def14a
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Soliciting Material Pursuant to § 240.14a-12 |
VALEANT PHARMACEUTICALS INTERNATIONAL
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box)
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April 24,
2007
To the Stockholders of
Valeant Pharmaceuticals International:
You are cordially invited to attend Valeant Pharmaceutical
Internationals 2007 Annual Meeting of Stockholders to be
held at 1:00 p.m. on Tuesday, May 22, 2007 at the
Newport Beach Marriott Hotel located at 900 Newport Center
Drive, Newport Beach, California 92660. At the meeting, we will
vote on the matters set forth in the accompanying notice of
annual meeting and proxy statement, as well as address any other
business matters that may properly come before the meeting.
We encourage you to vote so that your shares will be represented
at the meeting. Information on how you may vote your shares
appears on the enclosed proxy card.
Sincerely,
Robert A. Ingram
Chairman of the Board
VALEANT
PHARMACEUTICALS INTERNATIONAL
One Enterprise
Aliso Viejo, California 92656
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 2007
To the Stockholders of
Valeant Pharmaceuticals International:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of Valeant Pharmaceuticals International, a Delaware corporation
(our Company), will be held at the Newport Beach
Marriott Hotel located at 900 Newport Center Drive, Newport
Beach, California 92660, on May 22, 2007, at
1:00 p.m., local time, for the following purposes:
1. To elect three directors to hold office until the 2010
Annual Meeting of Stockholders or until their respective
successors are elected and qualified.
2. To ratify the appointment of PricewaterhouseCoopers LLP
as independent registered public accounting firm (the
accounting firm) for our Company for the fiscal year
ending December 31, 2007.
3. To transact such other business as may properly come
before the meeting or any adjournments or postponements thereof.
The record date for the meeting is April 10, 2007. Only
stockholders of record at the close of business on
April 10, 2007 will be entitled to notice of and to vote,
in person or by proxy, at the meeting and any adjournments or
postponements thereof.
The proxy statement that accompanies this Notice of Annual
Meeting of Stockholders (the Proxy Statement)
contains additional information regarding the proposals to be
considered at the Annual Meeting, and Stockholders are
encouraged to read it in its entirety. Our 2006 Annual Report
and
Form 10-K
accompany this Proxy Statement.
As set forth in the Proxy Statement, proxies are being solicited
by and on behalf of the Board of Directors of our Company. All
proposals set forth above are proposals of the Board of
Directors. It is expected that these materials will be first
mailed to stockholders on or about April 24, 2007.
All stockholders are cordially invited to attend the Annual
Meeting in person. Your vote is important. Please complete,
date, sign and return the accompanying proxy in the enclosed,
postage-paid envelope, or vote over the telephone or the
Internet as instructed by these materials, as promptly as
possible, whether or not you plan to attend the Annual
Meeting. Your promptness in returning the proxy
will assist in the expeditious and orderly processing of the
proxies and in ensuring that a quorum is present. If you return
your proxy, you may nevertheless attend the Annual Meeting and
vote your shares in person if you wish. Please note however that
if your shares are held of record by a broker or other nominee
and you wish to vote at the meeting, you must obtain a proxy
issued in your name from the record holder. If you want to
revoke your proxy at a later time for any reason, you may do so
in the manner described in the Proxy Statement.
By Order of the Board of Directors,
Christina de Vaca
Secretary
Dated: April 24, 2007
TABLE OF
CONTENTS
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i
VALEANT
PHARMACEUTICALS INTERNATIONAL
One Enterprise
Aliso Viejo, California 92656
PROXY
STATEMENT
TO BE HELD ON MAY 22, 2007
This Proxy Statement is being mailed on or about April 24,
2007 to stockholders of record at the close of business on
April 10, 2007 (the Record Date) of Valeant
Pharmaceuticals International (our Company or
Valeant) in connection with the solicitation of
proxies by the Valeant Board of Directors for use at the Annual
Meeting of Stockholders to be held on Tuesday, May 22,
2007, and any adjournments or postponements thereof (the
Annual Meeting), for the purposes set forth in this
Proxy Statement and in the accompanying Notice of Annual Meeting
of Stockholders.
METHOD OF
VOTING
Stockholders can vote by proxy by means of the mail, telephone
or the Internet, or by attending the Annual Meeting and voting
in person. A proxy card (the Proxy) is enclosed. If
you return your signed proxy card to us before the Annual
Meeting, we will vote your shares as you direct. If you vote by
telephone or over the Internet, you do not need to return the
Proxy. Telephone and Internet voting facilities for stockholders
of record will be available 24 hours a day, and will close
at 5:00 p.m., Eastern Time, on May 21, 2007. Robert A.
Ingram and Christina de Vaca, together and separately, are the
designated proxyholders (the Proxyholders). If you
hold shares of our common stock in street name, you
must either instruct your broker or nominee as to how to vote
such shares or obtain a proxy, executed in your favor by the
broker or nominee, to be able to vote at the Annual Meeting.
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Voting by Mail. If you choose to vote by mail,
simply mark the enclosed Proxy and complete, sign, date and mail
it in the postage-paid envelope provided. The Proxy must be
completed, signed and dated by you or your authorized
representative.
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Voting by Telephone. You can vote by calling
the toll-free telephone number on the Proxy. Voice prompts will
instruct you to vote your shares and confirm that your vote has
been properly recorded.
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Voting over the Internet. You can vote on the
Internet at http://proxy.georgeson.com/. As with
telephone voting, you can confirm that your vote has been
properly recorded.
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Voting in Person at the Annual Meeting. If you
plan to attend the meeting and vote in person, we will provide
you with a ballot at the meeting. If your shares are registered
directly in your name, you are considered the stockholder of
record and you have the right to vote in person at the meeting.
If your shares are held in the name of your broker or other
nominee, you are considered the beneficial owner of shares held
in street name. As a beneficial owner, if you wish to vote at
the meeting, you will need to bring to the meeting a legal proxy
from your broker or other nominee authorizing you to vote those
shares.
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We provide Internet proxy voting to allow you to vote your
shares on-line, with procedures designed to ensure the
authenticity and correctness of your proxy vote instructions.
However, please be aware that you must bear any costs associated
with your Internet access, such as usage charges from Internet
access providers and telephone companies.
When a Proxy in the form enclosed with this Proxy Statement is
returned properly executed, the shares represented thereby will
be voted at the Annual Meeting in accordance with the directions
indicated thereon. You may either vote For all the
nominees to the Board of Directors or you may
Withhold your vote for any nominee you specify. For
each of the other matters to be voted on, you may vote
For or Against or abstain from voting.
If you return a signed and dated proxy card without marking any
voting selections, your shares will be voted FOR the
election of the Board of Directors nominees and
FOR the ratification of the appointment of
1
PricewaterhouseCoopers LLP, as independent registered public
accounting firm for the fiscal year ending December 31,
2007, and in accordance with the recommendations of the Board of
Directors as to any other matter that may properly be brought
before the Annual Meeting or any continuation, adjournment or
postponement thereof.
If shares are held by a broker or other intermediary, you must
either instruct the broker or intermediary as to how to vote
such shares or obtain a proxy, executed in your favor by your
broker or intermediary, to be able to vote such shares at the
Annual Meeting in person or by proxy.
If you receive more than one proxy card, your shares are
registered in more than one name or are registered in different
accounts. Please complete, sign and return each proxy
card to ensure that all of your shares are voted.
REVOCABILITY
OF PROXIES
A stockholder who executes and returns the enclosed Proxy may
revoke it at any time prior to its exercise by giving written
notice of such revocation to the Secretary of the Company, at
our address, by revoking it in person at the Annual Meeting, or
by voting at the Annual Meeting. Stockholders may also revoke a
prior Proxy by executing a later-dated Proxy and submitting it
to the Secretary of the Company prior to commencement of the
Annual Meeting. Attendance at the Annual Meeting by a
stockholder who has executed and returned the enclosed Proxy
does not alone revoke the Proxy. You should consult with your
broker or other intermediary concerning the method of revoking
their Proxy.
VOTING
RIGHTS
Only stockholders of record at the close of business on
April 10, 2007 (each a Stockholder) will be
entitled to notice of and to vote, in person or by proxy, at the
Annual Meeting. As of the close of business on April 10,
2007, there were 94,820,820 shares of our common stock, par
value $.01 per share (the Common Stock)
outstanding and entitled to vote, held of record by
approximately 4,956 Stockholders, each of which shares is
entitled to one vote, in person or by proxy, at the Annual
Meeting.
A majority of the shares of Common Stock issued and outstanding
and entitled to vote at the Annual Meeting, present either in
person or by proxy, will constitute a quorum for the transaction
of business at the Annual Meeting. Votes withheld, abstentions
and broker non-votes (as defined below) will be
counted for purposes of determining the presence of a quorum.
Brokers holding Common Stock in street name who are
members of a stock exchange are required by the rules of the
exchange to transmit this Proxy Statement to the beneficial
owner of the Common Stock and to solicit voting instructions
with respect to the matters submitted to the Stockholders. If
the broker has not received instructions from the beneficial
owner by the date specified in the statement accompanying such
material, the broker may give or authorize the giving of a Proxy
to vote the Common Stock at his discretion in the election of
directors or the appointment of the independent registered
public accounting firm. However, brokers or nominees do not have
discretion to vote on certain non-discretionary items without
specific instructions from the beneficial owner. On
non-discretionary items for which you do not give your broker
instructions, the shares will be treated as broker non-votes.
For Proposal No. 1, election of directors, each
candidate is elected by the vote of the majority of the votes
cast with respect to that candidate. A majority of the
votes cast means that the number of votes cast
For a directors election exceeds fifty percent
(50%) of the number of votes cast with respect to that
directors election (excluding abstentions). For more
information, see Proposal No. 1
Election of Directors; Information Concerning Company Nominees
and Directors. Accordingly, only votes For or
Withheld will affect the outcome. Abstentions and
broker non-votes will have no effect. Our Restated Certificate
of Incorporation, as amended (the Certificate of
Incorporation), and Amended and Restated Bylaws (the
Bylaws) divide our Board of Directors into three
classes, with each class to be elected for a three-year term on
a staggered basis. Our Certificate of Incorporation and Bylaws
do not permit cumulative voting.
2
To be approved, Proposal No. 2 must receive a
For vote from holders of a majority of shares
present in person or represented by proxy and entitled to vote
at the Annual Meeting. If you abstain from voting, it will have
the same effect as an Against vote. Broker non-votes
will have no effect.
PROPOSAL NO. 1
ELECTION
OF DIRECTORS
The Certificate of Incorporation of our Company provides that
the Board of Directors (the Board) be divided into
three classes of directors. There are three directors in the
class whose term of office expires in 2007 and three directors
can be elected at the Annual Meeting, each to serve until the
2010 Annual Meeting of Stockholders or until his or her
respective successor is elected and qualified. Upon the
recommendation of the Corporate Governance/Nominating Committee,
the Board nominated for election as directors at the Annual
Meeting: Norma Ann Provencio, Timothy C. Tyson and Elaine
Ullian. Mr. Tyson and Ms. Ullian are currently
directors of our Company who were previously elected by
stockholders. Ms. Provencio has not previously served as a
director of our Company. Each nominee has indicated his or her
willingness to serve and, unless otherwise instructed, the
Proxyholders will vote the Proxies received by them for the
Boards nominees. If for any reason one or more nominees
should not be available for election or be unable to serve as
directors at the time of the Annual Meeting or any continuation,
postponement or adjournment thereof, the accompanying Proxy will
be voted for the election of such other persons, if any, as the
Board may nominate. The Board has no reason to believe that any
nominee will be unavailable for election or unable to serve.
Each director is elected by the vote of the majority of the
votes cast with respect to that director. A majority of
the votes cast means that the number of votes cast
For a directors election exceeds fifty percent
(50%) of the number of votes cast with respect to that
directors election (excluding abstentions). In order
for any incumbent director to become a nominee of the Board for
further service on the Board, such person must tender an
irrevocable resignation, contingent on (i) that person not
receiving a majority of the votes cast, and (ii) acceptance
of the resignation by the Board. Each incumbent nominee has
tendered his or her contingent resignation. If a nominee for
director who is an incumbent director is not elected and no
successor has been elected at such meeting, the Corporate
Governance/Nominating Committee shall make a recommendation to
the Board as to whether to accept or reject the resignation
tendered in connection therewith, or whether other action should
be taken. The Board shall act on the tendered resignation,
taking into account the Corporate Governance/Nominating
Committees recommendation, and publicly disclose its
decision regarding the tendered resignation and the rationale
behind the decision within ninety (90) days from the date
of the certification of the election results. If the incumbent
directors resignation is not accepted by the Board, such
director shall continue to serve until the end of his or her
term of office and until his or her successor shall have been
elected and qualified or his or her earlier resignation or
removal. If a directors resignation is accepted by the
Board, or if a nominee is not an incumbent director and such
nominee is not elected, then the Board, in its sole discretion,
may fill any resulting vacancy or may seek to decrease the
authorized number of directors in accordance with the
Certificate of Incorporation.
Apart from the three nominees recommended by the Board, no other
persons have been nominated for election as directors.
Procedures to be used by a Stockholder submitting a nomination
for the Board for next years annual meeting are provided
under the caption Other Stockholder Proposals
and Director Nominations for the 2008 Annual Meeting.
The Board of Directors of our Company recommends that the
Stockholders vote FOR the election of the three nominees
for director proposed by your Board: Norma Ann Provencio,
Timothy C. Tyson and Elaine Ullian.
INFORMATION
CONCERNING COMPANY NOMINEES AND DIRECTORS
The Board presently consists of seven members and two vacancies
in the class of 2008. Our Certificate of Incorporation and
Bylaws divide the Board into three equal classes, with each
class elected to a three-year term on a staggered basis.
Accordingly, at each annual meeting, the terms of one-third of
the Directors expire and the stockholders elect their
successors. Under the current Certificate of Incorporation, if a
Director ceases to serve
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before his or her term expires, the Board will appoint a new
director to serve out the remainder of the term, as a member of
the class of the director he or she succeeded. The Board also
has the power to appoint directors to fill vacancies created by
new directorships if the Board increases in size.
Each of Timothy C. Tyson and Elaine Ullian has served as a
director of our Company since 2004 and is standing for election
for a term expiring in 2010. Norma Ann Provencio has not
previously served as a director of our Company. Edward A.
Burkhardt has served as director of our Company since 2001 and
is not standing for re-election upon expiration of his term at
the Annual Meeting.
Richard H. Koppes is serving until the 2008 Annual Meeting of
Stockholders. Lawrence N. Kugelman, Robert A. Ingram and Theo
Melas-Kyriazi are serving until the 2009 Annual Meeting of
Stockholders.
The Corporate Governance/Nominating Committee of the Board
considers the qualifications of potential candidates for
election as directors and recommends candidates to the Board.
The members of the Corporate Governance/Nominating Committee are
Messrs. Koppes, Ingram and Ms. Ullian. The Corporate
Governance/Nominating Committee reviewed the background,
qualifications and performance of the three directors standing
for election. Ms. Ullian recused herself as to her own
nomination. The Corporate Governance/Nominating Committee also
sought assistance from the firm of Spencer Stuart, a third-party
search firm, in identifying potential candidates, for which a
fee was paid.
The Corporate Governance/Nominating Committee made its report to
the Board on April 16, 2007. Following that report, the
Board determined that it would be in the best interests of our
Company and our Stockholders to nominate Mr. Tyson,
Ms. Ullian and Ms. Provencio as directors to be
elected at the Annual Meeting. Mr. Tyson and
Ms. Ullian each recused themselves as to his or her own
nomination.
4
Set forth below with respect to each director or nominee is
certain personal information, including such persons
present principal occupation, recent business experience and
age, the year such person commenced service as a director of our
Company and other public company directorships held by such
person.
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Year First
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Serving as
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Name and Principal Occupation
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Age
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Director
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Other Public Company Directorships
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Nominees For Election
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NORMA ANN PROVENCIO
Ms. Provencio has been president and owner of Provencio
Advisory Services, Inc., a healthcare financial and operational
consulting firm since October 2003. From May 2002 to September
2003, she was
Partner-in-Charge
of the Healthcare Industry for the Pacific Southwest for KPMG
LLP. From 1979 to May 2003, she was with Arthur Andersen, and
was
Partner-in-Charge
of Arthur Andersens Pharmaceutical, Biomedical and
Healthcare Practice for the Pacific Southwest from November 1995
to May 2002.
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49
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Signalife, Inc. (Chair of the
Audit Committee and member of Nominations and Qualifications
Committee)
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TIMOTHY C. TYSON
Mr. Tyson has been the President of our Company since
November 2002 and Chief Executive Officer since January 2005.
From November 2002 to December 2004, he served as Chief
Operating Officer of our Company. From June 1998 through
November 2002, Mr. Tyson served as President of Global
Manufacturing and Supply for GlaxoSmithKline plc. From February
1992 through June 1998, he held various senior management
positions at GlaxoSmithKline, including Vice President, General
Manager Glaxo Dermatology and Cerenex Division; Vice President,
General Manager Marketing and Vice President, General Manager
Business Operations.
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2004
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ELAINE ULLIAN(a)(b)
Ms. Ullian has been the President and Chief Executive
Officer of Boston Medical Center since July 1996. From April
1994 through July 1996, Ms. Ullian was the President and
Chief Executive Officer of Boston University Medical Center
Hospital. From January 1987 through March 1994, she was the
President and Chief Executive Officer of Faulkner Hospital.
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2004
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Thermo Fisher Scientific
(Presiding Director, member of Audit Committee, Compensation
Committee and Executive Committee); Vertex Pharmaceuticals
(member of Compensation Committee)
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Year First
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Serving as
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Age
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Director
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Other Public Company Directorships
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Directors Whose Terms Expire in
2008
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RICHARD H. KOPPES(a)(c)
Mr. Koppes has been Of Counsel to the law firm of Jones Day
since August 1996, and is
Co-Director
of Executive Education Programs at Stanford University School of
Law. From May 1986 through July 1996, Mr. Koppes held
several positions with the California Public Employees
Retirement System (CalPERS) including General Counsel, Interim
Chief Executive Officer and Deputy Executive Officer. He has
also been an officer of the National Association of Public
Pension Attorneys (NAPPA) for the past nine years. He is also on
the Boards of Investor Research Responsibility Center Institute
(IRRCI) and the Society of Corporate Secretaries and Governance
Professionals.
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2002
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Apria Healthcare Group Inc.
(Chairman of Compliance Committee and member of Corporate
Governance and Nominating Committee)
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Directors Whose Terms Expire in
2009
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ROBERT A. INGRAM(a)(b)
Mr. Ingram has been the Vice Chairman Pharmaceuticals of
GlaxoSmithKline plc, a pharmaceutical research and development
company, since January 2003. Mr. Ingram was the Chief
Operating Officer and President, Pharmaceutical Operations, of
GlaxoSmithKline plc from January 2001 to January 2003. He was
Chief Executive of Glaxo Wellcome plc from October 1997 to
December 2000 and Chairman of Glaxo Wellcome Inc., Glaxo
Wellcome plcs U.S. subsidiary, from January 1999 to
December 2000. Mr. Ingram was President and Chief Executive
Officer of Glaxo Wellcome Inc. from October 1997 to January
1999. Mr. Ingram is also a member of the Board of Advisors
for the H. Lee Moffitt Cancer Center and Research Institute.
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2003
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Edwards Life Sciences Corporation
(member of Audit Committee); Lowes Companies, Inc. (member
of Governance Committee and Compensation Committee); Wachovia
Corporation (member of Executive Committee, Compensation
Committee and Nominating and Governance Committee); OSI
Pharmaceuticals, Inc. (Chairman of the Board, Chairman of
Nominating Committee, and member of Compensation Committee);
Allergan Inc. (Chairman of Corporate Governance Committee and
member of Organization and Compensation Committee)
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LAWRENCE N. KUGELMAN(b)(c)
Mr. Kugelman is a healthcare consultant and private
investor. From December 1995 through October 1996,
Mr. Kugelman was President, Chief Executive Officer and
Director of Coventry Health Care, Inc., a managed care
organization. From 1980 through 1992, he served as a Chief
Executive Officer of several HMOs and managed healthcare
organizations in the United States.
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64
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2002
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Coventry Health Care, Inc.
(Chairman of Audit Committee)
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Year First
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|
|
|
|
Serving as
|
|
|
Name and Principal Occupation
|
|
Age
|
|
Director
|
|
Other Public Company Directorships
|
|
THEO MELAS-KYRIAZI(b)(c)
Mr. Melas-Kyriazi has been the Chief Financial Officer of
Levitronix LLC since July 2006. He was the Chief Financial
Officer of Thermo Electron Corporation from January 1999 through
October 2004. Mr. Melas-Kyriazi was a Vice President of
Thermo Electron Corporation from February 1998, and was
Treasurer of Thermo Electron Corporation and all of its publicly
traded subsidiaries from May 1988 to June 1994.
|
|
|
47
|
|
|
|
2003
|
|
|
Cyberkinetics Neurotechnology
Systems, Inc. (member of Audit Committee and Compensation
Committee); Glenrose Instruments Inc. (member of Compensation
Committee)
|
Director Whose Term Expires in
2007 Who Is Not Standing for Re-election
|
|
|
|
|
|
|
|
|
|
|
EDWARD A. BURKHARDT(c)
|
|
|
|
|
|
|
|
|
|
|
Mr. Burkhardt has been the
President of Rail World, Inc. since August 1999. From October
1987 through August 1999, Mr. Burkhardt held a number of
positions with Wisconsin Central Transportation Corporation,
including Chairman, President and Chief Executive Officer.
|
|
|
68
|
|
|
|
2001
|
|
|
PolyMedica Corporation (member of
Audit Committee and Governance Committee)
|
|
|
|
(a) |
|
Member of the Corporate Governance/Nominating Committee. |
|
(b) |
|
Member of the Compensation Committee. |
|
(c) |
|
Member of the Finance and Audit Committee. |
None of the directors or nominees for director were selected
pursuant to any arrangement or understanding. None of the
directors or nominees for directors is related by blood,
marriage or adoption to one another or to any other executive
officer of our Company.
7
GOVERNANCE
The Board is committed to sound and effective corporate
governance practices with the goal of ensuring the
Companys financial strength and overall business success.
The Board adopted and adheres to governance guidelines
consistent with the highest ethical standards and legal
requirements. Our governance practices are regularly assessed
against those practices suggested by recognized governance
authorities and are updated to maintain alignment with
stockholder interests and accepted key governance best practices.
Director
Nomination Process
The Corporate Governance/Nominating Committee is responsible for
the selection of director nominees to fill new or vacant
positions for the Board. The Corporate Governance/Nominating
Committee seeks appropriate candidates through various sources,
including other non-management directors and search firms to
which reasonable fees are paid for their assistance. In addition
to the review and evaluation of potential new candidates, the
Corporate Governance/Nominating Committee assesses the
qualifications of incumbent directors based on the same factors,
as well as a directors performance prior to their
re-election.
Essential criteria for all candidates considered by the
committee include the following: integrity and ethical behavior;
maturity; management experience and expertise; independence and
diversity of thought; broad business or professional experience;
and an understanding of business, corporate governance and
financial affairs and the complexities of business
organizations. In the case of director nominees, the Corporate
Governance/Nominating Committee also determines whether the
nominee is independent in accordance with several standards,
i.e. New York Stock Exchange listing standards and the
Securities and Exchange Commission rules and regulations.
Additionally, the Corporate Governance/Nominating Committee
considers stockholder candidates submitted to the attention of
the Corporate Secretary, together with appropriate biographical
information as outlined under the caption
Other Stockholder Proposals and Director
Nominations for the 2008 Annual Meeting included in this
Proxy Statement. Stockholder nominations that comply with these
procedures and that meet the criteria outlined above will
receive the same consideration that the Corporate
Governance/Nominating Committees candidates receive.
Communication
with the Board of Directors
Stockholders and other interested parties may contact our
Companys directors in writing, as a group or individually,
by directing their correspondence to the attention of the Chief
Governance Officer and Corporate Secretary, Valeant
Pharmaceuticals International, One Enterprise, Aliso Viejo,
California 92656. Stockholders and other interested parties may
also contact our Companys directors by calling our
Companys helpline in the United States and Canada at
(800) 461-9330,
or internationally at
(720) 514-4400
(collect calls accepted). The Corporate Secretary will log
incoming information and forward appropriate messages promptly
to the director(s). Communications are distributed to the Board,
or to any individual director or directors as appropriate,
depending on the facts and circumstances outlined in the
communication.
Certain items that are unrelated to the duties and
responsibilities of the Board will not be distributed to the
Board, such as mass mailings, product complaints, product
inquiries, new product suggestions, resumes and other forms of
job inquiries, surveys and business solicitations or
advertisements. In addition, material that is inappropriate or
unsuitable will be excluded, with the provision that any
communication that is excluded must be made available to any
non-employee director upon request.
Communications that include information better addressed by the
Finance and Audit Committee will be addressed directly by that
Committee.
This communications process has been approved by the Board and
is available on our Company website referenced at the end of
this section.
8
Annual
Meeting of Stockholders
The Board considers it important for its members to be present
and available to stockholders at our Companys Annual
Meeting. Directors are therefore expected to attend the
Companys Annual Meeting. All of our Board members were in
attendance at the 2006 annual meeting except for two directors
who had unavoidable conflicts.
Independent
Chairman
In August 2006, Mr. Ingram was appointed Chairman of the
Board. This action eliminated the need for a Lead Director
because Mr. Ingram is an independent chairman. In this role
Mr. Ingram also chairs the Boards regularly scheduled
non-management executive sessions. Additionally, Mr. Ingram
works with the Chief Executive Officer to establish the
Boards meeting agendas.
Director
Independence
The Board has adopted certain specific categorical standards for
determining whether a director has a material relationship with
our Company, either directly or as a partner, stockholder or
officer of an organization, its parent or a consolidated
subsidiary that has a relationship with us. These guidelines are
set forth in our Corporate Governance Guidelines, which are
included as Annex A to this Proxy Statement. A director
will be deemed independent upon affirmative determination by the
Board that he or she meets the independence requirements
established in the New York Stock Exchange listing standards,
applicable Securities and Exchange Commission rules and our
Corporate Governance Guidelines.
The Board has determined that the following directors are
independent as defined in the New York Stock Exchange listing
standards: Messrs. Burkhardt, Ingram, Koppes, Kugelman,
Melas-Kyriazi and Ms. Ullian. The Board has also determined
that the non-incumbent nominee, Ms. Provencio, is
independent. Additionally, each of the members of our Finance
and Audit, Compensation and Corporate Governance/Nominating
Committees has no material relationship with our Company and
meets the New York Stock Exchange director independence
standards and applicable Securities and Exchange Commission
rules.
Governance
Initiatives/ Processes Update
|
|
|
|
|
Majority Voting. A revision to our Company
Bylaws was approved by the Board and implemented to require
that, beginning with the 2007 election, a nominee receive a
majority of the votes present in person or represented by proxy
and entitled to vote at an election of directors in order to be
elected to the Board. The amendment is effectuated by having
each nominee submit, prior to the election, a binding,
irrevocable letter of resignation effective only if the nominee
does not receive a majority of the votes present in person or
represented by proxy and entitled to vote.
|
|
|
|
Executive Stock Ownership Guidelines. The
Board approved an exercise and hold policy that
requires that shares equaling 50% of the post-exercise,
after-tax value of options exercised related to option grants
made to certain executives on or after October 31, 2006, be
held for a period of at least two years following the exercising
of options.
|
|
|
|
Board Assessment Methodology and Workplan. The
Board, Committee and director assessment process, which was
initiated in 2003, continues to evolve. Consistent with the
methodology approved in the four-year Workplan (see
Annex B), the individual director reviews were implemented
in 2006 as a new and final component of the Workplan.
|
Code
of Business Conduct and Ethics
The Code of Business Conduct and Ethics applies to all of our
directors, officers and employees and sets forth the ethical and
legal principles required to be followed in conducting business
on behalf of our Company. The Board also adopted a Code of
Ethics for our Chief Executive Officer and senior level
financial executives as a supplement to the Code of Business
Conduct and Ethics, which is intended to promote honest and
ethical conduct, as well as full and accurate reporting, and
compliance with applicable laws. Our Corporate Compliance
Officer oversees Code- related matters and receives any report
received via our Companys helpline. Our compliance process
is fully
9
outlined on our website. Interested parties may call the
helpline at
(800) 461-9330
in the United States and Canada, or internationally at
(720) 514-4400
(collect calls accepted).
Company
Website
Key documents such as Corporate Governance Guidelines, Board
Committee Charters, the Code of Business Conduct and Ethics, the
Code of Ethics for our Chief Executive Officer and senior level
financial executives are reviewed annually and updated by the
corresponding Committees and the Board of Directors. Each of
these documents and information regarding stockholder
communications with the Board can be found on our website at
www.valeant.com. If we make any substantive amendments to
the Code of Business Conduct and Ethics or grant any waiver from
a provision of the Code to any executive or director, we will
promptly disclose the nature of the amendment or waiver on its
website. A written copy of any of these documents will be
provided to any stockholder upon request to the Chief Governance
Officer and Corporate Secretary or to the Vice President of
Investor Relations, Valeant Pharmaceuticals International, One
Enterprise, Aliso Viejo, California 92656.
COMMITTEES
AND MEETINGS OF THE BOARD OF DIRECTORS
The following table describes the current members of each
Committee, its Chairman, its primary responsibilities and the
number of meetings held in 2006. The Committees are composed of
non-employee, independent directors, as defined under the rules
promulgated by the New York Stock Exchange and the Securities
and Exchange Commission and adopted by the Board. All directors
serve on one or more Committees of the Board, except
Mr. Tyson.
10
|
|
|
|
|
|
|
Committee/Members
|
|
|
Primary Responsibilities
|
|
|
Meetings Held
|
FINANCE AND AUDIT
Theo Melas-Kyriazi
(Chairman)
Edward Burkhardt
Richard Koppes
Lawrence Kugelman
|
|
|
Oversee our financial controls and reporting processes
Select independent accounting firm and review the scope and timing of the audits
Review annual financial statements and audit results
Review quarterly financial statements and quarterly earnings releases
Review internal control over financial reporting including the independent accounting firms and managements assessment
Oversee compliance with our Code of Conduct and conflicts of interest outside jurisdiction of Corporate Governance/Nominating Committee
Annually review adequacy of the Committee charter
|
|
|
Twelve
|
COMPENSATION
Elaine Ullian
(Chairman)(1)
Lawrence Kugelman
Robert Ingram
Theo
Melas-Kyriazi(2)
|
|
|
Administer our annual incentives and long-term incentive plans
Review and adopt major compensation plans, including Board compensation
Approve compensation for the chief executive officer, corporate officers and certain senior management
Annually review adequacy of the Committee charter
|
|
|
Seven
|
1 The
Committee chairman was changed from Mr. Kugelman to
Ms. Ullian in May 2006.
|
|
|
|
|
|
|
2 Mr. Melas-Kyriazi
was appointed to the Committee in October 2006.
|
|
|
|
|
|
|
CORPORATE GOVERNANCE/
NOMINATING
Richard Koppes
(Chairman)
Robert Ingram
Elaine Ullian
|
|
|
Develop and recommend
to the Board corporate governance guidelines applicable to the
Board and our Company
Review and recommend changes to our corporate
governance guidelines when appropriate
Monitor implementation of the guidelines
Assist in succession planning
Review possible conflicts of interest of Board
members and Company management
Make recommendations regarding the appropriate size
and effectiveness of the Board
Identify new Director candidates to fill new or
vacant positions
Evaluate incumbent Directors
Recommend nominees to the Board of Directors for
election
Annually review adequacy of the Committee charter
|
|
|
Nine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Board met twenty-seven times during 2006. All of the
directors attended at least 75% of the Board meetings. In
addition, all committee members attended at least 75% of the
committee meetings on which they serve.
11
EXECUTIVE
OFFICERS
The executive officers of our Company are as follows:
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Title
|
|
Timothy C. Tyson
|
|
|
55
|
|
|
President and Chief Executive
Officer
|
Peter J. Blott
|
|
|
45
|
|
|
Chief Financial Officer
|
Bary G. Bailey
|
|
|
48
|
|
|
Executive Vice President
|
Wesley P. Wheeler
|
|
|
50
|
|
|
President, North America/Research
and Development
|
Charles J. Bramlage
|
|
|
46
|
|
|
President, Europe/Middle
East/Africa
|
Eileen C. Pruette
|
|
|
48
|
|
|
Executive Vice President and
General Counsel and Executive Vice President of Human Resources
|
TIMOTHY C. TYSON has been our President since November 2002 and
Chief Executive Officer since January 2005. He served as our
Chief Operating Officer from November 2002 to December 2004.
Mr. Tyson served as President of Global Manufacturing and
Supply for GlaxoSmithKline plc from June 1998 to November 2002.
In that capacity, he was responsible for managing 115
manufacturing sites and 42,000 employees in 42 countries. From
February 1992 through June 1998, he held various senior
management positions at GlaxoSmithKline, including Vice
President, General Manager Glaxo Dermatology and Cerenex
Division; Vice President, General Manager Marketing and Vice
President, General Manager Business Operations. At
GlaxoSmithKline plc, he managed two divisions, launched 32
pharmaceutical products and managed its 5,000 person
U.S. sales force.
PETER J. BLOTT has been our Chief Financial Officer since March
2007. He served as our Senior Vice President, Group Financial
Controller from March 2004 to March 2007. Prior to that, he
served as our Vice President, Operations Finance from July 2003
to February 2004. With 20 years of finance and accounting
experience, Mr. Blott oversaw Operations Finance, Financial
Consolidations and Reporting, and Accounting Shared Services for
us. Mr. Blott has an extensive background in accounting and
operations in the pharmaceutical industry. From January 2002 to
June 2003, Mr. Blott served as Head of Finance and
Logistics for Otsuka Pharmaceuticals Europe. Prior to that he
worked for over ten years at GlaxoSmithKline (formerly Glaxo
Wellcome), where he held a number of management and financial
positions within various manufacturing, commercial and head
office operations. Mr. Blott is a U.K. Chartered
Accountant, qualifying with Coopers & Lybrand in
London, England.
BARY G. BAILEY served as our Executive Vice President and Chief
Financial Officer from December 2002 to March 2007.
Mr. Bailey remains as an Executive Vice President with us
through a May 31, 2007 transition date. Mr. Bailey
served as Executive Vice President, Pharmacy and Technology of
PacifiCare Health Systems, Inc., a provider of managed care
services to approximately 5 million members, from July 2000
to December 2002. In that capacity, Mr. Bailey was
responsible for managing approximately 1,500 employees in both
operations and technology. From May 1995 to July 2000, he was
Executive Vice President and Chief Financial Officer of Premier,
Inc.
WESLEY P. WHEELER has been the President of North American
operations and Global Commercial Development since February 2003
and our President, Research and Development since April 2006.
Mr. Wheeler is responsible for our regional operations in
the United States and Canada. He is also responsible for our
commercial development activities, global marketing functions
and research and development functions. Prior to joining us,
Mr. Wheeler had extensive management experience in the
pharmaceutical industry. From January 2002 to February 2003,
Mr. Wheeler served as President and Chief Executive Officer
of DSM Pharmaceuticals Inc., a leading contract manufacturer of
prescription pharmaceuticals and biopharmaceuticals and a
subsidiary of its Dutch parent, DSM. From 1998 to 2002,
Mr. Wheeler was the Senior Vice President of Global
Logistics and Strategy for GlaxoSmithKline plc. From 1997 to
1998, Mr. Wheeler was Vice President of Marketing at Glaxo
Wellcome.
CHARLES J. BRAMLAGE has been President of our European
operations since September 2003 and President of Operations for
Middle East and Africa since April 2006. He is responsible for
our European, Middle Eastern and African markets.
Mr. Bramlage has more than 20 years of pharmaceutical
experience with a strong background in marketing and sales. From
April 2001 to September 2003, Mr. Bramlage held senior
executive positions, including most recently as President and
Chief Executive Officer, at BattellePharma, Inc., a specialty
12
pharmaceutical company developing products using new inhalation
technology and now known as Ventaira Pharmaceuticals, Inc. From
April 1992 to April 2001, Mr. Bramlage held various
marketing and sales positions at GlaxoSmithKline plc, including
Vice President of Respiratory Global Commercial Development and
Vice President of U.S. Respiratory and Cardiovascular
Marketing.
EILEEN C. PRUETTE has been our Executive Vice President and
General Counsel since April 2003 and our Executive Vice
President of Human Resources since April 2006. Ms. Pruette
served as Vice President, U.S. Legal and Global
Intellectual Property for Sony Ericsson Mobile Communications
from October 2001 to March 2003. Ms. Pruette served as
General Counsel at Ericsson Inc. for a number of operating
groups from January 1996 to October 2001. From June 1990 to
January 1995, Ms. Pruette served at GlaxoSmithKline, where
she provided legal support for commercial operations while
rendering regulatory, commercial and employment law counsel.
None of the executive officers were selected pursuant to any
arrangement or understanding. None of the executive officers are
related by blood, marriage or adoption to one another or to any
director or nominee for director of our Company.
13
OWNERSHIP
OF OUR COMPANYS SECURITIES
PRINCIPAL
STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of our Common Stock and the percentage of
shares owned beneficially by those holders of our Common Stock
known to us to be beneficial owners of more than 5% of the
outstanding shares of our Common Stock as of March 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
and Nature of
|
|
|
|
|
|
|
Beneficial
|
|
|
Percentage of
|
|
Identity of Owner or Group
|
|
Ownership
|
|
|
Class(1)
|
|
|
ValueAct Capital Management,
L.P.
|
|
|
13,241,300
|
(2)
|
|
|
14.0
|
%
|
435 Pacific Avenue,
San Francisco, CA 94133
|
|
|
|
|
|
|
|
|
T. Rowe Price Associates,
Inc.
|
|
|
12,332,210
|
(3)
|
|
|
13.0
|
%
|
100 E. Pratt Street,
Baltimore, MD 21202
|
|
|
|
|
|
|
|
|
Iridian Asset Management LLC
|
|
|
8,960,815
|
(4)
|
|
|
9.5
|
%
|
276 Post Road West, Westport, CT
06880
|
|
|
|
|
|
|
|
|
Loomis, Sayles & Co.,
L.P.
|
|
|
7,670,958
|
(5)
|
|
|
8.1
|
%
|
One Financial Center, Boston, MA
02111
|
|
|
|
|
|
|
|
|
Franklin Mutual Advisers, LLC
|
|
|
7,239,522
|
(6)
|
|
|
7.6
|
%
|
101 John F. Kennedy Parkway, Short
Hills, NJ 07078
|
|
|
|
|
|
|
|
|
ClearBridge Advisors, LLC
|
|
|
4,755,200
|
(7)
|
|
|
5.0
|
%
|
399 Park Avenue, New York, NY
10022
|
|
|
|
|
|
|
|
|
This table is based upon information supplied by the principal
stockholders and Schedules 13D and 13G filed with the Securities
and Exchange Commission. Unless otherwise indicated in the
footnotes to this table, we believe that the stockholders named
in the table have sole voting and investment power with respect
to the shares indicated as beneficially owned.
|
|
|
(1) |
|
Based on 94,785,840 shares of Common Stock outstanding on
March 31, 2007. |
|
(2) |
|
Includes 13,241,300 shares beneficially owned by ValueAct
Capital Management, L.P., ValueAct Capital Management, LLC,
Jeffrey W. Ubben, George F. Hamel, Jr., and Peter H. Kamin,
over which each has shared voting and dispositive power;
11,857,600 shares beneficially owned by ValueAct Capital
Master Fund, L.P. and VA Partners, LLC, over which each has
shared voting and dispositive power; and 1,383,700 shares
beneficially owned by ValueAct Capital Master Fund III,
L.P. and VA Partners III, LLC, over which each has shared
voting and dispositive power. |
|
(3) |
|
Includes 12,332,210 shares over which T. Rowe Price
Associates, Inc. holds sole dispositive power, of which
1,941,100 shares are deemed issuable upon conversion of
warrant privileges; and 1,917,382 shares over which T. Rowe
Price Associates, Inc. has sole voting power, of which
206,282 shares are deemed issuable upon conversion of
warrant privileges. T. Rowe Price Associates, Inc. disclaims
beneficial ownership of these shares. |
|
(4) |
|
Includes 8,960,815 shares beneficially owned by Iridian
Asset Management LLC, the Governor and Company of the Bank of
Ireland, BIAM Holdings, BancIreland (US) Holdings, Inc and BIAM
(US) Inc. over which each of the aforementioned parties has
shared voting and shared dispositive power. |
|
(5) |
|
Shares issuable upon conversion of certain bonds beneficially
owned by Loomis, Sayles & Co., L.P. Includes
5,969,071 shares over which Loomis, Sayles & Co.,
L.P. holds sole voting power, 288,973 shares over which
Loomis, Sayles & Co., L.P. holds shared voting power,
and 7,670,958 shares over which Loomis, Sayles &
Co., L.P. holds sole dispositive power. Loomis,
Sayles & Co., L.P. disclaims beneficial ownership of
these securities. |
|
(6) |
|
Includes 7,239,522 shares beneficially owned by one or more
open-end investment companies or other managed accounts which,
pursuant to investment management contracts, are managed by
Franklin Mutual Advisers, LLC (FMA), which is deemed
to have sole voting and dispositive power of such shares. FMA
disclaims pecuniary interest in or beneficial ownership of such
shares. |
|
(7) |
|
Includes (i) 4,635,200 shares beneficially owned by
ClearBridge Advisors, LLC, 4,634,700 shares over which
ClearBridge Advisors, LLC holds shared voting power and
4,635,200 shares over which ClearBridge Advisors, |
14
|
|
|
|
|
LLC holds shared dispositive power; and
(ii) 120,000 shares beneficially owned by Smith Barney
Fund Management LLC, over which Smith Barney Fund Management LLC
holds shared voting and dispositive power. |
OWNERSHIP
BY MANAGEMENT
The following table sets forth, as of March 31, 2007,
certain information regarding the beneficial ownership of our
Common Stock and the percentage of shares owned beneficially by
each current director, each director nominee nominated by the
Board of Directors and (i) the person serving as Chief
Executive Officer of our Company during 2006, (ii) the
person serving as Chief Financial Officer of our Company during
2006, (iii) the other three most highly paid executive
officers of our Company who were serving as executive officers
at December 31, 2006, and (iv) the two most highly
paid executive officers of our Company who were not serving as
executive officers at December 31, 2006 (together, the
Named Executive Officers), and all current
directors, director nominees and executive officers of our
Company as a group.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
and Nature of
|
|
|
|
|
|
|
Beneficial
|
|
|
Percentage
|
|
Identity of Owner or Group
|
|
Ownership(1)(2)
|
|
|
of Class(3)
|
|
|
Current Named Executive
Officers, Directors and Director
Nominees
|
|
|
|
|
|
|
|
|
Bary G. Bailey(4)
|
|
|
1,092,087
|
|
|
|
*
|
|
Charles J. Bramlage(4)
|
|
|
435,180
|
|
|
|
*
|
|
Edward A. Burkhardt(4)
|
|
|
285,120
|
|
|
|
*
|
|
Robert A. Ingram
|
|
|
37,168
|
|
|
|
*
|
|
Richard H. Koppes(4)
|
|
|
46,348
|
|
|
|
*
|
|
Lawrence N. Kugelman(4)
|
|
|
48,848
|
|
|
|
*
|
|
Theo Melas-Kyriazi
|
|
|
28,848
|
|
|
|
*
|
|
Norma Ann Provencio
|
|
|
0
|
|
|
|
*
|
|
Eileen C. Pruette(4)
|
|
|
479,126
|
|
|
|
*
|
|
Timothy C. Tyson(4)
|
|
|
2,636,337
|
|
|
|
1.8
|
%
|
Elaine Ullian
|
|
|
28,910
|
|
|
|
*
|
|
Wesley P. Wheeler(4)
|
|
|
590,626
|
|
|
|
*
|
|
Former Named Executive
Officers
|
|
|
|
|
|
|
|
|
John I. Cooper
|
|
|
5,420
|
|
|
|
*
|
|
Kim D. Lamon(4)
|
|
|
339,696
|
|
|
|
*
|
|
Directors, director nominees and
current and former executive officers of our Company as a group
(15 persons)
|
|
|
6,217,214
|
|
|
|
4.0
|
%
|
|
|
|
* |
|
Less than 1% of the outstanding Common Stock. |
|
(1) |
|
This table is based on information supplied by current and
former executive officers, directors and director nominees. We
believe that shares shown as beneficially owned are those as to
which the named persons possess sole voting and investment
power. However, under the laws of California and certain other
states, personal property owned by a married person may be
community property, which either spouse may manage and control,
and we have no information as to whether any shares shown in
this table are subject to community property laws. This column
illustrates the individuals total Valeant stock-based
holdings plus non-voting interests such as restricted stock
units and stock options, including those that will not become
exercisable within 60 days. |
|
(2) |
|
The amounts reported include the number of restricted stock
units and dividend equivalent rights held by the directors and
officers as follows: Messrs. Bailey, Bramlage and Wheeler
and Ms. Pruette (10,180 each); Mr. Burkhardt (20,120);
Mr. Ingram (37,168); Messrs. Koppes, Kugelman and
Melas-Kyriazi (28,848 each); Mr. Tyson (30,541); and
Ms. Ullian (28,410). |
15
|
|
|
(3) |
|
Based on 94,785,840 shares of Common Stock outstanding on
March 31, 2007 plus shares beneficially owned by each
individual. Under
Rule 13d-3
of the Securities Exchange Act of 1934, certain shares may be
deemed to be beneficially owned by more than one person (if, for
example, a person shares the power to vote or the power to
dispose of the shares). In addition, under
Rule 13d-3(d)(1)
of the Securities Exchange Act of 1934, shares not outstanding
which are subject to options, warrants, rights or conversion
privileges exercisable on or before 60 days of the date as
of which the information is provided are deemed outstanding for
the purpose of calculating the number and percentage owned by
such person (or group), but not deemed outstanding for the
purpose of calculating the percentage owned by each other person
(or group) listed. As a result, the percentage of outstanding
shares of any person as shown in this table does not necessarily
reflect the persons actual ownership or voting power with
respect to the number of shares of Common Stock actually
outstanding on March 31, 2007. |
|
(4) |
|
Included in the shares set forth above are the following stock
options that are currently exercisable, or will become
exercisable within 60 days, as follows: Mr. Bailey
(750,961); Mr. Bramlage (188,750); Mr. Burkhardt
(15,000); Mr. Koppes (15,000); Mr. Kugelman (10,000);
Dr. Lamon (186,500); Ms. Pruette (256,750);
Mr. Tyson (1,655,250); and Mr. Wheeler (338,500). |
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires our executive officers and directors, and persons who
own more than ten percent of a registered class of our equity
securities, to file reports of ownership and changes in
ownership with the SEC and the NYSE. Such executive officers,
directors and stockholders are required by SEC regulation to
furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based solely on a review of the copies of such
reports furnished to us, or written representations from certain
reporting persons that no such forms were required for those
persons, we believe that during fiscal year 2006, all filing
requirements applicable to our executive officers, directors and
ten percent beneficial owners were timely satisfied, other than
one late filing by VA Partners LLC.
EXECUTIVE
COMPENSATION AND RELATED MATTERS
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
of Compensation Program
Our executive compensation and benefits program is designed to
support our goal to attract, retain and motivate high-performing
executives who will deliver superior stockholder value while
operating with the highest level of integrity.
The determination of the form and amount of compensation paid to
the executive officers of our Company is grounded in the
Compensation Philosophy of our Company established by the
Compensation Committee of the Board (for purposes of this
analysis, the Committee). The Committee regularly
monitors current trends and best practices in executive
compensation and updates the Compensation Philosophy as
appropriate.
Serving on our Committee are Elaine Ullian (Chairperson), Robert
A. Ingram, Theo Melas-Kyriazi and Lawrence N. Kugelman, all of
whom have been found to be independent in an assessment by the
Corporate Governance/Nominating Committee.
Compensation
Philosophy and Objectives
We believe that the most effective executive compensation
program is substantially weighted towards performance-based
compensation (Incentive Pay) with the ultimate
objective of delivering superior stockholder value. We seek to
ensure that the total compensation to our executives is fair to
stockholders, reasonable to our executives and competitive
within the industry.
As a guide in establishing the specific levels of compensation,
our philosophy is expressed in terms of a competitive pay
analysis where the Committee uses the assistance of a
compensation consultant, currently Watson
16
Wyatt Worldwide (the Committee Consultant), to
assess compensation levels for executive officers as compared to
the Companys Compensation Philosophy. The Committee
Consultant uses a combination of pay surveys for pharmaceutical
and general industry companies similar in size and an
appropriate group of industry-specific comparison companies (the
Compensation Peer Group). Generally, we seek to pay:
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Base salaries between the 50th and 60th percentiles of
competitive pay levels using a combination of the pay surveys
and the Compensation Peer Group.
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|
Incentive pay at the median of the competitive pay for meeting
target goals and in the upper quartile for achieving
significantly challenging goals and when company performance is
above competitive. Long-term incentives are targeted in such a
way that the sum of base salary, target annual bonus and
long-term incentives achieve between the 50th and
60th percentiles in direct compensation of competitive pay
levels for average performance and the upper quartiles for
superior performance.
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|
Retirement and welfare broad-based benefits which are
competitive, approximating the median with general industry
companies of similar size and location of our major operations
centers. We do not attempt to mirror the pharmaceutical industry
benefit programs where, historically, defined benefit retirement
programs have been prevalent.
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|
Executive benefits and perquisites which are competitive,
approximating the median with general industry companies of
similar size. We do not provide supplemental executive
retirement programs.
|
As these are only guidelines to our plans, variations occur as
dictated by the experience level of the individual, geographical
market factors, individual performance and prior commitments
under negotiated contracts.
To remain consistent with our Compensation Philosophy, the
Committee has engaged the Committee Consultant to conduct an
annual review of its total compensation program for the Valeant
Management Team (VMT) which includes the Named
Executive Officers. The Committee Consultant provides the
Committee with relevant market data and alternatives to consider
when making compensation decisions for the Chief Executive
Officer and reviewing the recommendations made by our management
for executives other than the Chief Executive Officer. The
Committee Consultant provides extensive data on comparative
salaries, incentive compensation (both annual cash incentives
and the long-term equity incentives) and makes recommendations
regarding target bonus levels under the annual cash incentive
program.
The Committee Consultant also advises the Committee regarding
non-employee Director compensation, reviewing periodically with
the Committee the cash and equity compensation program for
non-employee Directors.
We paid the Committee Consultant $181,913.00 for services in
advising the Committee in 2006 and paid them $8,327.00 for
services in advising management in 2006. None of the services
provided to management involved executive compensation.
The
Compensation Peer Group and Competitive Pay
The Compensation Peer Group, which is periodically reviewed and
updated by the Committee based, in part, on recommendations made
by the Committee Consultant, consists of companies against which
the Committee believes our Company competes for talent and for
stockholder investment. The salary, bonus and equity grant data
for the officers in this peer group are combined with national
survey data to establish the Companys competitive pay
guidelines for the VMT.
With its long lead time to market, complex regulatory framework
and risk profile, the fundamental characteristics of the
pharmaceutical industry are considered of utmost importance in
determining appropriate companies to be included in the
Compensation Peer Group. Among companies in the pharmaceutical
industry, the Committee seeks to find companies with similar
revenues and market capitalization. The Compensation Peer Group
companies reported revenues between $370 million and
$1.8 billion and market capitalization of $530 million
to $4.6 billion.
17
The most recent comparison companies used by the Committee as
the Compensation Peer Group were:
Abraxis Bioscience, Inc.; Alpharma Inc.; Andrx Corporation;
Cephalon, Inc.; Covance Inc.; Edwards Lifesciences Corporation;
Endo Pharmaceutical Holdings, Inc.; Invitrogen Corporation; King
Pharmaceuticals, Inc.; KOS Pharmaceuticals, Inc.; KV
Pharmaceutical Company; Medicis Pharmaceutical Corporation;
Millennium Pharmaceuticals, Inc.; Mylan Laboratories Inc.; Par
Pharmaceutical Companies, Inc.; The Perrigo Company; and Watson
Pharmaceuticals, Inc.
In the interim, both Andrx and KOS have been acquired so the
Committee will need to make adjustments to the Compensation Peer
Group as necessary to assist in future executive compensation
decisions.
Implementation
of Compensation Philosophy
The Committee directly monitors the implementation of the
Compensation Philosophy with respect to the VMT. The Chief
Executive Officer prepares a recommendation to the Committee for
base salary, annual incentive and equity grants as to each
member of the VMT, other than the Chief Executive Officer whose
compensation is determined solely by the Committee and the
Board. In determining the compensation to be awarded to the
Chief Executive Officer and reviewing the recommendations as to
other members of the VMT, the Committee reviews, among other
things:
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|
comparative data provided by the Committee Consultant;
|
|
|
|
tally sheets showing compensation history of each VMT member,
including salary, cash incentives and equity grants;
|
|
|
|
termination tally tables showing amounts to be paid in the event
of terminations
and/or
changes-in-control; and
|
|
|
|
carried interest tables showing the value of vested and unvested
long-term incentives under an array of stock price assumptions.
|
The Committee exercises its discretion in modifying or rejecting
any recommended aspect of compensation paid or payable to
executives. For all other employees, management makes aggregate
recommendations to the Committee as to all elements of pay,
which recommendations are consistent with the Compensation
Philosophy and with the annual budget approved by the Board.
The
Executive Compensation Mix
As the executive team of our Company is entrusted with both long
and short-term success of our Company, particular care has been
given to the balance of the major components in the executive
compensation program:
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Base Salary
|
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Incentive Pay
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|
Executive Annual Incentive Plan
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Long-term Equity Incentive Program
|
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|
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|
Retirement and Welfare Benefits; and
|
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|
Executive Benefits and Perquisites
|
For 2006, the aggregate base salaries for the Named Executive
Officers approximated 25% of the targeted total direct
compensation package (salary plus incentives). Target annual
incentives under the EAIP approximated 20% of the aggregate
total direct compensation for the Named Executive Officers.
Long-term equity incentives represented about 55% of the target
total direct compensation for the Named Executive Officers as a
group.
18
Base
Salary
Base salary addresses performance of core duties for each
executive role, providing an amount of fixed compensation. Base
salary for each Named Executive Officer is determined based on:
|
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|
|
his or her position and responsibility;
|
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|
comparison data provided by the Committee Consultant;
|
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|
review of the executives compensation relative to other
executive officers; and
|
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individual performance of the executive
|
Salary levels are typically adjusted annually as part of our
performance review process, as well as upon a promotion or other
change in job responsibility.
Incentive
Pay
The 2006 Equity Incentive Plan (the 2006 Plan) was
approved by a vote of the stockholders on May 23, 2006. The
2006 Plan restated and amended the 2003 Equity Incentive Plan,
which was a continuation of other earlier plans (collectively
the Incentive Plans). The Incentive Plans give the
Committee the latitude to design annual cash incentive programs
(the Executive Annual Incentive Plan or EAIP) and
equity-based incentive compensation programs (the Long-term
Equity Incentive Program, or LTEIP) to secure and
retain high-performing executives, to provide incentives for
such persons to exert maximum efforts for the success of our
Company and to provide a means by which our executives may share
in the long-term growth and profitability of our Company.
A significant percentage of total compensation is allocated to
these two incentives programs (about 75% for the Named Executive
Officers in 2006), although there is no pre-established policy
or target for the allocation between the EAIP and the LTEIP.
Rather, the Committee reviews information provided by the
Committee Consultant to determine the appropriate level and mix
of incentive compensation. Historically, and in 2006, the
Committee granted a majority of total compensation to our
executive officers under the LTEIP. In determining the mix of
these compensation elements for executives, we also consider the
tax efficiency of the compensation program and competitive data,
with a preference toward stock-based awards designed to align
with stockholder interests.
The
Executive Annual Incentive Plan
The EAIP is an annual cash incentive program which rewards
contributions to our achievement of specific annual financial
and strategic goals, assuring focus on key annual goals that
lead to long-term success and motivating achievement of critical
annual performance metrics.
The EAIP provides formulas for the calculation of annual cash
incentive based compensation, subject to Committee oversight and
modification. In the first quarter of each year, the Committee
reviews and approves the various incentive levels for the VMT
based on the participants accountability and impact on our
operations, with target award opportunities that are established
as a percentage of base salary. An executive may earn
0% 200% of the target award, depending on
performance. In addition, regional heads can earn an EBITDA
kicker (an additional award based on 5% of their regions
EBITDA in excess of their maximum goal).
There are two sets of objectives for each executive participant
in the EAIP: financial goals and strategic initiatives. Detailed
goals for both sets of objectives are documented in writing
through a Commitment Summary that is reviewed with each
participant. The EAIP financial goal measurements, which do not
necessarily reflect GAAP or reported measures but rather include
adjustments that the Committee believes better reflects senior
managements impact on the Companys performance, are:
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earnings per share (EPS);
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working capital;
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revenue; and
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|
earnings before interest, taxes, depreciation and amortization
(EBITDA).
|
19
The applicability and weighting of financial goals as to each
executive is made by the Committee each year upon the
recommendation of management. For the Chief Executive Officer,
the Chief Financial Officer, the Chief Information Officer, the
Controller and the General Counsel, the financial goals are
overall corporate measures. For the Regional Heads, the EPS
target is a corporate measure, but EBITDA, working capital and
revenue reflect regional goals. The Committee also sets the
threshold, target and maximum levels for each component of the
financial objectives portion of the EAIP, with target goal
levels set based upon the approved strategic plan for the
relevant year, and threshold and maximum levels being set based
on a percentage below and above the target goal reflecting the
level of difficulty of achieving the target goals. Generally,
the Committee sets the threshold, target and maximum levels such
that the relative difficulty of achieving the target level is
consistent from year to year. The occurrence of material events,
including major acquisitions or dispositions, causes a
re-examination of the financial goals to assure continued
appropriate levels of difficulty in achieving goals.
The remaining portion of each executives EAIP award is
based upon the completion of strategic initiatives of each
individual executive approved by the Committee.
Upon completion of the fiscal year, the Committee assesses the
performance of our Company for each corporate financial
objective of the EAIP, comparing the actual fiscal year results
to the established threshold, target and maximum levels for each
objective, and an overall percentage amount for the corporate
financial objectives is calculated.
Discretionary Adjustment On an exception
basis, once the formula award has been calculated under the
EAIP, the Chief Executive Officer may recommend to the Committee
an increase or decrease of an executives award up to 25%
to recognize special circumstances. Such recommendation may only
be implemented upon the further recommendation to, and approval
of, the Board. There were no discretionary adjustments made to
any awards for the Named Executive Officers for the 2006 awards
paid in 2007.
For 2006, the target bonuses as a percentage of salary for the
VMT ranged from 40% of base salary to 100% of base salary and
55% to 100% for our Named Executive Officers. The target bonus
for the Chief Executive Officer is 100% of his base salary. The
combination of executive base salaries and actual bonus payments
in 2007 for 2006 performance resulted in aggregate payouts for
the Named Executive Officers approximating the
60th percentile of competitive pay and is consistent with
the Companys Compensation Philosophy.
The chart below shows the weighting of various financial
objectives for the VMT for fiscal 2006.
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|
Financial Measures
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|
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|
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|
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|
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|
Total
|
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|
Working
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|
Department
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|
Financial
|
|
|
Strategic
|
|
|
EBITDA
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|
EPS
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|
Revenue
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|
Capital
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|
EBITDA
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|
Expenses
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Weight
|
|
|
Initiatives
|
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|
Kicker
|
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|
Chief Executive Officer and
President
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60%
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10%
|
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|
15%
|
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85%
|
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|
15%
|
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|
|
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|
Chief Financial Officer
|
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|
60%
|
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|
10%
|
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|
15%
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|
85%
|
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|
15%
|
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|
Regional Heads
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15%
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20%
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|
5%
|
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|
50%
|
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|
|
|
|
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|
90%
|
|
|
|
10%
|
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|
|
ü
|
|
General Counsel
|
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|
45%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45%
|
|
|
|
55%
|
|
|
|
|
|
SVP, CIO
|
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|
25%
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
25%
|
|
|
|
50%
|
|
|
|
50%
|
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|
|
|
|
SVP, Controller
|
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|
50%
|
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|
|
|
|
|
|
5%
|
|
|
|
|
|
|
|
|
|
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|
55%
|
|
|
|
45%
|
|
|
|
|
|
Under the 2006 EAIP, in order to receive any payment under the
financial goals portion of the EAIP, an executive had to have
achieved the threshold level of:
|
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|
the EBITDA goal for Regional Heads; or
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|
EPS for all other participating executives.
|
EBITDA Kicker Regional Heads whose region
exceeded the EBITDA maximum goal were eligible to earn an
additional award based on 5% of their regions EBITDA in
excess of their maximum goal.
20
In the spring of 2006, we announced a major restructuring
program, which included significant adjustments to our strategic
plan, as well as cost-saving measures. To align the EAIP with
the revised goals under the restructuring plan, the Committee
approved the following changes to the previously established
2006 EAIP:
|
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Increase in EPS threshold, target and maximum goals;
|
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|
Cap on overall payment under the EAIP to target level if the
revised EPS goal was not met at target levels; and
|
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|
Ability of Regional Heads, if we reached the revised target
level of EPS, to participate in the EAIP according to the
corporate financial metrics, rather than regional financial
metrics.
|
The weighted average percentage payout for the VMT for 2006
performance was 89% of the target award.
Awards made to Named Executive Officers under the EAIP for
performance in 2006 are reflected in the column entitled
Non-Equity Incentive Plan Compensation of the
Summary Compensation Table found under the Executive
Compensation and Related Matters section.
For 2007, the target bonus as a percentage of salary for the VMT
will range from 40 to 100 percent. The Company reviewed the
plan design and determined that placing greater emphasis on
financial performance measures was in the best interests of
shareholders and the alignment of pay and performance. The
weighting of the financial objectives for the 2007 EAIP have
been established as follows:
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|
Financial Measures
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|
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|
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|
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|
Total
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|
|
Working
|
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|
|
Financial
|
|
|
Strategic
|
|
|
EBITDA
|
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|
|
EPS
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|
Revenue
|
|
|
Capital
|
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|
EBITDA
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|
Weight
|
|
|
Initiatives
|
|
|
Kicker
|
|
|
Chief Executive Officer and
President
|
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|
70%
|
|
|
|
20%
|
|
|
|
10%
|
|
|
|
|
|
|
|
100%
|
|
|
|
0%
|
|
|
|
|
|
Chief Financial Officer
|
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|
70%
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|
|
|
20%
|
|
|
|
10%
|
|
|
|
|
|
|
|
100%
|
|
|
|
0%
|
|
|
|
|
|
Regional Heads
|
|
|
15%
|
|
|
|
20%
|
|
|
|
10%
|
|
|
|
45%
|
|
|
|
90%
|
|
|
|
10%
|
|
|
|
ü
|
|
General Counsel
|
|
|
70%
|
|
|
|
20%
|
|
|
|
10%
|
|
|
|
|
|
|
|
100%
|
|
|
|
0%
|
|
|
|
|
|
SVP, CIO
|
|
|
45%
|
|
|
|
15%
|
|
|
|
10%
|
|
|
|
|
|
|
|
70%
|
|
|
|
30%
|
|
|
|
|
|
Long-term
Equity Incentive Program
The Long-term Equity Incentive Program encourages executives to
focus on long-term Company performance and is designed to
balance short-term goals, and align executives performance
to stockholder interests, providing compensation directly
correlating to improved stockholder value.
Equity grant award levels are determined based on competitive
market data and vary among executives based on their positions
within our Company. Although the 2006 Equity Plan is flexible
and permits a broad array of equity grants, the Committee chose
in 2006 to grant solely stock options, as the Committee
determined that options most closely align equity grants to
increases in stockholder value, delivering value only when the
value of our stock price increases.
Annual awards of stock options to executives are made at the
Committees regularly scheduled Fall meeting, which is
scheduled sufficiently in advance so that grants can not be
timed to take advantage of the release of material
nonpublic information. Newly hired or promoted executives
receive their award of stock options on the later of
(a) their first day of employment or (b) the date of
approval of the grant by the Committee. All awards of stock
options under the 2006 Plan are made at or above the fair market
value of our common stock on the date of grant.
In determining the size of a grant to an executive, the
Compensation Committee considers, among other things, industry
survey data industry practices and trends, Company performance,
the executives individual performance, as well as the
executives current and expected contributions to the
Company. The Compensation Committee also reviews previously
granted awards and amounts of awards outstanding.
Stock options granted by the Committee vest at a rate of
25% per year over the first four years of the ten-year
option term. Vesting rights cease upon termination of
employment. Under the 2006 Plan, there is a limited period of
post-termination exercise of three months, except in the case of
death or disability where the post-termination
21
exercise period is extended to 12 months. Prior to the
exercise of an option, the holder has no rights as a stockholder
with respect to the shares subject to such option, including
voting rights and the right to receive dividends or dividend
equivalents. Each Incentive Plan has varying standards for the
application of change in control provisions, and prior to the
2006 Plan, generally accelerated options upon a change in
control. The 2006 Plan contains a so-called double
trigger provision which provides that options are
accelerated upon a change in control only if the employment of
the executive is involuntarily terminated without cause (or if
the participant resigns with good reason), in either case in
conjunction with the change in control. However,
Mr. Tysons employment agreement,
Mr. Baileys employment agreement and the severance
agreements of the other Named Executive Officers accelerate
vesting of options upon a change in control, irrespective of
loss of employment.
The combination of the aggregate Named Executive Officers
base salaries, target bonus payments and equity granted provided
in 2006 approximated the 50th percentile of competitive pay
and is consistent with the Companys compensation
philosophy.
Exercise and Hold Requirements
To align the interests of executives with the interests of the
stockholders, we have instituted an exercise and
hold rule for all equity grants made on or after
October 31, 2006 to the Chief Executive Officer and those
reporting to the Chief Executive Officer as of the date of the
grant. Beginning with the annual grants issued on that date, a
provision has been added to the standard option award agreement
applicable to such executives prohibiting the executive from
selling, disposing of, transferring, or entering into any
similar transaction with the same economic effect as a sale of
fifty percent (50%) of the net shares of common
stock purchased upon the exercise of the option until the
earlier of (i) the executives death, (ii) the
executives disability, (iii) the termination of the
executives service, or (iv) the second anniversary of
the date on which the executive purchased such shares. In order
to enforce the foregoing, we may impose stop-transfer
instructions with respect to such shares of Common Stock until
the end of such period, or place legends on stock certificates
issued pursuant to the Incentive Plan restricting the transfer
of such shares until the end of such period. For purposes of
this requirement, the term net shares means the
number of shares being exercised minus the minimum number of
whole shares necessary to pay the purchase price of the option
and pay for applicable withholding taxes.
Retirement
and Welfare Benefits
The retirement and welfare benefit programs are a necessary
element of the total compensation package to ensure a
competitive position in attracting and maintaining a committed
workforce. Participation in these programs is not tied to
performance.
The specific contribution levels by our Company to these
programs are evaluated annually to maintain a competitive
position while considering costs.
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|
|
Retirement Savings Plan All employees in the United
States are eligible to participate in the Retirement Savings
Plan. The Retirement Savings Plan is a tax-qualified retirement
savings plan under Section 401(k) of the Internal Revenue
Code pursuant to which all U.S. based employees, including
the Named Executive Officers, are able to contribute to the
Retirement Savings Plan, on a before-tax basis, the lesser of
(a) up to 50% of their annual salary or (b) the limit
prescribed by the Internal Revenue Service. We will match 50% of
the first 6% of pay that is contributed to the Retirement
Savings Plan. All employee contributions to the Retirement
Savings Plan are fully vested upon contribution; matching
contributions vest at 20% per year of employment.
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|
Welfare Plans Our executives are eligible to
participate in our broad-based welfare benefits plans (including
medical, dental, vision, life insurance and disability plans)
upon the same terms and conditions as other U.S. based
employees; certain waivers of deductibles and co-pays available
to officers in 2006 have been eliminated for 2007.
|
Executive
Benefits and Perquisites
We provide Named Executive Officers with perquisites and other
personal benefits that we and the Committee believe are
reasonable and consistent with our overall compensation program
to better enable us to attract and retain
22
superior employees for key positions. The Committee periodically
reviews the levels of perquisites and other personal benefits
provided to Named Executive Officers.
In addition to participation in the plans and programs described
above, the Named Executive Officers are provided the following
programs which were established in 2003:
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|
|
An Executive Medical Reimbursement Program, which reimburses up
to $10,000 per year of medical and dental costs which are
not otherwise covered by insurance.
|
|
|
|
An Executive Allowance, which varies for the Named Executive
Officers from $25,000 to $35,000. This compensation is not
included in salary upon which bonuses are determined and is not
subject to annual raises, but is provided as a flexible
alternative to automobile allowances, financial planning
allowances or similar compensation paid by peers who compete for
our executive talent.
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|
|
A Supplemental Life Insurance program with two elements. First,
term life insurance coverage is increased from one times
salary to three times salary, with a
$1 million cap. Second, we purchase on behalf of the
executives a universal whole life policy with a face value of
$200,000.
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|
|
An Executive Physical Program under which executives are offered
a comprehensive annual physical at a local medical facility at
no charge to the executive.
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Pursuant to his employment contract, the Chief Executive Officer
is entitled to reimbursement of expenses for spousal travel
while his spouse accompanies him on Company business trips.
|
Attributed costs of the personal benefits described above for
the Named Executive Officers for the fiscal year ended
December 31, 2006, are included in the column entitled
All Other Compensation of the Summary Compensation
Table.
The employment agreements of Mr. Tyson, the Chief Executive
Officer and Mr. Bailey, an Executive Vice President,
include change in control provisions providing for certain cash
payment and other benefits in the event of a change in control.
In addition, we have entered into executive severance agreements
providing change in control benefits for certain key employees,
including the Named Executive Officers other than the Chief
Executive Officer. The executive severance agreements are
designed to promote stability and continuity of senior
management. The employment agreement of the Chief Executive
Officer includes a provision giving him limited rights to a
Section 280G gross up in certain circumstances;
the employment agreement of Mr. Bailey and the severance
agreements of the other Named Executive Officers provide for a
reduction in benefits paid to the executive should a severance
payment become subject to Section 280G to the extent that
the reduction in benefits yields a more favorable after tax
result for the executive. Information regarding applicable
payments under such agreements for the Named Executive Officers
is provided under the Executive Compensation and Related Matters
sub-section,
Potential Payments Upon Termination or
Change-in-Control.
Tax and
Accounting Implications
Deductibility
of Executive Compensation
As part of its role, the Committee reviews and considers the
deductibility of executive compensation under
Section 162(m) of the Internal Revenue Code, which provides
that we may not deduct compensation in excess of $1,000,000 that
is paid to certain individuals. We generally develop our
compensation plans such that compensation paid under the
management incentive plans is fully deductible for federal
income tax purposes. However, in certain situations, the
Committee may approve compensation that will not meet these
requirements in order to ensure competitive levels of total
compensation for its executive officers. For fiscal 2006, the
post-restructuring changes to the EAIP which were made after
March 31, 2006 but, which increased the difficulty of
achieving target objectives, may have caused certain payments to
Mr. Tyson to be non-deductible.
Accounting
for Stock-Based Compensation
Beginning on January 1, 2006, we began accounting for
stock-based payments including our Equity Incentive Program in
accordance with the requirements of FASB Statement 123(R).
23
SUMMARY
COMPENSATION TABLE
The following table sets forth the annual and long-term
compensation awarded to or paid to the Named Executive Officers
for services rendered to our Company in all capacities during
the year ended December 31, 2006.
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|
|
|
|
|
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|
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|
|
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Non-Equity
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Stock
|
|
Option
|
|
Incentive Plan
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All Other
|
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|
|
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|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
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|
($)(4)
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|
($)
|
|
Current Officers
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy C. Tyson*
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|
2006
|
|
|
|
860,000
|
|
|
|
|
|
|
|
148,404
|
|
|
|
3,231,352
|
|
|
|
645,000
|
|
|
|
88,334
|
(5)
|
|
|
4,973,090
|
|
President and Chief Executive
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bary G. Bailey
|
|
|
2006
|
|
|
|
434,718
|
|
|
|
|
|
|
|
49,464
|
|
|
|
1,255,813
|
|
|
|
256,481
|
|
|
|
61,767
|
(6)
|
|
|
2,058,243
|
|
Executive Vice President and Chief
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wesley P. Wheeler
|
|
|
2006
|
|
|
|
409,500
|
|
|
|
|
|
|
|
49,464
|
|
|
|
794,403
|
|
|
|
173,527
|
|
|
|
53,598
|
(7)
|
|
|
1,480,492
|
|
President, North America/R&D
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles J. Bramlage
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|
2006
|
|
|
|
388,500
|
|
|
|
|
|
|
|
49,464
|
|
|
|
714,189
|
|
|
|
163,170
|
|
|
|
67,652
|
(8)
|
|
|
1,382,975
|
|
President, Europe/Middle East/Africa
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|
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|
|
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|
|
|
|
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|
|
|
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|
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Eileen C. Pruette
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|
2006
|
|
|
|
340,000
|
|
|
|
|
|
|
|
49,464
|
|
|
|
644,266
|
|
|
|
286,231
|
|
|
|
51,603
|
(9)
|
|
|
1,371,564
|
|
Executive Vice President, Human
Resources and General Counsel
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Former Officers
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|
|
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|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kim D. Lamon
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|
|
2006
|
|
|
|
229,403
|
|
|
|
|
|
|
|
24,732
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|
|
|
750,496
|
|
|
|
|
|
|
|
876,175
|
(10)
|
|
|
1,880,806
|
|
President and Chief Scientific
Officer
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|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John I. Cooper
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|
|
2006
|
|
|
|
183,312
|
|
|
|
|
|
|
|
24,732
|
|
|
|
101,318
|
|
|
|
|
|
|
|
730,513
|
(11)
|
|
|
1,039,875
|
|
Executive Vice President, Global
Manufacturing and Supply
|
|
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* |
|
Mr. Tyson also serves on our Board. Mr. Tyson did not
receive compensation of any kind for his services as a Board
member. |
|
(1) |
|
This column represents the dollar amount recognized for
financial statement reporting purposes with respect to the 2006
fiscal year of restricted stock units granted in 2006 as well as
prior fiscal years, in accordance with SFAS 123(R). |
|
(2) |
|
This column represents the dollar amount recognized for
financial statement reporting purposes with respect to the 2006
fiscal year of stock options granted in 2006 as well as prior
fiscal years in accordance with SFAS 123(R). Assumptions
used in the calculation of these amounts are included in
note 14 to our financial statements for the fiscal year
ended December 31, 2006, within our Annual Report on
Form 10-K
filed with the Securities and Exchange Commission on
March 1, 2007 and in note 13 to our financial
statements for the fiscal year ended December 31, 2005,
within our amended Annual Report on
Form 10-K/A
filed with the Securities and Exchange Commission on or around
January 23, 2007. |
|
(3) |
|
Except where otherwise indicated, amounts included in this
column are for performance bonuses earned with respect to the
applicable year, but paid in the following year. |
|
(4) |
|
These numbers include the cost to our Company of providing
perquisites and other personal benefits. |
|
(5) |
|
Includes the following perquisites: spouse travel benefits
($18,407); automobile allowance ($22,493); tax preparation
expenses ($14,000); executive medical reimbursement allowance
($10,000); group term life insurance; whole life insurance;
executive life insurance; 401(k) match; annual physical; and
dividend equivalent rights. |
24
|
|
|
(6) |
|
Includes the following perquisites: executive allowance
($35,000); executive medical reimbursement allowance ($10,000);
group term life insurance; whole life insurance; executive life
insurance; 401K match; annual physical; and dividend equivalent
rights. |
|
(7) |
|
Includes the following perquisites: executive allowance
($25,000); executive medical reimbursement allowance ($10,000);
401(k) match ($6,476); group term life insurance; whole life
insurance; executive life insurance; annual physical; dividend
equivalent rights; and presidents club discretionary spend. |
|
(8) |
|
Includes the following perquisites: executive allowance
($25,000); spouse travel benefits ($16,339); executive medical
reimbursement allowance ($10,000); 401(k) match; group term life
insurance; whole life insurance; executive life insurance;
annual physical; and dividend equivalent rights. |
|
(9) |
|
Includes the following perquisites: executive allowance
($25,000); executive medical reimbursement allowance ($10,000);
401(k) match ($6,600); group term life insurance; whole life
insurance; executive life insurance; annual physical; and
dividend equivalent rights. |
|
(10) |
|
Includes the following perquisites: executive allowance; spouse
travel benefits; executive medical reimbursement allowance;
401(k) match; group term life insurance; whole life insurance;
executive life insurance; and annual physical. Also included in
this amount is a severance payment to Dr. Lamon in the
amount of $841,774. This payment was made pursuant to
Dr. Lamons Executive Employment Agreement which
provides that upon termination, Dr. Lamon would receive an
amount equal to two times his base salary and a bonus amount.
Bonus amount is defined as the average annual cash bonus
received by Dr. Lamon during the two fiscal years
immediately preceding the termination date. |
|
(11) |
|
Includes the following perquisites: executive allowance;
executive medical reimbursement allowance; group term life
insurance; whole life insurance; executive life insurance;
401(k) match; annual physical; and gift card. Also included in
this amount is a severance payment to Mr. Cooper in the
amount of $696,688. This payment was made pursuant to
Mr. Coopers Executive Severance Agreement which
provided that upon termination, Mr. Cooper would receive
his target bonus for 2006, pro-rated to his effective
termination date, one years salary, one years target
bonus and outplacement fees. |
25
OPTION
GRANT INFORMATION
The following table sets forth information with respect to
non-equity awards and stock options granted to the Named
Executive Officers in 2006.
Grants of
Plan-Based Awards
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
|
|
Exercise
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
Securities
|
|
or Base
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
Underlying
|
|
Price of
|
|
Full Grant
|
|
|
|
|
Plan Awards(1)
|
|
Options
|
|
Option
|
|
Date Fair
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
(2)
|
|
Awards(3)
|
|
Value(4)
|
Name
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
($/Sh)
|
|
($)
|
|
Current Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy C. Tyson
|
|
|
10/31/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
345,000
|
|
|
|
18.68
|
|
|
|
2,786,255
|
|
|
|
|
N/A
|
|
|
|
137,600
|
|
|
|
860,000
|
|
|
|
1,720,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bary G. Bailey
|
|
|
10/31/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
18.68
|
|
|
|
807,610
|
|
|
|
|
N/A
|
|
|
|
55,643
|
|
|
|
347,770
|
|
|
|
869,426
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wesley P. Wheeler
|
|
|
10/31/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
|
18.68
|
|
|
|
726,849
|
|
|
|
|
N/A
|
|
|
|
34,398
|
|
|
|
245,700
|
|
|
|
819,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles J. Bramlage
|
|
|
10/31/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
|
18.68
|
|
|
|
726,849
|
|
|
|
|
N/A
|
|
|
|
32,634
|
|
|
|
233,100
|
|
|
|
777,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eileen C. Pruette
|
|
|
10/31/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
|
18.68
|
|
|
|
726,849
|
|
|
|
|
N/A
|
|
|
|
69,360
|
|
|
|
204,000
|
|
|
|
680,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Officers(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kim D. Lamon
|
|
|
N/A
|
|
|
|
95,431
|
|
|
|
367,044
|
|
|
|
917,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John I. Cooper
|
|
|
N/A
|
|
|
|
57,194
|
|
|
|
219,975
|
|
|
|
733,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
These columns show the potential value of the payout for each
Named Executive Officer under our 2006 Executive Incentive Plan
if the threshold, target or maximum goals are satisfied for both
performance measures. The method for determining the payouts is
described in the Executive Compensation and Related Matters
sub-section,
Compensation Discussion and Analysis. |
|
(2) |
|
This column shows the number of stock options granted in 2006 to
the Named Executive Officers. These stock options vest in four
equal parts beginning one year following the date of grant and
on each subsequent anniversary of the date of grant. |
|
(3) |
|
This column shows the exercise price for the stock options
granted, which was the closing price of Valeant stock on
October 31, 2006, the date the Board approved the options. |
|
(4) |
|
This column shows the full grant date fair value of stock
options under SFAS 123(R) granted to the Named Executive
Officers in 2006. |
|
(5) |
|
Amounts listed are for former officers. Upon termination of
employment, these former officers were no longer eligible to
receive any future payments under our 2006 Executive Incentive
Plan. |
26
Outstanding
Equity Awards at Fiscal Year-End
The following table provides information as of December 31,
2006, on the holdings of stock options and stock awards by the
Named Executive Officers. This table includes unexercised and
unvested option awards and unvested restricted stock units. Each
equity grant is shown separately for each Named Executive
Officer. The market value of the stock awards is based on the
closing market price of our common stock on December 31,
2006, which was $17.24.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
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Number of
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Number of
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Number
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Value of
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Securities
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Securities
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of Shares
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Shares or
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Underlying
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Underlying
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or Units
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Units of
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Unexercised
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Unexercised
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Options
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of Stock
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Stock That
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Options
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Options
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Exercise
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Option
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That Have
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Have Not
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(#)(1)
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(#)(1)
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Price
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Expiration
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Not Vested
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Vested
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Name
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Exercisable
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Unexercisable
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($)
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Date
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(#)(2)
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($)
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Current Officers
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Timothy C. Tyson
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345,000
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18.68
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10/31/2016
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90,000
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270,000
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17.72
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11/1/2015
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30,000
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517,200
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200,000
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200,000
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23.92
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11/26/2014
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365,250
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121,750
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18.55
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11/4/2013
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1,000,000
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8.42
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11/5/2012
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Bary G. Bailey
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100,000
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18.68
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10/31/2016
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30,000
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90,000
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17.72
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11/1/2015
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10,000
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172,400
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70,000
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70,000
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23.92
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11/26/2014
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|
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163,500
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54,500
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18.55
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11/4/2013
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65,596
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21,865
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13.08
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5/23/2013
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400,000
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10.78
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12/9/2012
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Wesley P. Wheeler
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90,000
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18.68
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10/31/2016
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|
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22,500
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|
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67,500
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17.72
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11/1/2015
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10,000
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172,400
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|
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37,500
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37,500
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23.92
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11/26/2014
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130,500
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43,500
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18.55
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11/4/2013
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110,500
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37,500
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10.80
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1/14/2013
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Charles J. Bramlage
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90,000
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18.68
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10/31/2016
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|
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22,500
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67,500
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17.72
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11/1/2015
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10,000
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172,400
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35,000
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35,000
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23.92
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11/26/2014
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|
|
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|
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|
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|
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37,500
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12,500
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18.55
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11/4/2013
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|
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93,750
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|
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31,250
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14.99
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8/12/2013
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Eileen C. Pruette
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90,000
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18.68
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10/31/2016
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|
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20,000
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|
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60,000
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17.72
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11/1/2015
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|
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10,000
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|
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172,400
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|
|
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30,000
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30,000
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|
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23.92
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11/26/2014
|
|
|
|
|
|
|
|
|
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81,750
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|
|
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27,250
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|
|
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18.55
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11/4/2013
|
|
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|
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|
|
|
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93,750
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|
|
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31,250
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|
|
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8.45
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|
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3/12/2013
|
|
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|
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|
Former Officers
|
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|
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Kim D. Lamon
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22,500
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67,500
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|
|
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17.72
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|
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11/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
42,500
|
|
|
|
42,500
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|
|
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23.92
|
|
|
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11/26/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
110,250
|
|
|
|
36,750
|
|
|
|
18.55
|
|
|
|
11/4/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
303,792
|
|
|
|
|
|
|
|
11.48
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|
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2/21/2013
|
|
|
|
|
|
|
|
|
|
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11,250
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|
|
|
|
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10.05
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|
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8/1/2012
|
|
|
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|
|
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John I. Cooper
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|
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53,500
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|
|
|
|
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18.55
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|
11/4/2013
|
|
|
|
|
|
|
|
|
|
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49,050
|
|
|
|
|
|
|
|
11.32
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|
|
|
1/7/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The stock options vest in four equal parts beginning one year
following the date of grant and on each subsequent anniversary
of the date of grant. |
|
(2) |
|
The restricted stock units vest over five years with 50% vesting
at the third anniversary of the date of grant and the remaining
50% vesting in two equal annual installments at the fourth and
fifth anniversary of the date of grant. |
27
Option
Exercises and Stock Vested
|
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|
|
|
Option Awards
|
|
|
Stock Awards
|
|
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|
Number of Shares
|
|
|
Value Realized
|
|
|
Number of Shares
|
|
|
Value Realized
|
|
|
|
Acquired on Exercise
|
|
|
on Exercise
|
|
|
Acquired on Vesting
|
|
|
on Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
Current
Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy C. Tyson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bary G. Bailey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wesley P. Wheeler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles J. Bramlage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eileen C. Pruette
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former
Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kim D. Lamon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John I. Cooper(1)
|
|
|
44,700
|
|
|
$
|
351,346
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Cooper exercised 44,700 stock options on
August 28, 2006, with an exercise price of $11.32 and a
market price of $19.18. |
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
We entered into an Executive Employment Agreement with
Mr. Tyson on October 24, 2002, and an Amended and
Restated Executive Employment Agreement with Mr. Tyson on
March 21, 2005, effective as of January 1, 2005
(Mr. Tysons agreement, as amended and restated, is
referred to herein as the Tyson Employment
Agreement).
The Tyson Employment Agreement provides that
Mr. Tysons employment may be terminated by us upon
his death or disability, or with or without cause, or by
Mr. Tyson with or without good reason (as defined in the
agreement). Upon termination by reason of death or disability,
by us for cause, or by Mr. Tyson without good reason,
Mr. Tyson receives all amounts earned or accrued through
the termination date, as specified in the agreement. Upon
termination by reason of death or disability, Mr. Tyson is
entitled to a prorated portion of his annual bonus, health and
medical coverage for two years, and immediate vesting of all
outstanding awards, options and stock appreciation rights (which
remain exercisable for up to two years). Upon termination of
Mr. Tysons employment by us without cause, or by
Mr. Tyson for good reason, or if the Company decides not to
extend the term of his agreement, Mr. Tyson is entitled to
the same benefits he would receive upon termination for death or
disability, plus, subject to his not engaging in certain
prohibited activities, a severance payment equal to
two times the sum of (i) his base salary and (ii) the
greater of (a) his average bonus for the prior two years;
or (b) his target bonus for the year of his termination.
Mr. Tyson is also entitled to continuation of employee
welfare benefits for 24 months. All restrictions on
outstanding equity awards lapse and all such awards, including
stock options become immediately and fully vested and stock
options become exercisable for two years following termination.
If such termination occurs within 12 months following or in
contemplation of a change in control, Mr. Tyson is entitled
to the same benefits as described above for a termination
without a change in control, except that the severance payment
is equal to three times the sum of (i) his base salary and
(ii) the greater of (a) his average bonus of the prior
two years; or (b) his target bonus for the year of his
termination. Further in the event of a termination in connection
with a change in control, the post termination exercise period
for his options becomes three years. Mr. Tyson is also
entitled to employee benefits for 24 months and a cash
payment equal to the excess of the actuarial equivalent of his
aggregate retirement benefits had he remained employed by us for
an additional two years over the actuarial equivalent of his
actual retirement benefit. In each case, Mr. Tyson is under
no obligation to mitigate amounts payable under his agreement.
For purposes of the Tyson Employment Agreement, a change
in control generally means any of the following events:
|
|
|
|
|
the acquisition by any person of beneficial ownership of more
than 30% of the combined voting power of our outstanding voting
securities, other than an acquisition (i) directly from us,
(ii) by a trustee or other fiduciary
|
28
|
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|
|
|
holding securities under one or more employee benefit plans
maintained by us or any of our subsidiaries, or (iii) by
any corporation which, immediately prior to such acquisition, is
owned directly or indirectly by the stockholders of our Company
in the same proportion as their ownership of stock in our
Company immediately prior to such acquisition;
|
|
|
|
|
|
the individuals serving on the board of directors of our Company
as of the date of the Tyson Employment Agreement and any new
director whose election by the Board or nomination for election
by our stockholders was approved by the affirmative vote of at
least a majority of the directors then still in office who
either were directors on the date of the Tyson Employment
Agreement or whose election or nomination for election was
previously so approved, cease for any reason to constitute at
least a majority of the board of directors;
|
|
|
|
the closing of a merger or consolidation involving our Company
if the stockholders immediately before the merger or
consolidation do not, as a result of the merger or
consolidation, own more than 50% of the combined voting power of
the then outstanding voting securities of the corporation
resulting from the merger or consolidation in substantially the
same proportion as their ownership of the combined voting power
of the voting securities of our Company outstanding immediately
before the merger of consolidation; or
|
|
|
|
the closing of a complete liquidation or dissolution of our
Company, or an agreement for the sale or other disposition of
all or substantially all of the assets of our Company.
|
Mr. Tysons agreement also provides for certain
gross-up
payments if he is subject to the excise tax imposed under
Section 4999 of the Internal Revenue Code (or related
interest and penalties) with respect to payments and benefits
under his agreement or otherwise.
We entered into an Executive Employment Agreement with
Mr. Bailey on October 22, 2002 (the Bailey
Employment Agreement). The Bailey Employment Agreement
provides that Mr. Baileys employment may be
terminated by us upon his death or disability, or with or
without cause, or by Mr. Bailey with or without good reason
(as defined in the agreement). Upon termination by reason of
death or disability, by us for cause, or by Mr. Bailey
without good reason, Mr. Bailey receives all amounts earned
or accrued through the termination date, as specified in the
agreement. Upon termination by reason of death or disability,
Mr. Bailey is also entitled to a prorated portion of his
annual bonus. Upon termination of Mr. Baileys
employment by us without cause, or by Mr. Bailey for good
reason, or if we decide not to extend the term of his agreement,
Mr. Bailey is entitled to accrued compensation, plus,
subject to his not engaging in certain prohibited
activities for one year, an additional payment equal to
the sum of (a) his base salary and (b) his average
annual bonus for the prior two years. If such termination occurs
within twelve months after a change in control, such payment is
based on three times salary and bonus, and Mr. Bailey is
also entitled to (i) certain employee benefits for up to
twenty-four months, (ii) immediate vesting of all
outstanding awards, options and stock appreciation rights, and
(iii) a cash payment equal to the excess of the actuarial
equivalent of his aggregate retirement benefits had he remained
employed by us for an additional two years over the actuarial
equivalent of his actual retirement benefit.
For purposes of the Bailey Employment Agreement, a change
in control generally means the occurrence of any of the
following events:
|
|
|
|
|
the acquisition by any person of beneficial ownership of more
than 30% of the combined voting power of our outstanding voting
securities, other than an acquisition (i) directly from us,
(ii) by a trustee or other fiduciary holding securities
under one or more employee benefit plans maintained by us or any
of our subsidiaries, or (iii) by any corporation which,
immediately prior to such acquisition, is owned directly or
indirectly by the stockholders of our Company in the same
proportion as their ownership of stock in our Company
immediately prior to such acquisition;
|
|
|
|
the individuals serving on the board of directors of our Company
as of October 22, 2002 and any new director whose election
by the Board or nomination for election by the Companys
stockholders was approved by the affirmative vote of at least
two-thirds of the directors then still in office who either were
directors on October 22, 2002 or whose election or
nomination for election was previously so approved, cease for
any reason to constitute at least two-thirds of the board of
directors;
|
29
|
|
|
|
|
the approval by the stockholders of our Company of a merger or
consolidation involving our Company if the stockholders
immediately before the merger or consolidation do not, as a
result of the merger or consolidation, own more than 70% of the
combined voting power of the then outstanding voting securities
of the corporation resulting from the merger or consolidation in
substantially the same proportion as their ownership of the
combined voting power of the voting securities of our Company
outstanding immediately before the merger of
consolidation; or
|
|
|
|
the approval by the stockholders of our Company of a complete
liquidation or dissolution of our Company, or an agreement for
the sale or other disposition of all or substantially all of the
assets of our Company.
|
Mr. Baileys agreement provides that payments and
benefits under his agreement and all other related arrangements
will not exceed the maximum amount that may be paid to him
without triggering excess parachute payment
penalties under Section 280G of the Internal Revenue Code
of 1986, but only if this would increase the net amount he would
realize after payment of income and excise taxes.
Executive
Officer Agreements
We have also entered into severance agreements (the
Executive Severance Agreements) with
Messrs. Blott, Wheeler and Bramlage and Ms. Pruette
(each, an Executive). Each Executive Severance
Agreement expires on December 31, 2010 unless sooner
terminated following a change in control, and shall
automatically be extended for successive one-year periods unless
no later than six months prior to a scheduled expiration date we
notify the Executive that the agreement will not be extended.
The purposes of the severance agreements are to retain key
executives and provide a competitive level of severance benefits
should the executive be involuntarily terminated under certain
circumstances.
Under each Executive Severance Agreement, upon termination by
reason of death or disability, by us for cause, or by the
Executive without good reason, the Executive will receive all
amounts earned or accrued through the termination date, as
specified in the agreement. Upon termination by reason of death
or disability, the Executive, in addition, will be entitled to a
prorated portion of the Executives annual bonus.
If the Executives employment is terminated by us without
cause, or by the Executive with good reason, and the Executive
agrees to not to engage in certain activities that might compete
with us for a period of one year after termination, the
Executive will receive a payment equal to the sum of:
(a) any accrued and unpaid salary, (b) any unpaid
annual bonus payable for the most recently completed year,
(c) the Executives annual base salary then in effect
and (d) the lesser of the average of the annual incentive
program bonuses paid to the Executive for the five prior years
(or such shorter period if the Executive has not been eligible
to participate in the annual incentive program) or the
Executives target bonus at such time. If the Executive is
terminated by us, other than for cause, disability or death, or
by the Executive for good reason, we will also pay up to an
aggregate of $20,000 for outplacement services.
If in contemplation of or within twelve months after a change in
control, the Executive is terminated by us without cause, or
terminates his employment with good reason, and the Executive
agrees not to engage in prohibited activities for a period of
one year following termination, the Executive will be entitled
to a payment equal to two times the sum of (a) the
Executives annual base salary plus (b) the higher of
the average of the annual incentive program bonuses paid to the
Executive for the five prior years (or such shorter period if
the Executive has not been eligible to participate in the annual
incentive program) or the Executives target bonus at the
time of the change in control. In addition, for one year after
such termination following a change in control or such longer
period as may be provided by the terms of the appropriate
benefit plans, we shall provide the Executive and his or her
family with medical, dental and life insurance benefits at least
equal to those which would have been provided had the Executive
not been terminated, in accordance with the applicable benefit
plans in effect on the change in control measurement date or, if
more favorable, in effect generally at any time after the change
in control measurement date with respect to other peer
executives of our Company and our affiliated companies. All
outstanding options to purchase shares of Common Stock, each
outstanding restricted stock award and any other unvested equity
compensation right shall be fully vested or exercisable and each
such share or equity interest shall no longer be subject to a
right of repurchase by us.
30
Under each Executive Severance Agreement, a change in
control generally means any of the following events:
|
|
|
|
|
the acquisition by any person of beneficial ownership of more
than 30% of the combined voting power of our outstanding voting
securities, other than an acquisition (i) directly from us,
(ii) by a trustee or other fiduciary holding securities
under one or more employee benefit plans maintained by us or any
of our subsidiaries, or (iii) by any corporation which,
immediately prior to such acquisition, is owned directly or
indirectly by the stockholders of our Company in the same
proportion as their ownership of stock in our Company
immediately prior to such acquisition;
|
|
|
|
the individuals serving on the board of directors of our Company
as of the date of each Executive Severance Agreement, and any
new director whose election by the Board or nomination for
election by our stockholders was approved by the affirmative
vote of at least two-thirds of the directors then still in
office who either were directors on the date of each Executive
Severance Agreement or whose election or nomination for election
was previously so approved, cease for any reason to constitute
at least two-thirds of the board of directors;
|
|
|
|
the approval by the stockholders of our Company of a merger or
consolidation involving our Company if the stockholders
immediately before the merger or consolidation do not, as a
result of the merger or consolidation, own more than 70% of the
combined voting power of the then outstanding voting securities
of the corporation resulting from the merger or consolidation in
substantially the same proportion as their ownership of the
combined voting power of the voting securities of our Company
outstanding immediately before the merger of
consolidation; or
|
|
|
|
the approval by the stockholders of our Company of a complete
liquidation or dissolution of our Company, or an agreement for
the sale or other disposition of all or substantially all of the
assets of our Company.
|
Each Executive Severance Agreement provides that payments and
benefits under the agreement and all other related arrangements
will not exceed the maximum amount that may be paid to the
Executive without triggering excess parachute
payment penalties under Section 280G of the Internal
Revenue Code of 1986, but only if this would increase the net
amount the Executive would realize after payment of income and
excise taxes.
Termination/Change-in-Control(1)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Accelerated
|
|
|
Accelerated
|
|
|
|
|
|
|
Cash
|
|
|
Benefits and
|
|
|
Option
|
|
|
RSU
|
|
|
Section 280G
|
|
|
|
Severance
|
|
|
Perquisites
|
|
|
Vesting
|
|
|
Vesting(2)
|
|
|
Gross-up(3)
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Current Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy C. Tyson
|
|
|
6,020,000
|
(4)
|
|
|
74,674
|
|
|
|
|
(5)
|
|
|
517,200
|
|
|
|
2,452,505
|
|
Bary G. Bailey
|
|
|
2,574,039
|
(6)
|
|
|
82,320
|
|
|
|
90,958
|
(7)
|
|
|
174,400
|
|
|
|
|
|
Wesley P. Wheeler
|
|
|
1,698,004
|
(8)
|
|
|
49,124
|
|
|
|
241,500
|
(7)
|
|
|
174,400
|
|
|
|
|
|
Charles J. Bramlage
|
|
|
1,476,300
|
(8)
|
|
|
54,220
|
|
|
|
70,313
|
(7)
|
|
|
174,400
|
|
|
|
|
|
Eileen C. Pruette
|
|
|
1,430,508
|
(8)
|
|
|
54,460
|
|
|
|
274,688
|
(7)
|
|
|
174,400
|
|
|
|
|
|
Former Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kim D. Lamon
|
|
|
2,356,737
|
(9)
|
|
|
69,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John I. Cooper
|
|
|
1,065,615
|
(9)
|
|
|
54,915
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
This table includes estimated amounts payable assuming each
Named Executive Officers employment were terminated on
December 31, 2006 by us without cause or by Named Executive
Officer for good reason within twelve months following a
change-in-control
or in contemplation of a
change-in-control. |
|
(2) |
|
Amount shown is equal to the number of accelerated restricted
stock units multiplied by the share price on December 31,
2006, which was $17.24. |
31
|
|
|
(3) |
|
Compensation and benefits in excess of three times compensation
may be subject to a non-deductible 20% excise tax under Internal
Revenue Code 280G. Amounts in this column estimate the tax
gross-up
assuming a
change-in-control
date of December 31, 2006 at a stock price of
$17.24 per share. |
|
(4) |
|
Amount shown is equal to (a) three times the sum of
Mr. Tysons base salary as of December 31, 2006
plus his 2006 target bonus, plus (b) his 2006 pro-rata
bonus at the target level. |
|
(5) |
|
Mr. Tysons stock options that were otherwise unvested
at December 31, 2006 would have vested pursuant to the
terms of the employment agreement. However, as of
December 31, 2006, none of Mr. Tysons unvested
stock options had intrinsic value (i.e. none had an exercise
price that was less than the December 31, 2006 share
price of $17.24). |
|
(6) |
|
Amount shown is equal to (a) three times the sum of
Mr. Baileys base salary as of December 31, 2006
plus his 2006 target bonus, plus (b) his 2006 pro-rata
bonus at the target level. |
|
(7) |
|
Reflects the increase in the present
in-the-money
value of these awards resulting from acceleration of the vesting. |
|
(8) |
|
Amount shown is equal to (a) two times the sum of the Named
Executive Officers base salary as of December 31,
2006 plus the higher of his or her individual average of bonuses
for the five payouts prior to termination or his or her 2006
target bonus and, (b) his or her 2006 pro-rata bonus at the
target level. |
|
(9) |
|
Amounts listed are for former officers. Upon termination of
employment, these former officers were no longer eligible for
any future payments. |
Termination/No
Change-in-Control
(1)
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and
|
|
|
Accelerated
|
|
|
Accelerated RSU
|
|
|
|
Cash Severance
|
|
|
Perquisites
|
|
|
Option
|
|
|
Vesting
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
Vesting
|
|
|
($)
|
|
|
Current Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy C. Tyson
|
|
|
4,300,000
|
(2)
|
|
|
57,988
|
|
|
|
|
(3)
|
|
|
517,200
|
(4)
|
Bary G. Bailey
|
|
|
858,013
|
(5)
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
Wesley P. Wheeler
|
|
|
900,900
|
(6)
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
Charles J. Bramlage
|
|
|
805,119
|
(6)
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
Eileen C. Pruette
|
|
|
748,000
|
(6)
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
Former Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kim D. Lamon
|
|
|
1,571,158
|
(7)
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
John I. Cooper
|
|
|
403,286
|
(7)
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
This table includes estimated amounts payable assuming each
Named Executive Officers employment were terminated on
December 31, 2006 by us without cause or by Named Executive
Officer for good reason. |
|
(2) |
|
Amount shown is equal to (a) two times the sum of
Mr. Tysons base salary as of December 31, 2006
plus his 2006 target bonus, plus (b) his 2006 pro-rata
bonus at the target level. |
|
(3) |
|
Mr. Tysons stock options that were otherwise unvested
at December 31, 2006 would have vested pursuant to the
terms of the employment agreement. However, as of
December 31, 2006, none of Mr. Tysons unvested
stock options had intrinsic value (i.e. none had an exercise
price that was less than the December 31, 2006 share
price of $17.24). |
|
(4) |
|
Amount shown is equal to the number of accelerated restricted
stock units multiplied by the share price on December 31,
2006, which was $17.24. |
|
(5) |
|
Amount shown is equal to the sum of Mr. Baileys base
salary as of December 31, 2006 plus his average annual cash
bonus received by Mr. Bailey during 2005 and 2006 for
bonuses earned with respect to 2004 and 2005, respectively. |
|
(6) |
|
Amount shown is equal to (a) the sum of the Named Executive
Officers base salary as of December 31, 2006 plus the
lower of his or her average of bonuses for the five payouts
prior to termination or his or her 2006 target bonus and,
(b) his or her 2006 pro-rata bonus at the target level. |
|
(7) |
|
Amounts listed are amounts actually paid to former officers.
Upon termination of employment, these former officers were no
longer eligible for any future payments. |
32
DIRECTOR
COMPENSATION
|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualifed
|
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Robert W. OLeary(3)
|
|
|
|
|
|
|
201,292
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
708
|
(5)
|
|
|
202,000
|
|
Edward A. Burkhardt
|
|
|
81,500
|
|
|
|
120,885
|
|
|
|
3,237
|
|
|
|
|
|
|
|
|
|
|
|
4,501
|
(5)
|
|
|
210,123
|
|
Robert A. Ingram
|
|
|
|
|
|
|
173,920
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,759
|
(5)
|
|
|
181,679
|
|
Richard H. Koppes
|
|
|
105,875
|
|
|
|
120,885
|
|
|
|
3,237
|
|
|
|
|
|
|
|
|
|
|
|
6,483
|
(5)
|
|
|
236,480
|
|
Lawrence N. Kugelman
|
|
|
98,875
|
|
|
|
120,885
|
|
|
|
2,242
|
|
|
|
|
|
|
|
|
|
|
|
6,483
|
(5)
|
|
|
228,485
|
|
Theo Melas-Kyriazi
|
|
|
115,750
|
|
|
|
120,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,483
|
(5)
|
|
|
243,118
|
|
Randy H. Thurman(6)
|
|
|
23,250
|
|
|
|
60,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
570
|
(7)
|
|
|
84,510
|
|
Timothy C. Tyson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elaine Ullian
|
|
|
|
|
|
|
200,415
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,811
|
(5)
|
|
|
206,226
|
|
|
|
|
(1) |
|
This column represents the dollar amount recognized for
financial statement reporting purposes with respect to the 2006
fiscal year of restricted stock units granted in 2006 as well as
prior fiscal years, in accordance with SFAS 123(R). Fair
value is calculated using the closing price of Valeant stock on
the date of grant. The following directors had outstanding stock
awards at 2006 fiscal year-end: Mr. Burkhardt (20,120);
Mr. Ingram (37,168); Messrs. Koppes, Kugelman, and
Melas-Kyriazi (28,848 each); Mr. OLeary (3,280);
Mr. Thurman (21,741); and Ms. Ullian (28,410). |
|
(2) |
|
This column represents the dollar amount recognized for
financial statement reporting purposes with respect to the 2006
fiscal year for the fair value of stock options previously
granted to directors. The following directors had outstanding
stock options at 2006 fiscal year-end: Messrs. Burkhardt
and Koppes (15,000 each) and Mr. Kugelman (10,000). |
|
(3) |
|
Mr. OLeary passed away on August 14, 2006. |
|
(4) |
|
Includes restricted stock in lieu of cash for Board fees and
Board and Committee meeting fees pursuant to the election of
Mr. Ingram and Ms. Ullian. This election was not
available to Mr. Ingram or Ms. Ullian for 2007 because
of the restatement pending as of December 31, 2006.
Therefore, in 2007, all fees will be paid in cash. |
|
(5) |
|
Includes dividend equivalent rights, life insurance and
accidental death and dismemberment premiums. |
|
(6) |
|
Mr. Thurman resigned from the Board on April 4, 2006. |
|
(7) |
|
Includes life insurance and accidental death and dismemberment
premiums. |
Members of the Board, other than employees, were paid an annual
fee of $30,000 in 2006, payable quarterly, plus fees of $1,500
for each day of attendance at an in-person Board meeting; $1,500
for each in-person committee meeting attended and $750 for each
telephonic meeting attended, except our Finance and Audit
Committee members, who were paid a fee of $1,750 for each
in-person committee meeting attended and $875 for each
telephonic meeting attended. Each committee chair received an
additional annual fee of $7,500, payable quarterly, except our
Finance and Audit Committee Chair, who received an additional
annual fee of $10,000, payable quarterly. Directors are also
reimbursed for their
out-of-pocket
expenses in attending meetings and paid a $1,500 per diem
($750 for four hours or less) for services rendered to us in
their capacity as directors apart from meetings. Prior to
Mr. Ingrams appointment as Chairman of the Board,
Mr. Koppes served as presiding director. For his services
as such, he received $1,250. The Board can change the
compensation of directors at any time.
A Special Committee of the Board was formed to review
information related to historical stock option granting. The
Special Committee members were paid a fee of $1,750 for each
in-person meeting attended and $875 for each telephonic meeting.
Mr. Koppes and Mr. Melas-Kyriazi were the members of
this committee and this committee met ten times in 2006.
Mr. Melas-Kyriazi is the Chairman of this committee and was
granted 5,000
33
restricted stock units for his services as such. The restricted
stock units were issued two days following the date that the
shares underlying the restricted stock units became available
for issuance under our applicable registration statement.
Presently, on the date of each annual meeting (including the
Annual Meeting), non-employee directors holding office as
director after, and giving effect to, the election at the annual
meeting, are granted a number of restricted stock units equal to
the lesser of (a) $120,000 divided by the per share fair
market value on the date of grant, or (b) the economic
value of 25,000 options, assuming a strike price equal to the
per share fair market value on the date of grant. The economic
value of the 25,000 options is calculated using the
Black-Scholes option pricing model.
We and Mr. OLeary agreed to have
Mr. OLeary continue to serve as non-executive
Chairman of the Board, effective January 1, 2006. For the
period from January 1, 2006 until the 2006 Annual
Stockholders Meeting on May 23, 2006 (the Initial
Term), Mr. OLeary received a pro-rated retainer
of $12,500 and was paid meeting and other fees consistent with
the fee schedule generally applicable, as adopted from time to
time by the Board of our Company. For the period of May 23,
2006 until his death on August 14, 2006 (the
Subsequent Term), Mr. OLeary received the
retainer payable to all directors, paid on the schedule
generally applicable to directors. In consideration of his
service for the Initial Term, we granted Mr. OLeary
5,000 restricted stock units in December 2005. For the
Subsequent Term, as non-executive Chairman, we granted
Mr. OLeary a number of restricted stock units equal
in value to $240,000. The restricted stock units granted to
Mr. OLeary as non-executive Chairman were not vested
at the date of his death and thus were cancelled.
Mr. Ingram was elected Chairman of the Board on
August 14, 2006. The Compensation Committee recommended to
the Board, which accepted the recommendation, that
Mr. Ingram be granted $40,000 worth of restricted stock
units, prorated to reflect his service as Chairman of the Board
for less than a full twelve-month period (from August 14,
2006 through the Annual Meeting) and as determined by the per
share fair market value of the Companys Common Stock on
August 14, 2006. The restricted stock units were issued two
days following the date that the shares underlying the
restricted stock units became available for issuance under our
applicable registration statement.
Mr. Tyson received compensation in 2006 only in his
capacity as President and Chief Executive Officer of our
Company. See Summary Compensation Table.
COMMITTEE
REPORTS
The Report of the Compensation Committee of the Board of
Directors shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 (the
Securities Act) or under the Securities Exchange Act
of 1934 (the Exchange Act), except to the extent
that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such
Acts.
The Compensation Committee of our Company has reviewed and
discussed the Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management and, based on such review and discussions, the
Compensation Committee recommended to the Board that the
Compensation Discussion and Analysis be included in this Proxy
Statement.
Compensation Committee
Elaine Ullian, Chairperson
Robert A. Ingram
Lawrence N. Kugelman
Theo Melas-Kyriazi
34
EQUITY
COMPENSATION PLAN INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
Number of Securities
|
|
|
|
|
|
Future Issuance under
|
|
|
|
to Be Issued Upon
|
|
|
Weighted-Average
|
|
|
Equity Compensation Plans
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
(Excluding Securities
|
|
Plan Category
|
|
Outstanding Options
|
|
|
Outstanding Options
|
|
|
Reflected in Column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity Compensation Plans Approved
By Stockholders
|
|
|
13,351,000
|
|
|
$
|
18.28
|
|
|
|
11,017,000
|
(1)
|
Equity Compensation Plans Not
Approved By Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
13,351,000
|
|
|
$
|
18.28
|
|
|
|
11,017,000
|
|
|
|
|
(1) |
|
Includes 6,641,000 shares of Common Stock from our 2003
Employee Stock Purchase Plan. |
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of Messrs. Ingram,
Kugelman, and Melas-Kyriazi, and Ms. Ullian, each of whom
is a non-employee director for purposes of
Rule 16b-3
of the Securities Exchange Act of 1934, as amended. None of
these members is a current or former officer of our Company.
There were no compensation committee interlocks with other
companies in 2006 within the meaning of the SECs proxy
rules.
FINANCE
AND AUDIT COMMITTEE
The Report of the Finance and Audit Committee of the Board of
Directors shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act or under the
Exchange Act, except to the extent that we specifically
incorporate this information by reference, and shall not
otherwise be deemed filed under such Acts.
All the members of the Finance and Audit Committee meet the
independence and experience requirements of the New York Stock
Exchange listing standards and the Securities and Exchange
Commission regulations. The Board has also determined that
Mr. Theo Melas-Kyriazi meets the requirements for being the
audit committee financial expert, as defined by
regulations of the SEC.
Report
of the Finance and Audit Committee
The Finance and Audit Committee, comprised of independent
directors, is delegated by the Board to monitor the integrity of
our financial statements, the independent accounting firms
qualifications and independence, the performance of the
independent accounting firm and our internal auditors, and our
Companys compliance with legal and regulatory requirements.
Management has primary responsibility for our financial
statements and the overall reporting process as well as
establishing and maintaining our internal controls.
PricewaterhouseCoopers LLP, our independent registered
accounting firm (the independent auditors) have
responsibility for expressing an opinion as to the quality and
acceptability of the audited financial statements in accordance
with generally accepted accounting principles in the United
States and on the effectiveness of our internal controls.
The Finance and Audit Committee met with management and the
independent auditors to review and discuss the audited financial
statements for the year ended December 31, 2006, as well as
managements assessment of the effectiveness of our
internal controls over financial reporting and the independent
auditors assessment of our internal controls over
financial reporting. The independent auditors, as well as the
internal auditors had full access to the Finance and Audit
Committee, including regular meetings without management present.
The Finance and Audit Committee received from and discussed with
the independent auditors the written disclosures and the letter
required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) confirming
their independence. Additionally, the Committee discussed with
the independent auditors the matters required by the
Codification of Statements on Auditing Standards (SAS 61 and 90).
35
The Finance and Audit Committee acts only in an oversight
capacity and must rely on the information provided to it and on
the representations made by management and the independent
auditors. Based on the aforementioned reviews and discussions,
and the report of the independent auditors, the Committee
recommended to the Board that the audited financial statements
for the year ended December 31, 2006, be included in our
Companys Annual Report on
Form 10-K
filing with the Securities and Exchange Commission.
Finance and Audit Committee
Theo Melas-Kyriazi, Chairman
Edward A. Burkhardt
Richard H. Koppes
Lawrence N. Kugelman
CERTAIN
TRANSACTIONS
The Director of Consumer Markets for our Company, Richard
Cunningham, is Mr. OLearys
son-in-law.
As Director of Consumer Markets, Mr. Cunningham was paid
approximately $267,660 in salary, bonus and commission in 2006.
In addition, in 2006 Mr. Cunningham received 2,400 stock
options granted at the fair market value at date of grant price
of $18.68.
While our Company has not adopted a formal policy for reviewing
transactions with related persons (directors,
director nominees and executive officers or their immediate
family members, or stockholders owning 5% or greater of our
Companys outstanding stock) in which the amount exceeds
$120,000 and in which the related person has a direct or
indirect material interest, our Corporate Compliance Officer
oversees our conflict of interest policy, which is part of our
Code of Business Conduct and Ethics. Our conflict of interest
policy applies to employees and directors and is intended to
avoid situations in which any of those persons has a potential
or actual conflict of interest with our Company. Under this
policy, before engaging in any of the following activities, a
director or employee must make full written disclosure to, and
receive prior written approval from the Finance and Audit
Committee or the applicable senior supervisor, before engaging
in any such activity:
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Ownership by a director or employee or any member of the
directors or employees family of a substantial
interest in any concern that does business with our Company,
whether as a supplier, dealer or customer, or are a competitor
(except in the case of a publicly owned corporation whose
securities are traded on the open market).
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Serving as a director, officer, employee, consultant, advisor,
or in any other capacity for any business or other organization
with which our Company currently (or potentially) has a business
relationship or which is, or can expect to become, a competitor
of our Company.
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Engaging in an outside activity with an individual, business or
organization which currently (or potentially) has a competitive
or business relationship with our Company where such activity is
likely to decrease the impartiality, judgment, effectiveness or
productivity expected from an employee.
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Performance by a director or employee or a member of the
directors or employees family of services for any
outside concern or individual that does business with our
Company.
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Outside employment which conflicts or might be reasonably
expected to conflict with the normal duties of the director or
employee.
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Any director or employee involved in any of the types of
relationships described in the conflict of interest policy
should immediately and fully disclose the relevant circumstances
to the Finance and Audit Committee, in the case of a director,
or his or her immediate supervisor, in the case of an employee,
or the Corporate Compliance Officer, for a determination as to
whether a potential or actual conflict of interest exists. Where
appropriate, the Corporate Compliance Officer will bring the
potential or actual conflict of interest to the Finance and
Audit Committee for its review.
36
In addition, our executive officers, directors and director
nominees complete annual questionnaires intended to identify any
related-person transactions. All executive officers, directors
and director nominees are required to identify, to the best of
their knowledge after reasonable inquiry, business and financial
affiliations involving themselves or their immediate family
members that could reasonably be expected to give rise to a
reportable related-party transaction. Any potential
related-person transactions that are identified in the
questionnaires are subject to review by the Finance and Audit
Committee to determine whether it is advisable for our Company
to amend or terminate the transaction. If a member of the
Finance and Audit Committee is involved in the transaction, that
director will be recused from all discussions and decisions
about the transaction. Any such transaction must be approved in
advance wherever practicable, and if not practicable, is subject
to review as promptly as practicable.
Our Company is studying the advisability of implementing a
policy directed more specifically to related-party transactions.
37
PROPOSAL NO. 2
RATIFICATION
OF APPOINTMENT OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
The Finance and Audit Committee has appointed
PricewaterhouseCoopers LLP to serve as our independent
registered public accounting firm for the fiscal year ending
December 31, 2007. Although our Company is not required to
seek stockholder ratification of this appointment, the Board
believes it is sound corporate governance to do so. If
stockholders do not ratify the appointment of
PricewaterhouseCoopers LLP, the Finance and Audit Committee will
consider the stockholders action in determining whether to
appoint PricewaterhouseCoopers LLP as our independent accounting
firm for 2007. Even if the appointment is ratified, the Finance
and Audit Committee, in its discretion, may direct the
appointment of different independent accounting firms at any
time during the year if they determine that such change would be
in the best interests of our Company and our stockholders. A
representative of PricewaterhouseCoopers LLP will be present at
the Annual Meeting and will have an opportunity to make a
statement if desired. Further, the representative will be
available to respond to appropriate stockholder questions
directed to him or her.
The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote
at the Annual Meeting will be required to ratify the appointment
of PricewaterhouseCoopers LLP. Abstentions will be counted
toward the tabulation of votes cast on proposals presented to
the stockholders and will have the same effect as negative
votes. Broker non-votes are counted towards a quorum, but are
not counted for any purpose in determining whether this matter
has been approved.
The Board of Directors of our Company recommends that the
Stockholders vote FOR Proposal No. 2.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FEES
Audit
Fees
The aggregate fees billed for professional services rendered by
PricewaterhouseCoopers LLP for the fiscal years ended
December 31, 2006 and December 31, 2005 for the audit
of our consolidated annual financial statements and the reviews
of the financial statements included in our
Forms 10-Q,
the audits of our internal control over financial reporting with
the objective of obtaining reasonable assurance about whether
effective internal control over financial reporting was
maintained in all material respects, the attestation of
managements report on the effectiveness of internal
control over financial reporting, or services that are normally
provided by PricewaterhouseCoopers LLP in connection with
statutory and regulatory filings or engagements, were
approximately $5,175,000 and $4,047,000, respectively.
Audit-Related
Fees
The aggregate fees billed for assurance and related services
rendered by PricewaterhouseCoopers LLP during the fiscal years
ended December 31, 2006 and December 31, 2005 that are
reasonably related to the performance of the audit or review of
the Companys financial statements and are not included in
Audit Fees above were $69,000 and $430,000,
respectively.
Tax
Fees
The aggregate fees billed for tax compliance, tax advice and tax
planning services rendered by PricewaterhouseCoopers LLP during
the fiscal years ended December 31, 2006 and
December 31, 2005 were $500,000 and $715,000, respectively.
All
Other Fees
In addition to the fees described above, aggregate fees of
$11,000 and $27,000 respectively, were billed by
PricewaterhouseCoopers LLP during the years ended
December 31, 2006, and December 31, 2005 for other
services performed.
38
All other fees related to fees for licenses to a business
process best practices database and assistance with a subpoena
served on the Company.
All fees described above were either approved by the Finance and
Audit Committee or incurred in accordance with the pre-approval
policy adopted by the Finance and Audit Committee.
The Finance and Audit Committee pre-approved the audit and
non-audit services performed by the independent accounting firm
in order to assure that the provision of such services does not
impair the accounting firms independence. These services
include audit services, audit-related services, tax services and
other services. The Finance and Audit Committee has adopted a
policy for the pre-approval of services provided by the
independent accounting firm. Any proposed services exceeding
pre-approved levels were pre-approved by the Finance and Audit
Committee.
OTHER
FOR THE 2008 ANNUAL MEETING
Our Certificate of Incorporation provides that stockholders
seeking to bring business before an annual meeting of
stockholders, or to nominate candidates for election as
directors at an annual meeting of stockholders, must provide
timely notice in writing. To be timely, a stockholders
notice generally must be delivered to, or mailed and received
at, our principal executive offices not less than 60 days
nor more than 90 days prior to the scheduled date of the
annual meeting, regardless of any postponement, deferral or
adjournment of that meeting. However, if less than 70 days
notice or prior public disclosure of the date of the meeting is
given or made to stockholders, then to be timely, notice by the
stockholder must be given not later than the close of business
on the 10th day following the earlier of (i) the day
on which the notice of the date of the meeting was mailed, or
(ii) the day on which such public disclosure was made.
In addition, SEC rules provide that a stockholder wishing to
include a proposal in the proxy statement for our 2008 annual
meeting must submit the proposal so that it is received by us at
our principal executive offices (One Enterprise, Aliso Viejo,
California 92656, Attention: Secretary) no later than
December 26, 2007 in a form that complies with applicable
regulations. If the date of the 2008 annual meeting is advanced
or delayed more than 30 days from the date of the 2007
annual meeting, stockholder proposals intended to be included in
the proxy statement for the 2008 annual meeting must be received
by us within a reasonable time before we begin to print and mail
the proxy statement for the 2008 annual meeting. Upon any
determination that the date of the 2008 annual meeting will be
advanced or delayed by more than 30 days from the date of
the 2007 annual meeting, we will disclose the change in the
earliest practicable Quarterly Report on
Form 10-Q.
SEC rules also govern a companys ability to use
discretionary proxy authority with respect to stockholder
proposals that were not submitted by the stockholders in time to
be included in the proxy statement. In the event a stockholder
proposal is not submitted to the Company prior to March 10,
2008, the proxies solicited by the Board for the 2008 annual
meeting of stockholders will confer authority on the
proxyholders to vote the shares in accordance with their best
judgment and discretion if the proposal is presented at the 2008
annual meeting of stockholders without any discussion of the
proposal in the proxy statement for such meeting.
Stockholder proposals and nominations must be submitted in
conformance with our Certificate of Incorporation and the rules
of the Securities and Exchange Commission. The following is a
summary of the requirements for submitting a nomination or a
proposal in accordance with our Certificate of Incorporation.
Our Certificate of Incorporation requires a stockholders
notice of a proposed nomination for director to include the
following:
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the name, age, business address or residence address of each
proposed nominee;
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the principal occupation or employment of the proposed nominee;
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the number (and class) of shares of our stock owned by the
proposed nominee;
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any other information concerning the proposed nominee that we
would be required to include in the proxy statement, including
the proposed nominees written consent to being named in the
proxy statement and to serving as director if elected;
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the name and address of the stockholder making the nomination,
and any other stockholders known to be supporting the
nomination, as they appear on our books;
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the number (and class) of shares of our stock owned by the
stockholder and any other stockholders known to be supporting
the nomination, on the day of the notice;
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a representation that the holder is a stockholder entitled to
vote his or her shares at the annual meeting and intends to vote
his or her shares in person or by proxy for the person nominated
in the notice; and
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a description of all arrangements or understandings between the
stockholder(s) supporting the nomination and each nominee.
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Our Certificate of Incorporation requires a stockholders
notice of a proposal to be submitted to the stockholders at an
annual meeting to include the following:
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a summary, in 500 words or less, of the business desired to be
brought before the annual meeting and the reasons for conducting
such business at the annual meeting;
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the name and address of the stockholder submitting the proposal,
and any other stockholders known to be supporting the proposal,
as they appear on our books;
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the number (and class) of shares of our stock owned by the
stockholder and any other stockholders known to be supporting
the proposal, on the date of the notice;
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a description, in 500 words or less, of any interest of the
stockholder in such proposal; and
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a representation that the holder is a stockholder entitled to
vote his or her shares at the annual meeting and intends to vote
his or her shares in person or by proxy at the meeting to
present the proposal.
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ANNUAL
REPORT
The Annual Report to Stockholders for the year ended
December 31, 2006 (including
Form 10-K)
is being mailed to stockholders with this Proxy Statement. The
Annual Report does not form part of the material for the
solicitation of proxies.
PROXY
SOLICITATION
The costs of preparing and mailing this Proxy Statement and
related Notice and the enclosed form of Proxy will be paid by
us. In addition to soliciting proxies by mail, employees of our
Company may, at our expense, solicit proxies in person, by
telephone, telegraph, courier service, advertisement, telecopier
or other electronic means. We have retained Georgeson Inc.
(Georgeson) to assist in the solicitation of
proxies. We will pay fees to Georgeson not to exceed $9,000,
plus reasonable
out-of-pocket
expenses incurred by them. We will pay brokers, nominees,
fiduciaries and other custodians their reasonable fees and
expenses for forwarding solicitation material to principals and
for obtaining their instructions.
HOUSEHOLDING
OF PROXY MATERIALS
The SEC has adopted rules that permit companies and
intermediaries (e.g., brokers) to satisfy the delivery
requirements for proxy statements and annual reports with
respect to two or more stockholders sharing the same address by
delivering a single proxy statement addressed to those
stockholders. This process, which is commonly referred to as
householding, potentially means extra convenience
for stockholders and cost savings for companies.
40
This year, a number of brokers with account holders who are our
stockholders will be householding our proxy
materials. A single proxy statement will be delivered to
multiple stockholders sharing an address unless contrary
instructions have been received from the affected stockholders.
Once you have received notice from your broker that they will be
householding communications to your address,
householding will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you
no longer wish to participate in householding and
would prefer to receive a separate proxy statement and annual
report, please notify your broker, or direct your written
request to Valeant Pharmaceuticals International, Attn: Investor
Relations, One Enterprise, Aliso Viejo, California 92656.
Stockholders who currently receive multiple copies of the proxy
statement at their address and would like to request
householding of their communications should contact
their broker.
MISCELLANEOUS
If any other matters are properly presented for consideration at
the Annual Meeting, including, among other things, consideration
of a motion to adjourn the meeting to another time or place in
order to solicit additional proxies in favor of the
recommendation of the Board, the persons named as Proxyholders
and acting thereunder intend to vote the share represented by
the Proxies on such matters in accordance with the
recommendation of the Board and the authority to do so is
included in the Proxy.
As of the date this Proxy Statement goes to press, the Board of
Directors knows of no other matters which are likely to come
before the Annual Meeting.
By Order of the Board of Directors,
Robert A. Ingram
Chairman of the Board
Aliso Viejo, California
April 24, 2007
WE WILL MAIL WITHOUT CHARGE UPON WRITTEN REQUEST A COPY OF
OUR MOST RECENT ANNUAL REPORT ON
FORM 10-K,
INCLUDING THE FINANCIAL STATEMENTS, SCHEDULES AND A LIST OF
EXHIBITS. REQUESTS SHOULD BE SENT TO: CORPORATE SECRETARY,
VALEANT PHARMACEUTICALS INTERNATIONAL, ONE ENTERPRISE, ALISO
VIEJO, CALIFORNIA 92656. THE ANNUAL REPORT IS ALSO AVAILABLE
FREE OF CHARGE ON THE COMPANY WEBSITE: WWW.VALEANT.COM
41
ANNEX A
CORPORATE
GOVERNANCE GUIDELINES
PURPOSE
The primary objective of Valeant Pharmaceuticals International
(Company) is to maximize stockholder value over the
long term while adhering to the laws of the jurisdictions within
which it operates and observing the highest ethical standards.
SELECTION
AND COMPOSITION OF THE BOARD
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I.
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Corporate
Governance/Nominating Committee
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As a permanent part of the structure of the Board of Directors
(Board) there will be a standing Corporate
Governance/Nominating Committee responsible for
identifying individuals qualified to become Board members,
consistent with criteria approved by the Board, and selecting or
recommending that the Board select, the Director nominees for
the next annual meeting of shareholders, as well as developing
and recommending to the Board a set of corporate governance
guidelines applicable to the corporation and overseeing the
evaluation of the Board. The Committee shall review the
composition of the Board for the appropriate skills and
characteristics required of members of the Board in the context
of the then current
make-up of
the Board. This assessment should include consideration of
issues of judgment, integrity, diversity and skills, including,
but not limited to, understanding the business of the Company
and possessing a relevant international background
all in the context of an assessment of the perceived needs of
the Board at that point in time. The Committee is open to
consider recommendations from all interested parties.
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II.
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Compensation
Committee
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As a permanent part of the structure of the Board there will be
a standing Compensation Committee responsible for reviewing and
approving corporate goals and objectives relevant to CEO
compensation, evaluating the CEOs performance in light of
those goals and objectives, and, either as a committee or
together with the other independent directors (as directed by
the Board), determining and approving the CEOs
compensation level based on this evaluation. The Committee shall
also make recommendations to the Board with respect to non-CEO
executive officer compensation, and incentive compensation and
equity-based plans that are subject to Board approval.
Additionally, the Committee is responsible for producing a
Compensation Committee report on executive officer compensation
as required by the SEC to be included in the Companys
annual proxy statement or annual report on
Form 10-K
filed with the SEC.
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III.
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Finance &
Audit Committee
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As a permanent part of the structure of the Board there will be
a standing Finance & Audit Committee responsible for,
at least annually, obtaining and reviewing a report by the
independent auditor describing: the firms internal
quality-control procedures; any material issues raised by the
most recent internal quality-control review, or peer review, of
the firm, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years,
respecting one or more independent audits carried out by the
firm, and any steps taken to deal with any such issues; and (to
assess the auditors independence) all relationships
between the independent auditor and the Company. In addition,
the Committee must meet the requirements set out in
Rule 10-A-3(b)(2),
(3), (4) and (5) of the Exchange Act.
A-1
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IV.
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Selection
and Orientation of New Directors
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The Board shall be responsible for selecting its own members and
in recommending them for presentation to the stockholders for
election. The Board delegates the screening process involved to
the Corporate Governance/Nominating Committee. The
Corporate Governance/Nominating Committee will recommend
to the Board the names of prospective Board members. The Board
will review and act on these recommendations, forwarding them to
the shareholders where appropriate. The Board and the Company
have a complete orientation process for new Directors that
includes background material, meetings with senior management,
and visits to Company facilities.
A Director must attend at least one accredited outside Director
Education session every three years following their election,
which session shall be pre-approved by the Chairman of the
Board. In addition, all Directors are strongly encouraged to
participate in at least one accredited, Chairman-approved,
Director education session annually.
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VI.
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Corporate
Governance/Nominating Committee Review of Board and Majority
Vote Guidelines
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The Corporate Governance/Nominating Committee, after
consultation with the Chairman of the Board and the Chief
Executive Officer, will formally review each Directors
continuation on the Board every three years, preceding
renomination.
In order for any incumbent director to become a nominee of the
Board for further service on the Board, such person must tender
an irrevocable resignation, contingent on (i) that person
not receiving a majority of the votes cast, and
(ii) acceptance of the resignation by the Board.
BOARD
LEADERSHIP
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VII.
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Chairman,
Chief Executive Officer and Lead Director
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The Board believes it is desirable that the role of Chairman and
Chief Executive Officer should not be combined in one
individual. However, from time to time it may be desirable, in
certain circumstances, to combine these roles in one individual.
Whenever the Chairman and Chief Executive Officer roles are
combined, then the Board shall appoint a Lead Director to
preside over the non-management sessions of the Board.
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VIII.
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Executive
Sessions of Non-Management Directors
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The Chairman will call for and preside over meetings of the
non-management Directors at each regularly scheduled Board
meeting.
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IX.
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Mix of
Management and Independent Directors
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The Board believes that, as a matter of policy, there should be
a substantial majority of Independent Directors on the Board.
BOARD
COMPOSITION AND PERFORMANCE
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X.
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Board
Definition of What Constitutes Independence for
Directors
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The definition of independent director will be in
accordance with the guidelines of the New York Stock Exchange
(Independent Director). No director will be deemed
independent unless the Board affirmatively determines that the
director has no material relationship with the Company. To
assist in meeting this objective, the Board has adopted certain
specific categorical standards to ascertain whether a director
has
A-2
a material relationship with the Company, either directly or as
a partner, shareholder or officer of an organization, its parent
or a consolidated subsidiary that has a relationship with the
Company.
The following will be cause for disqualifications of
independence:
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(a)
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a director who is an employee, or whose immediate family member
is an executive officer, of the Company, its parent or a
consolidated subsidiary (other than employment as interim
Chairman or CEO), until three years after the end of such
employment relationship;
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(b)
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a director who receives, or whose immediate family member
receives, more than $100,000 per year in direct
compensation from the Company, its parent or a consolidated
subsidiary, other than director and committee fees and pension
or other forms of deferred compensation for prior services
(provided such compensation is not contingent in any way on
continued service) (and other than compensation for service as
interim Chairman or CEO or received by an immediate family
member for service as a non-executive employee), until three
years after he or she ceases to receive more than
$100,000 per year in such compensation;
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(c)
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a director who is affiliated with or employed, or whose
immediate family member is affiliated with or employed in a
professional capacity, by a present or former internal or
external auditor of the Company, its parent or a consolidated
subsidiary, until three years after the end of the affiliation
or the employment or auditing relationship;
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(d)
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a director who is an executive officer, or whose immediate
family member is an executive officer, of another company whose
compensation committees membership includes an executive
officer of the Company, its parent or a consolidated subsidiary
is not independent until three years after the end of such
service or the employment relationship;
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(e)
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a director who is an executive officer or employee, or whose
immediate family member is an executive officer, of a company
that makes payments to, or receives payments from, the Company
for the greater of $1 million, or 2% of such other
companys consolidated gross revenues, is not independent
until three years after falling below such threshold.
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The following will not be considered a material relationship:
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(a)
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if a director, within the preceding three years, serves as an
officer, director or trustee of a charitable organization, and
the Companys discretionary charitable contributions to the
organization have not exceeded the greater of $1 million or
2% of such charitable organizations consolidated gross
revenues.
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For relationships not covered by the aforementioned categorical
standards, the determination of the existence of a material
relationship shall be made by those Board members who satisfy
the independence guidelines as defined above.
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XI.
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Director
Responsibilities
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The Board represents and oversees the interests of shareholders
of the Company. Director responsibilities include:
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review, approval and monitoring of critical business, financial
strategies and corporate objectives;
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assessing major risks facing the Company and providing
strategies to ameliorate those risks;
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overseeing processes designed to ensure Company compliance with
applicable laws, regulations and corporate policies;
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adopt policies of ethical conduct and monitor compliance with
those policies;
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monitoring the effectiveness of the Companys internal
controls;
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review, approval and monitoring of major corporate actions;
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overseeing processes designed to ensure the accuracy and
completeness of the companys financial reporting;
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overseeing succession planning for the chief executive officer;
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overseeing the compensation of the Companys principal
officers elected by the Board;
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providing counsel and assistance to the Companys
leadership.
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XII.
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Stock
Ownership Requirement for Directors
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Effective January 1, 2004, each Director must own at least
three times their annual retainer within four years. This amount
includes values attributable to options. New Board members must
meet this requirement within four years of their initial service
date.
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XIII.
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Former
Chairman/Chief Executive Officers Board
Membership
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The Board believes this arrangement is a matter to be decided in
each individual instance. When the Chairman of the Board or
Chief Executive Officer resigns from that position,
he/she
should submit
his/her
resignation from the Board at the same time. Whether the
individual continues to serve on the Board is a matter for
discussion at that time with the new Chairman of the Board or
Chief Executive Officer and the Board.
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XIV.
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Director
Job Status Change
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If the occupation, career, or principal business activity of a
director materially changes such that the directors
occupation, career or principal business activity is
significantly different from, or operates at a significantly
reduced level from, the roles and responsibilities described in
the proxy for the year in which the director was last elected as
a Board member, the director shall offer to resign from the
Board. The Board shall determine whether to accept the
resignation or ask that the director continue to serve on the
Board.
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XV.
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Chief
Executive Officer Outside Board Membership
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The Chief Executive Officer shall obtain Board approval prior to
accepting a nomination to the board of directors of any
publicly-traded company. Additionally, the Chief Executive
Officer shall not serve as a member of the board of directors of
more than one publicly-traded company other than the Company.
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XVI.
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Director
Membership on Additional Boards
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It is the policy of the Company that Company Directors do not
serve on the board of directors of more than five public
companies in addition to the Company. The Corporate
Governance/Nominating Committee may recommend an exception to
this policy to the Board upon application of a Director, which
application must be submitted to the Corporate
Governance/Nominating Committee. The Corporate
Governance/Nominating Committee shall review the matter and make
a recommendation to the Board, which shall grant or deny the
exception, in its discretion.
No Director shall be nominated to serve for more than five
three-year terms.
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XVIII.
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Board
Compensation
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It is appropriate for the staff of the Company to report
periodically to the Compensation Committee on the status of
Board compensation in relation to other companies. As part of a
Directors total compensation and to create a direct
linkage with corporate performance, the Board believes that a
meaningful portion of a Directors compensation should be
held in restricted stock units (RSUs) or shares of the Company.
Changes in Board compensation, if any, should come at the
suggestion of the Compensation Committee, but with concurrence
by the Board.
A-4
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XIX.
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Boards
Interaction with Investors, Media and the Public
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The Chief Executive Officer
and/or
his/her designees are authorized to speak on behalf of the
Company. The Chairman of the Board or individual Board members
may, from time to time, be asked by the Chief Executive Officer
to speak on behalf of the Company with various constituencies.
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XX.
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Annual
Meeting Participation
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The Board considers it important for Board members to be present
and available to shareholders at the Companys Annual
Meeting. Directors are expected to attend the Companys
Annual Meeting.
BOARD
RELATIONSHIP TO SENIOR MANAGEMENT
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XXI.
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Regular
Attendance of
Non-Directors
at Board Meetings
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The Board welcomes the regular attendance at each Board meeting
of non-Board members who are in the most senior management
positions of the Company.
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XXII.
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Board
Access to Senior Management
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Board members will have complete access to the Companys
management. It is assumed that Board members will use proper
judgment to be sure that this contact is not distracting to the
business operation of the Company. Accordingly, the Board is
encouraged to coordinate these communications with the Chief
Executive Officer. The attendance at Board meetings of
non-members of the Board will be at the discretion of the Board.
In the normal course of business, the Chairman of the Board, in
consultation with the Chief Executive Officer, will invite
appropriate management and
non-directors
to the meetings.
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XXIII.
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Selection
of Agenda Items for Board Meetings
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The Chairman, in consultation with the Chief Executive Officer
will establish the agenda for each Board meeting. Each Board
member is free to suggest to the Chairman the inclusion of items
on the agenda.
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XXIV.
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Board
Materials Distributed in Advance
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Information and data that is important to the Boards
understanding of the business to be addressed at the meeting
will be distributed in writing to the Board before the Board
meets. Management will make every attempt to see that this
material is as complete and brief as possible while still
providing the desired information. The material should be
available 5 days in advance of the proposed or scheduled
date of the meeting.
COMMITTEE
MATTERS
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XXV.
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Number,
Structure and Independence of Committees
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From time to time, the Board may want to form a new committee or
disband a current committee depending upon the circumstances.
Each committee will have a charter approved by the Board. The
current standing committees are Corporate
Governance/Nominating, Compensation, and Finance and
Audit. Membership in the Corporate Governance/Nominating,
Compensation and Finance and Audit Committees will consist only
of Independent Directors.
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XXVI.
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Assignment
and Rotation of Committee Members
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The Board believes that the corporate governance process is
facilitated by an active and involved committee structure. The
Board believes that the periodic rotation of committee
chairmanships and memberships is in the best interests of the
Company and its stockholders. The Chairman of the Board,
A-5
after consultation with other members of the Board and the Chief
Executive Officer, will consider the assignment of committee
memberships and chairmanships and submit
his/her
nominees to the full Board for approval. All Board members will
participate in the Committee structure of the Board.
The chairman of a committee, in consultation with the
appropriate members of the committee and management, will
develop the committee agendas.
LEADERSHIP
DEVELOPMENT
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XXVIII.
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Formal
Evaluation of the Chairman and Chief Executive Officer
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The Chairman of the Board, with input from all Board members,
will manage the performance evaluation of the Chief Executive
Officer at least annually and communicate
his/her
recommendations in writing to the Compensation Committee . The
Compensation Committee will prepare a written compensation
recommendation for action by the full Board.
The Corporate Governance/Nominating Committee will be
responsible for the coordination of an annual self-evaluation of
the Boards performance and procedures to determine whether
it and its committees are functioning effectively, and will
report the results of the evaluation to the Board. The Board
approved the Board Assessment Workplan attached hereto as
Annex B.
Succession planning will include policies and principles for CEO
selection and performance review, as well as policies regarding
succession in the event of an emergency or the retirement of the
chief executive officer. Succession planning should also be
considered on a continuing basis for all senior managers in the
event he/she
may be unexpectedly unable to serve or found unqualified for
promotion. The Board, through the Governance/Nominating
Committee, will review the succession plans on an annual basis.
The Board or, a committee may seek legal or other expert advice
from a source independent of management. Generally, this
engagement would be with the knowledge of both the Chief
Executive Officer and the Chairman of the Board.
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XXXII.
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Corporate
Reporting and Communications Helpline
|
Any shareholder or interested party wishing to communicate with
the Board or with a specific director, may do so by accessing
the Companys helpline in the United States and Canada by
calling
(800) 461-9330,
or internationally by dialing collect to
(720) 514-4400.
The information will be relayed to the Companys Chief
Governance Officer & Corporate Secretary for
coordination of delivery to the Board or specific director.
The Company has established an anonymous reporting process via
the corporate helpline at
(800) 461-9330
in the United States and Canada, or a collect call can be placed
internationally at
(720) 514-4400
for reporting by any employee or shareholder of concerns
relative to unethical or inappropriate behavior on the part of a
Company employee or matters regarding suspected unethical
financial practices.
REVISION
OF GUIDELINES
These guidelines may be altered from time to time by
recommendation of the Governance/Nominating Committee and the
approval of the full Board.
A-6
ANNEX B
BOARD AND
COMMITTEE ASSESSMENT PROCESS AND WORKPLAN
This Workplan has been approved by the Board of Directors to
guide the Board assessment process through various stages. The
plan includes several phases through 2006, which incorporate
enhancements and evolve to expand the scope of the yearly
assessment process. It is anticipated that this Plan will be
reviewed on an on-going basis to ensure that the Plan
encompasses opportunities for improvement as appropriate.
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Focus Group(s)
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Individual Evaluator(s)
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Feedback
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2003
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Board
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Board Members
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Full Board
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Chairman and Lead Director
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Board Members
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Chairman and Lead Director
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II
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2004
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Board
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Board Members
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Full Board
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Board Committees
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Members of Respective
Committees
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Individual Committees
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Chairman and Lead Director
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Board Members
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Chairman and Lead Director
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III
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2005
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Board
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Board Members
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Full Board
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Board Committees
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Board Members and Members of
Respective Committees
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Full Board and Individual
Committees
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Chairman and Lead Director
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Board Members
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Chairman and Lead Director
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IV
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2006
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Board
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Board Members
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Full Board
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Board Committees
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Board Members and Members of
Respective Committees
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Full Board and Individual
Committees
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Chairman
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Board Members
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Full Board and Chairman
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Individual Board Members
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All Board Members (Peer Review)
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Individual Board Members
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Note: Effective in August, 2006 the Board appointed an
independent Director as Chairman, thereby eliminating the need
for a Lead Director.
B-1
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
VALEANT PHARMACEUTICALS INTERNATIONAL
ONE ENTERPRISE, ALSO VIEJO, CALIFORNIA 92656
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON MAY 22, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
VALEANT PHARMACEUTICALS INTERNATIONAL
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P R O X Y
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The undersigned hereby appoints each of Robert A. Ingram and Christina de Vaca, together and
separately, as Proxyholders, each with the power to appoint his or her substitute, and hereby
authorizes each of them to represent and to vote, without duplication, as designated below, all the
shares of common stock of Valeant Pharmaceuticals International (the Company) held of record by
the undersigned on April 10, 2007 at the Annual Meeting of Stockholders to be held at 1:00 p.m.,
local time, on May 22, 2007, and any adjournments or postponements thereof. |
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This proxy when properly executed will be voted in the manner directed herein by the undersigned
stockholder. If no instructions are indicated herein, this proxy will be treated as a grant of
authority to vote FOR the nominees to the Board of Directors listed on the reverse side of this
proxy card and FOR the ratification of the appointment of PricewaterhouseCoopers LLP as independent registered public
accounting firm for the Company, to the extent authorized by Rule 14a-4(c) promulgated under the
Securities Exchange Act of 1934, as amended. This proxy confers discretionary authority to vote on
any other matter, if any, that may properly come before the meeting. This proxy shall be voted in accordance with the recommendations of the
Board of Directors with respect to such other matters that may be properly brought before the
annual meeting or any continuation, adjournment or postponement thereof, to the extent authorized by Rule 14a-4(c) promulgated under the Securities Exchange Act of 1934, as amended.
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This proxy revokes all prior proxies given by the undersigned with respect to matters covered by
this proxy and the voting of shares of common stock at the 2007 Annual Meeting of Stockholders. |
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(Continued, and to be signed, on the reverse side.) |
THERE ARE THREE WAYS TO VOTE YOUR PROXY
TELEPHONE VOTING
This method of voting is available for residents of the U.S. and Canada. On a touch tone telephone,
call TOLL FREE 1-877-381-4017, 24 hours a day, 7 days a week. Have this proxy card ready, then
follow the prerecorded instructions. Your vote will be confirmed and cast as you have directed.
Available until 5:00 p.m., Eastern Daylight Time, on May 21, 2007.
INTERNET VOTING
Visit the Internet voting Web site at http://proxy.georgeson.com. Have this proxy card ready and
follow the instructions on your screen. You will incur only your usual Internet charges. Available
until 5:00 p.m., Eastern Daylight Time, on May 21, 2007.
VOTING BY MAIL
Simply sign and date your proxy card and return it in the postage-paid envelope to Georgeson, Inc.
Wall Street Station, P.O. Box 1100, New York, NY 10269-0646. If you are
voting by telephone or the Internet, please do not mail your proxy card.
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
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x
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Please mark votes as in this example. |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITS NOMINEES
TO THE BOARD OF DIRECTORS AND FOR PROPOSAL 2.
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1.
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Election of three persons to the Board of Directors of the Company.
Nominees: Norma Ann Provencio, Timothy C. Tyson and Elaine Ullian
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FOR ALL
NOMINEES LISTED
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WITHHOLD
AUTHORITY FOR
ALL NOMINEES
LISTED |
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£
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£ |
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Instruction: To
withhold authority
to vote for any
individual
nominee(s), write
the name(s) of such
nominee(s) in the
following space. |
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FOR
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AGAINST
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ABSTAIN |
2.
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Ratification of the
appointment of
PricewaterhouseCoopers LLP as
independent
registered public
accounting firm for
our Company.
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£
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£
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£ |
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3. |
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Other Business. In the Proxyholders discretion, to vote on any other
matter as properly may come before the meeting and any continuation,
postponement or adjournment thereof. |
The undersigned acknowledges receipt of the copy of the Notice of Annual Meeting and Proxy
Statement (with enclosures and attachments) of our Company relating to the 2007 Annual Meeting of
Stockholders.
The board of directors recommends that you vote FOR the election of each
of the nominees in Proposal No. 1 and FOR the ratification of the appointment of PricewaterhouseCoopers, LLP as
our independent registered public accounting firm. All proposals to be acted upon are proposals of the Company. If any
other business is properly presented at the meeting, including, among other things, consideration of a motion to
adjourn the meeting to another time or place in order to solicit additional proxies in favor of the recommendations of the
board of directors, this proxy shall be voted by the proxyholders in accordance with the recommendations of the board of directors.
At the date this proxy statement went to press, we did not anticipate any other matters would be raised at the annual meeting.
THE BOARD OF DIRECTORS OF THE COMPANY
RECOMMENDS THAT YOU SIGN,
DATE AND MAIL THIS PROXY CARD TODAY.
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Date
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, 2007 |
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Signature(s) |
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Signature(s) |
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Please date this Proxy and sign exactly as your name appears herein. When there is more than
one owner, all must sign. When signing as an attorney, executor, administrator, trustee, guardian,
corporate officer or partner, sign full title as such. If a corporation, please sign in full
corporate name by duly authorized officer. If a partnership, please sign in partnership name by a
duly authorized person.