On February 24, 2016, the Board of Directors unanimously adopted a resolution recommending that the Company’s Restated Certificate of Incorporation be amended to provide that the Company’s Board of Directors shall consist of not less than eight (8) persons, subject to shareholder approval at this Annual Meeting. The Board believes that it is in the best interests of the Company and its shareholders to provide for a more flexible Board size to ensure that, at all times, the Board consists of members with experience and skill sets that are appropriate for the Company.
The Company’s Restated Certificate of Incorporation currently provides that the Board is to consist of not less than twelve (12) nor more than twenty-five (25) persons, with the exact number within that range to be determined by the Board of Directors or shareholders voting a majority of the votes cast for or against the matter at a meeting of shareholders.
If approved by the shareholders at this Annual Meeting, the amendment will become effective upon the filing of an amendment to the Company’s Restated Certificate of Incorporation with the Department of State of the State of New York. This amendment will be accomplished by amending Article VIII, Sec- tion A of the Company’s Restated Certificate of Incorporation to read as follows:
“Article VIII.
A. Number, Election and Terms of Directors. The business and affairs of the Corporation shall be managed under the direction of its Board of Directors which, subject to any rights of the hold- ers of any series of Preferred Stock then outstanding to elect additional directors under speci- fied circumstances, shall consist of not less than eight (8) persons. The exact number of directors shall be determined from time to time by the affirmative vote of (i) a majority of the Board of Directors, or (ii) shareholders voting a majority of the votes cast for or against the matter at a meeting of shareholders. At each Annual Meeting of Shareholders, directors shall be elected for a term of office to expire at the next Annual Meeting of Shareholders after their election and after their successors have been duly elected and qualified.”
Approval and Related Matters
The affirmative vote of the holders of the majority of the outstanding shares of the Company’s common stock is required to approve the amendment to Article VIII, Section A of the Company’s Restated Certificate of Incorporation.
The following resolution will be offered by the Board of Directors at the Annual Meeting:
RESOLVED: That the proposal to amend Article VIII, Section A of the Restated Certificate of In- corporation of the Company so as to provide that the minimum number of directors on the Board shall be eight (8) and to remove the maximum limitation on the number of directors on the Board is hereby approved, authorized and adopted.
The Board of Directors’ Recommendation
Your Board recommends a vote FOR this proposed amendment.Unless you specify otherwise, the Board intends the accompanying proxy to be voted for this proposal.
Item 4. Proposal to Approve, on an Advisory Basis, the Executive
Compensation Program for the Company’s Named Executive Officers
Under the rules of the SEC, the Company is required to provide its shareholders with the opportunity to cast an advisory vote on the executive compensation program for the Company’s named executive officers. This proposal is frequently referred to as a “say-on-pay” vote. At the 2011 Annual Meeting, shareholders voted, on an advisory basis, in favor of casting the advisory say-on-pay vote on an annual basis. The Company’s executive compensation program is intended to attract, motivate and reward the executive talent required to achieve our corporate objectives and increase shareholder value. We believe that our executive compensation program is both competitive and strongly focused on pay-for-performance principles, and provides an appropriate balance between risk and rewards. In particular, our executive compensation program:• aligns executive compensation with shareholder value on an annual and long-term basis through a combination of base pay, annual cash incentives and long-term stock-based in- centives;
• includes a mix of compensation elements that emphasizes performance results, with approx- imately 85% of the targeted compensation for Mr. Douglas L. Peterson, the Company’s Chief Executive Officer, and a significant portion of the targeted compensation for the other named executive officers being performance-based;
• delivers annual incentive payouts to executives based on the achievement of approved per- formance goals, which were based on net income and revenue goals for 2015;
• aligns the interests of executives with those of shareholders through long-term stock-based incentives comprised of Performance Share Units that are based on the achievement of earn- ings per share targets. For 2015, the Performance Share Unit award vests at the end of a three-year award cycle, with payment ranging up to a maximum of 200% of the shares based on the achievement of compound annual diluted earnings per share growth goals; and • has features designed to further align executive compensation with shareholder interests and
mitigate risks, including stock ownership requirements, the Senior Executive Pay Recovery Policy (a “claw-back” policy), an anti-hedging and pledging policy and limited perquisites. Our executive compensation program is described in the Compensation Discussion and Analysis (“CD&A”), related compensation tables and other narrative executive compensation disclosures re- quired by the disclosure rules of the SEC, all of which are found in this Proxy Statement. In particular, the CD&A, beginning on page 40 of this Proxy Statement, describes the Company’s executive compensation program in detail, and we encourage you to review it.
Since the vote on this proposal is advisory, it is not binding on the Company. Nonetheless, the Com- pensation and Leadership Development Committee, which is responsible for approving the overall de- sign and administering certain aspects of the executive compensation program, will take into account the outcome of the vote when making future executive compensation decisions. The Board of Directors recommends that you approve the following resolution that will be submitted for a shareholder vote at the 2016 Annual Meeting in support of the Company’s executive compensation program:
RESOLVED: That the shareholders of the Company approve, on an advisory basis, the executive compensation program for the Company’s named executive officers as disclosed pursuant to the rules of the SEC, including the Compensation Discussion and Analysis, related compensation tables and other narrative executive compensation disclosures included in the Proxy Statement for this Annual Meeting.
The Board of Directors’ Recommendation
Your Board recommends a vote FOR the approval, on an advisory basis, of this proposal.
Item 5. Proposal to Ratify the Appointment of the Company’s
Independent Registered Public Accounting Firm
The Board, after receiving a favorable recommendation from the Audit Committee, has again selected Ernst & Young LLP to serve as the independent Registered Public Accounting Firm of the Company and its subsidiaries for 2016. Although not required to do so, the Board is submitting the selection of this firm for ratification by the Company’s shareholders for their views. Ernst & Young LLP has advised the Company that it has no direct, nor any material indirect, financial interest in the Company or any of its subsidiaries. The Board and the Audit Committee may change the appointment at any time if they determine that a change would be in the best interests of the Company and its shareholders.
The following resolution will be offered by the Board of Directors at the Annual Meeting:
RESOLVED: That the selection by the Board of Directors of Ernst & Young LLP to serve as the in- dependent Registered Public Accounting Firm of the Company and its subsidiaries for 2016 be, and hereby is, ratified and approved.
The Board of Directors’ Recommendation
Your Board recommends that you vote FOR this proposal.Unless you specify otherwise, the Board intends the accompanying proxy to be voted for this proposal.
Item 6. Other Matters
The Board knows of no other matters which may properly be brought before the Annual Meeting. How- ever, if other matters should properly come before the Meeting, it is the intention of those named in the solicited proxy to vote such proxy in accordance with their best judgment.
By Order of the Board of Directors.
KATHERINE J. BRENNAN
Senior Vice President, Deputy General Counsel & Corporate Secretary New York, New York