def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
THE TIMBERLAND COMPANY
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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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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THE
TIMBERLAND COMPANY
200 Domain Drive
Stratham, New Hampshire 03885
April 17,
2009
TO THE STOCKHOLDERS:
The Board of Directors and Officers of The Timberland Company
invite you to attend the 2009 Annual Meeting of Stockholders to
be held on Thursday, May 21, 2009, at 9:00 a.m., at
the Companys headquarters located at 200 Domain Drive,
Stratham, New Hampshire.
A copy of the Proxy Statement and the proxy are enclosed.
If you cannot be present at the meeting, please mark, date
and sign the enclosed proxy and return it as soon as possible in
the enclosed envelope.
Cordially,
Sidney
W. Swartz
Chairman
THE
TIMBERLAND COMPANY
200 Domain Drive
Stratham, New Hampshire 03885
NOTICE OF 2009 ANNUAL MEETING
OF STOCKHOLDERS
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Date:
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Thursday, May 21, 2009
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Time:
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9:00 a.m.
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Location:
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The Timberland Company
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World Headquarters
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200 Domain Drive
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Stratham, New Hampshire
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Purposes
for Meeting:
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1.
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To fix the number of directors at twelve for the coming year,
subject to further action by the Board of Directors as provided
in the Companys By-Laws, and to elect twelve directors to
hold office until their successors are duly elected and
qualified;
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2.
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To ratify the appointment of Deloitte & Touche LLP as
the Companys independent registered public accounting firm;
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3.
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To increase the number of shares reserved for issuance under the
Companys 1991 Employee Stock Purchase Plan, as amended
(the ESPP), from 300,000 to 500,000 and remove the
requirements that employees complete six months of continuous
service and customarily work more than 20 hours per week in
order to participate in the ESPP; and
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4.
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To transact such other business as may properly come before the
Annual Meeting and any adjournments thereof.
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Holders of Class A Common Stock will vote separately as a
class to elect three directors. Holders of Class A Common
Stock and holders of Class B Common Stock will vote
together as a single class to elect the remaining nine
directors, to ratify the appointment of Deloitte &
Touche LLP as the Companys independent registered public
accounting firm and to approve the amendments to the
Companys ESPP.
You will receive notice of and may vote and act at the Annual
Meeting only if you were a stockholder of record at the close of
business on Thursday, March 26, 2009.
Important Notice Regarding the Availability of Proxy
Materials for the Annual Stockholders Meeting to be Held on
May 21, 2009: The Proxy Statement and Annual Report to
Stockholders are also available at
http://materials.proxyvote.com/887100.
By Order of the Board of Directors
Danette Wineberg
Secretary
April 17, 2009
THE
TIMBERLAND COMPANY
200 Domain Drive
Stratham, New Hampshire 03885
PROXY STATEMENT
April 17, 2009
TABLE OF CONTENTS
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INFORMATION
CONCERNING SOLICITATION AND VOTING
General
The Board of Directors of The Timberland Company, a Delaware
corporation (we, our, us,
its, Timberland or the
Company), is sending you the enclosed proxy in
connection with its 2009 Annual Meeting of Stockholders (the
Annual Meeting) and any adjourned sessions of the
Annual Meeting. The Annual Meeting will be held on Thursday,
May 21, 2009, at 9:00 a.m., at the Companys
headquarters located at 200 Domain Drive, Stratham, New
Hampshire. The purposes of the Annual Meeting are:
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1.
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to fix the number of directors at twelve for the coming year and
to elect twelve directors to hold office until their successors
are duly elected and qualified;
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2.
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to ratify the appointment of Deloitte & Touche LLP as
the Companys independent registered public accounting firm;
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3.
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to increase the number of shares reserved for issuance under the
Companys 1991 Employee Stock Purchase Plan, as amended
(the ESPP), from 300,000 to 500,000 and remove the
requirements that employees complete six months of continuous
service and customarily work more than 20 hours per week in
order to participate in the ESPP; and
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4.
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to transact such other business as may properly come before the
Annual Meeting and any adjournments of the Annual Meeting.
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Voting
Rights and Outstanding Shares
You may vote at the Annual Meeting only if you are a stockholder
of record as of the close of business on Thursday,
March 26, 2009, which we refer to as the record date. As of
the record date, the following number of shares of the
Companys Common Stock were outstanding:
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Number of Shares
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Class of Common Stock
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Outstanding
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Class A Common Stock, $.01 par value
(Class A Common Stock)
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45,451,705
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Class B Common Stock, $.01 par value
(Class B Common Stock)
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11,529,160
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We bear all costs of solicitation of proxies. We may solicit
proxies personally or by telephone, mail or telegram. None of
the Companys directors, officers or employees will be
specially compensated for soliciting proxies. We expect to mail
this Proxy Statement and the enclosed proxy to stockholders of
record as of the record date on or about April 17, 2009.
Unless the Company has received instructions to the contrary,
only one Annual Report or Proxy Statement, as applicable, is
being delivered to multiple stockholders sharing an address.
Upon written or oral request to the Secretary of the Company, by
mail at 200 Domain Drive, Stratham, New Hampshire 03885 or by
telephone at
(603) 772-9500,
the Company will promptly deliver a copy of the Annual Report or
Proxy Statement to a stockholder if that stockholder shares an
address with another stockholder to which a single copy of the
applicable document was delivered. To receive a separate Annual
Report or Proxy Statement, as applicable, in the future, contact
the Secretary of the Company as described above. To request
delivery of a single copy of an Annual Report or Proxy Statement
for a household currently receiving multiple copies of Annual
Reports or Proxy Statements, contact the Secretary of the
Company as described above.
To vote your shares at the Annual Meeting, you must properly
sign, date and return the enclosed proxy. You may specify in the
proxy how you want to vote your shares. If you sign and return
your proxy but do not specify how to vote your shares, then your
shares will be voted to fix the number of directors at twelve
and to elect all twelve nominees, to ratify the appointment of
Deloitte & Touche LLP as the Companys
independent registered public accounting firm and to increase
the number of shares reserved for issuance under the ESPP from
300,000 to 500,000 and remove the requirements that employees
complete six months of continuous service and customarily work
more than 20 hours per week in order to participate in the
ESPP.
1
You may revoke your proxy at any time before the Annual Meeting
by either:
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attending the Annual Meeting and voting in person;
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filing with the Secretary of the Company an instrument in
writing revoking your proxy; or
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delivering to the Secretary a newly executed proxy bearing a
later date.
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If a nominee for director is unable to serve as a director, the
persons appointed as proxy for the Annual Meeting may, in his,
her or their discretion, vote for another person as director or
vote to reduce the number of directors to less than twelve, as
the Board of Directors may recommend. The Company believes that
all of the nominees will be available to serve.
The Board of Directors knows of no other matters to be presented
at the Annual Meeting. If any additional matters should properly
come before the Annual Meeting, the persons appointed as proxy
to vote on such matters intend to vote in accordance with his,
her or their judgment.
Quorum
A quorum of our stockholders must be present, whether by proxy
or in person, for the Annual Meeting to occur. Consistent with
Delaware law and under the Companys By-Laws, a majority of
the voting power of all stock issued and outstanding and
entitled to vote at the Annual Meeting constitutes a quorum.
To determine the presence of a quorum, in addition to shares
voted for or against any matter, the following will count as
shares present:
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shares represented by proxies that withhold authority to vote
for a nominee for director;
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shares represented by proxies that indicate an abstention to
vote for any matter; or
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broker non-votes (shares held by your brokers or
nominees as to which (i) you have not provided voting
instructions and (ii) the broker or nominee does not have
discretionary voting power).
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Required
Votes and Method of Tabulation
You are entitled to one vote for each share of Class A
Common Stock you hold and ten votes for each share of
Class B Common Stock you hold. Holders of Class A
Common Stock will vote separately as a class to elect nominees
Ian W. Diery, Irene M. Esteves and John A. Fitzsimmons as
directors. Holders of Class A Common Stock and holders of
Class B Common Stock will vote together as a single class
to elect nominees Sidney W. Swartz, Jeffrey B. Swartz, Virginia
H. Kent, Kenneth T. Lombard, Edward W. Moneypenny, Peter R.
Moore, Bill Shore, Terdema L. Ussery, II and Carden N.
Welsh as directors, to ratify the appointment of
Deloitte & Touche LLP as the Companys
independent registered accounting firm and to increase the
number of shares reserved for issuance under the ESPP from
300,000 to 500,000 and remove the requirements that employees
complete six months of continuous service and customarily work
more than 20 hours per week in order to participate in the
ESPP.
We will appoint election inspectors who will count the votes
cast by proxy or in person at the Annual Meeting. The twelve
nominees for election as directors who receive the greatest
number of votes properly cast at the Annual Meeting will be
elected. Under our By-Laws, an affirmative vote of a majority of
the votes properly cast at the Annual Meeting is necessary to
ratify the appointment of Deloitte & Touche LLP as the
Companys independent registered public accounting firm and
to increase the number of shares reserved for issuance under the
ESPP from 300,000 to 500,000 and remove the requirements that
employees complete six months of continuous service and
customarily work more than 20 hours per week in order to
participate in the ESPP. For purposes of the vote required under
our By-Laws, we will not treat abstentions or broker non-votes
as votes cast. Therefore, they will have no effect on the voting
for any matter to be voted on at the annual meeting under our
By-Laws.
Furthermore, the approval of the amendments to the ESPP is
subject to an additional approval requirement under the rules of
the New York Stock Exchange (NYSE). The minimum vote
which will
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constitute stockholder approval for NYSE purposes is defined as
a majority of votes cast on the proposal, provided that the
total vote cast on the proposal represents more than 50% in
interest of all shares entitled to vote thereon. Because the
proposed amendments to the ESPP are considered a non-routine
matter, if you hold your shares through a broker and do not give
your broker instructions on how to vote your shares with respect
to this matter, a broker non-vote will result.
Under NYSE rules, broker non-votes could have the effect of a
vote against the proposal to amend the ESPP, to the extent that,
as a result of such broker non-votes, the number of votes cast
on the proposal represents less than 50% in interest of all
shares entitled to vote thereon. Under NYSE rules, abstentions
will have no effect on the voting to amend the ESPP.
ITEM 1. ELECTION
OF DIRECTORS
The directors elected at each Annual Meeting serve for the
following year and until their respective successors are duly
elected and qualified. The Companys By-Laws specify that
the Board of Directors or the stockholders may determine the
number of directors of the Company. The stockholders or the
Board of Directors may increase the number of directors fixed at
the Annual Meeting and may fill any vacancy arising on the Board
of Directors.
The current Board of Directors consists of eleven members. All
current directors are nominees for director at the Annual
Meeting. In addition to the current directors, Carden N. Welsh,
the Chief Administrative Officer of the Company, has been
nominated to serve as a director. The incumbent directors were
elected at the 2008 Annual Meeting of Stockholders.
Information
with Respect to Nominees
The names, ages, principal occupations during the past five
years and certain other information with respect to the nominees
for election are as follows:
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Name and Year
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Principal Occupation During the Past Five Years
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First Elected Director
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Age
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and Directorships of Other Public Companies
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Sidney W. Swartz (1978)
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Sidney Swartz has been the Companys Chairman of the Board
since June 1986. Sidney Swartz also was the Companys Chief
Executive Officer and President from June 1986 until June 1998.
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Jeffrey B. Swartz (1990)
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Jeffrey Swartz has been the Companys President and Chief
Executive Officer since June 1998. Jeffrey Swartz is the son of
Sidney Swartz. Jeffrey Swartz serves as a director of Limited
Brands Inc., a publicly traded specialty retailer of
womens intimate apparel, beauty and personal care products
and accessories.
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Ian W. Diery (1996)
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Mr. Diery has been the Chairman of the Board, President and
Chief Executive Officer of Electronic Scrip Incorporated, an
organization dedicated to establishing relationships between
commerce and community to provide resources to organizations and
projects that support children, since November 1997.
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Name and Year
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Principal Occupation During the Past Five Years
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First Elected Director
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Age
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and Directorships of Other Public Companies
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Irene M. Esteves (2003)
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Ms. Esteves has been the Senior Executive Vice President and
Chief Financial Officer of Regions Financial Corporation since
April 1, 2008. Regions is one of the nations largest
full-service providers of consumer and commercial banking,
trust, securities brokerage, mortgage and insurance products and
services. Prior to this, she was the Chief Financial Officer of
The Capital Management Group of Wachovia Corporation, a
financial services company providing online banking, bill pay,
brokerage, loan, financial planning, investing, lending and
insurance services, from June 2006 through March 2008. Prior to
this, Ms. Esteves served as Senior Managing Director, Chief
Financial Officer and Chief of Human Resources at Putnam
Investments from July 2003 through April 2004. Prior to that,
she served as Putnams Chief Financial Officer from 1997.
Ms. Esteves serves as a director of Johnson Diversey, Inc., a
global provider of commercial cleaning and hygiene solutions.
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John A. Fitzsimmons (1996)
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Mr. Fitzsimmons was the Senior Vice President
Consumer Electronics of Circuit City Stores, Inc., a consumer
electronics retailer, from January 1987 until his retirement in
June 2000.
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Virginia H. Kent (1999)
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Ms. Kent is an independent consultant and was the President and
Chief Executive Officer of reflect.com, an online custom
cosmetics company, from December 1999 until June 2002. Prior to
this, Ms. Kent served at Hasbro Corporation, a manufacturer of
toys and related items, in a variety of positions, most recently
as President U.S. Toy Group.
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Kenneth T. Lombard (2005)
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Mr. Lombard was formerly the President of Starbucks
Entertainment, a business unit of Starbucks Coffee Company, a
leading roaster and retailer of specialty coffee, from 2004 to
2008. From 1992 to 2004, Mr. Lombard was the co-founder and
President of Johnson Development Corporation, an urban real
estate development company.
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Edward W. Moneypenny (2005)
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Mr. Moneypenny was the Senior Vice President Finance
and Chief Financial Officer of 7-Eleven, Inc., a worldwide chain
of convenience stores, from 2002 until his retirement in January
2006. Mr. Moneypenny serves as a director of New York &
Company, Inc., a publicly traded specialty retailer of
womens fashion and accessories, and as a member of the
Board of Trustees of Saint Josephs University in
Philadelphia, Pennsylvania.
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Name and Year
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Principal Occupation During the Past Five Years
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First Elected Director
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Age
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and Directorships of Other Public Companies
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Peter R. Moore (2005)
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Mr. Moore has been President of EA
SPORTStm
Label business unit of Electronic Arts Inc., a developer of
interactive entertainment software for video game systems,
personal computers and the Internet, since August 2007. Prior to
this, Mr. Moore was Corporate Vice President, Interactive
Entertainment Business of Microsoft Corporation, a provider of a
wide range of software, services and Internet technologies for
personal and business computing, since January 2003. From 1999
to 2003, Mr. Moore served first as Senior Vice President of
Marketing and then as President and Chief Operating Officer of
Sega of America, Inc., a manufacturer of video game consoles and
software.
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Bill Shore (2001)
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Mr. Shore founded Share Our Strength, a leading anti-hunger and
anti-poverty organization, in 1984 and is currently its
President. Mr. Shore is also Chairman of Community Wealth
Ventures, Inc., a for-profit subsidiary of Share Our Strength
assisting non-profit organizations with business ventures and
corporate partnerships and helping corporations implement
community investment strategies.
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Terdema L. Ussery, II (2005)
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Mr. Ussery has been the President and Chief Executive Officer of
the Dallas Mavericks, a National Basketball Association
franchise, since 1997. Mr. Ussery has also been the Chief
Executive Officer of HDNet, a high definition national
television network, since 2001. Mr. Ussery serves as a director
of Treehouse Foods, Inc., a publicly traded provider of quality
food products primarily for the private label and foodservice
industries, and Entrust Inc., a publicly traded provider of
identity and access management security software and services.
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Carden N. Welsh
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Mr. Welsh has been the Companys Senior Vice President and
Chief Administrative Officer since September 2007. Prior to
this, Mr. Welsh was the Treasurer of the New Hampshire U.S.
Congressional Campaign in 2007; served on the Advisory Board of
The Trust for Public Land New Hampshire from 2006 to
2007; and was undertaking Masters studies at the University of
New Hampshire from 2003 to 2006. From 1998 through 2003, Mr.
Welsh was the Companys Senior Vice President,
International.
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THE BOARD
OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR
THE
ELECTION OF ALL 12 NOMINEES FOR DIRECTOR.
Corporate
Governance and Code of Ethics
The Board of Directors has established corporate governance
principles for the Board of Directors and committees thereof to
follow regarding effective corporate governance and compliance
with laws and regulations. The corporate governance principles
require the Board of Directors to appoint a Lead Director if the
Chairman of the Board of Directors is not independent. Because
Sidney W. Swartz is not independent, the Board of Directors
originally appointed Irene M. Esteves as the Lead Director in
2004, and she has been reappointed each year since then. The
Lead Director, among other duties, acts as the presiding
director at
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executive sessions of the non-management members of the Board of
Directors and assists the Board of Directors and management in
setting the agenda for each meeting of the Board of Directors.
We have also adopted a Code of Ethics that applies to all
directors, executives, and employees of the Company to deter
wrongdoing and promote ethical conduct, compliance with law and
internal reporting of wrongdoing. The corporate governance
principles, the Code of Ethics and the charter for each of the
committees of the Board of Directors are available on the
Companys website, www.timberland.com, and may also be
obtained by writing to the Companys Secretary at 200
Domain Drive, Stratham, New Hampshire 03885.
Stockholder
Communications to the Board of Directors
Stockholders and other interested parties may send
communications to the non-management members of the Board of
Directors. Stockholders may send their written communications to
the Secretary of the Company at 200 Domain Drive, Stratham, New
Hampshire 03885 and all communications will be given directly to
the non-management directors unless they would be more
appropriately addressed by other departments within the Company,
such as customer or vendor services.
Committees
of the Board of Directors and Board of Directors
Independence
Committees
of the Board
The Board of Directors has the following standing committees:
Governance and Nominating Committee, Management Development and
Compensation Committee, Audit Committee, and Corporate Social
Responsibility Committee.
During 2008, the Board of Directors and its committees held the
following number of meetings:
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2008 Meetings
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Board of Directors
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5
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Governance and Nominating Committee
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5
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Management Development and Compensation Committee
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5
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Audit Committee
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10
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Corporate Social Responsibility Committee
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All directors attended at least 75% of the total number of
meetings held in 2008 of the Board of Directors and the
committees of the Board on which he or she served. The Company
expects all nominees for the Board of Directors to attend the
Annual Meeting of Stockholders. All members of and nominees for
the Board of Directors at May 15, 2008, the date of the
last Annual Meeting of Stockholders, attended the meeting,
except for Mr. Moore.
The membership and responsibilities of each of these committees
is described in greater detail below.
Board
Independence
While we believe that the majority of the members of our Board
of Directors are independent, the Company is exempt from the
listing standards of the New York Stock Exchange requiring that
a majority of the Board of Directors be independent and that all
of the members of the compensation and nominating committees be
independent. The Company is relying on the controlled
company exemption provided by the New York Stock Exchange
rules based on the fact that more than 50% of the voting power
of the Companys outstanding voting stock is held by Sidney
W. Swartz and The Sidney W. Swartz 1982 Family Trust.
The Board has not adopted categorical standards with respect to
director independence as it believes it is more appropriate to
make independence determinations taking into account all factors
and circumstances that it considers relevant. In May 2008, the
Board concluded that no proposed member of the Audit Committee,
including any family member, had any personal or financial
relationship with the Company that would affect the independence
of the Audit Committee member. In making this conclusion, the
Board considered the
6
Governance and Nominating Committees independence
recommendation, and the directors and officers
questionnaires completed by Board members. With respect to the
Securities and Exchange Commission and New York Stock Exchange
requirements that all members of an Audit Committee be
independent, the Board has determined that all current members
of, or members who have been nominated to serve on, the Audit
Committee, qualify as independent based upon such requirements.
Directors
Compensation
DIRECTORS
COMPENSATION FOR FISCAL YEAR 2008
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Change in
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Pension
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Value and
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Fees
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Nonqualified
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Earned
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Non-Equity
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Deferred
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or Paid
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Stock
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Option
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Incentive Plan
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Compensation
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All other
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in Cash
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Awards
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Awards(1)(2)
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Compensation
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Earnings
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Compensation
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Total
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Name
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($)
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($)
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($)
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($)
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($)
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($)
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($)
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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Ian W. Diery
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46,000
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154,960
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200,960
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Irene M. Esteves
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78,750
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155,993
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234,743
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John A. Fitzsimmons
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49,000
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154,960
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203,960
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Virginia H. Kent
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56,500
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155,371
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211,871
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Kenneth T. Lombard
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52,500
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167,971
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220,471
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Edward W. Moneypenny
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51,000
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167,971
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218,971
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Peter R. Moore
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45,000
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167,971
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212,971
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Bill Shore
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52,500
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167,927
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220,427
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Terdema L. Ussery, II
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45,000
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167,971
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212,971
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Jeffrey B. Swartz(3)
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Sidney W. Swartz(4)
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574,475
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574,475
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(1) |
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This column shows the accounting expense recognized for
financial statement reporting purposes for our year ended
December 31, 2008 for the stock options awarded to each
non-employee director under the 2001 Non-Employee Directors
Stock Plan, as amended, and the 2007 Incentive Plan. These
amounts are calculated in accordance with Statement of Financial
Accounting Standards 123(R) (SFAS 123(R)),
before forfeitures. Please refer to Note 13 to our
consolidated financial statements, entitled Share-based
Compensation, included in Part II, Item 8 of our
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008 for a
discussion of the assumptions used in determining the valuations
shown in this column. The stock option granted to each
non-employee director in 2008 and its grant date fair value
determined in accordance with SFAS 123(R) was as follows:
Mr. Diery and Mr. Fitzsimmons, 16,876 stock options
each with a grant date fair value of $154,561; Ms. Esteves,
17,494 stock options with a grant date fair value of $154,559;
Ms. Kent, 16,745 stock options with a grant date fair value
of $154,565; Mr. Lombard, Mr. Moneypenny,
Mr. Moore, and Mr. Ussery, 17,048 stock options each
with a grant date fair value of $154,561; and Mr. Shore,
19,868 stock options with a grant date fair value of $140,055. |
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(2) |
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At December 31, 2008, the total number of outstanding stock
options for each non-employee director was as follows:
Mr. Diery, 87,233; Ms. Esteves, 72,843;
Mr. Fitzsimmons, 87,233; Ms. Kent, 117,175;
Mr. Lombard, 57,479; Mr. Moneypenny, 57,479;
Mr. Moore, 57,479; Mr. Shore, 80,304; and
Mr. Ussery, 57,479. |
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(3) |
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Jeffrey B. Swartz is the President and Chief Executive Officer
and an employee of the Company. Mr. Jeffrey Swartz does not
receive any fees, stock, option awards or other compensation for
his Board service. Please refer to the Summary Compensation
Table and footnotes thereto for information with respect to
Mr. Jeffrey Swartzs compensation as an employee of
the Company. |
7
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(4) |
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Sidney W. Swartz is Chairman of the Board and an employee of the
Company. Mr. Sidney Swartz does not receive any fees,
stock, option awards or other compensation for his Board
service. Mr. Sidney Swartz receives an annual salary of
$500,000 which is reflected in column (g). Also included in
column (g) for Mr. Sidney Swartz is the aggregate
incremental cost to the Company of providing various perquisites
and personal benefits, including: for personal use of the
Company aircraft, $34,967, and for payment of tax services
provided to Mr. Sidney Swartz by a tax advisor, $30,750. In
determining the value of the use of the aircraft, we calculate
the aggregate incremental cost to the Company based on the cost
of fuel, trip related maintenance and repair, crew travel
expenses, navigation fees and smaller variable costs. Since the
Company-owned aircraft is used primarily for business travel, we
do not include the fixed costs that do not change based on
usage, such as pilots salaries, the purchase costs of the
Company-owned aircraft, and the cost of maintenance not related
to trips. The aggregate incremental cost to provide tax services
is based on the invoice amount for such services. |
Additional
Information to Understand the Director Compensation
Table
In 2008, we paid fees to our non-employee directors in
connection with their service as a director as follows: $30,000
annual retainer to each director; an additional $15,000 annual
retainer to the Lead Director; $2,000 for each Board of
Directors meeting attended; an additional $7,500 annual retainer
to each committee chairperson; and $1,000 for each committee
meeting attended.
Effective January 1, 2009, we pay fees to our non-employee
directors in connection with their service as a director as
follows: $50,000 annual retainer to each director; an additional
$15,000 annual retainer to the Lead Director; $2,000 for each
Board of Directors meeting attended; an additional $12,500
annual retainer to each committee chairperson; and $1,000 for
each committee meeting attended.
Effective January 1, 2009, under the Companys 2007
Incentive Plan, newly elected or appointed non-employee
directors receive an initial award on the date of the annual
meeting of stockholders at which the director is first elected
(or, if the director is first elected or appointed by the Board,
on the date of the first annual meeting of stockholders
occurring after such director is elected or appointed) of
restricted stock units (RSUs) having a value equal
to $200,000 on the date of grant based upon the closing price of
the Companys Class A Common Stock quoted on the New
York Stock Exchange on such date, which grant vests in three
(3) equal annual installments. Re-elected directors receive
an award, on the date of the annual meeting of stockholders at
which such directors are re-elected, of RSUs having a value
equal to $100,000 on the date of grant based upon the closing
price of the Companys Class A Common Stock quoted on
the New York Stock Exchange on such date, which grant vests in
full on the first anniversary of the date of grant.
Prior to January 1, 2009, under the Companys 2001
Non-Employee Directors Stock Plan, as amended, and the
Companys 2007 Incentive Plan, as applicable, non-employee
directors who were newly elected or appointed received an
initial award of options to purchase a number of shares of the
Companys Class A Common Stock on the date of election
or appointment calculated by multiplying the then current annual
directors retainer by ten and applying the quarterly
adjusted Black-Scholes option pricing model using the fair
market value of the Class A Common Stock on the date of
grant. On each anniversary of the initial award, an annual award
was made using the same formula except that the then current
annual directors retainer was multiplied by five. All of
these stock options have an exercise price equal to the fair
market value on the date of grant, with initial awards vesting
in three (3) equal annual installments and annual awards
vesting in full on the first anniversary of the date of grant
for so long as the director remains a director of the Company.
Prior to January 1, 2005, newly elected or appointed
directors received an initial award of options to purchase
10,000 shares, and on each anniversary of the initial award
received an award of options to purchase 2,500 shares.
These options are exercisable at the rate of 25% of the total
underlying shares on each of the first four anniversaries of the
date of grant for so long as the director remains a director of
the Company.
All options expire ten years from the date of grant or when the
holder ceases to be a director, if earlier. Options granted
prior to March 2004 that are vested upon a directors
retirement or voluntary termination of service remain
exercisable for three months following such termination. Options
granted during and after March 2004 that are vested upon a
directors retirement or voluntary termination also remain
exercisable for
8
three months following such termination unless the director has
ten or more years of service in which case they will remain
exercisable for the life of the options.
During 2008, the Company granted the following stock options to
its non-employee directors:
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Director
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Number of Shares
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Date of Grant
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Exercise Price
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Ian W. Diery
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16,876
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May 16, 2008
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$
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17.83
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Irene M. Esteves
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17,494
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June 23, 2008
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$
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17.20
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John A. Fitzsimmons
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16,876
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May 16, 2008
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$
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17.83
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Virginia H. Kent
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16,745
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May 20, 2008
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$
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17.97
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Kenneth T. Lombard
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17,048
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May 19, 2008
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$
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17.65
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Edward W. Moneypenny
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17,048
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May 19, 2008
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$
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17.65
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Peter R. Moore
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17,048
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May 19, 2008
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$
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17.65
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Bill Shore
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19,868
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March 3, 2008
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$
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14.96
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Terdema L. Ussery, II
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17,048
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May 19, 2008
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$
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17.65
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See the section of this Proxy Statement entitled Security
Ownership of Certain Beneficial Owners and Management for
information regarding ownership of the Companys securities
by directors and nominees for director.
The
Governance and Nominating Committee
The members of the Governance and Nominating Committee are
Terdema L. Ussery, II, Chair, John A. Fitzsimmons, Virginia
H. Kent and Bill Shore. The Governance and Nominating
Committees responsibilities include, but are not limited
to:
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reviewing the organization, role and structure of the Board of
Directors including the nature and extent of delegation of
responsibilities to committees of the Board and reviewing
directors compensation;
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developing, reviewing, evaluating and recommending to the Board
for adoption corporate governance principles applicable to the
Company;
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making recommendations to the full Board with respect to
membership on committees and chairmanship of committees;
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recommending to the Board guidelines and criteria for Board
membership and identifying and reviewing candidates for election
to the Board and making recommendations relative to their
election as directors;
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periodically evaluating the composition of the Board and the
effectiveness of the Board, and overseeing the evaluation of the
Board and its committees, including its own performance
annually; and
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communicating with management to ensure that materials and
information provided to the Board are appropriate to enable the
Board to fulfill its responsibilities.
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The Governance and Nominating Committee has established a
process for identifying and evaluating nominees for director.
Although the Governance and Nominating Committee will consider
nominees recommended by stockholders, the Committee believes
that the process it utilizes 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 Companys mission. The
Committee may identify nominees through the use of professional
search firms that may utilize proprietary screening techniques
to match candidates to the Committees specified
qualifications. The Committee may also receive recommendations
from existing directors, executive officers, key business
partners, and trade or industry affiliations. The Committee will
consider, among other factors, the following to evaluate
Committee or stockholder recommended nominees: candidates
experience, skills, and other qualifications in view of the
specific needs of the Board of Directors and the Company;
diversity of backgrounds, skills, and expertise; and high
ethical
9
standards, integrity and proven business judgment. The
Companys Chief Executive Officer discusses all prospective
nominees with the Committee. The Committee further evaluates
each nominee based on the criteria described above prior to
approving a nominee for election to the Board of Directors.
The Governance and Nominating Committee will consider
nominations to the Board of Directors from stockholders using
the same criteria described above. To be considered by the
Governance and Nominating Committee for nomination and inclusion
in the Companys proxy statement for its 2010 Annual
Meeting of Stockholders, stockholder recommendations must be
received by the Companys Secretary no later than
December 18, 2009. Stockholders should write to the
Companys Secretary at 200 Domain Drive, Stratham, New
Hampshire 03885 and such recommendations must include:
(i) the name and address of the candidate, (ii) a
brief biographical description as well as qualifications, taking
into consideration the criteria described above, and
(iii) a signed consent from the candidate indicating his or
her consent to be named in the proxy statement and serve if
elected.
The
Management Development and Compensation Committee
The members of the Management Development and Compensation
Committee are Kenneth T. Lombard, Chair, Irene M. Esteves, John
A. Fitzsimmons, Edward W. Moneypenny and Peter R. Moore. The
Management Development and Compensation Committees
responsibilities include, but are not limited to:
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determining and presenting to the Board of Directors, other than
management directors, for its ratification the compensation of
the Chairman, and of the President and Chief Executive Officer;
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determining the compensation of the Chief Financial Officer and
the executive officers who report directly to the Chief
Executive Officer;
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reviewing, adopting and revising succession plans for the
positions of Chairman, President, Chief Executive Officer and
other key executive positions;
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reviewing the general principles on which the Company bases its
compensation, benefits and management development and succession
policies and practices for all employees of the Company;
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supervising the administration of the Companys 2007
Incentive Plan, and other non-stock based benefit plans;
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consulting with the Governance and Nominating Committee
regarding compensation for members of the Board, and making
recommendations to the Board regarding changes to related equity
incentive plans; and
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evaluating its own performance annually.
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The
Corporate Social Responsibility Committee
The Corporate Social Responsibility Committee was formed in late
2006. It held its first meeting in early 2007. The members of
the Corporate Social Responsibility Committee are Bill Shore,
Chair, Virginia H. Kent, Kenneth T. Lombard and Peter R. Moore.
The Corporate Social Responsibility Committees
responsibilities include, but are not limited to:
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reviewing and monitoring the Companys corporate social
responsibility work;
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monitoring the Companys compliance with its Code of
Conduct;
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reviewing and discussing corporate social responsibility
initiatives and goals in view of the Companys business
strategy, including impact and relationship to business
objectives and creation of stockholder value; and
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ensuring alignment between the Companys executive officers
and the Board of Directors on corporate social responsibility
goals.
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10
The Audit
Committee
Edward W. Moneypenny, Chair, Ian W. Diery, Irene M. Esteves and
Terdema L. Ussery, II are the members of our Audit
Committee. The Audit Committee was established in accordance
with Section 3(a)(58)(A) of the Securities Exchange Act of
1934, as amended. All of the members of our Audit Committee are
independent (as defined in the New York Stock Exchanges
listing standards). The Board of Directors has determined that
there is at least one audit committee financial expert serving
on the Audit Committee. Ms. Esteves is the named audit
committee financial expert. The primary purpose of the Audit
Committee is to assist the Board of Directors in its oversight
of the Companys financial reporting process and its
responsibilities include, but are not limited to:
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monitoring the integrity of the Companys financial
statements;
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ensuring the Companys compliance with legal and regulatory
requirements;
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retaining and, if appropriate, dismissing the independent
registered public accounting firm;
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establishing the qualifications, and monitoring the independence
and performance, of the Companys independent registered
public accounting firm;
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monitoring the performance of the Companys internal audit
function; and
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assessing the adequacy of the Companys systems of internal
accounting and financial controls.
|
The Audit
Committee Report
The Audit Committee has (1) reviewed and discussed the
Companys audited consolidated financial statements for the
fiscal year ended December 31, 2008 with the Companys
management, (2) discussed with the Companys
independent registered public accounting firm,
Deloitte & Touche LLP, the matters required to be
discussed by the statement on Auditing Standards No. 61, as
amended (AICPA, Professional Standards, Vol. 1, AU
Section 380), as adopted by the Public Company Accounting
Oversight Board (the PCAOB) in Rule 3200T,
(3) received the written disclosures and the letter from
Deloitte & Touche LLP, required by applicable
requirements of the PCAOB regarding Deloitte & Touche
LLPs communications with the Audit Committee concerning
independence, and (4) discussed with Deloitte &
Touche LLP their independence as the Companys independent
registered public accountants.
Based on the review and discussions referred to in the preceding
paragraph, the Audit Committee recommended to the Board of
Directors, and the Board of Directors recommended, that the
audited consolidated financial statements for the fiscal year
ended December 31, 2008 be included in the Companys
2008 Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008 for filing with
the Securities and Exchange Commission.
Audit Committee:
Edward W. Moneypenny, Chair
Ian W. Diery
Irene M. Esteves
Terdema L. Ussery, II
Audit and
Non-Audit Fees
The aggregate fees billed by Deloitte & Touche LLP,
the member firms of Deloitte & Touche Tohmatsu, and
their respective affiliates (collectively Deloitte)
for professional fees rendered in each of the fiscal years ended
December 31, 2008 and December 31, 2007 were as
follows:
Audit Fees: $2,874,313 and $3,193,951,
respectively, for professional services necessary to perform an
audit in accordance with the standards of the Public Company
Accounting Oversight Board, including services rendered for the
Companys annual financial statements (including services
incurred with rendering an opinion under Section 404 of the
Sarbanes-Oxley Act of 2002) and for reviews of the
financial statements included in
11
the Companys Quarterly Reports on
Form 10-Q.
Also includes fees for services that are normally incurred in
connection with statutory and regulatory filings or engagements,
such as comfort letters, statutory audits, attest services,
consents and review of documents filed with the Securities and
Exchange Commission;
Audit-Related Fees: $0 and $124,500,
respectively, for assurance and related services that were
reasonably related to the performance of services specified
under Audit Fees but not included in Audit Fees. In 2007, these
services consisted of services performed relating to employee
benefit plans;
Tax Fees: $99,401 and $255,918, respectively,
for professional services rendered for tax compliance, tax
advice, and tax planning; and
All Other Fees: $104,089 and $39,053,
respectively, for products and services other than the services
specified under Audit Fees, Audit-Related Fees and Tax Fees.
These products and services primarily consisted of internal
control assistance services in Switzerland and tax services for
Sidney Swartz in 2008, and tax services for Sidney Swartz in
2007.
In accordance with the Sarbanes-Oxley Act of 2002, the Audit
Committee established policies and procedures under which all
audit and non-audit services performed by the Companys
independent registered public accounting firm must be approved
in advance by the Audit Committee. During fiscal 2008, all audit
and non-audit services performed by Deloitte were pre-approved.
During fiscal 2007, fees totaling $132,035, or less than five
percent of total fees for 2007, were paid to an affiliate of
Deloitte for a tax services related engagement in a foreign
location that were not pre-approved, but were approved by the
Audit Committee promptly after the inadvertent omission from the
pre-approval process was discovered.
Audit
Committee Pre-Approval of Audit and Non-Audit Services
As part of its responsibility for oversight of the independent
registered public accountants, the Audit Committee has
established a pre-approval policy for engaging audit and
permitted non-audit services provided by the Companys
independent registered public accountants. In accordance with
this policy, each type of audit, audit-related, tax and other
permitted service to be provided by the independent registered
public accounting firm is specifically described and each such
service, together with a fee level or budgeted amount for such
service, is pre-approved annually by the Audit Committee. The
Audit Committee has delegated pre-approval authority to its
Chair to pre-approve additional non-audit services (provided
such services are not prohibited by applicable law) up to a
pre-established aggregate dollar limit. All services
pre-approved by the Chair of the Audit Committee must be
presented at the next Audit Committee meeting for its review and
ratification.
ITEM 2. RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
In accordance with its charter, the Audit Committee has selected
the firm of Deloitte & Touche LLP, an independent
registered public accounting firm, to be the Companys
independent accountants for the year ending December 31,
2009 and, with the endorsement of the Board of Directors,
recommends to stockholders that they ratify such appointment.
Deloitte & Touche LLP served in this capacity for the
fiscal year ended December 31, 2008. Its representative
will be present at the Annual Meeting and will have an
opportunity to make a statement and be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS AND THE AUDIT COMMITTEE RECOMMEND THAT
YOU VOTE
FOR
APPROVAL OF ITEM 2.
12
ITEM 3. INCREASE
IN THE NUMBER OF SHARES RESERVED UNDER THE COMPANYS
1991 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED (ESPP)
AND CHANGE IN THE ELIGIBILITY REQUIREMENTS FOR
EMPLOYEES
A total of 300,000 shares of the Companys
Class A Common Stock have been reserved for issuance under
the ESPP. The Company believes the ESPP encourages employee
stock ownership and increases the employees proprietary
interest in the Companys success by providing an
opportunity for eligible employees to purchase shares of
Class A Common Stock at a reduced price. As of
April 3, 2009, there were 68,139 shares of
Class A Common Stock available for issuance under the ESPP.
The Company expects that such available shares will be purchased
by December 31, 2009. The Board believes that it is
important to continue to encourage employee stock ownership in
the Company. As a result, on March 5, 2009, the Board
approved, and is submitting for stockholder approval, a proposal
to increase the number of shares of Class A Common Stock
reserved for issuance under the ESPP from 300,000 shares to
500,000 shares.
The ESPP, as amended through May 20, 1999, imposed the
following three service requirements upon employees in order to
participate: (1) each employee must complete six months or
more of continuous service; (2) each employees
customary employment must be in excess of 20 hours per
week; and (3) each employees customary employment
must be in excess of five months in each calendar year. To
further encourage employee stock ownership in the Company, on
March 5, 2009, the Board approved, and is submitting for
stockholder approval, a proposal to eliminate the first two
service requirements listed above. The ESPP will continue to
require that employees customarily work in excess of five months
in each calendar year.
General
Description of the ESPP
The ESPP was adopted by the Board of Directors on
February 22, 1991 and approved by the stockholders on
May 16, 1991. On May 18, 1995, the stockholders
approved an increase in the number of shares of Class A
Common Stock reserved for issuance under the ESPP from
100,000 shares to 200,000 shares. On May 20,
1999, stockholders approved another increase in the number of
shares of Class A Common Stock reserved for issuance under
the ESPP from 200,000 to 300,000 shares. If stockholders
approve Item 3, the number of shares of Class A Common
Stock reserved for issuance under the ESPP will increase from
300,000 shares to 500,000 shares.
Currently, employees of the Company and its participating
subsidiaries who have worked for the Company for at least six
continuous months and customarily work in excess of
20 hours per week and five months in each calendar year are
eligible to participate in the ESPP. If stockholders approve
Item 3, employees of the Company and its participating
subsidiaries who customarily work in excess of five months in
each calendar year will be eligible to participate in the ESPP.
Employees who own 5% or more of the Class A Common Stock
are not eligible to participate in the ESPP under any
circumstances. As of January 1, 2009, approximately
1,227 employees were eligible to participate in the ESPP.
As participation in the ESPP is voluntary, we cannot now
determine the extent of participation by any particular officer,
employee or group thereof.
Eligible employees may contribute, through payroll withholdings,
from 2% to 10% of their regular base compensation during
six-month participation periods. The number of shares purchased
is determined by dividing the balance in the employees
withholding account on the last day of the participation period
by 85% of the fair market value of Class A Common Stock on
either the first or the last day of the participation period,
whichever is lower. An employee may not purchase an amount of
Class A Common Stock with a fair market value exceeding
$25,000 (determined at the first trading day of each
participation period) in any calendar year.
An employee may cancel his or her participation at any time
prior to the last day of a participation period. If an employee
terminates his participation, then the Company will return to
him the balance of his withholding account without interest. No
employee may sell, pledge, assign or otherwise transfer rights
to purchase shares under the ESPP. The ESPP does not and should
not be construed to give an employee the right to be employed by
the Company.
13
In the event there is a change in the outstanding stock of the
Company due to a stock dividend, stock split, combination of
shares, recapitalization, merger or other capital change, the
aggregate number of shares available under the ESPP, the
purchase price and other relevant provisions will be
appropriately adjusted.
The ESPP is administered by the Companys Compensation and
Benefits Committee, which consists of certain members of
management appointed by the Management Development and
Compensation Committee (MDCC) of the Board of
Directors or the Board of Directors. Only the MDCC or Board of
Directors, however, has the power to amend the ESPP (other than
amendments relating to the number of shares to be issued under
the ESPP or the employees or class of employees eligible to
participate in the ESPP, which are subject to stockholder
approval) or to terminate the ESPP. If the number of shares of
Class A Common Stock to be issued to participants
(calculated by dividing the total amount of all payroll
deductions during the participation period by the applicable
purchase price) exceeds the number of shares then available
under the ESPP, the Compensation and Benefits Committee will
reduce proportionally the number of shares to be issued.
Federal
Tax Effects
For U.S. Federal income tax purposes, neither the
participation in the ESPP nor the purchase of stock under the
ESPP will produce ordinary income to the employee or a deduction
to the Company.
In general, an employee who disposes of shares purchased under
the ESPP within two years after the first day of the
participation period relating to those shares will recognize:
(i) ordinary income on the difference between the purchase
price and the fair market value on the last day of the
applicable participation period, and (ii) a capital gain or
loss on the difference between the amount realized on the sale
and the employees basis in the shares (i.e., the purchase
price plus any ordinary income recognized by reason of the sale).
If an employee disposes of shares purchased under the ESPP more
than two years after the first day of the participation period
relating to the purchased shares, or dies at any time while
holding such shares, ordinary income will be recognized equal to
the lesser of (i) the excess of the fair market value of
the shares at the time of disposition or death over the purchase
price, or (ii) 15% of the fair market value of the shares
on the first day of the participation period relating to the
purchased shares. The Company will not be entitled to a
deduction for this amount. In addition to ordinary income,
capital gain will be recognized on the excess, if any, of the
amount realized on a sale or exchange over the employees
basis in the shares (i.e., the purchase price paid by the
employee plus any ordinary income recognized by reason of the
sale).
The foregoing is intended as a summary of U.S. Federal
income tax consequences associated with the ESPP and does not
involve any discussion of other U.S. Federal tax
consequences or of state, local or
non-U.S. taxes.
THE BOARD
OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR
APPROVAL
OF ITEM 3.
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Introduction
This Compensation Discussion and Analysis explains how our
compensation programs are designed and how they reward our named
executive officers (NEOs), which consist of our
Chief Executive Officer (CEO), Chief Financial
Officer (CFO), and the three other most highly
compensated executives of our Company. The Compensation
Discussion and Analysis describes our compensation philosophy
and examines how each of the primary components of our
compensation programs is designed to support that philosophy. We
will also explain the results of our pay for performance
programs in 2008. Finally, we will discuss other benefits and
perquisites that we provide to our NEOs and describe several of
our key executive compensation policies.
14
Executive
Compensation Philosophy
Our executive compensation philosophy centers around two primary
objectives: to provide a competitive pay package and to pay for
performance. These two objectives are described in further
detail below.
Competitive Pay: We believe that a
competitive compensation package is instrumental in attracting
and retaining top executive talent. Our objective in developing
an executive pay package is to provide an overall level of pay
that is competitive within our peer group and the broader
industry assuming that targeted levels of performance are
achieved. In addition to providing an overall level of pay that
is competitive we aim to achieve this through a mix of pay using
a combination of base salary and incentive compensation awards.
Pay for Performance: We promote a pay
for performance culture at Timberland and design our executive
compensation package to align executive pay with the interests
of our stockholders. Therefore, a significant portion of our
executive pay package is at risk for our executives and directly
linked to the overall financial performance of the Company. To
achieve our pay for performance objectives, a large portion of
the executive compensation package is delivered in the form of
incentive awards for both short-and long-term Company
performance.
Executive
Compensation Program Design
We believe that our executive compensation package is
appropriate and reasonable because it is aligned with our
business objectives and designed with stockholder interests in
mind. The Management Development and Compensation Committee
(Committee), the Committees compensation
consultant, and Company management all influence the design and
effectiveness of our executive compensation package. Below, we
will discuss the role of each of these groups in making
executive compensation decisions in further detail.
The
Role of the Management Development and Compensation
Committee
The Committee is responsible for providing oversight of our
executive compensation program and management development plans,
which includes the compensation of our NEOs. The Committee
annually reviews and evaluates the effectiveness of our
executive compensation program, ensures that it is aligned with
our compensation philosophy, and retains the discretion to
reduce the size of any award earned under our incentive plans.
The section of this Proxy Statement entitled Management
Development and Compensation Committee beginning on
page 10 discusses the duties and responsibilities of the
Committee in further detail.
The
Role of the Compensation Consultant
The Committee has retained Hewitt Associates as its independent
external compensation consultant. As such, Hewitt Associates
assists the Committee in its review of executive and director
compensation practices, including the competitiveness of pay
levels, executive compensation design issues, market trends, and
technical considerations. Hewitt Associates is not engaged by
the Company for management consulting or any other projects. Our
human resources staff acquires and uses published reports and
the competitive market survey data that Hewitt Associates makes
available to participating companies. The Committee periodically
reviews Hewitt Associates performance and has the sole
authority to hire and terminate its consultant.
The
Role of Company Management
The CEO makes recommendations to the Committee concerning the
compensation of the other NEOs and members of senior management.
In addition, the CEO and CFO are involved in establishing the
business objectives that are used as the performance goals for
the short- and long-term incentive plans. The Corporate Culture
Officer and his compensation and benefits staff work closely
with the Committee, Hewitt Associates, and management to:
(i) ensure that the Committee is provided with the relevant
information and data to make its decisions; (ii) propose
succession planning, compensation, and benefit program and
policy recommendations for the Committee to consider; and
(iii) communicate those decisions to management for
implementation.
15
Competitive
Analysis
Our management and the Committee examine and design the
executive compensation programs to be reasonable and fair from
the perspective of the stockholder, external competitiveness and
internal equity. The Committee, representing the
stockholders perspective, evaluates all executive
compensation programs based on attracting and retaining the
talent we need to run the business while allowing us to maintain
a competitive position with respect to our compensation expense.
Management and the Committee evaluate external competitiveness
using two primary sources of compensation data: a competitive
peer group and broader market data gathered from published
salary surveys and reports. The Committee annually reviews and
approves a list of companies, as recommended by
Timberlands management, to serve as the peer group. Our
peer group consists of 19 publicly-traded companies with which
we may compete for talent, which reasonably approximate our
financial and market performance, and which are in related
industries. For 2008, the peer group of companies included:
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American Eagle Outfitters
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Jones Apparel Group
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Quiksilver, Inc.
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Brown Shoe Company
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Kenneth Cole Productions, Inc.
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Skechers USA, Inc.
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Coach, Inc.
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Limited Brands, Inc.
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Urban Outfitters, Inc.
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Columbia Sportswear Company
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Liz Claiborne, Inc.
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VF Corporation
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Deckers Outdoor Corporation
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Nike, Inc.
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Wolverine Worldwide, Inc.
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Estee Lauder Companies, Inc.
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Pacific Sunwear California, Inc.
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The Gap, Inc.
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Polo Ralph Lauren
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As part of the competitive analysis, we examine all elements of
pay, including base salary, total cash compensation (base salary
plus annual bonus opportunity), and total direct compensation
(total cash compensation plus the value of long-term incentives)
(TDC). This data, combined with compensation survey
data from Hewitt Associates and Mercer, LLC, is used to
establish a range and mix of pay that we believe to be
competitive in the marketplace. For the purposes of our
analysis, all competitive compensation data is adjusted to
reflect our Companys revenue size either through
regression analysis, or by limiting the data set to companies
with annual revenues of approximately the same size. While we do
not target a specific data point in the range, such as the
average or median, to determine an executives pay, we do
evaluate each executive on an individual basis and use the data
to guide our specific pay recommendations.
Our external competitive analysis also includes a comparison of
our financial performance to that of the other companies in our
peer group on a number of financial metrics, such as revenue
growth, operating contribution margin, net income margin, and
total stockholder return over 1-, 3-, and
5-year
periods.
We also examine how each of our NEOs is compensated relative to
one another and other executives within the Company. We consider
factors such as the executives experience and past
performance, current level of performance, level of
responsibility and any anticipated increases, their potential to
make significant contributions, and succession planning
retention strategies.
We believe that externally competitive compensation packages
that are also fair when compared to internal peers help to
attract and retain the executive talent we need to successfully
run our business.
The
Primary Components of our 2008 Executive Compensation
Program
The primary components of our Executive Compensation Program in
2008 include:
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Base salary
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Our Short-Term Incentive Plan (STIP)
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Our Long-Term Incentive Plan (LTIP)
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Our executive compensation program has historically been more
heavily weighted toward performance-based variable pay, rather
than base salary, in order to promote a pay for performance
culture. During 2008, 80% of our CEOs total compensation
opportunity consisted of performance-based variable
compensation. For
16
the other NEOs, performance-based variable compensation made up
60-75% of
total compensation opportunity. We believe that this mix of pay
provides our NEOs with significant upside earning potential for
the achievement of actual results above expectations, and
significantly lower earning potential for results that are below
expectations.
At the beginning of the year, we realized that 2008 would be a
challenging year for the Company. After reviewing the final
operating budget for 2008, we determined that achieving our
budget would not support a full payout for our STIP and LTIP
programs. As a result, we determined that attainment of budgeted
performance should instead support a 50% payout of our incentive
plans and created the plans accordingly. Rather than reducing
the incentive opportunities for our NEOs, we adjusted the payout
ranges to reflect our expectations of Company performance in
light of the challenging market conditions. Our executives would
only receive targeted payouts under the incentive plans if
budgeted performance was exceeded. Further details about the
incentive plan designs will be discussed below.
The sections below will examine each of the primary components
independently and explain what action the Committee took with
respect to each component.
Base
Salary
Each year, the Committee considers recommendations made by the
CEO, along with his assessment of each NEOs performance,
with respect to making changes to base salaries. The Committee
makes final determinations regarding base salary changes in
executive session without the CEO being present. Additionally,
the Committee presents proposed salary adjustments for the
Chairman and CEO to the Board of Directors for consideration and
approval. These recommendations are discussed and final
determinations are made during the Boards executive
session without the Chairman or the CEO present. Effective
January 1, 2008, Mr. McCarthy received a base pay
increase of $75,000 associated with being promoted to
Co-President, Timberland Brand. No changes were recommended or
made to the base salaries of our other NEOs based upon the
Companys business performance in 2007.
Short-Term
Incentive Plan
Our STIP is designed to reward actual performance during the
fiscal year against predetermined financial performance targets.
This annual cash-based incentive plan encourages our management
team to drive annual performance which in turn helps to create
stockholder value. The annual incentive award opportunity for
each NEO is expressed as a percentage of the NEOs base
salary as determined by the individuals pay grade
assignment. The incentive opportunity for Mr. Swartz is
100% of his annual base salary, 80% for Messrs. Harrison,
McCarthy, and Welsh, and 65% for Mr. Crimmins.
In 2008, we chose to focus on two financial metrics: Company
earnings and asset management. Company earnings, measured as
operating contribution, represent 75% of the incentive
opportunity of the 2008 STIP. This measure was heavily weighted
because it directly impacts stockholder value through
profitability and is a measure over which management can exert
influence. In the STIP, operating contribution (OC)
is generally defined as total revenues, less cost of goods sold
and operating expenses, excluding items such as restructuring
charges and other one-time, nonrecurring expenses. Asset
management, measured as operating working capital
(OWC), represents 25% of the incentive opportunity
of the 2008 STIP. OWC measures the successful management of our
inventory and cash flow and is generally defined as our
quarterly average of accounts receivable plus inventory less
accounts payable, divided by total revenue. Management can
affect overall OWC performance through the effective management
of accounts receivable, inventory, and accounts payable.
Successful asset management creates stockholder value by
reducing the Companys investment requirements and
increasing the Companys return on investment.
17
For 2008, the STIP structure, performance targets, and actual
results were as follows:
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Calculated
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Payout as a
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Actual
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Percent of
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Threshold
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Budget
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Target
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Maximum
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Achievement
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Target
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Performance Measure
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Weight
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Payout = 25%
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Payout = 50%
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Payout = 100%
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Payout = 150%
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in 2008
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Opportunity
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TBL OC (millions)
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75
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%
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$
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71.00
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$
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88.80
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$
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110.10
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$
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130.50
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$
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72.90
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20.8
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%
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TBL OWC
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25
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%
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23.00
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%
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22.75
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%
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22.50
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%
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22.25
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%
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22.04
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%
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37.5
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%
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Total Payout as a Percent of Target Opportunity
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58.3
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%
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Based on the Total Payout as a Percent of Target
Opportunity, the payments to our NEOs under the 2008 STIP
were as follows:
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Payment Earned Under
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Officer
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the 2008 STIP
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Mr. Swartz
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$
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480,661
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Mr. Harrison
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$
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186,438
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Mr. McCarthy
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$
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186,438
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Mr. Welsh
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$
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186,438
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Mr. Crimmins
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$
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123,078
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Long-Term
Incentive Plan
Our LTIP represents a significant portion of potential
compensation for our NEOs. These equity-based awards are
provided to retain and motivate our executives and focus their
efforts on activities that enhance stockholder value over the
long term.
The 2008 Executive Long-Term Incentive Plan (2008
LTIP) was designed to focus managements efforts on
exceeding the 2008 net income budget. For the purposes of
the 2008 LTIP, net income is generally defined as net income as
shown on the audited consolidated statements of income included
in the Companys Annual Report on
Form 10-K,
adjusted for items such as changes in federal tax rates,
extraordinary items of loss or expense, and any other unusual or
nonrecurring items of loss or expense including restructuring
charges. The 2008 LTIP award grants were denominated in dollar
values and, if awarded, would be settled in equity. Under the
terms of the 2008 LTIP, awards are scheduled to be settled 60%
in stock options that vest in equal installments over three
years, and 40% in restricted shares of Company stock that vest
in equal installments over two years. The number of stock
options granted would be determined by using the Black-Scholes
valuation model on the date of grant. The number of restricted
shares granted would be based on the fair market value of the
Companys stock on the date of grant. The 2008 LTIP
performance targets, payout levels, and actual results were as
follows:
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Calculated
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Payout as a
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Actual
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Percent of
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Threshold
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Budget
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Target
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Maximum
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Achievement
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Target
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Performance Measure
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Payout = 25%
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Payout = 50%
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Payout = 100%
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Payout = 150%
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in 2008
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Opportunity
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TBL Net Income (millions)
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$
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43.0
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$
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53.7
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$
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67.1
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$
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80.6
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$
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44.7
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29.14
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%
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18
Based on the Calculated Payout as a Percent of Target
Opportunity, the equity awards earned by our NEOs under
the 2008 LTIP were valued as follows:
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Payment
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Earned Under
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the 2008
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Officer
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LTIP
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Mr. Swartz
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$
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728,500
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Mr. Harrison
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$
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218,550
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Mr. McCarthy
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$
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218,550
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Mr. Welsh
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$
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218,550
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Mr. Crimmins
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$
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72,850
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Results
of Our 2008 Executive Compensation Program
Annually, we review the effectiveness of our pay for performance
programs by examining our NEOs actual TDC. We compare this
value against the earnings opportunity at various levels of
performance. Based on actual Company performance in 2008, our
executives earned TDC that was above the Threshold and well
below the Targeted level of compensation. We believe that this
level of compensation is consistent with our pay for performance
philosophy considering the Companys overall performance.
Below are illustrations of how actual Company performance
affected each of our NEOs TDC in 2008.
19
Equity
Grant Practices
The Board of Directors retains the sole authority to grant
equity awards to our CEO, while the Committee retains the sole
authority to grant equity awards to our other NEOs, and
delegates granting authority to our CEO for equity awards to all
other employees. All equity awards are generally granted on the
same date as one of the five regularly scheduled meetings of our
Board of Directors. The exercise price for all stock option
awards is the closing price of the Companys Class A
Common Stock on the New York Stock Exchange on the date of the
grant. In 2008, no equity grants were made to our NEOs other
than those resulting from the 2007 Long-Term Incentive Plan.
Benefits
and Perquisites
NEOs participate in medical, disability, and life insurance
benefits and annual contributions to qualified savings plans on
the same basis as all salaried employees based in the United
States. The Company does not provide pension arrangements
(supplemental or otherwise), post-retirement healthcare coverage
or similar benefits to such executives.
Due to the scope of the Companys international operations,
the NEOs use a Company-owned aircraft for business travel. The
aircraft provides increased security for the NEOs and increases
the efficiency with which they can conduct Company business. The
CEO may use the aircraft for personal travel. For security and
efficiency, the CEO is also provided with transportation to and
from work in a Company-owned vehicle driven by a
Company-provided driver. Further, the CEO is provided the use of
administrative assistant services for personal matters.
Additional information on perquisites can be found in Footnote 3
to the Summary Compensation Table included in this
Proxy Statement.
At the time of his hire in April of 2006, Mr. McCarthy
entered into an agreement with the Company pursuant to which the
Company reimburses Mr. McCarthy for certain lodging, meal,
and transportation expenses. These reimbursements are grossed up
for income tax purposes. In 2008, Mr. McCarthy received a
total of $34,951 for such reimbursements.
NEOs, along with certain other management employees based in the
United States, are also eligible to participate in the Deferred
Compensation Plan (DCP). In this program, eligible
employees can defer up to 100% of their base salary and 100% of
their cash bonus subject to the Companys withholding for
applicable taxes and employee benefit plans withholding. The
Company does not make matching contributions to the DCP. The DCP
is offered, in addition to the Companys 401(k) plan, to
provide NEOs with an additional opportunity to defer
compensation which may assist them with their retirement
planning. Benefits under the DCP will be paid no earlier than
six (6) months following the participants retirement
or termination. Additional information on the DCP and the
participation of NEOs in 2008, which are reflected in the
20
Summary Compensation Table, can be found in the
Nonqualified Deferred Compensation Plan section of
this Proxy Statement.
Severance
Benefits / Change in Control
In December 2008, we amended and restated the Change of Control
Severance Agreements (as amended, the Change of Control
Agreements) with each of the NEOs and other key employees
primarily to bring the agreements into compliance with
Section 409A of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder. The
provisions of the Change of Control Agreements described below
were not changed and are designed to promote stability and
continuity of senior management if a triggering event occurs in
order to align the interests of executives and stockholders. If
a change of control occurs, executives would receive certain
compensation if their employment is terminated without
Cause or for Good Reason within
24 months following the change of control. This
compensation is intended to retain the executives. The benefit
encourages them to remain with the Company, despite uncertainty,
with guaranteed financial protection upon loss of employment. In
addition, under the terms of the Change of Control Agreements,
executives may voluntarily terminate their employment during the
13th full calendar month after the change of control and receive
certain reduced compensation. This provision increases the
likelihood that key executives will be retained during the
critical first year transition period. Additional information
regarding the Change of Control Agreements, applicable payments
thereunder and other plans for the covered executives is
provided in the Potential Payments Upon Termination of
Employment and Potential Payments Upon a
Change-in-Control
section of this Proxy Statement.
Impact of
Regulatory Requirements on Compensation (Tax
Considerations)
Section 162(m) of the Internal Revenue Code generally
disallows a tax deduction to a public company for compensation
over $1.0 million paid to the companys NEOs. However,
eligible performance-based compensation awards are not subject
to the deduction limits if certain requirements are satisfied.
The Committee takes the limitations of Section 162(m) into
account in determining the design of incentive awards made to
these executives. Neither base salary nor other non-performance
based compensation programs exceeded $1.0 million in 2008
for any of these NEOs.
The
Management Development and Compensation Committee
Report
The Committee has reviewed and discussed the Compensation
Discussion and Analysis found in this Proxy Statement with the
Companys management. Based on the review and discussion
outlined in the preceding sentence, the Committee recommended to
the Board of Directors, and the Board of Directors recommended,
that the Compensation Discussion and Analysis be included in the
Companys 2008 Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008 for filing with
the Securities and Exchange Commission.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
Kenneth T. Lombard, Chair
Irene M. Esteves
John A. Fitzsimmons
Edward W. Moneypenny
Peter R. Moore
21
Summary
Compensation Table
The following table and footnotes discuss the compensation
awarded to, earned by or paid to the Chief Executive Officer,
the Chief Financial Officer and the three other most highly
compensated executive officers of the Company who served as such
at December 31, 2008 (together, the NEOs).
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Change in
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Pension
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Value and
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Non-Equity
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Non-Qualified
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Stock
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Option
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Incentive Plan
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Deferred
|
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All Other
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Name and
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|
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Salary
|
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Bonus
|
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Awards(1)
|
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Awards(1)
|
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Compensation(2)
|
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Compensation
|
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Compensation(3)
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Total
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Principal Position
|
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Year
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($)
|
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($)
|
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($)
|
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($)
|
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($)
|
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Earnings
|
|
($)
|
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($)
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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(i)
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(j)
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Jeffrey B. Swartz
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2008
|
|
|
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825,000
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|
|
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1,863,993
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99,926
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|
|
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480,661
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|
|
|
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436,748
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3,706,328
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President and Chief
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2007
|
|
|
|
825,000
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|
|
|
|
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2,773,052
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150,414
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|
|
|
|
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|
|
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416,737
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4,165,203
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Executive Officer
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2006
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|
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818,750
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|
|
|
|
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3,808,414
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|
|
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407,989
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|
|
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199,649
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|
|
|
|
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404,215
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|
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5,639,017
|
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John D. Crimmins, III(4)
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2008
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|
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325,000
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100,000
|
|
|
|
30,349
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|
|
|
143,668
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|
|
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123,078
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|
|
|
|
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8,405
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|
|
|
730,500
|
|
Vice President,
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2007
|
|
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303,633
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75,000
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30,903
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|
|
|
108,117
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|
|
|
|
|
|
|
|
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8,405
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|
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526,058
|
|
Chief Financial Officer
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|
|
|
|
|
|
|
|
|
|
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Michael J. Harrison
|
|
|
2008
|
|
|
|
400,000
|
|
|
|
|
|
|
|
576,146
|
|
|
|
74,658
|
|
|
|
186,438
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|
|
|
|
|
|
|
8,557
|
|
|
|
1,245,799
|
|
Co-President,
|
|
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2007
|
|
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|
400,000
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|
|
|
|
|
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729,773
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|
|
|
84,647
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|
|
|
|
|
|
|
|
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8,557
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|
|
|
1,222,977
|
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Timberland Brand
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2006
|
|
|
|
391,035
|
|
|
|
|
|
|
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772,075
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|
|
|
197,347
|
|
|
|
79,167
|
|
|
|
|
|
|
|
6,141
|
|
|
|
1,445,765
|
|
Eugene R. McCarthy
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2008
|
|
|
|
400,000
|
|
|
|
|
|
|
|
91,045
|
|
|
|
201,691
|
|
|
|
186,438
|
|
|
|
|
|
|
|
44,835
|
|
|
|
924,009
|
|
Co-President,
|
|
|
2007
|
|
|
|
318,333
|
|
|
|
|
|
|
|
92,708
|
|
|
|
91,277
|
|
|
|
|
|
|
|
|
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23,516
|
|
|
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525,834
|
|
Timberland Brand
|
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Carden N. Welsh
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2008
|
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400,000
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|
|
|
|
|
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|
28,544
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|
|
|
116,576
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|
|
|
186,438
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9,620
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741,178
|
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Senior Vice President and
Chief Administrative Officer
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(1) |
|
For the NEOs, Column (e) shows the accounting expense
recognized for stock awards under the Companys 2004, 2007
and 2008 Executive Long-Term Incentive Programs. Column
(f) shows the accounting expense recognized for stock
options granted under the Companys 1997 and 2007 Incentive
Plans. These expenses are recognized in accordance with the
rules of Statement of Financial Accounting Standard
No. 123(R), before any forfeiture assumptions. Please refer
to Note 13 to our consolidated financial statements,
entitled Share-based Compensation, included in
Part II, Item 8 of our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008 for a
discussion of the assumptions used in determining the valuations
shown in these columns. |
|
(2) |
|
Column (g) shows the non-equity, short-term incentive plan
cash bonuses earned by the NEOs under the 2008 STIP. |
|
(3) |
|
Column (i) includes all other compensation not reported in
any of the other columns including, but not limited to, the
aggregate incremental cost to the Company of providing various
perquisites and personal benefits during 2008 in excess of
reporting thresholds, including (1) for Mr. Swartz:
(a) for personal use of Company-owned aircraft, $285,232
(b) for personal use of Company-owned automobiles including
depreciation, registration fees, insurance and maintenance
(tolls, repairs, and fuel) and a portion of the salaries and
benefits paid to employee drivers of the automobiles: $25,832
for one hundred percent (100%) of the identified automobile
costs and $55,029, for eighty percent (80%) of the employee
drivers salary and benefits attributable to transporting
Mr. Swartz; and (c) for personal use of administrative
assistance services, $61,242, which is approximately
seventy-five percent (75%) of the salary and benefits
attributable to such administrative assistance, and (2) for
Mr. McCarthy: reimbursements totaling $23,854 for certain
lodging and meal expenses, and a gross up for taxes related to
such reimbursements of $11,097. In determining the value of the
personal use of the Company-owned aircraft, we calculate the
aggregate incremental cost to the Company based on the cost of
fuel, trip related maintenance and repair, crew travel expenses,
navigation fees and smaller variable costs. Because the
Company-owned aircraft is used primarily for business travel, we
do not include the fixed costs that do not change based on
usage, such as pilots salaries, the purchase costs of the
Company-owned aircraft, and the cost of maintenance not related
to trips. In determining the value of the personal use of
Company-owned automobiles and employee drivers, we calculate the
aggregate incremental cost to the Company based on the total
costs described above to own and |
22
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|
operate the vehicles and the cost to the Company of providing
employee drivers, which includes the total salary, bonus, and
benefits for each driver with eighty percent (80%) of that cost
attributable to Mr. Swartz and twenty percent (20%) of that
cost attributable to Company business. We calculate the
aggregate incremental cost to provide administrative assistance
services on the same basis as the employee drivers but we
attribute approximately seventy-five percent (75%) of that cost
to providing administrative assistance services not related to
Company business. For additional information on perquisites,
please refer to the Compensation Discussion and
Analysis portion of this Proxy Statement under the
Benefits and Perquisites heading. |
|
(4) |
|
In March of 2007, Mr. Crimmins was selected by
Mr. Swartz to receive a retention payment of $100,000
payable on June 30, 2008. |
23
Grants of
Plan-Based Awards Table Fiscal Year 2008
The following table sets forth information for each of the NEOs
as to grants of non-equity and equity incentive plan awards,
stock and option awards, the exercise price of option awards and
the grant date fair value of stock and option awards made to
each of such NEOs in 2008.
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All Other
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All Other
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Stock
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Option
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Awards:
|
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Awards:
|
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Exercise
|
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|
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Estimated Future Payouts Under
|
|
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Number of
|
|
|
Number of
|
|
|
or Base
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
Approval
|
|
|
Estimated Future Payouts Under
|
|
|
Equity
|
|
|
Shares of
|
|
|
Securities
|
|
|
Price of
|
|
|
Fair Value
|
|
|
|
Award
|
|
|
|
|
|
Date of
|
|
|
Non-Equity Incentive Plan Awards
|
|
|
Incentive Plan Awards
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Option
|
|
|
of Stock and
|
|
Name
|
|
Type
|
|
|
Grant Date
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units(#)
|
|
|
Options
|
|
|
Awards
|
|
|
Option Awards
|
|
(a)
|
|
|
|
|
(b)
|
|
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/sh)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
(k)
|
|
|
(l)
|
|
|
Jeffrey B. Swartz
|
|
|
2008 STIP
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
206,300
|
|
|
|
825,000
|
|
|
|
1,237,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 LTIP
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
625,000
|
|
|
|
2,500,000
|
|
|
|
3,750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John D. Crimmins, III
|
|
|
2008 STIP
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
52,800
|
|
|
|
211,300
|
|
|
|
316,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 LTIP
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,500
|
|
|
|
250,000
|
|
|
|
375,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 LTIP
|
(3)
|
|
|
|
3/5/2008
|
|
|
|
3/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,401
|
|
|
|
|
|
|
|
|
|
|
|
49,995
|
|
|
|
|
2007 LTIP
|
(4)
|
|
|
|
3/5/2008
|
|
|
|
3/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,103
|
|
|
|
14.70
|
|
|
|
49,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Harrison
|
|
|
2008 STIP
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
160,000
|
|
|
|
320,000
|
|
|
|
640,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 LTIP
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
187,500
|
|
|
|
750,000
|
|
|
|
1,125,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 LTIP
|
(3)
|
|
|
|
3/5/2008
|
|
|
|
3/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,204
|
|
|
|
|
|
|
|
|
|
|
|
149,999
|
|
|
|
|
2007 LTIP
|
(4)
|
|
|
|
3/5/2008
|
|
|
|
3/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,309
|
|
|
|
14.70
|
|
|
|
146,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eugene R. McCarthy
|
|
|
2008 STIP
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
160,000
|
|
|
|
320,000
|
|
|
|
640,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 LTIP
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
187,500
|
|
|
|
750,000
|
|
|
|
1,125,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 LTIP
|
(3)
|
|
|
|
3/5/2008
|
|
|
|
3/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,204
|
|
|
|
|
|
|
|
|
|
|
|
149,999
|
|
|
|
|
2007 LTIP
|
(4)
|
|
|
|
3/5/2008
|
|
|
|
3/4/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,309
|
|
|
|
14.70
|
|
|
|
146,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carden N. Welsh
|
|
|
2008 STIP
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
160,000
|
|
|
|
320,000
|
|
|
|
640,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 LTIP
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
187,500
|
|
|
|
750,000
|
|
|
|
1,125,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key:
STIP = Short-Term Incentive Plan
LTIP = Long-Term Incentive Plan
|
|
|
(1) |
|
These awards were approved by the Board of Directors or the
Management Development and Compensation Committee (the
MDCC), as applicable, on 3/5/2008 and 3/4/2008,
respectively. These awards will be paid to the NEOs upon the
determination by the Board of Directors or the MDCC, as
applicable, of the level of achievement of the applicable
performance metrics. Please refer to Footnote (2) to the
Summary Compensation Table included in this Proxy
Statement and to the Short-Term Incentive Plan portion of the
Compensation Discussion and Analysis section of this
Proxy Statement for further discussion of cash awards. |
|
(2) |
|
These awards were approved by the Board of Directors or the
MDCC, as applicable, on 3/5/2008 and 3/4/2008, respectively.
These awards will be paid to the NEOs in stock options and
restricted stock awards, as applicable, upon the determination
by the Board of Directors or the MDCC, as applicable, of the
level of achievement of the applicable performance metrics.
Please refer to the Long-Term Incentive Plan portion of the
Compensation Discussion and Analysis section of this
Proxy Statement for further discussion of equity awards. |
|
(3) |
|
Restricted stock awards granted under The Timberland Company
2007 Incentive Plan upon the determination by the MDCC of the
level of achievement of the applicable performance metrics under
the 2007 LTIP. The grant date fair value was determined by the
number of shares awarded multiplied by the closing price of the
Companys Class A Common Stock on the date of grant
($14.70). These awards were approved by the MDCC on 2/27/2007. |
|
(4) |
|
Stock option awards granted under The Timberland Company 2007
Incentive Plan upon the determination by the MDCC of the level
of achievement of the applicable performance metrics under the
2007 LTIP. Each stock options grant date fair value was
determined in accordance with SFAS 123(R). These awards
were approved by the MDCC on 2/27/2007. |
24
Option
Exercises and Stock Vested Table Fiscal Year
2008
The following table sets forth information for each of the NEOs
as to options exercised in 2008, the dollar value realized upon
exercise, the number of shares of stock that have vested, and
the dollar value realized upon the vesting of stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
|
Value
|
|
|
Shares
|
|
|
Value
|
|
|
|
Acquired
|
|
|
Realized on
|
|
|
Acquired on
|
|
|
Realized on
|
|
|
|
on
|
|
|
Exercise
|
|
|
Vesting
|
|
|
Vesting(1)
|
|
Name
|
|
Exercise(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
Jeffrey B. Swartz
|
|
|
|
|
|
|
|
|
|
|
96,069
|
|
|
|
1,448,042
|
|
John D. Crimmins, III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Harrison
|
|
|
|
|
|
|
|
|
|
|
11,108
|
|
|
|
169,286
|
|
Eugene R. McCarthy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carden N. Welsh
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The aggregate dollar amount realized is based on the closing
price of the Companys Class A Common Stock as quoted
on the NYSE on the vesting date. |
25
Outstanding
Equity Awards at Fiscal Year Ended December 31,
2008
The following table sets forth information for each of the NEOs
(i) as to each outstanding option award, the total number
that were exercisable and unexercisable held at
December 31, 2008 (columns (b) and (c)), each
options exercise price and its expiration date (columns
(e) and (f)) and (ii) as to the total number of shares
held at December 31, 2008 that were not then vested and the
total market value of those shares based on the closing price of
the Companys Class A Common Stock on
December 31, 2008 ($11.55) (columns (g) and (h)).
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
or Payout
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Value of
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Unearned
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
Number
|
|
Shares,
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
Market
|
|
of Unearned
|
|
Units or
|
|
|
Number of
|
|
Number of
|
|
Number
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Shares,
|
|
Other
|
|
|
Securities
|
|
Securities
|
|
of Securities
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Units or
|
|
Rights
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Units of
|
|
Units of
|
|
Other
|
|
That
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
|
|
Stock That
|
|
Stock That
|
|
Rights
|
|
Have
|
|
|
Options
|
|
Options
|
|
Unearned
|
|
Exercise
|
|
Option
|
|
Have Not
|
|
Have Not
|
|
That Have
|
|
Not
|
|
|
(#)
|
|
(#)
|
|
Options
|
|
Price
|
|
Expiration
|
|
Vested
|
|
Vested
|
|
Not Vested
|
|
Vested
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
(#)
|
|
($)
|
|
Date
|
|
(#)(8)
|
|
($)
|
|
(#)
|
|
($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
Jeffrey B. Swartz
|
|
|
120,000
|
|
|
|
|
|
|
|
|
|
|
|
28.50
|
|
|
|
3/1/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
17.74
|
|
|
|
2/28/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
|
|
|
|
|
|
|
|
|
19.49
|
|
|
|
3/6/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
|
31.29
|
|
|
|
3/3/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
197,969
|
|
|
|
2,286,542
|
|
|
|
|
|
|
|
|
|
John D. Crimmins, III
|
|
|
7,500
|
|
|
|
|
|
|
|
|
|
|
|
19.49
|
|
|
|
3/6/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,500
|
|
|
|
|
|
|
|
|
|
|
|
31.29
|
|
|
|
3/3/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,500
|
|
|
|
4,500
|
(1)
|
|
|
|
|
|
|
35.42
|
|
|
|
3/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,666
|
|
|
|
3,334
|
(2)
|
|
|
|
|
|
|
35.01
|
|
|
|
3/2/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500
|
|
|
|
5,000
|
(3)
|
|
|
|
|
|
|
25.26
|
|
|
|
7/19/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,333
|
|
|
|
16,667
|
(4)
|
|
|
|
|
|
|
18.95
|
|
|
|
9/11/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,103
|
(5)
|
|
|
|
|
|
|
14.70
|
|
|
|
3/5/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,401
|
|
|
|
39,282
|
|
|
|
|
|
|
|
|
|
Michael J. Harrison
|
|
|
120,000
|
|
|
|
|
|
|
|
|
|
|
|
25.50
|
|
|
|
10/28/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,000
|
|
|
|
|
|
|
|
|
|
|
|
31.29
|
|
|
|
3/3/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,309
|
(5)
|
|
|
|
|
|
|
14.70
|
|
|
|
3/5/2018
|
|
|
|
66,979
|
|
|
|
773,607
|
|
|
|
|
|
|
|
|
|
Eugene R. McCarthy
|
|
|
16,666
|
|
|
|
8,334
|
(6)
|
|
|
|
|
|
|
34.09
|
|
|
|
4/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
15,000
|
(7)
|
|
|
|
|
|
|
18.98
|
|
|
|
12/12/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,309
|
(5)
|
|
|
|
|
|
|
14.70
|
|
|
|
3/5/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,204
|
|
|
|
117,856
|
|
|
|
|
|
|
|
|
|
Carden N. Welsh
|
|
|
16,666
|
|
|
|
33,334
|
(4)
|
|
|
|
|
|
|
18.95
|
|
|
|
9/11/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
This stock option award was granted on March 3, 2005 and
the unexercisable amount shown will vest on March 3, 2009. |
|
(2) |
|
This stock option award was granted on March 2, 2006 and
the unexercisable amount shown will vest on March 2, 2009. |
|
(3) |
|
This stock option award was granted on July 19, 2007 and
the unexercisable amount shown will vest one half on
July 19, 2009, and one half on July 19, 2010. |
|
(4) |
|
This stock option award was granted on September 11, 2007
and the unexercisable amount shown will vest one half on
September 11, 2009, and one half on September 11, 2010. |
|
(5) |
|
This stock option award was granted on March 5, 2008 and
the unexercisable amount shown will vest one third on
March 5, 2009, one third on March 5, 2010, one third
March 5, 2011. |
|
(6) |
|
This stock option award was granted on April 18, 2006 and
the unexercisable amount shown will vest on April 18, 2009. |
26
|
|
|
(7) |
|
This stock option award was granted on December 12, 2007
and the unexercisable amount shown will vest one half on
December 12, 2009, and one half on December 12, 2010. |
|
(8) |
|
Shares in this column that had not vested at December 31,
2008 for each of the NEOs will vest as follows:
(i) Mr. Jeffrey Swartz, 173,815 shares will vest
on July 5, 2009; and 24,154 shares will vest on
July 10, 2010; (ii) Mr. Harrison,
49,848 shares will vest on July 5, 2009;
6,927 shares will vest on July 10, 2010;
5,102 shares will vest on March 5, 2009; and
5,102 shares will vest on March 5, 2010;
(iii) Mr. McCarthy, 5,102 shares will vest on
March 5, 2009; and 5,102 shares will vest on
March 5, 2010; and (iv) Mr. Crimmins,
1,700 shares will vest on March 5, 2009; and
1,701 shares will vest on March 5, 2010. |
Nonqualified
Deferred Compensation Plan
The information in the following table relates to our Deferred
Compensation Plan which permits our
U.S.-based
executives, members of our Board of Directors, and certain of
our salaried employees to defer salary, bonuses, fees,
commissions and refunds of 401(k) plan contributions.
Participants in this Plan may defer up to that amount of the
compensation described which leaves an amount necessary for
current payments such as FICA (including Medicare), income taxes
and employee benefit plan withholding requirements. Each
eligible participant is required to make deferral elections
prior to earning the amounts subject to the deferral elections.
Each participant designates a percentage of the deferred amounts
to be deemed invested in money market, bond and equity funds
which measure the notional or hypothetical investment return on
deferred amounts. Participants will receive their cash balance,
including any investment gains or losses, upon retirement,
termination of employment or at certain other times, including
at scheduled withdrawal dates, in a lump-sum or in installments,
as previously elected by the participant. A participant may
extend a scheduled withdrawal date provided the extension occurs
at least twelve (12) months prior to a scheduled withdrawal
date and defers the payment date by at least five (5) years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Balance at
|
|
|
|
Contributions in
|
|
|
Contributions in
|
|
|
Earnings
|
|
|
Withdrawals/
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2008
|
|
|
in 2008
|
|
|
Distributions
|
|
|
2008
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
(a)
|
|
(b)(1)
|
|
|
(c)
|
|
|
(d)(1)
|
|
|
(e)
|
|
|
(f)(1)
|
|
|
Jeffrey B. Swartz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John D. Crimmins, III
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Harrison
|
|
|
36,000
|
|
|
|
|
|
|
|
(62,620
|
)
|
|
|
|
|
|
|
99,244
|
|
Eugene R. McCarthy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carden N. Welsh
|
|
|
100,000
|
|
|
|
|
|
|
|
(22,695
|
)
|
|
|
|
|
|
|
77,305
|
|
|
|
|
(1) |
|
Amounts in column (b) are included in amounts reported in
the Summary Compensation Table. Amounts in column (d) are
not included in amounts reported in the Summary Compensation
Table. Amounts in column (f) include each executives
aggregate contribution to our Deferred Compensation Plan which
have been reported as compensation to the executive in the
Summary Compensation Table for prior years, but any earnings on
such contributions which are included in column (f) have
not been reported as compensation to the executive in prior
years Summary Compensation Tables. |
27
The table below shows the investment funds available under our
Deferred Compensation Plan and their annual rate of return for
the calendar year ended December 31, 2008.
|
|
|
|
|
|
|
Annual Rate of
|
|
Investment Choices
|
|
Return
|
|
|
BlackRock Money Market Class A
|
|
|
2.69
|
%
|
PIMCO Inflation Protected Bond Class A
|
|
|
−6.81
|
%
|
PIMCO Total Return Admin Class
|
|
|
4.62
|
%
|
BlackRock Bond Income Class A
|
|
|
−3.62
|
%
|
BlackRock High Yield Class A
|
|
|
−24.27
|
%
|
MFS Total Return Class F
|
|
|
−22.47
|
%
|
American Funds Growth-Income Class 2 Shares
|
|
|
−37.97
|
%
|
Legg Mason Partners Variable Fundamental Value
Class I
|
|
|
−36.70
|
%
|
Legg Mason Partners Variable Investors Class I
|
|
|
−35.75
|
%
|
Lord Abbett Growth and Income Class B
|
|
|
−36.46
|
%
|
Legg Mason Partners Variable Equity Index
Class I
|
|
|
−37.47
|
%
|
American Funds Growth Class 2 Shares
|
|
|
−44.08
|
%
|
Janus Forty
|
|
|
−41.97
|
%
|
Lord Abbett Mid Cap Value Class B
|
|
|
−38.90
|
%
|
Pioneer Mid-Cap VCT Value Class II Shares
|
|
|
−33.89
|
%
|
BlackRock Aggressive Growth Class D
|
|
|
−45.85
|
%
|
Third Avenue Small Cap Value Class B
|
|
|
−29.96
|
%
|
Dreyfus VIF Developing Leaders Initial Shares
|
|
|
−37.72
|
%
|
Russell 2000 Index Class A
|
|
|
−33.63
|
%
|
Franklin Small-Mid Cap Growth Securities
Class 2 Shares
|
|
|
−42.61
|
%
|
American Funds Global Growth Class 2 Shares
|
|
|
−38.51
|
%
|
Janus Aspen Series Worldwide Growth Service
Shares
|
|
|
−44.92
|
%
|
Templeton Foreign Securities Class 2
|
|
|
−40.50
|
%
|
Templeton Developing Markets Securities Class 2
|
|
|
−52.80
|
%
|
Janus Aspen Series Global Technology Service
Shares
|
|
|
−44.08
|
%
|
Benefits under our Deferred Compensation Plan will be paid,
subject to any limitations imposed by the Section 409A of
the Internal Revenue Code, upon termination of employment from
the Company.
Potential
Payments Upon Termination of Employment and Potential Payments
Upon a
Change-In-Control
We describe below any contract, agreement, plan or arrangement,
written or unwritten, that provides for payment to an NEO at,
following, or in connection with any termination of employment
(including death or disability) or in connection with a change
in control of the Company. Some of our plans, as discussed
below, accelerate the vesting of option, restricted stock and
unrestricted stock awards and require payment of other amounts
upon certain termination of employment events or changes in
control. The Amended and Restated Change of Control Severance
Agreements described below (the Change of Control
Agreements) accelerate the vesting of option and other
similar awards upon a change in control and require payment of
salary, bonus and other amounts upon certain termination of
employment events following a change in control. For potential
payments upon a change of control to each of the NEOs under our
2007 Incentive Plan and 1997 Incentive Plan, as amended, and a
Change of Control Agreement, refer to the table below under the
heading Potential Payments Under Amended and Restated
Change of Control Severance Agreement and Plans
Termination of Employment at December 31, 2008. For
potential payments to each of the NEOs related to other
termination of employment, death or disability pursuant to our
2007 Incentive Plan and 1997 Incentive Plan, as amended, and the
terms of stock option and restricted stock award agreements made
under such plans, refer to the
28
discussion below under the heading Potential Payments
Under Awards Termination of Employment, Death and
Disability at December 31, 2008.
Stock
Options
We have granted stock options to certain of our employees under
our 2007 Incentive Plan and our 1997 Incentive Plan, as amended.
Certain change of control provisions within such plans may apply
to all stock option recipients. In addition, as described below
under the heading Amended and Restated Change of Control
Severance Agreements, stock options held by executives who have
a Change of Control Agreement will immediately vest upon a
change of control of the Company unless the administrator of our
2007 Incentive Plan and our 1997 Incentive Plan, as amended,
provides for the assumption of such stock options by the
acquiror or provides for a substitute or replacement award. The
terms of all stock option awards provide for the immediate
vesting of all such options upon the death of the holder. For
potential payments related to stock options to each of the NEOs
who were party to a Change of Control Agreement at
December 31, 2008, refer to the table below under the
heading Potential Payments Under Amended and Restated
Change of Control Severance Agreement and Plans
Termination of Employment at December 31, 2008 and
for potential payments related to stock options to each of the
NEOs employed at December 31, 2008, refer to the discussion
below under the heading Potential Payments Under
Awards Termination of Employment, Death and
Disability at December 31, 2008.
Restricted
Stock
We have granted restricted stock subject to agreements and
created incentive plans with restricted stock award
opportunities for Jeffrey B. Swartz, Michael J. Harrison, John
D. Crimmins, III and Eugene R. McCarthy under our 1997
Incentive Plan, as amended, and our 2007 Incentive Plan. The
terms of such restricted stock agreements and incentive plans
provide for the full or partial vesting of restricted shares if
the executives employment is terminated in certain
circumstances defined in the agreements or plans which
constitute termination without cause, voluntary termination for
good reason, disability, death or a change in control. For
potential payments to such executives at December 31, 2008
related to restricted stock, refer to the table below under the
heading Potential Payments Under Amended and Restated
Change of Control Severance Agreement and Plans
Termination of Employment at December 31, 2008 and
the discussion below under the heading Potential Payments
Under Awards Termination of Employment, Death and
Disability at December 31, 2008.
Cash
Severance
All of our employees, including our named executive officers,
are employed on an at will basis and, therefore, do
not have employment contracts with us which might have specified
a cash severance amount. While the Company has a severance
policy, amounts that may be paid as cash severance to an
executive upon certain termination of employment events are not
calculable because various factors will impact the amount of
cash severance that the Company is willing to pay, if any, and
the amount that the executive is willing to accept.
Pension
Benefits
We do not provide pension arrangements or post-retirement health
coverage for our NEOs. Our NEOs are eligible to participate in
our 401(k) contributory defined contribution plan. In any plan
year, we will contribute to each participant a matching
contribution equal to 50% of the first 6% of the
participants compensation that has been contributed to the
plan. All of our NEOs participated in our 401(k) plan during the
2008 fiscal year and received matching contributions.
Nonqualified
Deferred Compensation
We do not provide any nonqualified defined contribution plans.
We do offer a deferred compensation plan to our NEOs and certain
of our
U.S.-based
salaried employees under our Deferred Compensation Plan. Under
29
such plan, participants may defer salary, bonuses, fees,
commissions and refunds of 401(k) plan contributions.
Participants will receive their cash balance, including any
investment gains or losses, upon retirement, termination of
employment or at certain other times in a lump-sum or in
installments, as previously elected by the participant.
Other
Post-Employment Payments
All of our employees, including our named executive officers,
are employed on an at will basis and, therefore, do
not have employment contracts with us. Generally, we do not
provide post-employment health coverage or other benefits,
except in connection with the Change of Control Agreements we
have entered into with our NEOs and certain other key employees,
details of which are included below under the heading
Amended and Restated Change of Control Severance
Agreements. Accrued vacation days are paid in cash to all
employees upon termination of employment.
Amended
and Restated Change of Control Severance Agreements
We have entered into Change of Control Agreements with all five
NEOs, namely, Jeffrey B. Swartz, John D. Crimmins, III,
Eugene R. McCarthy, Michael J. Harrison and Carden N. Welsh. The
Change of Control Agreements for each of the covered executives
are identical. The form of the Change of Control Agreement was
amended and restated in 2008 and filed as Exhibit 10.1 to
the Companys Current Report on
Form 8-K
filed December 18, 2008. The Change of Control Agreement
was amended and restated primarily to ensure compliance with
Section 409A of the Internal Revenue Code of 1986, as
amended, and final regulations promulgated thereunder. The
changes to the Change of Control Agreement are described in
Item 5.02 of the Current Report on
Form 8-K
referenced above.
The Change of Control Agreement for each covered executive
generally provides that, if within 24 months following a
change in control the executives employment is terminated
for reasons other than for Cause (as defined in the
Change of Control Agreement) or by the executive for Good
Reason (as defined in the Change of Control Agreement), we
will make a lump sum cash payment to the executive equal to two
times the sum of the executives annual base salary in
effect at the date of termination and the average of the annual
bonuses earned by the executive under our Short-Term Incentive
Program over the preceding three full fiscal years, and for a
period of 24 months following the date of termination the
executive will also receive medical, dental, disability, life
insurance and automobile benefits in effect at the time of
termination. If the executive voluntarily terminates employment
during the thirteenth full month following a change in control,
then the executive will receive a lump sum cash payment from us
equal to fifty percent of the salary and bonus amounts described
above and 12 months of the other benefits described above.
In the event that any payment or benefit made to an executive
under the Change of Control Agreement will be subject to excise
tax pursuant to Section 4999 of the Internal Revenue Code,
the Company will make an additional lump sum cash payment to the
executive to make the executive whole for all taxes and any
associated interest and penalties imposed under or as a result
of Section 4999. In addition, in the event of a change of
control pursuant to the Change of Control Agreement, any stock
option, restricted stock or similar equity award awarded to and
held by the executive under the Companys equity
compensation plans and arrangements will become immediately
exercisable to the extent not otherwise provided for under those
plans and arrangements. In each case, the equity award will
become immediately exercisable whether or not the
executives employment is also terminated in connection
with the change of control. If the executive voluntarily
terminates employment during the thirteenth month following a
change of control and receives the payment and benefits
described, the executive agrees not to compete with the Company
for a period of six months. The Change of Control Agreement
calls for us to require that such agreement will be assumed by
any of our successors.
Had a change in control transaction occurred on
December 31, 2008, and had an NEOs employment been
terminated on December 31, 2008 without Cause
or for Good Reason, as those terms are defined in
the Change of Control Agreement, such NEO would have been
eligible to receive the payments set forth in the columns under
the heading Within 24 Months of a Change in Control
in the table below. Assuming a change in control transaction
occurred thirteen months earlier, and the NEOs voluntarily
terminated their employment at December 31, 2008 for other
than Good Reason, as that term is defined in the
Change of
30
Control Agreement, the NEOs would have been eligible to receive
the payments set forth in the columns under the heading
During the 13th Month Following a Change in
Control in the table below.
Potential
Payments Under Amended and Restated Change of Control Severance
Agreement and Plans Termination of Employment at
December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within 24 Months of a Change in Control
|
|
|
During the 13th Month Following a Change in Control
|
|
|
|
|
|
|
Excise
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
Excise
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
Salary &
|
|
|
Tax and
|
|
|
|
|
|
and
|
|
|
|
|
|
Salary &
|
|
|
Tax and
|
|
|
|
|
|
and
|
|
|
|
|
|
|
Bonus
|
|
|
Gross Up
|
|
|
Benefits
|
|
|
Stock
|
|
|
Total
|
|
|
Bonus
|
|
|
Gross Up
|
|
|
Benefits
|
|
|
Stock
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)(1)
|
|
|
Awards(2)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)(1)
|
|
|
Awards(3)
|
|
|
($)
|
|
|
Jeffrey B. Swartz
|
|
|
2,421,950
|
|
|
|
0
|
|
|
|
85,470
|
|
|
|
194,045
|
|
|
|
2,701,465
|
|
|
|
1,210,975
|
|
|
|
0
|
|
|
|
42,735
|
|
|
|
946,675
|
|
|
|
2,200,385
|
|
John D. Crimmins, III
|
|
|
791,607
|
|
|
|
0
|
|
|
|
31,491
|
|
|
|
3,571
|
|
|
|
826,669
|
|
|
|
395,803
|
|
|
|
0
|
|
|
|
15,746
|
|
|
|
0
|
|
|
|
411,549
|
|
Eugene R. McCarthy
|
|
|
800,000
|
|
|
|
0
|
|
|
|
30,581
|
|
|
|
10,709
|
|
|
|
841,290
|
|
|
|
400,000
|
|
|
|
0
|
|
|
|
15,290
|
|
|
|
0
|
|
|
|
415,290
|
|
Michael J. Harrison
|
|
|
1,085,409
|
|
|
|
0
|
|
|
|
43,252
|
|
|
|
66,358
|
|
|
|
1,195,019
|
|
|
|
542,705
|
|
|
|
0
|
|
|
|
21,626
|
|
|
|
258,471
|
|
|
|
822,802
|
|
Carden N. Welsh
|
|
|
800,000
|
|
|
|
0
|
|
|
|
20,342
|
|
|
|
0
|
|
|
|
820,342
|
|
|
|
400,000
|
|
|
|
0
|
|
|
|
10,171
|
|
|
|
0
|
|
|
|
410,171
|
|
|
|
|
(1) |
|
This column lists medical, dental, disability, life insurance
and automobile benefits. The value of these benefits is based
upon the type of insurance coverage we carried for each officer
as of December 31, 2008 and is valued based on the premiums
in effect on that date for 24 months and 12 months of
continued coverage, respectively. The annual automobile
allowance in effect on December 31, 2008 for
Mr. Swartz was $25,832 and for Mr. Harrison was
$6,000. Messrs. Crimmins, McCarthy and Welsh had no annual
automobile allowance in effect on December 31, 2008. |
|
(2) |
|
This column lists the value of options and restricted stock
awards that may be provided to our NEOs upon termination of
employment following a change of control transaction, calculated
pursuant to Section 280G of the Internal Revenue Code. The
calculations assume a change of control occurred
December 31, 2008, that the NEOs terminated employment on
that date, and the options and stock immediately vested and were
cashed out. The Change of Control Agreement provides that
options or restricted stock awarded to covered executives under
the Companys stock compensation plans and arrangements
become immediately exercisable (i.e., vest) upon
termination of employment following a change of control
transaction. The acceleration of these vesting rights contingent
upon a change of control constitutes a payment. Accordingly, the
value of the accelerated vesting of the options and restricted
stock listed in this column is calculated in accordance with
Section 280G of the Internal Revenue Code, using the
closing price of the Companys Class A Common Stock on
December 31, 2008 ($11.55). |
|
(3) |
|
This column lists the value of options and restricted stock
awards that may be provided to our NEOs who terminate employment
during the 13th month following a change of control transaction,
calculated pursuant to Section 280G of the Internal Revenue
Code. The calculations assume that the NEOs became vested in
their outstanding unvested options and restricted stock awards
due to a change of control transaction occurring on
November 1, 2007. The acceleration of vesting rights
contingent upon a change of control constitutes a payment.
Accordingly, the value of the accelerated vesting of the options
and restricted stock listed in this column is calculated in
accordance with Section 280G of the Internal Revenue Code,
using the closing price of the Companys Class A
Common Stock on November 1, 2007 ($17.43). |
Potential
Payments Under Awards Termination of Employment,
Death and Disability at December 31, 2008
2007
Incentive Plan and 1997 Incentive Plan, as amended
Stock Option Agreements
All outstanding stock options vest upon death and become
exercisable by the estate of the option holder. Assuming
immediate exercise and sale of the vested and previously
unvested and in the money stock options upon death on
December 31, 2008, no estate of an NEO would have
recognized value. The closing price of the Companys
Class A Common Stock on December 31, 2008 was $11.55.
2007
Incentive Plan and 1997 Incentive Plan, as amended
Restricted Stock Award Agreements
All outstanding restricted stock award agreements contain terms
providing for the full or partial vesting of the restricted
stock upon termination of employment without Cause or for Good
Reason (as those terms are
31
defined in those agreements), and upon death or disability.
Assuming termination of employment without Cause or for Good
Reason on December 31, 2008, the value that would have been
recognized by each of the then-employed NEOs would have been:
Jeffrey B. Swartz, 151,424 shares with a value of
$1,748,947; John D. Crimmins, III, 1,913 shares with a
value of $22,095; Eugene R. McCarthy, 5,740 shares with a
value of $66,297; and Michael J. Harrison, 49,166 shares
with a value of $567,867. Assuming termination of employment
upon death or disability on December 31, 2008, the value
that would have been recognized by each of the then-employed
NEOs would have been: Jeffrey B. Swartz, 197,969 shares
with a value of $2,286,542; John D. Crimmins, III,
3,401 shares with a value of $39,282; Eugene R. McCarthy,
10,204 shares with a value of $117,856; and Michael J.
Harrison, 66,979 shares with a value of $773,607. The
closing price of the Companys Class A Common Stock on
December 31, 2008 was $11.55.
Equity
Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining
|
|
|
|
Number of Securities
|
|
|
|
|
|
Available for Future
|
|
|
|
to be Issued
|
|
|
Weighted-Average
|
|
|
Issuance Under
|
|
|
|
Upon Exercise of
|
|
|
Exercise Price of
|
|
|
Equity Compensation Plans
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
(Excluding Securities
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Reflected in Column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by security holders
|
|
|
4,163,628
|
|
|
$
|
26.03
|
|
|
|
3,121,365
|
(1)
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
4,163,628
|
|
|
$
|
26.03
|
|
|
|
3,121,365
|
|
|
|
|
(1) |
|
Excludes an award approved in 2008 by our Board of Directors of
stock options and restricted stock (the 2008 LTIP)
to be issued under the Companys 2007 Incentive Plan based
on achieving net income targets for the twelve month period from
January 1, 2008 through December 31, 2008. In
accordance with the 2008 LTIP, the award amount of
$1.5 million will be settled 60% in stock options, which
will vest equally in three equal installments, and 40% in
restricted stock, which will vest two equal installments. The
options and shares will be issued not later than March 31,
2009. For purposes of the settlement, the number of shares
subject to the options will be based on the value of the option
as of the date of issuance of the option using the Black-Scholes
option pricing model, and the number of restricted shares issued
will be based on the fair market value of the Companys
Class A Common Stock on the date of issuance. All of these
shares are subject to restrictions on sale and transferability,
a risk of forfeiture and certain other terms and conditions. |
32
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents the number of shares of
Class A Common Stock and Class B Common Stock
beneficially owned by (i) persons known to the Company to
be beneficial owners of 5% or more of the outstanding shares of
either Class A Common Stock or Class B Common Stock,
(ii) each director, nominee for director and named
executive officer, and (iii) all directors and executive
officers as a group, as of the close of business on
February 1, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Owned Beneficially
|
|
|
|
Class A
|
|
|
Class B
|
|
Name and Address of Beneficial Owner(1)
|
|
Number(2)
|
|
|
Percent(3)
|
|
|
Number
|
|
|
Percent
|
|
|
Sidney W. Swartz(10)
|
|
|
425,629
|
|
|
|
|
*
|
|
|
8,060,684
|
(11)
|
|
|
69.9
|
|
Judith H. Swartz and Robert N. Shapiro, as Trustees of The
Sidney W. Swartz 1982 Family Trust(10)
|
|
|
278,204
|
|
|
|
|
*
|
|
|
3,220,612
|
|
|
|
27.9
|
|
Royce & Associates, LLC(7)
|
|
|
5,021,722
|
|
|
|
10.92
|
|
|
|
|
|
|
|
|
|
Wells Fargo & Company(8)
|
|
|
4,891,700
|
|
|
|
10.64
|
|
|
|
|
|
|
|
|
|
FMR LLC(5)
|
|
|
4,500,000
|
|
|
|
9.785
|
|
|
|
|
|
|
|
|
|
Barclay Global Investors NA(6)
|
|
|
2,962,395
|
|
|
|
6.44
|
|
|
|
|
|
|
|
|
|
Capital Research Global Investors(4)
|
|
|
2,822,000
|
|
|
|
6.1
|
|
|
|
|
|
|
|
|
|
Jeffrey B. Swartz(10)
|
|
|
1,356,077
|
(9)
|
|
|
2.95
|
|
|
|
247,864
|
(9)
|
|
|
2.2
|
|
Michael J. Harrison
|
|
|
260,375
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
Virginia H. Kent
|
|
|
100,430
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
Bill Shore
|
|
|
80,304
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
Ian W. Diery
|
|
|
70,357
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
John A. Fitzsimmons
|
|
|
70,357
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
John D. Crimmins, III
|
|
|
75,921
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
Irene M. Esteves
|
|
|
55,349
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
Eugene R. McCarthy
|
|
|
53,833
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
Kenneth T. Lombard
|
|
|
40,431
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
Edward W. Moneypenny
|
|
|
40,431
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
Peter R. Moore
|
|
|
40,431
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
Terdema L. Ussery, II
|
|
|
40,431
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
Carden N. Welsh
|
|
|
38,478
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
All directors and executive officers as a group (18 persons)
|
|
|
3,313,437
|
|
|
|
7.20
|
|
|
|
11,529,160
|
|
|
|
100
|
|
|
|
|
* |
|
Does not exceed 1% of the class |
|
(1) |
|
Address, unless otherwise noted:
c/o The
Timberland Company, 200 Domain Drive, Stratham, NH 03885. |
|
(2) |
|
Amounts include shares issuable upon the exercise of stock
options which are either currently exercisable or will become
exercisable on or before April 1, 2009, as follows:
Mr. Crimmins, 64,200; Mr. Diery, 70,357;
Ms. Esteves, 55,349; Mr. Fitzsimmons, 70,357;
Mr. Harrison, 156,103; Ms. Kent, 100,430;
Mr. Lombard, 40,431; Mr. McCarthy, 34,269;
Mr. Moneypenny, 40,431; Mr. Moore, 40,431;
Mr. Shore, 80,304; Mr. Jeffrey Swartz, 410,000;
Mr. Ussery, 40,431; Mr. Welsh, 16,666; and all
executive officers and directors as a group, 1,493,973. Amounts
also include the (i) unvested shares awarded pursuant to
restricted stock awards to Mr. Jeffrey Swartz, 229,168,
Mr. Harrison, 76,339, Mr. Crimmins, 6,521,
Mr. McCarthy, 19,564 and Mr. Welsh, 9,360; and
(ii) 2,960 shares issued pursuant to prior years
restricted stock unit agreements between certain executive
officers, other than the named executive officers, and the
Company. |
|
(3) |
|
Percentages are calculated on the basis of the amount of
outstanding shares of common stock of such class plus, for each
person or group, any shares such person or group has the right
to acquire on or prior to April 1, 2009. |
33
|
|
|
(4) |
|
Capital Research Global Investors, a division of Capital
Research and Management Company, by reason of its investment
advisor status is deemed to be a beneficial owner of
2,822,000 shares of Class A Common Stock. Address: 333
South Hope Street, Los Angeles, California
90071-1406.
Beneficial Ownership as of December 31, 2008 based on a
Schedule 13G filed February 17, 2009. |
|
(5) |
|
FMR LLC is the parent holding company of Fidelity
Management & Research Company, a registered investment
adviser to Fidelity Low Priced Stock Fund, which held
4,500,000 shares of Class A Common Stock. Address: 82
Devonshire Street, Boston, Massachusetts 02109. Beneficial
ownership as of December 31, 2008 based on a Schedule 13G/A
filed on February 17, 2009. |
|
(6) |
|
Barclays Global Investors NA held 1,221,539 shares of
Class A Common Stock; Barclays Global Fund Advisors
held 1,702,683 shares of Class A Common Stock;
Barclays Global Investors, Ltd held 31,782 shares of
Class A Common Stock; Barclays Global Investors Japan
Limited held 3,493 shares of Class A Common Stock; and
Barclays Global Investors Australia Limited held
2,898 shares of Class A Common Stock. Address: 400
Howard Street, San Francisco, CA 94105. Beneficial
ownership as of December 31, 2008 based on a
Schedule 13G filed on February 5, 2009. |
|
(7) |
|
Royce & Associates, LLC is a registered investment
adviser to Royce Premier Fund, which held 2,893,900 shares
of Class A Common Stock. Address: 1414 Avenue of the
Americas, New York, New York 10019. Royce &
Associates, LLC held beneficial ownership as of
December 31, 2008 of 5,021,722 based on a
Schedule 13G/A filed on January 30, 2009. |
|
(8) |
|
Wells Fargo & Company is the parent holding company of
Evergreen Investment Management Company, which held
4,827,270 shares of Class A Common Stock. Address: 420
Montgomery Street, San Francisco, CA 94163. Wells
Fargo & Company held beneficial ownership as of
December 31, 2008 of 4,891,700 shares based on a
Schedule 13G/A that was filed on January 16, 2009. |
|
(9) |
|
Amount includes 31,200 shares of Class A Common Stock
and 183,484 shares of Class B Common Stock held by
Mr. Jeffrey Swartz as custodian for minor children, and
87,204 shares of Class A Common Stock held by
Mr. Swartzs spouse. |
|
(10) |
|
Sidney Swartz, his son Jeffrey and his grandchildren
beneficially own all of the Class B Common Stock. As of
February 1, 2009, Sidney Swartz, The Sidney W. Swartz 1982
Family Trust, a trust for the benefit of his family (the
Family Trust), and The Swartz Foundation, held, in
the aggregate, approximately 72.5% of the combined voting power
of the Companys capital stock, and the Family Trust held
less than 1% of the Class A Common Stock. By virtue of this
stock ownership, Sidney Swartz may be deemed to be a
control person of the Company within the meaning of
the rules and regulations under the Securities Act of 1933, as
amended, and the Family Trust influences the election of
Mr. Diery, Ms. Esteves, and Mr. Fitzsimmons.
Jeffrey Swartz, the Companys President and Chief Executive
Officer, is one of the beneficiaries of the Family Trust. |
|
(11) |
|
Amount includes 1,505,500 shares of Class B Common
Stock held by The Swartz Foundation, a private foundation, of
which Sidney Swartz is one of two trustees. |
34
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Review
and Approval or Ratification of Related Person
Transactions
The Companys legal department is primarily responsible for
identifying and reviewing relationships and transactions in
which the Company and our directors, executive officers, certain
of our stockholders or their immediate family members are
participants to determine whether any of these related
persons had or will have a direct or indirect material
interest. In order to identify potential related person
transactions, the Companys legal department annually
prepares and distributes to all directors and executive officers
a written questionnaire which includes questions intended to
elicit information about any related person transactions. In
addition, our internal audit department conducts an annual
review of the Companys charitable contributions and
submits a written request annually to all executive
officers assistants regarding executive compensation,
perquisites and related person transactions, responses to which
are shared with the legal department. Information regarding
transactions with related persons or any violation of policy,
including transactions involving a potential conflict of
interest in violation of our Code of Ethics, may be anonymously
reported by employees through the Companys Integrity Line
and may be subsequently obtained by our general counsel. A copy
of our Code of Ethics is posted on the corporate governance
section of our website at
www.timberland.com/investorrelations/index.jsp.
If a related person transaction is identified by the legal
department as one which must be reported in the Companys
Proxy Statement pursuant to applicable Securities and Exchange
Commission regulations, our Governance and Nominating Committee
is ultimately responsible for reviewing and approving or
ratifying any such related person transactions. In evaluating
related person transactions, our Governance and Nominating
Committee members apply the same standards of good faith and
fiduciary duty they apply to their general responsibilities as a
committee of the Board of Directors and as individual directors.
The Governance and Nominating Committee may approve a related
person transaction when, in its good faith judgment, the
transaction is in the best interests of the Company. Based on
information provided by the directors, executive officers, and
the legal and internal audit departments, there were no related
person transactions since the beginning of the Companys
2008 fiscal year to be reported in this Proxy Statement under
applicable Securities and Exchange Commission regulations.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Management Development and
Compensation Committee of the Board of Directors are Kenneth T.
Lombard, Chair, Irene M. Esteves, John A. Fitzsimmons, Edward W.
Moneypenny and Peter R. Moore. No member of the Management
Development and Compensation Committee was at any time during
the fiscal year ended December 31, 2008, or formerly, an
officer or employee of the Company or any subsidiary of the
Company, nor has any member of the Management Development and
Compensation Committee had any relationship with the Company
during the fiscal year ended December 31, 2008 requiring
disclosure under Item 404 of
Regulation S-K.
None of our executive officers has served as a director or
member of the compensation committee (or other committee serving
an equivalent function) of any other entity, one of whose
executive officers served as a director or member of the
Management Development and Compensation Committee of the Company.
FINANCIAL
AND OTHER INFORMATION
The Company mailed its 2008 Annual Report and
Form 10-K
to its stockholders on or about April 17, 2009. The
combined 2008 Annual Report and
Form 10-K
includes audited financial statements, and other business
information and is incorporated herein by reference.
To obtain a free copy of the Companys combined Annual
Report and
Form 10-K
for the fiscal year ended December 31, 2008, which
Form 10-K
was filed by the Company with the Securities and Exchange
Commission, contact the Investor Relations Department, The
Timberland Company, 200 Domain Drive, Stratham, New Hampshire
03885 (Telephone:
(603) 773-1212).
35
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The securities laws of the United States require the
Companys directors, its executive officers and any persons
holding more than 10% of the Class A Common Stock to report
their ownership of Class A Common Stock and any changes in
that ownership to the Securities and Exchange Commission. All
such persons satisfied these filing requirements during and with
respect to fiscal year 2008, except that one report covering an
aggregate of two transactions was filed late by the Company on
behalf of each of John D. Crimmins, III, Michael J. Harrison,
Eugene R. McCarthy, John P. Pazzani and Danette Wineberg. In
making this disclosure, the Company has relied solely on written
representations furnished to the Company by its directors, its
executive officers and persons who previously held more than 10%
of the Class A Common Stock, and copies of the reports that
these persons have filed with the Securities and Exchange
Commission.
OTHER
BUSINESS
The Board of Directors knows of no other matters to be presented
at the Annual Meeting. If any additional matters should properly
come before the Annual Meeting, the persons appointed as proxies
in the enclosed proxy intend to vote such proxy in accordance
with their judgment on any such matters.
STOCKHOLDER
PROPOSALS
Proposals which stockholders intend to present at the 2010
Annual Meeting of Stockholders must be received by the Secretary
of the Company no later than March 3, 2010 to be presented
at that Annual Meeting. Any proposal received after such date
will be untimely and will not be considered at the 2010 Annual
Meeting of Stockholders. To be eligible for inclusion in next
years Proxy Statement, the Secretary of the Company must
receive stockholder proposals no later than December 18,
2009. In addition to these mailing requirements, stockholder
proposals also must be in compliance with applicable Securities
and Exchange Commission regulations.
36
THE TIMBERLAND COMPANY
1991 EMPLOYEE STOCK PURCHASE PLAN
(As Amended Through )
This 1991 Employee Stock Purchase Plan (the Plan) is intended to provide a method by which
eligible employees of The Timberland Company (Timberland) and its participating subsidiaries
(Timberland and such subsidiaries being hereinafter referred to as the Company) may use
voluntary, systematic payroll deductions to purchase shares of Timberland Class A Common Stock
(Stock) and thereby acquire an interest in the future of the Company. For purposes of the Plan, a
participating subsidiary is any corporation in which Timberland owns, directly or indirectly, stock
possessing 50% or more of the total combined voting power of all classes of stock and which has
been designated by the Management Development and Compensation Committee (MDCC) of the Board of
Directors of the Company (Board) or by the Board as a participating subsidiary. Such designation
may be made before or after the Plan has been approved by shareholders and may include a subsidiary
acquired before or after such approval of the Plan.
2. |
|
OPTIONS TO PURCHASE STOCK |
The maximum aggregate number of shares of Stock (subject to adjustment as provided in Section
14) available for sale pursuant to the exercise of options (options) granted under the Plan to
employees (within the meaning of Section 3401(c) of the Internal Revenue Code of 1986 (the Code))
of the Company (employees) who meet the eligibility requirements set forth in Section 3 hereof
(eligible employees) shall be equal to the sum of the following:
(a) three hundred thousand (300,000) shares of Stock authorized under the Plan as amended
through May 20, 1999; plus
(b) two hundred thousand (200,000) shares of Stock.
The Stock to be delivered upon exercise of options under the Plan may be either shares of
Timberland authorized but unissued Stock or shares of reacquired Stock, as the MDCC or Board shall
determine.
Except as otherwise provided below, each employee shall be eligible to participate in the
Plan.
(a) Any employee who immediately after the grant of an option would (in accordance with the
provisions of Sections 423 and 424(d) of the Code) own Stock possessing 5% or more of the total
combined voting power or value of all classes of Stock of the employer corporation
or of its parent or subsidiary corporations, as defined in Section 424 of the Code, shall not be
eligible to receive an option to purchase stock pursuant to the Plan.
(b) No employee shall be granted an option under the Plan which would permit his rights to
purchase shares of stock under all employee stock purchase plans of the Company and any parent and
subsidiary corporations to accrue at a rate which exceeds $25,000 in fair market value of such
stock (determined at the time the option is granted) for each calendar year during which any such
option granted to such employee is outstanding at any time, as provided in Sections 423 and 424 of
the Code.
(c) No employee shall be eligible to participate in the Plan unless such employees customary
employment with the Company is in excess of five months in each calendar year.
4. |
|
METHOD OF PARTICIPATION |
The period of July 15, 1991 to December 31, 1991 and thereafter the periods of January 1 to
June 30 and July 1 to December 31 of each year shall be option periods. Each person who will be an
eligible employee on the first day of any option period may elect to participate in the Plan by
executing and delivering to Timberland, at least 15 days prior to such day, a payroll deduction
authorization in accordance with Section 5. Such employee shall thereby become a participant
(participant) on the first day of such option period and shall remain a participant until his
participation is terminated as provided in the Plan. Notwithstanding the foregoing, the
participation in the Plan of individuals who make hardship withdrawals under The Timberland
Retirement Earnings 401(k) Plan (TREK) shall be temporarily suspended under the Plan to the
extent, if any, required to comply with TREK and Section 401(k) of the Code (including the
regulations thereunder) and as consistent with Section 423 of the Code, all as determined by the
Compensation and Benefits Committee described in Section 15.
The payroll deduction authorization shall request withholding at a rate of not less than 2%
nor more than 10% from the participants Compensation by means of substantially equal payroll
deductions over the option period. For purposes of the Plan, Compensation shall mean all regular
base compensation paid to the participant by the Company and currently includible in gross income,
including any withholding or deductions, but excluding bonuses, commissions, overtime, shift
premium, incentive compensation and other similar amounts. A participant may, prospectively,
increase or decrease (including to zero percent) his or her withholding rate once (or such other
number of times as determined by the Compensation and Benefits Committee and communicated to
participants) during an option period. Any increase or decrease in withholding rate shall be made
by delivering written notice to Timberland in such form as the Compensation and Benefits Committee
provides prior to the fifteen (15) day period (or such period of time as determined by the
Compensation and Benefits Committee and communicated to participants) immediately preceding the end
of the option period. All amounts withheld in accordance with a participants payroll deduction
authorization shall be credited to a withholding account for such participant.
2
Each person who is a participant on the first day of an option period shall as of such day be
granted an option for such period. Such option shall be for the number of whole shares of Stock to
be determined by dividing (a) the balance in the participants withholding account on the last day
of the option period, by (b) the purchase price per share of the Stock determined under Section 7.
The Compensation and Benefits Committee shall reduce, on a substantially proportionate basis, the
number of shares of Stock subject to exercise of an option for any option period in the event that
the number of shares then available under the Plan is otherwise insufficient.
The purchase price of Stock issued pursuant to the exercise of an option shall be 85% of the
fair market value of the Stock at (a) the time of grant of the option or (b) the time at which the
option is deemed exercised, whichever is less. Fair market value shall mean the Closing Price of
the Stock. The Closing Price of stock on any business day shall be the last sale price as
reported on the principal market on which the Stock is traded or, if no last sale is reported,
then the mean between the highest bid and lowest asked prices on that day. A good faith
determination by the MDCC or Board as to fair market value shall be final and binding.
If an employee is a participant in the Plan on the last business day of an option period, he
shall be deemed to have exercised the option granted to him for that period. Upon such exercise,
the Company shall apply the balance of the participants withholding account to the purchase of the
number of whole shares of Stock determined under Section 6 and as soon as practicable thereafter,
Timberland shall transfer said shares to the participant by issue and delivery of certificates or
by such other means as may be permitted by law. No fractional shares shall be issued hereunder.
Any balance of a participants withholding account shall be returned to the participant.
Timberland shall not be obligated to deliver any shares of Stock (a) until, in the opinion of
the Companys counsel, all applicable federal and state laws and regulations have been complied
with, and (b) if the outstanding Stock is at the time listed on any stock exchange, until the
shares to be delivered have been listed or authorized to be listed on such exchange upon official
notice of issuance, and (c) until all other legal matters in connection with the issuance and
delivery of such shares have been approved by the Companys counsel. If the sale of Stock has not
been registered under the Securities Act of 1933, as amended, Timberland may require, as a
condition to exercise of the option, such representations or agreements as counsel for the Company
may consider appropriate to avoid violation of such Act and may require that the certificates
evidencing such Stock bear an appropriate legend restricting transfer.
No interest will be payable on withholding accounts.
3
10. |
|
CANCELLATION AND WITHDRAWAL |
A participant who holds an option under the Plan may at any time prior to exercise thereof
under Section 8 cancel all (but not less than all) of his options by written notice delivered to
Timberland. Upon such cancellation, the balance in his withholding account shall be returned to
him. A participant who has cancelled all of his options shall not again participate in the Plan
with respect to the related option period, however, the participant may participate in subsequent
option periods in accordance with the terms of the Plan.
11. |
|
TERMINATION OF EMPLOYMENT |
Except as provided in the immediately following sentence, upon the termination of a
participants service with the Company for any reason, including without limitation death,
retirement, resignation, layoff or discharge, he shall cease to be a participant, and any option
held by him under the Plan shall be deemed canceled, the balance of his withholding account shall
be returned to him, and he shall have no further rights under the Plan. Notwithstanding the
immediately preceding sentence, in the event that a participant commences a leave of absence during
an option period and such leave of absence has been approved by the Compensation and Benefits
Committee, such participant shall be eligible to participate in the Plan with respect to such
option period to the extent of payroll deductions withheld during such option period.
12. |
|
PARTICIPANTS RIGHTS NOT TRANSFERABLE |
All participants granted options under the Plan shall have the same rights and privileges, and
each participants rights and privileges under any option granted under the Plan shall be
exercisable during his lifetime only by him, and shall not be sold, pledged, assigned, or
transferred in any manner. In the event any participant violates the terms of this Section, any
options held by him may be terminated by the Company and upon return to the participant of the
balance of his withholding account, all his rights under the Plan shall terminate.
Nothing contained in the provisions of the Plan shall be construed to give to any employee the
right to be retained in the employ of the Company or to interfere with the right of the Company to
discharge any employee at any time; nor shall it be construed to give the Company the right to
require any employee to remain in its employ or to interfere with any employees right to terminate
his employment at any time.
14. |
|
CHANGE IN CAPITALIZATION |
In the event of any change in the outstanding Stock of Timberland by reason of a stock
dividend, split-up, recapitalization, merger, consolidation, reorganization, or other capital
change, the aggregate number and class of shares available under the Plan and the number and class
of shares under option but not exercised, the option price, and the share limit provided for in
Section 6 shall be appropriately adjusted.
4
15. |
|
ADMINISTRATION OF PLAN |
The Plan is administered by the Compensation and Benefits Committee (CBC), the members of
which are appointed by the MDCC or Board and serve at its pleasure. The CBC is responsible for the
day-to-day administration of the Plan, including determinations of eligibility under the Plan,
determinations as to the first and last days of a participation period when such days do not fall
on a business day where trading in the Stock occurred, decisions with respect to requests for
leaves of absence by a participating employee as such requests relate to the employees
participation in the Plan and other questions that may arise under the Plan. Only the MDCC or
Board, however, has the power to amend or to terminate the Plan.
A majority of the members of the CBC shall constitute a quorum, and all determinations of the
CBC shall be made by a majority of its members. Any determination of the CBC under the Plan may be
made without notice or meeting of the CBC by a writing signed by a majority of the CBC members.
The CBC may delegate to any person or persons, severally or jointly, the authority to perform any
ministerial act in connection with the administration of the Plan.
16. |
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AMENDMENT AND TERMINATION OF PLAN |
Timberland reserves the right at any time or times to amend the Plan to any extent and in any
manner it may deem advisable by vote of the MDCC or Board; provided, however, that any amendment
relating to the aggregate number of shares which may be issued under the Plan (other than an
adjustment provided for in Section 14) or to the employees (or class of employees) to receive
options under the Plan shall have no force or effect unless it shall have been approved by the
shareholders within twelve months before or after its adoption. Shareholder approval, however, is
not required with respect to a change in the designation of corporations whose employees may be
offered options under the Plan as provided in Section 1.
The Plan may be terminated at any time by the MDCC or Board, but no such termination shall
adversely affect the rights and privileges of holders of the outstanding options. The Plan will
terminate in any case when all of the Stock reserved for the purposes of the Plan has been
purchased.
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APPROVAL OF SHAREHOLDERS |
The Plan shall be subject to the approval of the shareholders of Timberland, which approval
shall be secured within twelve months after the date the Plan is adopted by the Board of Directors.
The provisions of the Plan shall be governed by the laws of the State of Delaware without
resort to that states conflicts of law rules.
5
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Using a black ink pen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas.
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x |
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Annual
Meeting Proxy Card
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▼ PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
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A
Proposals The Board of Directors recommends a vote
FOR all the nominees listed, FOR Proposal 2,
and FOR Proposal 3.
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1. Election of Directors*:
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For
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Withhold |
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For
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Withhold |
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01 - Sidney W. Swartz
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o
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07 - Kenneth T. Lombard
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02 - Jeffrey B. Swartz
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08 - Edward W. Moneypenny
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03 - Ian W. Diery
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09 - Peter R. Moore
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04 - Irene M. Esteves
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10 - Bill Shore
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05 - John A. Fitzsimmons
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11 - Terdema L. Ussery, II
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06 - Virginia H. Kent
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12 - Carden N. Welsh
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* |
To fix the number of directors at twelve for the coming year, subject to
further action by the Board of Directors as provided in the Companys
By Laws, and to elect the nominees listed. |
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For
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Against
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Abstain |
2.
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To ratify the appointment of Deloitte &
Touch LLP as the Companys independent
registered public accounting firm.
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3.
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To increase the number of shares reserved
for issuance under the Companys 1991
Employee Stock Purchase Plan, as amended
(the ESPP), from 300,000 to 500,000 and
remove the requirements that employees
complete six months of continuous service
and customarily work more than twenty hours
per week in order to participate in the ESPP.
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B
Authorized Signatures This section must be completed for your vote to be counted Date and
Sign Below |
Please sign here personally, exactly as your name is printed on your stock certificate. If the
stock certificate is registered in more than one name, each joint owner or each fiduciary should
sign personally. Only authorized officers should sign for a corporation.
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Date (mm/dd/yyyy) Please print date below.
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Signature 1 Please keep signature within the box.
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Signature 2 Please keep signature within the box. |
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1 U PX |
0 2 1 2 3 5 2 |
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<STOCK #> 011NQB |
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6 PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 6
Proxy THE TIMBERLAND COMPANY
ANNUAL MEETING OF STOCKHOLDERSMAY 21, 2009
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Sidney W. Swartz and Jeffrey B. Swartz, and each of them, as
attorneys and proxies, with the power of substitution, to represent and vote at the Annual Meeting
of Stockholders of The Timberland Company (the Company) and at any adjournments thereof, all
shares of the Companys Class A Common Stock which the undersigned could vote if present, in such
manner as they, or either of them, may determine on any matters which may properly come before the
meeting or any adjournments thereof and to vote on the matters set forth on the reverse side of
this proxy as directed by the undersigned. The Annual Meeting will be held on Thursday, May 21,
2009, at 9:00 a.m., at The Timberland Company, 200 Domain Drive, Stratham, New Hampshire 03885.
A stockholder is entitled to one vote for each share of Class A Common Stock and ten votes for each
share of Class B Common Stock held of record at the close of business on March 26, 2009. The
holders of Class A Common Stock will vote separately as a class to elect three nominees for
director, Ian W. Diery, Irene M. Esteves and John A. Fitzsimmons, and the holders of Class A Common
Stock and the holders of Class B Common Stock will vote together as a single class to elect nine
nominees for director, Sidney W. Swartz, Jeffrey B. Swartz, Virginia H. Kent, Kenneth T. Lombard,
Edward W. Moneypenny, Peter R. Moore, Bill Shore, Terdema L. Ussery, II and Carden N. Welsh; to
ratify the appointment of Deloitte & Touche LLP as the Companys independent registered public
accounting firm; and to increase the number of shares reserved for issuance under the Companys
1991 Employee Stock Purchase Plan, as amended (the ESPP), from 300,000 to 500,000 and remove the
requirements that employees complete six months of continuous service and customarily work more
than twenty hours per week in order to participate in the ESPP.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED TO FIX THE NUMBER OF DIRECTORS AT TWELVE, TO ELECT ALL TWELVE
NOMINEES, TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANYS INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM, AND TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE UNDER
THE ESPP FROM 300,000 TO 500,000 AND REMOVE THE REQUIREMENTS THAT EMPLOYEES COMPLETE SIX MONTHS OF
CONTINUOUS SERVICE AND CUSTOMARILY WORK MORE THAN TWENTY HOURS PER WEEK IN ORDER TO PARTICIPATE IN
THE ESPP. THE PROXIES ARE AUTHORIZED TO VOTE IN THEIR DISCRETION UPON SUCH OTHER BUSINESS NOT KNOWN
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.