Compensation Risk Assessment.
Consistent with Securities and Exchange Commission disclosure
requirements, in August 2012 we reviewed our compensation policies and practices to determine whether they
encourage excessive risk taking. Although all compensation programs worldwide were reviewed, the focus was
on the programs with variability of payout. Based on this comprehensive review, we concluded that our
compensation programs do not create risks that are reasonably likely to have a material adverse effect on the
company for the following reasons:
We believe our programs appropriately balance short- and long-term incentives;
Our long-term incentive grants for senior management are allocated between stock options, restricted
stock units and long-term cash awards, which provide a balance of incentives;
Our long-term incentive awards generally are granted on an annual basis with long-term, overlapping
vesting periods to motivate eligible recipients to focus on sustained stock price appreciation;
Cash and equity incentive plans contain a cap on the maximum payout; the Compensation Committee (or
other applicable program administrator) generally retains authority to reduce the incentive plan payouts in
its discretion;
In determining whether to exercise its authority to reduce cash incentive plan payouts, the plan
administrator may consider qualitative factors beyond the quantitative financial metrics, including
compliance and ethical behaviors;
Our long-term cash incentive awards are not overly reliant on one performance measure and generally
include a mix of sales and profitability targets to mitigate the risk of employees focusing exclusively on
short term top-line growth at the expense of sustained profitability;
Our Chief Executive Officer's significant equity holdings help protect against short-term risk taking at the
expense of long-term growth and stability;
Our executive stock ownership guidelines require that all of our senior executives hold a significant
amount of our equity to further align their interests with stockholders over the long term, and all of our
senior executives are in compliance with the guidelines; and
We have a compensation recovery ("clawback") policy applicable in the event an officer's misconduct
leads to an accounting restatement.
Committees
Our Board of Directors has standing Executive, Audit, Compensation and Governance Committees. The
Governance Committee, among other things, performs functions similar to a nominating committee. Our Board
of Directors usually determines the membership of these committees at its organizational meeting held
immediately after the annual meeting of stockholders. The following table identifies the current members of the
committees:
Director
Executive
Audit
Compensation
Governance
Kathleen A. Cote . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
John F. Coyne . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chair
Henry T. DeNero . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Chair
William L. Kimsey . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michael D. Lambert . . . . . . . . . . . . . . . . . . . . . . . . . .
Chair
Len J. Lauer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Matthew E. Massengill . . . . . . . . . . . . . . . . . . . . . . . .
Roger H. Moore . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kensuke Oka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thomas E. Pardun(1) . . . . . . . . . . . . . . . . . . . . . . . . .
Chair
Arif Shakeel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Masahiro Yamamura . . . . . . . . . . . . . . . . . . . . . . . . . .
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