative vote of 75% of the shares of common stock
entitled to vote at the Meeting is required for approval of this
Proposal 3.
THE BOARD
RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
THE AMENDMENT OF THE RESTATED
CERTIFICATE OF INCORPORATION TO PROVIDE STOCKHOLDERS THE RIGHT
TO CALL SPECIAL MEETINGS OF
STOCKHOLDERS.
AMENDMENT
OF RESTATED CERTIFICATE OF INCORPORATION RELATED TO REMOVAL OF
DIRECTORS (PROPOSAL 4)
The Board recommends that stockholders approve an amendment to
our Certificate in order to reduce the stockholder vote required
to remove a director for cause. In connection with the review of
our corporate governance practices and policies, the Board
determined that, although it believes that the extraordinary
action of removing a director with cause should only be taken by
stockholders when there is a substantial consensus among all
stockholders, it is appropriate at this time that stockholders
representing a majority of the voting power be able to take such
action. The Board is proposing an amendment to our Certificate
to provide stockholders representing at least a majority of the
votes which all stockholders would be entitled to cast in any
annual election of directors or class of directors with the
right to remove a director for cause. The Certificate currently
requires the vote of stockholders representing at least 75% of
the votes which all stockholders would be entitled to cast in
any annual election of directors or class of directors in order
for stockholders to remove a director for cause.
We believe the proposed amendment described in this
Proposal 4 appropriately balances the roles of shareholders
and directors in governing the Company. The Board, upon the
recommendation of the Nominating and Corporate Governance
Committee, has unanimously adopted resolutions approving this
amendment to the Certificate and recommending approval of this
amendment to our stockholders. The Board also has adopted a
corresponding amendment to the By-laws that would become
effective upon stockholder approval of this Proposal 4.
The text of the proposed amendment to Article Ninth of the
Certificate is set forth below (with deletions indicated by
strikethrough and additions indicated by underline):
5. Removal. Subject to the
rights of holders of any series of Preferred Stock, directors of
the Corporation may be removed only for cause and only by the
affirmative vote of the holders of at least seventy-five
percent (75%)a majority of the votes
which all the stockholders would be entitled to cast in any
annual election of directors or class of directors.
The affirmative vote of 75% of the shares of common stock
entitled to vote at the Meeting is required for approval of this
Proposal 4.
42
THE BOARD
RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
THE AMENDMENT OF THE RESTATED
CERTIFICATE OF INCORPORATION TO REDUCE THE STOCKHOLDER VOTE
REQUIRED TO REMOVE A DIRECTOR FOR
CAUSE.
ADVISORY
VOTE ON EXECUTIVE COMPENSATION (PROPOSAL 5)
Pursuant to Section 14A of the Exchange Act, we are seeking
stockholder approval of the Companys executive
compensation program and practices as disclosed in this Proxy
Statement. Stockholders are being asked to vote on the following
advisory resolution:
RESOLVED, that the Companys stockholders approve, on
an advisory basis, the compensation of the Companys
executive officers, as disclosed in the 2011 Proxy Statement
pursuant to the compensation disclosure rules of the Securities
and Exchange Commission, including the Compensation Discussion
and Analysis, the 2010 Summary Compensation Table and the other
related tables and disclosure.
The Company has a
pay-for-performance
philosophy that forms the foundation of our decisions regarding
execution of compensation. This philosophy and the compensation
structure approved by the Compensation Committee are central to
the Companys ability to attract, retain and motivate
individuals who can achieve superior financial results in the
best interests of the Company and its stockholders. To that end,
our program links pay to performance by delivering a significant
majority of the total compensation opportunity of our NEOs in
variable or pay at risk compensation programs
(annual and long-term incentive plans). Our program also aligns
the NEOs financial interest with those of our stockholders
by delivering a substantial portion of their total compensation
in the form of equity awards and other long-term incentive
vehicles.
We urge our stockholders to read Compensation Discussion
and Analysis above, which describes in detail how our
executive compensation program and practices operate and are
designed to achieve our compensation objectives, as well as the
accompanying compensation tables which provide detailed
information on the compensation of our NEOs.
This advisory vote on the Companys executive compensation
program and practices is non-binding on the Board. Although
non-binding, the Board and the Compensation Committee will
carefully review the voting results when evaluating our
executive compensation program.
The affirmative vote of a majority of the shares of common stock
present in person or represented by proxy and entitled to be
voted on the proposal at the Meeting is required for approval of
this advisory resolution.
43
THE BOARD
RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF
THE ADVISORY RESOLUTION SET FORTH
ABOVE.
ADVISORY
VOTE ON FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE
COMPENSATION (PROPOSAL 6)
Pursuant to Section 14A of the Exchange Act, we are asking
stockholders to vote on whether future advisory votes on
executive compensation of the nature reflected in
Proposal 5 above should occur every year, every two years
or every three years.
After careful consideration the Board has determined that
holding an advisory vote on executive compensation every year is
the most appropriate policy for the Company at this time, and
recommends that stockholders vote for future advisory votes on
executive compensation to occur every year. While the
Companys executive compensation programs are designed to
promote a long-term connection between pay and performance, the
Board recognizes that executive compensation disclosures are
made annually. Given that the
say-on-pay
advisory vote provisions are new, holding an annual advisory
vote on executive compensation provides the Company with more
direct and immediate feedback on our compensation disclosures.
We believe that an annual advisory vote on executive
compensation is consistent with our practice of seeking input
and engaging in dialogue with our stockholders on corporate
governance matters and our executive compensation philosophy,
policies and practices.
This advisory vote on the frequency of future advisory votes on
executive compensation is non-binding on the Board. Stockholders
will be able to specify one of four choices for this proposal on
the proxy card: one year, two years, three years or abstain. The
frequency alternative that receives the most votes will be the
choice of stockholders. Stockholders are not voting to approve
or disapprove the Boards recommendation. Although
non-binding, the Board and the Compensation Committee will
carefully review the voting results. Notwithstanding the
Boards recommendation and the outcome of the stockholder
vote, the Board may in the future decide to conduct advisory
votes on a more or less frequent basis and may vary its practice
based on factors such as discussions with stockholders and the
adoption of material changes to compensation programs.
RECOMMENDATION:
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE TO CONDUCT FUTURE
ADVISORY VOTES ON EXECUTIVE COMPENSATION EVERY YEAR.
STOCKHOLDER
PROPOSALS FOR 2012 ANNUAL MEETING OF STOCKHOLDERS
Any stockholder who intends to present proposals at the Annual
Meeting of Stockholders in 2012 pursuant to
Rule 14a-8
under the Securities Exchange Act of 1934 must send notice of
such proposal to us so that we receive it no later than November
2011. Any stockholder who intends to present proposals at the
Annual Meeting of Stockholders in 2012 other than pursuant to
Rule 14a-8
must comply with the notice provisions in our By-laws. The
notice provisions in our By-laws require that, for a proposal to
be properly brought before the Annual Meeting of Stockholders in
2012, proper notice of the proposal must be received by us not
less than 90 days or more than 120 days prior to the
first anniversary of this years Annual Meeting.
Stockholder proposals should be addressed to TreeHouse Foods,
Inc., 2021 Spring Road, Suite 600, Oak Brook, IL 60532,
Attention: Corporate Secretary.
HOUSEHOLDING
The SEC has adopted rules that permit companies and
intermediaries (e.g., brokers) to satisfy the delivery
requirements for proxy materials with respect to two or more
stockholders sharing the same address by delivering a single
proxy statement and annual report addressed to those
stockholders. This process, which is commonly referred to as
householding, potentially means extra convenience
for stockholders and cost savings for companies. We have not
implemented householding rules with respect to our record
holders. However, a number of brokers with account holders who
are stockholders may be householding our proxy
materials. If a stockholder receives a householding notification
from his, her or its broker, a single proxy statement and annual
report will be delivered to
44
multiple stockholders sharing an address unless contrary
instructions have been received from an affected stockholder.
Once you have received notice from your broker that they will be
householding communications to your address,
householding will continue until you are notified
otherwise.
Stockholders who currently receive multiple copies of the proxy
materials at their address and would like to request
householding of their communications should contact
their broker. In addition, if any stockholder that receives a
householding notification wishes to receive a
separate annual report and proxy statement at his, her or its
address, such stockholder should also contact his, her or its
broker directly. Stockholders who in the future wish to receive
multiple copies may also contact the Company at 2021 Spring
Road, Suite 600, Oak Brook, IL 60532, attention: Investor
Relations;
(708) 483-1300.
STOCKHOLDER
COMMUNICATION WITH THE BOARD
Stockholders and other interested parties may contact the Board
of Directors, the non-management directors or any individual
director (including the Lead Independent Director) by writing to
them
c/o TreeHouse
Foods Corporate Secretary, 2021 Spring Road, Suite 600, Oak
Brook, IL 60523, and such mail will be forwarded to the director
or directors, as the case may be.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Company has been advised that a representative of
Deloitte & Touche LLP, its independent registered
public accounting firm, will be present at the Annual Meeting
and available to respond to appropriate questions. The
representative will also be given an opportunity to make a
statement if he or she so desires.
OTHER
MATTERS
If any other matters properly come before the Annual Meeting, it
is the intention of the person named in the enclosed form of
proxy to vote the shares they represent in accordance with the
judgments of the persons voting the proxies.
The Annual Report of the Company for the year ending
December 31, 2010, was mailed to stockholders together with
this Proxy Statement.
We file annual, quarterly and special reports, proxy
statements and other information with the SEC. Our SEC filings
are available to the public over the internet at the SECs
website at www.sec.gov and on our website at
www.treehousefoods.com. You may also read and copy any
document we file with the SEC at its public reference facilities
at 450 Fifth Street, N.W., Washington, D.C. 20549.
You may also request one free copy of any of our filings
(other than an exhibit to a filing unless that exhibit is
specifically incorporated by reference into that filing) by
writing or telephoning Thomas E. ONeill, Senior Vice
President, General Counsel, Chief Administrative Officer and
Corporate Secretary at our principal executive office: TreeHouse
Foods, Inc., 2021 Spring Road, Suite 600, Oak Brook,
Illinois 60523, telephone
(708) 483-1300.
By Order of the Board of Directors
Thomas E. ONeill
Corporate Secretary
45
Appendix A
CORPORATE
GOVERNANCE GUIDELINES: DIRECTOR INDEPENDENCE
Except as may otherwise be permitted by NYSE rules, a majority
of the members of the Board shall be independent directors. To
be considered independent: (1) a director must be
independent as determined under Section 303A.02(b) of the
New York Stock Exchange Listed Company Manual and (2) in
the Boards judgment (based on all relevant facts and
circumstances), the director does not have a material
relationship with the Company (either directly or as a partner,
stockholder or officer of an organization that has a
relationship with the Company).
A-1
YOUR VOTE IS IMPORTANT
VOTE BY INTERNET/TELEPHONE
24 HOURS A DAY, 7 DAYS A WEEK
Proxies submitted by telephone or internet must be received by 11:59 p.m. Central Time, on April
27, 2011.
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VOTE BY INTERNET |
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VOTE BY TELEPHONE |
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VOTE BY MAIL |
http://www.proxyvoting.com/ths |
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1-866-540-5760 |
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Go to the website address
listed above.
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OR
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Use any touch-tone telephone.
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OR
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Mark, sign and date your proxy card.
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Have your proxy card ready.
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Have your proxy card ready.
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Detach your proxy card. |
Follow the simple
instructions that appear on
your computer screen.
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Follow the simple recorded instructions.
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Return your
proxy card in the postage-paid envelope provided. |
If
you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card
Mark, Sign, Date and Return The Proxy Card Promptly
Using the Enclosed Envelope
Votes must be indicated
(x) in Black or Blue ink
The Board of Directors recommends a vote FOR all nominees for director, FOR proposals 2, 3, 4 and
5 below, and FOR the 1 year frequency option in Proposal 6.
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Nominees:
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FOR
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AGAINST
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ABSTAIN |
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(01) Ann M. Sardini
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(02) Dennis F. OBrien
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(03) Sam K. Reed
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Ratification of Selection of Deloitte & Touche LLP as Independent Auditors |
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Amendment of the TreeHouse Foods, Inc. Restated Certificate of Incorporation to provide
stockholders the right to call special meetings of stockholders |
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Amendment of the TreeHouse Foods, Inc. Restated Certificate of Incorporation to reduce the
stockholder vote required to remove a director for cause |
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Advisory approval of executive compensation |
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Advisory approval of the frequency of future advisory votes on executive compensation |
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In their discretion, the proxies are authorized to vote upon any other business as may
properly come before the meeting or any adjournment or postponement thereof.
Please sign this proxy and return it promptly whether or not you expect to attend the meeting.
You may nevertheless vote in person if you attend. Please sign exactly as your name appears herein.
Give full title if an Attorney, Executor, Administrator, Trustee, Guardian, etc. For an account in
the name of two or more persons, each should sign, or if one signs, he should attach evidence of
his authority.
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Share Owner sign here
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Date
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Co-Owner sign here
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Date |
You can now access your TreeHouse Foods, Inc. account online.
Access your TreeHouse Foods, Inc. account online via Investor ServiceDirect® (ISD).
BNY Mellon Shareowner Services, the transfer agent for TreeHouse Foods, Inc., now makes it easy and
convenient to get
current information on your stockholder account.
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View account status
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View payment history for dividends |
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View certificate history
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Make address changes |
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View book-entry information
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Obtain a duplicate 1099 tax form |
Visit us on the web at http://www.bnymellon.com/shareowner/equityaccess
For Technical Assistance Call 1-877-978-7778 between 9am-7pm
Monday-Friday Eastern Time
Investor ServiceDirect®
Available 24 hours per day, 7 days per week
TOLL FREE NUMBER: 1-800-370-1163
Choose MLinkSM for fast, easy and secure 24/7 online access
to your future proxy materials, investment plan statements, tax
documents and more. Simply log on to Investor ServiceDirect® at
www.bnymellon.com/shareowner/equityaccess where step-by-step
instructions will prompt you through enrollment.
Important notice regarding the Internet availability of proxy materials for the Annual Meeting of
stockholders. The Proxy Statement and the 2010 Annual Report to Stockholders are available at:
http://www.proxyvoting.com/ths
▼ FOLD AND DETACH HERE ▼
TREEHOUSE FOODS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS APRIL 28, 2011
The undersigned appoints Sam K. Reed, David B. Vermylen and Thomas E. ONeill, and each of
them, attorneys and proxies, with the power of substitution in each of them, to vote for and on
behalf of the undersigned at the Annual Meeting of Stockholders of the Company to be held on April
28, 2011, and any adjournment thereof, upon the matters coming before the meeting, as set forth in
the Notice of Meeting and Proxy Statement, both of which have been received by the undersigned.
Without otherwise limiting the general authorization given hereby, said attorneys and proxies are
instructed to vote as follows:
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATIONS MADE, IF NO CHOICES ARE INDICATED,
THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR DIRECTOR, FOR PROPOSALS 2, 3, 4 AND 5 AND FOR THE ONE
YEAR FREQUENCY OPTION IN PROPOSAL 6.
YOUR VOTE IS IMPORTANT! PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE AND RETURN
IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
(Continued and to be marked, dated and signed, on the other side)
Address Change/Comments
(Mark the corresponding box on the reverse side)
BNY MELLON SHAREOWNER SERVICES
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250