Federated Department Stores, Inc. DEF 14A
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material under Rule 14a-12
Federated Department Stores, Inc.
Name of the 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):
þ No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(1)
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Title
of each class of securities to which transaction
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(2)
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Aggregate number of
securities to which transaction applies: |
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(3)
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Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined): |
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(4)
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Proposed maximum
aggregate value of transaction: |
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(5)
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Total fee
paid: |
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o
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Fee paid previously with preliminary materials. |
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o
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Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting
fee was paid previously. Identify the previous
filing by registration statement number, or the
Form or Schedule and the date of its filing. |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
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Filing Party: |
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Date Filed: |
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FEDERATED DEPARTMENT STORES,
INC.
7 West Seventh Street Cincinnati, Ohio 45202
and
151 West 34th Street New York, New York 10001
April 4,
2007
To the Stockholders:
It is my privilege to invite you to attend Federateds 2007
annual meeting of stockholders. We are holding the annual
meeting on Friday, May 18, 2007, at 11:00 a.m.,
Eastern Daylight Savings Time, at Federateds offices
located at 7 West Seventh Street, Cincinnati, Ohio 45202.
We are enclosing the official notice of meeting, proxy statement
and form of proxy with this letter. The matters listed in the
notice of meeting are described in the attached proxy statement.
Your vote is important. Accordingly, we encourage you to read
the proxy statement and cast your vote promptly by following the
instructions on the enclosed proxy card.
Thank you for your cooperation and support of Federated.
Sincerely,
Terry J. Lundgren
Chairman of the Board, President
and Chief Executive Officer
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE CAST YOUR VOTE PROMPTLY
BY FOLLOWING THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD.
FEDERATED DEPARTMENT STORES,
INC.
7 West Seventh Street, Cincinnati, Ohio 45202
and
151 West 34th Street, New York, New York 10001
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
Federated hereby gives notice that the annual meeting of its
stockholders will be held at 11:00 a.m., Eastern Daylight
Savings Time, on Friday, May 18, 2007, at Federateds
offices located at 7 West Seventh Street, Cincinnati, Ohio
45202. The items on the agenda for the annual meeting are:
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1.
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To elect six members of Federateds board of directors;
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2.
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To ratify the appointment of KPMG LLP as Federateds
independent registered public accounting firm for the fiscal
year ending February 2, 2008;
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3.
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To approve an amendment to Federateds Certificate of
Incorporation changing Federateds corporate name to
Macys, Inc.;
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4.
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To approve Federateds 1992 Incentive Bonus Plan, as
amended;
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5.
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To approve the issuance of common stock under the Director
Deferred Compensation Plan; and
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6.
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To act upon such other business as may properly come before the
annual meeting or any postponements or adjournments thereof.
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Each of these matters is more fully described in the attached
proxy statement. Stockholders of record at the close of business
on March 23, 2007 are entitled to vote at the annual
meeting or any postponements or adjournments of the annual
meeting.
Dennis J. Broderick
Secretary
April 4, 2007
PLEASE VOTE BY FOLLOWING THE INSTRUCTIONS ON THE ENCLOSED
PROXY CARD. YOU MAY VOTE BY MAIL, BY TELEPHONE OR OVER THE
INTERNET. IF YOU CHOOSE TO VOTE BY MAIL, PLEASE COMPLETE THE
PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
FEDERATED
DEPARTMENT STORES, INC.
7 West
Seventh Street, Cincinnati, Ohio 45202
and
151 West 34th Street, New York, New York 10001
PROXY
STATEMENT
Federateds board of directors (the Board) is
furnishing this proxy statement in connection with its
solicitation of proxies for use at the annual meeting of
Federateds stockholders. The annual meeting will be held
at 11:00 a.m., Eastern Daylight Savings Time, on Friday,
May 18, 2007, at Federateds offices located at
7 West Seventh Street, Cincinnati, Ohio 45202. The proxies
received will be used at the annual meeting and at any
postponement or adjournment of the annual meeting for the
purposes set forth in the accompanying notice of meeting. We
will begin mailing the proxy statement, the notice of meeting
and accompanying proxy on April 12, 2007.
Except where the context requires otherwise, the term
Federated includes Federated Department Stores, Inc.
and its subsidiaries. All share and per share amounts in this
proxy statement are adjusted to reflect a
two-for-one
stock split effected as a stock dividend on June 9,
2006.
TABLE OF
CONTENTS
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2
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4
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7
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21
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22
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23
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27
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30
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45
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47
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74
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74
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74
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75
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76
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77
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77
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POLICY AND PROCEDURES FOR
PRE-APPROVAL OF NON-AUDIT SERVICES BY OUTSIDE AUDITORS
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A-1
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1992 INCENTIVE BONUS PLAN
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B-1
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DIRECTOR DEFERRED COMPENSATION PLAN
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C-1
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1
GENERAL
The record date for the annual meeting is March 23, 2007.
If you are a holder of record of shares of Federateds
common stock at the close of business on the record date you are
entitled to vote those shares at the annual meeting. You are
entitled to one vote for each share of common stock you own on
each of the matters listed in the notice of meeting. As of the
record date, 459,620,329 shares of common stock were
outstanding. This number excludes shares held in the treasury of
Federated.
The Board has adopted a policy under which all voting materials
that identify the votes of specific stockholders will be kept
confidential and will not be disclosed to Federateds
officers, directors or employees or to third parties except as
described below. Voting materials may be disclosed in any of the
following circumstances:
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if required by applicable law;
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to persons engaged in the receipt, counting, tabulation or
solicitation of proxies who have agreed to maintain stockholder
confidentiality as provided in the policy;
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in those instances in which stockholders write comments on their
proxy cards or otherwise consent to the disclosure of their vote
to Federateds management;
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in the event of a proxy contest or a solicitation of proxies in
opposition to the voting recommendations of the Board;
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in respect of a stockholder proposal that Federateds
Nominating and Corporate Governance Committee of the Board,
referred to as the NCG Committee, after having allowed the
proponent of the proposal an opportunity to present its views,
determines is not in the best interests of Federated and its
stockholders; and
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in the event that representatives of Federated determine in good
faith that a bona fide dispute exists as to the authenticity or
tabulation of voting materials.
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The policy described above will apply to the annual meeting.
A quorum of stockholders is necessary to hold a valid annual
meeting. The holders of a majority of the stock issued and
outstanding and entitled to vote at the annual meeting, present
in person or represented by proxy, will constitute a quorum at
the annual meeting for the transaction of business at the
meeting. Federated will treat all shares of Federated common
stock represented at the meeting, including abstentions and
broker non-votes, as shares that are present and
entitled to vote for purposes of determining the presence of a
quorum. Federated will treat abstentions and broker non-votes as
shares not voted for purposes of determining whether the
requisite vote on a matter has been obtained. In order to obtain
approval of any matter, the affirmative vote of the holders of a
majority (or, in the case of the election of any nominee as a
director, a plurality) of the shares of common stock represented
at the annual meeting and actually voted is required.
Consequently, abstentions and broker non-votes will have no
effect on the outcome of the vote on any such matter. If the
persons present or represented by proxy at the annual meeting
constitute the holders of less than a majority of the
outstanding shares of common stock as of the record date, the
annual meeting may be adjourned to a subsequent date for the
purpose of obtaining a quorum. Broker non-votes are
shares held by a broker, bank or other nominee that are
represented at the meeting, but with respect to which the
beneficial owner of such shares has not instructed the broker,
bank or nominee on how to vote on a particular proposal, and
with respect to which the broker, bank or nominee does not have
discretionary voting power on such proposal.
2
All shares of common stock represented at the annual meeting by
proxies properly submitted prior to or at the annual meeting
will be voted at the annual meeting in accordance with the
instructions on the proxies, unless such proxies previously have
been revoked. If no instructions are indicated, such shares will
be voted:
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FOR the director nominees identified below;
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FOR the ratification of the appointment of Federateds
independent registered public accounting firm;
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FOR the approval of an amendment to Federateds Certificate
of Incorporation changing Federateds corporate name to
Macys, Inc.;
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FOR the approval of Federateds 1992 Incentive Bonus Plan,
as amended; and
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FOR the approval of the issuance of common stock under the
Director Deferred Compensation Plan.
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You may vote in person at the annual meeting or by proxy.
Federated recommends that you vote by proxy even if you plan to
attend the annual meeting. You have three options for voting by
proxy:
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Internet: You can vote over the Internet at
the Web address shown on your proxy card. Internet voting is
available 24 hours a day, seven days a week. When you vote
over the Internet, you should not return your proxy card.
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Telephone: You can vote by telephone by
calling the toll-free number on your proxy card. Telephone
voting is available 24 hours a day, seven days a week.
Easy-to-follow
voice prompts allow you to vote your shares and confirm that
your instructions have been properly recorded. When you vote by
telephone, you should not return your proxy card.
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Mail: You can vote by mail by simply signing,
dating and mailing your proxy card in the postage-paid envelope
included with this proxy statement.
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A number of banks and brokerage firms participate in a program
that also permits stockholders whose shares are held in street
name to direct their vote over the Internet or by telephone. If
your bank or brokerage firm gives you this opportunity, the
voting instructions from the bank or brokerage firm that
accompany this proxy statement will tell you how to use the
Internet or telephone to direct the vote of shares held in your
account. The Internet and telephone proxy procedures are
designed to authenticate your identity, to allow you to give
your proxy voting instructions and to confirm that those
instructions have been properly recorded. Votes directed over
the Internet or by telephone through such a program must be
received by 5:00 p.m., Eastern Daylight Savings Time, on
Thursday, May 17, 2007. Requesting a proxy prior to the
deadline described above will automatically cancel any voting
directions you have previously given over the Internet or by
telephone with respect to your shares. Directing the voting of
your shares will not affect your right to vote in person if you
decide to attend the annual meeting; however, you must first
obtain a signed and properly executed proxy from your bank,
broker or other nominee to vote your shares held in street name
at the annual meeting.
If you participate in Federateds Profit Sharing 401(k)
Investment Plan or The May Department Stores Companys
(May) Profit Sharing Plan, you will receive a voting
instruction card for the Federated common stock allocated to
your account in the applicable plan. You may instruct the plan
trustee on how to vote your proportional interest in any
Federated shares held by the plan by signing, dating and mailing
the enclosed voting instruction card, or by submitting your
voting instructions by telephone or over the Internet. The
applicable plan trustee will vote your proportional interest in
accordance with your instructions and the terms of the plan. If
you fail to vote, the trustee for the applicable plan, subject
to its fiduciary obligations under
3
ERISA, will vote your proportional interest in the same
proportion as it votes the proportional interests for which it
receives instructions from other plan participants. Under the
terms of the two plans, the trustees must receive voting
instructions from plan participants by 5:00 p.m., Eastern
Daylight Savings Time, on Wednesday, May 16, 2007.
You may revoke your proxy at any time by:
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submitting evidence of your revocation to the Corporate
Secretary of Federated;
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voting again over the Internet or by telephone;
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signing another proxy card bearing a later date and mailing it
so that it is received prior to the annual meeting; or
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voting in person at the annual meeting, although attendance at
the annual meeting will not, in itself, revoke a proxy.
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STOCK
OWNERSHIP
Certain Beneficial Owners. The following table
sets forth information as to the beneficial ownership of each
person known to Federated to own more than 5% of
Federateds outstanding common stock as of
December 31, 2006.
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Most Recent
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Number of
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Percent of
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Name and Address
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Schedule 13G
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Shares
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Class
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FMR Corp. (FMR)
82 Devonshire Street
Boston, MA 02109
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February 14, 2007
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29,300,976
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5.6
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%
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According to the FMR Schedule 13G, (a) 24,266,645 of
the 29,300,976 shares beneficially owned by FMR
(approximately 4.6% of the total number of shares of common
stock outstanding) were beneficially owned by Fidelity
Management & Research Company, a wholly-owned
subsidiary of FMR (FMRC), as a result of acting as
investment advisor to various investment companies,
(b) 14,500 of such shares (approximately 0.003% of the
total number of shares of common stock outstanding) were
beneficially owned by Fidelity Management Trust Company, a
wholly-owned subsidiary of FMR (FMTC), as a result
of its serving as investment manager of institutional
account(s), (c) 3,439,788 of such shares (approximately
0.7% of the total number of shares outstanding) were
beneficially owned by Fidelity International Limited
(FIL), (d) 2,928 of such shares were
beneficially owned by Strategic Advisers, Inc., a wholly-owned
subsidiary of FMR, (e) 212,500 of such shares
(approximately 0.04% of the total number of shares outstanding)
were beneficially owned by Pyramis Global Advisor, LLC, an
indirect wholly-owned subsidiary of FMR (PGALLC),
and (f) 1,364,615 of such shares (approximately 0.3% of the
total number of shares outstanding) were beneficially owned by
Pyramis Global Advisors Trust Company, an indirect wholly-owned
subsidiary of FMR (PGATC). According to the FMR
Schedule 13G:
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Each of Edward C. Johnson 3d, Chairman of FMR and FMR, through
its control of FMRC, has sole power to dispose of
24,266,645 shares described in clause (a) above.
Neither Edward C. Johnson 3d nor FMR has sole voting power over
such shares owned directly by the Fidelity Funds. The Fidelity
Funds Boards of Trustees has the power to vote such shares.
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Edward C. Johnson 3d and FMR, through its control of FMTC, each
has sole power to dispose of and vote the 14,500 shares
described in clause (b) above.
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FIL has sole power to dispose of the 3,439,788 shares
described in clause (c) above, sole power to
vote 3,128,968 of such shares and no power to
vote 310,820 of such shares.
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A partnership controlled predominantly by family members of
Edward C. Johnson 3d or trusts for their benefit owns shares of
FIL voting stock with the right to cast approximately 47% of the
total votes that may be cast by all holders of FIL voting stock.
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Edward C. Johnson 3d and FMR, through its control of PGALLC,
each has sole power to dispose of and vote the
212,500 shares described in clause (e) above.
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Edward C. Johnson 3d and FMR, through its control of PGATC, each
has sole power to dispose of the 1,364,615 shares described
in clause (f) above and sole power to vote 1,350,015
of such shares.
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According to the FMR Schedule 13G, Edward C. Johnson 3d and
various Johnson family members are the predominant owners of the
Series B shares of common stock of FMR, representing
approximately 49% of the voting power of FMR. According to the
FMR Schedule 13G, through their ownership of FMRs
voting common stock and related agreements, members of the
Johnson family may be deemed to form a controlling group with
respect to FMR.
Stock Ownership of Directors and Executive
Officers. The following table sets forth the
shares of common stock beneficially owned (or deemed to be
beneficially owned pursuant to the rules of the Securities and
Exchange Commission, referred to as the SEC), as of
March 23, 2007 by each Federated director who is not an
employee of Federated, referred to as a Non-Employee Director,
by each executive named on the 2006 Summary Compensation Table,
referred to as a Named Executive, and by Federateds
directors and executive officers as a group. The business
address of each of the individuals named in the table is
7 West Seventh Street, Cincinnati, Ohio 45202.
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Number of Shares
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Percent of
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Name
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(2)
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Class
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Meyer Feldberg
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76,853
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63,500
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less than 1
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Sara Levinson
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70,122
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67,000
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less than 1
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%
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Joseph Neubauer
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103,540
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63,500
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less than 1
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%
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Joseph A. Pichler
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71,300
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63,500
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less than 1
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%
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Joyce M. Roché
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4,492
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2,500
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less than 1
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%
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William P. Stiritz(3)
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570,174
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2,918
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less than 1
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%
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Karl M. von der Heyden
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80,900
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63,500
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less than 1
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%
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Craig E. Weatherup
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69,500
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63,500
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less than 1
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Marna C. Whittington
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86,266
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63,500
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less than 1
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%
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Terry J. Lundgren
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2,638,210
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2,432,564
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less than 1
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%
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Karen M. Hoguet
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587,394
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493,982
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less than 1
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%
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Thomas G. Cody
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615,222
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559,714
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less than 1
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%
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Thomas L. Cole
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628,439
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540,424
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less than 1
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%
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Janet E. Grove
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612,057
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560,342
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less than 1
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%
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Susan D. Kronick
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624,369
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539,726
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less than 1
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%
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Ronald W. Tysoe
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594,696
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593,750
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less than 1
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%
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All directors and executive
officers as a group (17 persons)(4)
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6,951,703
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5,685,974
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1.5
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%
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5
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(1) |
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Aggregate number of shares of common stock currently held or
which may be acquired within 60 days after March 23,
2007 through the exercise of options granted under
Federateds 1995 Executive Equity Incentive Plan, referred
to as the 1995 Equity Plan. Includes shares pledged as security
in brokerage firm customary margin accounts, as follows:
Stiritz, 407,256 shares; Whittington, 7,954 shares. |
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(2) |
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Number of shares of common stock which may be acquired within
60 days after March 23, 2007 through the exercise of
options granted under the 1995 Equity Plan. |
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(3) |
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Includes 100,000 shares held by Mr. Stiritz
spouse and 60,000 shares held by his son. |
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(4) |
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Mr. Tysoe ceased to be an executive officer in October 2006
when he resigned from his position as Vice Chair of
Federated. Consequently, his holdings are not included. |
Securities Authorized for Issuance Under Equity Compensation
Plans. The following table presents certain
aggregate information, as of February 3, 2007, with respect
to the 1995 Equity Plan and Federateds 1994 Stock
Incentive Plan, referred to as the 1994 Stock Plan (included on
the line captioned Equity compensation plans approved by
security holders).
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Number of securities
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Number of securities
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Weighted-average
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remaining available for
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to be issued upon
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exercise price of
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future issuance under
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exercise of
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outstanding
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equity compensation plans
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outstanding options,
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options, warrants
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(excluding securities
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warrants and rights
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and rights ($)
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reflected in column (a))
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Plan Category
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(a)
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(b)
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(c)
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Equity compensation plans approved
by security holders
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40,644,498
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$
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26.99
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27,420,704
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Equity compensation plans not
approved by security holders
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0
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0
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0
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Total
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40,644,498
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$
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26.99
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27,420,704
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The foregoing table does not reflect shares of restricted stock
previously issued under the 1995 Equity Plan or the 1994 Stock
Plan. As of February 3, 2007:
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387,000 shares of restricted stock were outstanding and
subject to possible forfeiture, and
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3,808,000 shares of common stock were available for future
issuance as restricted stock or restricted stock units under the
1995 Equity Plan and the 1994 Stock Plan.
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The shares remaining available for future issuance as restricted
stock or restricted stock units are included in the totals
reflected in column (c). Under the 1995 Equity Plan and the 1994
Stock Plan, if these shares are not issued as restricted stock
they may be made subject to grants of stock options.
The foregoing table does not reflect stock credits issued under
Federateds Executive Deferred Compensation Plan, the
Director Deferred Compensation Plan, and the Associated Dry
Goods Corporation Executives Deferred Compensation Plan (assumed
by Federated in connection with its acquisition of May), which
plans have not been approved by Federateds stockholders.
Pursuant to the Executive Deferred Compensation Plan, eligible
executives may elect to receive a portion of their cash
compensation in the form of stock credits. For a discussion of
stock credits issued to Non-Employee Directors under the
Director Deferred Compensation Plan, see Further
Information Concerning the Board of Directors
Director Compensation and Item 5. Approval of
the Issuance of Common Stock Under the Director Deferred
Compensation Plan. Pursuant to the Associated Dry Goods
Corporation Executives Deferred Compensation Plan, participants
elected to receive a portion of their cash compensation in the
form of stock credits.
6
Under the plans described in the immediately preceding
paragraph, entitlements due to participants are expressed as
dollar amounts and then converted to stock credits in amounts
equal to the number of shares of common stock that could be
purchased by the applicable plan at current market prices with
the cash that otherwise would have been payable to the
participant. Under the Executive Deferred Compensation Plan and
the Associated Dry Goods Corporation Executives Deferred
Compensation Plan, each stock credit, other than a stock credit
payable in cash, entitles the holder to received one share of
common stock upon the termination of the holders
employment or service with Federated. Payments include dividend
equivalents on the stock credits equal to any dividends paid to
stockholders on shares of common stock. No specific numbers of
shares are authorized for issuance under these plans.
ITEM 1.
ELECTION OF DIRECTORS
Federateds current Certificate of Incorporation and
By-Laws provide that:
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beginning at the 2006 annual meeting, as current terms expire,
directors will be elected at each annual meeting of Federated
stockholders for a one-year term;
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directors elected prior to the 2006 annual meeting will continue
to serve for their current terms; and
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by 2008, all directors will be elected annually and would serve
one-year terms.
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In accordance with the recommendation of the NCG Committee, the
Board has nominated Sara Levinson, Joseph Neubauer, Joseph
Pichler, Joyce M. Roché, Karl von der Heyden and Craig E.
Weatherup, each of whom is currently a member of the Board, for
election as directors. If elected, such nominees will serve for
a one-year term to expire at Federateds annual meeting of
stockholders in 2008 or until their successors are duly elected
and qualified. Information regarding these nominees, as well as
the other persons who are expected to serve on the Board
following the annual meeting, is set forth below. Ages are as of
March 23, 2007. William P. Stiritz has reached
Federateds mandatory retirement age for directors and is
retiring effective as of the date of the annual meeting.
Each nominee has consented to being nominated and agreed to
serve if elected. If any nominee becomes unavailable to serve as
a director before the annual meeting, the Board may designate a
substitute nominee and the persons named as proxies may, in
their discretion, vote your shares for the substitute nominee
designated by the Board. Alternatively, the Board may reduce the
number of directors to be elected at the annual meeting.
The Board recommends that you vote FOR the election of
the nominees named above, and your proxy will be so voted unless
you specify otherwise.
Nominees
for Election as Directors Terms Expire at the 2008
Annual Meeting
Sara
Levinson
Ms. Levinson, age 56, has been the Non-Executive
Chairman of ClubMom, Inc. since October 2002 and was President
of the Womens Group of Rodale, Inc. from October 2002
until June 2005. Prior to October 2000, she was President of NFL
Properties, Inc. since September 1994. Ms. Levinson is also
a member of the board of directors of Harley Davidson, Inc. and
KickApps Corporation. Ms. Levinson has been a director
since May 1997.
7
Joseph
Neubauer
Mr. Neubauer, age 65, has been Chairman and Chief
Executive Officer of ARAMARK Holdings Corporation since January
2007. From September 2004 to January 2007, Mr. Neubauer
served as Chairman and Chief Executive Officer of ARAMARK
Corporation. From January 2004 to September 2004 he served as
Executive Chairman of ARAMARK Corporation. Prior to that, he was
Chief Executive Officer of ARAMARK Corporation from 1983 until
December 2003 and Chairman from 1984 until December 2003. He is
also a member of the boards of directors of ARAMARK Corporation,
Verizon Communications, Inc. and Wachovia Corporation.
Mr. Neubauer has been a director since September 1992.
Joseph
A. Pichler
Mr. Pichler, age 67, was Chairman of The Kroger Co.
from June 2003 until June 2004 and was Chairman and Chief
Executive Officer of The Kroger Co. from September 1990 until
June 2003. Mr. Pichler has been a director since December
1997.
Joyce
M. Roché
Ms. Roché, age 60, is the President and Chief
Executive Officer of Girls Incorporated, a national non-profit
research, education and advocacy organization. Prior to assuming
her position at Girls Incorporated in September 2000,
Ms. Roché was an independent marketing consultant from
1998 to August 2000. She served as President and Chief Operating
Officer of Carson, Inc. from 1996 to 1998 and also held senior
marketing positions with Carson, Inc., Revlon, Inc. and Avon,
Inc. Ms. Roché is also a member of the boards of
directors of Anheuser-Busch Companies, Inc., AT&T, Inc. and
Tupperware Corporation. Ms. Roché has been a director
since February 2006.
Karl
M. von der Heyden
Mr. von der Heyden, age 70, was Vice Chairman of the Board
of Directors of PepsiCo, Inc. from September 1996 to January
2001. He is also a member of the board of directors of the New
York Stock Exchange Group and Dreamworks Animation SKG, Inc.
Mr. von der Heyden has been a director since February 1992.
Craig
E. Weatherup
Mr. Weatherup, age 61, was Chairman and Chief
Executive Officer of The Pepsi Bottling Group, Inc. from
November 1998 until January 2003. Mr. Weatherup is also a
member of the board of directors of Starbucks Corporation.
Mr. Weatherup has been a director since August 1996.
Continuing
Directors Terms Expire at the 2008 Annual
Meeting
Meyer
Feldberg
Professor Feldberg, age 65, has been Dean Emeritus and
Sanford Bernstein Professor of Leadership and Ethics at Columbia
Business School at Columbia University since June 2004. Prior to
that time, he served as the Dean of the Columbia Business School
at Columbia University from 1989 to June 2004. He is currently
on leave of absence from Columbia University and is serving as a
Senior Advisor at Morgan Stanley. He is also a member of the
boards of directors of Revlon, Inc., Primedia, Inc., UBS Global
Asset Management and SAPPI Limited. Professor Feldberg has been
a director since May 1992.
8
Terry
J. Lundgren
Mr. Lundgren, age 55, has been Chairman of Federated
since January 15, 2004 and President and Chief Executive
Officer of Federated since February 26, 2003. Prior to that
time, he served as the President/Chief Operating Officer and
Chief Merchandising Officer of Federated since April 15,
2002. From May 1997 until April 15, 2002, he was President
and Chief Merchandising Officer of Federated. Mr. Lundgren
has been a director since May 1997.
Marna
C. Whittington
Dr. Whittington, age 59, has been President of
Nicholas Applegate Capital Management since 2001 and Chief
Operating Officer of Allianz Global Investors, the parent of
Nicholas Applegate Capital Management, since 2002.
Dr. Whittington is also a member of the board of directors
of Rohm & Haas Company. Dr. Whittington has been a
director since June 1993.
FURTHER
INFORMATION CONCERNING THE BOARD OF DIRECTORS
Attendance
at Meetings
The Board held eight meetings during the fiscal year ended
February 3, 2007, referred to as fiscal 2006. During fiscal
2006, no director attended fewer than 75%, in the aggregate, of
the total number of meetings of the Board and Board Committees
on which such director served.
Director
Attendance at Annual Meetings
As a matter of policy, Federated expects its directors to make
reasonable efforts to attend Federateds annual meetings of
stockholders. Nine of Federateds directors attended its
most recent annual meeting of stockholders.
Communications
with the Board
You may communicate with the full Board, the Audit Committee,
the Non-Employee Directors, or any individual director by
communicating through Federateds Internet website at
www.fds.com/ir/corpgov or by mailing such communications to
7 West Seventh Street, Cincinnati, Ohio 45202, Attn:
General Counsel. Such communications should indicate to whom
they are addressed. We will refer any communications we receive
that relate to accounting, internal accounting controls or
auditing matters to members of the Audit Committee unless the
communication is otherwise addressed. You may communicate
anonymously
and/or
confidentially if you desire. Federateds Office of the
General Counsel will collect all communications and forward them
to the appropriate director(s).
Director
Independence
Federateds Corporate Governance Principles require that a
majority of the Board consist of directors who the Board has
determined do not have any material relationship with Federated
and are independent. The Board has adopted standards for
director independence to assist the Board in determining if a
director is independent. These standards are disclosed on
Federateds website at www.fds.com/ir/corpgov.
The Board has determined that each Non-Employee Director
qualifies as independent under New York Stock Exchange
(NYSE) rules and satisfies Federateds
standards for director independence. To assist the
9
Board in making that determination, the NCG Committee reviewed,
among other things, each directors employment status and
other board commitments and, where applicable, each
directors (and his or her immediate family members)
affiliation with consultants, service providers or suppliers of
the company.
During fiscal 2006, the NCG Committee specifically reviewed
whether Mr. Neubauers service on the board of
directors of Verizon Communications, Inc. impacted his
independence since Federated purchases telecommunications
network management services from Verizon. The committee focused
on two of the independence standards:
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whether the director or an immediate family member is affiliated
with or employed in a professional capacity including as an
executive officer, partner or principal, by any corporation or
other entity that is or was a paid advisor, consultant or
provider of professional services to, or a substantial supplier
of, Federated; and
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whether the director is an employee or executive officer, or any
immediate family member is an executive officer, of a company
that makes payments to, or receives payments from, Federated for
property or services in an amount which, in any single fiscal
year, exceeds the greater of $1 million or two percent of
the other companys consolidated gross revenues.
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The NCG Committee determined that Mr. Neubauers
service on the Verizon board did not result in a failure to meet
either standard because serving as a director of Verizon does
not make him affiliated with Verizon in a professional
capacity and he is not an employee or executive officer of
Verizon. The committee then recommended that the Board determine
that Mr. Neubauer qualified as independent.
Non-Employee
Directors Meetings
The Non-Employee Directors meet in executive session without
management either before or after all regularly scheduled Board
meetings. The chairpersons of the Board Committees preside at
such sessions by rotation. Non-Employee Directors who are not
independent under the NYSE listing standards may participate in
these executive sessions, but the Board would then hold at least
one executive session each year exclusively for Non-Employee
Directors who are independent under the NYSE listing standards.
10
Committees
of the Board
The following standing committees of the Board were in existence
throughout fiscal 2006: the Audit Committee, the Compensation
and Management Development Committee, referred to as the CMD
Committee, the Finance Committee and the NCG Committee. The
table below provides the current members of each Board committee
and meeting information for fiscal 2006:
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Name
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Audit
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CMD
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Finance
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NCG
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Meyer Feldberg
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X
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**
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X
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Sara Levinson
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X
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X
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Terry J. Lundgren
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Joseph Neubauer
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X
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**
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X
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X
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**
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Joseph A. Pichler
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X
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X
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*
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Joyce M. Roché
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X
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X
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William P. Stiritz
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X
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X
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Karl M. von der Heyden
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X
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X
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*
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Craig E. Weatherup
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X
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*
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X
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Marna C. Whittington
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X
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*
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X
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**
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2006 Meetings
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5
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8
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8
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5
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Audit Committee. The Audit Committee was
established in accordance with the applicable requirements of
the Securities Exchange Act of 1934 and the NYSE. Its
charter is disclosed on Federateds website at
www.fds.com/ir/corpgov. As required by the Audit Committee
charter, the Board has determined that all members of the Audit
Committee are independent under Federateds standards for
director independence and that Dr. Whittington qualifies as
a financial expert because of her business
experience, understanding of generally accepted accounting
principals and financial statements, and educational background.
In addition, the Board has determined that other members of the
Audit Committee also qualify as financial experts.
The responsibilities of the Audit Committee include:
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reviewing the professional services provided by Federateds
independent registered public accounting firm and the
independence of such firm;
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reviewing the scope of the audit by Federateds independent
registered public accounting firm;
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reviewing any proposed non-audit services by Federateds
independent registered public accounting firm to determine if
the provision of such services is compatible with the
maintenance of their independence, and approval of same;
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reviewing Federateds annual financial statements, systems
of internal accounting controls, material legal developments
relating thereto, and legal compliance policies and procedures;
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reviewing matters with respect to the legal, accounting,
auditing and financial reporting practices and procedures of
Federated as it may find appropriate or as may be brought to its
attention, including Federateds compliance with applicable
laws and regulations;
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reviewing with members of Federateds internal audit staff
the internal audit departments staffing, responsibilities
and performance, including its audit plans, audit results and
actions taken with respect to those results; and
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establishing procedures for the Audit Committee to receive,
review and respond to complaints regarding accounting, internal
accounting controls, and auditing matters, as well as
confidential, anonymous submissions by employees of concerns
related to questionable accounting or auditing matters.
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See Report of the Audit Committee for further
information regarding the Audit Committees review.
Compensation and Management Development
Committee. The charter for the CMD Committee is
disclosed on Federateds website at www.fds.com/ir/corpgov.
As required by the CMD Committee charter, all current members of
the CMD Committee are independent under Federateds
standards for director independence.
The responsibilities of the CMD Committee include:
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reviewing the salaries of the chief executive officer and other
executive officers of Federated and, either as a Committee or
together with the independent directors (as directed by the
Board), set compensation levels for these executives;
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administering the bonus, incentive and stock option plans of
Federated, including (i) establishing any annual or
long-term performance goals and objectives and maximum annual or
long-term incentive awards for the chief executive officer and
the other executives, (ii) determining whether and the
extent to which annual
and/or
long-term performance goals and objectives have been achieved,
and (iii) determining related annual
and/or
long-term incentive awards for the chief executive officer and
the other executives;
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reviewing and approving the benefits of the chief executive
officer and the other executive officers of Federated;
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reviewing and approving any proposed employment agreement with,
and any proposed severance, termination or retention plans,
agreements or payments applicable to, any executive officer of
Federated;
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advising and consulting with Federateds management
regarding pension, benefit and compensation plans, policies and
practices of Federated;
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establishing chief executive officer and key executive
succession plans, including plans in the event of an emergency,
resignation or retirement; and
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reviewing and monitoring executive development strategies and
practices for senior level positions and executives to assure
development of a pool of management and executive personnel for
adequate and orderly management succession.
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See Report of the Compensation Committee for further
information regarding the CMD Committees responsibilities.
Finance Committee. The charter for the Finance
Committee is disclosed on Federateds website at
www.fds.com/ir/corpgov. As required by the Finance Committee
charter, a majority of the members of the Finance Committee are
independent under Federateds standards for director
independence.
12
The responsibilities of the Finance Committee include:
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reviewing capital projects and other financial commitments and
approving such projects and commitments above $15 million
and below $25 million, reviewing and tracking the actual
progress of approved capital projects against planned
projections and reporting to the Board on all such projects and
commitments of $25 million and above;
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reporting to the Board on potential transactions affecting
Federateds capital structure, such as financings,
refinancings and the issuance, redemption or repurchase of
Federateds debt or equity securities;
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reporting to the Board on potential changes in Federateds
financial policy or structure which could have a material
financial impact on Federated;
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reviewing the financial considerations relating to acquisitions
and dispositions of businesses and operations involving
projected costs or income above $15 million and below
$25 million and approving all such transactions, and
reporting to the Board on all such transactions involving
projected costs or income of $25 million and above; and
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reviewing the management and performance of the assets of
Federateds retirement plans.
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Nominating and Corporate Governance
Committee. The charter for the NCG Committee is
disclosed on Federateds website at www.fds.com/ir/corpgov.
As required by the NCG Committee charter, all current members of
the NCG Committee are independent under Federateds
standards for director independence.
The responsibilities of the NCG Committee include:
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identifying and screening candidates for future Board membership;
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proposing candidates to the Board to fill vacancies as they
occur, and proposing nominees to the Board for election by the
stockholders at annual meetings;
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reviewing Federateds Corporate Governance Principles and
recommending to the Board any modifications that the NCG
Committee deems appropriate;
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overseeing the evaluation of and reporting to the Board on the
performance and effectiveness of the Board and its committees
and other issues of corporate governance, and recommending to
the Board any changes concerning the composition, size,
structure and activities of the Board and the committees of the
Board as the NCG Committee deems appropriate based on its
evaluations;
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reviewing and reporting to the Board with respect to director
compensation and benefits and make recommendations to the Board
as the NCG Committee deems appropriate; and
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considering possible conflicts of interest of Board members and
management and making recommendations to prevent, minimize, or
eliminate such conflicts of interest.
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The NCG Committee reviews the director compensation program
periodically. To help it perform its responsibilities, the NCG
Committee makes use of company resources, including members of
senior management in Federateds human resources and legal
departments. In addition, the NCG Committee engages the services
of Mercer Human Resources Consulting as an independent outside
compensation consultant to assist the NCG Committee in assessing
the competitiveness and overall appropriateness of
Federateds director compensation program.
13
Identification
and Selection of Nominees for the Board
Federateds By-laws provide that director nominations may
be made by or at the direction of the Board. The NCG Committee
is charged with identifying individuals qualified to become
Board members and recommending such individuals to the Board for
its consideration. The NCG Committee is authorized, among other
means of identifying potential candidates, to employ third-party
search firms. In evaluating potential candidates, the NCG
Committee considers, among other things, the following:
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personal qualities and characteristics, accomplishments and
reputation in the business community;
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knowledge of the communities in which Federated does business
and Federateds industry or other industries relevant to
Federateds business;
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relevant experience and background that would benefit Federated;
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ability and willingness to commit adequate time to Board and
committee matters;
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the fit of the individuals skills and personality with
those of other directors and potential directors in building a
Board that is effective, collegial and responsive to the needs
of Federated; and
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diversity of viewpoints, background, experience and demographics.
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The NCG Committee also takes into consideration whether
particular individuals satisfy the independence criteria set
forth in the NYSE listing standards and Federateds
standards for director independence, together with any special
criteria applicable to service on various standing committees of
the Board. The full Board (a) considers candidates that the
NCG Committee recommends, (b) considers the optimum size of
the Board, (c) determines how to address any vacancies on
the Board, and (d) determines the composition of all Board
committees.
The NCG Committee will consider candidates for nomination
recommended by stockholders of Federated and will evaluate such
candidates using the same criteria discussed above that it uses
to evaluate director candidates identified by the NCG Committee.
Stockholders who wish to recommend a candidate for a director
nomination should write to the Nominating and Corporate
Governance Committee, c/o Dennis J. Broderick, Secretary,
Federated Department Stores, Inc., 7 West Seventh Street,
Cincinnati, Ohio 45202. The recommendation should include the
full name and address of the proposed candidate, a description
of the proposed candidates qualifications and other
relevant biographical information.
Director
Nominations by Stockholders
Federateds By-Laws also provide that director nominations
may be made by the companys stockholders. The By-Laws
require that stockholders intending to nominate candidates for
election as directors deliver written notice thereof to the
Secretary of Federated not less than 60 days prior to the
meeting of stockholders. However, in the event that the date of
the meeting is not publicly announced by Federated by inclusion
in a report filed with the SEC or furnished to stockholders, or
by mail, press release or otherwise more than 75 days prior
to the meeting, notice by the stockholder to be timely must be
delivered to the Secretary of Federated not later than the close
of business on the tenth day following the day on which such
announcement of the date of the meeting was so communicated. The
By-Laws further require, among other things:
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that the notice by the stockholder set forth certain information
concerning such stockholder and the stockholders nominees,
including their names and addresses;
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a representation that the stockholder is entitled to vote at
such meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the
notice;
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the class and number of shares of Federateds stock owned
or beneficially owned by such stockholder;
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a description of all arrangements or understandings between the
stockholder and each nominee;
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such other information as would be required to be included in a
proxy statement soliciting proxies for the election of the
nominees of such stockholder; and
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the consent of each nominee to serve as a director of Federated
if so elected.
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The chairman of the Board may refuse to acknowledge the
nomination of any person not made in compliance with these
requirements. Similar procedures prescribed by the By-Laws are
applicable to stockholders desiring to bring any other business
before an annual meeting of the stockholders. See
Submission of Future Stockholder Proposals.
Corporate
Governance Principles and Code of Business Conduct and
Ethics
The Corporate Governance Principles and the Code of Business
Conduct and Ethics approved by the Board for adoption by
Federated are disclosed on Federateds website at
www.fds.com/ir/corpgov.
Director
Compensation
Non-Employee Directors receive the following compensation:
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Type of Compensation
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Amount of Compensation
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Board Retainer
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$60,000 annually
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Board or Board Committee Meeting
Fee
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$2,000 for each meeting attended
and for each review session with one or more members of
management
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Committee Chairperson Retainer
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$10,000 annually
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Equity Grant
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up to 10,000 stock options
annually
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Each Non-Employee Director, his or her spouse and eligible
dependents also receive executive discounts on merchandise
purchased at Federated stores. This benefit remains available to
them following retirement from the Board. As described below,
the retirement plan for Non-Employee Directors was terminated in
1997.
The following table reflects the compensation information for
each Non-Employee Director for fiscal 2006. Mr. Lundgren
does not receive separate compensation for his service as a
Director; his compensation is
15
reflected in the 2006 Summary Compensation Table in the section
titled Compensation of the Named Executives for 2006.
2006
NON-EMPLOYEE DIRECTOR SUMMARY COMPENSATION TABLE
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Change in Pension
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Value and
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Non-Qualified
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Fees Earned
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|
|
|
|
|
|
|
|
Deferred
|
|
|
All Other
|
|
|
|
|
|
|
or Paid in
|
|
|
Stock Awards
|
|
|
Option Awards
|
|
|
Compensation
|
|
|
Compensation (5)
|
|
|
|
|
Name
|
|
Cash (1)($)
|
|
|
(1)(3)($)
|
|
|
(2)(3)($)
|
|
|
Earnings (4)($)
|
|
|
($)
|
|
|
Total($)
|
|
|
Meyer Feldberg
|
|
|
51,000
|
|
|
|
189,183
|
|
|
|
102,438
|
|
|
|
6,666
|
|
|
|
20,575
|
|
|
|
369,862
|
|
Sara Levinson
|
|
|
48,000
|
|
|
|
181,746
|
|
|
|
102,438
|
|
|
|
0
|
|
|
|
27,246
|
|
|
|
359,430
|
|
Joseph Neubauer
|
|
|
57,000
|
|
|
|
220,782
|
|
|
|
330,780
|
|
|
|
6,920
|
|
|
|
15,866
|
|
|
|
631,348
|
|
Joseph A. Pichler
|
|
|
56,000
|
|
|
|
197,023
|
|
|
|
135,700
|
|
|
|
0
|
|
|
|
7,640
|
|
|
|
396,363
|
|
Joyce M. Roché
|
|
|
44,500
|
|
|
|
56,054
|
|
|
|
22,617
|
|
|
|
0
|
|
|
|
0
|
|
|
|
123,171
|
|
William P. Stiritz
|
|
|
52,000
|
|
|
|
75,883
|
|
|
|
135,700
|
|
|
|
0
|
|
|
|
105
|
|
|
|
263,688
|
|
Karl M. von der Heyden
|
|
|
58,000
|
|
|
|
238,411
|
|
|
|
135,700
|
|
|
|
10,918
|
|
|
|
12,734
|
|
|
|
455,763
|
|
Craig E. Weatherup
|
|
|
56,000
|
|
|
|
187,982
|
|
|
|
102,438
|
|
|
|
1,227
|
|
|
|
28,520
|
|
|
|
376,167
|
|
Marna C. Whittington
|
|
|
57,000
|
|
|
|
232,856
|
|
|
|
102,438
|
|
|
|
3,494
|
|
|
|
24,091
|
|
|
|
419,879
|
|
|
|
|
(1) |
|
Under Federateds Director Deferred Compensation Plan, 50%
of the annual Board retainer (including the retainer payable to
a committee chair) and 50% of the meeting fees payable to
Non-Employee Directors (the Mandatory Stock
Compensation) are paid in credits representing the right
to receive shares of common stock (Mandatory Stock
Credits), with the balance (Elective
Compensation) paid in cash or deferred under the Director
Deferred Compensation Plan. See Item 5. Approval of
the Issuance of Common Stock Under the Director Deferred
Compensation Plan. If a Non-Employee Director elects to
defer all or a portion of the Elective Compensation into either
stock credits or cash credits under the Director Deferred
Compensation Plan, those amounts are not paid to him or her
until service on the Board ends. Mandatory Stock Credits and
stock credits relating to Elective Compensation that is deferred
as stock credits are calculated monthly. Shares of Federated
common stock associated with such stock credits are transferred
quarterly to a rabbi trust for the benefit of the participating
Non-Employee Director. Dividend equivalents on the amounts
deferred as stock credits are reinvested in
additional stock credits. Elective Compensation deferred as cash
credits earn interest each year at a rate equal to the yield
(percent per annum) on
30-Year
Treasury Bonds as of December 31 of the prior plan year.
Seven of the Non-Employee Directors elected to defer all or a
portion of the Elective Compensation payable to them during
fiscal 2006, as follows: |
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elective
|
|
|
Deferred
|
|
|
|
|
|
|
Compensation
|
|
|
as Cash
|
|
|
Deferred as Stock
|
|
Name
|
|
Deferred($)
|
|
|
Credits($)
|
|
|
Credits(#)
|
|
|
Levinson
|
|
|
48,000
|
|
|
|
48,000
|
|
|
|
|
|
Neubauer
|
|
|
57,000
|
|
|
|
|
|
|
|
1,498
|
|
Pichler
|
|
|
56,000
|
|
|
|
56,000
|
|
|
|
|
|
Roché
|
|
|
33,375
|
|
|
|
|
|
|
|
894
|
|
Stiritz
|
|
|
52,000
|
|
|
|
|
|
|
|
1,368
|
|
Weatherup
|
|
|
56,000
|
|
|
|
|
|
|
|
1,474
|
|
Whittington
|
|
|
57,000
|
|
|
|
|
|
|
|
1,502
|
|
The amounts in the Stock Awards column reflect the
variable accounting treatment and dollar amounts recognized for
financial statement reporting purposes in accordance with
Statement of Financial Accounting Standards No. 123
(revised 2004), Share-Based Payment
(FAS 123(R)) for fiscal 2006 for Mandatory
Stock Credits issued in fiscal 2006 and prior years.
Non-Employee Directors received the following Mandatory Stock
Credits with respect to the Mandatory Stock Compensation payable
to them in fiscal 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 Additional
|
|
|
|
|
|
|
Mandatory Stock
|
|
|
Mandatory Stock
|
|
|
Expense Relating to
|
|
|
|
|
Name
|
|
Credits(#)
|
|
|
Compensation($)
|
|
|
Variable Accounting($)
|
|
|
Total($)
|
|
|
Feldberg
|
|
|
1,345
|
|
|
|
51,000
|
|
|
|
138,183
|
|
|
|
189,183
|
|
Levinson
|
|
|
1,272
|
|
|
|
48,000
|
|
|
|
133,746
|
|
|
|
181,746
|
|
Neubauer
|
|
|
1,499
|
|
|
|
57,000
|
|
|
|
163,782
|
|
|
|
220,782
|
|
Pichler
|
|
|
1,480
|
|
|
|
56,000
|
|
|
|
141,023
|
|
|
|
197,023
|
|
Roché
|
|
|
1,144
|
|
|
|
44,500
|
|
|
|
11,554
|
|
|
|
56,054
|
|
Stiritz
|
|
|
1,368
|
|
|
|
52,000
|
|
|
|
23,883
|
|
|
|
75,883
|
|
von der Heyden
|
|
|
1,529
|
|
|
|
58,000
|
|
|
|
180,411
|
|
|
|
238,411
|
|
Weatherup
|
|
|
1,475
|
|
|
|
56,000
|
|
|
|
131,982
|
|
|
|
187,982
|
|
Whittington
|
|
|
1,502
|
|
|
|
57,000
|
|
|
|
175,856
|
|
|
|
232,856
|
|
|
|
|
(2) |
|
The grant date fair value of the stock options granted to
Non-Employee Directors in fiscal 2006 was $135,700. The amounts
in the Option Awards column do not reflect
compensation actually received by the Non-Employee Directors.
The amounts reflect the dollar amount recognized for financial
statement reporting purposes in accordance with FAS 123(R)
for fiscal 2006 for stock options issued pursuant to the 1995
Equity Plan. The table below shows that the amount recognized
includes awards granted in fiscal 2006 and in as many as four
prior years. Since Mr. Pichler, Mr. Stiritz and
Mr. von der Heyden are over age 65, only the full
grant date fair market value of their 2006 stock option awards
were expensed in fiscal 2006. The fair value of their stock
option awards prior to fiscal 2006 have already been fully
expensed. Mr. Neubauer turned age 65 during fiscal
2006, so the full grant date fair market value of his 2006 stock
option award was expensed in fiscal 2006. In addition, the fair
value of the portions of his stock option awards prior to fiscal
2006 that had not yet been fully expensed were expensed in 2006.
Assumptions and terms used in the calculation of the amounts
expensed for fiscal 2006 are included in footnote 15 to
Federateds audited financial statements for fiscal 2006
included in Federateds Annual Report on
Form 10-K
filed with the SEC on April 4, 2007 (the 2006
10-K),
in footnote 15 to Federateds audited financial
statements for the fiscal year ended January 28, 2006
included in Federateds Annual Report on
Form 10-K |
17
|
|
|
|
|
filed with the SEC on April 13, 2006, as amended (the
2005
10-K)
and in footnote 12 to Federateds audited financial
statements for the fiscal year ended January 29, 2005
included in Federateds Annual Report on
Form 10-K
filed with the SEC on March 28, 2005 (the 2004
10-K). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 Grants
|
|
|
2005 Grants
|
|
|
2004 Grants
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
Options
|
|
|
FMV
|
|
|
Expense
|
|
|
Options
|
|
|
FMV
|
|
|
Expense
|
|
|
Options
|
|
|
FMV
|
|
|
Expense
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
Over Age 65 in Fiscal 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pichler
|
|
|
10,000
|
|
|
|
13.57
|
|
|
|
135,700
|
|
|
|
10,000
|
|
|
|
13.12
|
|
|
|
0
|
|
|
|
10,000
|
|
|
|
9.30
|
|
|
|
0
|
|
Stiritz
|
|
|
10,000
|
|
|
|
13.57
|
|
|
|
135,700
|
|
|
|
1,666
|
|
|
|
11.08
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
von der Heyden
|
|
|
10,000
|
|
|
|
13.57
|
|
|
|
135,700
|
|
|
|
10,000
|
|
|
|
13.12
|
|
|
|
0
|
|
|
|
10,000
|
|
|
|
9.30
|
|
|
|
0
|
|
Turned Age 65 During Fiscal
2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neubauer
|
|
|
10,000
|
|
|
|
13.57
|
|
|
|
135,700
|
|
|
|
10,000
|
|
|
|
13.12
|
|
|
|
112,067
|
|
|
|
10,000
|
|
|
|
9.30
|
|
|
|
54,250
|
|
Under Age 65 during Fiscal
2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Feldberg
|
|
|
10,000
|
|
|
|
13.57
|
|
|
|
22,617
|
|
|
|
10,000
|
|
|
|
13.12
|
|
|
|
32,800
|
|
|
|
10,000
|
|
|
|
9.30
|
|
|
|
23,250
|
|
Levinson
|
|
|
10,000
|
|
|
|
13.57
|
|
|
|
22,617
|
|
|
|
10,000
|
|
|
|
13.12
|
|
|
|
32,800
|
|
|
|
10,000
|
|
|
|
9.30
|
|
|
|
23,250
|
|
Roché
|
|
|
10,000
|
|
|
|
13.57
|
|
|
|
22,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weatherup
|
|
|
10,000
|
|
|
|
13.57
|
|
|
|
22,617
|
|
|
|
10,000
|
|
|
|
13.12
|
|
|
|
32,800
|
|
|
|
10,000
|
|
|
|
9.30
|
|
|
|
23,250
|
|
Whittington
|
|
|
10,000
|
|
|
|
13.57
|
|
|
|
22,617
|
|
|
|
10,000
|
|
|
|
13.12
|
|
|
|
32,800
|
|
|
|
10,000
|
|
|
|
9.30
|
|
|
|
23,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003 Grants
|
|
|
2002 Grants
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
Options
|
|
|
FMV
|
|
|
Expense
|
|
|
Options
|
|
|
FMV
|
|
|
Expense
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
Over Age 65 in Fiscal 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pichler
|
|
|
10,000
|
|
|
|
5.99
|
|
|
|
0
|
|
|
|
10,000
|
|
|
|
10.56
|
|
|
|
0
|
|
Stiritz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
von der Heyden
|
|
|
10,000
|
|
|
|
5.99
|
|
|
|
0
|
|
|
|
10,000
|
|
|
|
10.56
|
|
|
|
0
|
|
Turned Age 65 During Fiscal
2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Neubauer
|
|
|
10,000
|
|
|
|
5.99
|
|
|
|
19,967
|
|
|
|
10,000
|
|
|
|
10.56
|
|
|
|
8,796
|
|
Under Age 65 During Fiscal 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Feldberg
|
|
|
10,000
|
|
|
|
5.99
|
|
|
|
14,975
|
|
|
|
10,000
|
|
|
|
10.56
|
|
|
|
8,796
|
|
Levinson
|
|
|
10,000
|
|
|
|
5.99
|
|
|
|
14,975
|
|
|
|
10,000
|
|
|
|
10.56
|
|
|
|
8,796
|
|
Roché
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weatherup
|
|
|
10,000
|
|
|
|
5.99
|
|
|
|
14,975
|
|
|
|
10,000
|
|
|
|
10.56
|
|
|
|
8,796
|
|
Whittington
|
|
|
10,000
|
|
|
|
5.99
|
|
|
|
14,975
|
|
|
|
10,000
|
|
|
|
10.56
|
|
|
|
8,796
|
|
18
|
|
|
(3) |
|
The Non-Employee Directors held the following stock options and
stock credits as of the end of fiscal 2006 (values are based on
a closing price at fiscal year-end of $41.88): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
Stock Credits
|
|
|
|
Number of Securities Underlying
|
|
|
|
|
|
|
|
|
|
Unexercised Options
|
|
|
Number of Stock
|
|
|
Market Value of
|
|
|
|
(#)
|
|
|
Credits
|
|
|
Stock Credits
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
(#)
|
|
|
($)
|
|
|
Feldberg
|
|
|
56,000
|
|
|
|
25,000
|
|
|
|
4,787
|
|
|
|
200,480
|
|
Levinson
|
|
|
63,000
|
|
|
|
25,000
|
|
|
|
15,229
|
|
|
|
637,791
|
|
Neubauer
|
|
|
63,000
|
|
|
|
25,000
|
|
|
|
56,483
|
|
|
|
2,365,508
|
|
Pichler
|
|
|
56,000
|
|
|
|
25,000
|
|
|
|
13,371
|
|
|
|
559,977
|
|
Roché
|
|
|
0
|
|
|
|
10,000
|
|
|
|
1,926
|
|
|
|
80,661
|
|
Stiritz
|
|
|
418
|
|
|
|
11,248
|
|
|
|
3,279
|
|
|
|
137,325
|
|
von der Heyden
|
|
|
56,000
|
|
|
|
25,000
|
|
|
|
43,942
|
|
|
|
1,840,291
|
|
Weatherup
|
|
|
63,000
|
|
|
|
25,000
|
|
|
|
30,891
|
|
|
|
1,293,715
|
|
Whittington
|
|
|
63,000
|
|
|
|
25,000
|
|
|
|
21,665
|
|
|
|
907,330
|
|
|
|
|
(4) |
|
The present value of benefits under the Non-Employee Director
retirement plan for each individual was determined as a deferred
temporary life annuity based on years of Board service prior to
May 16, 1997. The present value basis includes a discount
rate of 5.85% and mortality rates under the RP2000CH table
projected to January 1, 2006 using scale AA. The
calculations assume that the annual retainer remains at $60,000
and a retirement at age 72, the mandatory retirement age
for Directors. |
|
(5) |
|
All Other Compensation includes the items shown
below. Merchandise discounts are credited to the Directors
charge accounts.
Gross-up on
taxes on the merchandise discount and spousal travel are paid in
cash after the end of the year, so the amounts shown reflect the
gross up on the prior fiscal year amounts. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merchandise
|
|
|
|
|
|
Spousal
|
|
|
|
Discount
|
|
|
Gross-Up
|
|
|
Travel
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Feldberg
|
|
|
13,475
|
|
|
|
7,099
|
|
|
|
0
|
|
Levinson
|
|
|
17,137
|
|
|
|
10,109
|
|
|
|
0
|
|
Neubauer
|
|
|
9,925
|
|
|
|
5,941
|
|
|
|
0
|
|
Pichler
|
|
|
2,814
|
|
|
|
1,263
|
|
|
|
3,563
|
|
Roché
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Stiritz
|
|
|
0
|
|
|
|
105
|
|
|
|
0
|
|
von der Heyden
|
|
|
6,654
|
|
|
|
3,471
|
|
|
|
2,609
|
|
Weatherup
|
|
|
14,423
|
|
|
|
14,097
|
|
|
|
0
|
|
Whittington
|
|
|
16,583
|
|
|
|
6,204
|
|
|
|
1,304
|
|
Director
Retirement Plan
Federateds retirement plan for Non-Employee Directors was
terminated on a prospective basis effective May 16, 1997
(the Plan Termination Date). As a result of such
termination, persons who first become Non-Employee Directors
after the Plan Termination Date will not be entitled to receive
any benefit from the plan. Persons who were Non-Employee
Directors as of the Plan Termination Date will be entitled to
receive
19
retirement benefits accrued as of the Plan Termination Date.
Subject to an overall limit in an amount equal to the aggregate
retirement benefit accrued as of the Plan Termination Date
(i.e., the product of the amount of the annual Board retainer
earned immediately prior to retirement and the years of Board
service prior to the Plan Termination Date), and the vesting
requirements described below, persons who retire from service as
Non-Employee Directors after the Plan Termination Date will be
entitled to receive an annual payment equal to the amount of the
annual Board retainer earned immediately prior to retirement,
payable in monthly installments, commencing at the later of
retirement or age 60 and continuing for the lesser of such
persons remaining life or a number of years equal to such
persons years of Board service prior to the Plan
Termination Date. Full vesting will occur for Non-Employee
Directors who reach age 60 while serving on the Board,
irrespective of such persons years of Board service.
Vesting will occur as follows for Non-Employee Directors whose
Board service terminates before the director reaches
age 60: 50% vesting after five years of Board service and
an additional 10% vesting for each year of Board service after
five years. Board service following the Plan Termination Date
will be given effect for purposes of the foregoing vesting
requirements. There are no survivor benefits under the terms of
the retirement plan. Five of the current Non-Employee Directors
participate in the plan. If they had retired on
December 31, 2006, each would have been entitled to a
$60,000 annual payment for the following maximum number of years:
|
|
|
|
|
Name
|
|
Years
|
|
|
Feldberg
|
|
|
5
|
|
Neubauer
|
|
|
5
|
|
von der Heyden
|
|
|
5
|
|
Weatherup
|
|
|
1
|
|
Whittington
|
|
|
4
|
|
Director
Stock Ownership Guidelines
In fiscal year 2005, the NCG Committee recommended, and the
Board adopted, stock ownership guidelines for Non-Employee
Directors. Under these guidelines, Non-Employee Directors are
required to accumulate over time shares of Federated common
stock equal in value to at least five times the annual Board
retainer. Currently, the annual Board retainer is $60,000, so
the guideline currently is $300,000 worth of Federated common
stock. Shares counted toward this requirement include:
|
|
|
|
|
any shares beneficially owned by the director;
|
|
|
|
restricted stock before the restrictions have lapsed; and
|
|
|
|
stock credits or other stock units credited to a directors
account.
|
Federated common stock subject to unvested or unexercised stock
options granted to Non-Employee Directors does not count toward
the ownership requirement. Non-Employee Directors must comply
with these guidelines by December 9, 2010 or within five
years from the date the directors Board service commenced,
whichever is later. As of the end of the last fiscal year, all
Non-Employee Directors that have served as Directors for five or
more years owned sufficient shares to satisfy the ownership
guidelines.
Matching
Gift Program
Non-Employee Directors may participate in the matching gift
program of the Federated Department Stores Foundation on the
same terms as all company employees. Under this program, the
Federated
20
Department Stores Foundation will match up to a total of $22,500
in gifts made by the director to approved charities in any
calendar year. For fiscal 2006, the Foundation matched the
following gifts:
|
|
|
|
|
|
|
Matching Gift Amount
|
|
Name
|
|
($)
|
|
|
Feldberg
|
|
|
5,500
|
|
Levinson
|
|
|
11,500
|
|
Neubauer
|
|
|
22,500
|
|
Pichler
|
|
|
22,500
|
|
Roché
|
|
|
6,150
|
|
Stiritz
|
|
|
22,500
|
|
von der Heyden
|
|
|
22,500
|
|
Weatherup
|
|
|
22,500
|
|
Whittington
|
|
|
22,500
|
|
ITEM 2. APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed KPMG LLP, an independent
registered public accounting firm, to audit the books, records
and accounts of Federated for the fiscal year ending
February 2, 2008. The Audit Committees appointment is
subject to ratification by Federateds stockholders. KPMG
LLP and its predecessors have served as the independent
registered public accounting firm for Federated since 1988, and
the Board considers them well qualified. Representatives of KPMG
LLP are expected to be present at the annual meeting and will
have the opportunity to make a statement if they desire to do
so. It is also expected that they will be available to respond
to appropriate questions.
Fees Paid
to Independent Registered Public Accounting Firm
The table below summarizes the fees paid to KPMG LLP during
fiscal 2006 and fiscal year 2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit-
|
|
|
|
All
|
|
|
Year
|
|
Audit Fees($)
|
|
Related Fees($)
|
|
Tax Fees($)
|
|
Other Fees($)
|
|
Total($)
|
|
|
2006
|
|
|
|
5,727,500
|
|
|
|
3,336,372
|
|
|
|
162,974
|
|
|
|
0
|
|
|
|
9,226,846
|
|
|
2005
|
|
|
|
6,700,000
|
|
|
|
3,842,700
|
|
|
|
163,665
|
|
|
|
0
|
|
|
|
10,706,365
|
|
Audit fees represent fees for professional services rendered for
the audit of Federateds annual financial statements, the
audit of Federateds internal controls over financial
reporting and the reviews of the interim financial statements
included in Federateds
Forms 10-Q.
Audit-related fees represent professional services principally
related to the audits of financial statements of employee
benefit plans, audits of financial statements of certain
subsidiaries and certain agreed upon procedures reports.
Tax fees represent professional services related to tax
compliance and consulting services, provided, however, that such
tax consulting services did not involve the provision of advice
regarding tax strategy or planning.
All other fees represent professional services other than those
covered above.
21
The Audit Committee has adopted policies and procedures for the
pre-approval of all permitted non-audit services provided by
Federateds independent registered public accounting firm.
A description of such policies and procedures is attached as
Appendix A to this proxy statement and incorporated herein
by reference.
The Board recommends that you vote FOR ratification of
the appointment of KPMG LLP, and your proxy will be so voted
unless you specify otherwise.
ITEM 3. AMENDMENT
TO CERTIFICATE OF INCORPORATION TO CHANGE CORPORATE
NAME
The Board of Directors has adopted resolutions approving,
declaring advisable and recommending that the companys
stockholders approve an amendment to Federateds Second
Restated Certificate of Incorporation to change its corporate
name from Federated Department Stores, Inc. to
Macys, Inc. If approved, the change in
corporate name will become effective on June 1, 2007 upon
the filing of a certificate of amendment with the Secretary of
State of the State of Delaware. The company currently plans to
file the certificate of amendment as soon as reasonably
practicable after receiving approval of the amendment from its
stockholders.
If this proposal is approved, Article First of the
certificate of incorporation will be amended to read in its
entirety as follows:
The name of the corporation is Macys, Inc. (the
Company).
Purpose
and Rationale for the Proposed Amendment
The Board is recommending the approval of the company name
change to reflect the transformation that the company has
experienced in recent years. Effective February 1, 2006,
Federated realigned its store operations into eight retail
operating divisions seven Macys and one
Bloomingdales. At the same time, it began to market and
advertise the Macys retail operations on a nationwide
basis as a nationwide department store. The Board believes that
changing the companys name to reflect one of its primary
trade names will further promote the national awareness of the
company in the minds of consumers, vendors, stockholders and the
investment community.
Effect of
the Proposed Amendment
If approved by stockholders, the change in corporate name will
not affect the validity or transferability of any existing stock
certificates that bear the name Federated Department
Stores, Inc. If the proposed name change is approved,
stockholders with certificated shares should continue to hold
their existing stock certificates. The rights of stockholders
holding certificated shares under existing stock certificates
and the number of shares represented by those certificates will
remain unchanged. Direct registration accounts and any new stock
certificates that are issued after the name change becomes
effective will bear the name Macys, Inc.
Currently Federateds stock is quoted on the New York Stock
Exchange under the symbol FD. If the proposed name
change is approved, the stock will trade under the symbol
M. A new CUSIP number will also be assigned to the
common stock following the name change.
If the proposal to change the corporate name is not approved,
the proposed amendment to Federateds certificate of
incorporation will not be made and its corporate name and ticker
symbol will remain unchanged.
22
Required
Approvals
The affirmative vote of the holders of a majority of the total
number of shares of common stock outstanding as of the record
date will be required to approve this proposal. Abstentions and
broker non-votes will have the same effect as a vote against
this proposal.
The Board recommends that you vote FOR the amendment to
the certificate of incorporation, and your proxy will be so
voted unless you specify otherwise.
ITEM 4. APPROVAL
OF THE 1992 INCENTIVE BONUS PLAN, AS AMENDED
The 1992 Incentive Bonus Plan, referred to as the 1992 Bonus
Plan, was approved by Federateds stockholders at the 1997
and 2002 annual meetings. In order to preserve the deductibility
of compensation awarded under the plan, Federated again is
seeking approval of the 1992 Bonus Plan at this years
annual meeting. The purpose of the 1992 Bonus Plan is to promote
the attainment of Federateds performance goals by
providing incentive compensation for certain key executives of
Federated and its subsidiaries.
Section 162(m) of the Internal Revenue Code generally
disallows a tax deduction to public companies for compensation
over $1.0 million accrued with respect to the chief
executive officer and the four most highly compensated executive
officers in addition to the chief executive officer employed by
Federated at the end of the applicable year. Performance-based
compensation will not be subject to the deduction limit if
certain requirements are met. In the case of the 1992 Bonus
Plan, one such requirement is that Federateds stockholders
approve the plan at least once every five (5) years.
The Board has amended the 1992 Bonus Plan, subject to
stockholder approval at the 2007 annual meeting, as follows:
|
|
|
|
|
to provide that the only form of payment under the 1992 Bonus
Plan will be cash;
|
|
|
|
to permit the 1992 Bonus Plan to use the same performance
measures that the stockholders approved last year under
Federateds equity incentive plans;
|
|
|
|
to add a definition of change in control; and
|
|
|
|
to update the administrative provisions of the 1992 Bonus Plan.
|
The CMD Committee administers the 1992 Bonus Plan; however, the
Board has retained the power to amend or terminate this plan.
Each member of the CMD Committee is independent under
Federateds standards for director independence and NYSE
rules. The CMD Committee may delegate its authority to executive
employees of Federated from time to time, and may revoke any
such delegation from time to time (references to the CMD
Committee throughout this discussion also include any executive
employee to whom the CMD Committee has delegated authority).
Executives of Federated or its subsidiaries (including store
principals, general merchandise managers, store managers, vice
presidents and other elected officers) may participate in the
1992 Bonus Plan if the CMD Committee designates them as a
Participant for one or more performance periods. The 1992 Bonus
Plan provides for both annual incentive awards and long-term
incentive awards. Annual incentive awards are based upon the
achievement of specified performance goals for the applicable
fiscal year. Long-term incentive awards are based on the
achievement of specified performance goals over a specified
period, not to exceed five consecutive fiscal years. However,
the CMD Committee stopped granting new long-term incentive
awards under the 1992 Bonus Plan in 2002. The CMD Committee has
no current plans to make long-term incentive
23
awards, but believes it is in the best interests of Federated to
have the flexibility to make long-term incentive awards under
the 1992 Bonus Plan in the future. As of the date of this proxy
statement, approximately 1,900 executive and management
participants in the 1992 Bonus Plan are eligible for annual
incentive awards, and no participants in the 1992 Bonus Plan
have outstanding long-term incentive awards.
Before or shortly after the beginning of each performance
period, the CMD Committee approves the applicable performance
goals for the performance period for Federated and each other
covered business unit and, in certain cases, for individual
participants. The performance goals are based upon
Federateds business plan for the performance period. In
the case of a participant who is, or is determined to be likely
to become, a covered employee within the meaning of
Section 162(m) of the Internal Revenue Code, the
performance goals will be based solely upon one or more of the
following measures of performance:
|
|
|
|
|
total sales;
|
|
|
|
comparable store sales;
|
|
|
|
gross margin;
|
|
|
|
operating or other expenses;
|
|
|
|
earnings before interest and taxes (EBIT);
|
|
|
|
earnings before interest, taxes, depreciation and amortization;
|
|
|
|
net income;
|
|
|
|
earnings per share (either basic or diluted);
|
|
|
|
cash flow;
|
|
|
|
return on investment (determined with reference to one or more
categories of income or cash flow and one or more categories of
assets, capital or equity, including return on net assets,
return on sales, return on equity and return on invested
capital);
|
|
|
|
stock price appreciation;
|
|
|
|
operating income;
|
|
|
|
net cash provided by operations;
|
|
|
|
total stockholder return; and
|
|
|
|
customer satisfaction.
|
The performance goals may be expressed with respect to Federated
or with respect to one or more of its business units and may be
expressed in terms of absolute levels or percentages or ratios
expressing relationships between two or more of the foregoing
measures of performance (e.g., EBIT as a percentage of total
sales),
period-to-period
changes, performance relative to business plans or budgets, or
performance relative to one or more other companies or one or
more indices. For participants who are not covered
employees the performance goals may also include
individual performance ratings or other performance measures, as
determined by the CMD Committee.
24
Each business units actual performance during a particular
performance period is measured against the applicable
performance goals. If the business units performance for
the performance period:
(i) is below the threshold performance goal, no annual or
long-term incentive awards are paid to participants;
(ii) is equal to the threshold performance goal, the
threshold levels of annual and long-term incentive awards, as
applicable, are paid to participants;
(iii) is equal to the target performance goal, the target
levels of annual and long-term incentive awards, as applicable,
are paid to participants;
(iv) is equal to or greater than the maximum performance
goal, the maximum level of annual and long-term incentive
awards, as applicable, are paid to participants; and
(v) is in between any two of the performance goal levels
described in the immediately preceding clauses (ii),
(iii) and (iv), the levels of the annual and long-term
incentive awards, as applicable, paid to participants are
determined through interpolation.
If a performance goal has no threshold level of performance,
target performance must be achieved in order for any annual
incentive award to be paid to participants. If a performance
goal has no maximum level of performance and performance exceeds
the target level of performance, the annual incentive will be
calculated at a rate established by the CMD Committee for above
target performance. No annual incentive award paid to any
participant may exceed $7.0 million, and no long-term
incentive award paid to any participant for any long-term
performance period may exceed $3.0 million.
The 1992 Bonus Plan provides that all annual and long-term
incentive awards will be paid to participants:
(i) in cash;
(ii) in a lump sum
and/or in
deferred payments; and
(iii) on the date(s) and other terms, including any premium
in respect of any deferred payments,
in each case as determined by the CMD Committee at the time that
performance goals are established for a particular performance
period.
In connection with a change in control, the CMD Committee will
take all actions that it deems necessary or appropriate to treat
participants equitably, including the modification or waiver of
applicable performance formulas, performance goals, performance
measures, performance periods or awards, and including
potentially establishing or funding a trust or other arrangement
intended to secure the payment of awards. Under the 1992 Bonus
Plan, a change in control occurs if:
|
|
|
|
|
Federated is merged, consolidated or reorganized into or with
another corporation and, as a result of or immediately following
such merger, consolidation or reorganization, less than a
majority of the voting power of the other corporation
immediately after the transaction is held in the aggregate by
the holders of the voting stock of Federated immediately prior
to the transaction; or
|
|
|
|
Federated sells or otherwise transfers all or substantially all
of its assets to another corporation and, as a result of or
immediately following such sale or transfer, less than a
majority of the voting power of the then-outstanding securities
of the other corporation immediately after such sale or transfer
is held in the aggregate by the holders of voting stock of
Federated immediately before the transaction; or
|
25
|
|
|
|
|
a person discloses that the person has become the beneficial
owner of securities representing 30% or more of the combined
voting power of Federated; or
|
|
|
|
if, in any two-year period, individuals who, at the beginning of
the period, constitute the directors of Federated cease for any
reason to constitute at least a majority of the board.
|
A change in control will not occur under the third bullet point
above if Federated, an entity controlled by Federated or an
employee benefit plan of Federated or any entity controlled by
Federated discloses that it beneficially owns securities,
whether more than 30% or otherwise.
The foregoing discussion of the material provisions of the 1992
Bonus Plan does not purport to be complete and is qualified in
its entirety by reference to the full text of the plan, which is
attached as Appendix B to this proxy statement and
incorporated herein by reference. The 1992 Bonus Plan is subject
to amendment from time to time by the Board.
Awards under the 1992 Bonus Plan are determined based on future
performance, so future actual awards, if any, cannot now be
determined. The following table sets forth the annual bonus
opportunities for fiscal 2007 depending on the extent to which
the performance goals established by the CMD Committee are
achieved. There is no assurance that performance goals will
actually be achieved, and therefore there is no assurance that
any awards actually will be paid for fiscal 2007 or any future
performance period.
NEW PLAN
BENEFITS
1992 Incentive Bonus Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Threshold($)
|
|
|
Target($)
|
|
|
Maximum ($)(1)
|
|
|
T. Lundgren
|
|
|
600,000
|
|
|
|
2,250,000
|
|
|
|
4,500,000
|
|
K. Hoguet
|
|
|
160,000
|
|
|
|
600,000
|
|
|
|
1,200,000
|
|
T. Cody
|
|
|
170,000
|
|
|
|
637,500
|
|
|
|
1,275,000
|
|
T. Cole
|
|
|
195,000
|
|
|
|
731,250
|
|
|
|
1,462,500
|
|
J. Grove
|
|
|
195,000
|
|
|
|
731,250
|
|
|
|
1,462,500
|
|
S. Kronick
|
|
|
220,000
|
|
|
|
825,000
|
|
|
|
1,650,000
|
|
R. Tysoe(2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
All executive officers as a group
(8 persons)
|
|
|
1,678,000
|
|
|
|
6,311,250
|
|
|
|
12,622,500
|
|
All non-executive officers
(approximately 1,892 persons)
|
|
|
20,235,326
|
|
|
|
78,696,695
|
|
|
|
157,393,390
|
|
|
|
|
(1) |
|
If corporate EBIT performance exceeds plan by more than a
predetermined amount, the executives may receive a bonus in
excess of the maximum amount reflected in the table.
In no event, however, will an award exceed the $7 million
plan maximum for annual bonus awards. |
|
(2) |
|
Mr. Tysoe ceased to be an executive officer of the company
when he resigned his position as Vice Chair of Federated.
He is not eligible for an annual bonus in fiscal 2007. |
Under present federal income tax law, a participant in the 1992
Bonus Plan will be taxed at ordinary income rates on the amount
of any award received pursuant to the 1992 Bonus Plan. Generally
and subject to the provisions of Section 162(m), Federated
will receive a federal income tax deduction corresponding to the
amount of income recognized by a 1992 Bonus Plan participant.
26
If the holders of a majority of the shares of common stock that
are actually voted on the matter at the annual meeting vote for
the approval of the 1992 Bonus Plan, the 1992 Bonus Plan will be
deemed to have been approved by Federateds stockholders.
If such approval by Federateds stockholders is not
obtained at the annual meeting, Federated will not receive a
federal income tax deduction for any annual incentive awards
payable to the executives subject to Section 162(m) of the
Internal Revenue Code for any performance period commencing
after February 3, 2007.
The Board recommends that you vote FOR the approval of
the 1992 Bonus Plan, as amended, and your proxy will be so voted
unless you specify otherwise.
ITEM 5. APPROVAL
OF THE ISSUANCE OF COMMON STOCK UNDER THE DIRECTOR DEFERRED
COMPENSATION PLAN
On February 23, 2007, upon the recommendation of the NCG
Committee, the Board approved and adopted the Director Deferred
Compensation Plan (the Director Plan), subject to
stockholder approval. In order for some elements of compensation
that must be deferred under the Director Plan to be paid out in
the form of Federated common stock, the NYSE requires that the
issuance of Federated common stock with respect to Mandatory
Stock Compensation (as defined below) be approved by
stockholders. If stockholders approve the issuance of Federated
common stock with respect to Mandatory Stock Compensation under
the Director Plan, the effective date of the Director Plan is
May 18, 2007, and it will cover compensation amounts earned
after the date of the annual meeting. The Director Plan aligns
the interests of Non-Employee Directors with the interests of
other Federated stockholders by offering long-term stock
incentives in addition to current cash compensation.
The following is a summary of the principal provisions of the
Director Plan, a copy of which is set forth as Appendix C
to this proxy statement.
Summary
of the Director Plan
Shares Subject to the Director Plan. The
maximum number of shares of Federated common stock that may be
credited to accounts and issued as Mandatory Stock Compensation
pursuant to the Director Plan will be 250,000 shares,
subject to adjustment in accordance with the Director Plan.
Participants. Each member of the Board who is
not a full-time employee of Federated or any subsidiary of
Federated (Non-Employee Director) is a participant
in the Director Plan. As of January 1, 2007, Federated had
nine Non-Employee Directors eligible to participate in the
Director Plan.
Administration. The Board shall administer the
Director Plan. The Board may delegate the administration of the
Director Plan to the NCG Committee.
Mandatory Stock Compensation. The Director
Plan requires that 50% of the annual base retainer fee
(including the fee payable to a committee chair) and 50% of the
fees payable to Non-Employee Directors for attending Board and
committee meetings (Mandatory Stock Compensation) be
paid in credits representing the right to receive shares of
common stock (Mandatory Stock Credits). The
Mandatory Stock Compensation is subject to a three-year deferral
period. Each month, a Non-Employee Director is credited with
Mandatory Stock Credits equal to the number of shares of
Federated common stock that could be purchased with the amount
of Mandatory Stock Compensation payable to the Non-Employee
Director for the month in accordance with the Director Plan.
Mandatory Stock Credits are credited monthly to a bookkeeping
account in the name of the Non-Employee Director. The dollar
amount of any Mandatory Stock Compensation that is not credited
27
as Mandatory Stock Credits (because the amount is less than the
value of a share of common stock) is also credited to the
account.
A Non-Employee Directors account is credited on the last
day of each calendar quarter with a number of additional stock
credits equal to the amount of dividends paid by Federated
during the calendar quarter in cash or property on the number of
shares of common stock equivalent to the number of Mandatory
Stock Credits in the Non-Employee Directors account from
time to time during such quarter (combined with other amounts of
Mandatory Stock Compensation credited to the Non-Employee
Directors account other than as Mandatory Stock Credits)
divided by the closing price of one share of common stock on the
last trading day of such quarter. For purposes of the Director
Plan, the stock credits described in the preceding sentence are
treated as additional Mandatory Stock Credits. At the end of
each calendar quarter, a number of shares of common stock equal
to the amount of Mandatory Stock Credits credited to the
Non-Employee Directors account during the calendar quarter
are credited to a rabbi trust.
Distributions will be made three years after the end of the
calendar quarter in which Mandatory Stock Credits are credited
to a Non-Employee Directors account. Alternatively, the
Non-Employee Director may elect to further defer distribution of
the Mandatory Stock Compensation under the elective deferred
compensation feature of the Director Plan until the
Directors service on the Board ends, at which time the
Mandatory Stock Compensation will be distributed in shares of
common stock in accordance with the distribution schedule
elected by the Non-Employee Director. Distributions of shares of
Federated common stock may be made directly from the trust.
Elective Compensation. The 50% of fees payable
to Non-Employee Directors that is not Mandatory Stock
Compensation (Elective Compensation) is paid
currently in cash or, at the election of the Non-Employee
Director, may be deferred until the Non-Employee Directors
service on the Board ends.
If the Non-Employee Director elects to defer the Elective
Compensation, the Elective Compensation may be deferred in the
form of cash or in the form of common stock. Elective
Compensation that is deferred in the form of cash is credited to
the Non-Employee Directors bookkeeping account at the end
of each month. All amounts credited to the account as cash will
accrue interest in accordance with the terms of the Director
Plan. The amounts in the account will be distributed in cash in
annual installments commencing on or about the first Tuesday
following the end of the calendar quarter in which the
Directors service on the Board ends pursuant to the
distribution schedule elected by the Non-Employee Director.
Elective Compensation that is deferred in the form of common
stock is credited to the Non-Employee Directors account as
stock credits (Elective Stock Credits) at the end of
each month. Each month, a Non-Employee Director is credited with
Elective Stock Credits equal to the number of shares of
Federated common stock that could be purchased with the amount
of Elective Compensation payable for the month to the
Non-Employee Director that is deferred in the form of common
stock. Such dollar amounts that are not credited as Elective
Stock Credits (because the amount is less than the value of a
share of common stock) are also credited to the Non-Employee
Directors account. A Non-Employee Directors account
is credited on the last day of each calendar quarter with a
number of additional stock credits equal to the amount of
dividends paid by Federated in cash or property during the
calendar quarter on the number of shares of common stock
equivalent to the number of Elective Stock Credits in the
Non-Employee Directors account from time to time during
such quarter (combined with other amounts of Elective
Compensation that are deferred in the form of common stock and
credited to the Non-Employee Directors account other than
as Elective Stock Credits) divided by the closing price of one
share of common stock on the last trading day of such quarter.
For purposes of the Director Plan, the stock credits described
in the preceding sentence are treated as additional
28
Elective Stock Credits. At the end of each calendar quarter, a
number of shares of common stock equal to the number of Elective
Stock Credits credited to a Non-Employee Directors account
during the calendar quarter are credited to the trust. Elective
Compensation that is deferred in the form of common stock will
be distributed in shares of common stock in accordance with the
distribution schedule elected by the Non-Employee Director.
Distributions of shares of Federated common stock may be made
directly from the trust.
Adjustments. In the event there is any change
in the outstanding shares of Federated common stock as a result
of (a) any stock dividend, stock split, combination of
shares, recapitalization, or other change in the capital
structure of the Company, (b) any merger, consolidation,
spin-off, split-off, spin-out,
split-up,
reorganization, partial or complete liquidation, or other
distribution of assets or issuance of rights or warrants to
purchase securities, or (c) any other corporate transaction
or event having an effect similar to any of the foregoing,
Mandatory Stock Credits, Elective Stock Credits and the number
of shares of common stock available for issuance under the
Director Plan shall be adjusted accordingly.
Amendment and Termination. The Board may at
any time amend or terminate the Director Plan to the extent
permitted by law. However, no such action may adversely affect a
Directors rights with respect to any fees already earned
but not yet paid in cash, Mandatory Stock Credits, Elective
Stock Credits or common stock without the Non-Employee
Directors written consent.
Compliance with Section 409A of the Internal Revenue
Code. To the extent applicable, it is intended
that the Director Plan comply with the provisions of
Section 409A of the Internal Revenue Code. The Director
Plan shall be administered in a manner consistent with this
intent. Any amendments made to comply with Section 409A of
the Internal Revenue Code may be retroactive to the extent
permitted by Section 409A and may be made by Federated
without the consent of the Non-Employee Directors. Any reference
in this Director Plan to Section 409A will also include any
proposed, temporary or final regulations, or any other guidance,
promulgated with respect to such Section by the
U.S. Department of the Treasury or the Internal Revenue
Service.
Federal Income Tax Consequences. The following
discussion summarizes the federal income tax consequences to
participants in the Director Plan. This summary is not intended
to be complete and does not describe state or local tax
consequences.
Taxes Related to the Receipt of Stock
Credits. The recipient of the Mandatory Stock
Credits and Elective Stock Credits will generally be subject to
tax at ordinary income rates on the fair market value of the
common stock received in satisfaction of the Mandatory Stock
Credits or Elective Stock Credits at the time of distribution.
Federated will be entitled to a tax deduction equal to the
amount of ordinary income recognized by the Non-Employee
Director at that time.
Taxes Related to the Deferral of Cash. Cash
received under the Director Plan will generally be subject to
tax as ordinary income in the year received. Accordingly, if a
Non-Employee Director elects to defer receipt of Elective
Compensation to be paid in cash, he or she will not be taxed
currently, but will be taxed in the future when the cash is
actually received. The cash will be taxed as ordinary income and
Federated will be entitled to a tax deduction equal to the
amount of ordinary income recognized.
If the holders of a majority of the shares of common stock that
are actually voted on the matter at the annual meeting vote for
the approval of issuance of common stock under the Director
Plan, the issuance of common stock under the Director Plan will
be deemed to have been approved by Federateds
stockholders. See footnote 1 to the 2006 Non-Employee
Director Summary Compensation Table for a table showing the
29
number of Mandatory Stock Credits credited to the Non-Employee
Directors accounts in fiscal 2006 under the Director Plan.
The Board recommends that you vote FOR the approval of
the issuance of common stock under the Director Plan, and your
proxy will be so voted unless you specify otherwise.
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
Federated is one of the nations premier retailers, with
fiscal 2006 sales of $27 billion. In August 2005, Federated
completed the acquisition of The May Department Stores Company,
nearly doubling the size of the company. The acquisition
included over 400 store locations operated by May under 11
regional nameplates. During fiscal 2006, Federated converted the
May regional nameplates to the Macys nameplate and the May
stores to either Macys or Bloomingdales stores,
strengthening the reach of both of the national retailing
brands. At the end of fiscal 2006, Federated operated more than
850 department stores in 45 states, the District of
Columbia, Guam and Puerto Rico under the names of Macys
and Bloomingdales. Federated also operates
macys.com, bloomingdales.com and
Bloomingdales By Mail. The company employs about 188,000
regular full-time and part-time employees.
The retailing industry is intensely competitive.
Federateds stores and
direct-to-customer
business operations compete with many retailing formats in the
geographic areas in which they operate, including department
stores, specialty stores, general merchandise stores, off-price
and discount stores, new and established forms of home shopping
(including the Internet, mail order catalogs and television) and
manufacturers outlets, among others. In addition to
competing for customers, Federated also must compete very
aggressively for executive talent.
Successfully integrating two retailers of the size and scope of
Federated and May is a significant undertaking, requiring a
tremendous amount of time and effort from Federateds
executive team during fiscal 2006 in addition to their ongoing
responsibilities for Federateds core business. Through the
integration process, Federated identified many talented people
from the May organization that Federated wanted to retain for
the integrated business. Federateds compensation programs
are designed to compete with the compensation programs of other
retailers and, as appropriate, general industry in order to
attract and retain the best executives and keep them motivated
to drive stockholder value.
Compensation
Philosophy
Federateds overall compensation program is
performance-driven and designed to support the needs of the
business by:
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Providing Competitive and Reasonable Compensation
Opportunities.
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Federateds compensation levels and individual compensation
programs are assessed against market norms periodically by the
CMD Committee with input from independent outside compensation
consultants as needed. Under ordinary circumstances, the CMD
Committee undertakes a comprehensive review of the program
approximately every three years. Pay data is validated against
several benchmarks, including specific pay levels of other large
retail and vendor organizations and information from published
surveys of the retail industry and general industry. In
addition,
30
compensation of individual executives or specific plans or
practices are reviewed more frequently, depending on business
needs.
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Focusing on Results and Strategic Initiatives.
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Federateds compensation programs are based on measures of
business success. They reflect a combination of specific
internal measurements of success (such as EBIT, sales and cash
flow) and external measurements of success (such as customer
satisfaction and stock price performance). A portion of the
compensation program focuses on the strategic initiatives that
will help continue to differentiate Federated from other
retailers and that are important in making Macys and
Bloomingdales stores the customers first choice in
shopping.
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Fostering a Pay for Performance Culture.
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A significant portion of an executives compensation
program is linked to variable compensation components, such as
short-term cash incentives, stock options, stock credits and
restricted stock. As a result, an individuals compensation
level is dependent on individual and company performance,
including stock price appreciation. The mix of components and
the proportion of each as a percentage of total compensation may
vary from year to year, but the total mix is designed to
maximize performance.
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Attracting and Retaining Key Executives.
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Federateds executives are recognized as some of the most
talented people in the retail industry, and Federateds
training and development programs have earned national
recognition. The compensation programs are designed to attract
and retain high caliber executives who are key to the continued
success of the business, who can provide consistent leadership
and whose talents support strong succession planning.
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Providing a Strong Link to our Stockholders
Interests.
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The combination of the core principles above appropriately ties
Federateds performance with compensation and thereby
aligns the interests of key executives with the interests of the
stockholders.
Operation
of the CMD Committee
The CMD Committee of the Board administers the compensation
program for corporate officers and division principals, oversees
the companys benefit plans and policies, including its
incentive and equity plans, and also ensures that appropriate
succession plans are in place for the chief executive officer
and other key executive positions. For a more complete
description of the responsibilities of the CMD Committee, see
Further Information Concerning the Board of
Directors Committees of the Board and the
charter for the CMD Committee posted on Federateds website
at www.fds.com/ir/corpgov.
The
Compensation Program
Key components of Federateds current compensation program
are:
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base pay;
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annual performance-based bonus (under Federateds
short-term performance-based non-equity incentive plan);
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31
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long-term performance-based and other equity incentives,
including stock options, restricted stock
and/or stock
credits; and
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benefits.
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With respect to Named Executives, the CMD Committee annually
reviews base pay, annual bonus payments and equity awards at its
March committee meeting, at which time all financial results for
the prior fiscal year for the company are available and
individual and company performance against financial targets can
be measured. Generally, total compensation for this group is
targeted between the 50th and 75th percentiles of
market practice.
The CMD Committee periodically benchmarks the ongoing
competitiveness of Federateds compensation program to test
how well actual compensation levels reflect the targeted market
position and promote Federateds compensation
philosophy. As a general rule, the CMD Committee reviews a
comprehensive benchmarking analysis by its independent
compensation consultant for the chief executive officer every
year and for the other Named Executives every three years. In
addition, in evaluating the compensation of the Named
Executives, the CMD Committee reviews the compensation of other
senior Federated executives for internal pay equity.
For the chief executive officer and the vice chairs, the CMD
Committee compares executive compensation levels with proxy data
reported by a group of major retailers and vendors. In fiscal
2006, as a secondary test against the market, the chief
executive officers compensation was also compared to the
proxy data reported by a peer group of consumer products
companies that manage national brands and have revenues ranging
from $10 to $60 billion. The component companies of both
peer groups are listed below.
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Retailer and Vendor Peer
Group
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Abercrombie & Fitch
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Jones Apparel Group
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Polo Ralph Lauren
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Ann Taylor Stores
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Kohls
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Sears Holdings
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Best Buy
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Kroger
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SuperValu
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Burberry Ltd.
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Limited Brands
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Talbots
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Dillards
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Liz Claiborne
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Target
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Gap
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LVMH
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TJX Companies
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Gucci Group
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Neiman Marcus Group
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VF Corp
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J.C. Penney
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Nordstrom
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Wal-Mart
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Consumer Products Peer
Group
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3M
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General Mills
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PepsiCo
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Anheuser Busch
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Johnson & Johnson
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Procter & Gamble
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Colgate Palmolive
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Kimberly Clark
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Sara Lee
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Coca-Cola
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Kraft
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For the chief financial officer, the CMD Committee compares
compensation to retail and general industry surveys published by
various survey providers, including Hay, Hewitt, Mercer and
Towers Perrin. These surveys contain compensation data for
dozens, and in some cases hundreds, of companies.
The results of the benchmarking conducted in fiscal 2006
indicated that the compensation levels of the Named Executives
were within the targeted pay positions. Federateds chief
executive officers compensation was between the
50th and 75th percentiles of the peer group of
retailers and vendors, but below the median of
32
the consumer products peer group. The compensation of the other
Named Executives was between the 50th and
75th percentile of either the retail and vendor proxy data
or the retail and general industry survey data, as applicable.
Compensation
Mix
The components of compensation for the Named Executives are the
same as for the rest of Federateds executive
group base salary, annual performance-based bonus,
long-term performance-based and other equity incentives and
benefits. The CMD Committee has established guidelines for
annual performance-based bonuses and for long-term incentive
awards. The chart below shows the mix of compensation that would
be payable to the Named Executives on average over time at these
award guideline levels, factoring in current salary rates as
well as the Change in Pension Value and Non-qualified
Deferred Compensation Earnings and All Other
Compensation amounts from the 2006 Summary Compensation
Table. While the values in the chart may change from year to
year, depending on how the CMD Committee administers the
programs, as well as other factors, they broadly reflect how the
CMD Committee structures Federateds compensation program
over time to support the performance elements of the
companys compensation philosophy.
Based on the combination of the annual performance-based bonus
and long-term award guidelines, 75% of the chief executive
officers total compensation is tied to financial
performance
and/or stock
price performance. For the other Named Executives, more than 50%
of total compensation is tied to financial performance
and/or stock
price performance. These ratios are consistent with
Federateds compensation philosophy of focusing on results
and strategic initiatives and fostering a
pay-for-performance
culture.
As the chart below shows, the value of the long-term award
guideline for the chief executive officer is almost three times
the value of the annual performance-based bonus at
target. For the Named Executives other than
Mr. Tysoe, the value of the long-term award guidelines is
almost two times the value of the annual performance-based bonus
at target. These ratios encourage the Named
Executives to focus on Federateds long-term performance.
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Not Tied to Financial Performance and/or
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Tied to Financial Performance and/or
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Stock Price Performance
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Stock Price Performance
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Changes in
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Long-Term and
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Pension and
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All Other
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Annual Bonus at
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Equity
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Salary
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Deferred
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Compensation
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Subtotal
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Target
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Compensation
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Subtotal
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Total
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Chief Executive Officer
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13
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%
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11
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%
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1
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%
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25
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%
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20
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%
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55
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%
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75
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%
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100
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%
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Average of the other Named
Executives
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%
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14
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%
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2
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%
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42
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%
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19
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%
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39
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%
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58
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%
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100
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%
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For fiscal 2006, the compensation guidelines shown above were
supplemented by the grant of merger stock credits to the Named
Executives and by the special 2006 retention grants made on
July 11, 2006 to the Named Executives other than
Mr. Lundgren, Mr. Cody and Mr. Tysoe. Both of
these awards provide additional long-term incentives intended to
support the merger integration process and retain key members of
Federateds executive team during the most critical
post-merger period.
Base
Pay
Base pay is a significant retention tool when managed properly.
Base pay is designed to compensate an individual for his or her
level of responsibility and performance. The CMD Committee
decisions regarding an individuals base pay take into
account many factors, including:
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division
and/or
company performance;
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the individuals current and historical performance and
contribution to Federated;
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the individuals future potential with Federated;
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the individuals role and unique skills; and
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consideration of external market data for similar positions,
adjusted for Federateds size, the scope of
responsibilities and the uniqueness of the role.
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Federated utilizes base pay ranges for the chief financial
officer and executive levels below that position, based upon
position and responsibilities and market and competitive data,
as described above. The CMD Committee periodically reviews base
pay ranges, most recently in fiscal 2006. The CMD Committee
adopted new base pay ranges for fiscal 2007 to reflect the
integration of the May acquisition. Base pay of the other Named
Executives is managed individually without using a base pay
range.
Following the close of the fiscal year, the CMD Committee, with
input from the full Board, conducts an annual performance review
for the chief executive officer. The chief executive officer
conducts an annual performance review for the other Named
Executives. The CMD Committee bases its decisions about whether
to increase base pay and, if so, by how much, on a number of
factors, including those listed above and, for the chief
financial officer, the individuals salary within the base
pay range established for that position. The CMD Committee
reviews preliminary recommendations for annual increases at its
February meeting and final recommendations at its March meeting.
Annual increases in base pay normally take effect on
April 1st of each year.
Fiscal 2006 Action: In fiscal 2006, the
Named Executives received the following annual base pay rate
increases:
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Annual Increase in
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Base Pay Rate
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$
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% of Base Pay
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T. Lundgren
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100,000
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7.7
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K. Hoguet
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50,000
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7.1
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T. Cody
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45,000
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6.0
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T. Cole
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100,000
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12.5
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J. Grove
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100,000
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12.5
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S. Kronick
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45,000
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4.5
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R. Tysoe
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0
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n/a
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Annual
Performance-Based Bonus
The Named Executives participate in the 1992 Bonus Plan. The
1992 Bonus Plan is a non-equity incentive plan under
current SEC rules. It is designed to align a significant portion
of the pay of Federateds senior executives with
Federateds annual performance. The actual amount of annual
cash bonus earned each year is based on Federateds
performance results against performance measures set by the CMD
Committee at the beginning of the fiscal year. No bonus will be
paid if Federated does not achieve a net profit, excluding
restructuring charges and extraordinary items for the fiscal
year.
For fiscal 2006, the performance measures were EBIT, sales, and
cash flow dollars. The performance measures may not be adjusted
for the Named Executives during the performance period except to
prevent dilution or enlargement of any award as a result of
extraordinary events or to exclude the effects of
34
extraordinary, unusual or nonrecurring events, changes in
accounting principles, discontinued operations, acquisitions or
divestitures and material restructuring charges. Federated has
not disclosed the specific performance targets for each of the
performance measures because they constitute confidential
business information that could damage Federateds ability
to compete effectively in the retail market place. However, the
CMD Committee believes that the companys business plan is
such that achieving target levels of performance requires the
executives to stretch. Over the last five years, the company has
achieved performance below the threshold level of
performance once, between threshold and
target once, and in excess of target
three times. The Named Executives would be entitled to the
following percentages of base pay for achieving the following
threshold, target and
maximum levels of performance.
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Annual Bonus as a % of Base Pay
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Position
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Component
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Threshold
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Target
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Maximum
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Chief Executive Officer
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EBIT $
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18
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%
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90
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%
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No maximum
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Sales $
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0
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%
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30
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%
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60
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%
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Cash Flow $
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12
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%
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30
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%
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60
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%
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Total
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30
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%
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150
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%
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No maximum
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|
|
Other Named Executives
|
|
EBIT $
|
|
|
9
|
%
|
|
|
45
|
%
|
|
|
No maximum
|
|
|
|
Sales $
|
|
|
0
|
%
|
|
|
15
|
%
|
|
|
30
|
%
|
|
|
Cash Flow $
|
|
|
6
|
%
|
|
|
15
|
%
|
|
|
30
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
15
|
%
|
|
|
75
|
%
|
|
|
No maximum
|
|
For the 2007 fiscal year, in order to encourage more aggressive
sales plan strategies, the CMD Committee approved a change in
the threshold level of performance for the
sales performance measure, to 10% for the Chief
Executive Officer and 5% for the other Named Executives.
Fiscal 2006 Action: The CMD Committee reviewed
performance data at the end of fiscal 2006 with management at
its March 2007 meeting and determined that Federated achieved a
net profit for fiscal 2006, excluding restructuring charges and
extraordinary items, and determined the extent to which the
targeted levels of performance measures were achieved. The
annual bonuses for the Named Executives for fiscal 2006 were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Payout for fiscal 2006 as a % of Base Pay
|
|
Bonus Component
|
|
2006 Performance
|
|
Chief Executive Officer
|
|
|
Other Named Executives
|
|
|
EBIT $
|
|
Above Target
|
|
|
133.2
|
%
|
|
|
66.6
|
%
|
Sales $
|
|
Below Target
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
Cash Flow $
|
|
Maximum
|
|
|
60.0
|
%
|
|
|
30.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
193.2
|
%
|
|
|
96.6
|
%
|
The maximum permitted annual bonus payment for any year under
the 1992 Bonus Plan is $7.0 million. For fiscal 2006, the
chief executive officers annual bonus was 38.6% of the
maximum bonus payment under the 1992 Bonus Plan. The amount of
annual incentive bonus paid for fiscal 2006 to each Named
Executive is reflected in the Non-Equity Incentive Plan
Compensation column of the 2006 Summary Compensation Table.
35
Annual incentive bonuses are determined as a percentage of the
executives base salary as of the last day of the fiscal
year. Bonus percentages are interpolated for performance results
falling between threshold and target and
between target and maximum for the
applicable performance component, as measured against the
companys business plan for those components. If a
performance component does not have a threshold level of
performance, bonus percentages are interpolated for performance
results falling between target and maximum. If a performance
component has no maximum level of performance and performance
exceeds the target level of performance, the annual bonus will
be calculated at a rate established by the CMD Committee for
above-target performance. Annual bonuses are submitted to the
CMD Committee for approval at its March meeting.
For a more complete description of the 1992 Bonus Plan, see the
discussion under Item 4. Approval of the 1992
Incentive Bonus Plan, as Amended.
Special 2006 Bonuses. To reflect the strong
performance of the company during the year despite the many
challenges associated with the merger integration activities
throughout the year, the CMD Committee approved an additional
$25,000 special bonus for fiscal 2006 for each of
Mrs. Hoguet, Mr. Cody, Mr. Cole, Ms. Grove
and Ms Kronick. In addition, the CMD Committee approved a
$200,000 special bonus for Mr. Cody to recognize his
handling of the unique legal and human resources aspects of the
May integration process. (For additional information concerning
special, merger related retention arrangements for
Mrs. Hoguet, Mr. Cole, Ms. Grove and
Ms. Kronick, see Special 2006 Retention Grants
below.)
Long-Term
Performance-Based and Other Equity Incentives
Each year the CMD Committee reviews the use of long-term
incentives under three long-term plans:
|
|
|
|
|
the 1995 Equity Incentive Plan, referred to as the 1995 Equity
Plan;
|
|
|
|
the 1994 Stock Incentive Plan, referred to as the 1994 Stock
Plan; and
|
|
|
|
stock credit plans adopted from time to time, referred to as the
stock credit plans.
|
Federateds stockholders have approved the 1995 Equity Plan
and the 1994 Stock Plan. Approximately 1,900 executives are
eligible for equity grants, including stock options and
restricted stock, under these plans.
Stock Options. The 1995 Equity Plan and
the 1994 Stock Plan reflect Federateds commitment to
effective management of equity-based compensation. Stock option
grants are discretionary. The CMD Committee determines grant
types and grant levels based on market data (as described
above), emerging trends and other financial considerations,
including the impact on stockholder dilution. Options granted
under the plans incorporate the following terms:
|
|
|
|
|
the term of the option grants does not exceed 10 years;
|
|
|
|
the exercise price is not less than the market price of the
underlying Federated common stock on the date of grant (which,
for purposes of these grants, is defined as the closing price of
Federated common stock on the trading date prior to the grant
date);
|
|
|
|
grants do not include reload provisions; and
|
|
|
|
repricing of options is prohibited, unless approved by the
stockholders.
|
36
Despite the accounting changes resulting in the expensing of
stock options, Federated has continued to use stock options as a
long-term incentive vehicle because:
|
|
|
|
|
Stock options align the interests of executives with those of
the stockholders, support a
pay-for-performance
culture, foster employee stock ownership, and focus the
management team on increasing value for the stockholders.
|
|
|
|
Stock options are performance based. All the value received by
the recipient from a stock option is based on the growth of the
stock price above the option price.
|
|
|
|
Stock options offer a balance to the overall compensation
program: the annual incentive plan focuses on financial
objectives; the performance period of the stock credit plan
focuses on longer-term financial and operational performance,
while the holding period applicable to stock credits focuses on
increases in stockholder value; and stock options focus on
increases in stockholder value.
|
|
|
|
Stock options have retentive value and provide a long-term focus.
|
The CMD Committees use of stock options has evolved in
recent years:
|
|
|
|
|
For years prior to fiscal 2004, the CMD Committee relied almost
exclusively on stock options, and determined grants based on
guidelines that specified numbers of option shares for each
position.
|
|
|
|
In fiscal 2004, the CMD Committee determined to shift from such
a heavy reliance on stock options, and took other actions to
reduce the impact of stock options on stockholder dilution.
|
|
|
|
For fiscal years 2004 and 2005, the CMD Committee reduced option
grant levels for the Named Executives by 50%. The CMD Committee
replaced one-half of the stock option grant levels with stock
credits under the
2004-2005
stock credit plan described below in the Stock Credits section,
replacing three stock options with one stock credit. Stock
credits are cash awards that track the value of Federated common
stock. In addition, a portion of the stock credits is
performance-based.
|
|
|
|
For fiscal years 2006 and 2007, the CMD Committee re-evaluated
how it should determine the numbers of options and stock credits
to grant to the Named Executives, concluding that Federated
should:
|
|
|
|
|
|
determine levels of options and stock credits based on grant
date dollar values rather than on numbers of shares; and
|
|
|
|
emphasize stock credits more by shifting the ratio of stock
credits to stock options from 50/50 to
60/40.
|
The CMD Committee approves annual stock option grants at its
March meeting. The March meeting occurs after financial results
for the company are available at least four weeks
after Federated releases its year-end earnings and at least ten
days after February sales are announced. In fiscal 2006, the
date of the CMD Committee meeting was March 24th. Under the
terms of the equity plans, the exercise price for these stock
options was set at the closing price of Federated common stock
on the NYSE on the trading day prior to the grant date. The
options vest 25% per year over four years beginning with
the first anniversary of the grant date. In addition to the
annual option grants, the CMD Committee may approve options
grants on a limited basis on other dates in special
circumstances, such as to newly hired executives, or to
executives promoted into option eligible positions or to retain
executives important to the success of the company.
Fiscal 2006 Action: The CMD Committee based
the number of stock options granted in fiscal 2006 to each Named
Executive other than Mr. Tysoe on a specific dollar value.
Since he had announced his intention
37
to resign from his position as a Vice Chair of Federated in
fiscal 2006, Mr. Tysoe did not receive a stock option grant
in fiscal 2006. The CMD Committee determined the grant date
dollar value of the options granted to each Named Executive in
fiscal 2004 using the Black-Scholes option valuation method and
the grant date value of stock credits granted to each Named
Executive in fiscal 2004, and then calculated the number of
option shares and stock credits needed to provide the Named
Executive with the same dollar value in fiscal 2006. The CMD
Committee then awarded 60% of that dollar amount as
core stock credits under the
2006-2007
stock credit plan (described below) and 40% of that dollar
amount as stock options under the 1995 Equity Plan. The options
have a
10-year
term, vest 25% on each of the four anniversaries following the
March 24, 2006 grant date and are priced at the closing
price of Federated common stock on the NYSE on March 23,
2006. The 2006 stock option grants to the Named Executives are
reflected in the 2006 Grants of Plan-Based Awards table under
Compensation of the Named Executives for 2006.
For information concerning special retention stock option grants
made to certain Named Executives in fiscal 2006, see
Special 2006 Retention Grants below.
Stock Credits. In March 2004, Federated
implemented a two-year stock credit plan covering, among other
personnel, the Named Executives. The plan was designed to
accomplish several important objectives established by the CMD
Committee, including:
|
|
|
|
|
provide an incentive to drive the achievement of the Four
Priorities (as discussed below);
|
|
|
|
shift a portion of long-term compensation out of stock options
and into stock credits to reduce dilution and share usage;
|
|
|
|
offer a form of compensation that remains connected to stock
price performance; and
|
|
|
|
retain key executives.
|
After Mr. Lundgrens appointment as chief executive
officer in 2003, he outlined four key strategic initiatives to
reinvent the company and drive profitable top-line growth for
2004 and 2005, referred to as the Four Priorities:
|
|
|
|
|
Merchandise Assortments differentiated and better
edited assortments;
|
|
|
|
Price Simplification simplify pricing and highlight
value;
|
|
|
|
Improving the Shopping Experience make it easy,
efficient and comfortable; and
|
|
|
|
Marketing create a brand strategy.
|
To achieve those objectives, management executives would have to
change the way they managed their businesses, often with steps
that could have had a short-term negative impact on division and
corporate performance and, consequently, on annual incentive
compensation. The CMD Committee determined that the stock credit
plan would be an effective tool to retain executives and keep
them focused on the long-term significant changes needed to
achieve the Four Priorities. The CMD Committee, with input from
Mr. Lundgren, determines the extent to which the objectives
relating to the Four Priorities have been achieved.
As described above, the
2004-2005
stock credit plan replaced 50% of the option grants to the Named
Executives and, as a result, the number of options that normally
would have been granted to participants in fiscal years 2004 and
2005 were reduced by 50%. The number of stock credits was
determined by converting the replaced options with stock credits
at a ratio of three stock options to one stock credit. One-third
of the
38
stock credits granted in 2004 were subject to performance
criteria over 2004 and 2005, based on Federateds Four
Priorities.
At the end of fiscal 2005, the CMD Committee evaluated the
performance results for the 33% of the stock credits granted in
2004 that were subject to performance criteria. Based on that
evaluation, the CMD Committee concluded that 95% of those stock
credits were earned. The remaining 5% of those stock credits
were forfeited. The stock credits are subject to a two-year and
three-year holding period and their ultimate value to the
participants will be based on Federateds stock price
performance at the end of the applicable holding period. The
value of one-half of the stock credit balance will be paid in
cash in Spring 2008 and the value of the other half will be paid
in Spring 2009. In each case, the value will be determined on
the basis of the average closing price of Federated common stock
as reported on the NYSE for the 20 business days preceding the
payment date. During the holding period, participants receive
additional credits on their stock credits equivalent to the
dividends paid to stockholders on Federated common stock.
Two-thirds of the stock credits granted in 2004 were time-based.
The stock credits are subject to holding periods and their
ultimate value to the participants will be based on
Federateds stock price performance at the end of the
applicable holding period. The value of one-half of the stock
credit balance will be paid in cash in Spring 2008 and the value
of the other half will be paid in Spring 2009. In each case, the
value will be determined on the basis of the average closing
price of Federated common stock as reported on the NYSE for the
20 business days preceding the payment date.
During 2005, the CMD Committee reviewed the elements of the
total compensation program for the Named Executives and
determined that stock credits continue to provide the link it
seeks to align managements compensation to
Federateds performance and stockholder interests and to
drive implementation of the Four Priorities, including the
introduction and implementation of the Four Priorities at the
400 plus stores acquired in the May transaction.
On March 24, 2006, the CMD Committee authorized a new stock
credit plan for the
2006-2007
performance period. Stock credits issued under the
2006-2007
stock credit plan for the Named Executives other than
Mr. Tysoe consist of core stock credits, 50% of which are
time based and 50% of which have performance objectives tied to
the Four Priorities, and merger stock credits, 100% of which
have performance objectives tied to the achievement of synergies
relating to the May acquisition, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
|
|
|
Payout of Earned Benefit
|
|
Stock Credit
|
|
Earning Criteria
|
|
Period
|
|
|
2010
|
|
|
2011
|
|
|
Core
|
|
50% based on performance against
the Four Priorities
|
|
|
2006-2007
|
|
|
|
50
|
%
|
|
|
50
|
%
|
|
|
50% time based
|
|
|
2006-2007
|
|
|
|
50
|
%
|
|
|
50
|
%
|
Merger
|
|
100% based on performance against
financial measurements of merger synergies
|
|
|
2006-2007
|
|
|
|
50
|
%
|
|
|
50
|
%
|
At the end of fiscal 2007, the CMD Committee will evaluate
performance against the performance criteria applicable to the
stock credits to determine the percent (from 0% to 100%) of
performance-based stock credits earned by the Named Executives.
The performance-based stock credits earned by the Named
Executives and the time-based stock credits held by them will
then be subject to the two-year and three-year holding periods.
The value of one-half of the stock credits will be paid in cash
in Spring 2010 and the value of the other half will be paid in
Spring 2011. In each case, the value will be determined on the
basis of the average closing price of Federated common stock as
reported on the NYSE for the 20 business days preceding the
payment date.
39
The performance portion of the stock credits granted to
Mr. Tysoe in fiscal 2006 are based on goals specific to his
responsibilities for merger-related asset and real estate
transactions. His stock credits are 75% performance-based and
25% time-based. Mr. Tysoes performance period is
2006-2007.
In accordance with his separation arrangements with Federated,
Mr. Tysoe will be paid his time-based and any earned
performance-based stock credits in 2008. Mr. Tysoes
separation arrangements are discussed in further detail under
the heading Compensation of the Named Executives for
2006 Potential Payments Upon Termination or Change
In Control.
Participants who leave the company during the performance period
will forfeit their core and merger stock credits unless they
retire at or after age 62 with at least 10 years of
vesting service or if they are terminated by Federated other
than for cause, in which case their payments will be prorated
for the number of months of completed service during the
performance period divided by 24. Their payments will be made at
the same time and in the same manner as payments to actively
employed participants. In the event that a participant dies or
becomes totally and permanently disabled during the performance
period, the participant (in the event of disability) or the
participants estate (in the event of death) will receive a
lump sum payment of 50% of the participants core stock
credit balance, discounted to present value.
Participants who leave the company during a holding period will:
|
|
|
|
|
forfeit their core and merger stock credit balances if they
leave the company voluntarily or if their employment is
terminated for cause;
|
|
|
|
receive the core and merger stock credits they have earned if
they retire at or after age 62 with at least 10 years
of vesting service or if they are terminated by Federated for
other than cause, payable at the same time and in the same
manner as payments to actively employed participants;
|
|
|
|
receive a pro-rata payment of their core and merger stock credit
balance if they retire between the ages of 55 and 62 with at
least 10 years of vesting service, payable at the same time
and in the same manner as payments to actively employed
participants; and
|
|
|
|
receive a lump sum payment of the discounted present value of
the total account in case of death or total and permanent
disability.
|
All stock credit balances in the
2006-2007
stock credit plan vest and become immediately payable upon a
change in control of the company.
Fiscal 2006 Action: The CMD Committee granted
core stock credits and merger stock credits to the Named
Executives on March 24, 2006. The grant value of the core
stock credits was based on 60% of the grant date dollar value of
the combined 2004 stock option and stock credit grants to these
executives, as described above. Fifty percent of the core stock
credits granted to the Named Executives other than
Mr. Tysoe are time-based and 50% are performance-based,
with performance measures tied to the Four Priorities. The value
of the merger stock credits was approximately 33.3% of the value
of the core stock credit grants. The merger stock credits are
100% performance-based, with performance measures tied to
company-wide objectives related to achieving certain financial
merger synergies during fiscal 2006 and 2007. The Named
Executives other than Mr. Tysoe each received the following
number of stock credits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Stock Credits
|
|
Merger Stock Credits
|
|
|
Performance-Based
|
|
Time Based
|
|
Performance-Based
|
|
T. Lundgren
|
|
|
99,780
|
|
|
|
99,778
|
|
|
|
66,520
|
|
Other Named Executives
|
|
|
21,926
|
|
|
|
21,924
|
|
|
|
14,616
|
|
40
The CMD Committee will evaluate performance against the
performance criteria applicable to the stock credits to
determine the percent of performance-based stock credits earned
by the Named Executives. The CMD Committee will award between 0
and 100% of the core performance-based stock credits depending
upon execution of the strategic plan objectives relating to the
Four Priorities. The CMD Committee will award between 0 and 100%
of the merger stock credits depending upon meeting the
objectives relating to merger synergies. Each Named Executive
will receive the same percentage of their performance-based
stock credits. All stock credits are subject to the holding
periods described above. Mr. Tysoe received 18,274
time-based stock credits and 54,824 performance-based stock
credits. The CMD Committee will award between 0 and 100% of his
performance-based stock credits depending upon the level of
achievement for his objectives relating to merger-related asset
and real estate transactions.
Restricted Stock. The CMD Committee
also may grant restricted stock under the 1995 Equity Plan and
the 1994 Stock Plan for retention and performance reasons.
Restricted stock grants under the two plans can be either
time-based or performance-based. Time-based restricted stock
will generally be forfeited by the executive if the
executives employment with Federated ends prior to the
vesting date. Shares may vest 100% on the third anniversary of
the grant date or in installments over a number of years
following the first anniversary of the grant date. Time-based
restricted stock may not fully vest in under three years.
Performance-based restricted stock is subject to forfeiture if
performance criteria applicable to the shares are not satisfied
and/or if
the executives employment ends prior to the vesting date.
Performance-based restricted stock may not fully vest in less
than one year. Depending upon satisfaction of the performance
criteria, shares may vest up to 100% on the first anniversary of
the grant date or in installments over a number of years
following the first anniversary of the grant date. To the extent
performance criteria are not satisfied, shares are forfeited.
Restricted stock grants typically are approved by the CMD
Committee at its March meeting and are granted as of that day.
In addition, the CMD Committee may approve special restricted
stock grants on other dates in special circumstances, such as to
retain executives important to the success of the company.
Restricted stock can complement stock options. Stock options
work well (that is, they provide incentives) when the fair
market value of the stock is above or slightly below the
exercise price of the options. However, stock options do not
work as well (that is, they provide little or no incentive) if
the fair market value of the stock underlying the options falls
significantly below the exercise price of the options. On the
other hand, restricted stock can continue to work well even if
the fair market value of the stock falls significantly below the
value on the grant date.
Fiscal 2006 Action: Since the CMD Committee
does not make annual grants of restricted stock,
there were no annual grants in fiscal 2006. However,
for information concerning a special retention restricted stock
grant to certain of the Named Executives, see Special 2006
Retention Grants below.
Special
2006 Retention Grants.
In addition to the annual stock option grants, on July 11,
2006, the CMD Committee approved special grants under the 1995
Equity Plan of stock options and time-based restricted stock to
Mrs. Hoguet, Mr. Cole, Ms. Grove and
Ms. Kronick. Each of these executives is deemed by
Mr. Lundgren and the CMD Committee as an essential member
of the Federated-May integration team. The special grants were
awarded as a tool to retain these executives and keep the
integration team intact and the integration efforts on track.
The CMD Committee determined July 11th to be an
appropriate date to award the special grants because the date
was sufficiently after the date on which Federated released its
June, 2006 sales information (July 6, 2006) and
sufficiently before the next financial release date. Pursuant to
the terms of the 1995 Equity Plan, the exercise price for these
stock options was set at the closing price of Federated common
stock on the NYSE on
41
July 10th, the trading date prior to the grant date. These
options vest 100% on the third anniversary of the grant date.
The shares of restricted stock granted will vest 100% on the
third anniversary of the grant date, if the Named Executives
remain employed through that date. The CMD Committee determined
the numbers of shares of restricted stock and options for the
July 11, 2006 grant so that the shares and options would
have an aggregate value of approximately 4.0 to 4.5 times the
executives base salary.
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
|
Restricted Stock
|
|
|
K. Hoguet
|
|
|
125,000
|
|
|
|
42,000
|
|
T. Cole
|
|
|
150,000
|
|
|
|
50,000
|
|
J. Grove
|
|
|
150,000
|
|
|
|
50,000
|
|
S. Kronick
|
|
|
200,000
|
|
|
|
50,000
|
|
Benefits
Benefits are established based upon an assessment of competitive
market factors and a determination of what is needed to attract
and retain high caliber executives. Federateds primary
benefits for executives include participation in the
companys broad-based plans: the cash account pension plan,
the 401(k) profit sharing plan, the companys health and
dental plans and various insurance plans, including disability
and life insurance and Federateds matching gift program.
Federated also provides the following benefits to the Named
Executives:
|
|
|
|
|
Supplementary Retirement Plan Federated provides a
supplementary retirement plan to eligible executives described
under Compensation of the Named Executives for
2006 Post Retirement Compensation. The
Supplementary Retirement Plan supplements the pension benefits
provided under the cash account pension plan, and takes into
account compensation that the tax rules do not permit the cash
account pension plan to take into account. In addition, it
supports Federateds
pay-for-performance
culture by rewarding better performance with increased
retirement benefits payable to eligible executives whose bonus
compensation would otherwise not be taken into account under the
broad based cash account pension plan. The Named Executives are
taxed on supplementary retirement benefits when those benefits
are paid.
|
|
|
|
Deferred Compensation Plan Federated provides
executives the opportunity to defer receiving income until after
they terminate their employment. This benefit offers tax
advantages to eligible executives, permitting them to defer
payment of their compensation and defer taxation on that
compensation until after termination. The deferred compensation
plan is described under the heading Compensation of the
Named Executives for 2006 Post Retirement
Compensation Non-qualified Deferred Compensation
Plans.
|
|
|
|
Financial Counseling Federated pays for financial
counseling services, the cost of which depends upon the
compensation level of the executive. The Named Executives
receive imputed income for fees paid for the services. This
benefit provides the Named Executives with access to an
independent financial advisor who is familiar with the Federated
compensation and benefits programs and can provide the services
efficiently and at the convenience of the executives, helping
them focus more of their time on the companys business.
|
|
|
|
Automobile Program Federated provides the Named
Executives a choice of a car lease or an automobile allowance.
The car lease option includes insurance, maintenance and fuel.
This benefit provides the Named Executives with an opportunity
to use a company-provided car for both business
|
42
|
|
|
|
|
and personal use. Where Federated facilities do not have free
parking, they also receive a parking allowance. This benefit
helps put the Named Executives on an even level with executives
in the car program who work in locations with free parking. The
company reports imputed income for income tax purposes for all
company-paid expenses.
|
|
|
|
|
|
Business Luncheon Club The Named Executives are
entitled to company-paid memberships at business luncheon clubs
for the purpose of conducting business on behalf of Federated.
Any meal or other expenses incurred at the clubs that are not
business-related are the responsibility of the Named Executive.
This benefit provides the Named Executives with access to
congenial and helpful settings for business lunches and
encourages them to use those locations for business lunches with
vendors and other business related meetings.
|
|
|
|
Additional Executive Discount All regular employees
are eligible for a base merchandise discount. The Named
Executives are eligible for an additional discount on top of the
base discount for a total discount of 40%. They are reimbursed
for estimated taxes on imputed income associated with the
additional discount. This benefit provides the company with a
competitive advantage in attracting, retaining and motivating
executive talent.
|
|
|
|
Company Airplane Mr. Lundgren is permitted to
use company-owned aircraft for personal flights as well as
business flights. This benefit increases the level of safety and
security for Mr. Lundgren and his family. In addition,
making the aircraft available to Mr. Lundgren allows him to
efficiently and securely conduct business during both business
and personal flights. Furthermore, given the delays today
associated with early check-in requirements, security
clearances, baggage claim and the need for additional time to
avoid missing a flight due to possible delays at any point in
the process, commercial travel has become even more inefficient
in recent years, and making the aircraft available to
Mr. Lundgren maximizes his availability to conduct business
both before and after his flights. Finally, Federated believes
that the value to Mr. Lundgren of making the aircraft
available for Mr. Lundgren and his family, in terms of
convenience and saving of time, is greater than the incremental
cost that Federated incurs to make the aircraft available and
therefore is an efficient form of compensation for him.
Mr. Cody (and Mr. Tysoe prior to his resignation as a
Vice Chair of Federated) is permitted to use company-owned
aircraft for personal flights for up to a total of 25 hours
of in-flight time per six month period under a former corporate
aircraft usage policy that continues to apply to him. The
company reports imputed income for income tax purposes for the
value of any personal use based on the Standard Industry Fair
Level (SIFL) in accordance with the Internal Revenue Code and
Treasury Regulations.
|
Deductibility
The CMD Committee considers the deductibility for federal income
tax purposes under Section 162(m) of the Internal Revenue
Code in the design of Federateds compensation programs.
Section 162(m) places a limit of $1 million on the
amount of compensation that Federated may deduct in any one year
with respect to the Named Executives. There is an exception to
the $1 million limitation for performance-based
compensation meeting certain requirements defined by the IRS.
Annual non-equity incentive plan compensation, stock option
awards and performance-based restricted stock awards generally
are performance-based compensation meeting those requirements
and, as such, are fully deductible. The CMD Committee has taken
the necessary actions to maximize the deductibility of payments
under Federateds 1992 Bonus Plan and of awards under its
two equity plans. However, to maintain flexibility in
compensating the Named Executives in a manner designed to
promote Federateds business goals, the CMD Committee
does not require all compensation to be deductible.
43
Consequently, portions of the total compensation program may not
be deductible under Section 162(m), including the portion
of base pay of some of the Named Executives in excess of
$1 million, time based restricted stock and stock credit
awards.
Change-in-Control
Agreements
Federated entered into
change-in-control
arrangements with certain senior executives initially in 1992.
The CMD Committee reviews and evaluates these arrangements
periodically. In fiscal 2006, the CMD Committee reviewed the
change in control arrangements, referred to as the
Change-in-Control
Agreements, with each of the Named Executives other than
Mr. Tysoe, all of which were due to expire November 1,
2006. The CMD Committee determined that the arrangements help to
attract, retain and motivate the caliber and quality of
executive that Federated needs in its most senior positions, and
that the arrangements help provide for continuity of management
in the event of a change in control of Federated.
The CMD Committee determined that Federated should offer to
extend the
Change-in-Control
Agreements for terms of one year, to November 1, 2007, and
not change the other terms of the agreements. The CMD Committee
wanted the benefit of another years experience to monitor
trends in market practices for
Change-in-Control
Agreements and the guidance to be provided in final 409A
Treasury Regulations before deciding whether to offer additional
changes in the terms of the agreements.
The arrangements for the Named Executives provide that if,
following a change in control, the executive is terminated for
any reason, other than death, disability or for cause, or if the
executive terminates his or her employment for good
reason, then the executive is entitled to benefits
described under the heading Compensation of the Named
Executives for 2006 Potential Payments upon
Termination or Change in Control.
In addition, Federateds equity programs and deferred
compensation programs provide for accelerated benefits in the
event of a change in control, which affect all participants in
those programs as well as the Named Executives.
As part of its review in fiscal 2006, the CMD Committee
determined that the
Change-in-Control
Agreements continued to fit into its overall compensation
objectives because they address compensation issues that arise
because of a very specific circumstance that is, in
the event of a change in control of Federated and
that are not otherwise addressed by other elements of the
compensation program. The
Change-in-Control
Agreements:
|
|
|
|
|
provide reasonable compensation opportunities in the specific
circumstance of a change in control of Federated, which is a
circumstance that requires special and unique provisions;
|
|
|
|
help the executives focus on results and strategic initiatives
in the unique circumstance of a change in control;
|
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|
|
help Federated attract and retain the highest caliber and
quality of executives during the transition period associated
with a change in control; and
|
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|
|
help provide a strong link to our stockholders interests
by helping put the executive in a position to make decisions in
the best interests of the stockholders, minimizing the
executives concerns about his or her own job and position.
|
44
The
Change-in-Control
Agreements define change in control and good
reason as described under Compensation of the Named
Executives for 2006 Potential Payments upon
Termination or Change in Control below.
Stock
Ownership Guidelines For Executives
During fiscal 2006, the Board adopted stock ownership guidelines
for certain executives of Federated, including the Named
Executives. Under the guidelines, each corporate officer at the
level of Senior Vice President and above and each division
principal is required to own Federated stock, as follows:
|
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Position
|
|
Ownership Guideline
|
|
|
Chief Executive Officer
|
|
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5 x base salary
|
|
Vice Chair and Executive Vice
President
|
|
|
3 x base salary
|
|
Senior Vice President and
Division Principal
|
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|
1 x base salary
|
|
Shares counted toward the ownership requirement include:
|
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|
|
any shares beneficially owned by the executive;
|
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|
|
stock credits or other stock units credited to an
executives account through deferrals under the
companys deferred compensation program;
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restricted stock before the restrictions have lapsed;
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|
time-based stock credits issued under the stock credit plans
during performance and holding periods;
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|
performance-based stock credits issued under the stock credit
plans during holding periods; and
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|
|
the executives proportionate share of the Federated common
stock fund under the companys 401(k) plan.
|
Federated common stock subject to unvested or unexercised stock
options does not count toward the ownership requirement. An
executive must comply with these guidelines by the later of
August 1, 2011 or within five years from the date the
executive is employed in one of the positions listed above. As
of the end of fiscal 2006, each of the Named Executives owned
sufficient shares to satisfy the stock ownership guidelines.
COMPENSATION
COMMITTEE REPORT
The CMD Committee establishes and administers the compensation
practices related to the senior executive officers of Federated
and also ensures appropriate succession plans for the CEO and
key executive positions. All members of the CMD Committee
qualify:
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|
|
as independent under the applicable listing
standards of the NYSE;
|
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|
as non-employee directors under
Rule 16b-3
of the Securities Exchange Act of 1934; and
|
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|
|
as outside directors under Section 162(m) of
the Internal Revenue Code of 1986.
|
The CMD Committee met eight times in fiscal 2006. The CMD
Committee regularly meets in executive session without the
presence of management.
45
To help it perform its responsibilities, the CMD Committee makes
use of company resources, including members of senior management
in Federateds human resources, legal and finance
departments. The CMD Committee reviews tally sheets for the
Named Executives that includes all elements of compensation and
termination benefits.
The CMD Committee engages the services of Mercer Human Resources
Consulting as an independent outside compensation consultant to
assist the CMD Committee in assessing the competitiveness and
overall appropriateness of Federateds executive
compensation program. In 2006, Mercer provided support to the
CMD Committee in its annual evaluation of the chief executive
officers compensation. Mercer benchmarked the chief
executive officers compensation against the peer groups of
companies described in the Compensation Discussion and Analysis.
This analysis also considered Federateds performance
relative to the performance of retail peer companies during the
chief executive officers tenure, as well as historical
compensation and market trends. In addition, Mercer benchmarked
the compensation of the other Named Executives and advised on
market trends.
The compensation consultant works at the direction of the CMD
Committee and maintains regular contact with the CMD Committee.
The chief executive officer does not participate in the review
process and has no knowledge of recommendations that impact his
personal compensation prior to review by the CMD Committee.
Periodically the CMD Committee meets with the compensation
consultant without the presence of management, as well as in
executive session.
The CMD Committee has reviewed and discussed the Compensation
Discussion & Analysis with Federateds management.
Based on the review and discussions referred to above, the CMD
Committee recommended to the Board that the Compensation
Discussion & Analysis be included in Federateds
annual report on
Form 10-K
and proxy statement.
The foregoing report was submitted by the CMD Committee and
shall not be deemed to be soliciting material or to
be filed with the SEC or subject to
Regulation 14A promulgated by the SEC or Section 18 of
the Exchange Act.
Respectfully submitted,
Craig E. Weatherup, Chairperson
Meyer Feldberg
Sara Levinson
Joseph Neubauer
Joseph A. Pichler
Karl M. von der Heyden
46
COMPENSATION
OF THE NAMED EXECUTIVES FOR 2006
The following table summarizes the compensation for fiscal 2006
of Federateds principal executive officer, principal
financial officer, the four other most highly compensated
executive officers of Federated as of the end of fiscal 2006,
and a former executive officer, collectively referred to as the
Named Executives. Because of the magnitude of the
changes in compensation disclosure requirements under the rules
adopted by the SEC in 2006, the SEC is not requiring companies
to recalculate or restate the compensation information for 2004
and 2005 included in last years proxy statement.
Consequently, only compensation information for fiscal 2006 is
reflected in the following tables.
2006
SUMMARY COMPENSATION TABLE
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Changes in
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Pension Value
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and
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Non-Equity
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Nonqualified
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Incentive
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Deferred
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All Other
|
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Stock
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Option
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Plan
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Compensation
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Compen-
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Name and Principal
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Salary
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Bonus
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Awards(1)
|
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|
Awards (2)
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Compensation
|
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Earnings (3)
|
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sation (4)
|
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Total
|
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Position
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
T. Lundgren
|
|
|
2006
|
|
|
|
1,383,333
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|
|
|
|
|
|
6,651,653
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|
|
|
3,464,675
|
|
|
|
2,704,800
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|
|
1,199,550
|
|
|
|
243,106
|
|
|
|
15,647,117
|
|
Chairman, President and
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
K. Hoguet
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|
|
2006
|
|
|
|
741,667
|
|
|
|
25,000
|
|
|
|
1,235,294
|
|
|
|
877,552
|
|
|
|
724,500
|
|
|
|
296,471
|
|
|
|
79,848
|
|
|
|
3,980,332
|
|
Executive Vice President
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and CFO
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T. Cody
|
|
|
2006
|
|
|
|
792,500
|
|
|
|
225,000
|
|
|
|
2,256,147
|
|
|
|
529,213
|
|
|
|
772,800
|
|
|
|
694,345
|
|
|
|
211,405
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|
|
|
5,481,410
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|
Vice Chair
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|
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|
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|
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|
|
|
|
|
|
|
|
|
|
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|
|
T. Cole
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|
2006
|
|
|
|
883,333
|
|
|
|
25,000
|
|
|
|
1,691,762
|
|
|
|
1,023,142
|
|
|
|
869,400
|
|
|
|
444,407
|
|
|
|
58,045
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|
|
|
4,995,089
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|
Vice Chair
|
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|
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|
|
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|
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|
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|
J. Grove
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|
|
2006
|
|
|
|
883,333
|
|
|
|
25,000
|
|
|
|
1,702,317
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|
|
|
1,023,142
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|
|
|
869,400
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|
|
|
348,355
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|
|
|
57,026
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|
|
|
4,908,573
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|
Vice Chair
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|
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|
|
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|
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|
|
|
|
|
|
S. Kronick
|
|
|
2006
|
|
|
|
1,042,500
|
|
|
|
25,000
|
|
|
|
1,978,004
|
|
|
|
1,146,552
|
|
|
|
1,014,300
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|
|
|
475,305
|
|
|
|
58,535
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|
|
|
5,740,196
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|
Vice Chair
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|
|
|
|
|
|
|
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|
R. Tysoe
|
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|
2006
|
|
|
|
830,000
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|
|
|
|
|
|
|
3,275,056
|
|
|
|
554,758
|
|
|
|
801,800
|
|
|
|
299,029
|
|
|
|
285,682
|
|
|
|
6,046,325
|
|
Former Vice Chair
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(1) |
|
The amounts in this column reflect the dollar amounts recognized
for financial statement reporting purposes for fiscal 2006, in
accordance with FAS 123(R), for restricted stock awarded
under the 1995 Equity Plan and for stock credits awarded under
Federateds stock credit plans, and thus include amounts
with respect to awards granted in and prior to fiscal 2006. In
addition, with respect to stock credits, the amounts also
reflect variable accounting treatment. Assumptions used in the
calculation of these amounts are included in footnotes 1
and 15 to Federateds audited financial statements included
in the 2006
10-K and in
footnotes 1 and 15 to Federateds audited financial
statements included in the 2005
10-K. In all
cases, the amounts assume that the Named Executive remains with
Federated until all time-based restrictions have lapsed and that
100% of performance-based stock credits are earned. |
47
Restricted Stock:
|
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|
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|
|
|
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|
|
|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
July 11, 2006 Award
|
|
|
March 26, 2004 Award
|
|
|
February 24, 2003 Award
|
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
2006
|
|
|
|
|
|
Market
|
|
|
2006
|
|
|
|
|
|
Market
|
|
|
2006
|
|
|
|
Shares
|
|
|
Value
|
|
|
Expense
|
|
|
Shares
|
|
|
Value
|
|
|
Expense
|
|
|
Shares
|
|
|
Value
|
|
|
Expense
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
Lundgren
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
12.79
|
|
|
|
319,750
|
|
Hoguet
|
|
|
42,000
|
|
|
|
36.44
|
|
|
|
255,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cody
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole
|
|
|
50,000
|
|
|
|
36.44
|
|
|
|
303,655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grove
|
|
|
50,000
|
|
|
|
36.44
|
|
|
|
303,655
|
|
|
|
2,000
|
|
|
|
25.25
|
|
|
|
10,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kronick
|
|
|
50,000
|
|
|
|
36.44
|
|
|
|
303,655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 26, 2004 Stock Credit Grants:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
Dividend
|
|
|
Total Expense
|
|
|
|
|
|
|
Expense
|
|
|
Expense
|
|
|
for 2006
|
|
Name
|
|
Shares (#)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Lundgren
|
|
|
114,744
|
|
|
|
1,807,108
|
|
|
|
58,542
|
|
|
|
1,865,649
|
|
Hoguet
|
|
|
36,062
|
|
|
|
410,890
|
|
|
|
18,398
|
|
|
|
429,289
|
|
Cody
|
|
|
42,620
|
|
|
|
186,676
|
|
|
|
21,744
|
|
|
|
208,419
|
|
Cole
|
|
|
42,620
|
|
|
|
384,982
|
|
|
|
21,744
|
|
|
|
406,725
|
|
Grove
|
|
|
42,620
|
|
|
|
384,982
|
|
|
|
21,744
|
|
|
|
406,725
|
|
Kronick
|
|
|
42,620
|
|
|
|
671,223
|
|
|
|
21,744
|
|
|
|
692,967
|
|
Tysoe
|
|
|
42,620
|
|
|
|
693,110
|
|
|
|
21,744
|
|
|
|
714,854
|
|
March 24, 2006 Stock Credit Grants:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
Dividend
|
|
|
Total Expense
|
|
|
|
|
|
|
Expense
|
|
|
Expense
|
|
|
for 2006
|
|
Name
|
|
Shares (#)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Lundgren
|
|
|
266,078
|
|
|
|
4,466,254
|
|
|
|
0
|
|
|
|
4,466,254
|
|
Hoguet
|
|
|
58,466
|
|
|
|
550,925
|
|
|
|
0
|
|
|
|
550,925
|
|
Cody
|
|
|
58,466
|
|
|
|
2,047,728
|
|
|
|
0
|
|
|
|
2,047,728
|
|
Cole
|
|
|
58,466
|
|
|
|
981,382
|
|
|
|
0
|
|
|
|
981,382
|
|
Grove
|
|
|
58,466
|
|
|
|
981,382
|
|
|
|
0
|
|
|
|
981,382
|
|
Kronick
|
|
|
58,466
|
|
|
|
981,382
|
|
|
|
0
|
|
|
|
981,382
|
|
Tysoe
|
|
|
73,098
|
|
|
|
2,560,202
|
|
|
|
0
|
|
|
|
2,560,202
|
|
|
|
|
(2) |
|
The amounts in this column reflect the dollar amount recognized
for financial statement reporting purposes in accordance with
FAS 123(R) for fiscal 2006 for stock options issued
pursuant to the 1995 Equity Plan, and thus may include amounts
from awards granted in and prior to 2006. Assumptions used in
the calculation of these amounts are included in
footnote 15 to Federateds audited financial
statements included in the 2006
10-K, in
footnote 15 to Federateds audited financial
statements included in the 2005
10-K and in
footnote 12 to Federateds audited financial
statements included in the 2004
10-K. |
48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/11/06
Grants
|
|
|
3/24/06
Grants
|
|
|
2005 Grants
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
Options
|
|
|
FMV
|
|
|
Expense
|
|
|
Options
|
|
|
FMV
|
|
|
Expense
|
|
|
Options
|
|
|
FMV
|
|
|
Expense
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
Lundgren
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
177,352
|
|
|
|
13.58
|
|
|
|
501,758
|
|
|
|
550,000
|
|
|
|
10.50
|
|
|
|
1,443,750
|
|
Hoguet
|
|
|
125,000
|
|
|
|
13.67
|
|
|
|
308,524
|
|
|
|
38,970
|
|
|
|
13.58
|
|
|
|
110,253
|
|
|
|
55,000
|
|
|
|
10.50
|
|
|
|
144,375
|
|
Cody
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,970
|
|
|
|
13.58
|
|
|
|
529,213
|
|
|
|
65,000
|
|
|
|
10.50
|
|
|
|
0
|
|
Cole
|
|
|
150,000
|
|
|
|
13.67
|
|
|
|
370,229
|
|
|
|
38,970
|
|
|
|
13.58
|
|
|
|
110,253
|
|
|
|
65,000
|
|
|
|
10.50
|
|
|
|
170,625
|
|
Grove
|
|
|
150,000
|
|
|
|
13.67
|
|
|
|
370,229
|
|
|
|
38,970
|
|
|
|
13.28
|
|
|
|
110,253
|
|
|
|
65,000
|
|
|
|
10.50
|
|
|
|
170,625
|
|
Kronick
|
|
|
200,000
|
|
|
|
13.67
|
|
|
|
493,639
|
|
|
|
38,970
|
|
|
|
13.58
|
|
|
|
110,253
|
|
|
|
65,000
|
|
|
|
10.50
|
|
|
|
170,625
|
|
Tysoe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,000
|
|
|
|
10.50
|
|
|
|
170,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 Grants
|
|
|
2003 Grants
|
|
|
2002 Grants
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
2006
|
|
|
|
Options
|
|
|
FMV
|
|
|
Expense
|
|
|
Options
|
|
|
FMV
|
|
|
Expense
|
|
|
Options
|
|
|
FMV
|
|
|
Expense
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
($)
|
|
|
Lundgren
|
|
|
275,000
|
|
|
|
10.10
|
|
|
|
694,375
|
|
|
|
500,000
|
|
|
|
4.87
|
|
|
|
608,750
|
|
|
|
500,000
|
|
|
|
10.37
|
|
|
|
216,042
|
|
Hoguet
|
|
|
55,000
|
|
|
|
10.10
|
|
|
|
138,875
|
|
|
|
110,000
|
|
|
|
5.44
|
|
|
|
149,600
|
|
|
|
60,000
|
|
|
|
10.37
|
|
|
|
25,925
|
|
Cody
|
|
|
65,000
|
|
|
|
10.10
|
|
|
|
0
|
|
|
|
130,000
|
|
|
|
5.44
|
|
|
|
0
|
|
|
|
100,000
|
|
|
|
10.37
|
|
|
|
0
|
|
Cole
|
|
|
65,000
|
|
|
|
10.10
|
|
|
|
164,125
|
|
|
|
130,000
|
|
|
|
5.44
|
|
|
|
176,800
|
|
|
|
72,000
|
|
|
|
10.37
|
|
|
|
31,110
|
|
Grove
|
|
|
65,000
|
|
|
|
10.10
|
|
|
|
164,125
|
|
|
|
130,000
|
|
|
|
5.44
|
|
|
|
176,800
|
|
|
|
72,000
|
|
|
|
10.37
|
|
|
|
31,110
|
|
Kronick
|
|
|
65,000
|
|
|
|
10.10
|
|
|
|
164,125
|
|
|
|
130,000
|
|
|
|
5.44
|
|
|
|
176,800
|
|
|
|
72,000
|
|
|
|
10.37
|
|
|
|
31,110
|
|
Tysoe
|
|
|
65,000
|
|
|
|
10.10
|
|
|
|
164,125
|
|
|
|
130,000
|
|
|
|
5.44
|
|
|
|
176,800
|
|
|
|
100,000
|
|
|
|
10.37
|
|
|
|
43,208
|
|
|
|
|
(3) |
|
The amounts reflected represent the change in fiscal 2006 in the
actuarial present value of accumulated pension benefits under
the companys cash balance pension plan and supplementary
executive retirement plan. Federated does not pay above-market
interest under its deferred compensation plan. The assumptions
used in determining the present value of benefits are the same
assumptions used for financial reporting purposes. The present
value of benefits was determined using a unit credit cost method
and 5.85% discount rate. The assumed retirement age used for
these calculations was the normal retirement age of 65, as
defined by the plans and each Named Executive was assumed to
live to and retire at the normal retirement age. |
|
(4) |
|
Included in All Other Compensation is the
incremental cost to Federated of the following perquisites for
the Named Executives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
|
|
|
401(k) Matching
|
|
|
|
Aircraft
|
|
|
Financial
|
|
|
Car
|
|
|
Merchandise
|
|
|
|
|
|
Contribution/
|
|
|
|
Usage(a)
|
|
|
Counseling
|
|
|
Usage (b)
|
|
|
Discount
|
|
|
Gross up (c)
|
|
|
Insurance Premiums
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Lundgren
|
|
|
141,894
|
|
|
|
15,200
|
|
|
|
9,984
|
|
|
|
48,382
|
|
|
|
21,219
|
|
|
|
6,427
|
|
Hoguet
|
|
|
0
|
|
|
|
15,200
|
|
|
|
10,213
|
|
|
|
31,423
|
|
|
|
16,585
|
|
|
|
6,427
|
|
Cody
|
|
|
124,733
|
|
|
|
15,200
|
|
|
|
10,134
|
|
|
|
41,481
|
|
|
|
13,430
|
|
|
|
6,427
|
|
Cole
|
|
|
0
|
|
|
|
15,200
|
|
|
|
12,820
|
|
|
|
15,973
|
|
|
|
7,625
|
|
|
|
6,427
|
|
Grove
|
|
|
0
|
|
|
|
15,200
|
|
|
|
10,536
|
|
|
|
16,379
|
|
|
|
8,484
|
|
|
|
6,427
|
|
Kronick
|
|
|
0
|
|
|
|
15,200
|
|
|
|
11,264
|
|
|
|
14,959
|
|
|
|
12,410
|
|
|
|
4,702
|
|
Tysoe
|
|
|
82,729
|
|
|
|
15,200
|
|
|
|
10,328
|
|
|
|
124,635
|
|
|
|
46,363
|
|
|
|
6,427
|
|
49
|
|
|
(a) |
|
The amount shown for aircraft usage represents a ratio of
personal flights divided by total flight hours on all company
planes. The ratio was applied against total airplane cost
(excluding depreciation, real estate taxes, insurance, rent and
other fixed operating costs). |
|
|
|
|
|
Total flight hours equals the total number of hours for every
flight flown.
|
|
|
|
Flights were deemed business or personal based on the primary
purpose for the flight.
|
|
|
|
If a trip was deemed personal, ferry flight hours, if any, were
included as personal.
|
|
|
|
If a trip included an intermediary personal stop, only the
difference between a direct flight and the indirect flight was
considered personal.
|
|
|
|
If a trip was exclusively personal except for a
one-day
business stop, all miles were treated as personal less an
adjustment for the flight hours to and from the originating
airport to the business location.
|
For a more detailed description of Federateds policies
with respect to personal use of company airplanes, see the
Benefits discussion in the Compensation
Discussion and Analysis.
|
|
|
(b) |
|
The amount shown reflects the product of (i) the percentage
of miles the Named Executive used the vehicle for non-business
reasons multiplied by (ii) the actual costs incurred to
provide the vehicle, including the costs of the lease, fuel,
parking and insurance, reduced by any personal contributions
made by the Named Executive. |
|
(c) |
|
The amount shown reflects gross up payments made in December
2006 on the executive discount for the period from November 2005
through October 2006. |
50
Plan-Based
Awards
The following table sets forth certain information regarding the
annual incentive plan and stock options and other equity awards
granted during fiscal 2006 to each of the Named Executives.
2006
GRANTS OF PLAN-BASED AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
Exercise
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
or Base
|
|
|
Fair Value
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
|
Estimated Future Payouts Under
|
|
|
Shares of
|
|
|
Securities
|
|
|
Price of
|
|
|
of Stock
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards (1)
|
|
|
Equity Incentive Plan Awards
|
|
|
Stock or
|
|
|
Underlying
|
|
|
Option
|
|
|
and Option
|
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units (#)
|
|
|
Options
|
|
|
Awards
|
|
|
Awards
|
|
Name
|
|
Grant Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#) (2)
|
|
|
(#)
|
|
|
(3)
|
|
|
(#) (4)
|
|
|
($/sh)
|
|
|
($)(5)
|
|
|
Lundgren
|
|
|
3/24/06
|
|
|
|
420,000
|
|
|
|
2,100,000
|
|
|
|
4,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/24/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
177,352
|
|
|
|
36.26
|
|
|
|
2,408,440
|
|
|
|
|
3/24/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166,300
|
|
|
|
|
|
|
|
99,778
|
|
|
|
|
|
|
|
|
|
|
|
9,532,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hoguet
|
|
|
3/24/06
|
|
|
|
112,500
|
|
|
|
562,500
|
|
|
|
1,125,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/24/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,970
|
|
|
|
36.26
|
|
|
|
529,213
|
|
|
|
|
3/24/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,542
|
|
|
|
|
|
|
|
21,924
|
|
|
|
|
|
|
|
|
|
|
|
2,094,544
|
|
|
|
|
7/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
|
|
|
36.51
|
|
|
|
1,708,750
|
|
|
|
|
7/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,000
|
|
|
|
|
|
|
|
|
|
|
|
1,530,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cody
|
|
|
3/24/06
|
|
|
|
120,000
|
|
|
|
600,000
|
|
|
|
1,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/24/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,970
|
|
|
|
36.26
|
|
|
|
529,213
|
|
|
|
|
3/24/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,542
|
|
|
|
|
|
|
|
21,924
|
|
|
|
|
|
|
|
|
|
|
|
2,094,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cole
|
|
|
3/24/06
|
|
|
|
135,000
|
|
|
|
675,000
|
|
|
|
1,350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/24/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,970
|
|
|
|
36.26
|
|
|
|
529,213
|
|
|
|
|
3/24/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,542
|
|
|
|
|
|
|
|
21,924
|
|
|
|
|
|
|
|
|
|
|
|
2,094,544
|
|
|
|
|
7/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
36.51
|
|
|
|
2,050,500
|
|
|
|
|
7/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
1,822,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grove
|
|
|
3/24/06
|
|
|
|
135,000
|
|
|
|
675,000
|
|
|
|
1,350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/24/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,970
|
|
|
|
36.26
|
|
|
|
529,213
|
|
|
|
|
3/24/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,542
|
|
|
|
|
|
|
|
21,924
|
|
|
|
|
|
|
|
|
|
|
|
2,094,544
|
|
|
|
|
7/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
36.51
|
|
|
|
2,050,500
|
|
|
|
|
7/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
1,822,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kronick
|
|
|
3/24/06
|
|
|
|
157,500
|
|
|
|
787,500
|
|
|
|
1,575,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/24/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,970
|
|
|
|
36.26
|
|
|
|
529,213
|
|
|
|
|
3/24/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,542
|
|
|
|
|
|
|
|
21,924
|
|
|
|
|
|
|
|
|
|
|
|
2,094,544
|
|
|
|
|
7/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
36.51
|
|
|
|
2,734,000
|
|
|
|
|
7/11/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
1,822,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tysoe
|
|
|
3/24/06
|
|
|
|
124,500
|
|
|
|
622,500
|
|
|
|
1,245,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/24/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,824
|
|
|
|
|
|
|
|
18,274
|
|
|
|
|
|
|
|
|
|
|
|
2,618,736
|
|
51
|
|
|
(1) |
|
The Named Executives are eligible for an annual cash incentive
award under Federateds 1992 Bonus Plan, which is deemed a
non-equity incentive plan under SEC rules. Bonus
awards are interpolated for performance that falls between
Threshold and Target and between
Target and Maximum. If corporate EBIT
performance exceeds plan by more than a predetermined amount,
the Named Executives may receive a bonus in excess of the
maximum amount reflected in the table. In no event,
however, will a Named Executive receive an award that exceeds
the $7 million plan maximum for annual bonus awards. The
actual amount earned for fiscal 2006 under the 1992 Bonus Plan
is reported in the Non-Equity Incentive Plan
Compensation column of the 2006 Summary Compensation
Table. For a more detailed discussion of the 1992 Bonus Plan,
see the Annual Performance-Based Bonus discussion in
the Compensation Discussion and Analysis and
Item 4. Approval of the 1992 Incentive Bonus Plan, as
Amended. |
|
(2) |
|
The numbers in this column represent performance-based stock
credits awarded to the Named Executives under Federateds
2006-2007
stock credit plan. For a detailed description of these stock
credits see the Stock Credits discussion in the
Compensation Discussion and Analysis. |
|
(3) |
|
The numbers in this column for the March 24, 2006 grant
date represent time-based stock credits awarded to the Named
Executives under Federateds
2006-2007
stock credit plan. The numbers in this column for the
July 11, 2006 grant date represent time-based restricted
stock granted to the Named Executives under Federateds
1995 Equity Plan. |
|
(4) |
|
The numbers reflected in this column represent the number of
stock options granted to the Named Executives under
Federateds 1995 Equity Plan. |
|
(5) |
|
Stock options were valued as of the grant date using the
Black-Scholes option pricing model, using the following
assumptions: |
|
|
|
|
|
|
|
|
|
|
|
3/24/06
Grant
|
|
|
7/11/06
Grant
|
|
|
Dividend yield:
|
|
|
1.50
|
%
|
|
|
1.50
|
%
|
Expected volatility:
|
|
|
39.80
|
%
|
|
|
39.80
|
%
|
Risk-free interest rate:
|
|
|
4.60
|
%
|
|
|
4.60
|
%
|
Expected life:
|
|
|
5.3 years
|
|
|
|
5.3 years
|
|
Black-Scholes value:
|
|
$
|
13.58
|
|
|
$
|
13.67
|
|
Restricted stock and stock credits were valued for purposes of
this table based on the closing price of Federated common stock
on the grant date.
Stock Options. All stock options
granted to the Named Executives in fiscal 2006 were granted from
the stockholder-approved 1995 Equity Plan. The options granted
on March 24, 2006 vest 25% per year over four years
beginning with the first anniversary of the date of grant.
Therefore, in order to exercise all options in this grant, the
recipient generally must remain with Federated for four years
after the grant. The options granted on July 11, 2006 vest
fully on July 11, 2009. For a more detailed description of
Federateds stock option plans, see the Stock
Options discussion in the Compensation Discussion
and Analysis.
Restricted Stock. The shares of
restricted stock granted to the Named Executives are time-based
restricted shares and were granted from the 1995 Equity Plan.
The shares were granted on July 11, 2006 and vest fully on
July 11, 2009 if the Named Executive remains employed by
Federated through that date. If any Named Executives
employment ends prior to July 11, 2009, then the unvested
shares of restricted stock held by that executive are forfeited.
The Named Executives receive dividends on these shares at the
same rate and
52
on the same payment date as other Federated stockholders receive
dividends on the Federated common stock they own. For a more
detailed description of the restricted stock grants, see the
Special 2006 Retention Grants discussion in the
Compensation Discussion and Analysis.
Stock Credits. The CMD Committee
authorized a new stock credit plan for the
2006-2007
performance period for senior management, including the Named
Executives. For the Named Executives other than Mr. Tysoe,
the stock credits consist of both core stock credits with
performance objectives relating to the Four Priorities and
merger stock credits with performance objectives relating to
attainment of certain Federated-May merger synergies. These
stock credits were awarded on March 24, 2006. At the end of
fiscal 2007, the CMD Committee will evaluate the performance
results for the stock credits granted in fiscal 2006 that are
subject to performance criteria and may reduce the number of
performance-based stock credits held by participants based on
the attainment of the performance criteria. The stock credits
will then be subject to a two-year and three-year holding
period, with the value of the stock credits being paid out in
cash in Spring 2010 and Spring 2011. For a more detailed
description of the
2006-2007
stock credit plan and the terms of the stock credits awarded to
Mr. Tysoe, see the Stock Credits discussion in
the Compensation Discussion and Analysis.
Outstanding
Equity Interests
The following table sets forth certain information regarding the
total number and aggregate value of options, stock credits and
restricted stock held by each of the Named Executives at
February 3, 2007. The dollar amount shown for stock credits
and restricted stock is calculated by multiplying the number of
stock credits or shares of restricted stock, as applicable, by
the closing price of Federated common stock ($41.88) on the last
trading day of the fiscal year.
2006
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Awards:
|
|
|
Payout
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
Number of
|
|
|
Value of
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Unearned
|
|
|
Unearned
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Units of
|
|
|
Shares, Units
|
|
|
Shares,
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Stock
|
|
|
or Other
|
|
|
Units or
|
|
|
|
Options
|
|
|
Options
|
|
|
Option
|
|
|
|
|
|
Units of Stock
|
|
|
That Have
|
|
|
Rights That
|
|
|
Other Rights
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Exercise
|
|
|
Option
|
|
|
That Have
|
|
|
Not
|
|
|
Have Not
|
|
|
That Have
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Expiration
|
|
|
Not Vested
|
|
|
Vested
|
|
|
Vested
|
|
|
Not Vested
|
|
Name
|
|
(1)
|
|
|
(1)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
(#)(2)
|
|
|
($)
|
|
|
Lundgren
|
|
|
225,000
|
|
|
|
0
|
|
|
|
25.6250
|
|
|
|
3/27/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600,000
|
|
|
|
0
|
|
|
|
16.2187
|
|
|
|
2/25/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
306,976
|
(3)
|
|
|
0
|
|
|
|
21.5000
|
|
|
|
6/08/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
0
|
|
|
|
21.3400
|
|
|
|
3/22/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
375,000
|
|
|
|
125,000
|
|
|
|
12.7900
|
|
|
|
2/24/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
137,500
|
|
|
|
137,500
|
|
|
|
25.0050
|
|
|
|
3/26/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
137,500
|
|
|
|
412,500
|
|
|
|
30.5350
|
|
|
|
3/25/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
177,352
|
|
|
|
36.2600
|
|
|
|
3/24/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
(8)
|
|
|
4,188,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
214,522
|
(9)
|
|
|
8,984,181
|
|
|
|
166,300
|
|
|
|
6,964,644
|
|
53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Awards:
|
|
|
Payout
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
Number of
|
|
|
Value of
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Unearned
|
|
|
Unearned
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Units of
|
|
|
Shares, Units
|
|
|
Shares,
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Stock
|
|
|
or Other
|
|
|
Units or
|
|
|
|
Options
|
|
|
Options
|
|
|
Option
|
|
|
|
|
|
Units of Stock
|
|
|
That Have
|
|
|
Rights That
|
|
|
Other Rights
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Exercise
|
|
|
Option
|
|
|
That Have
|
|
|
Not
|
|
|
Have Not
|
|
|
That Have
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Expiration
|
|
|
Not Vested
|
|
|
Vested
|
|
|
Vested
|
|
|
Not Vested
|
|
Name
|
|
(1)
|
|
|
(1)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
(#)(2)
|
|
|
($)
|
|
|
Hoguet
|
|
|
84,000
|
|
|
|
0
|
|
|
|
25.6250
|
|
|
|
3/27/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,000
|
|
|
|
0
|
|
|
|
16.2187
|
|
|
|
2/25/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,000
|
|
|
|
0
|
|
|
|
21.4250
|
|
|
|
3/23/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
153,488
|
(3)
|
|
|
0
|
|
|
|
21.5000
|
|
|
|
6/08/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
0
|
|
|
|
21.3400
|
|
|
|
3/22/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,500
|
|
|
|
27,500
|
|
|
|
14.2850
|
|
|
|
3/28/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,500
|
|
|
|
27,500
|
|
|
|
25.0050
|
|
|
|
3/26/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,750
|
|
|
|
41,250
|
|
|
|
30.5350
|
|
|
|
3/25/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
38,970
|
|
|
|
36.2600
|
|
|
|
3/24/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
125,000
|
(4)
|
|
|
36.5100
|
|
|
|
7/11/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,000
|
(8)
|
|
|
1,758,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57,986
|
(9)
|
|
|
2,428,454
|
|
|
|
36,542
|
|
|
|
1,530,379
|
|
Cody
|
|
|
120,000
|
|
|
|
0
|
|
|
|
25.6250
|
|
|
|
3/27/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
0
|
|
|
|
21.4250
|
|
|
|
3/23/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
203,720
|
(3)
|
|
|
0
|
|
|
|
21.5000
|
|
|
|
6/08/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
0
|
|
|
|
21.3400
|
|
|
|
3/22/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,500
|
|
|
|
32,500
|
|
|
|
14.2850
|
|
|
|
3/28/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,500
|
|
|
|
32,500
|
|
|
|
25.0050
|
|
|
|
3/26/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,250
|
|
|
|
48,750
|
|
|
|
30.5350
|
|
|
|
3/25/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
38,970
|
|
|
|
36.2600
|
|
|
|
3/24/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,544
|
(9)
|
|
|
2,703,103
|
|
|
|
36,542
|
|
|
|
1,530,379
|
|
Cole
|
|
|
72,000
|
|
|
|
0
|
|
|
|
16.2187
|
|
|
|
2/25/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,000
|
(5)
|
|
|
0
|
|
|
|
16.2187
|
|
|
|
2/25/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,000
|
|
|
|
0
|
|
|
|
21.4250
|
|
|
|
3/23/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
164,930
|
(3)
|
|
|
0
|
|
|
|
21.5000
|
|
|
|
6/08/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,000
|
|
|
|
0
|
|
|
|
21.3400
|
|
|
|
3/22/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
32,500
|
|
|
|
14.2850
|
|
|
|
3/28/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,500
|
|
|
|
32,500
|
|
|
|
25.0050
|
|
|
|
3/26/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,250
|
|
|
|
48,750
|
|
|
|
30.5350
|
|
|
|
3/25/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
38,970
|
|
|
|
36.2600
|
|
|
|
3/24/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
150,000
|
(4)
|
|
|
36.5100
|
|
|
|
7/11/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(8)
|
|
|
2,094,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,544
|
(9)
|
|
|
2,703,103
|
|
|
|
36,542
|
|
|
|
1,530,379
|
|
54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Awards:
|
|
|
Payout
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
Number of
|
|
|
Value of
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Unearned
|
|
|
Unearned
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Units of
|
|
|
Shares, Units
|
|
|
Shares,
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Stock
|
|
|
or Other
|
|
|
Units or
|
|
|
|
Options
|
|
|
Options
|
|
|
Option
|
|
|
|
|
|
Units of Stock
|
|
|
That Have
|
|
|
Rights That
|
|
|
Other Rights
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Exercise
|
|
|
Option
|
|
|
That Have
|
|
|
Not
|
|
|
Have Not
|
|
|
That Have
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Expiration
|
|
|
Not Vested
|
|
|
Vested
|
|
|
Vested
|
|
|
Not Vested
|
|
Name
|
|
(1)
|
|
|
(1)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
(#)(2)
|
|
|
($)
|
|
|
Grove
|
|
|
42,000
|
|
|
|
0
|
|
|
|
25.6250
|
|
|
|
3/27/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
(6)
|
|
|
0
|
|
|
|
19.0312
|
|
|
|
3/26/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,000
|
|
|
|
0
|
|
|
|
16.2187
|
|
|
|
2/25/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,000
|
|
|
|
0
|
|
|
|
21.4250
|
|
|
|
3/23/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
159,348
|
(3)
|
|
|
0
|
|
|
|
21.5000
|
|
|
|
6/08/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,000
|
|
|
|
0
|
|
|
|
21.3400
|
|
|
|
3/22/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
97,500
|
|
|
|
32,500
|
|
|
|
14.2850
|
|
|
|
3/28/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,500
|
|
|
|
32,500
|
|
|
|
25.0050
|
|
|
|
3/26/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,250
|
|
|
|
48,750
|
|
|
|
30.5350
|
|
|
|
3/25/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
38,970
|
|
|
|
36.2600
|
|
|
|
3/24/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
150,000
|
(4)
|
|
|
36.5100
|
|
|
|
7/11/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,000
|
(8)
|
|
|
2,135,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,544
|
(9)
|
|
|
2,703,103
|
|
|
|
36,542
|
|
|
|
1,530,379
|
|
Kronick
|
|
|
50,000
|
(6)
|
|
|
0
|
|
|
|
19.0312
|
|
|
|
3/26/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,000
|
(5)
|
|
|
0
|
|
|
|
16.2187
|
|
|
|
2/25/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,000
|
|
|
|
0
|
|
|
|
21.4250
|
|
|
|
3/23/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
207,232
|
(3)
|
|
|
0
|
|
|
|
21.5000
|
|
|
|
6/08/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,000
|
|
|
|
0
|
|
|
|
21.3400
|
|
|
|
3/22/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
97,500
|
|
|
|
32,500
|
|
|
|
14.2850
|
|
|
|
3/28/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,500
|
|
|
|
32,500
|
|
|
|
25.0050
|
|
|
|
3/26/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,250
|
|
|
|
48,750
|
|
|
|
30.5350
|
|
|
|
3/25/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
38,970
|
|
|
|
36.2600
|
|
|
|
3/24/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
200,000
|
(4)
|
|
|
36.5100
|
|
|
|
7/11/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(8)
|
|
|
2,094,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,544
|
(9)
|
|
|
2,703,103
|
|
|
|
36,542
|
|
|
|
1,530,379
|
|
Tysoe
|
|
|
240,000
|
(7)
|
|
|
|
|
|
|
32.0312
|
|
|
|
3/27/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
240,000
|
(7)
|
|
|
|
|
|
|
35.8750
|
|
|
|
3/27/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
240,000
|
(7)
|
|
|
|
|
|
|
39.7187
|
|
|
|
3/27/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
21.4250
|
|
|
|
3/23/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
230,232
|
(3)
|
|
|
|
|
|
|
21.5000
|
|
|
|
6/8/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
21.3400
|
|
|
|
3/22/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
32,500
|
|
|
|
14.2850
|
|
|
|
3/28/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,500
|
|
|
|
32,500
|
|
|
|
25.0050
|
|
|
|
3/26/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,250
|
|
|
|
48,750
|
|
|
|
30.5350
|
|
|
|
3/25/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,894
|
(9)
|
|
|
2,550,241
|
|
|
|
54,824
|
|
|
|
2,296,029
|
|
55
|
|
|
(1) |
|
Unless otherwise noted, all options vest at a rate of
25% per year over the first four years of the ten-year
option term. |
|
(2) |
|
Performance-based stock credits vest at the end of fiscal 2007,
subject to the satisfaction of performance criteria. Shares that
vest will then be subject to the holding periods described in
the Stock Credits discussion in the
Compensation Discussion and Analysis. |
|
(3) |
|
Stock options vested 100% on
6/1/05. |
|
(4) |
|
Stock options vest 100% on
7/11/09. |
|
(5) |
|
Stock options vested 100% on
2/25/04. |
|
(6) |
|
Stock options vested 100% on
3/26/03. |
|
(7) |
|
Stock options vested 100% on
3/27/02. |
|
(8) |
|
Time-based restricted stock. For Mr. Lundgren, the shares
vested on
2/28/07. For
Mrs. Hoguet, Mr. Cole and Ms. Kronick, the shares
vest on
7/11/09. For
Ms. Grove, 500 of the shares vested on
3/26/07, 500
of the shares vest on
3/26/08 and
the remaining 50,000 shares vest on
7/11/09. |
|
(9) |
|
Time-based and vested performance-based stock credits, subject
to satisfaction of holding periods that expire as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holding Period Expiration Date
|
|
|
|
2/4/08
|
|
|
2/2/09
|
|
|
2/1/10
|
|
|
1/31/11
|
|
|
Lundgren
|
|
|
57,372
|
|
|
|
57,372
|
|
|
|
49,889
|
|
|
|
49,889
|
|
Hoguet
|
|
|
18,031
|
|
|
|
18,031
|
|
|
|
10,962
|
|
|
|
10,962
|
|
Cody
|
|
|
21,310
|
|
|
|
21,310
|
|
|
|
10,962
|
|
|
|
10,962
|
|
Cole
|
|
|
21,310
|
|
|
|
21,310
|
|
|
|
10,962
|
|
|
|
10,962
|
|
Grove
|
|
|
21,310
|
|
|
|
21,310
|
|
|
|
10,962
|
|
|
|
10,962
|
|
Kronick
|
|
|
21,310
|
|
|
|
21,310
|
|
|
|
10,962
|
|
|
|
10,962
|
|
Tysoe
|
|
|
39,584
|
|
|
|
21,310
|
|
|
|
0
|
|
|
|
0
|
|
The following table sets forth certain information regarding the
value realized by each of the Named Executives during fiscal
2006 upon the exercise of stock options and vesting of
restricted stock.
2006
OPTION EXERCISES AND STOCK VESTED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
Value Realized
|
|
|
Number of Shares
|
|
|
Value Realized on
|
|
|
|
Number of Shares
|
|
|
Upon Exercise(1)
|
|
|
Acquired on Vesting
|
|
|
Vesting
|
|
Name
|
|
Acquired on Exercise (#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
Lundgren
|
|
|
262,500
|
|
|
|
4,880,469
|
|
|
|
0
|
|
|
|
0
|
|
Hoguet
|
|
|
44,000
|
|
|
|
687,251
|
|
|
|
0
|
|
|
|
0
|
|
Cody
|
|
|
185,000
|
|
|
|
2,506,644
|
|
|
|
0
|
|
|
|
0
|
|
Cole
|
|
|
269,500
|
|
|
|
4,777,399
|
|
|
|
0
|
|
|
|
0
|
|
Grove
|
|
|
126,000
|
|
|
|
2,407,401
|
|
|
|
500
|
|
|
|
17,788
|
|
Kronick
|
|
|
232,000
|
|
|
|
3,305,408
|
|
|
|
0
|
|
|
|
0
|
|
Tysoe
|
|
|
197,500
|
|
|
|
4,460,013
|
|
|
|
0
|
|
|
|
0
|
|
56
|
|
|
(1) |
|
The amounts realized from option exercises reflect
the appreciation on the date of exercise (based on the excess of
the fair market value of the shares on the date of exercise over
the exercise price). However, because the Named Executives may
keep the shares they acquire upon the exercise of the option (or
sell them at different prices), these amounts do not necessarily
reflect cash actually realized upon the exercise of those
options. |
Post
Retirement Compensation
Retirement
Plans
Federateds retirement program, referred to as the
Retirement Program, consists of defined benefit plans and a
defined contribution plan. As of January 1, 2006,
approximately 127,000 employees, including the Named Executives,
participated in the Retirement Program.
Defined Benefit Plans. Federated has
two defined benefit plans covering the Named
Executives a cash account pension plan, referred to
as the CAPP, and a supplementary executive retirement plan,
referred to as the SERP. The following table shows the actuarial
present value of the Named Executives accumulated benefit
under each plan, calculated as of the end of fiscal 2006.
Federated determined the present value using the same
assumptions used for financial reporting purposes a
unit credit cost method, a 5.85% discount interest rate, and a
normal retirement age of 65 (as defined by the plans).
2006
PENSION BENEFITS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Years of
|
|
|
Present Value of
|
|
|
|
|
|
|
Credited Service
|
|
|
Accumulated Benefit
|
|
Name
|
|
Plan Name
|
|
|
(#)
|
|
|
($)
|
|
|
Lundgren
|
|
|
CAPP
|
|
|
|
25
|
|
|
|
114,324
|
|
|
|
|
SERP
|
|
|
|
25
|
|
|
|
6,157,303
|
|
Hoguet
|
|
|
CAPP
|
|
|
|
24
|
|
|
|
152,216
|
|
|
|
|
SERP
|
|
|
|
24
|
|
|
|
1,643,087
|
|
Cody
|
|
|
CAPP
|
|
|
|
24
|
|
|
|
393,872
|
|
|
|
|
SERP
|
|
|
|
24
|
|
|
|
4,478,557
|
|
Cole
|
|
|
CAPP
|
|
|
|
34
|
|
|
|
363,711
|
|
|
|
|
SERP
|
|
|
|
34
|
|
|
|
4,402,809
|
|
Grove
|
|
|
CAPP
|
|
|
|
33
|
|
|
|
306,940
|
|
|
|
|
SERP
|
|
|
|
33
|
|
|
|
4,133,003
|
|
Kronick
|
|
|
CAPP
|
|
|
|
33
|
|
|
|
261,384
|
|
|
|
|
SERP
|
|
|
|
33
|
|
|
|
4,433,678
|
|
R. Tysoe(1)
|
|
|
CAPP
|
|
|
|
19
|
|
|
|
127,688
|
|
|
|
|
SERP
|
|
|
|
19
|
|
|
|
2,163,383
|
|
|
|
|
(1) |
|
Mr. Tysoes employment with Federated commenced on
March 1, 1987. However, pursuant to an arrangement with
Federated entered into at the time his employment commenced,
Mr. Tysoe is deemed to have commenced employment on
February 19, 1981 for purposes of calculating years of
vesting service for benefits accrual under the CAPP and SERP.
The present value of the total amount of additional benefits |
57
|
|
|
|
|
due to Mr. Tysoe under his contractual arrangement is
estimated to be approximately $626,573 as of February 3,
2007. |
Cash Account Pension Plan. Under the CAPP, a
participant retiring at normal retirement age is eligible to
receive the amount credited to his or her pension account or the
monthly benefit payments determined actuarially based on the
amount credited to his or her pension account. Amounts credited
to a participants account consist of:
|
|
|
|
|
an opening cash balance for participants in the plan at
December 31, 1996, equal to the single sum present value,
using stated actuarial assumptions, of the participants
accrued normal retirement benefit earned at December 31,
1996, under the applicable predecessor pension plan;
|
|
|
|
pay credits (generally, a percentage of eligible compensation
credited annually based on length of service); and
|
|
|
|
interest credits (credited quarterly, based on the
30-Year
Treasury Bond rate for the November prior to each calendar year).
|
In addition, if a participant had attained at least age 55
by December 31, 1996 and had completed ten or more years of
vesting service by December 31, 2001, the pension benefit
payable in an annuity form, other than a single life annuity,
will not be less than that which would have been payable from
the predecessor pension plan under which such participant was
covered on December 31, 1996.
Supplementary Executive Retirement Plan. To
allow the Retirement Program to provide benefits based on a
participants total compensation, Federated adopted the
SERP, which is a nonqualified unfunded plan. All benefits under
the SERP are payable out of the general corporate assets of
Federated. It provides retirement benefits to eligible
executives based on all eligible compensation, including
compensation in excess of Internal Revenue Code maximums, as
well as on amounts deferred under Federateds Executive
Deferred Compensation Plan, referred to as the EDCP, in each
case employing a formula that is based on the participants
years of vesting service and final average compensation, taking
into consideration the participants balance in the CAPP,
the participants Prior Plan Credits (defined below) and
Social Security benefits. As of January 1, 2007,
approximately 850 employees were eligible to receive benefits
under the terms of the SERP. Federated has reserved the right to
suspend or terminate supplemental payments as to any category of
employee or former employee, or to modify or terminate any other
element of the Retirement Program, in accordance with applicable
law.
Eligible compensation for this purpose includes amounts
reflected in the 2006 Summary Compensation Table under the
headings Salary and Non-Equity Incentive Plan
Compensation but excludes amounts reflected in other
columns of such table and excludes bonus amounts that exceed
100% (160% for Mr. Lundgren) of salary.
In addition to the CAAP and SERP, Federateds Retirement
Program includes a Profit Sharing Investment 401(k) Plan. The
401(k) Plan permits executives to contribute up to 8% of
compensation (up to maximum amounts established from time to
time by the Internal Revenue Code) each year. Federated matches
contributions of up to 5% of eligible compensation each year.
The matching rate is discretionary, but not less that
331/3%
of matchable contributions. The executive may choose any of
several investment funds for investment of the executives
balances, and may change those elections daily. Benefits may be
paid out at termination of employment. Executives may borrow
portions of their investment balances while employed. Company
contributions to the Named Executives under the 401(k) Plan are
reported in the All Other Compensation column of the
2006 Summary Compensation Table.
58
Prior to the adoption of the 401(k) plan, Federateds
primary means of providing retirement benefits to employees was
through defined contribution profit sharing plans. An
employees accumulated retirement profit sharing interests
in the profit sharing plans (the Prior Plan Credits)
which accrued prior to the adoption of the 401(k) Plan, continue
to be maintained and invested as a part of the 401(k) Plan until
retirement, at which time they are distributed.
Non-qualified
Deferred Compensation Plans
Federated provides the opportunity for executives to defer
compensation through the Executive Deferred Compensation Plan,
referred to as the EDCP. Under the EDCP, eligible executives may
elect to defer a portion of their compensation each year as
either stock credits or cash credits. Stock credit accounts
reflect common stock equivalents and dividend equivalents.
Common stock equivalents are the number of full shares of
Federated common stock for each calendar quarter that could be
purchased based on the dollars deferred, and dividend
equivalents are determined by multiplying the dividends payable
upon a share of common stock to a stockholder of record during
such calendar quarter by the number of stock equivalents in the
participants stock credit account at the beginning of each
quarter, less the number of shares distributable or withdrawn
during each quarter in which the credit is being made. Total
value of the stock credits is determined at the end of each
quarter based on the closing price of the Companys common
stock as of the last day of the quarter. Cash credit accounts
reflect dollars deferred plus interest equivalents determined by
applying to 100% of such participants cash credits at the
beginning of each quarter, less amounts distributable or
withdrawn during such quarter, an interest rate equal to one
quarter of the percent per annum on US
5-year
Treasury Notes as of the last day of each quarter. Deferred
compensation is distributed in the fiscal year following the
fiscal year in which termination of employment occurs.
2006
NONQUALIFIED DEFERRED COMPENSATION
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Executive
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Registrant
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Aggregate
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Aggregate
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Aggregate
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