UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment No. __)
Filed by
the Registrant x
Filed by
a Party other than the Registrant o
Check the
appropriate box:
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o Preliminary
Proxy Statement
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o Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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x Definitive
Proxy Statement
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o Definitive
Additional Materials
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o Soliciting
Material Pursuant to § 240.14a-12
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TEMPUR-PEDIC
INTERNATIONAL INC.
(Name of
Registrant as Specified In Its Charter)
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
x No
fee required.
o Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was
determined):
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(4)
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Proposed
maximum aggregate value of
transaction:
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(5)
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Total
fee paid:
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o
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Fee
paid previously with preliminary materials.
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o
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its
filing.
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(1)
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Amount
previously paid:
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(2)
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Form,
Schedule or Registration Statement
No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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2010
PROXY STATEMENT
ANNUAL
MEETING OF STOCKHOLDERS
The 2010
Annual Meeting of Stockholders of Tempur-Pedic International Inc.
will be
held at the offices of Bingham McCutchen LLP, 13th
Floor,
One
Federal St., Boston, MA 02110
May 4,
2010 at 10:00 A.M.
PROXY VOTING
OPTIONS
YOUR VOTE IS
IMPORTANT!
Important
Notice Regarding Availability of Proxy Materials:
The 2010
Proxy Statement and 2009 Annual Report are available at www.ProxyVote.com.
Whether
or not you expect to attend in person, we urge you to vote your shares by phone,
via the Internet, or by signing, dating, and returning the proxy card enclosed
with the paper copy of your voting materials at your earliest convenience. This
will ensure the presence of a quorum at the meeting. Promptly voting your shares
will save us the expense and extra work of additional solicitation. Submitting
your proxy now will not prevent you from voting your stock at the meeting if you
want to do so, as your vote by proxy is revocable at your option.
Voting by
the Internet or telephone is fast and
convenient, and your vote is immediately confirmed and tabulated. Most
important, by using the Internet or telephone, you help us reduce postage and
proxy tabulation costs. Or, if you prefer, you can vote by mail by returning the
enclosed proxy card in the addressed, prepaid envelope provided.
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VOTE BY INTERNET
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VOTE BY TELEPHONE
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VOTE BY MAIL
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http://www.proxyvote.com
24 hours
a day/7 days a week
Use
the Internet to vote your
proxy.
Have your proxy card
in
hand when you access the
web
site.
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1-800-690-6903
toll-free
24 hours
a
day/7 days a week
Use
any touch-tone telephone
to
vote your proxy. Have your
proxy
card in hand when you call.
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Sign
and date the proxy card and
return
it in the enclosed postage-
paid
envelope.
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If you vote your proxy by
Internet or by telephone, please do NOT mail back the proxy card. You can
access, view and download this year’s Annual Report on Form 10-K and Proxy
Statement at http://www.proxyvote.com.
To our
Stockholders:
I am
pleased to invite you to attend the annual meeting of stockholders of
Tempur-Pedic International Inc. to be held on Tuesday, May 4, 2010 at
10 a.m., local time, at the offices of Bingham McCutchen LLP, 13th
Floor, One Federal Street, Boston, Massachusetts.
Details
regarding admission to the meeting and the business to be conducted are more
fully described in the accompanying notice of annual meeting and Proxy
Statement.
We are
mailing to many of our stockholders a Notice of Availability of Proxy Materials
instead of a paper copy of this Proxy Statement, our 2009 Annual Report on Form
10-K and proxy card, as permitted by the rules of the Securities and Exchange
Commission. The Notice contains instructions on how to access those documents
over the Internet. The Notice also contains instructions on how each stockholder
can receive a paper copy of our proxy materials, including this Proxy Statement,
our 2009 Annual Report on Form 10-K and a form of proxy card or voting
instruction card. All stockholders who do not receive this Notice will receive a
paper copy of the proxy materials by mail. We believe that this process
conserves natural resources and reduces the costs of printing and distributing
our proxy materials.
Your vote
is important. Whether or not you plan to attend the annual meeting, we hope you
will vote as soon as possible. You may vote by proxy over the Internet or by
telephone, or, if you received paper copies of the proxy materials by mail, you
can also vote by mail by following the instructions on the proxy card or voting
instruction card. Voting over the Internet, by telephone or by written proxy or
voting instruction card will ensure your representation at the annual meeting
regardless of whether you attend in person.
Thank you
for your ongoing support of and continued interest in Tempur-Pedic
International.
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Sincerely,
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&
#160; 
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MARK
SARVARY
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President,
Chief Executive Officer and Director
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2010
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY,
MAY 4, 2010
10:00 A.M.
NOTICE
OF MEETING AND PROXY STATEMENT
YOUR
VOTE IS IMPORTANT
Tempur-Pedic
International Inc. (Company) will hold its 2010 Annual Meeting of Stockholders
at the offices of Bingham McCutchen LLP, 13th
Floor, One Federal Street, Boston, Massachusetts 02110 on Tuesday, May 4,
2010, at 10:00 a.m. At the Annual Meeting, stockholders will:
(1) elect ten directors to each serve for a one-year term and until the
director’s successor has been duly elected and qualified, (2) ratify the
appointment of Ernst & Young LLP as the Company’s independent auditors for
the year ending December 31, 2010, (3) approve the Amended and
Restated Annual Incentive Bonus Plan for Senior Executives, and (4) transact
such other business as may properly come before the meeting or any adjournment
thereof.
If you are a
stockholder of record, you may vote in any one of four ways: in person by
attending the Annual Meeting, by Internet, by telephone or by mail using the
proxy card enclosed in the paper copy of your voting materials. Specific voting
information is included under the caption “Voting Procedures.” Only stockholders
of record at the close of business on March 5, 2010, are entitled to vote. On
March 5, 2010, 71,869,119 shares of the Company’s common stock were
outstanding. Each share entitles the holder to one vote.
Our Board of
Directors asks you to vote in favor of the director nominees and the
ratification of Ernst & Young LLP as the Company’s independent auditors.
This Proxy Statement provides you with detailed information about each of these
matters. We encourage you to read this Proxy Statement carefully.
Important Notice Regarding the
Availability of Proxy Materials
for
the Stockholder Meeting to be Held on May 4, 2010
The Proxy
Statement and Annual Report on Form 10-K and the means to vote by Internet
are available at http://www.proxyvote.com.
We have sent
to you the notice of availability of proxy materials. If you would like to
receive a paper copy or e-mail copy of the voting materials, you may elect to do
so following the instructions on the notice of availability. Instead of
receiving paper copies of our annual reports and Proxy Statements in the mail,
we encourage you to elect to receive an e-mail that will provide an electronic
link to these documents.
All of
our stockholders are cordially invited to attend the Annual
Meeting.
By Order of the Board of
Directors,
; 
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Dale
E. Williams
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Executive
Vice President, Chief Financial Officer, and Secretary
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Lexington,
Kentucky
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March
24, 2010
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Picture
identification will be required to enter the Annual Meeting. Cameras and
recording equipment will not be permitted at the Annual Meeting.
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TEMPUR-PEDIC
INTERNATIONAL INC.
1713
Jaggie Fox Way
Lexington,
Kentucky 40511
Annual
Meeting of Stockholders To Be Held on Tuesday, May 4, 2010
Our
Board of Directors is soliciting proxies for the 2010 Annual Meeting of
Stockholders. The 2010 Annual Meeting of Stockholders of Tempur-Pedic
International Inc. will be held at 10:00 a.m., local time on May 4, 2010 at the
offices of Bingham McCutchen LLP, 13th
Floor, One Federal Street, Boston, Massachusetts 02110. This Proxy Statement
contains important information for you to consider when deciding how to vote on
the matters brought before the meeting. Please read it carefully.
We have sent
to you the notice of availability of proxy materials. If you would like to
receive a paper copy or e-mail copy of the voting materials, you may elect to do
so following the instructions on the notice of availability. Instead of
receiving paper copies of our annual reports and Proxy Statements in the mail,
we encourage you to elect to receive an e-mail that will provide an electronic
link to these documents. Choosing to receive your proxy materials online will
save us the cost of producing and mailing documents to you as well as conserve
natural resources. With electronic delivery, we will notify you by e-mail as
soon as the annual report and Proxy Statement are available on the Internet, and
you can easily submit your stockholder vote online. If you are a stockholder of
record, you may enroll in the electronic delivery service at the time you vote
by marking the appropriate box on your proxy card, by selecting electronic
delivery if you vote on the Internet, or at any time in the future by going
directly to www.proxyvote.com,
selecting the “Investor Service Direct” option, and following the enrollment
instructions. If you are a beneficial holder, you may also have the opportunity
to receive annual meeting materials electronically. Please check the information
provided in the proxy materials mailed to you by your brokerage firm, bank or
trustee.
Notice
of the meeting and Notice of Availability of the voting materials, which include
this Proxy Statement and a proxy card, were mailed to stockholders beginning on
or about March 24, 2010. Our principal executive offices are located
at 1713 Jaggie Fox Way, Lexington, Kentucky 40511. Our telephone number is
(800) 878-8889. As used in this Proxy Statement, the term “Tempur-Pedic
International,” refers to Tempur-Pedic International Inc. and the terms “we,”
“our,” “ours,” “us,” and “Company” refer to Tempur-Pedic International Inc. and
its consolidated subsidiaries.
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Q:
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Who may vote at the meeting? | |
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A:
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Our
Board set March 5, 2010 as the record date for the meeting. All
stockholders who owned Tempur-Pedic International common stock of record
at the close of business on March 5, 2010 may attend and vote at the
meeting. Each stockholder is entitled to one vote for each share of common
stock held on all matters to be voted on. On March 5,
2010, 71,869,119 shares of Tempur-Pedic International common stock
were outstanding. The common stock is the only class of securities
eligible to vote at the meeting.
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Q:
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How
many votes does Tempur-Pedic International need to be present at the
meeting?
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A:
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A
majority of Tempur-Pedic International’s outstanding shares of common
stock as of the record date must be present at the meeting in order to
hold the meeting and conduct business. This is called a quorum. Shares are
counted as present at the meeting if you:
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Are
present and vote in person at the meeting; or
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Have
properly submitted a proxy card, by submitting the proxy card via the
Internet, telephone or in writing.
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What
proposals will be voted on at the meeting?
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There
are three proposals scheduled to be voted on at the
meeting:
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Election
of ten (10) directors to each serve for a one-year term and until the
director’s successor has been duly elected and qualified (Proposal
One).
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Ratification
of the appointment of the firm of Ernst & Young LLP as
Tempur-Pedic International’s independent auditors for the year ending
December 31, 2010 (Proposal Two).
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Approval
of the Amended and Restated Annual Incentive Bonus Plan for Senior
Executives (Proposal Three).
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Q:
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What
is the voting requirement to approve the proposal?
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A:
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At
an annual meeting at which a quorum is present, the following votes will
be necessary to elect directors, to ratify the appointment of the
independent auditors and to approve the Amended and Restated Annual
Incentive Bonus Plan for Senior Executives described in this proxy
statement:
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• | Each director shall be elected by the vote of a majority of the votes cast with respect to the director. For purposes of this vote, a majority of the votes cast means that the number of shares voted “for” a director must exceed the number of shares voted “against” that director (excluding abstentions). |
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• |
Ratification
of the appointment of Ernst & Young LLP as independent auditors
for the year ending December 31, 2010 requires the affirmative vote
of the majority of shares present and entitled to vote. Abstentions are
counted as votes present and entitled to vote and have the same effect as
votes against the proposal.
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| • | Approval of the Amended and Restated Annual Incentive Bonus Plan for Senior Executives described in this proxy statement requires the affirmative vote of the majority of shares present and entitled to vote. Abstentions are counted as votes present and entitled to vote and have the same effect as votes against the proposal. Broker non-votes, if any, will be handled as described below. |
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| Q: |
If
I hold my shares in a brokerage account and do not provide voting
instructions to my broker, will my shares be voted?
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A:
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Under
New York Stock Exchange (“NYSE”) rules, brokerage firms may vote in their
discretion on certain matters on behalf of clients who do not provide
voting instructions at least 15 days before the date of the annual
meeting. Generally, brokerage firms may vote to ratify the appointment of
independent auditors and on other “discretionary” items. In
contrast, brokerage firms may not vote to elect directors or on
stockholder proposals because those proposals are considered
“non-discretionary” items. Accordingly, if your shares are held
in a brokerage account and you do not return voting instructions to your
broker by its deadline, your shares may be voted by your broker on some,
but not all, of the proposals described in this proxy
statement. Broker non-votes will not be considered in
determining the number of votes cast in connection with non-discretionary
items.
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How
would my shares be voted if I do not specify how they should be
voted?
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If
you sign and return your proxy card without indicating how you want your
shares to be voted, the Proxy Committee appointed by the Board will vote
your shares as follows:
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Proposal One: “FOR” the election of ten directors to each serve for a one-year term and until the director's successor has been duly elected and qualified. | |
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Proposal Two: “FOR” the ratification of the appointment of the firm of Ernst & Young LLP as Tempur-Pedic International's independend auditors for the year ending December 31, 2010. | |
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Proposal Three: “FOR” the approval of the Amended and Restated Annual Incentive Bonus Plan for Senior Executives. | |
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Q:
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How
may I vote my shares in person at the meeting?
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A:
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Shares
held directly in your name as the stockholder of record may be voted in
person at the meeting. If you choose to attend the meeting, please bring
the enclosed proxy card and proof of identification for entrance to the
meeting. If you hold your shares in street name, you must request a legal
proxy from the stockholder of record (your stockbroker or bank) in order
to vote at the
meeting.
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Q:
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How
can I vote my shares without attending the meeting?
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A:
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You
may vote in person at the meeting or by proxy. We recommend you vote by
proxy even if you plan to attend the meeting. You can always change your
vote 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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Via Internet: Go to http://www.proxyvote.com and follow the instructions. You will need to enter the control number printed on your proxy materials. | |
| • | By Telephone: Call toll-free 1-800-690-6903 and follow the instructions. You will need to enter the control number printed on your proxy materials. | |
| • | In Writing: Complete, sign, date and return your proxy card in the enclosed envelope (if you have received a paper copy of the voting materials). | |
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If
your shares are held in street name, you may vote by submitting voting
instructions to your stockbroker or nominee. In most cases, you will be
able to do this by mail. Please refer to the summary instructions included
on your proxy card. For shares held in street name, the voting instruction
card will be included by your stockbroker or nominee.
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You
may submit your proxy by mail by signing your proxy card or, for shares
held in street name, by following the voting instruction card included by
your stockbroker or nominee and mailing it in the enclosed, postage-paid
envelope. If you provide specific voting instructions, your shares will be
voted as you have
instructed.
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| Q: |
How
can I change my vote after I return my proxy
card?
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You
may revoke your proxy and change your vote at any time before the final
vote at the meeting. You may do this by signing and submitting a new proxy
card with a later date via internet, telephone or mail or by attending the
meeting and voting in person. Attending the meeting will not revoke your
proxy unless you specifically request it.
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| Q: |
What
is Tempur-Pedic International’s voting
recommendation?
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Our
Board of Directors recommends that you vote your shares “FOR” each of the
nominees to the Board (Proposal One), “FOR” the ratification of the
appointment of Ernst & Young LLP as Tempur-Pedic International’s
independent auditors for the year ending December 31, 2010 (Proposal Two)
and “FOR” approval of the Amended and Restated Annual Incentive Bonus Plan
for Senior Executives (Proposal Three).
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Q:
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Where
can I find the voting results of the
meeting?
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A:
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The
preliminary voting results will be announced at the meeting. The final
results will be published on Form 8-K within four days after the meeting
date.
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Tempur-Pedic
International’s Board of Directors currently consists of eleven members, each
serving a one-year term. The nominees for this year’s election of directors
include ten current members of the Board of Directors: Evelyn Dilsaver, Francis
A. Doyle, John A. Heil, Peter K. Hoffman, Sir Paul Judge, Nancy F. Koehn,
Christopher A. Masto, P. Andrews McLane, Mark Sarvary and Robert B. Trussell,
Jr. The nominees, if elected, will each serve a one-year term until Tempur-Pedic
International’s annual meeting in 2011 or until his or her respective successor
is elected and qualified. Each of the nominees has consented to serve a one-year
term. There are no family relationships among our executive officers and
directors.
All of the
nominees are standing for re-election by our stockholders, except for Ms.
Dilsaver. Upon the recommendation of the Board’s Nominating and
Corporate Governance Committee, our Board of Directors elected Ms. Dilsaver to
the Board of Directors and the Audit Committee of the Board of Directors on
December 17, 2009.
H. Thomas
Bryant decided not to stand for re-election to the Board of Directors in 2010.
Mr. Bryant retired as the Company’s Chief Executive Officer in 2008, and will
retire from the Board of Directors as of May 4, 2010, the date of the next
annual meeting. The Board of Directors gratefully acknowledges Mr. Bryant’s
service.
VOTE
REQUIRED
Each director
will be elected by the vote of a majority of the votes cast. This
means the number of votes cast “for” a director must exceed 50% of the votes
with respect to that director (excluding abstentions). Each director
elected will serve a one-year term until Tempur-Pedic International’s annual
meeting of stockholders in 2011 or until his or her respective successor is
elected and qualified. Any director not elected by a majority of the votes cast
at the annual meeting must offer to tender his or her resignation to the Board
of Directors. The Nominating & Corporate Governance Committee will make a
recommendation to the Board of Directors whether to accept the resignation. The
Board of Directors will consider the recommendation and publicly disclose its
decision within 90 days after the certification of the election
results.
THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION TO THE
BOARD OF DIRECTORS OF EACH OF THE FOLLOWING NOMINEES:
Evelyn S.
Dilsaver, 54, has served as a member of Tempur-Pedic International’s
Board of Directors since December 2009. Ms. Dilsaver was President
and Chief Executive Officer of Charles Schwab Investment Management from July
2004 until September 2007. Prior to that, Ms. Dilsaver held various senior
management positions with The Charles Schwab Corporation since December 1991,
including Executive Vice President and Senior Vice President, Asset Management
Products and Services, of Charles Schwab Investment Management and Chief
Financial Officer for U.S. Trust Company. Ms. Dilsaver is also a member of the
board of directors of Aeropostale, Inc. Tamalpais Bancorp and HighMark Funds as
well as Blue Shield of California and other non-profit boards. In the past five
years, Ms. Dilsaver has also served as a director of Longs Drugs. Ms. Dilsaver
is a certified public accountant and holds a B.S. degree in accounting from
California State University-Hayward. Ms. Dilsaver’s brings a long professional
career in finance, accounting and general management and considerable experience
with consumer-oriented businesses to the Board as a senior executive of a large
investment management firm and her many years as serving as a director of
companies in a variety of businesses.
Francis A. Doyle,
61, has
served as a member of Tempur-Pedic International’s Board of Directors since
April 2003. Mr. Doyle has served as President and Chief Executive Officer
of Connell Limited Partnership, a global manufacturer of industrial products,
since 2001. From 1972 to 2001, he was a partner at PricewaterhouseCoopers LLP,
where he was Global Technology and E-Business Leader and a member of the firm’s
Global Leadership Team. He currently serves on the Board of Directors of Liberty
Mutual Holding Company, Inc. In the past five years, Mr. Doyle has
served as a director of Citizens Financial Group. He is also a trustee of Boston
College. Mr. Doyle is a certified public accountant and holds a
B.S. degree and an M.B.A. degree from Boston College. Mr. Doyle’s
experience as the President and Chief Executive Officer of a global manufacturer
and his years of experience at PricewaterhouseCoopers allows him to lend
considerable financial, accounting and business skills to the
Board.
4
John A. Heil,
57, has served as a member of Tempur-Pedic International’s Board of
Directors since March 2008. Mr. Heil has served since January 2007 as
Spectrum Brands, Inc.’s Chief Operating Officer and President. Spectrum Brands,
Inc. filed a voluntary petition for reorganization under Chapter 11 in February
2009. From February 2005 until January 2007, he was the President of United Pet
Group, Inc., a global manufacturer and marketer of pet supplies and subsidiary
of Spectrum Brands, Inc. From 2000 to February 2005 he served as United Pet
Group’s President and Chief Executive Officer. Mr. Heil has been a member of the
board of directors and a member of the audit committee of VCA Antech, Inc., a
NYSE listed company, since February 2002, and previously served as a director
from 1995 to 2000. Prior to joining United Pet Group, Mr. Heil spent
twenty-five years with the H. J. Heinz Company in various executive and general
management positions including President and Managing Director of Heinz Pet
Products and President of Heinz Specialty Pet Foods. Mr. Heil holds a BA degree
in economics from Lycoming College. Mr. Heil’s long career in management and the
branded consumer products arena brings a remarkable depth of operational and
strategic experience to the Board.
Peter K. Hoffman,
61, has
served as a member of Tempur-Pedic International’s Board of Directors since
October 2006. From January 1, 2000, Mr. Hoffman served as President of
Global Grooming for The Procter & Gamble Company (formerly The Gillette
Company) until his retirement at the end of 2006. Mr. Hoffman spent over 34
years with The Gillette Company and Procter & Gamble in executive positions
both in North America and Europe, including roles as President, Global Blades
and Razors; President, Duracell North Atlantic; and President, Braun North
America. Mr. Hoffman received an A.B. degree in Economics from Columbia
University and an M.B.A. degree with distinction from the Tuck School of
Business, Dartmouth College, where he was elected an Edward Tuck
Scholar. Mr. Hoffman brings extensive experience with consumer
products, marketing, advertising, new product creation, strategy, and
multi-national and global business to the Board.
Sir Paul
Judge, 60, has served as a member of Tempur-Pedic International’s Board
of Directors since July 2004. Sir Paul Judge is chairman of
the British-North American Committee and Deputy Chairman of the
American Management Association, and President of the United Kingdom Chartered
Management Institute. After thirteen years working for Cadbury Schweppes, Sir
Paul led the buyout of that company’s food operations to form Premier Brands,
becoming its chairman. Sir Paul Judge was subsequently chairman of Food from
Britain, director general of the Conservative Party and a ministerial adviser at
the UK Cabinet Office. Sir Paul Judge has served on the board of Eurasian
Natural Resources Corporation PLC since December 2007, Standard Bank
Group Ltd of Johannesburg since June 2003 and Schroder Income Growth Fund plc
since December 1995, and as a member of the Advisory Board for Barclays Private
Bank. In 1996, he became a Knight Bachelor in recognition of his public and
political service. He was an Open Scholar at Trinity College, University of
Cambridge, graduating in 1971, and received an M.B.A. in 1973 from the Wharton
Business School. In addition to his broad business experience, Sir Paul Judge
brings an international perspective to the Board and invaluable management
operating experience in Europe and elsewhere outside of North
America.
Nancy F.
Koehn, 50, has served as a member of Tempur-Pedic International’s Board
of Directors since March 2004. Ms. Koehn has been a Professor of Business
Administration at Harvard Business School since July 2001. From July 1997
through June 2001, Ms. Koehn was an Associate Professor at Harvard Business
School. From July 1991 through June 1997, she was an Assistant Professor
at Harvard Business School. She is the author of a number of books on various
business topics, including her most recent book The Story of American Business: From
the Pages of the New York Times, and has written and supervised numerous
articles and case studies. Ms. Koehn consults with many companies and speaks
frequently before business leaders on a range of subjects including strategic
branding, leading in turbulent times, visionary entrepreneurs—past and
present—and competing on the demand side in the Information Revolution. In 2001,
Business 2.0 named Ms. Koehn one of 19 leading business gurus in the United
States. In the past five years, Ms. Koehn has also served as a
director of ING North American Advisory Board and Seniorbridge Family
Companies. Ms. Koehn holds a B.A. degree from Stanford University, an
M.A. degree in Public Policy from the Harvard University Kennedy School of
Government and an M.A. degree and a Ph.D. degree in European History from
Harvard University. As a professor and academic, Ms. Koehn brings diverse
business experience and a unique perspective to the Board.
Christopher A. Masto,
42, has
served as a member of Tempur-Pedic International’s Board of Directors since
November 2002. Mr. Masto is a Senior Managing Director of Friedman
Fleischer & Lowe, LLC, a private equity firm, which he co-founded in
1997. Prior to 1997, he worked as a management consultant with Bain &
Company. Prior to that, Mr. Masto was employed at Morgan Stanley &
Co., where he worked as an investment banker. He currently serves on the board
of Archimedes Technology Group and Speedy Cash Holdings Corp. Mr. Masto
graduated magna cum laude
from Brown University with an Sc.B. in Electrical Engineering and
received his M.B.A. degree from Harvard Business School. With considerable
experience in private equity and investment banking, Mr. Masto brings to the
Board in-depth experience in strategic planning and finance.
5
P. Andrews
McLane, 62, has served as Chairman
of Tempur-Pedic International’s Board of Directors since November 2002. His
career began in 1973 with the State Street Bank. Mr. McLane
joined TA Associates, Inc. in 1979, became a Managing Director in 1982 and
Senior Managing Director in 1997, and served on TA Associate’s Executive
Committee for 20 years. He became a Senior Advisor of the firm in 2008.
Mr. McLane is a director of Numeric Investors LLC and First Eagle
Investment Management Inc., formerly known as Arnhold and S. Bleichroeder
Advisers. In the past five years Mr. McLane has also been on the
board of Advisory Research, Inc. Mr. McLane also serves on the boards
of the Cambridge Boat Club, St. Paul’s School and on the board of overseers of
the Museum of Fine Arts, Boston. Mr. McLane graduated from Dartmouth
College with an A.B. degree and from the Tuck School of Business at
Dartmouth with an M.B.A. degree. Mr. McLane brings invaluable significant
strategic insight and business experience to the Board with his long career in
private equity with a focus on financial services, business services and
consumer industries.
Mark Sarvary,
50, joined Tempur-Pedic International in June 2008 and serves as President and
Chief Executive Officer of Tempur-Pedic International Inc. Prior to joining
Tempur-Pedic, from January 2008 until June 2008, Mr. Sarvary served as an
Operating Partner with CVC Capital Partners, a global private equity firm. Prior
to CVC, from March 2004 to October 2007, Mr. Sarvary was the Executive Vice
President and President of Campbell Soup Company, North America
division, responsible for $6 billion in business, including Campbell Soup,
Pepperidge Farm, Pace, Prego and V8 as well as Godiva’s global business. From
2002 until 2004, Mr. Sarvary was the President of Campbell’s Pepperidge Farm
division. Prior to joining Campbell’s, from 1999 to 2002, Mr. Sarvary was the
CEO of J. Crew Group, Inc., and from 1993 to 1999 he worked for Nestle, most
recently as the President of the Stouffer’s Frozen Food division. Earlier in his
career, Mr. Sarvary worked as a strategy consultant with Bain & Company and
in sales and marketing roles with IBM in Europe. Mr. Sarvary received his BSc in
Physics from Kent University in the United Kingdom and an MBA from INSEAD
Business School in France. Mr. Sarvary is an accomplished business leader,
through his private equity experience coupled with his considerable experience
as an executive for large global companies, who brings a great breadth of skills
in sales, marketing, product innovation, strategy and operations to the
Board.
Robert B. Trussell,
Jr., 58, has served as a member of Tempur-Pedic International’s Board of
Directors or its predecessors since 1992, and has served as Vice Chairman of the
Board of Directors since April 2006. Mr. Trussell served as Chief Executive
Officer of Tempur-Pedic International until May 2006, and served in that
capacity at Tempur-Pedic International or its predecessor since November 2002.
From 1994 to December 2004, Mr. Trussell served as President of Tempur-Pedic
International or one of the predecessors to Tempur-Pedic International. Prior to
joining Tempur-Pedic International, Mr. Trussell was general partner of several
racing limited partnerships that owned racehorses in England, France and the
United States. He was also the owner of several start-up businesses in the
equine lending and insurance business. Mr. Trussell received his B.S. degree
from Marquette University. As former Chief Executive Officer and a principal
founder of the Company, Mr. Trussell brings management experience and a
historical perspective to the Board.
|
Name
|
Age
|
Position
|
||
|
Mark
Sarvary
|
50
|
|
President
and Chief Executive Officer
|
|
|
Dale E. Williams
|
47
|
Executive
Vice President, Chief Financial Officer and Secretary
|
||
|
Richard
W. Anderson
|
49
|
Executive
Vice President and President, North America
|
||
|
Matthew D. Clift
|
50
|
|
Executive
Vice President of Global Operations
|
|
|
Lou
H. Jones
|
59
|
Executive
Vice President and General Counsel
|
||
|
David Montgomery
|
49
|
|
Executive
Vice President and President of International
Operations
|
|
|
Bhaskar
Rao
|
44
|
Chief
Accounting Officer and Senior Vice President of Strategic Planning,
Corporate Development
|
Dale E.
Williams joined Tempur-Pedic International in July 2003 and serves as
Executive Vice President, Chief Financial Officer and Secretary. From November
2001 through 2002, Mr. Williams served as Vice President and Chief Financial
Officer of Honeywell Control Products, a division of Honeywell International,
Inc. From 2000 to 2001, Mr. Williams served as Vice President and Chief
Financial Officer of Saga Systems, Inc./Software AG, Inc. Prior to that, Mr.
Williams spent 15 years in various management positions at General Electric
Company, most recently as Vice President and Chief Financial Officer of GE
Information Services, Inc. Mr. Williams received his B.A. degree in finance from
Indiana University.
Richard W. Anderson
joined Tempur-Pedic International in July 2006 and serves as Executive
Vice President and President, North America. From 1983 to 2006, Mr.
Anderson was employed by The Gillette Company, which became a part of Procter
& Gamble in 2005. Mr. Anderson most recently served as the Vice President of
Marketing for Oral-B and Braun in North America. Previously, Mr. Anderson
was the Vice President of Global Business Management for
Duracell. Mr. Anderson has held several management positions in
marketing and sales as well as overseeing branding, product development and
strategic planning. Mr. Anderson obtained B.S. and M.B.A. degrees from Virginia
Tech.
Matthew D.
Clift joined Tempur-Pedic International in December 2004 and serves as
Executive Vice President of Global Operations, with responsibilities including
manufacturing and research and development. From 1991 to December 2004, Mr.
Clift was employed by Lexmark International where he most recently served as
Vice President and General Manager of the consumer printer division. From 1981
to 1991, Mr. Clift was employed by IBM Corporation and held several management
positions in research and development and manufacturing. Mr. Clift obtained his
B.S. degree in chemical engineering from the University of
Kentucky.
Lou H. Jones
joined Tempur-Pedic International in June 2009 and serves as Executive
Vice President and General Counsel. From July 2007 to January 2009, Ms. Jones
was employed by Papa John’s International, where she served as General Counsel.
From March 1998 to July 2007, Ms. Jones was employed by Blockbuster Inc.,
serving as Senior Vice President, Corporate and International
Law. From May 1984 to March 1998, Ms. Jones was a partner and
shareholder at the law firm of Thompson & Knight. Ms. Jones earned a B.A.
degree from the University of Texas, a B.G.S. degree from the University of
Nebraska and a J.D. degree from Southern Methodist University.
6
David
Montgomery joined Tempur-Pedic International in February 2003 and serves
as Executive Vice President and President of International Operations, with
responsibilities including marketing and sales. From 2001 to November 2002, Mr.
Montgomery was employed by Rubbermaid, Inc., where he served as President of
Rubbermaid Europe. From 1988 to 2001, Mr. Montgomery held various management
positions at Black & Decker Corporation, most recently as Vice President of
Black & Decker Europe, Middle East and Africa. Mr. Montgomery received his
B.A. degree, with honors, from L’ Ecole Superieure de Commerce de Reims, France
and Middlesex Polytechnic, London.
Bhaskar Rao
joined Tempur-Pedic International in January 2004 as Director of
Financial Planning and Analysis. In October 2005, Mr. Rao was promoted to Vice
President of Strategic Planning. In May 2006, Mr. Rao was promoted to the
position of Chief Accounting Officer and continued to serve as Vice President of
Strategic Planning. In February, 2010, Mr. Rao was promoted to the position of
Senior Vice President of Strategic Planning, Corporate Development and continues
to serve as Chief Accounting Officer. From 2002 until December 2003,
Mr. Rao was employed by Ernst & Young as a Senior Manager in the assurance
and business advisory group. Mr. Rao was employed by Arthur Anderson
from 1994 until 2002. Mr. Rao graduated from Bellarmine University
with B.A. degrees in Accounting and Economics. Mr. Rao is also a Certified
Public Accountant.
The Company
believes that sound corporate governance practices are essential to maintain the
trust of our stockholders, customers, employees and other stakeholders. We
operate under governance practices that are transparent, up-to-date and
appropriate for our industry.
The following
materials related to our corporate governance and related matters are available
on our website at: http://investor.tempurpedic.com/
under the caption “Corporate Governance”:
|
•
|
Mission
Statement
|
|
•
|
Core
Values
|
|
•
|
Corporate
Governance Guidelines
|
|
•
|
Code
of Business Conduct and Ethics for Employees, Executive Officers and
Directors
|
|
•
|
Policy
on Complaints of Accounting, Internal Accounting Controls and Auditing
Matters
|
|
•
|
Audit
Committee Charter
|
|
•
|
Compensation
Committee Charter
|
|
•
|
Nominating
and Corporate Governance Committee Charter
|
|
•
|
Committees
Membership
|
|
•
|
Contact
the Presiding Director
|
|
•
|
Fourth Amended and Restated By-Laws |
| • | Amended and Restated Certificate of Incorporation |
Copies may also be
obtained, free of charge, by writing to: Tempur-Pedic International
Inc., 1713 Jaggie Fox Way Lexington, Kentucky 40511, Attention: Investor
Relations. Please specify which document you would like to
receive.
On March 8,
2010, the Board of Directors amended the Tempur-Pedic International By-Laws to
provide that a director in an uncontested election will be elected by a majority
of votes cast (excluding abstentions) at a stockholder meeting at which a quorum
is present. For purposes of this vote, a majority of the votes cast means that
the number of shares voted “for” a director must exceed the number of shares
voted “against” that director (excluding abstentions). If an incumbent director
fails to receive the requisite vote, the director must tender his or her
resignation for consideration by the Nominating and Corporate Governance
Committee. In an election for directors where the number of nominees exceeds the
number of directors to be elected – a contested election – the directors would
be elected by the vote of a plurality of the shares represented at the meeting
and entitled to vote on the matter. Previously, a director was
elected by a plurality of votes cast at a meeting where a quorum was
present.
Neither
Tempur-Pedic International’s Certificate of Incorporation nor its By-laws
provide for a classified Board of Directors.
The Board of
Directors held five meetings in 2009, and acted by written consent eight times.
Each director attended 80% or more of the combined total number of meetings of
the Board of Directors and its committees held in 2009 during the period in
which they served as directors or committee members.
Our corporate
governance guidelines provide that a majority of the Board of Directors shall
consist of independent directors within the meaning of the New York Stock
Exchange Rules governing the composition of the Board of Directors and its
committees (NYSE Independence Rules). The Board of Directors has
determined that none of Evelyn S. Dilsaver, Francis A. Doyle, John Heil, Peter
K. Hoffman, Sir Paul R. Judge, Nancy F. Koehn, Christopher A. Masto, P. Andrews
McLane or Robert B. Trussell, Jr. 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) within the meaning of the NYSE Independence
Rules and accordingly are “independent” for purposes of the NYSE Independence
Rules.
The Board of
Directors has determined that Mark Sarvary does not qualify as an independent
director under the NYSE Independence Rules because he serves as President and
Chief Executive Officer of Tempur-Pedic International. The Board of Directors
has also determined that H. Thomas Bryant does not qualify as an independent
director under the NYSE Independence Rules as he was employed as the President
and Chief Executive Officer of Tempur-Pedic International within the last three
years.
As stated in
its Corporate Governance Guidelines, the Board has no set policy with respect to
the separation of the officers of Chairman and the Chief Executive
Officer. Currently, the Board believes that the separation of the
chairman and chief executive officer positions is the most appropriate structure
for the Company and has had a separate Chairman and Chief Executive for the past
8 years. Since the formation of Tempur-Pedic in 2002, P. Andrews
McLane has served as the Chairman of the Board while Robert Trussell, Thomas
Bryant and Mark Sarvary have served in the role of Chief Executive Officer and a
member of the Board. By having a separate Chairman and Chief
Executive Officer, the Board believes that the Chief Executive Officer may
devote more of his attention to running the operations of the Company while the
Chairman assumes the responsibility of running the Board. In
addition, the Board believes it is beneficial to have an independent Chairman
whose sole job is leading the Board, as the independent chairman may more
effectively and objectively monitor the performance of the Company and the Chief
Executive Officer. Having the Chief Executive Officer serve on the
Board of Directors ensures that the Board contains the individual most familiar
with the Company’s business and industry and most effective at identifying
strategic priorities and implementation of the Company’s strategy, while also
retaining an independent leader.
The Board
believes that the structure of its leadership may vary from time to time,
depending on the circumstances of the Company and its succession
planning. Therefore, the Board periodically reviews its leadership
structure.
The Board of
Directors is responsible for overseeing the management and operations of the
Company, including overseeing its risk assessment and risk management
functions. As discussed elsewhere in this proxy statement, the Board
of Directors has delegated responsibility for reviewing the Company’s policies
with respect to risk assessment and risk management to the Audit
Committee. The Board has determined that this oversight
responsibility can be most efficiently performed by the Audit Committee as part
of its overall responsibility for providing independent, objective oversight
with respect to Tempur-Pedic International’s accounting and financial reporting
functions, internal and external audit functions and systems of internal
controls over financial reporting and legal, ethical and regulatory
compliance. The Audit Committee regularly reports to the Board of
Directors with respect to its oversight of these important areas.
The standing
committees of the Board of Directors are the Audit Committee, the Compensation
Committee and the Nominating and Corporate Governance Committee.
|
The
Audit Committee
|
The members
of the Audit Committee are Francis A. Doyle (Chair), Evelyn S. Dilsaver, Peter
K. Hoffman, Sir Paul Judge and Nancy F. Koehn. The Board has determined that
each member of the Audit Committee is independent as defined in the NYSE
Independence Rules and the rules of the Securities and Exchange Commission
(SEC). The Board has also determined that Mr. Doyle, Ms. Dilsaver and Sir
Paul Judge are audit committee financial experts within the meaning of Item 407
(d) (5) (ii) of Regulation S-K of the Securities and Exchange Act of 1934, as
amended (Exchange Act) and has “accounting or related financial management
expertise” within the meaning of the applicable New York Stock Exchange rules.
The Audit Committee was established in accordance with Section 3(a)(58) of the
Exchange Act.
The Audit
Committee of the Board of Directors is responsible for providing independent,
objective oversight with respect to Tempur-Pedic International’s accounting and
financial reporting functions, internal and external audit functions and systems
of internal controls over financial reporting and legal, ethical and regulatory
compliance. Some of the Audit Committee’s responsibilities include:
|
•
|
reviewing
the scope of internal and independent audits;
|
|
•
|
reviewing
the Company’s quarterly and annual financial statements and annual report
on Form 10-K;
|
|
•
|
reviewing
the adequacy of management’s implementation of internal
controls;
|
|
•
|
reviewing
the Company’s accounting policies and procedures and significant changes
in accounting policies;
|
|
•
|
reviewing
the Company’s business conduct and ethics policies and
practices;
|
|
•
|
reviewing
the Company’s policies with respect to risk assessment and risk
management;
|
|
•
|
reviewing
information to be disclosed and types of presentations to be made in
connection with the Company’s earnings press releases, as well as
financial information and earnings guidance provided to analysts and
rating agencies;
|
|
•
|
preparing
an annual evaluation of the committee’s performance;
|
|
•
|
reporting
regularly to the Board on the committee’s activities;
and
|
|
•
|
appointing
the independent public accountants and reviewing their independence and
performance and the reasonableness of their
fees.
|
The Audit
Committee has established whistle blower procedures, which provide for the (a)
the receipt, retention and treatment of complaints received regarding
accounting, internal accounting controls or auditing matters; and (b) the
confidential, anonymous submission by employees of concerns regarding
questionable accounting or auditing matters. Tempur-Pedic International also has
a confidential, anonymous reporting system which is web-based and available to
all employees. All reports are treated confidentially.
The Audit
Committee met nine times and acted by written consent once in 2009. A copy of
the Audit Committee charter as adopted by our Board of Directors is available on
Tempur-Pedic International’s website at http://investor.tempurpedic.com/,
under the caption “Corporate Governance.”
|
The
Compensation Committee
|
The members
of the Compensation Committee are Peter K. Hoffman (Chair), John A. Heil, Sir
Paul Judge and Francis A. Doyle. The Board of Directors has determined that
each member of the Compensation Committee is independent as defined in the NYSE
Independence Rules. The committee’s responsibilities include:
|
• |
reviewing
and approving on an annual basis the corporate goals and objectives with
respect to compensation for the chief executive officer, evaluating at
least once a year the chief executive officer's performance in light of
these established goals and objectives and, based upon these evaluations,
determining and approving the chief executive officer's annual
compensation, including salary, bonus, incentive and equity
compensation;
|
|
•
|
reviewing
on an annual basis the Company's compensation structure for officers and
employees other than the chief executive officer and making
recommendations to the Board regarding the compensation of these officers
and employees;
|
|
•
|
oversee
the development of executive succession plans and the leadership
development and training of the Company’s executive
team;
|
|
•
|
reviewing
on an annual basis the Company’s compensation structure for its directors
and making recommendations to the Board regarding the compensation of
directors;
|
|
•
|
reviewing
the Company's incentive compensation and stock-based plans and
recommending changes in such plans to the Board as needed, having and
exercising all the authority of the Board with respect to the
administration of such plans;
|
|
•
|
reviewing
executive officer compensation for compliance with Section 16 of the
Exchange Act and Section 162(m) of the Internal Revenue Code of 1986, as
amended (Code), and other applicable laws, rules and
regulations;
|
|
•
|
reviewing
and approving employment agreements, severance arrangements and change in
control agreements and provisions when, and if, appropriate, as well as
any special supplemental benefits;
|
|
•
|
reviewing
with management the “Compensation Discussion and Analysis” section in the
Company’s Proxy Statement;
|
|
•
|
preparing
and publishing an annual executive compensation report in the Company's
Proxy Statement;
|
|
•
|
preparing
an annual evaluation of the committee's
performance;
|
|
•
|
reporting
regularly to the Board on the committee's
activities;
|
|
•
|
performing
any other activities consistent with the committee’s charter, the
Company's by-laws and governing law, as the committee or the Board deems
appropriate; and
|
|
•
|
with
respect to any reference in the committee’s charter to NYSE or SEC
requirements, complying with these requirements when listed by the NYSE or
subject to the requirements of the
SEC.
|
10
The
Compensation Committee, in its role as administrator under the Company’s Amended
and Restated 2003 Equity Incentive Plan, as amended, has delegated authority to
the Company’s President and Chief Executive Officer to grant certain options
within certain specified parameters.
In
determining the compensation of our executive officers, our President and Chief
Executive Officer recommends performance objectives to the Compensation
Committee and assists the Compensation Committee to determine if the performance
objectives have been achieved.
Since 2005,
the Compensation Committee has periodically engaged Frederic W. Cook & Co.,
Inc. (Cook), an executive compensation consultant, to evaluate the Company’s
overall compensation structure and equity compensation for the Company’s
executive officers. In May 2008, the Compensation Committee engaged
Cook to advise us in determining and preparing an initial compensation package
for Mark A. Sarvary. In November 2008, the Compensation Committee
engaged Cook to reevaluate our peer group companies and provide an overall
analysis of the compensation structure of the Company’s Named Executive Officers
for 2008. In 2009, the Compensation Committee engaged Cook to
reevaluate our incentive compensation programs, as well as to update the
competitive analysis of executive compensation levels and structure. For a
further description of the services Cook has provided, see “Executive
Compensation – Compensation Discussion and Analysis.”
Cook does no
work for management unless requested by and on behalf the Compensation Committee
Chair, receives no compensation from the Company other than for its work in
advising the Compensation Committee and maintains no other economic
relationships with the Company. A representative from Cook attends meetings of
the Compensation Committee, when requested by the Compensation Committee Chair,
and the Compensation Committee Chair frequently interacts with the consultant
between meetings to define the nature of work to be conducted, to review
materials to be presented at Committee meetings and to obtain the consultant’s
opinion and perspective on proposals prepared by management.
The
Compensation Committee met six times in 2009 and acted by written consent five
times. A copy of the Compensation Committee charter as adopted by our
Board of Directors is available on Tempur-Pedic International’s website at http://investor.tempurpedic.com/,
under the caption “Corporate Governance.”
No member of
our Compensation Committee is a current or former officer or employer of
Tempur-Pedic International or has any interlocking relationships as set forth in
applicable SEC rules.
|
The
Nominating and Corporate Governance
Committee
|
The members
of the Nominating and Corporate Governance Committee are P. Andrews McLane
(Chair), Nancy F. Koehn, Christopher A. Masto and Robert B. Trussell, Jr. The
Board of Directors has determined that each member of the Nominating and
Corporate Governance Committee is independent as defined in the NYSE
Independence Rules. The committee’s responsibilities include:
|
•
|
identifying
individuals qualified to become members of the Board;
|
|
•
|
recommending
to the Board director nominees to be presented at the annual meeting of
stockholders and to fill vacancies on the Board;
|
|
•
|
developing
appropriate criteria for identifying properly qualified directorial
candidates;
|
|
•
|
annually
reviewing and recommending to the Board members to each standing committee
of the Board;
|
|
•
|
preparing
an annual evaluation of the committee’s performance and reporting
regularly to the Board concerning actions and recommendations of the
committee;
|
|
•
|
establishing
procedures to assist the Board in developing and evaluating potential
candidates for executive positions, including the chief executive
officer;
|
|
•
|
reviewing
and evaluating related party transactions; and
|
|
•
|
developing
and recommending to the Board corporate governance guidelines for the
Company.
|
11
The
Nominating and Corporate Governance Committee met four times and acted by
written consent two times in 2009. A copy of the Nominating and
Corporate Governance Committee charter as adopted by our Board of Directors is
available on Tempur-Pedic International’s website at http://investor.tempurpedic.com/
under the caption “Corporate Governance.”
In March
2007, our Board of Directors, upon the recommendation of the Nominating and
Corporate Governance Committee, adopted a written Related Party Transactions
Policy providing for the review and approval or ratification by the Nominating
and Corporate Governance Committee of certain transactions or relationships
involving Tempur-Pedic International and its directors, executive officers and
their affiliates. In reviewing a transaction or relationship, the Nominating and
Corporate Governance Committee will take into account, among other factors it
deems appropriate, whether it is on terms no more favorable than to an
unaffiliated third party under similar circumstances, as well as the extent of
the related party’s interest in the transaction.
Director
Qualifications and Review of Director Nominees
The
Nominating and Corporate Governance committee makes recommendations to the Board
of Directors regarding the size and composition of the Board. The
Committee reviews annually with the Board the composition of the Board as a
whole and recommends, if necessary, measures to be taken so that the Board
reflects the appropriate balance of knowledge, experience, skills, expertise and
diversity required for the Board as a whole and contains at least the minimum
number of independent directors required by applicable laws and
regulations. The Committee is responsible for ensuring that the
composition of the Board accurately reflects the needs of the Company’s business
and, in furtherance of this goal, proposing the addition of members and the
necessary resignation of members for purposes of obtaining the appropriate
members and skills. Board members should possess such attributes and
experience as are necessary to provide a broad range of personal characteristics
including diversity, management skills, and business
experience. Directors should be able to commit the requisite time for
preparation and attendance at regularly scheduled Board and committee meetings,
as well as be able to participate in other matters necessary to ensure good
corporate governance is practiced.
In evaluating
a director candidate, the Committee considers factors that are in the best
interests of the Company and its stockholders, including the potential
contribution of each candidate to the diversity of backgrounds, experience and
competencies which the Board desires to have represented; independence;
reputation for integrity, honesty and adherence to high ethical standards; the
ability to exercise sound business judgment; substantial business or
professional experience and the ability to offer meaningful advice and guidance
to the Company’s management based on that experience; each candidate’s ability
to devote sufficient time and effort to his or her duties as a director; and any
other criteria established by the Board and any core competencies or technical
expertise necessary to staff Board committees. In addition, the
Committee assesses whether a candidate possesses the integrity, judgment,
knowledge, experience, skills and expertise that are likely to enhance the
Board’s ability to manage and direct the affairs and business of the Company,
including, when applicable, to enhance the ability of committees of the Board to
fulfill their duties.
In addition
to fulfilling the above criteria, nine of the ten nominees for re-election named
above are considered independent under the NYSE rules. Mr. Sarvary is
not considered independent because he is an employee of the Company. The
Nominating and Corporate Governance Committee believes that all ten nominees are
independent of the influence of any particular stockholder or group of
stockholders whose interests may diverge from the interests of our stockholders
as a whole.
12
Each nominee
also brings a strong and unique background and set of skills to the Board,
giving the Board as a whole competence and experience in a wide variety of
areas, including corporate governance and board service, executive management,
private equity, finance, manufacturing, consumer product companies, sales,
marketing and international business. Set forth below are the
conclusions reached by the Board with regard to its nominees.
Ms. Dilsaver
brings significant accounting, auditing and financial skills, based on her
training as an accountant and her senior positions at a number of financial
services companies, including in the role of chief financial
officer.
Mr. Doyle
brings significant accounting and auditing skills based on his long experience
as an accountant, and also brings significant manufacturing and international
experience based on his experience as a chief executive officer.
Mr. Heil has
served in positions of president, chief executive officer or chief operating
officer of a number of food and consumer products companies, and has significant
manufacturing, marketing and managerial experience.
Mr. Hoffman
brings significant experience in the branded consumer products industry as a
result of his long career with The Gillette Company and Procter & Gamble,
including significant marketing and international experience.
Sir Paul
Judge brings significant executive and financial experience in the food
industry, and as a UK citizen brings an international perspective to the
Board.
Ms. Koehn’s
experience at Harvard Business School and as a leading consultant brings
significant expertise in strategic branding and marketing.
Mr. Masto has
significant experience in private equity, management consulting and investment
banking, and brings deep financial and analytical skills.
Mr. McLane
has significant experience as a private equity investor and brings significant
financial and investment experience, as well as significant experience as a
director of a large number of companies, both public and private, over the
years.
Mr. Sarvary
serves as our Chief Executive Officer and has significant experience in senior
management positions with consumer businesses.
Mr. Trussell
has significant experience with Tempur-Pedic, having founded the U.S. portion of
its business in 1994 and having served as its Chief Executive Officer. Mr.
Trussell provides a breadth of knowledge about the evolution of the Company’s
products, marketing and relations with retailers over the years.
The
Nominating and Corporate Governance Committee of the Board of Directors is
responsible for reviewing with the Board of Directors from time to time the
appropriate qualities, skills and characteristics desired of members of the
Board of Directors in the context of the needs of the business and the
composition of the Board of Directors. This assessment includes
consideration of the following minimum qualifications that the Nominating and
Corporate Governance Committee believes must be met by all
directors:
|
•
|
a
reputation for integrity, honesty and adherence to high ethical
standards;
|
|
•
|
the
ability to exercise sound business
judgment;
|
|
•
|
substantial
business or professional experience and the ability to offer meaningful
advice and guidance to the Company’s management based on that experience;
and
|
|
•
|
the
ability to devote the time and effort necessary to fulfill their
responsibilities to the Company.
|
The
Nominating and Corporate Governance Committee also considers numerous other
qualities, skills and characteristics when evaluating director nominees,
including whether the nominee has specific strengths that would augment existing
skills and experience of the Board of Directors, such as an understanding of and
experience in international business, accounting, governance, finance or
marketing and whether the nominee has leadership experience with public
companies or other sophisticated and complex organizations. Further,
consideration is given to having a diversity of background, experience, skill
and perspective among the directors, including perspectives that may result from
diversity in ethnicity, race, gender, national origin or nationality, and that
the directors represent a range of differing professional positions, industry
sectors, expertise and geographic representation. The Board does not
have a specific policy with respect to the diversity of its directors, and
diversity is only one consideration when selecting and nominating
directors.
Process for
Identifying and Evaluating Director Nominees
The
Nominating and Corporate Governance Committee has established a process for
identifying and evaluating nominees for director. Although the
Nominating and Corporate Governance Committee will consider nominees recommended
by stockholders, the Committee believes that the process it uses to identify and
evaluate nominees for director is designed to produce nominees that possess the
educational, professional, business and personal attributes that are best suited
to further the Company's mission. The Committee may identify nominees through
the use of professional search firms that may utilize proprietary screening
techniques to match candidates to the Committee's specified qualifications. The
Committee may also receive recommendations from existing directors, executive
officers, key business partners and trade or industry affiliations. The
Committee will evaluate nominations at regular or special meetings, and in
evaluating nominations, will seek to achieve a balance of knowledge, experience
and capability on the Board and to address the membership criteria set forth
above under "Director Qualifications." The Board itself is ultimately
responsible for recommending candidates for election to the stockholders or for
appointing individuals to fulfill a vacancy.
In 2009, the
Company did not employ a search firm or pay fees to any third party to either
search for or evaluate Board nominee candidates.
Procedures
for Recommendation of Director Nominees by Stockholders
The
Nominating and Corporate Governance Committee will consider director candidates
recommended by our stockholders. In evaluating candidates recommended by our
stockholders, the Nominating and Corporate Governance Committee applies the same
criteria set forth above under “Director Qualifications.” Any stockholder
recommendations of director nominees proposed for consideration by the
Nominating and Governance Committee should include the nominee's name and
qualifications for Board membership and should be addressed in writing to the
Committee, care of: Tempur-Pedic International Inc., 1713 Jaggie Fox
Way, Lexington, Kentucky 40511, Attention: Corporate Secretary. In
addition, the Company’s bylaws permit stockholders to nominate directors for
consideration at an annual stockholder meeting in accordance with certain
procedures described in this Proxy Statement under the heading “Stockholder
Proposals for 2011 Proxy Statement.”
The Board of
Directors has designated P. Andrews McLane as the “presiding director” as that
term is defined in applicable NYSE Independence Rules. Stockholders or other
interested parties wishing to communicate with our Board of Directors can call
(859) 514-4605 and leave a message for the presiding director. You may also
contact the presiding director by e-mail at presidingdirector@tempurpedic.com or
by going to Tempur-Pedic International’s website at
http://investor.tempurpedic.com/ under the caption “Corporate
Governance — Contact the Presiding Director.” Regardless of the method you
use, the presiding director will be able to view your unedited message. The
presiding director will determine whether to relay your message to other members
of the Board.
Executive
sessions, or meetings of the outside (non-management) directors without
management present, are held regularly. In 2009, executive sessions
were held after four regularly scheduled meetings of the Board of Directors.
Executive sessions are led by P. Andrews McLane, the presiding
director.
Tempur-Pedic
International has not made any charitable contributions to any charitable
organization in which a director serves as an executive officer in which, within
the preceding three years, such contributions in any single year exceeded the
greater of $1 million, or 2% of such organization’s consolidated gross
revenues.
In accordance
with our Corporate Governance Guidelines, all directors are generally expected
to attend the annual meeting of stockholders. At our last annual meeting, which
was held on May 5, 2009 all of the directors standing for re-election on the
Board attended.
The following
table sets forth information as of March 5, 2010 regarding the beneficial
ownership of our outstanding equity securities by:
| • |
each
person known to beneficially own more than 5% of Tempur-Pedic
International’s outstanding common stock;
|
|
•
|
each
of Tempur-Pedic International’s directors and Named Executive Officers (as
defined below in “Executive Compensation and Related
Information”); and
|
|
•
|
all
of Tempur-Pedic International’s directors and executive officers as a
group.
|
Beneficial
ownership of shares is determined under Rule 13d-3(d)(1) of the Exchange Act and
generally includes any shares over which a person exercises sole or shared
voting or investment power and the number of shares that can be acquired within
sixty (60) days upon exercise of any option. Common stock subject to these
options, warrants and rights is deemed to be outstanding for the purpose of
computing the ownership percentage of the person holding such options, but is
not deemed to be outstanding for the purpose of computing the ownership
percentage of any other person. As of the close of market on March 5,
2010, there were 71,869,119 shares of common stock outstanding, which is
used to calculate the percentages in the table below.
Except as
otherwise indicated, the persons named in the table below have sole voting and
investment power with respect to all shares of common stock held by
them.
|
Shares Beneficially
Owned
|
||||||||
|
Number
of
|
Percentage
|
|||||||
|
Name of Beneficial Owner:
|
Shares
|
of Class
|
||||||
|
5%
Stockholders:
|
||||||||
|
FMR
LLC (1)
|
10,443,537
|
14.5 |
%
|
|||||
|
Wellington
Management Company (2)
|
3,889,520
|
5.4 | % | |||||
|
BlackRock,
Inc. (3)
|
3,698,993
|
5.1 | % | |||||
|
Vanguard
Group, Inc. (4)
|
3,670,935
|
5.1 |
%
|
|||||
|
Executive
Officers and Directors:
|
||||||||
|
Mark
Sarvary (5)
|
225,000
|
*
|
%
|
|||||
|
Dale
E. Williams (5)
|
548,687
|
*
|
%
|
|||||
|
Richard
W. Anderson (5)
|
193,750
|
*
|
%
|
|||||
|
Matthew
D. Clift (5)
|
412,034
|
*
|
%
|
|||||
|
David
Montgomery (5)
|
715,066
|
1.0
|
%
|
|||||
|
P.
Andrews McLane (5),(6)
|
387,625
|
*
|
%
|
|||||
|
Christopher
A. Masto (5),(7)
|
186,595
|
*
|
%
|
|||||
|
Francis
A. Doyle (5)
|
148,122
|
*
|
%
|
|||||
|
Nancy
F. Koehn (5)
|
113,850
|
*
|
%
|
|||||
|
Sir
Paul Judge (5)
|
88,850
|
*
|
%
|
|||||
|
Robert
B. Trussell, Jr. (5),(8)
|
118,700
|
*
|
%
|
|||||
|
Peter
K. Hoffman (5)
|
77,650
|
*
|
%
|
|||||
|
John
A. Heil (5)
|
32,800
|
*
|
%
|
|||||
|
H.
Thomas Bryant (5)
|
69,836
|
*
|
%
|
|||||
|
Evelyn
S. Dilsaver (5)
|
8,791
|
*
|
%
|
|||||
|
All
executive officers and directors as a group (17 persons)
(5):
|
3,443,267 |
4.8
|
%
|
|||||
|
*
|
Represents
ownership of less than one percent
|
|
(1)
|
Amounts
shown reflect the aggregate number of shares of common stock held by FMR
LLC based on information set forth in a schedule 13G/A filed with the SEC
on March 10, 2010. The address of FMR LLC is 82 Devonshire
Street, Boston, MA, 02109.
|
|
|
(2)
|
Amounts
shown reflect the aggregate number of shares of common stock held by
Wellington Management Company LLP based on information set forth in a
schedule 13G filed with the SEC on February 12, 2010. The
address of Wellington Management Company LLP is 75 State Street, Boston,
MA, 02109.
|
|
|
(3)
|
Amounts
shown reflect the aggregate number of shares of common stock held by
BlackRock Inc. based on information set forth in a schedule 13G/A filed
with the SEC on February 10, 2010. The address of BlackRock
Inc. is 40 East 52nd
Street, New York, NY, 10022.
|
|
|
(4)
|
Amounts
shown reflect the aggregate number of shares of common stock held
by Vanguard Group, Inc. based on information set forth in a schedule
13F-HR/A filed with the SEC on March 3, 2010. The address of Vanguard
Group, Inc. is 100 Vangaurd Blvd., Malvern, PA,
19355.
|
|
|
(5)
|
Includes
the following number of shares of common stock which a director or
executive officer has the right to acquire upon the exercise of stock
options that were exercisable as of March 5, 2010, or that will become
exercisable within 60 days after that date:
|
|
|
Name:
|
Number of Shares | Name: | Number of Shares | |||
|
Mark
Sarvary
|
225,000 | Nancy F. Koehn | 113,850 | |||
|
Dale
E. Williams
|
325,000 |
Sir
Paul Judge
|
88,850 | |||
|
Richard
W. Anderson
|
193,750 |
Robert
B. Trussell, Jr.
|
53,600 | |||
|
Matthew
D. Clift
|
390,000 |
Peter
K. Hoffman
|
77,650 | |||
|
David
Montgomery
|
287,500 |
John
Heil
|
32,800 | |||
|
P.
Andrews McLane
|
22,100 |
H.
Thomas Bryant
|
12,000 | |||
|
Christopher
A. Masto
|
57,200 |
Evelyn
S. Dilsaver
|
8,791 | |||
|
Francis
A. Doyle
|
95,600 |
|
||||
|
|
All executive officers and directors as a group | 2,080,302 | ||||
|
(6)
|
Includes
254,943 shares of common stock which Mr. McLane may be deemed to have an
indirect pecuniary interest as his spouse is the trustee of 10 trusts
holding these shares in the aggregate for the benefit of his children and
grandchildren.
|
|
|
(7)
|
Includes
129,395 shares of common stock held in revocable trust for the benefit of
Mr. Masto’s children.
|
|
|
(8)
|
Includes
65,100 an aggregate number of shares of common stock, owned by RBT
Investments, LLC and Robert B. Trussell, Jr. and Martha O. Trussell,
Tenants in Common.
|
TEMPUR-PEDIC
INTERNATIONAL INC.
The
Compensation Committee of our Board of Directors has responsibility for
establishing, monitoring and overseeing our Company’s compensation philosophy
and objectives. In the paragraphs that follow, we provide an overview and
analysis of our compensation philosophy, the material compensation decisions we
have made with respect to our compensation philosophy and the material factors
that we considered when making those decisions.
Throughout
this Proxy Statement, those persons who served as (i) our principal executive
officer during the year ended December 31, 2009, (ii) our principal financial
officer during the year ended December 31, 2009 and (iii) our three other most
highly compensated executive officers for the year ended December 31, 2009 are
collectively referred to as our “Named Executive Officers.” Members
of our senior management, including the Chief Executive Officer and employees at
the Executive Vice President level are collectively referred to as “executive
officers.” The compensation programs described below apply in many cases to
larger groups of the Company’s employees other than the five Named Executive
Officers.
Our senior
management compensation plan is designed to attract, motivate and retain our
management talent and to reward our management for strong Company performance
and successful execution of our key business plans and strategies. We believe
that our compensation philosophy aligns management incentives with the long-term
interests of our stockholders.
We compensate
our senior management, including the executive officers, through a mix of base
salary, annual incentive bonus and equity compensation that ties pay to
performance and is designed to provide pay that is competitive with individuals
holding comparable positions and providing similar results at companies of
similar size, value and complexity. While the mix of these elements
varies by an employee’s level in the organization, a majority of the potential
compensation for senior management, consistent with our compensation philosophy,
is considered “at risk” based on Company and individual
performance.
In 2009,
approximately 60% of Mr. Sarvary’s compensation was at risk dependent on
performance, and approximately 62% - 68% of the other Named Executive Officers’
compensation was at risk dependent on performance. We currently
provide long-term incentives in the form of periodic equity compensation grants,
but we do not offer deferred compensation plans or retirement plans (other than
our 401K plan, which is available on the same terms to all eligible
employees).
The
Compensation Committee reviews our Chief Executive Officer’s compensation
annually and makes determinations regarding annual merit increases and other
changes in salary, incentive bonus and equity compensation. Mr. Sarvary’s
initial compensation package as Chief Executive Officer was determined by our
Compensation Committee in connection with the negotiation of his employment
agreement in June 2008.
The Chief
Executive Officer reviews the compensation of the other executive officers
annually and makes recommendations to the Compensation Committee regarding
annual merit increases, annual incentive bonuses and equity compensation with
respect to our executive officers, which are further discussed below. The Board,
upon recommendation of the Compensation Committee, reviews and approves the
compensation for our executive officers other than our Chief Executive
Officer.
The executive
officers meet annually to review the performance of each senior manager and
subsequently meet with the appropriate senior manager to review the performance
of each applicable employee of the Company. The conclusions reached and
recommendations made with respect to employees other than executive officers,
including salary adjustments and annual incentive bonuses, are based on the
reviews and presented to the Chief Executive Officer for approval, with any
equity awards to be approved by the Compensation Committee.
In developing
our Company’s compensation structure, the Compensation Committee has sought to
develop a compensation program for its senior management, including executive
officers, which would reward achievement of corporate and business unit
financial and strategic objectives and align the interests of management with
those of stockholders. To achieve this goal, the Compensation
Committee has retained outside consultants to provide advice with respect to the
Company’s compensation structure for its executive officers, including
information regarding the Company’s compensation structure and compensation
levels compared to a peer group.
Use of
Outside Consultants and Peer Groups
Since 2005,
the Compensation Committee has periodically engaged Frederic W. Cook & Co.,
Inc. (Cook), an executive compensation consultant, to assist in the evaluation
of our overall compensation structure. Through these engagements,
Cook has provided comparative analyses of the Company’s overall compensation
structure, specifically reviewed the compensation of our Named Executive
Officers and has developed a comparative peer group for the Company. The Cook
studies have covered total direct compensation including base salaries, annual
incentive bonuses and long-term incentive compensation, as well as competitive
trends and practices in executive compensation. In subsequent years
Cook has updated its analyses of the Company’s overall compensation structure,
updated its evaluation of our peer group companies and assisted the Committee to
analyze the compensation structure for the Company’s Chief Executive Officer
position, including the preparation of an initial compensation package for
Mr. Sarvary when he joined the Company as Chief Executive Officer in
2008.
In November
2008, the Compensation Committee engaged Cook to reevaluate our peer group
companies and provide an overall analysis of the compensation structure of the
Company’s Named Executive Officers for 2008. Cook provided the
Compensation Committee with the results of its study in January 2009 (2008 Cook
Report), including an update on trends and practices in executive compensation.
Overall, the 2008 Report concluded that the target direct compensation for the
five Named Executive Officers approximated the median of the peer group
data.
In June 2009,
the Compensation Committee engaged Cook to review the design of our annual and
long-term incentive programs. Cook provided the Compensation
Committee Chair with the results of its study and indicated directions for
change in August 2009 (August 2009 Cook Report). In the ensuing
months, Cook worked, on behalf of the Compensation Committee, with management to
tailor Cook’s recommended changes to our incentive compensation programs, and
developed a plan for implementation for 2010. In November 2009, the Compensation
Committee engaged Cook to review its executive compensation program to confirm
the peer group, gather market data and compare Tempur-Pedic to its competitors,
similar to the studies done in prior years. Cook provided the
Compensation Committee with the results of its study in January 2010 (January
2010 Cook Report). Overall, the January 2010 Cook Report
concluded that on average, the base salaries for the top five Named Executive
Officers are generally competitive, with a few executives below median, and that
the target bonuses are appropriately positioned generally at the competitive
median.
Cook
maintains no other direct or indirect business relationship with the Company.
All executive compensation services provided by the consultant are conducted
under the direction and authority of the Compensation Committee.
Peer
Group
In its June
2006 report, Cook developed a peer group for the Company. In
selecting the peer group, Cook included branded consumer product companies that
had comparable revenues, net income and market capitalization. Cook reviews and,
if appropriate, recommends updates to the peer group each year. While
consistency from year to year is desirable, the Compensation Committee reviews
these peer group recommendations from year to year and makes updates to the peer
group as appropriate.
18
In the
August 2009 Cook Report, Cook recommended that Carter’s and Warnaco Group,
two companies meeting the peer group criteria, be added. Set forth
below is the peer group of branded consumer products companies used by Cook to
assess the competitiveness and cost effectiveness of our executive compensation
plan in the January 2010 Cook Report. The January 2010 Cook
Report was used in connection with establishing base salary, annual incentive
bonus and equity compensation to be earned in 2010.
|
Callaway
Golf
Carter’s
Central
Garden & Pet
Columbia
Sportswear
Deckers
Outdoor
Elizabeth
Arden
Ethan
Allen
|
Fossil
Guess
Herman
Miller
Movado
Group
Nautilus
Nu
Skin Enterprises
|
Sealy
Select
Comfort
Timberland
Tupperware
Brands
Under
Armour
Warnaco
Group
Wolverine
World Wide
|
Compensation
Components
Based on our
compensation philosophy, the three principal components of our compensation
include the following:
|
•
|
Base
Salary
|
|
•
|
Annual
Incentive Bonus
|
|
•
|
Long-Term
Incentives
|
Overall, the
Compensation Committee seeks to strike a balance among these three components,
with an emphasis on ensuring that a majority of the total potential compensation
for the Company’s executive officers is significantly at risk and tied to
overall Company performance.
Base
Salary
In
determining the annual base salary for our senior management, including each of
our Named Executive Officers, our goal is to provide a reasonable level of
guaranteed compensation that is set at a competitive level. Each
individual’s initial or starting base salary is a result of the person’s
previous experience, prior compensation history and the current compensation
level of other senior managers within the Company with similar experience and
responsibility.
At the
beginning of each year, all of our employees, including each of our executive
officers, are required to establish individual objectives. These objectives are
used in connection with performance reviews, salary increases and annual
bonuses. Each employee’s set of objectives is approved by his or her supervising
manager and must be consistent with our core values and strategic objectives. In
the case of Mr. Sarvary, our President and Chief Executive Officer, the goals
and objectives are approved by the Compensation Committee. All other executive
officers’, including the Named Executive Officers’, objectives are initially
approved by the Chief Executive Officer, subsequently reviewed by our
Compensation Committee and upon recommendation from the Compensation Committee,
approved by the Board. Each employee’s performance is reviewed annually and
merit increases to an individual’s base salary are aligned with overall Company
and individual performance and successful execution of their individual
objectives as well as peer group benchmarks.
With
respect to our employees, including our Named Executive Officers, the base
salary increase in any year is based on prevailing market practices, economic
conditions and individual performance measurements. In 2009, guided by the
results of the 2008 Cook Report, the Compensation Committee determined that no
salary adjustments were required for the executive officers, including the Chief
Executive Officer and the other Named Executive Officers. Based on
the January 2010 Cook Report, the salaries for each of our Named
Executive officers continues to be near the median of the peer group. As a
result, the Compensation Committee determined that no salary adjustments were
required for our executive officers in 2010.
Annual
Incentive Bonus
The annual
incentive bonus is a lump-sum cash payment for each eligible senior
manager. The amount of the bonus is linked to the achievement of
specific financial and operating targets or strategic
initiatives. Our senior managers are eligible to receive annual
incentive bonuses set at a targeted percentage of their base salary. The
Compensation Committee believes senior management, including the Named Executive
Officers, who hold positions affording them the authority to make critical
decisions affecting the Company’s overall performance, should have a material
percentage of their annual compensation contingent upon the Company’s
performance, with the Chief Executive Officer’s percentage at a higher level
than the other Named Executive Officers.
Overview
Since 2008,
the Compensation Committee’s practice has been to set the targeted annual
incentive bonus level for the Chief Executive Officer at 100% of his base salary
and the targeted annual incentive bonus level for each of the other Named
Executive Officers at 55% of his base salary, with an actual bonus award based
on the achievement of the performance criteria amounting to more or less than
the target amount. Based on the comparison to the peer group in the
August 2009 Cook Report, the Compensation Committee decided to maintain the
targeted annual incentive bonus percentage in relation to each executive’s base
salary at the same levels in 2010 for all Named Executive Officers. For the
Chief Executive Officer, this target bonus percentage took into consideration
the Chief Executive Officer’s overall responsibility for the performance of the
Company. The following table sets forth the targeted annual incentive
bonus levels for each Named Executive Officer shown as a percentage of his base
salary:
|
Named
Executive Officer
|
Targeted
Annual Incentive Bonus
|
|||||||
|
2010
|
2009
|
|||||||
|
Mark
Sarvary
|
100 | % | 100 | % | ||||
|
Dale
E. Williams
|
55 | % | 55 | % | ||||
|
Matthew
D. Clift
|
55 | % | 55 | % | ||||
|
David
Montgomery
|
55 | % | 55 | % | ||||
|
Richard
W. Anderson
|
55 | % | 55 | % | ||||
For
2009, the annual incentive bonus for our Named Executive Officers was comprised
of three components: (i) a Company goals component based on specific Net
sales and EBIT targets, (ii) a Company goals component based on market share
growth and (iii) an Individual goals component based on the successful
execution of individual objectives established at the beginning of each year as
determined in the discretion of the Compensation Committee or the Board of
Directors, as applicable. The 2009 Company goals and 2009 Individual
goals were developed and established in February 2009. A portion of
the 2009 Company goals component related to market share was revised in
September 2009 due to the unavailability and unreliability of certain market
data. As revised, the Company goal component of the bonus based on
Net sales and EBIT represented 55% of the total target bonus, the Company goal
component based on market share represented 18% of the total target bonus, and
the Individual goals component represented 27% of the total target
bonus.
The Net
sales/EBIT goal component of the annual incentive bonus is established using a
matrix to allow for payments between 0% and 200% of the targeted Net sales/EBIT
goal component, depending on the level of Net sales and EBIT for each
year. A failure to meet the minimum requirement may result in no
bonus payment with respect to the Net sales/EBIT goal component. In
calculating the Net sales/EBIT goal component payout, the Compensation Committee
considers material, unanticipated or unusual events that affect the financial
targets in addition to achievement on the specific metrics and then makes a
recommendation to the Board for approval.
The market
share component was added to the bonus program for 2009 in order to create an
incentive tied to the Company’s long-term goal of growing its overall business
by increasing the market share for its products. The market share goal component
of the annual incentive bonus is comprised of two measured categories: share of
Total U.S. mattress market and share of U.S. Specialty mattress market, with
each category contributing one-half of the market share goal
component. The data source of the categories is the International
Sleep Products Association, or ISPA, monthly industry sample for total
mattresses and quarterly report for specialty mattresses. When
setting the market share goal component, the Compensation Committee retained the
discretion to adjust the results due to data reliability factors. The
achievement of each category was dependent upon the basis point share gain or
loss from 2008, allowing for payments between 0% and 200% of the target bonus
component based on market share.
The
Individual goals component of the annual incentive bonus for the Named Executive
Officers is heavily weighted toward the successful completion of individual
objectives. In the case of the Chief Executive Officer, the goals and
objectives are approved by the Compensation Committee. The goals and objectives
for all of the other Named Executive Officers are initially approved by the
Chief Executive Officer, subsequently reviewed by the Compensation Committee
and, upon recommendation by the Compensation Committee, approved by the Board.
The Individual goals component of the annual incentive bonus targets 100% payout
for the achievement of an executive’s annual objectives. Payments can
range from no bonus payment to 200% of the targeted Individual goals component,
based on individual performance. The determination of whether the Individual
goals component of the bonus has been met and to what degree is based on the
subjective determination of the Compensation Committee, and in exercising this
discretion the Compensation Committee looks broadly at each executive’s
performance against individual objectives and the overall performance of the
applicable Named Executive Officers within their specific area of
responsibility.
The design
and purpose of the Company goals components, represented by the Net sales/EBIT
targets and market share targets of the Company, and the purpose of the
Individual goals component, represented by the achievement of individual
targets, are to focus the Named Executive Officers on behaviors that support the
overall performance and success of our Company. Individual and
Company goals are set with a reasonable level of difficulty that require the
Company and Named Executive Officers to perform at a high level in order to meet
the goals and objectives, and the likelihood of attaining these goals and
objectives is not assured.
Achievement
of Company Goals for 2009
For Named
Executive Officers, the annual incentive bonus plan for 2009 was consistent with
the Company’s bonus plan for 2008, but with the addition of the market share
goal component and the financial target matrix updated for new Net sales/EBIT
targets for 2009. The matrix expressed a range of targets for total
Net sales (ranging from $705 million to $855 million) and EBIT (ranging from $80
million to $155 million) as established by the Compensation
Committee. At the time it established the targets for the Company
goals component for 2009, the Compensation Committee believed that these targets
were commensurate with the long-term growth objectives of our business and
reflected a performance that would require strong operating
execution. Although the range of targets for 2009 was lower than the
range of targets for 2008, the Compensation Committee believed the targets were
challenging for the executives to achieve given the deteriorating macroeconomic
condition at the beginning of 2009. Comparatively, in 2008, the total
Net sales target ranged from $1.195 billion to $1.286 billion and the EBIT
target ranged from $269.5 million to $310 million. None of the Named Executive
Officers, who were with the Company for the full year, received a bonus payout
based on the targeted Company goals component for 2008 as established at the
beginning of that year. Our Compensation Committee considered the
target levels for 2009 to be challenging for executives to achieve and believed
that they required our management to achieve Company Net sales and EBIT that
represented good levels of accomplishment given the market conditions and
outlook for 2009. During 2009, the Company achieved Net sales of $831 million
and EBIT of $145 million. As a result, each of the Named Executive
Officers received the maximum bonus payout of 200% based on the targeted Net
sales/EBIT goal component.
When the
Compensation Committee established the market share goal component in February
2009, it represented 25% of the annual incentive bonus. It was
comprised equally among three market share performance categories: Total U.S.
mattress market, Total U.S Specialty mattress market and Total International
mattress market. However, in September 2009, upon learning that
certain international market share data may be unavailable or unreliable, the
Compensation Committee decided to eliminate the International category of the
market share goal component, while also decreasing the overall proportion of the
market share goal component to the annual incentive bonus. As a
result, the market share goal component was decreased from 25% to 18%, and the
Net sales/EBIT component and Individual goal component were increased as
relative portions of the annual incentive bonus.
21
The total
market share goal component payout ranged from 0% to 200%. The matrix
expressed a range of market share changes compared to the actual market share
data for 2008, and the percentage payout for each category. The
target for U.S. Specialty market share ranged from a 0.1% increase to a 1%
increase in market share, and the target for the U.S. Total market share ranged
from a 1% decrease to a 1% increase in market share. The Company
achieved a 2009 U.S. Specialty market share increase of 0.9% over 2008,
resulting in 180% of the applicable bonus payout for that
element. The Company achieved a 2009 U.S. Total market share decrease
of 0.4% since 2008, resulting in a 60% bonus payout for that
element. Overall, the market share goal component payout was 120% of
the market share target.
Achievement
of Individual Goals for 2009
Mark
Sarvary
The
individual objectives for the Individual goals component of the annual incentive
bonus for 2009 for Mr. Sarvary, our Chief Executive Officer, included the
following:
|
•
|
improve
the Company’s cost structure;
|
|
•
|
manage
the Company effectively in the uncertain business
environment;
|
|
•
|
continue
to strengthen the Company
organization;
|
|
•
|
improve
the Company’s performance and relationships with the retailer
base;
|
|
•
|
increase
the Company’s actual and perceived product
differentiation;
|
|
•
|
meet
and form relationships with key external constituencies;
and
|
|
•
|
strengthen
U.S. Direct response channel sales.
|
In reviewing
the Chief Executive Officer’s performance for 2009, the Compensation Committee
concluded that Mr. Sarvary’s individual achievements had been significant during
this period. The Compensation Committee cited the following
achievements:
|
•
|
significant
gross margin and overhead expense cost
improvements;
|
|
•
|
business
managed very tightly during period of significant
uncertainty;
|
|
•
|
excellent
Strategic Business Plan created with key areas of growth
defined;
|
|
•
|
strong
additions to management team in key
positions;
|
|
•
|
redesign
of sales organization and better focus on retail
partners;
|
|
•
|
development
and launch of new Tempur-Pedic Cloud mattress and product line
architecture; and
|
|
•
|
reestablished
growth in Direct response channel.
|
The
Compensation Committee noted that Mr. Sarvary had met all his Individual goals,
with many being achieved at a high level of achievement in a difficult overall
business environment. After the review of these achievements, the
Compensation Committee determined and paid out 140% of Mr. Sarvary’s Individual
goals component target, reflecting his achievements for 2009.
Dale E.
Williams
The
individual objectives for the Individual goals component of the annual incentive
bonus for 2009 for Mr. Williams, our Executive Vice President and Chief
Financial Officer, included the following:
|
•
|
strengthen
oversight of the Company’s financial
objectives;
|
|
•
|
maintain
a strong balance sheet;
|
|
•
|
continue
to strengthen relationships with investors and
analysts;
|
|
•
|
manage
the Company effectively in the uncertain business environment;
and
|
|
•
|
strengthen
the organization and improve employee engagement
scores.
|
22
In 2009, Mr.
Williams achieved or exceeded almost all of his Individual goals,
including:
|
•
|
streamlining
the financial monitoring process;
|
|
•
|
effecting
the repatriation of foreign
earnings;
|
|
•
|
keeping
corporate costs low and exceeding expectations on certain budget
items;
|
|
•
|
increasing
investor relations activity;
|
|
•
|
contributing
to development of a strong strategic plan;
and
|
|
•
|
strong
improvements in employee engagement
scores.
|
In addition,
the Compensation Committee concluded that Mr. Williams had been very successful
in managing the Company’s capital structure, and these efforts were instrumental
in positioning the Company for the current challenging economic
environment. Accordingly, his Individual goals component was paid out
at 150% of his target.
Richard W.
Anderson
The
individual objectives for the Individual goals component of the annual incentive
bonus for 2009 for Mr. Anderson, our Executive Vice President of North America,
included the following:
|
•
|
manage
North American financial
objectives;
|
|
•
|
increase
actual and perceived product
differentiation;
|
|
•
|
improve
performance with retailers;
|
|
•
|
strengthen
U.S. Direct Response by focusing on
internet;
|
|
•
|
manage
the Company effectively in the uncertain business environment;
and
|
|
•
|
strengthen
the organization and improve employee engagement
scores.
|
In 2009, Mr.
Anderson achieved most of his Individual goals, including:
|
•
|
improved
Net sales ahead of budget target;
|
|
•
|
developing
and successfully launching the Cloud and Cloud Supreme
mattresses;
|
|
•
|
creating
a high potential new advertising and marketing
campaign;
|
|
•
|
redesigning
the sales organization and improved retail partner
focus;
|
|
•
|
increasing
U.S. Direct response sales; and
|
|
•
|
strengthening
organizational talent and
engagement.
|
Accordingly,
Mr. Anderson’s Individual goals component was paid out at 150% of his
target.
Matthew D.
Clift
The
individual objectives for the Individual goals component of the annual incentive
bonus for 2009 for Mr. Clift, our Executive Vice President of Global Operations,
included the following:
|
•
|
improve
the effectiveness of factory
operations;
|
|
•
|
improve
gross margin;
|
|
•
|
increase
the Company’s actual and perceived product
differentiation;
|
|
•
|
improve
performance with the Company’s
retailers;
|
|
•
|
manage
the Company effectively in this uncertain business environment;
and
|
|
•
|
strengthen
the organization and improve employee engagement
scores.
|
23
In 2009, Mr.
Clift achieved or exceeded almost all of his Individual goals,
including
|
•
|
increasing
global factory productivity and global
safety;
|
|
•
|
attainment
of significant cost reductions;
|
|
•
|
delivering
major new technology and new products on
schedule;
|
|
•
|
achievement
of new product performance goals via consumer testing;
and
|
|
•
|
improving
the operations and IT organization through new
hires.
|
Accordingly,
his Individual goals component was paid out at 140% of his target.
Mr.
Montgomery
The
individual objectives for the Individual goals component of the annual incentive
bonus for 2009 for Mr. Montgomery, our Executive Vice President of International
Operations, included the following:
|
•
|
manage
international financial objectives;
|
|
•
|
improve
margins;
|
|
•
|
increase
the Company’s actual and perceived product
differentiation;
|
|
•
|
improve
performance with retailers;
|
|
•
|
manage
the Company effectively in the uncertain business environment;
and
|
|
•
|
strengthen
the organization and improve employee engagements
scores.
|
In 2009 Mr.
Montgomery’s accomplishments included:
|
•
|
increases
in international gross profit
margin;
|
|
•
|
achieved
EBIT and free cash flow targets;
|
|
•
|
successful
launch of new products;
|
|
•
|
increasing
the store base in Japan and channels in Austria and the Czech
Republic;
|
|
•
|
tight,
proactive management of International business during uncertainty;
and
|
|
•
|
upgrading
and operating the International team
effectively.
|
Due to the
recessionary macroeconomic environment, the International Net sales target was
not fully achieved. Balancing his achievements against all of his Individual
goals, Mr. Montgomery’s Individual goals component was paid out at 120% of his
target.
Annual
Incentive Bonus Plan Payments for 2009
Based
on the relative weight of the Company goals component based on Net sales/EBIT
(55%), the Company goals component based on market share (18%) and the
Individual goals component (27%), each Named Executive Officer, received a
percentage of his overall incentive bonus target for 2009 as
follows:
|
Named
Executive Officer
|
Percentage
of Overall Incentive Bonus Target
|
|||
|
Mr.
Sarvary
|
169.4 | % | ||
|
Mr.
Williams
|
172.1 | % | ||
|
Mr.
Anderson
|
172.1 | % | ||
|
Mr.
Clift
|
169.4 | % | ||
|
Mr.
Montgomery
|
164.0 | % | ||
Equity
Compensation
Members
of senior management, including our Named Executive Officers, are eligible to
receive equity compensation awards under our equity incentive plans. We believe
that providing equity awards as a component of compensation for senior managers
aligns the interests of senior managers with the interests of our stockholders
by focusing the executive on the long-term growth of the Company, and not
short-term individual performance. In addition, we believe that equity grants
provide an additional method of compensation where the return for each senior
manager is directly tied to stockholders’ return on their
investment.
Historically,
our long-term incentive compensation program for executive officers, including
the Named Executive Officers, have been intermittent multi-year grants of stock
options with a four year vesting period, based on continued
employment. The value of these awards was at or above the median for
the peer group after spreading the value of our four-year option grants across
the relevant four years. In contrast, members of senior management
other than executive officers typically received annual stock option grants
based on their job level at the time and their individual and Company
performance for the year.
After his
appointment in June 2008, Mr. Sarvary, our President and Chief Executive
Officer, was awarded a four-year grant of 900,000 stock options. This award has
an exercise price of $7.81 and vests in four equal annual installments beginning
on the first anniversary date of the date of the grant and every year
thereafter, subject to Mr. Sarvary’s continued employment, until all the shares
are vested.
After
evaluating the analysis and conclusions contained in the 2008 Cook Report, the
Compensation Committee decided generally to transition away from intermittent
multi-year grants for executive officers and to move in steps towards an annual
grant cycle, which is consistent with the majority of peer group companies and
which the Compensation Committee believes will provide superior motivation and
retention for key executives, while continuing to cause executives to maintain a
long-term business focus aligned with the interests of
stockholders. As part of this transition, our Named Executive
Officers, other than the Chief Executive Officer, were awarded a stock option
grant in February 2009 in an amount intended to constitute the equity component
of their compensation package. The following table sets forth the
equity incentive awards for each Named Executive Officer granted in
2009.
|
Named
Executive Officer
|
Date
of Grant
|
Stock
Option Award
|
|||
|
Dale
E. Williams
|
2/27/2009
|
180,000 | |||
|
Richard
W. Anderson
|
2/27/2009
|
150,000 | |||
|
Matthew
D. Clift
|
2/27/2009
|
210,000 | |||
|
David
Montgomery
|
2/27/2009
|
180,000 | |||
Each of
the stock option awards granted in February 2009 has an exercise price of $6.14
and vests in four equal annual installments beginning on the first anniversary
date of the date of the grant and every year thereafter until all the shares are
vested. In addition, if a change of control of the Company occurs and
the Named Executive Officer’s employment is terminated but not for cause or if
he resigns for good reason (in each case as defined in his employment agreement)
within twelve (12) months after the occurrence of a change of control, the Named
Executive Officer’s next annual installment of shares will accelerate and vest
as of the date of his termination of employment.
In
setting the size of these equity awards, the Compensation Committee takes into
account a number of factors, including the Named Executive Officer’s position
with the Company, prevailing market conditions and the overall size of the
executive officer’s compensation package, as well as the studies completed by
Cook, the Compensation Committee’s executive compensation
consultant.
The
remaining senior managers have typically received grants of stock options on an
annual basis based on their individual and the Company’s performance. These
grants are awarded in the first quarter, consistent with a revised integrated
compensation timetable created in 2009 that ensures that stock option grants
fully recognize an assessment of each individual’s performance in the prior year
and potential for the individual’s growth within the Company in the future.
These stock option awards historically have ranged between 2,000 and 40,000
shares. In addition, individual stock option awards are granted throughout the
year as needed with respect to hiring new members of senior management or
promotions of employees into senior management positions. These
awards historically have ranged between 2,000 and 35,000 stock
options.
After evaluating the analysis and
conclusions in the August 2009 and January 2010 Cook Reports, the Compensation
Committee and Board decided to change the form of the Company’s long-term
incentive program throughout all levels of the Company. Prior to the
change, at senior management levels in the Company, equity compensation and
long-term incentives were based on a range around a fixed number of stock
options at various levels. The Compensation Committee found that such
awards often created large variability in value and cost based on the market
price of the Company’s common stock at the time of grant. The Compensation
Committee also desired to have a portion of the long-term incentives reward and
incent the successful implementation of longer term strategies.
Therefore, beginning in 2010, the
Compensation Committee and the Board are implementing a new long term incentive
program design through all levels of the Company eligible for equity
compensation. It is expected that long term incentive grants will be made on an
annual basis and will involve a mix of stock options and performance-based
restricted stock units (PRSUs), with the amount of the award based on a range of
value established by position. These ranges of value will be chosen to be
competitive to or somewhat higher than peer group benchmarks as the Company
hopes to attract, retain and motivate managers to plan for and achieve long-term
growth. The PRSU component is a grant of a target award, expressed as a number
of shares, to be earned based on certain performance achievements over a
designated period (usually three years). The actual number of shares
that will be issued may be higher or lower than the target award, based on the
actual performance over the designated periods. The performance metrics
underlying the PRSU component may be one or more of the
following: pre- or after-tax net earnings, sales growth, operating
earnings, operating cash flow, return on net assets, return on stockholders’
equity, return on assets, return on capital, stock price growth, stockholder
returns, gross or net profit margin, earnings per share, price per share of
common stock and market share, any of which may be measured either in absolute
terms or as compared to any incremental increase or as compared to results of a
peer group.
In 2010, in order to implement this
change in long-term incentive compensation, the Compensation Committee decided
to adopt a Long-Term Incentive Program, referred to as the LTIP Plan,
established under the Company’s Amended and Restated 2003 Equity Incentive
Plan.
For 2010, the Compensation Committee
determined that all eligible recipients of long-term incentive awards, other
than executive officers, would receive 50% of the value of the grant in the form
of options and 50% in the form of PRSUs. The stock options vest over
a three year period. The PRSUs vest at the end of the three-year performance
period.
In
February 2010, the Compensation Committee granted awards to the Named Executive
Officers pursuant to the LTIP Plan. The LTIP awards for executive officers,
including the Named Executive Officers, were solely in the form of PRSUs because
the executive officers had received option grants in prior years that were still
subject to vesting in 2010. The committee believed it important that the
Executive Officers, as leaders of the Company, participate in the first year of
this new performance incentive program. The Compensation Committee expects
that the executive officers will transition into full participation in the new
long-term incentive structure over time. The grants to the Named Executive
Officers are set forth below:
|
Named
Executive Officer
|
Date
of Grant
|
Performance
Restricted Stock Unit Awards (1)
|
|||
|
Mark
Sarvary
|
2/22/2010
|
35,224 | |||
|
Dale
E. Williams
|
2/22/2010
|
7,221 | |||
|
Richard
W. Anderson
|
2/22/2010
|
7,221 | |||
|
Matthew
D. Clift
|
2/22/2010
|
7,221 | |||
|
David
Montgomery
|
2/22/2010
|
7,221 | |||
| (1) Recipients of PRSUs may earn a total award ranging from 0% to 300% of the initial grant. Actual payout under this program is dependent upon the achievement of certain financial goals, including Net sales and EBIT margin targets. | |||||
Executive
Stock Ownership Guidelines
In January
2008, our board of directors adopted minimum stock ownership guidelines for our
executive officers and directors. The principal objective of the guidelines is
to enhance the linkage between the interests of stockholders and our executive
officers and directors through a minimum level of stock
ownership. The guidelines provide that, within 5 years, the Chief
Executive Officer should own a fixed number of shares equal to 5 times his base
salary, and that all other executive officers should own a fixed number of
shares equal to three times the executive’s base salary. Our
directors also are required to own, within five years, a fixed number of shares
equal to four times the director’s annual retainer. Unexercised
vested stock options count towards an individual’s ownership (based on the
anticipated after tax value), but unvested stock options and unvested restricted
stock are not counted towards an individual’s ownership. Until the
guidelines are met, executive officers and directors are required to retain 50%
of the net after-tax value of any shares obtained by option exercise or
restricted stock/restricted stock unit vesting. The value of shares, stock
units, restricted shares and vested stock options will be based on the market
value of our common stock on the last trading day of January in each
year.
Other
Benefits
Mr. Sarvary,
in 2008, received a one-time hiring bonus of $200,000 to help defray certain
relocation expenses in excess of the relocation expense reimbursement policy
offered to senior management in connection with his employment with the
Company. The Company paid $100,000 upon employment and paid the
remaining $100,000 upon the first anniversary of his employment
agreement. Mr. Sarvary’s employment agreement also provides that he
will receive two years of base salary plus benefits if he is terminated without
cause or if he resigns for good reason.
We offer a
401K plan to all of our eligible employees, including our senior management and
Named Executive Officers. The plan is designed to allow employees to defer
current earnings and recognize them later in accordance with statutory
regulations when their individual income tax rates may be more beneficial. The
Company typically matches 100% of the first three percent of each employee’s
salary that is deferred and 50% of the fourth and fifth percent of salary
deferred. However, the decision to make the match is at the sole discretion of
the Company. The Company made the matching contribution in 2009 for all
participating employees.
The Company
does not offer any other defined contribution or defined benefit pension plans.
There are no alternate plans in place for senior management.
The Company
also has various broad-based employee benefit plans. Named Executive Officers
participate in these plans on the same terms as eligible, non-executive
employees, subject to any legal limits on the amounts that may apply. Executive
officers, including the Named Executive Officers, receive an annual car
allowance.
Each of our
Named Executive Officers is a party to an employment agreement with the Company.
These employment agreements provide for severance arrangements in the event of
termination of employment in certain circumstances and also provide for
non-competition, non-solicitation and confidentiality agreements. These
severance arrangements are discussed in more detail below under “Potential
Payments Upon Termination Or Change In Control.” The employment agreements for
the Named Executive Officers were put in place at the time they became employees
with the Company (in certain cases, prior to the Company’s initial public
offering in 2003). We believe that these agreements, including the severance
provisions, are necessary to allow us to be competitive in recruiting and
retaining top talent for executive officer positions. The Compensation Committee
has not to date believed it necessary to revise the severance and related terms
in these employment agreements, except that in March 2008, the Company amended
Mr. Williams’ employment agreement to make the severance and related provisions
better align with the corresponding provisions in the employment agreements for
the other Executive Vice Presidents. However, as part of its analysis
of the reasonableness of each individual element of compensation and each Named
Executive Officer’s compensation package as a whole, the Committee expects that
it will periodically conduct an analysis of each of these arrangements for
reasonableness and market competitiveness.
Tax
and Accounting Implications
Deductibility of
Compensation
Section
162(m) of the Code limits the Company’s deduction for compensation paid to the
executive officers named in the Summary Compensation Table, other than the Chief
Financial Officer, to $1 million unless certain requirements are met. For 2009,
the requirements for deductible compensation under Section 162(m) were met for
all executive officers. The policy of the Compensation Committee with
respect to Section 162(m) is to establish and maintain a compensation program
that will optimize the deductibility of compensation. However, the Compensation
Committee may exercise its right to use judgment, where appropriate, to respond
to changing business conditions or to an executive officer’s individual
performance, to authorize compensation which may not in a specific case be fully
deductible by the Company. In order to ensure that the Compensation Committee
has maximum flexibility to grant incentive compensation opportunities to
executive officers that satisfy the requirements of Section 162(m), the Company
is submitting its Amended and Restated Annual Incentive Bonus Plan for Senior
Executives for consideration and approval by stockholders. For more
information regarding this proposal see “Proposal Three – Approval of
Tempur-Pedic International Inc. Amended and Restated Annual Incentive Bonus Plan
for Senior Executives.”
Accounting
for Stock-Based Compensation
The Company
accounts for stock-based payments, including its Equity Incentive Plans and
Employee Stock Purchase Plan, in accordance with FASB ASC 718, “Stock
Compensation.”
The information contained in this report shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the Securities and Exchange Commission, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that Tempur-Pedic International specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended (Securities Act), or the Exchange Act.
The
Compensation Committee is comprised entirely of independent
directors. The Compensation Committee has reviewed the Compensation
Discussion and Analysis required by Item 402(b) of Regulation S-K with
management and, based on such review and discussions, the Compensation Committee
recommended to the Board that the Compensation Discussion and Analysis be
included in this Proxy Statement and incorporated by reference into the
Company’s Annual Report on Form 10-K for the year ended December 31,
2009.
Submitted
by,
COMPENSATION
COMMITTEE
Peter K.
Hoffman (Chair)
Francis
A. Doyle
John
A. Heil
Sir
Paul Judge
28
The
Compensation Committee considers, in establishing and reviewing compensation
programs, whether the programs encourage unnecessary or excessive risk taking
and has concluded that they do not. Base salaries are fixed in amount and thus
do not encourage risk taking. In 2009, employees were also eligible
to receive a portion of their total compensation in the form of “at risk”
compensation opportunities, including the annual incentive bonus and, for senior
managers, the long-term incentive opportunities. The portion of “at
risk” compensation increases as an employee’s level of responsibility within the
Company increases. While the annual incentive bonus awards focus on
achievement of short-term or annual goals, and short-term goals may encourage
the taking of short-term risks at the expense of long-term results, the
Company’s annual incentive bonus program represents only a portion of eligible
employees’ total compensation opportunities. The Compensation Committee believes
that the annual incentive bonus program appropriately balances risk and the
desire to focus eligible employees on specific short-term goals important to the
Company’s success, and that it does not encourage unnecessary or excessive risk
taking.
The majority
of “at risk” compensation provided to senior managers is in the form of
long-term equity awards that are important to help further align senior
managers’ interests with those of the Company’s stockholders. The Compensation
Committee believes that these awards do not encourage unnecessary or excessive
risk taking since the ultimate value of the awards is tied to the Company’s
stock price, and since awards are staggered and subject to long-term vesting
schedules to help ensure that executives have significant value tied to
long-term stock price performance.
In January
2008, the Company adopted a stock ownership policy applicable to executive
officers and members of the Board of Directors intended to encourage long-term
ownership of a significant amount of Tempur-Pedic stock in order to promote a
long-term “owner’s” view of our business. The Committee believes the
Company’s compensation programs encourage employees to strive to achieve both
the short and long-term goals that are important to the Company’s success
without promoting unnecessary or excessive risk taking.
The following
table sets forth information concerning the annual and long-term compensation
for services in all capacities to Tempur-Pedic International for the year ended
December 31, 2009 of those persons who served as (i) our principal
executive officer during the year ended December 31, 2009, (ii) our
principal financial officer during the year ended December 31, 2009 and
(iii) our other three most highly compensated executive officers for the
year ended December 31, 2009. We refer to our principal executive officers,
principal financial officer and the other three most highly compensated
executive officers collectively as our “Named Executive Officers.”
|
Non-equity
|
||||||||||||||||||||||||
|
Stock
|
Incentive
Plan
|
All
Other
|
||||||||||||||||||||||
|
|
Bonus
|
Awards
|
Option
|
Compensation
|
Compensation
|
Total
|
||||||||||||||||||
|
Name
and Principal Position
|
Year
|
Salary
($)
|
($)
(3)
|
($)
|
Awards($)
(4)
|
($)
(3)
|
($)
(5)
|
($)
|
||||||||||||||||
|
Mark
Sarvary — President and Chief Executive Officer(1)
|
2009
|
$
|
750,000
|
$
|
383,500
|
$
|
—
|
$
|
—
|
$
|
987,000
|
$
|
15,155
|
$
|
2,135,655
|
|||||||||
|
2008
|
360,577
|
218,750
|
—
|
2,412,000
|
175,000
|
104,115
|
3,270,442
|
|||||||||||||||||
|
Dale
E. Williams — Executive
Vice-President, Chief Financial Officer and
Secretary
|
2009
|
340,000
|
75,735
|
—
|
405,000
|
246,092
|
14,909
|
1,081,736
|
||||||||||||||||
|
2008
|
341,601
|
68,567
|
—
|
204,000
|
—
|
17,230
|
631,398
|
|||||||||||||||||
|
2007
|
309,987
|
67,158
|
—
|
—
|
198,673
|
17,230
|
593,048
|
|||||||||||||||||
|
Richard
W. Anderson — Executive Vice-President, President North
America
|
2009
|
328,000
|
73,062
|
—
|
337,500
|
237,406
|
21,415
|
997,383
|
||||||||||||||||
|
2008
|
328,700
|
54,120
|
—
|
902,000
|
—
|
20,645
|
1,305,465
|
|||||||||||||||||
|
2007
|
314,711
|
68,182
|
—
|
—
|
201,701
|
8,230
|
592,824
|
|||||||||||||||||
|
Matthew
D. Clift — Executive Vice-President, Global Operations
|
2009
|
360,000
|
74,844
|
—
|
472,500
|
260,568
|
24,313
|
1,192,225
|
||||||||||||||||
|
2008
|
360,795
|
66,000
|
—
|
204,000
|
—
|
17,230
|
648,025
|
|||||||||||||||||
|
2007
|
344,867
|
86,224
|
—
|
—
|
221,066
|
17,230
|
669,387
|
|||||||||||||||||
|
David
Montgomery — Executive Vice-President, President of International
Operations (2)
|
2009
|
375,865
|
64,152
|
—
|
405,000
|
260,568
|
70,807
|
1,176,392
|
||||||||||||||||
|
2008
|
444,613
|
60,439
|
—
|
204,000
|
—
|
81,254
|
790,306
|
|||||||||||||||||
|
2007
|
461,455
|
68,671
|
—
|
—
|
293,437
|
86,790
|
910,353
|
|||||||||||||||||
|
(1)
|
Mr.
Sarvary joined the Company on June 30, 2008 and became our President and
Chief Executive Officer on August 4, 2008. Mr. Sarvary received a bonus of
$100,000 at the time he accepted employment with us. The remainder of the
2008 amount is representative of annual bonus payouts which were earned in
2008 and paid in February 2009. The amount in the “Bonus” column for 2009
includes the second installment of Mr. Sarvary’s signing bonus which was
payable under his employment agreement on the first anniversary of his
employment with the Company.
|
|
|
(2)
|
Mr.
Montgomery’s salary is paid in British Pounds (₤) and is converted to
United States Dollars ($) using the monthly payments translated at the
monthly average rate for each month in the year ended December 31, 2009.
Mr. Montgomery’s Non-Equity Incentive Plan Compensation is denominated in
British Pounds and has been converted to United States Dollar using the
spot conversion rate for the date paid to Mr.
Montgomery.
|
|
|
(3)
|
Bonus
and Non-equity Incentive Plan Compensation payouts were earned in 2009 and
paid in 2010 to Mr. Sarvary, Mr. Williams, Mr. Clift, Mr. Montgomery and
Mr. Anderson, pursuant to the 2009 Executive Incentive Bonus Plan. The
amount paid upon the achievement of the Individual goals appear in the
column “Bonus” and the amounts paid upon the achievement of the Company
performance appear in the column “Non-equity Incentive Plan
Compensation.”
|
|
|
(4)
|
For
stock options granted, the value set forth is the full grant date fair
value, in accordance with FASB ASC 718. See the Company’s Annual Report
for the year ended December 31, 2009 for a complete description of
the valuation.
|
|
|
(5)
|
Represents
amounts paid on behalf of each of the Named Executive Officers for the
following three respective categories of compensation: (i) premiums
for life, accidental death and dismemberment insurance and long-term
disability benefits, (ii) contributions to our defined contribution
plans and (iii) car allowance. Amounts for each of the Named Executive
Officers for each of the three respective preceding categories is as
follows: Mr. Sarvary: (2009 – $973,$6,983, $7,200); Mr. Williams:
(2009 – $973, $6,737, $7,200); Mr. Clift (2009 – $973, $16,140, $7,200);
Mr. Montgomery: (2009 – $7,748, $48,628, $13,703 ); and Mr. Anderson:
(2009 – $973, $13,242, $7,200). Mr. Montgomery also received tax
preparation fees in the amount of $728 which is included under
“All Other Compensation” for the year ended December 31,
2009.
|
The following
table provides information about annual and long term incentive award
opportunities granted to our named executive officers during
2009. These incentive award opportunities are described in the
Compensation Discussion and Analysis section of the proxy statement under
“Compensation Components – Annual Incentive Bonus” and “Compensation Components
– Equity Compensation.”
| Estimated
Possible Payouts
Under
Non-Equity Incentive
Plan Awards
(1)
|
||||||||||||||
|
Name/Type
of Award
|
Grant Date | Threshold ($) | Target ($) | Maximum ($) | All
Other Option Awards: Number of Securities Underlying
Options
(#) (2)
|
Exercise or Base Price of Option Awards ($/Sh)
|
Grant
Date Fair Value of Stock and Option Awards
($)
(3)
|
|||||||
|
Mark
Sarvary
|
||||||||||||||
|
Annual
Incentive Bonus
|
2/27/09
|
— | 750,000 | 1,500,000 | ||||||||||
|
Dale
E. Williams
|
||||||||||||||
|
Annual
Incentive Bonus
|
2/27/09
|
— | 187,000 | 374,000 | ||||||||||
|
Stock
Option
|
2/27/09
|
180,000 | 6.14 | 405,000 | ||||||||||
|
Matthew
D. Clift
|
||||||||||||||
|
Annual
Incentive Bonus
|
2/27/09
|
— | 198,000 | 396,000 | ||||||||||
|
Stock
Option
|
2/27/09
|
210,000 | 6.14 | 472,500 | ||||||||||
|
David
Montgomery
|
||||||||||||||
|
Annual
Incentive Bonus (4)
|
2/27/09
|
— | 189,196 | 378,391 | ||||||||||
|
Stock
Option
|
2/27/09
|
180,000 | 6.14 | 405,000 | ||||||||||
|
Richard
W. Anderson
|
||||||||||||||
|
Annual
Incentive Bonus
|
2/27/09
|
— | 180,400 | 360,800 | ||||||||||
|
Stock
Option
|
2/27/09
|
150,000 | 6.14 | 337,500 | ||||||||||
|
(1)
|
These
columns show the 2009 annual award opportunities under the Annual
Incentive Bonus Plan for Senior Executives. They do not reflect
the actual amounts paid out under the program which are included in the
Summary Compensation Table and discussed in detail in the Compensation
Discussion and Analysis Section under “Compensation Components – Annual
Incentive Bonus”.
|
|
|
(2)
|
This
column shows the stock options granted in 2009 under the Company’s Amended
and Restated 2003 Equity Incentive Plan. The stock
options vest over a four year period as follows: 25% vesting on
each of the first four anniversaries of the grant date, subject to the
named executive officer’s continued employment with the
Company.
|
|
| (3) |
For
stock options granted, the value set forth is the full grant date fair
value, in accordance with FASB ASC 718. See the Company’s Annual Report
for the year ended December 31, 2009 for a complete description of
the valuation.
|
|
|
|
|
|
|
(4)
|
Mr.
Montgomery’s salary is paid in British Pounds (₤). As a result, the Annual
Incentive Bonus, target and maximum opportunities were converted to United
States Dollars ($) based on the exchange spot rate on the date the award
was granted (February 27, 2009).
|
|
The table
below sets forth the outstanding stock option awards classified as exercisable
and unexercisable as of December 31, 2009 for each of our Named Executive
Officers. There are no unvested stock awards as of December 31,
2009.
|
Option
Awards
|
||||||||||||
|
Number
of
|
Number
of
|
|||||||||||
|
|
Securities
Underlying
|
Securities
Underlying
|
||||||||||
|
Unexercised
|
Unexercised
|
|||||||||||
|
Name
|
Options
(#)
Exercisable
|
Options (#)
Unexercisable
|
Option Exercise
Price
($)
|
Option
Expiration Date
|
||||||||
|
Mark
Sarvary
|
225,000
|
675,000
|
(1)
|
$
|
7.81
|
6/30/2018
|
||||||
|
Dale
E. Williams
|
65,625
|
—
|
|
2.38
|
7/7/2013
|
|||||||
|
156,250
|
93,750
|
(2)
|
13.47
|
6/28/2016
|
||||||||
|
25,000
|
25,000
|
(3)
|
11.76
|
5/15/2018
|
||||||||
|
—
|
180,000
|
(4)
|
6.14
|
2/27/2019
|
||||||||
|
Matthew
D. Clift
|
225,000
|
—
|
19.30
|
12/1/2014
|
||||||||
|
112,500
|
—
|
12.37
|
12/15/2015
|
|||||||||
|
25,000
|
25,000
|
(3)
|
11.76
|
5/15/2018
|
||||||||
|
—
|
210,000
|
(4)
|
6.14
|
2/27/2019
|
||||||||
|
David
Montgomery
|
240,625
|
109,375
|
(5)
|
13.47
|
6/28/2016
|
|||||||
|
25,000
|
25,000
|
(3)
|
11.76
|
5/15/2018
|
||||||||
|
—
|
180,000
|
(4)
|
6.14
|
2/27/2019
|
||||||||
|
Richard
W. Anderson
|
50,000
|
25,000
|
(6)
|
13.16
|
7/18/2016
|
|||||||
|
56,250
|
18,750
|
(7)
|
20.27
|
12/21/2016
|
||||||||
|
25,000
|
75,000
|
(8)
|
20.02
|
1/29/2018
|
||||||||
|
25,000
|
25,000
|
(3)
|
11.76
|
5/15/2018
|
||||||||
|
—
|
150,000
|
(4)
|
6.14
|
2/27/2019
|
||||||||
|
(1)
|
These
options, granted on June 30, 2008, have a 10-year term and become
exercisable in four equal installments over four years, beginning with the
one-year anniversary date of the grant.
|
|
|
(2)
|
These
options, granted on June 28, 2006, have a 10-year term. Twenty-five
percent (25%) of these options became exercisable on July 7, 2008 and the
remaining shares become exercisable in equal installments on a quarterly
basis over the subsequent twelve (12) quarters.
|
|
|
(3)
|
These
options, granted on May 15, 2008, have a 10-year term and become
exercisable in two equal installments over two years, beginning with the
one-year anniversary date of the grant.
|
|
|
(4)
|
These
options, granted on February 27, 2009, have a 10-year life and became
exercisable in equal installments over four years, beginning with the
one-year anniversary of the grant date.
|
|
|
(5)
|
These
options, granted on June 28, 2006, have a 10-year term. Twenty-five
percent (25%) of these options became exercisable on February 24, 2008 and
the remaining shares become exercisable in equal installments on a
quarterly basis over the subsequent twelve quarters.
|
|
|
(6)
|
These
options, granted on July 18, 2006, have a 10-year life and became
exercisable in equal installments over four years, beginning with the
one-year anniversary of the grant date.
|
|
|
(7)
|
These
options, granted on December 21, 2006, have a 10-year life and became
exercisable in equal installments over four years, beginning with the
one-year anniversary of the grant date.
|
|
|
(8)
|
These
options, granted on January 29, 2008, have a 10-year life and became
exercisable in equal installments over four years, beginning with the
one-year anniversary of the grant date.
|
|
No Named
Executive Officers exercised stock options or acquired stock upon vesting of
stock awards during the year ended December 31, 2009.
Tempur-Pedic International has entered
into agreements and adopted plans that require us to provide compensation and/or
other benefits to each Named Executive Officer in the event of that executive’s
termination of employment under certain circumstances. The table below sets
forth the amounts payable to each Named Executive Officer assuming the executive
officer’s employment had terminated under various scenarios
on December 31, 2009 (the last
business day of fiscal 2009).
The Company
has entered into employment agreements with each of its executive officers,
employment agreements for each Named Executive Officer are described
below. All other employees below the executive officer level are
deemed to be “at will” employees and are not under
contract. Definitions of terms commonly used in the employment
agreements and compensation plans are set forth below.
Certain
Definitions
“Good Reason.” Mr. Sarvary’s
employment agreement generally defines “Good Reason” as relocation of his
principal workplace, his demotion from his position as Chief Executive Officer,
or the Company’s material breach of his employment agreement. The employment
agreements for Messrs. Williams, Clift and Anderson generally define “Good
Reason” as relocation of their principal workplace, or the Company’s material
breach of their employment agreements.
“For Cause.” The
employment agreements for Mr. Sarvary generally define “For Cause” as the
employee’s (a) willful and continued failure to substantially perform the
reasonably assigned duties with the Company, (b) material breach of his
employment agreement which is not cured within 30 days after receipt of written
notice of such breach, (c) material violation of any material written
policy of the Company, (d) willful misconduct which is materially and
demonstrably injurious to the Company, (e) conviction by a court of
competent jurisdiction of, or his pleading guilty or nolo contendere to, any
felony, or (f) commission of an act of fraud, embezzlement, or
misappropriation against the Company, including, but not limited to, the offer,
payment, solicitation or acceptance of any unlawful bribe or kickback with
respect to the Company’s business.
The
employment agreements for Messrs. Williams, Clift and Anderson each generally
define “For Cause” as the employee’s (a) willful and continued failure to
substantially perform his assigned duties with the Company, (b) willful
engagement in illegal conduct, (c) conviction of, or guilty plea or nolo
contendere to, any felony, or (d) commission of an act of fraud, embezzlement,
or misappropriation against the Company, including, but not limited to, the
offer, payment, solicitation or acceptance of any unlawful bribe or kickback
with respect to the Company’s business.
Mr.
Montgomery’s employment agreement does not provide for a “For Cause”
termination, but does provide that he can be immediately terminated upon written
notice on a variety of grounds, including a serious breach of his employment
agreement, gross misconduct or any willful neglect in the discharge of his
duties.
“Change of Control.” The 2002
Stock Option Plan does not employ this term. However, under stock option award
agreements entered into pursuant to that Plan, 50% of unvested stock options
shall immediately vest upon (a) any sale of all or substantially all of the
assets of the Company and its subsidiaries, or (b) any merger or consolidation
of the Company, or any transaction as a result of which the Company is acquired
by the purchase of a majority of its outstanding Common stock, as a result of
which, in each such case, the holders of a majority of the outstanding Common
stock before such merger, consolidation or sale cease to hold, directly or
indirectly, a majority of the Common stock of the Company or a majority of the
Common stock of the successor to the Company immediately following such merger,
consolidation or sale.
Under the
Amended and Restated 2003 Equity Incentive Plan, as amended, “Change of Control”
is generally defined as (a) an acquisition of a third party, unless the
Company’s existing stockholders continue to hold at least 50% of the outstanding
stock, (b) an acquisition of more than 50% of the total combined voting power of
the Company’s outstanding securities pursuant to a tender or exchange offer made
directly to the Company’s stockholders that the Board does not recommend the
stockholders accept, (c) over a period of 36 consecutive months or less, there
is a change in the composition of a majority of the Board, without the approval
of existing Board members, or (d) if a majority of the Board votes in favor of a
decision that a Change in Control has occurred. The Amended and
Restated 2003 Equity Incentive Plan provides, unless provided otherwise in the
specific award agreement, that upon a change in control (a) any outstanding
stock options or stock appreciation rights that are not fully exercisable shall
accelerate and become exercisable with respect to 50% of those shares which are
not then exercisable, (b) any risk of forfeiture applicable to restricted stock
and restricted stock units which is not based on achievement of performance
goals shall lapse with respect to 50% of the restricted stock and restricted
stock units still subject to such risk of forfeiture, and (c) all outstanding
restricted stock and restricted stock unit awards conditioned on the achievement
of performance goals shall be deemed to have been satisfied as to a pro rata
number of shares based on the assumed achievement of all relevant performance
goals and the length of time within the performance period which has elapsed
prior to the Change in Control.
Employment
Arrangements
Mark Sarvary
- -- On June 30, 2008 we entered into an employment agreement with Mark Sarvary,
providing for his employment as President and Chief Executive Officer of
Tempur-Pedic International. The agreement has an initial term of one year and a
perpetual one-year renewal term. Either party may elect not to renew the
agreement, upon written notice, 90 days prior to the expiration of the initial
or renewal term. Mr. Sarvary’s agreement provides for an annual base salary of
$750,000, subject to annual adjustment by our Board of Directors beginning
January 1, 2009, a variable performance bonus set to a target of Mr. Sarvary’s
base salary if certain criteria are met, and options to purchase shares of our
common stock. In addition, he received a hiring bonus of $200,000 to help defray
certain relocation expenses not covered by the reimbursement of relocation
expense policy offered to senior management, of which fifty percent was payable
upon the commencement of his employment and fifty percent was paid upon the
first anniversary of his employment.
Dale E.
Williams -- On March 5, 2008, we entered into an amended and restated
employment agreement with Dale E. Williams, reflecting his promotion to
Executive Vice President in 2007. The agreement provides for his employment as
Executive Vice President, Chief Financial Officer and Secretary, or such other
executive position as may be assigned from time to time by our Chief Executive
Officer. The agreement has an initial term of one year and a perpetual one-year
renewal term. Either party may terminate the agreement, upon written notice, 90
days prior to the expiration of the initial or renewal term. The agreement
provides for an annual base salary of $225,000, subject to annual adjustment by
our Board of Directors beginning January 1, 2004, a variable performance bonus
set to a target of Mr. Williams’ base salary if certain criteria are met, and
options to purchase shares of our common stock.
Richard W.
Anderson -- On July 6, 2006, we entered into an executive employment
agreement with Richard W. Anderson, effective July 18, 2006, providing for his
employment as Executive Vice President, President North America or such other
executive position as may be assigned from time to time by our Chief Executive
Officer. The agreement has an initial term of one year and a perpetual one-year
renewal term. Either party may terminate the agreement, upon written notice, 90
days prior to the expiration of the initial or renewal term. The agreement
provides for an annual base salary of $300,000, subject to annual adjustment by
our Board of Directors beginning January 1, 2007, a variable performance bonus
set to a target of Mr. Anderson’s base salary if certain criteria are met, a
one-time hiring bonus and options to purchase shares of our common
stock.
Matthew D.
Clift -- On December 1, 2004, we entered into an executive employment
agreement with Matthew D. Clift, providing for his employment as Executive Vice
President, Operations or such other executive position as may be assigned from
time to time by our Chief Executive Officer. The agreement has an initial term
of one year and a perpetual one-year renewal term. Either party may terminate
the agreement, upon written notice, 90 days prior to the expiration of the
initial or renewal term. The agreement provides for an annual base salary of
$300,000, subject to annual adjustment by our Board of Directors beginning
January 1, 2006, a variable performance bonus set to a target of Mr. Clift’s
base salary if certain criteria are met, a one-time hiring bonus, options to
purchase shares of our common stock, and a grant of restricted stock
units.
34
David
Montgomery -- On September 12, 2003, we entered into an executive
employment agreement with David Montgomery, effective February 24, 2003,
providing for his employment as Executive Vice President and President,
Tempur-International Limited, or such other executive position as may be
assigned from time to time by our Chief Executive Officer. The agreement
provides that employment shall continue unless and until terminated by either
party. Mr. Montgomery may terminate employment with six months written notice.
We may terminate employment with 12 months written notice. The agreement
provides for an annual base salary of £192,500, subject to an annual adjustment
of our Board of Directors on or about January 1 of each year beginning with
January 1, 2004, and a variable performance bonus set to a target of Mr.
Montgomery’s base salary if certain criteria are met.
Termination
of Employment Arrangements and Change in Control Arrangements
Each of
the Company’s Named Executive Officers are entitled to receive certain benefits
if their employment were terminated under various scenarios. The circumstances
and amounts that would be received are displayed and described in the chart,
below, and are provided by the terms of each Named Executive Officer’s
employment agreement.
Receipt
of any severance and benefits is conditioned on the Named Executive Officer
signing a release and waiver of claims in a form satisfactory to the Company. No
Named Executive Officers are entitled to gross-ups associated with taxes owed on
Change in Control payments or taxes due to Section 280G of the
Code. By the terms of their employment agreements our
executive officers are prohibited from disclosing certain confidential
information and trade secrets, soliciting any employee for one or, for Mr.
Sarvary, two years following termination of their employment and working with or
for any competing companies during their employment and for one or, for Mr.
Sarvary, two years thereafter.
Tempur-Pedic
International has entered into agreements and adopted plans that require us to
provide compensation and/or other benefits to each Named Executive Officer in
the event of that executive’s termination of employment under certain
circumstances. The table below sets forth the amounts payable to each Named
Executive Officer assuming the executive officer’s employment had terminated
under various scenarios on December 31, 2009 (the last business day of
fiscal 2009).
Except as
otherwise expressly indicated, the amounts set forth in the table below do not
represent the actual sums a Named Executive Officer would receive if his
employment were terminated or there were a change of control of Tempur-Pedic
International. Rather, the amounts below generally represent only estimates,
based upon assumptions described in the footnotes to the table, of certain
payments and benefits that the Named Executive Officers who were employed by
Tempur-Pedic International or any of its subsidiaries on December 31, 2009
would have been entitled to receive had any of the identified events occurred on
such date. Moreover, for all of the Named Executive Officers, the amounts set
forth in the table necessarily are based upon the benefit plans and agreements
that were in effect as of December 31, 2009. Payments which Tempur-Pedic
International may make in the future upon an employee’s termination of
employment or upon a change of control of Tempur-Pedic International will be
based upon benefit plans and agreements in effect at that time, and the terms of
any such future plans and agreements may be materially different than the terms
of our benefit plans and agreements as of December 31,
2009.
|
Termination
|
||||||||||||||||||||
|
Termination
|
Employee
|
Termination
|
Due
to
|
Change
of
|
||||||||||||||||
|
By
Company
|
Resignation
|
By
Company
|
Death
or
|
Change
of
|
Control
and
|
|||||||||||||||
|
Without
Cause
|
For
Good Reason
|
For
Cause
|
Disability
|
Control
|
Termination
|
|||||||||||||||
|
Name
|
Benefits
and Payments
|
($)
(1)
|
($)
(1)
|
($)
|
($)
(1)
|
($)
|
($)
|
|||||||||||||
|
Mark
Sarvary
|
Cash
Severance (2)
|
$ | 2,228,542 | $ | 2,228,542 | — | $ | 750,000 | — | — | ||||||||||
|
Bonus
Payment (3)
|
750,000 | 750,000 | — | 750,000 | — | — | ||||||||||||||
|
Acceleration
of equity awards (4)
|
603,000 | 603,000 | — | 603,000 | — | 603,000 | ||||||||||||||
|
Health
and Welfare Continuation (5)
|
21,458 | 21,458 | — | — | — | — | ||||||||||||||
|
Dale
E. Williams
|
Cash
Severance (6)
|
340,000 | 340,000 | — | — | — | — | |||||||||||||
|
Bonus
Payment (3)
|
187,000 | 187,000 | — | 187,000 | — | — | ||||||||||||||
|
Acceleration
of equity awards (7)
|
— | — | — | — | 289,219 | 203,250 | ||||||||||||||
|
Health
and Welfare Continuation (5)
|
11,028 | 11,028 | — | — | — | — | ||||||||||||||
|
Matthew
D. Clift
|
Cash
Severance (6)
|
360,000 | 360,000 | — | — | — | — | |||||||||||||
|
Bonus
Payment (3)
|
198,000 | 198,000 | — | 198,000 | — | — | ||||||||||||||
|
Acceleration
of equity awards (8)
|
— | — | — | — | — | 220,125 | ||||||||||||||
|
Health
and Welfare Continuation (5)
|
9,430 | 9,430 | — | — | — | — | ||||||||||||||
|
David
Montgomery
|
Cash
Severance (9)
|
375,865 | 375,865 | — |
See
FN 10
|
— | — | |||||||||||||
|
Bonus
Payment
|
— | — | — | — | — | — | ||||||||||||||
|
Acceleration
of equity awards (11)
|
— | — | — | — | 327,578 | 203,250 | ||||||||||||||
|
Health
and Welfare Continuation
|
— | — | — | — | — | — | ||||||||||||||
|
Pension
Benefits (12)
|
48,628 | 48,628 | — | — | — | — | ||||||||||||||
|
Car
Allowance (13)
|
13,703 | 13,703 | — | — | — | — | ||||||||||||||
|
Richard
W. Anderson
|
Cash
Severance (6)
|
328,000 | 328,000 | — | — | — | — | |||||||||||||
|
Bonus
Payment (3)
|
180,400 | 180,400 | — | 180,400 | — | — | ||||||||||||||
|
Acceleration
of equity awards (14)
|
— | — | — | — | 148,281 | 360,875 | ||||||||||||||
|
Health
and Welfare Continuation (5)
|
10,729 | 10,729 | — | — | — | — | ||||||||||||||
|
(1)
|
Excludes
amounts for both unpaid, earned salary and for accrued, unused
vacation.
|
|
(2)
|
For
Mr. Sarvary, the amount presented under Cash Severance for Termination by
Company without Cause and for Employee Resignation for Good Reason
includes two years of base salary reduced by benefit continuation payments
and a lump sum amount equal to the pro-rata portion of base salary. Upon
Termination as a result of Death or Disability, Mr. Sarvary will receive a
lump sum payment equal to the pro-rata portion of base
salary.
|
|
(3)
|
Bonus
is calculated at target and represents the pro-rata portion of the
performance bonus with respect to the bonus year in which the termination
or death/disability occurs. Refer to “Compensation Discussion and Analysis
– Compensation Components – Annual Incentive Bonus” for a discussion of
each Named executive officer’s Target
bonus.
|
|
(4)
|
The
acceleration of equity awards represents the fair value of awards that
would accelerate upon vesting as of the event date. Mr. Sarvary’s stock
option agreement dated June 30, 2008 provides that if he is terminated
without cause, resigns for good reason, is terminated as a result of death
or disability or is terminated upon the Company’s election not to renew
his employment agreement, his next installment of 225,000 unvested options
as of the date preceding his termination will accelerate. In the event of
a change in control, if Mr. Sarvary is terminated without cause or resigns
for good reason (as defined in his employment agreement) within twelve
months of the change in control, his next installment of 225,000 unvested
options will accelerate as of the date preceding his
termination.
|
|
(5)
|
For
Mr. Sarvary, the continuation of welfare benefits will continue for a
period of two years. For all other NEO’s (except for Mr. Montgomery) the
continuation of welfare benefits is for a period of twelve
months.
|
|
(6)
|
For
Messrs. Williams, Clift and Anderson, the amount presented under Cash
Severance for Termination by Company without Cause and for Employee
Resignation for Good Reason represents twelve months of base
salary.
|
|
(7)
|
The
acceleration of equity awards represents the fair value of awards that
would accelerate upon vesting as of the event date. Mr. Williams’s stock
option agreement dated June 28, 2006 provides that if a change in control
occurs, fifty percent of his unvested options will vest upon the date of
the change in control. Mr. William’s stock option agreements dated May 15,
2008 and February 27, 2009 provide that if he is terminated without cause
or resigns for good reason (as defined in his employment agreement) within
twelve months of the change in control, his next installment of unvested
options will accelerate as of the date preceding his termination. The
option agreements dated May 15, 2008 and February 27, 2009 do not
accelerate vesting if only a change in control
occurs.
|
|
(8)
|
The
acceleration of equity awards represents the fair value of awards that
would accelerate upon vesting as of the event date. Mr. Clift’s stock
option agreements dated May 15, 2008 and February 27, 2009 provides that
if he is terminated without cause or resigns for good reason (as defined
in his employment agreement) within twelve months of the change in
control, his next installment of unvested options will accelerate as of
the date preceding his termination.
|
|
(9)
|
For
Mr. Montgomery, the amount presented under Cash Severance for Termination
by Company without Cause and for Employee Resignation for Good Reason
includes a lump sum payment equal to one year of base
salary.
|
|
(10)
|
For
Mr. Montgomery, the amount presented under “Termination due to Death or
Disability” includes: For death while in service to the Company, insurance
coverage up to four (4) times base salary and widow’s pension up to an
amount of 25% of base salary; For critical illness, insurance coverage up
four times base salary at the time of the illness or injury preventing him
from future service and in the case of long term disability, permanent
health insurance coverage beyond the amount covered for twelve months
equal to 55% of salary until normal retirement
age.
|
|
(11)
|
The
acceleration of equity awards represents the fair value of awards that
would accelerate upon vesting as of the event date. Mr. Montgomery’s stock
option agreement dated June 28, 2006 provides that if a change in control
occurs, fifty percent of his unvested options will vest upon the date of
the change in control. Mr. Montgomery’s stock option agreements dated May
15, 2008 and February 27, 2009 provides that if he is terminated without
cause or resigns for good reason (as defined in his employment agreement)
within twelve months of the change in control, his next installment of
unvested options will accelerate as of the date preceding his termination.
The option agreements dated May 15, 2008 and February 27, 2009 do not
accelerate vesting if only a change in control
occurs.
|
|
(12)
|
For
Mr. Montgomery, the amount presented under Pension benefits for
Termination by Company without Cause and for Employee Resignation for Good
Reason includes continuation of pension benefits for a period of twelve
months.
|
|
(13)
|
For
Mr. Montgomery, the amount presented under Car allowance benefits for
Termination by Company without Cause and for Employee Termination for Good
Reason includes continuation of car allowance benefits for a period of
twelve months.
|
|
(14)
|
The
acceleration of equity awards represents the fair value of awards that
would accelerate upon vesting as of the event date. Mr. Anderson’s stock
option agreements dated July 18, 2006 and December 21, 2006 provide that
if a change in control occurs, fifty percent of his unvested options will
vest upon the date of the change in control. Mr. Anderson’s stock option
agreements dated January 29, 2008, May 15, 2008 and February 27, 2009
provides that if he is terminated without cause or resigns for good reason
(as defined in his employment agreement) within twelve months of the
change in control, his next installment of unvested options will
accelerate as of the date preceding his termination. The option agreements
dated January 29, 2008, May 15, 2008 and February 27, 2009 do not
accelerate vesting if only a change in control
occurs.
|
The
following table sets forth the cash, equity awards and other compensation
earned, paid or awarded, as the case may be, to each of the Company’s
non-employee directors during the year ended December 31, 2009.
|
Fees
Earned or
|
Option
|
|||||||||
|
Name
|
Paid
in
Cash ($) (1)
|
Awards
($)(4)
|
Total
($)
|
|||||||
|
Francis
A. Doyle
|
$
|
72,800
|
$
|
197,610
|
(2)
|
$
|
270,410
|
|||
|
John
A. Heil
|
44,000
|
118,096
|
(2)
|
162,096
|
||||||
|
Peter
K. Hoffman
|
61,800
|
165,737
|
(2)
|
227,537
|
||||||
|
Nancy
F. Koehn
|
56,800
|
152,317
|
(2)
|
209,117
|
||||||
|
Sir
Paul Judge
|
56,800
|
152,317
|
(2)
|
209,117
|
||||||
|
Christopher
A. Masto
|
44,000
|
118,096
|
(2)
|
162,096
|
||||||
|
P.
Andrews McLane
|
74,000
|
198,616
|
(2)
|
272,616
|
||||||
|
Robert
B. Trussell, Jr.
|
44,000
|
118,096
|
(2)
|
162,096
|
||||||
|
H.
Thomas Bryant
|
40,000
|
107,360
|
(2)
|
147,360
|
||||||
|
Evelyn
S. Dilsaver
|
22,000
|
84,306
|
(3)
|
106,306
|
||||||
|
(1)
|
Director
compensation is based on the Board year, which is the period from one
annual meeting to the next annual meeting. The amounts shown are pro-rated
for fiscal year 2009, and do not represent the amounts each director will
earn from the 2009 Annual Meeting until the 2010 Annual
Meeting.
|
|
|
(2)
|
Stock
option grants were made on May 5, 2009 at an exercise price of $13.74 and
a fair value of $6.71 per share. The option awards vest in four equal
increments at the end of July 2009, October 2009, January 2010 and April
2010. Vesting of each option award is subject to the applicable grant
recipient being a member of the Board or applicable Committee as of the
applicable vesting date.
|
|
|
(3)
|
A
stock option grant was made to Ms. Dilsaver on December 17, 2009 at an
exercise price of $22.88 and a fair value of $9.59 per share. The option
awards vest on May 4, 2010.
|
|
|
(4)
|
For
stock options granted, the value set forth is the full grant date fair
value, in accordance with FASB ASC 718. See the Company’s Annual Report
for the year ended December 31, 2009 for a complete description of
the valuation.
|
The following table
sets forth the aggregate number of stock option awards outstanding for each
director as of December 31, 2009:
|
Aggregate
Option
Awards
|
|||
|
Outstanding
|
|||
|
as
of
|
|||
|
Name
|
December
31, 2009 (#)
|
||
|
Francis
A. Doyle
|
95,600
|
||
|
John
A. Heil
|
32,800
|
||
|
Peter
K. Hoffman
|
77,650
|
||
|
Nancy
F. Koehn
|
113,850
|
||
|
Sir
Paul Judge
|
113,850
|
||
|
Christopher
A. Masto
|
57,200
|
||
|
P.
Andrews McLane
|
44,200
|
||
|
Robert
B. Trussell, Jr.
|
53,600
|
||
|
H.
Thomas Bryant
|
25,000
|
||
|
Evelyn
S. Dilsaver
|
8,791
|
||
The Company’s
non-employee directors receive the following annual compensation for their
service on the Board of Directors:
|
Annual
Retainer:
|
$40,000,
payable in equal quarterly installments
|
|
|
Annual
Stock Option Grant:
|
An
annual option grant covering 12,000 shares of common stock, generally
granted at the annual meeting.
|
|
|
Annual
Non-executive Chairman of
the
Board Retainer:
|
$25,000
and a supplemental annual option grant covering 7,500 shares of common
stock
|
|
|
Annual
Committee Chair Retainer: |
•
•
|
Audit
Committee Chair receives a cash retainer of $16,000 and a supplemental
annual option grant covering 5,000 shares of common stock
Each of the Compensation Committee Chair and
the Nominating and Governance Committee Chair receives a cash retainer of
$5,000 and a supplemental annual option grant covering 1,500 shares of
common stock
|
|
Committee
Member Retainers:
|
•
•
|
Each Audit Committee member receives a cash
retainer of $12,800 and a supplemental annual option grant covering 3,850
shares of common stock
Each member of the Compensation Committee
and the Nominating and Governance Committee receives a cash retainer of
$4,000 and a supplemental annual option grant covering 1,200 shares of
common stock
|
|
Expense
Reimbursements:
|
Reimbursement
of reasonable expenses incurred in attending
meetings.
|
Section 16(a) of
the Exchange Act requires that Tempur-Pedic International’s executive officers,
directors, and persons who own more than 5% of our common stock to file reports
of ownership and changes in ownership with the SEC. Based solely on a review of
the copies of reports furnished to us, Tempur-Pedic International believes that
during the year ended December 31, 2009, its executive officers, directors,
and greater than 5% stockholders complied with all Section 16(a) filing
requirements, other than the following: H. Thomas Bryant, a member of our Board
of Directors, filed a Form 4 on January 4, 2010, reporting two purchases of
Tempur-Pedic International’s common stock that occurred during
2009.
Registration
Rights Agreement
On November
1, 2002, Tempur-Pedic International and certain of our stockholders entered into
a registration rights agreement. Under this agreement, holders of 10% of
Tempur-Pedic International’s registrable securities, as defined in the
registration rights agreement and certain stockholders who held notes with an
aggregate unpaid principal balance of $15.0 million have the right, subject to
certain conditions, to require Tempur-Pedic International to register any or all
of their shares under the Securities Act at Tempur-Pedic International’s
expense. In addition, all holders of registrable securities are entitled to
request the inclusion of any of their shares in any registration statement at
Tempur-Pedic International’s expense whenever we propose to register any of our
securities under the Securities Act. In connection with all such registrations,
Tempur-Pedic International has agreed to indemnify all holders of registrable
securities against certain liabilities, including liabilities under the
Securities Act. All holders requesting or joining in a registration have agreed
to indemnify Tempur-Pedic International against certain liabilities.
We
are asking stockholders to ratify the appointment of Ernst & Young LLP
as Tempur-Pedic International’s independent auditors for the year ending
December 31, 2010. Ernst & Young became the independent auditors
for Tempur-Pedic International after Tempur-Pedic International acquired Tempur
World, Inc. in 2002. Representatives of Ernst & Young LLP are expected
to be present at the Annual Meeting and will have the opportunity to make a
statement if they desire to do so. It is also expected that they will be
available to respond to appropriate questions.
VOTE
REQUIRED
The
affirmative vote of a majority of the shares of common stock present or
represented and voting at the Annual Meeting is required to ratify such
appointment.
THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP TO SERVE AS TEMPUR-PEDIC
INTERNATIONAL’S INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31,
2010.
The aggregate fees for professional
services rendered by Ernst & Young LLP for the years ended December 31, 2008
and December 31, 2009 were approximately as follows (amounts represent fees
billed, in thousands):
| 2008 | 2009 | ||||
|
Audit
fees(1)
|
$ |
1,622
|
$ |
1,565
|
|
|
Audit-related
fees(2)
|
—
|
216
|
|||
|
Tax
fees(3)
|
224
|
193
|
|||
|
All
other fees
|
—
|
—
|
|||
|
Total
|
$ |
1,846
|
$ |
1,974
|
(1) Audit
fees billed for 2008 and 2009 were related to services provided in connection
with the audit of our financial statements, management’s assessment of the
effectiveness of our internal control over financial reporting and the
effectiveness of our internal control over financial reporting as of and for the
years ended December 31, 2008 and December 31, 2009, the statutory audits
of certain international subsidiaries and the reviews of our quarterly financial
statements.
(2)
Audit-related fees include fees for transaction consultation
services.
(3) Tax
fees include fees for tax compliance, tax advice and tax
planning.
The
Audit Committee is responsible for appointing, setting compensation, and
overseeing the work of the independent auditor. The Audit Committee has
established a policy regarding pre-approval of all audit and non-audit services
provided by the independent auditor.
On
an ongoing basis, management communicates specific projects and categories of
service for which the advance approval of the Audit Committee is requested. The
Audit Committee reviews these requests and advises management if the Committee
approves the engagement of the independent auditor. On a periodic basis,
management reports to the Audit Committee regarding the actual spending for such
projects and services compared to the approved amounts. The projects and
categories of service are as follows:
Audit —Annual audit fees
relate to services rendered in connection with the audit of Tempur-Pedic
International’s consolidated financial statements and the quarterly reviews of
financial statements included in Tempur-Pedic International’s quarterly report
on Form 10-Q and registration statements filed with the SEC.
Audit Related
Services —Audit related services include fees for services related
to consultation on accounting standards or transactions, statutory audits, and
business acquisitions.
Tax —Tax services
include fees for tax compliance, tax advice, and tax planning.
During the
last two years ended December 31, 2009 and 2008, the Audit Committee approved
100% of the Audit Related Services, 100% of the Tax services and 100% of the
Other Services.
The
information contained in this report shall not be deemed to be
“soliciting material” or “filed” or incorporated by reference in future filings
with the Securities and Exchange Commission, or subject to the liabilities of
Section 18 of the Exchange Act, except to the extent that Tempur-Pedic
International specifically incorporates it by reference into a document filed
under the Securities Act or the Exchange Act.
The Audit
Committee of the Board of Directors is responsible for providing independent,
objective oversight with respect to the Company’s accounting and financial
reporting functions, internal and external audit functions, and system of
internal controls regarding financial matters and legal, ethical and regulatory
compliance. The Audit Committee is composed of five directors, Francis A. Doyle,
Evelyn S. Dilsaver, Peter K. Hoffman, Sir Paul Judge and Nancy F. Koehn, each of
whom the Board of Directors has determined is “independent” as defined in the
applicable rules of the New York Stock Exchange and the SEC. The Board of
Directors has also determined that Mr. Doyle, Sir Paul Judge and Ms.
Dilsaver are “audit committee financial experts” as defined under the applicable
rules of the Securities and Exchange Commission. The charter of the
Audit Committee is available on Tempur-Pedic International’s website at http://investor.tempurpedic.com/
under the caption “Corporate Governance.”
Management
is responsible for the Company’s internal controls and financial reporting
processes. Ernst & Young LLP, the Company’s independent certified public
accountants, is responsible for performing an independent audit of the Company’s
consolidated financial statements in accordance with auditing standards
generally accepted in the United States of America and to issue a report
thereon. The Audit Committee’s responsibility is to monitor and oversee these
processes.
In
connection with its responsibilities, the Audit Committee met on nine occasions
during 2009, either in person or via teleconference, and acted once by written
consent. These meetings involved representatives of management, internal
auditors and the independent accountants. Management represented to the Audit
Committee that the Company’s consolidated financial statements were prepared in
accordance with accounting principles generally accepted in the United States of
America, and the Audit Committee has reviewed and discussed with management,
internal auditors and the independent accountants the consolidated financial
statements. The Audit Committee has also discussed with internal auditors and
the independent accountants, with and without management present, the
evaluations of the Company’s internal controls and the overall quality of the
Company’s financial reporting. The Audit Committee has discussed with the
independent accountants the matters required by Statement on Auditing Standards
No. 61, as amended (Communication with Audit Committees). The Audit Committee
received from the Company’s independent accountants written disclosures required
by the applicable standards of the Public Company Accounting Oversight Board and
the Audit Committee has discussed with the independent accountants that firm’s
independence.
Based
upon the Audit Committee’s discussions with management, internal auditors and
the independent accountants, and the Audit Committee’s review of the audited
consolidated financial statements, evaluations of the Company’s internal
controls, and the representations of management, internal auditors and the
independent accountants, the Audit Committee recommended that the Board of
Directors include the audited consolidated financial statements in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2009, filed with the
SEC.
|
|
Submitted
by,
|
|
|
AUDIT
COMMITTEE:
|
|
|
Francis
A. Doyle (Chair)
|
|
|
Evelyn
S. Dilsaver
|
|
|
Peter
K. Hoffman
|
|
|
Sir
Paul Judge
|
|
|
Nancy
F. Koehn
|
APPROVAL
OF AMENDED AND RESTATED ANNUAL INCENTIVE BONUS PLAN FOR SENIOR
EXECUTIVES
The Compensation Committee reviewed and
recommended the Amended and Restated Annual Incentive Bonus Plan for Senior
Executives (the Annual Incentive Plan) to the Board on February 19, 2010.
On February 22, 2010, the Board reviewed and approved, subject to
stockholder approval, the Annual Incentive Plan and approved that
the Company submit the Annual Incentive Plan to the Company's
stockholders for approval.
The Compensation Committee believes
that an annual incentive program is a key element in the Company’s overall
executive compensation program. The Annual Incentive Plan is designed
to assist the Company in creating long-term value for stockholders by
attracting, motivating and retaining our management talent and enhancing Company
financial performance by linking annual incentive bonus award opportunities to
specific financial and operating targets and strategic
initiatives. Stockholder approval of the Annual Incentive Plan will
further ensure that the Company may, if it chooses to do so, create bonus
opportunities that are fully deductible under the Annual Incentive Plan in
accordance with the Section 162(m) of the Code. The Annual Incentive
Plan will permit the Company to:
|
•
|
Provide
its executive officers and members of senior management with an objective,
annual variable compensation opportunity, which is paid only if
performance meets or exceeds measurable financial and operational goals
set in advance by the Compensation Committee or the
Board;
|
|
|
|
|
•
|
Reward
achievement of annual performance goals that directly support the success
of the Company and the creation of long-term stockholder
value;
|
|
|
|
|
•
|
Provide
a competitive annual cash incentive compensation program that allows the
Company to recruit and retain talented executive officers and senior
managers; and
|
|
•
|
If
it chooses to do so, create bonuses that would qualify as “qualified
performance-based compensation” pursuant to Section 162(m) of the
Code.
|
The
following summary description of the Annual Incentive Plan is qualified in its
entirety by reference to the full text of the Annual Incentive Plan, which is
attached to this proxy statement as Appendix
A.
Compensation
Philosophy
The
intent of the Annual Incentive Plan is to provide highly competitive total cash
compensation through an annual variable pay program that reflects the Company's
performance and the participant’s performance against goals and
objectives. The Company’s compensation philosophy is to attract,
motivate, retain and reward its management talent with base salary, annual
incentive bonuses and equity compensation that competitively targets its market,
and its compensation programs are designed to reward its management for strong
company performance and successfull execution of key business plans and
strategies based on achievement of pre-established performance
targets. The Company believes this philosophy aligns management
incentives with the long-term interests of its stockholders.
Eligible
Participants in the Annual Incentive Plan
Eligible participants under the Annual
Incentive Plan include the Chief Executive Officer, Executive Vice Presidents,
and other senior managers who may be designated to participate from time to time
by the Compensation Committee. The Company believes that executive
officers and senior managers who hold positions affording them the authority to
make critical decisions affecting the Company’s overall performance should have
a material percentage of their annual compensation contingent on the Company’s
performance. Approximately 50 employees hold positions which make
them eligible to receive awards under the Plan.
Administration
of the Annual Incentive Plan
The Annual Incentive Plan is
administered by the Compensation Committee of Tempur-Pedic International’s
Board of Directors, referred to as the Administrator. However, the
Board itself may exercise any of the powers and responsibilities assigned to the
Committee under the Annual Incentive Plan and when so acting shall have the
benefit of the provisions of the Annual Incentive Plan pertaining to the
Committee’s exercise of its authority.
Relevant Features of Target
Bonuses
A target
bonus is an amount expressed as a percentage of a participant’s base salary as
in effect at the end of the performance period, which typically runs from
January 1 through December 31 (the Performance Period). Within 90
days of the commencement of the Performance Period, but in any event prior to
the expiration of 25% of the applicable Performance Period, the Administrator
shall set the targeted annual bonus for each participant. Each
participant’s target bonus shall be comprised of two or more
components: one or more components based on the achievement of
Company-wide goals (the Company Goals) and one or more components based on the
achievement of individual goals created for a particular participant (the
Individual Goals).
If any of
the Company Goals components of a target bonus or any of the Individual Goals
components of a target bonus for any participant for any Performance Period is
intended to constitute “qualified performance-based compensation” within the
meaning of Section 162(m) of the Code then (i) such component of the Company
Goals or Individual Goals shall be limited to the specific otherwise
illustrative goals identified below, (ii) each component of the bonus must be
assessed separately to determine whether the participant has achieved the
Company Goals or Individual Goals applicable to that component, and (iii) the
Company Goals and Individual Goals shall be selected and evaluated in such a
manner that in no event shall the achievement or failure to achieve any level of
any of the selected Company Goals or Individual Goals in any component shall
have any bearing or effect on whether the Company Goals or Individual Goals in
any other component have been achieved.
The
Administrator has the discretion to include or exclude extraordinary items,
restructuring charges, accounting changes or any other unusual or nonrecurring
items in its determination of whether a Company Goal or Individual Goal has been
satisfied; provided, that in the case of any qualified performance-based
compensation, the extent, if any, to which any such adjustments shall be made
shall be determined by the Administrator at the time of establishing the
relevant Company Goal or Individual Goal. At the time any Company
Goals or Individual Goals are established, the outcome as to whether the
applicable measures of performance will be met must be substantially uncertain
with respect to any component of a bonus intended to qualify as qualified
performance-based compensation.
The
purpose of any Company Goals component, represented by financial targets and
other Company-wide performance metrics, and the purpose of the Individual Goals
component, represented by the achievement of targets based on a specific
segment, division or business unit or individual targets, are designed to focus
the participants on behaviors that support the overall performance and success
of the Company.
Company
Goals. The Company
Goals component will be tied to the Company’s achievement of specific financial
targets and other Company-wide performance metrics. The Company Goals component
metrics may include, but are not limited to, one or more of the following, any
of which may be measured either in absolute terms or as compared to any
incremental increase or as compared to results of a peer group:
|
• debt
reduction
|
• pre-
or after-tax net earnings
|
|
• earnings
before interest and taxes (EBIT) or EBIT margin
|
• price
per share of stock
|
|
• earnings
before interest and taxes, depreciation and amortization (EBITDA) or
EBITDA margin
|
• return
on assets
|
|
• earnings
per share
|
• return
on capital
|
|
• gross
or net profit margin
|
• return
on net assetss
|
|
• market
share
|
• return
on stockholders' equity
|
|
• net
sales
|
• sales
or net sales growth
|
|
• operating
cash flow
|
• stock
price growth
|
|
• operating
earnings
|
• stockholder
returns
|
Any Company
Goals component of the bonus may be established using a matrix to allow for
maximum and minimum payments of the target bonus, depending on the level of
specified factors for the applicable Performance Period. A failure to
meet the minimum requirement may result in no bonus payment with respect to the
applicable Company Goals component of the Annual Incentive Plan.
Individual Goals. Each year,
individual incentive performance metrics and targets may be established as
Individual Goals for one or more of the participants. Any Individual Goals
component of a target bonus for a participant may be based on the performance of
a segment, division or business unit or goals unique to the particular
participant. The Individual Goals are expected to have a significant
component based on the successful completion of individual
objectives.
An Individual
Goals component will target 100% payout of the applicable portion of the Target
Bonus for the achievement of a participant’s Individual Goal or
Goals. Payments can range from no bonus payment to more than 100% of
the targeted Individual Goals component, based on individual performance. Except
as required in the case of qualified performance-based compensation, the
determination of whether an Individual Goals component of the Bonus has been met
and to what degree will be based on the subjective determination of the
Administrator, and in exercising this discretion the Administrator will review
each participant’s performance against individual objectives and the overall
performance of the applicable participant within his or her specific area of
responsibility.
Individual
Goals may be based on any of the Specific Company Metrics, as applied to any
specific segment, division or business unit, and may also include any one or
more of following, as applicable to a specific segment, division or business
unit or an individual:
|
• Cost
reduction initiatives
|
• H.R.
management metrics
|
|
• Enhance
financial planning process
|
• Improve
customer service metrics
|
|
• Execution
of Investor Relations plan
|
• New
product launches
|
|
• Expanding
slots per stores
|
• Sales
targets
|
|
• Expand
brand awareness
|
• Strategic
planning and growth initiatives
|
If the
Individual Goals component of a target bonus for any participant for any
Performance Period is intended to constitute qualified performance-based
compensation, then the Individual Goals component metrics shall be based on one
or more objectively determinable measures of performance, from which an
independent third party with knowledge of the facts could determine whether the
performance goal or range of goals is met and from that determination could
calculate the bonus to be paid.
The Company
may terminate, suspend or modify and if suspended, may reinstate with or without
modification all or part of the Annual Incentive Plan at any time, with or
without notice to the participant.
VOTE
REQUIRED
The
affirmative vote of the majority of shares present and entitled to vote will be
required to approve Proposal Three. Abstentions are counted as votes
present and entitled to vote and have the same effect as votes
against Proposal Three.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF ANNUAL
INCENTIVE BONUS PLAN FOR SENIOR EXECUTIVES
To be
considered for inclusion in our proxy statement for the 2011 annual meeting,
stockholder proposals must be submitted in writing and received by us no later
than 5:00 p.m., local time, on November 24, 2010, at the following
address:
|
Corporate
Secretary
Tempur-Pedic
International Inc.
1713
Jaggie Fox Way
Lexington,
Kentucky 40511
|
In addition,
a stockholder may bring business before the annual meeting, other than a
proposal included in the proxy statement, or may submit nominations for
directors, if the stockholder complies with the requirements specified in
Article II, Section 2.12 of Tempur-Pedic International’s
By-Laws. The requirements include:
• providing
written notice that is received by Tempur-Pedic International’s Corporate
Secretary between December 5, 2010 and January 4, 2011 (subject to adjustment if
the date of the 2010 annual meeting is moved by more than 30 days, or delayed by
more than 60 days, from the first anniversary date of the 2010 annual meeting,
as provided in Article II, Section 2.12 of the By-Laws); and
• supplying
the additional information listed in Article II, Section 2.12 of the
By-Laws.
Our Annual
Report on Form 10-K for the year ended December 31, 2009 is available
without charge to each stockholder, upon written request to the Corporate
Secretary of Tempur-Pedic International at our principal executive offices at
1713 Jaggie Fox Way, Lexington, Kentucky 40511 and is also available at on
our website at http://investor.tempurpedic.com/
under the caption “SEC
Filings.”
Only one copy
of our Annual Report on Form 10-K, Proxy Statement or Notice of Internet
Availability of Proxy Materials is being delivered to multiple security holders
sharing an address unless we have received instructions to the contrary from one
or more of the stockholders.
We will
deliver promptly upon written or oral request a separate copy our Annual Report
on Form 10-K, the Proxy Statement or Notice of Internet Availability
of Proxy Materials to any stockholder at a shared address to which a single copy
of either of those documents was delivered. To receive a separate copy our
Annual Report on Form 10-K, Proxy Statement or Notice of Internet Availability
of Proxy Materials, or if two stockholders sharing an address have received two
copies of any of these documents and desire to only receive one, you may write
the Corporate Secretary of Tempur-Pedic International at our principal executive
officers at 1713 Jaggie Fox Way, Lexington, Kentucky 40511 or call the
Corporate Secretary of Tempur-Pedic International at (800)
878-8889.
Tempur-Pedic
International will pay the costs of soliciting proxies from stockholders.
Directors, executive officers, and regular employees may solicit proxies, either
personally or by telephone, on behalf of Tempur-Pedic International, without
additional compensation, other than the time expended and telephone charges in
making such solicitations.
The Board of
Directors knows of no other matters to be submitted at the meeting. If any other
matters properly come before the meeting, it is the intention of the persons
named in the enclosed form of proxy to vote the shares they represent as the
Board of Directors may recommend.
&
#160;
&
#160; By
Order of the Board of Directors,
&
#160;
&
#160;
|
DALE
E. WILLIAMS
|
|
|
Executive
Vice President, Chief Financial Officer,
|
|
|
and
Secretary
|
Lexington,
Kentucky
March 24,
2010
APPENDIX
A
TEMPUR-PEDIC INTERNATIONAL INC.
Amended
and Restated Annual Incentive Bonus Plan for Senior Executives
Terms and
Conditions
Adopted: ___________
__, 2010
I. Compensation
Philosophy
The
intent of this Amended and Restated Annual Incentive Bonus Plan (the “Incentive Plan”) of
Tempur-Pedic International Inc. (“Tempur-Pedic” or the
“Company”) is
to provide highly competitive total cash compensation through an annual variable
pay program that reflects the Company’s performance and the participant’s
performance against goals and objectives.
Tempur-Pedic’s
compensation philosophy is to attract, motivate, retain and reward its
management talent with base salary, annual incentive bonuses and equity
compensation that competitively targets its market. Tempur-Pedic’s
compensation programs are designed to reward its management for strong company
performance and successful execution of key business plans and strategies, based
on Tempur-Pedic’s and the senior manager’s achievement of pre-established
performance targets. Tempur-Pedic believes that its
compensation philosophy aligns management incentives with the long-term
interests of Tempur-Pedic’s stockholders.
This
Incentive Plan is an important variable component of the total compensation
package for the Chief Executive Officer (“CEO”), Executive Vice
Presidents (“EVPs”) and other
senior managers who may be designated from time to time for participation in
this Incentive Plan (collectively, the “Senior Executives”).
Tempur-Pedic believes that senior management who hold positions affording them
the authority to make critical decisions affecting Tempur-Pedic’s overall
performance should have a material percentage of their annual compensation
contingent upon Tempur-Pedic’s performance.
II. Plan
Overview
This
Incentive Plan is a cash bonus plan for Senior Executives, designed to reward
them for their roles in the achievement of Tempur-Pedic’s annual goals, as
established by the Board of Directors or Compensation
Committee. Incentive Plan awards are determined on an annual basis,
based on whether and to what extent Tempur-Pedic achieves any applicable Company
Goals and each participant achieves any applicable Individual Goals for the
relevant Performance Period. The annual incentive bonus is a lump-sum cash
payment for each Senior Executive (the “Bonus”).
Administration. This Incentive
Plan shall be administered by the Compensation Committee (“Compensation
Committee”) of the Board of Directors of the Company; provided, however, that at
any time and on any one or more occasions the Board may itself exercise any of
the powers and responsibilities assigned the Compensation Committee under this
Incentive Plan and when so acting shall have the benefit of all of the
provisions of this Incentive Plan pertaining to the Compensation Committee’s
exercise of its authorities hereunder. The Compensation Committee
shall have the full power and authority to administer this Incentive
Plan. In applying and interpreting the provision, of this Incentive
Plan, the decision of the Compensation Committee shall be final.
As used
in this Incentive Plan, the term “Administrator” refers
to either the Board or the Compensation Committee exercising its authority under
this Incentive Plan as described above.
Performance
Period. Unless otherwise
determined by the Administrator with respect to any Target Bonus, the Incentive
Plan year runs from January 1 – December 31 (the “Performance
Period”).
Participants. The CEO, the
EVPs and other Senior Executives designated from time to time by the
Administrator shall be entitled to participate in this Incentive
Plan.
Target
Bonus. With
respect to any Performance Period and any Senior Executive, the Administrator
shall create a target Bonus for such Senior Executive, expressed as a percentage
of such Senior Executive’s base salary as in effect at the end of the
Performance Period (the “Target
Bonus”).
Within
ninety (90) days of the commencement of each Performance Period, but in any event prior to
the expiration of twenty-five percent (25%) of the applicable Performance
Period, the Administrator shall set the targeted annual Bonus for each
Senior Executive.
Components of Bonus. Unless otherwise
determined by the Administrator with respect to any Performance Period, each
participant’s Target Bonus shall be comprised of two or more
components: one or more components based on the achievement of
Company-wide goals (the “Company Goals”) and
one or more components based on the achievement of individual goals created for
any particular Senior Executive (the “Individual
Goals”).
If any of
the Company Goals components of a Target Bonus or any of the Individual Goals
components of a Target Bonus for any Senior Executive for any Performance Period
is intended to constitute “qualified performance-based compensation” within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the
“Code”, with
any such compensation referred to as “Qualified Performance-Based
Compensation”) then (i) such component of the Company Goals or Individual
Goals, as applicable, selected by the Administrator shall be limited to the
specific otherwise illustrative goals identified below, (ii) each component of
the Bonus must be assessed separately to determine whether the Senior Executive
has achieved the Company Goals or Individual Goals applicable to that component,
and (iii) the Company Goals and Individual Goals shall be selected and evaluated
in such a manner that in no event shall the achievement or failure to achieve
any level of any of the selected Company Goals or Individual Goals in any
component shall have any bearing or effect on whether the Company Goals or
Individual Goals in any other component have been achieved.
The
Administrator shall have the discretion to include or exclude extraordinary
items, restructuring charges, accounting changes or any other unusual or
nonrecurring items in its determination of whether a Company Goal or Individual
Goal has been satisfied; provided, that in the case of any Qualified
Performance-Based Compensation, the extent, if any, to which any such
adjustments shall be made shall be determined by the Administrator at the time
of establishing the relevant Company Goal or Individual Goal. At the time any Company
Goals or Individual Goals are established, the outcome as to whether the
Performance Measures will be met must be substantially uncertain with respect to
any component of a Bonus intended to qualify as Qualified Performance-Based
Compensation.
The
purpose of any Company Goals component, represented by financial targets and
other Company-wide performance metrics, and the purpose of the Individual Goals
component, represented by the achievement of targets based on a specific
segment, division or business unit or individual targets, are designed to focus
the Senior Executives on behaviors that support the overall performance and
success of the Company.
Company
Goals. The Company
Goals component will be tied to Tempur-Pedic’s achievement of specific financial
targets and other Company-wide performance metrics. The Company Goals component
metrics may include, but are not limited to, one or more of the following, any
of which may be measured either in absolute terms or as compared to any
incremental increase or as compared to results of a peer group:
|
• debt
reduction
|
• pre-
or after-tax net earnings
|
|
• earnings
before interest and taxes (EBIT) or EBIT margin
|
• price
per share of stock
|
|
• earnings
before interest and taxes, depreciation and amortization (EBITDA) or
EBITDA margin
|
• return
on assets
|
|
• earnings
per share
|
• return
on capital
|
|
• gross
or net profit margin
|
• return
on net assetss
|
|
• market
share
|
• return
on stockholders' equity
|
|
• net
sales
|
• sales
or net sales growth
|
|
• operating
cash flow
|
• stock
price growth
|
|
• operating
earnings
|
• stockholder
returns
|
These metrics are referred to as the “Specific Company Metrics.”
Any
Company Goals component of the Bonus may be established using a matrix to allow
for maximum and minimum payments of the Target Bonus, depending on the level of
specified factors for the applicable Performance Period. A failure to
meet the minimum requirement may result in no Bonus payment with respect to the
applicable Company Goals component of the Incentive Plan.
Individual
Goals. Each year,
individual incentive performance metrics and targets may be established as
Individual Goals for one or more of the Senior Executives. Any Individual Goals
component of a Target Bonus for a Senior Executive may be based on the
performance of a segment, division or business unit or goals unique to the
particular Senior Executive. The Individual Goals are expected to
have a significant component based on the successful completion of individual
objectives.
An
Individual Goals component will target 100% payout of the applicable portion of
the Target Bonus for the achievement of a Senior Executive’s Individual Goal or
Goals. Payments can range from no bonus payment to more than 100% of
the targeted Individual Goals component, based on individual performance. Except
as required in the case of Qualified Performance-Based Compensation, the
determination of whether an Individual Goals component of the Bonus has been met
and to what degree will be based on the subjective determination of the
Administrator, and in exercising this discretion the Administrator will review
each Senior Executive’s performance against individual objectives and the
overall performance of the applicable Senior Executive within his or her
specific area of responsibility.
Individual Goals may be based on any of
the Specific Company Metrics, as applied to any specific segment, division or
business unit, and may also include any one or more of following, as applicable
to a specific segment, division or business unit or an individual:
|
• Cost
reduction initiatives
|
• H.R.
management metrics
|
|
• Enhance
financial planning process
|
• Improve
customer service metrics
|
|
• Execution
of Investor Relations plan
|
• New
product launches
|
|
• Expanding
slots per stores
|
• Sales
targets
|
|
• Expand
brand awareness
|
• Strategic
planning and growth initiatives
|
If the Individual Goals component of a
Target Bonus for any Senior Executive for any Performance Period is intended to
constitute Qualified Performance-Based Compensation, then the Individual Goals
component metrics shall be based on one or more objectively determinable
measures of performance, from which an independent third party with knowledge of
the facts could determine whether the performance goal or range of goals is met
and from that determination could calculate the Bonus to be paid.
III. Designation
of Participants
For any
Performance Period, not later than the end of February of such Performance
Period, the Administrator shall determine whether any senior managers other than
the CEO and EVPs will participate in this Incentive Plan for that Performance
Period, in which case any of these other senior managers will constitute “Senior
Executives” under this Incentive Plan for that Performance
Period. With respect to any other senior managers hired during the
course of a fiscal year, the Administrator shall determine within thirty (30)
days after the employment of such senior manager whether or not such senior
manager shall participate in this Incentive Plan for such year. In
the event that the Administrator does not decide that such newly-hired senior
manager will participate in this Incentive Plan, such senior manager will not
participate in the Incentive Plan for such Performance Period. In the
event that the Administrator determines that a newly-hired senior manager will
participate in this Incentive Plan for the remainder of the current Performance
Period, the Administrator will promptly determine the terms of the Bonus for
such Senior Executive, including with respect to the matters referred to in
Section IV below.
Participation
in this Incentive Plan in one year does not automatically guarantee
participation in a future year. Compliance with all Tempur-Pedic
policies, guidelines and applicable laws is a prerequisite to receiving an award
pursuant to this Incentive Plan.
IV. Creation
of Bonus Terms for Any Fiscal Year
For any
Performance Period, within ninety (90) days after the commencement of that
Performance Period, but in any event prior to
the expiration of twenty-five percent (25%) of the applicable Performance
Period, the Administrator shall determine the following for the Senior
Executives participating in the Incentive Plan for that Performance
Period
|
•
|
the
Target Bonus for such Senior Executive, expressed as a percentage of his
or her base salary as of the end of the Performance
Period;
|
|
•
|
whether
there will be Company Goals for the Performance Period, and the type of
Company Goals that will apply;
|
|
•
|
for
each Senior Executive, whether there will be Individual Goals for that
Senior Executive;
|
|
•
|
the
relative weighting between Company Goals and Individual Goals for any
Senior Executive;
|
|
•
|
any
maximum or minimum payout with respect to any of the Company Goals or
Individual Goals;
|
|
•
|
whether
any component of the Bonus is intended to qualify as Qualified
Performance-Based Compensation; and
|
|
•
|
any
other terms applicable to the Bonuses for any Senior Executives for that
Performance Period.
|
If the Bonus is intended to constitute Qualified Performance-Based Compensation,
then the maximum amount payable under this Incentive Plan in respective of any
one person for any one Performance Period as Bonuses shall not exceed an amount
equal to 1% of the Company’s net sales for the fiscal year in which the
Performance Period ends.
V. Payment
Criteria
Unless
otherwise provided in any employment agreement between the Senior Executive and
the Company or otherwise determined by the Administrator, a participant must be
employed by Tempur-Pedic on the Bonus payment date with respect to the
applicable Performance Period to be eligible to receive payment of an Award
pursuant to this Incentive Plan.
Except as noted
above, all Bonus payments will be based on a participant’s base salary as in
effect at the end of the Performance Period, subject to the maximum amount that
may paid for awards intended to constitute Qualified Performance-Based
Compensation as set forth above. Bonus payments will be made by March
15 of the year following the Performance Period. Bonus payments will
be subject to all withholding required by applicable law.
Nothing
in this Incentive Plan guarantees any Bonus payment will be made to any
individual. Receipt of a Bonus payment in one year does not guarantee
eligibility in any future year.
VI. Termination,
Suspension or Modification and Interpretation of this Incentive
Plan
Tempur-Pedic
may terminate, suspend or modify and if suspended, may reinstate with or without
modification all or part of this Incentive Plan at any time, with or without
notice to the participant. Tempur-Pedic reserves the exclusive right
to determine eligibility to participate in this Incentive Plan and to interpret
all applicable terms and conditions, including eligibility
criteria.
VII. Other
This
document sets forth the terms of this Incentive Plan and is not intended to be a
contract or employment agreement between the participant and
Tempur-Pedic. As applicable, it is understood that both any
participant and Tempur-Pedic have the right to terminate the participant’s
employment with Tempur-Pedic at any time, with or without cause and with or
without notice, in acknowledgement of the fact that their employment
relationship is “at will.”
This
Amended and Restated Incentive Plan amends and restates the Annual Incentive
Bonus Plan for Senior Executives originally adopted on February 18, 2009 (the
“Original
Plan”). Any Target Bonuses created prior to the approval by
the stockholders of the Company of this Incentive Plan will be governed by the
Original Plan.
A -
7
Important
Notice Regarding the Availability of Proxy Materials for the Annual
Meeting: The Form
10-K, Notice & Proxy Statement is/are available
at www.proxyvote.com
.
TEMPUR-PEDIC
INTERNATIONAL, INC.
Annual
Meeting of Shareholders
May
4, 2010 10:00 AM
This
proxy is solicited by the Board of Directors
The
undersigned stockholder of TEMPUR-PEDIC INTERNATIONAL INC., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual
Meeting
of
Stockholders and Proxy Statement, each dated March 24, 2010, and hereby appoint
Bhaskar Rao and Dale E. Williams, each of them, as proxies and
attorneys-in-fact,
with full power of substitution, on behalf and in name of the undersigned, to
represent the undersigned at the 2010 Annual Meeting of
Stockholders
of Tempur-Pedic International Inc. to be held at 10:00 a.m., local time, on May
4, 2010 at the offices of Bingham McCutchen LLP, 13th Floor, One
Federal
Street, Boston, Massachusetts 02110 or at any adjournments thereof, and to vote
all shares of common stock which the undersigned would be entitled
to
vote, if
personally present, on the matters set forth on the reverse side and, in
accordance with their discretion, on any other business that may come before
the
Annual
meeting, and revokes all proxies previously given by the undersigned with
respect to the shares covered hereby.
This
proxy is revocable and the undersigned may revoke it at any time prior to the
Annual Meeting by giving written notice of such revocation to the
Secretary
of Tempur-Pedic International prior to the meeting or by filing with the
Secretary of Tempur-Pedic International prior to the meeting a
later-
dated
proxy. Should the undersigned be present and want to vote in person at the
Annual Meeting, or at any postponement or adjournment thereof,
the
undersigned may revoke this proxy by giving written notice of such revocation to
the Secretary of Tempur-Pedic International on a form provided
at
the Annual Meeting. The undersigned hereby acknowledges receipt of a Notice of
Annual Meeting of Stockholders of Tempur-Pedic International
Inc.
called for May 4, 2010, Proxy Statement and Annual Report on Form 10-K for the
year ended December 31, 2009 prior to the signing of this proxy.
THIS
PROXY WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS INDICATED, WILL
BE VOTED AS THE BOARD OF DIRECTORS
RECOMMENDS
WHERE A CHOICE IS NOT SPECIFIED AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER
MATTERS AS MAY PROPERLY
COME
BEFORE THE MEETING.
Continued
and to be signed on reverse side
60; VOTE BY INTERNET - www.proxyvote.com
Use the Internet
to transmit your voting instructions and for electronic delivery of
information up until 11:59 P.M.
Eastern Time the day before the
meeting date.
Have
your proxy card in hand when you access the web site and follow the
instructions
to obtain your records and to
create an electronic voting instruction
form.
TEMPUR-PEDIC INTERNATIONAL, INC
..
1713 JAGGIE FOX WAY
LEXINGTON,
KY 40511
; Electronic Delivery of
Future PROXY MATERIALS
If you would like
to reduce the costs incurred by
our company in mailing proxy
materials, you can consent to receiving all future proxy statements, proxy cards
and annual reports electronically via e-mail or the Internet. To sign up for
electronic delivery, please follow the instructions above
to vote using the Internet
and, when prompted, indicate that you agree to receive or access proxy materials
electronically in future years
..
;
; VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59
P.M. Eastern Time the
day before the meeting date.
Have your proxy card in hand
when you call
and then follow the instructions.
; VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we
have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way,
Edgewood, NY 11717.
TO VOTE,
MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS
PORTION FOR YOUR RECORDS
DETACH
AND RETURN THIS PORTION ONLY
THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
The
Board of Directors recommends you vote FOR
the
following proposal(s):
1.
Election
of Directors For
Against Abstain
1a Mark
Sarvary o o o
1b Evelyn
Dilsaver o o o
; The Board of
Directors recommends you vote FOR
the following
proposal(s): For Against Abstain
1c Francis
A.
Doyle o o o
60; 2. RATIFICATION
OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS o o o
1d John Heil o o o
60; 3. PROPOSAL
TO APPROVE THE COMPANY'S AMENDED AND
RESTATED ANNUAL
INCENTIVE BONUS PLAN FOR SENIOR EXECUTIVES o o o
1e Peter K.
Hoffman o o o
1f Sir
Paul
Judge o o o
1g Nancy F.
Koehn o o o
1i P.
Andrews
McLane o o o
1j Robert B, Trussell,
Jr. o o o
Please
sign exactly as your name(s) appear(s) hereon. When signing as
attorney,
executor, administrator, or other fiduciary, please give full
title as
such. Joint owners should each sign personally. All holders must
sign. If
a corporation or partnership, please sign in full corporate or
partnership
name, by authorized officer.
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Signature
[PLEASE SIGN WITHIN BOX]
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Date |
Signature (Joint
Owners)
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